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TRANSCRIPT OF PROCEEDINGS AUfHORIZING THE ISSUANCE OF $6,570,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2016-A Legal Opinion Gilmore & Bell, P.C. Kansas City, Missouri DATED JlJLY 26, 2016 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2016-A DATED JULY 26, 2016 CLOSING LIST Copies of the transcript of proceedings for the above referenced issue (the "Bonds"), will be prepared and distributed as follows: I. City of Salina, Kansas (the "Issuer") 2. Attorney General of the State of Kansas 3. Robert W. Baird & Co., Inc., Milwaukee, Wisconsin (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 Number PROCEEDINGS AUTHORIZING THE IMPROVEMENTS I. Iron Ave Reconstruction 2. North Ohio Street 3. Fire Headquarters 4. Centennial Road PROCEEDINGS AUTHORIZING THE SALE AND ISSUANCE OF THE BONDS 5. ExceIJJt of Minutes of the governing body meeting evidencing adoption of Resolution No. 16-7366 6. Resolution No. I 6-7366 authorizing the offering for sale of the Bonds 7. Notice of Sale, Preliminary Official Statement and Certificate Deeming Preliminary Official Statement Final 8. Official Statement 9. Omnibus Continuing Disclosure Undertaking 10. Excerpt of Minutes evidencing first reading of Ordinance No. 16-10838 11. 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. 16-10838 and adoption of Resolution No. 16-7380 12. Ordinance No. 16-10838 authorizing the issuance of the Bonds 13. Affidavit of publication of summary of Ordinance No. 16-10838; City Attorney Certificate 14. Resolution No. 16-7380 prescribing the form and details of the Bonds CLOSING DOCUMENTS 15. Transcript Certificate Exhibit A -Schedule of Outstanding General Obligation Indebtedness 16. Uniform Facsimile of Signature Certificates 17. Specimen Bond 18. Agreement Between Issuer and Agent 19. DTC Documents Blanket Letter of Representations Underwriting Safekeeping Agreement 20. Rating Letter -Moody's 21. Closing Certificate 22. 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 Finance Improvements; Final Allocation Exhibit E -Sample Annual Compliance Checklist Exhibit F -Allocation of Bonds -Multipurpose Issue Exhibit G-Non-Qualified Use Analysis Exhibit H -Certificate of Bidding Agent for Escrow Fund Schedule 1 -Reimbursement Expenditures 23. Certificate of Financial Advisor LEGAL OPINIONS 24. Approving legal opinion of Gilmore & Bell, PC. 11 25. Approval letter of Attorney General MISCELLANEOUS DOCUMENTS 26. Closing Letter 27. Letter from State Treasurer Confirming Registration Number * * * * * 111 IRON AVE RECONSTRUCTION Commtaion AClloat ciTY OP SALINA,KANSAS REGULA.R.MEETJNG OF THJt BOARD OF COMMISSJONERS .. February 11,20D2 4:00p.m. The City Commission convened 113:30p.m. fora Citizen (),ma Formn. 1he .Repbt Meeting oFthe Board ofCommiasiODC11was caDed toorderat4:00p.m. in Room 107, City-County BuilcJins. A roD call was tabn foUawcd by the Plcdp: of' AlJegianoe and a moment of siJeace. Thero were present: MnyorKrimn M. Seaton, Cbairmln presidin& Commissioner DebornhP. Divine. Commlasloncr Don Heath, Commissioner Alan E. Jilb, Commissioner Mc,ntc D. Shadwick Absent: Nono. ADMINISTRATION . (8.2) FirstreadingOrdinaneeNo.02.J007J dedgnatingcenaflutreets:asmaintrafflCWl)'Sand designaatng ccna1n additional streem u 1111fflcway connecdom. 02 .. 3114 Moved by Commissioner Sbadwict, seconded by CommiE&ioner Divine. to pass Ordinance No. 01-10071 on fiJst readms, Aye: (5). Nay: (0). Motioncanied. ADIOURNMENT 02·3191 MovcdbyCommissionccSbadwick,secomlcdbyCommissicmcrHeatb,thattboRegular Medina or the Boam of Commissioners be adjourned. Aye: (5). Nay: (0). Motion cmried. The meeting atijoumcd at 5:47 p.m. (SEAL) ATn'Sl': ft{Um, Ann NigoJa Lieu Ann NicoJa, CJty Clerk Isl Kd!UD M, kfton lCdslln M. Seaton, Mayor Commission Action# CITY OF SJ\LINA, KANSAS 'REGULARMEETINO OF THE BOARD OF COMMISSIONERS Febmary 25, 2002 4:00p.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/USO 305 Progiams Briefing. The Regular Meeting of the Board of Conunissioncn was caUcd to Older at 4:00 p.m. in Room 107, City-County Building. A roll call was taken followed by the Pledge of Ancgiance and a moment of m1cocc. There were present Mayor Kristin M. Seaton, Chairman presiding. Commissioner Deborah P. Divine, Commissioner Don H.eath. Commissioner Alan B. Talb., Commissioner Monte D. Shadwick Absent None. ADMINISTRATION (8.1) Second reading Onlinan~ No. 02-10071 designating certain streets as main traflicways and designating certain additional streets as lrafficway connections. 02-3193 Moved by Commissioner Shadwick, seconded by Commissioner Jilb, to adopt Ordiancc No. 02-10071 on second reading. A roll call vote was taken. Aye: (S) Divine, Heath, Jilka, Shadwick. Seaton. Nay: (0). Motion canied. · ADJOURNMENT 02-3198 Moved by C.Ommissioncr Jilka, seconded by Commissioner Divine, that the Regular Meeting of the Board of Commissioners be adjourned. Aye: (S). Nay: (0). Motion carried. The • meeting adjourned at 4:32 p.m. (SEAL] A'ITFST: Lieu Ann Nicola Lieu Ann Nicola, City Cleric Isl Kristin M. Staton Kristin M. Seaton. 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 February 25, 2002 regarding Ordinance No. 02-10071. 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SI* Slrst.11114 Wa:r'Wcll Balldm 1adl)' dllldJmled and ~-•ma1D ~JIIIIIIWII 10 U.A.12-'IS. fistlpn 1 To pnmdudcq\llSC cc I lkml wi&la 1be OlaiD Stnctnill blllcWQ'iD mdcr IO ft1ien talf&c C1111D&f*lims llftd mhfpso iraffia ~ lallCI sdllrid IO tJio atmmdMll Dftk NollJI Ohio bllad Ofapm ad nilaled lmpro,c:mmr11 II ti DCG I I 9)' Co l8llbllsla 1B fo11owJns U tnl&.cwlyaanectiona. , A. VAN BOKNB STJlEET-A1 and ocrar itl COIIIIOCdn ..SthNlltli Oldo Scnc&. B. YC>nSTREET-AI ad nm tis r:omiecdOll 1"ilhNClllb OIDD Slra:l. C. UNNAMfJ>fJtDNTAGE ROAD-TD lie atablaW m kmcrNCllth Ohio Sired qlll-ot'...ay 10 CIO!IDOCl ara lll'CCU wltb raUpod Ncmh OblD Sne&. Sgdlpp 1, 11111 Onfinam:c Number 9J.t.562 kbcnby repi::al:d. He $,, 11llt tlucmlimccsballllc ia &II fosecand efl'cd &aaanf a!ertta adoptiDII 11111Jmb1)c1Zlcm mcc ID 111D ofllclaJ dly ~· llltmdllced: FCibnm>' Jl,20G2 PNsed: hlnlr)t 25, 20ll2 Affidavit of Publication Following 1s a true and correct copyol _________ Ont. __ N_o_._02-__ 1_0011 ____________ _ together with prool of publtcahon of the same AFFIDAVIT 1, ____ _,Kim=' =N=o::.rw=ood ___ , being duly sworn, cieclare that I am lh& Adv&rtls1ng Manager of THE SALINA JOURNAL a daily newspaper published at Salina, Saline County, Kansas. and of general c1rculat1on In said county, which newspaper has been conllnuously and unin- terruptedly published for five consecut,ve years prior to first publlcation of attached notice, and that the attached __ Ont. No. 02-10071 has been correctly published tn said newspaper __ 1 __ times,-------the first publlcatlon being given 1n the Issue 0~4---· 19---1!!!);! cl1 u p,,9c/ Subscribed and sworn to before me1 this ~ day of ~O,r t.h. 1 A o,.,g::llOZ. \ A.)~~ c;..>-Notaty Publ,c. CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS June 1, 2015 4:00p.m. The City Commission convened at 3:45 p.m. for Citizens Forum. The Regular Meeting of the Board of Commissioners was called to order at 4:00 p.m. in Room 107, City-County Building. Roll call was taken followed by the Pledge of Allegiance and a moment of silence. Those present and comprising a quorum: Mayor Jon R. Blanchard (presiding), Commissioners Kaye Crawford, Trent Davis, Randall Hardy, and Karl Ryan. Also present: Jason. Gage, City Manager; Michael Schrage, Deputy City Manager; Greg Bengtson, City Attorney; and Shandi Wicks, City Clerk. (7.5) Resolution No. 15-7240 initiating proceedings for street and intersection improvements in the City of Salina, Kansas. Rod Franz, Director of Finance and Administration, explained the project and financing. Commissioner Crawford provided her thoughts on the cost of the project. 15-0212 Moved by Commissioner Hardy, seconded by Commissioner Ryan, to adopt Resolution No. 15- 7240 initiating proceedings for street and intersection improvements in the City of Salina, Kansas. Aye: (5). Nay: (0). Motion carried. ADJOURNMENT 15-0221 Moved by Commissioner Davis, seconded by Commissioner Ryan, that the regular meeting of the Board of City Commissioners be adjourned. Aye: (5). Nay: (0). Motion carried. The meeting adjourned at 9:15 p.m. (SEAL] ATTEST: /J/S/u;u,u,U, Wickf, Shandi Wicks, CMC, City Clerk /J/..fowR. 8/artcbard- Jon R. Blanchard, Mayor I hereby certify that the foregoing is a true correct excerpt of the action taken by the Governing Body at its regular meeting ~m.!une l, 2015 regarding Resolution No: 15-7240 . . . I . ' ~~ Shandi Wicks, City Clerk RESOLUTION NUMBER IS-7240 RESOLUTION INITIATING 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 Iron Avenue as a main trafficway pursuant to K.S.A. 12-685 et seq. (the "Act"); and WHEREAS, the Governing Body of the City has determined that it is necessary to improve or re improve portions of said main traffic way as follows: Reconstruction and improvements to Iron A venue from Front Street to approximately 800' East of the intersection with Ohio Street. Project will include removal and replacement of existing pavement, curb and gutter replacement, construction of sidewalks, bicycle lanes, traffic signals, and installation of enhanced street lighting; 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 a portion of 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 $2,250,000.00, 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 $2,250,000.00, plus costs of issuance and plus costs of interest on any temporary financing. . Section S. 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 1st day of Jun~. 2015 . (SEAL) ... • ATTEST: handWick CMC, City Clerk -2- NORTH OHIO STREET CITY OJ' SALINA,.KANSAS UGULAR.MEBTJNG OJl'TBJt BOARD OF COMMISSIONERS February l1,%0Dl 4:00p.m. The City Commiuion convened at 3:30p.m. fora Citizen Open Forum. The.lleplat Meeting orthe BomdofCommlasiODmwucaDedtoanlcrat4:00p.m.inltoom 107,Clty..Ccnmty8uiJ4ins.AroD can was tabn foUawod by tho Pledp of AJJegianae and a moment of siJence. There wezepresem: MllyorKrimnM. Seaton, Cbainmm presiding Commissioner DeborahP. Divine, ComndllSioncr Don Heath, Commissioner Alan E. J.iJb, Commissioner Monte D. Shadwick Absent: Nono. . ADMINISTRATION (1.2) First reading OnSinanee No. 02. J 0071 dralgmtillg cenaJn mu:11 as main trafflCWl)'S encl designating CCl18Jn addJtlonaJ ltrmal as 1rlfflcway com1cctlom. 02.3114 Moved by Commiaicmer Sbadwict. aeconded by Commls&ioner Divine, to pass Ordinance No. 01-10071 cm fi1St seadiag. Aye: (5). Nay: (0). Motion carried. ADIOURNMENT 02-3191 Movedby CommusioncrSbadwict,scccmdcdbyCommisaioncrHcatb,thatthoRcgular Meeting of the Board of Commissioners be adjoumed. Aye: (5). Nay: (0). Motion cmried. The mccdng 81ijoumed at S:47 p.m. (SF.AL) ATn'Bl': fl(ucu MD Nicola Lieu Ann Nicola, Chy Clerk Isl Kristlp M. Se,ton Commission Accionfl CITY OF SALINA, KANSAS 0REGULARMEETING OFTBE BOARD OF COMMISSIONERS Febnaary 25, 2001 4:00p.m. The City Commission convened at 3:30 p.m. for a Citizen Open Formn. 1bo City Commission also m~m a Study Session aflerthcregularmeotingfor a City/USO 305 Progaanas Briefing. 1boRcgular Meeting of 1he Board of Commissionm was c:alJecl to onler at 4:00 p.m. in Room 107, City-county Building. A roll call was taken followed by the Pledge of Allegiance and a mommt of silence. . 1bere were present: Mayor Kristin M. Seaton, Chairman presiding. Cmmnissloner Debomh P. Divine, Commissioner Don ~eath, Commissioner Alan B. T&Jb, Commissioner Monte D. Shadwick Absent None. ADMINISTRATION (8.1) SecondreadingOnlinancoNo. 02-10071 dcsignadngc:crlain streets as main trafficways and designating certain additional stn:ets as trafficway connectiODC. 02-3193 MovedbyCommissioncrSbadwick,seconcledbyCommissionerJilb,toadoptOtdiancc No. 02-10071 on second read.mg. A toll call vote was taken. Aye: {S) Di'Vine, Heath, Jilka, Shadwick. Seaton. Nay: (0). Motion cmied. · ADIOUBNMENT 0,2.,3198 Moved by Commissioner Jillca, seconded by ConunissiODCr Divine_ that the hgular Meeting of the Board of Commissioners be adjourned. Aye: (S). Nay: (0). Motion carried. The • meeting adjourned at 4:32 p.m. · (SEAL] A'ITEST: Lieu Ann Nicola Lieu Ann Nicola, City Clerlc Isl Kristin M. Seaton 1Crlstin M. Seaton, Mayor J hereby certify that tho foregoing is a tnao con= ~c«pt of tile action taken by the Govcming Bocly at its regular meeting on Fcbmary 25, 2002 reguding O.rdinance No. 02-10071. ~m . ft' 'II ,. " ,. .. P' P :,, " " P " ~ ul1 II ·~!i. f 0~ q i1L1 la •1 sa ..... ~ .. -.. ~ 111 ----~ i a.t1 a.~1:"' ... ,; ~.Q Iii:~ nsi -•I, 11!11 l ij &s~ ,. I H" II~ ·,=! t; rg ii lit: Ir! I i• It rn ii &t;Fi8 0 I ~~ U! rl~-ut Hi f 1 ,i~ iii: ail i!l ,;i iii ·tu i -1~, I i ~· HI l~i IH • e:1 •n 'l1' --, ;:· ra. ,it ri r1 i r;a 8. I -n -n1 111 in 111 -in tu 11· nt 111 u1 ih d1 t 1!1 1 , fi b Ji JI }11·f lit Jl1.1,, l'f l Jl1l Jf I H11· 11' ~,.,d •,· Ill 1 r . r ,..1 . • r r ~. I ~, I . ~U rt ii! JI; carrylziJ tllUic liliwan Oas a,,.. 111111h CClbl 111d IOldJacnl COdllDOdlJ dllllllcts llllll la. pdm:lpll 111ee1 am,m,~ lat& &11nq1a aic CICllll'l1 pon1oa otSbc ac,. M. 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Jl. sam.uNOROAD kamajoranadat 111ectft1B1111a wal..llmn()ldo 6111d to A.mold A..c:ut in Ille Ai,pad Jadmarial Nr4 111d b a priidplJ 1111d Clll)'bas CISl.lwmt 111& IIIIDap tbo "'6 ,onioll or tbtClly. s. SOUJH S'IB!ET Is • IDljor a>Dec:lar --IIIIUlla& -Dan BJNdwly ..,_to FoarGa 1111:d ad b a pWpalacctc:an)'IDg a:dlWat llaflic llnltlh 1be mini ponloDof'CIIDOly. T. STATES'l'IEIJ'is amjorldaial a"edllllm!II mtfnmlalm:llte 13$ lo lb, ccdrll bmmr:11 dlmict .S Ja I~ --1 c:llftJii8 eastfMlll .. lhnmp lho:mntbpmiml tlllbe a,y. U. • WAT&ll WJit.LllOA!> ia a lllljor eitalaJ lll'ICll nm1ms w:atJimD Nlillll &netdalllp lhe IIDllllb _, ora-.,arlDdalldal-• Mpart .-,.aDdl,apdadpallll'ldmll7JIIJm!atWIIINll.1:~ rmfoc IDduldal moiaJ amt JlllmmlD IJS latcn:Jlqca. fircllp 2. 'Dlltlia Slreet, Bdmmll0 Bcndanrd. lnudwq a»annS.CcntmmW bl4. CJod SlnDI. ColmlrrClll1J Raid, Cnwlcml Aftlllll, lnmAwraaa, ....... load, Mml111 Jtod. MC)'IDDlllltll-.N'"llllbSnet,lbtbSnct.Obic,Sl'IIIII.PcdioAwma:,~A--.SanlaFe Awmac, St:1illl1-&Jlol0. Soalh hid. SIID Slrml. 1111d w .. woU ..... ,.., ..... aDd ~a•amn ~Jlllllmnl to U.A.12-615. hdma J. 'To pnwide adr:qiwc connedinnrwilh elm Obio Slnd1111m blfk:wviD mder IO zdie,o nfSc DIDCf*liaa and mlsfJISO lrlffla alcv' blues sJmd IO lb Clllhllllldiclt ofdlt North Ohio JlaUlald D,apm IDCI n1llld fmpso tiii4UUII II II aa:cmry lo DBlll,l.,b die fb1lcwl111 at tzal&cwa)'~ • A. VAN BORWB STREE!'-At lllld DCal ha c:minec:elOD "WltbNlrdl Oldo Stm:t. B. YOU:STREEl'-Al ad near 11s e:owailm WUhNClftb Olio Slnl:l. C. UNNAMB>f'RONTAGEROAJ>-Tolieesll!>Jitlwl en kmcrNathOhioSlred dpt-of'-waylO C1C11aC1 anr:a sums wllll ,aliptld NC11b OJ:111> Sir-. Ss;ctlpp 1, 11111 Ordinm= Nambc:r S>M.562 kbcrlbr repml:d. B,ctlmt s. Tlllt llialffllillm WIie m M.1 f'ffleand e8'ed Imm! alerill edcpliml ad pdlUcllltcm WC il 111D offlc.111 dty 60WIJIIIPCf• IJllnldm:fd: Fdnlr)' II, 20Q2. Pmed: klamr)' 2S.2C>ll2 Affidavit of Publication Onl. No. 02-10071 Following 1satrueandcorrcctcopyot _________________________ _ together wnh prool of pubucat1on of lhe same AFFIDAVIT Kim Norwood ___ , being duly &wom. aeclare that I am 1ria Aln'ert1s1no Manager or THE SALINA JOURNAL a daily newspaper published at Sahna, Sa.tine County, Kansas, and of general c1rculat1on In said county, which newspaper has been continuously and un1n- terrupttdly published tor five ccnsecuttve years prior to t1rst publ1cat1on of auacncd nohce, and that the attached __ Onl. No. 02·10071 has been correc11y published tn said newspaper __ 1 __ time,, _______ the flrat publlcatlon being g1~en 1nthe lssueo~4---• 19~ ftt.cu,pJ S1.1bscrlbed .and swom to before me, this ~ aayor t'\0,re,h I AD . .>~ t_,A,,)~~~~c· CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS February 23, 2015 4:00 p.m. The City Commission convened at 3:45 p.m. for Citizens Forum. The Regular Meeting of the Board of Commissioners was called to order at 4:00 p.m. in Room 107, City-County Building. Roll call was taken followed by the Pledge of Allegiance and a moment of silence. Those present and comprising a quorum: Mayor Aaron Householter (presiding), Commissioners Jon R. Blanchard, Kaye J. Crawford, and Trent Davis. Also present: Jason A Gage, City Manager; Michael D. Schrage, Deputy City Manager; Greg Bengtson, City Attorney; and Shandi Wicks, City Clerk. Absent: Commissioner Randall R. Hardy. (7.4) Resolution No. 15-7183 initiating proceedings by the Governing Body for street and intersection improvements in the City of Salina, Kansas. Rod Franz, Director of Finance and Administration, explained the project and funding. Commissioner Davis asked if there was anything structurally wrong with the section of the street. Mr. Franz responded by stating that the street was a little narrow and in need of repairs. Commissioner Davis asked if the project was a priority outside of the projects listed within the Capital Improvement Plan. Jason Gage, City Manager, responded by stating that the street was in need of repair due to being an impact street connecting to the Ohio Street overpass. Commissioner Davis asked if there would be sidewalks constructed as part of the project. Mr. Gage stated that the sidewalks would be constructed on the west side of Ohio Street. Commissioner Blanchard stated that the project was originally scheduled for 2016 but accommodations were made to move the project up to be constructed in 2015 in conjunction with the Bicentennial Center Improvements. Mr. Gage spoke on street improvements and the need to perform more work on the city streets. 15-0060 Moved by Commissioner Davis, seconded by Commissioner Blanchard, to adopt Resolution No. 15-7183 initiating proceedings by the Governing Body for street and intersection improvements in the City of Salina, Kansas. Aye: (4). Nay: (0). Motion carried. ADJOURNMENT 15-0065 Moved by Commissioner Crawford, seconded by Commissioner Davis, that the regular meeting of the Board of City Commissioners be adjourned. Aye: (4). Nay: (0). Motion carried. The meeting adjourned at 7:50 p.m. [SEAL] ATTEST: (J(Sltant.i,v Wic/cr Shandi Wicks, CMC, City Clerk /J/AarowK. f{~er Aaron K. Householter, 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 February 23, 2015 regarding Resolution No. 15-7183. ~IVLVZ Shandi Wicks, City Clerk RESOLUTION NUMBER 15-7183 A RESOLUTION INITIATING PROCEEDINGS BY THE GOVERNING BODY FOR CERTAIN STREET, INTERSECTION, SIDEWALK, AND OTHER RELATED 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 Ohio Street as a main trafficway pursuant to K.S.A. 12-685 et seq. (the "Act''); and WHEREAS, the Governing Body of the City has detennined that it is necessary to improve or reimprove portions of said main trafficway as follows: Removal, replacement and widening of the existing pavement (including North street intersection), new curb and gutter, extension of the box culvert; underground storm sewers, multi-use trail and sidewalks on each side of Ohio Street, street lighting, and other related and necessary improvements, all located generally on Ohio Street between North Street and Elm Street (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 and/or temporary notes of the City as provided by the Act, the estimated maximum principal amount of such obligations being $1,700,000.00, 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 $1,700,000.00, plus costs of issuance and plus costs of interest on any temporary financing. Section S. This resolution shall be in full force and effect from and after its adoption. Adopted by the Board of Commissioners and signed ,by Mayor this 23'd day of February, 2015. (SEAL) ATIEST: ~t<Jlib Shandi Wicks, CMC, City Clerk . Householter, Mayor -2- .. FIRE HEADQUARTERS CITY OF SALINA, .KANSAS REGULAR.MEETJNG OF THE BOARD OF COMMISSIONERS Februry 11, 2002 4:00p.m. The City Commission convened at 3:30 p.m. for a Citiun Open Forum. The .Regul11t Meeting of the Board of Commlasionc11 wu called to order at4:D0 p.m. in Room 107, City-County Building. A roll call was taken f'oUawcd by the Pledge of AlJegiance and a moment of siJence. There were present Mayor Kriltin M. SeatoJI, Chairman presidm& Coxmnissioner Dtbornh P. Divine, Commissioner Don Heath. Commissioner Alan E. Jilb, Commissioner Monte D. Shadwiclc Absent: None. ADMINISTRATION . (8.2) F'nst reading Ordinanee No. 02-10071 designating cenafn ~u :as main trafllcways and designating ccrtBln addftlonal streets u trafflcway connections. 02·3184 Moved by Commiaioner Slwlwict. seconded by Commissioner Divine. ~ pass Ordinance No. 01-10071 on fiM reading. A'fC: (S). Nay: (0). Motion carried. ADSOURNMENT 02-3191 Moved by CommusionQ"Sbadwick. seconded by Commissioner Heath, that tho Regular Meeting of the Board of Commissioners be adjourned. Aye: (5). Nay: (0). Motion canicd. The meeting atljoumcd at S:47 p.m. {SEAL) ATTESI': fs[ ueu Ann fficoJa Lieu Ann Nicola. CJty Clerk /s/ Kristjn M, Seaton Kristin M. Seeton, .Mayor I he~by certify that the foregoing is a true correct excerpt of the action taken by the Governing Body at ita regular meding on FcbruaJ)' 11, 2002 iqpuding Ordinance No. OJ· 1007 J. ~Om Commission Ac:cion# CITY OF SALINA, KANSAS 0REGULARMEETING OFTBE BOARD OF COMMISSIONERS Febnaary 25, 2002 4:00p.m. The City Commission convened at 3:30 p.m. for a Citizen Open Forum. The City Commission also metin a Study Session after the regular meeting for a City/USO 305 Progtams Briefing. 1bcRcgular Meeting of1he Board of Commissioners was called to order at4:00 p.m. in Room 107, Qty-County Building. A roll call was 1aken followed by the Pledge of Allegiance and a mommt of silence. There were present: Mayor Kristin M. Seaton, Chairman presiding, Commissioner Debomh P. Divine, Commissioner Don ~th, Commissioner Alan B. JiDca, Commissioner Monte D. Shadwick Absent None. (8.1) Second reading Ordinance No. 02-10071 designating certain meets as main tramcways and designating certain additional streets as tndBcway connections. 02-3193 Moved by Commissioner Shadwick. seconded by Commissioner Jilka, to adoptOrdiance No. 02-10071 on second reading. A roll call vote was taken. Aye: {S) Diwie, Heath, Jilka, Shadwick, Seaton. Nay: (0). Motion camect. · ADJOURNMENT 02-3198 Moved by C.ommissioncr Jilka, seconded by Commissioner Divine, that the Regular Meeting of the Board of Commissioners be adjomned. Aye: (S). Nay: (0). Motion carried. The • meeting adjourned at 4:32 p.m. (SEAL] A'ITBST: Lieu Ann Nicola Lieu Ann Nicola, City Clede Is/ Kristin M. Seatan Kristin M. S~ 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 Febmary 25, 2002 regarding Ordmance No. 02-10071. Li~Ckrk - AN OJU)IRANCE DJtDc:NA"l'INC catrAJM ffkEtfl AS NAJM TAAfflCWAW PIJRIVAN'J' TO &a.A. tMIS AND DEStGNAnNG CEltTAIN ADDfflDJULSl'IUIZt'SASTltA.IPICWAYCONN£CiiONBPlJRSUANl'TOJC.S.A.IUU, .AND UPVJJNCOIDIIWIClt N1JMB1R IU:SG. BE Ir OJCDAIHJ:D II)' die OomabcBody otdleaty ofSllilla. JCam: lsUn ,. 11ao priml,J 6-lioll DtdloltrllCtldllaWlll Oiia llCtianla lic:nb)' '211114 b be tbeuwofllnaab1rdic bctwrmrmofCG11c ,11 lt&dleliwi!Ywilbin lbD cll)tor ..... nab .,.. wi1lml tbe a1tJ IIDCI tlaBic r.cilita Olltlide lbll city ped'ormS. 11d fimoliim or a major trl!limlt, baod IJJIOll D&c &IJftiDs: -A. ASH STJmBT Ja a major IICtUcct« ftndlmmiDa CISI lam Brodny Boulcwm ID Omo Street ad ls I pmmpel lt=t ~ mt/wat tnf&e 6rovp lbD ceda'ponion ~a.at,. 8. Bf.LMON?BOUl.EVARD Is a najor lllcdl1 llllllll1111111q IDlllllwat hip 01llo Slra:t IO Mnlh StllCI 1111d fl 1 pdllcipll 1111111 Clll)'lac ~alfJictbroaptlielOllhelllpoldonortnaiy. C. 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L MAGNOLL\ ROA1> ii a maj« lll1orial 1111d nmfaa IUI hm the WIil dly llmlls ID 111eem cli, lmlta llldka pnac:fpal na:t caa,ina wllhmtntlcdnlp 111Dllh poniaof'dleCiry, J. MARia.BY 1lOAI> ii • major collctor llllllt ftlllDIJi& aolll1a 6am Oawfald 10 Nlpo1fa Jtold -· la a pdncip,1 llftCt Clll)'itli DOdbl,aatb tn.Dio daauah lat UII portlz Gttbe City. I:. MARYMOU!n' ROAJ> Is a lllljor mtmiaJ llllWlt wmmin1 IIDl'Cb be Oocrd Snet lo Coanlr7 Qab load 1114 la a prinr:ipaJ 11rDct can,ini nonhlloulh uafflo lhroup t!ae eu1 pcatian AC~ a11. L NINTH Sl1lB£1" h 1 ~ anerial llreOl him dae 11onb city lhnlt .. DOnh or JDIC:lllat: 70 ao the IOllll\ city liad1a ~ Wamwdl Road canymJ a& llciweou I= Cir,'I ms,lh CClllrll ., S01llhcm coucmcrdll dilldcu and la apriDclpll cect can,illSDDltlnoltla D5c: .,. lbe ec:mnl ponJon ot1bc CiCJ. M. NOJmlSD.E!t'Csa ZDIIJor ctmla111Net sanabt,a 6Dn laOMll clsy limftl lo OIDcal city limlia lftll II a priDl::lpal llllllllt rsarymc..vwat tnf&c lm'DDJ1i 111D mda i,odlOll ofb ctly. N. OlUO STIBETk a ajarckrial 11rei:tl'lllllialllOIIII tan cmottbo lntersta 70 in=n:1slnga to the ICIIDlh dty Dmlls 11111 is hepmdpll stnet canJin1 IIOf1h'loudl traf&c oc lbe mw:mtn1 aleoftae City. O. P.ACPJC AVENU! la a major anaill mctrmmlag all &mt Hintb Streat -.1= mi al)' &mils and ts. prirdpa1 stn:ctCll!)'iaataL'wcsl tnf& lhroagJa 11m DOl1II podion of'lbe City. 1. 1lEPUBL1C AVENUB h a major coUa:a llfflll l11111WB mt frmn Cedmmial JtNd 10 lbeeut city Jimlt DCllftae 8IIDIS ..,_.,.._ 111d Is. pdnclpal llreet ~ em'well lrlllic Cbl-,Jl 121D IDllla Pll1iaa or1ma11. Q. SANJ'A 1B AVENUE Is a mjar artaia1 '1lsct nmaias D01'lb hm CWlin ID Otis and Is a prillcipa1 ma Clft)'flll .,.,.,,. 111.fSc dnapdlD cmlral prioa oldie City. Jl. sam.tlNO IOAll uamajarartmi&l 111reetnmDIDg ,,..Imm Oldo S1ffll 1o Amolcl Afflllll In lhe Airpalt 1admSrial A.la 1111d la a principal .. Cll1)'Dll casllW&lst lrlflic lbloap 1bo IOl6 ponilmor lbtQly. s. smnH STBEET ts a major mnecear arcct J111mD1 a liam Bioadway BoDleftzd 1o fOUl'lb Sired and II a piDcipal S1lecl canylDg Clllltlwat 1llfflc lbrDIIIII \his ccmnl pordonofdlD Qiy. T. STATB mm is a lDllier ldcdll mctlllmilla mtfinmlllleslare US IO Ibo cmnl nmas dimict IIDd .Is a psSDdpal ltnel~ eastlwell lmlic lhnmp lho:m,r1b paniao ttllbo City. U. · WJ.TliR. WELL llCW> Ja a 11119or ctedal Slrml nmaiq vat hm ma Slleet GINm&1t o-IDDlb emt ora 11191f lndmiaJan& a Allport bade ..S 1,a smc:iPal 1111C& an,Jnseu.,. Mat nffic..._. llllljoc bdlaatdal eammeroiaJ and JlllalmlD l35 latcn:1imp. fiscdon + 'llllt.Asla Sired, ~·J3oullffard. Bl'Dldwa1 ~Oc:nlr:nnfll load. OOD4 S-. Comlby CID Rold, Cmrlbrd AftDDC, lnmAw:am, Mapo1ia loal, Ymtley ~ Mcymoaint llNd, N'udb Snet, lb1b Stnct, Ohio Screes. h:llo.Awam:,It.qulicAwmae, SantaF• A\'maC, Scblllbtllload. Soalb Sine1. Sim Slnlll,, IIDd W-=rWcD Boad1111 lmdly ~ and Cltab&lbed a •amin ~ JIUl'llllll ID IC.SJ.. l2-6ts. hsffma 3. Topmideldcqaal.c conm=t!onawiea Iba ObioStnctniA lllfJlcwv In mdcr IO den nl6o rmpriml and mfslpso mf&-=7 lDIICI 11:JdaS ltltm m:IIDladiaa olllt; lbth Ohio JlalJl'Dld Ow:1,-, ad niJad UIIJIIDWammtl II it DCC IY IO IBTlblsh Ille fo11owfDJ U tsdlicwaycosmectiona. A. VAN BORNB STJU!Et'-At and ec:ar hi -IIClioD ...StbNcllth Olifo Stm:t. C. UNNAMEDJ=RONTAOEROAJ>-TobecdlblitW en lnu:r'NCflbOhloSlrcd ri,pt-oC-way &o CIO!UllOC& 1111:& w=, wltb rallpod Nmlb. OJ:do SUeer. &sctlm 1, nm OnfinlDcc Nmnbcr 9J,t.562 khcnlbr repealed. S,s;tiop 5. 'Iblt lhla ~ dJa]l l,eja &11 bee and effect haanl derita a,ptiall lllllf pabllcldon wo II 111o oflldll cllf MMJ'lfer, IJar,,ditced: F.,_,. 11. 20G2 Paaed: Fellnmy 2S, 20Q2 • Affid~vlt of Publication Ord. No.OZ.1~ fotlowtngllatrHt!WCIOff'IOt~•'------------------------- IOOlttllf wtlh proof of l)Ubllca11on of 1hf WIii, AFFIDAVIT CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS March 16, 2015 4:00p.m. The City Commission convened at 3:45 p.m. for Citizens Forum. The Regular Meeting of the Board of Commissioners was called to order at 4:00 p.m. in Room 107, City-County Building. Roll call was taken followed by the Pledge of Allegiance and a moment of silence. Those present and comprising a quorum: Mayor Aaron Householter (presiding), Commissioners Jon R. Blanchard, Kaye J. Crawford, Trent Davis and Randall R. Hardy. Also present: Jason A. Gage, City Manager; Michael D. Schrage, Deputy City Manager; Greg Bengtson, City Attorney; and Miki Orr-Muths, Administrative Assistant. (7.2) Resolution No. 15-7189, authorizing the issuance of long-term public improvement bonds of $2,096,654.00 plus capitalized interest and costs of issuance to finance the construction of improvements to Fire Station No. 1 Phase 2 Building Addition. Rod Franz, Director of Finance and Adplinistration, explained the issuance of long-term public improvement bonds plus capitalized interest and costs of issuance to finance the construction of improvements to Fire Station No. 1 Phase 2 Addition. Commissioner Crawford stated that it should be a Class A facility. Mr. Franz responded yes. 15-0082 Moved by Commissioner Hardy, seconded by Commissioner Blanchard, to adopt Resolution No. 15-7189 authorizing the issuance of long-term public improvement bonds of $2,096,654.00 plus capitalized interest and costs of issuance to finance the construction of improvements to Fire Station No. 1 Phase 2 Building Addition. Aye: (5). Nay: (0). Motion carried. ADJOURNMENT 15-0084 Moved by Commissioner Crawford, seconded by Commissioner Davis, that the regular meeting of the Board of City Commissioners be adjourned. Aye: (4). Nay: (0). Motion carried. The meeting adjourned at 6:40 p.m. /J/Aarorl/K. ff~ [SEAL] Aaron K. Householter, Mayor AITEST: /J/Sltand.v w~ Shandi Wicks, CMC, City Clerk I hereby certify that the foregoing is a true correct excerpt of the action taken by the Governing Body at its re ular meeting on March 16, 2015 regarding Resolution No. 15-7189. ~-/JJCUZ Shandi Wicks, City Clerk ... /·, . ' - RESOLUTION NO. 15·7189 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, the City of Salina, Kansas (the .. City") is authorized and empowered pursuant to K.S.A. J 2-1736 et seq. (the "Act") 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 \VHEREAS, the City is authorized and empowered pursuant to the Act to issue general obligation bonds for the purpose of financing the costs associated with the foregoing; and WHEREAS, the governing body of the City hereby finds and detennines that it is 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. NOW, THEREFORE: BE IT RESOLVED BY THE CITY OF SALINA, KANSAS, AS FOLLOWS: Section I. Project Authorization. Pursuant to the above, the governing body of the City hereby finds and detennines that it is necessary to make the following improvements: Improvements to Fire Station #I (222 W. Elm Street) including construction of two new apparatus bays with overhead doors, construction of a mezzanine with rescue training props, construction of a gear storage room, installation of a fire sprinkler system~ renovation of apparatus bay lighting and ceilings, redesign and installation of an apparatus bay exhaust systems, concrete drive removal and replacement, relocation of a breathing air compressor system, and all other necessary and related appunenances. (the "Improvements"). Section 2. Project Financing. The estimated cost of the Improvements is Sl,096,654. The cost of the Improvements and the associated financing costs shall be payable from the proceeds of general obligation bonds of the City issued under the authority of the Act. Section 3. Reimbursement. 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 Sl,096,654, 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 § J .150-2. l8 Section 4. Effecti\'e Date. This Resolution shall take effect and be in full force immediately after its adoption by the governing body. THIS RESOLUTION WAS ADOPTED BY THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS THIS 16TH DAV OF MARCH, 201S. ,,._~L-). ~ 'ATIEST: Jason Gage, City Manager CENTENNIAL ROAD ciTY OJI' SAUNA, KANSAS REGDLA.R.MEETJNG OFTHEBOARD OF COMMISSIONERS February 11, %0Dl .. 4:00p.m. The CJty Commiuion convened at 3:30p.m. fora Cidze:n Open Formn. 11ae .Reph:t Meeting orthe Board ofCommlniD.De1S wu called to cmlerat4:00p.m. in Room 107, City-County BuUd"ms, A roD call was tabn foUOWDd by tho Pledp of' AJJegiaace and a mmnent of dJencc. There were present MoyorKrimnM. Seaton, Chairman presiding Commissiauer DeborahP. Divine, Commilldoner Don Hcadl, Commissioner .A!n E. J.ilb, Commissioner MClfttc D. Shadwick Absent: Nono. ADMINISTRATION ' . . (8.2) f"irstreadlngOrdimnce No. 02-10071 delfpatiagcenatnsme11 as main IJaffiCWl)'Send designallng ccr18ln addhJonal strem a nfflcway co1111ecdom. 02.3114 Moved by Commiaicmer Sbadwict. aeconded by Commissioner l)jviJ\e. to pass Ordinance No. 01-10071 an filst reading. Aye: (5). Nay. (0). Momncarried. ADIOURNMJtNT 02-3191 .MOYCdbyCommiaaioncrShldwick,secondcdbyCommiAioncrHcatb,thattboRcgular Meetins of th: Board of Commissioners be acUoamed, Aye: (5). Nay: (0). Motion camcd. The mecdng 8*umed at 5:47 p.m. (SEAL) A11AT: {t{Ucu MD Nicola Lieu Ann Nicola. CJty Clerk ,,, Kristin M. h!en Commission Ac:lion# CITY OF SJ\L1NA, KANSAS .:REGULAR MEETING OF THE BOARD OF COMMISSIONERS February 25, 2001 4:00pm. The City Commission convened at 3:30 p.m. for a Citizen Open Forum. Tho City Commission also m~inaStudyScssionaflerthcregularmeetingforaCity/USD305ProgramsBric6ng. 1boRcgular Meeting of 1be Board of Commissiomn was callecl to onler at 4:00 p.m. in Room 107, City-County Building. A roll call was la.ken followed by the Pledge of Allegiance and a mommt of silence. 'lbere were present: Mayor KrisCin M. Seaton, Cwrmanpresiding,Commissloner Deborah P. Divine, Commissioner Don ~eatll, Commissioner Alan E. Jilb, Commissioner Monte D. Shadwick Absent None. ADMINISTRATION (8.1) Second readingOnlinan~No. 02-10071 dcsignadngcettain sttoctsas main traflicwa)'B and designating certain additional streets u trafficway connections. 02-3193 Moved by Commissioner Shadwick, seconcledbyComnissioner Jilb, to adoptOmiancc No. Ol-10071 on second reading. A roll call vote was taken. A~ (S) Diwie, Heath, Jilka, Shadwick. Seaton. Nay: (0). Motion carried. · ADJOURNMENT . 02-3198 Moved by C.ommissioncr Jilb, seconded by Commissioner Divine, that the Regular Meeting of the Board of Commissioners be adjomned. Aye: (S). Nay: (0). Motion carried. The • meeting adjourned at 4:32 p.m. · (SEAL] A'ITEST: Lieu Ann Nicola Lieu Ann Nicola, City Cleric . 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Tllll lluantirmW•ia6U ro.ecanc1 dl'ect 11am1 dr:r-t1t~ IDd pdillcazlOJl m= In 111D ofllclll city IIOWIJIIIC, ~ Flllnm711.icm ,-.; ...,,2$,2C>IR Affidavit of Publication Ord. No. 02-10071 Following 1satrueandcorrcdcopyof _________________________ _ together With prool of put>t1cat1on of the same AFFIDAVIT Kim Norwood ___ , being duly sworn. aeclare 1hal I am the Advsr11s1ng Manager c,f THE SALINA JOURNAL a dally newspaper publ1Shed at Salina, Sahne County, Kansas. and of general c1rculat1on 11'1 &aid county, which newspaper has been continuously and un1n~ terruptealy published tor five consecutive years prior to tm1t pubhcauon of attached nohce, and that the attached __ Ord. No. 02-10071 has btutn correctly published 1n said newspaper __ 1 __ time,,-------the tint pubflcatfon being given 1nthelssueo~4---• 19~ ('Aup.,9J Subacrlbed .and swom 10 before me, this ~ aayof l"\0,rt.h I AD . .I~ 'p,)~~ ,c..,-Notar,hbhc. I I z n. UJ .. C: ~ i ~ 8 116-0061 CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS February 22, 2016 4:00p.m. The City Commission convened at 3:45 p.m. for Citizens Forum. The Regular Meeting of the Board of Commissioners was called to order at 4:00 p.m. in Room 107, City-County Building. Roll call was taken followed by the Pledge of Allegiance and a moment of silence. · Those present and comprising a quorum: Mayor Jon R. Blanchard (presiding), Commissioners Kaye Crawford, Trent Davis, Randall Hardy, and Karl Ryan. Also present: Jason Gage, City Manager; Michael Schrage, Deputy City Manager; Greg Bengtson, City Attorney; and Shandi ·wicks, City Clerk. AWARDS AND PROCLAMATIONS (3.1) The week of February 21 through February 27, 2016 as "Engineers Week" in the city of Salina. Dan Stack, President of the Smoky Valley Chapter of KSPE, read the proclamation and announced events associated with the proclamation. CITIZENS FORUM None. PuBLIC HEARINGS AND ITEMS SCHEDULED FOR A CERTAIN TIME (5.1) Public hearing and report on Petition No. 4378 (filed by Steve Hardesty on behalf of the City of Salina), requesting the vacation of a 10 foot wide north-south public utility easement that abuts Lots 89, 91, 93, 95, 97 and 99 on Fifth Street and Lots 90, 92, 94, 96, 98 and 100 on Fourth Street all in the Original Town (now City) of Salina, Saline County, Kansas and a 10 foot wide north-south public alley that is located between Fifth Street and Fourth Street and between Ash Street and East Iron Avenue in the Original Town (now City) of Salina, Saline County, Kansas less the South 475 feet thereof to allow construction of the downtown field house project in that location. (5.1a) First reading Ordinance No. 16-10820. Mayor Blanchard opened the public hearing. Dean Andrew, Director of Planning, explained the request, affected public and franchise utilities and recommended action. Mayor Blanchard asked if there was a reason why the easement was not vacated before now. Mr. Andrew stated with unified ownership by the City of Salina, it allowed for the vacation. There being no further comments the public hearing was closed. Moved by Commissioner Hardy, seconded by Commissioner Ryan, to pass Ordinance No. 16- 10820 on first reading. Aye: (5). Nay: (0). ~otion carried. CONSENT AGENDA Page 1 I I I "' "' z Cl. w "' -~ .; (/) t ;;; 32 ~ 0 CJ (6.1) (6.2) (6.3) (6.4) (6.5) Approve the minutes of February 8, 2016. Approve the minutes of February 16, 2016. Approve Resolution No. 16-7320 appointing members to various boards and commissions. Authorize the Mayor to approve Change Order No. 2 for Laboratory Support - Chemical Testing of Vapor to Environmental Science Corporation in the amount of $1,434 (Revised Agreement Amount $36,427). Approve Resolution No. 16-7323 to amend the Public Safety Pay Plan to include the 2016 cost of living adjustment. 16-0062 Moved by Commissioner Davis, seconded by Commissioner Crawford, to approve the consent agenda as presented. Aye: (5). Nay: (0). Motion carried. 16-0063 ADMINISTRATION Mayor Blanchard asked to move Item No. 7.6 to the end of the meeting. (7.1) Award of contract for Centennial Road Improvements, Jumper Road to the South City Limits, Project No. 14-3055. Dan Stack, City Engineer, explained the project, bids received and recommended action. Commissioner Hardy asked who provides the inspection for the project. Mr. Stack stated city staff. Commissioner Davis asked if traffic would be detoured for the airport. Wayne Nelson, Civil Engineer II, stated the phasing would allow access for Schwan's trucking at all times. Moved by Commissioner Ryan, seconded by Commissioner Davis, to award the contract for Centennial Road Improvements, Jumper Road to South City Limits, Project No. 14-3055 to Vogts- Parga Construction, LLC. in the amount of $1,165,210.65 with a 5% construction contingency ($58,260.53). Aye: (5). Nay: (0). Motion carried. (7.2) Resolution No. 16-7325 initiating proceedings by the Governing Body for street and intersection improvements in the City of Salina, Kansas. Rod Franz, Director of Finance, explained the authorization and fiscal impact. Commissioner Davis asked for the difference in short term and long term funding for the project. Mr. Franz stated in order to include the project within the projected funds; the project would need to take the place of a yearly project. A conversation ensued between the Commission, Mr. Franz and Jason Gage, City Manager, regarding funding of projects. 16-0064 Moved by Commissioner Davis, seconded by Commissioner Ryan, to. adopt Resolution No. 16- 7325 initiating proceedings by the Governing Body for street and intersection improvements in the City of Salina, Kansas. Aye: (5). Nay: (0). Motion carried. (7.3) Resolution No. 16-7322 amending the City of Salina's Personnel Manual. Natalie Fischer, Director of Human Resources, explained the amendments. Page 2 I I I z a. w "' .s iii en t 16-oofs C: 0 (.) 16-0066 16-0067 Commissioner Hardy asked if the language in section 18 paragraph A, pertaining to possession and use of dangerous weapons by employees, would be in conflict with state legislation. Ms. Fischer stated the language could be a conflict and the item could be postponed for action or could be approved and amended in the future. Mr. Gage provided an update on the legislative items. A conversation ensued between the Commission, Mr. Gage and Ms. Fischer regarding the legislative items pertaining to dangerous weapons. Moved by Commissioner Davis, seconded by Commissioner Crawford, to adopt Resolution No. 16-7322 amending the City of Salina's Personnel Manual. Aye: (5). Nay: (0). Motion carried. (7.4) Conclusion of the 2015 Evaluation of City Manager's Performance and Periodic Review of City Manager's Base Salary. Natalie Fischer, Director of Human Resources, explained evaluation process and salary increase. Jason Gage, City Manager, thanked the Commission and stated he was excited for what lies ahead for the community and appreciated the City Commission's support. Moved by Commissioner Hardy, seconded by Commissioner Davis, that the City Manager be awarded a merit-based increase in base salary of 3%, retroactive to January 1, 2016, and that the Human Resources Director take such actions as are necessary to implement the change. Mayor Blanchard stated he appreciated the service and hard work of Mr. Gage on the creation of the EDO; the supervision of staff during vacancies; and the projects at Fire Station No. 1 and the Salina Bicentennial Center. Aye: (5). Nay: (0). Motion carried. (7.5) Resolution No. 16-7326 authorizing the redemption and payment of Hospital Refunding and Improvement Revenue Bonds, Series 2006 and the sale and conveyance of certain property to Salina Regional Health Center, Inc. Greg Bengtson, City Attorney, explained the history of the bonds, current request and action options. Commissioner Hardy asked if the bond amount would be included in the total amount of bonds paid by the City of Salina. Mr. Bengtson stated the bond amount was noted but would not affect City's bond indebtedness. Moved by Commissioner Davis, seconded by Commissioner Ryan, to adopt Resolution No. 16- 7326 authorizing the redemption and payment of Hospital Refunding and Improvement Revenue Bonds, Series 2006 and the sale and conveyance of certain property to Salina Regional Health Center, Inc. Aye: (5). Nay: (0). Motion carried. (7.7) Resolution No. 16-7327 authorizing the Mayor to amend a real estate lease with Charles Monroe Arnold III for property and buildings located at 156 N .. 5th Street, Salina, Kansas. Steve Hardesty, Interim Director of Parks & Recreation, explained the amendment.· Page 3 116-0068 Moved by Commissioner Ryan, seconded by Commissioner Crawford, to adopt Resolution No. 16- 7327 authorizing the Mayor to amend a real estate lease with Charles Monroe Arnold III for property and buildings located at 156 N. 5th Street, Salina, Kansas. Aye: (5). Nay: (0). Motion carried. I I "' "' z a. w "' .\; <ii (/) ~ ;;; :!1 g C: 0 u DEVELOPMENT BUSINESS (8.1) Application No. Z16-1, (filed by Salina City Planning Commission), requesting approval of Article IV, Division 14 of the Salina Zoning Ordinance by amending the C-4 (Central Business) district regulations to add bowling alleys to the list of permitted uses in Section 42-302 of the C-4 district regulations. (8.la) First reading Ordinance No. 16-10822. Dean Andrew, Director of Planning, explained the request, Planning Commission recommendation and action options. Commissioner Hardy asked if the only downside to not approving this item would be the ability to track the number of bowling alleys in the district. Mr. Andrew stated yes. 16-0069 Moved by Commissioner Hardy, seconded by Commissioner Crawford, to pass Ordinance No. 16- 10822 on first reading approving Article IV, Division 14 of the Salina Zoning Ordinance by amending the C-4 (Central Business) district regulations to add bowling alleys to the list of permitted uses in Section 42-302 of the C-4 district regulations. Aye: (5). Nay: (0). Motion carried. (8.2) Resolution No. 16-7319 approving a license agreement with 104 N. Santa Fe, LLC to allow a private step and associated handrail in a public alleyway east of Santa Fe A venue between Iron A venue and Ash Street. Dean Andrew, Director of Planning, explained the request, affected public and franchise utilities and agencies and action options. Commissioner Davis asked if the entrance could be recessed into the building and if the staircase would be lit at night. Roger Mattison, Managing Member of 104 N. Santa Fe, LLC, stated the entrance was a service entrance for employees, the ability to recess the entrance would be expensive and there currently were no plans to light the entrance. Commissioner Hardy asked if the stairway could be set for 20 inches. Mr. Mattison stated the manufacturer could build the stairway to 20 inches with the railing inset. Commissioner Crawford stated she thought the entrance to the alley should be closed. Mayor Blanchard asked if there was a way to provide notice to the citizens prior to closing the alley entrance. Jason Gage, City Manager, stated there was a process staff would go through to provide notice prior to closing the entrance. Commissioner Davis asked if other tenants in the area had been notified of the possible closure. Mr. Andrew stated it would be beneficial for staff to supervise the installation of . the step and associated handrail and evaluate the need to close the alley entrance. A conversation ensued between the Commission, Mr. Andrew and Mr. Gage regarding the installation of the private step and associated handrail and the possible closure of the alley entrance. Page 4 I I I V> V> z a. w a, ·" co (/) -g .; .'2 0 <I> C 0 u 16-0070 Mr. Gage asked if both ends of the alley were open. Mr. Andrew stated the entrance on the north end _was closed by bollards and the entrance on the south end was the only side open. Commissioner Davis asked how long the process would take to close the entrance. Mr. Andrew stated the typical notice ·would be twenty (20) days prior to the public hearing date. Mr. Andrew asked if there was a superior public use and the license agreement would need to be terminated, how would that be handled. Mr. Bengtson stated the current license agreement would need to be modified regarding the notification period . A conversation ensued between the Commission and Mr. Andrew regarding the closure of the entrance. Mr. Mattison stated the time frame had not been set but the stair could easily be removed. Commissioner Davis asked if closing the alley would affect this location. Mr. Mattison stated the closure would not affect his location. Judy Larson, 2801 Ray Avenue, provided her thoughts on the closure of the alley entrance. Mr. Bengtson a·sked if the public hearing would be done with the Planning Commission. Mr. Andrew stated the public hearing would occur upon a twenty (20) day notice period, then the item would be brought to the City Commission for review after the Planning Commission review. Moved by Commissioner Davis, seconded by Commissioner Hardy, to postpone adoption of Resolution No. 16-7319 approving a license agreement with 104 N. Santa Fe, LLC to allow a private step and associated handrail in a public alleyway east of Santa Fe Avenue between Iron Avenue and Ash Street to the April 18, 2016 City Commission meeting and direct staff to make necessary steps to review closure of the alley described in the resolution. Aye: (5). Nay: (0). Motion carried. (8 .3) Application No. Z15-13, (filed by the Salina City Planning Commission), requesting the amendment of Section 42-410(d) in Article VII, Planned Development District, of the Salina Zoning Ordinance to clarify the status of conditional uses in planned commercial districts. (8 .3a) First reading Ordinance No. 16-10823. Dean Andrew, Director of Planning, explained the request, Planning Conunission recommendation, and action options. Jason Gage, City Manager, stated the approval of this item would make the process clear. 16-0071 Moved by Commissioner Hardy, seconded by Commissioner Ryan, to pass Ordinance No. 16- 10823 on first reading amending of Section 42-410(d) in Article VII, Planned Development District, of the Salina Zoning Ordinance to clarify the status of conditional uses in planned commercial districts. Aye: (5). Nay: (0). Motion carried. (7.6) Resolution No. 16-7324 discontinuing the City of Salina's utilization· of the construction manager at risk delivery method for the downtown field house project and, therefore, terminating the Construction Manager At Risk Agreement with McCown Gordon Construction, L.L.C. Steve Hardesty, Interim Director of Parks & Recreation, explained the current agreement, CMAR process, fiscal impact and action options. Page 5 I I I "' "' z n. w "' .£ <ii Cl) t ;;; ."!2 g C 0 u Commissioner Davis asked how the termination of the agreement would affect the design oLthe project. Mr. Hardesty stated the design would continue to move forward with the use of FREW Development and SFS Architecture. Jason Gage, City Manager, provided additional information regarding the affect on the design of the project if the agreement was terminated. Commissioner Hardy asked if it would be a good idea to retain McCown Gordon Construction for the pre-construction of the project. Mr. Gage stated if the Commission would like to go with the design/bid/build approach that would need to be decided. Mr. Gage stated there would not be a big incentive for the construction manager at risk to remain on the project if there was a decision to go with the design/bid/build approach. Mayor Blanchard asked what the termination be based on. Mr. Gage stated there was discretion in the agreement for terminating the agreement contractually. Mayor Blanchard asked if staff had worked with McCown Gordon Construction over the last week. Mr. Gage stated staff has worked with the owner's representative but not with the construction manager at risk. Commissioner Hardy provided his thoughts on the bid approach. Mayor Blanchard asked who was hired first. Mr. Hardesty stated the owner's representative was hired first followed by the architect then the construction manager at risk. A conversation ensued between the Commission and Mr. Gage regarding the guaranteed maximum price for the project and the bid approaches. Norman Mannel, 7532 W. Pleasant Hill Road, provided his thoughts regarding the bid approach. Bob Miller, 500 Country Club Road, provided information from the local contractors on the proposed budget amount and the ability for local contractor participation in the design/bid/build process. Mayor Blanchard asked if the local sub-contractors would be utilized for the project if the design/bid/build process was chosen and a local contractor would be awarded the project. Mr. Miller stated the design/bid/build process was an easier process for local contractors to have the ability to submit bids. A conversation ensued between Mayor Blanchard and Mr. Miller regarding the bid approaches and the guaranteed maximum price. Todd Knight, McCown Gordon Construction, stated the budget provided for the 3 x 3 option was a quick calculation from the original 4 x 2 option, explained the bid opening process, the construction manager at risk process and stated they valued the relationship with the City of Salina. Mayor Blanchard asked who prepared the preliminary budget amount. Mr. Knight stated the building construction costs were provided by the construction manager at risk Commissioner Davis asked for information on the CMAR agreement fees and what could be done to include local contractors in the project. Mr. Knight stated McCown Gordon Construction would receive 2.75% of the total project amount and there was local interest in the project. Page 6 I I z 0.. w "' £ .; en ~ 16-0(¥72 C: 0 l) 116-0073 Mr. Gage provided information regarding fees for the construction manager at risk contract. Mayor Blanchard asked what the architect's comment would be regarding the ability to build the facility at a lower cost. Mr. Gage stated he did not want to speculate but did not think the designer would want to get in the middle of it. A conversation ensued between the Commission, Mr. Hardesty and Mr. Gage regarding the design of the building. Moved by Commissioner Crawford, seconded by Commissioner Ryan, to adopt Resolutio!1 No. 16- 7324 discontinuing the City of Salina's utilization of the construction manager at risk delivery method for the downtown field house project and, therefore, terminating the Construction Manager At Risk Agreement with McCown Gordon Construction, L.L.C. effective upon 7 days written notice. Mayor Blanchard asked when the contract would be terminated. Mr. Gage stated the discontinuation would be effective upon 7 days written notice according to the contract. Mayor Blanchard asked if there was a process to collectively discontinue the agreement in order to not harm the reputation of McCown Gordon Construction. Mr. Bengtson stated the change in the delivery method necessitates the need for the discontinuation of the agreement. A conversation ensued between the Commission and Mr. Gage regarding the discontinuation of the agreement. Mr. Knight stated that no one would ever want to be terminated and termination could be misconstrued in the future. He continued to state if the company would remain on the project, they would review the cost reductions to get the project on budget. He continued to provide information on the cost reduction process. Commissioner Davis provided his thoughts on the bid approach and termination of the contract. Mr. Gage stated information was provided tonight on the ability to build the facility within the budget amount and the ultimate question would be if McCown Gordon Construction could build the facility on the same budget amount. Conunissioner Davis asked Mr. Knight if his company would bid on the design/bid/build process. Mr. Knight stated it would be very challenging for the company to submit a bid but he was not sure if the company would be interested. Mayor Blanchard asked if there was a pre-qualification process for this construction manager at risk process and the number of proposals received. Mr. Gage stated there was a pre-qualification process and was unable to answer how many proposals were received. A conversation ensued between the Commission and Mr. Gage regarding the bid process and use of local contractors. Mr. Bengtson stated he drafted some language regarding the termination notice that could be incorporated into the resolution. Moved by Commissioner Crawford, seconded by Conunissioner Ryan, to amend the motion to add language provided by legal counsel to Section 1 of Resolution No. 16-7324. Aye: (4). Nay: (1) Davis. Motion carried. Page 7 116-0074 "' "' z 0.. w "' -~ .; en ,Ji .; :!1 g C 0 u 116-0075 I Moved by Commissioner Crawford, seconded by Commissioner Ryan, to adopt Resolution No. 16- 7324 discontinuing the City of Salina's utilization of the construction manager at risk delivery method for the downtown field house project and, therefore, terminating the Construction Manager At Risk Agreement with McCown Gordon Construction, L.L.C. and add language amended by legal counsel. Aye: (3). Nay: (2) Blanchard, Davis. Motion carried. OTHER BUSINESS (9.1) Request for executive session (legal). The request for executive session was requested to be removed by staff. Commissioner Hardy stated there was some confusion on the registering of the alarm systems with the Police Department and provided his thoughts on the process. Jason Gage, City Manager, stated the best approach would be to bring the item back to a future meeting to discuss the notification approach used for notifying citizens of the registration process. Commissioner Hardy stated he would be in favor of bringing the item back at a future meeting. A conversation ensued between the Commission and Mr. Gage regarding the notification approach. Mayor Blanchard invited fellow commissioners and the public to attend the Boys Scouts event at Christ the King Lutheran Church on Monday, February 29, 2016. ADJOURNMENT Moved by Commissioner Hardy, 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 7:17 p.m. [SEAL] ATIEST: ~~U)(lll Shandi Wicks, CMC, City Clerk Page 8 I ~ z ll. U/ ~ iii fl) ~ ~ 0 "' ~ I I RESOLUTION NUMBER 16-7325 A RESOLUTION INITIATING PROCEEDINGS BY THE GOVERNING BODY FOR CERTAIN STREET, INTERSECTION, SIDEWALK, AND OTHER RELATED IMPROVEMENTS IN THE CITY OF SALINA, KANSAS. WHEREAS, by the adoption of Ordinance No. 02-10071 on February 25, 2002, the Governing ody of the City of Salina, Kansas (the "City"), designated Centennial Road as a main trafficway pursuant to K.S .A. 12-685 et seq. (the "Act"); and WHEREAS, the Governing Body of the City has determined that it is necessary to improve or reimprove portions of said main trafficway as follows: Removal and replacement of the existing pavement, addition of curb and gutter, addition of underground storm sewers, extension of reinforced box culverts, sidewalks on one side of the road, and other related and necessary improvements, all located generally on Centennial Road from Jumper to the south City limits. (the "Improvements"); and WHEREAS, reports, estimates and plans ~ave been compiled and furnished to the Governing Body of the City to provide them with sufficient infonnation 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 and/or temporary notes of the City as provided by the Act, the estimated maximum principal amount of such obligations being $1,300,000.00, 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 $1,300,000.00, plus costs of issuance and plus costs of interest on any temporary financing. I Section 5. 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 22nd day of February, 2016. (SEAL) I I -2- EXCERPT OF MINUTES OF A MEETING OF THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS HELD ON JUNE 20, 2016 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: Present: Kaye J. Crawford, Jon Blanchard, Trent Davis and Karl Ryan Absent: Randall Hardy The Mayor declared that a quorum was present and called the meeting to order. ************** (Other Proceedings) The matter of providing for the offering for sale of General Obligation Internal Improvement Bonds, Series 2016-A, General Obligation Refunding Bonds, Series 2016-B, and General Obligation Temporary Notes, Series 2016-2, came on for consideration and was discussed. Commissioner Ryan presented and moved the adoption of a Resolution entitled: RESOLUTION AUTHORIZING THE OFFERING FOR SALE OF GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS, SERIES 2016-A, GENERAL OBLIGATION REFUNDING BONDS, SERIES 2016-B, AND GENERAL OBLIGATION TEMPORARY NOTES, SERIES 2016-2, OF THE CITY OF SALINA, KANSAS. Commissioner Davis seconded the motion to adopt the Resolution. Thereupon, the Resolution was read and considered, and, the question being put to a roll call vote, the vote thereon was as follows: Aye: Kaye J. Crawford, Jon Blanchard, Trent Davis and Karl Ryan Nay:None The Mayor declared the Resolution duly adopted; the Clerk designating the same Resolution No. 16-7366. ************** ( Other Proceedings) [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] * * * * * * * * * * * * * * 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 office. (Signature Page to Excerpt of Minutes-Sale Resolution) z 0.. w "' £ oi "' ,,, " oi :g i 8 RESOLUTION NO. 16-7366 RESOLUTION AUTHORIZING THE OFFERING FOR SALE OF GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS, SERIES 2016-A, GENERAL OBLIGATION REFUNDING BONDS, SERIES 2016-B, AND GENERAL OBLIGATION TEMPORARY NOTES, SERIES 2016-2, OF THE CITY OF SALINA, KANSAS. WHEREAS, the City of Salina, Kansas (the "Issuer") has previously authorized certain internal improvements described as follows (the "Note Improvements"): Project Description Field House Project Ordinance No. Authority Charter Ord. No. 39; Ord. No. 16-10840 Art. 12, Section 5 of the Kansas Constitution Estimated Improvement Fund Deposit* Not to exceed $7,000,000 WHEREAS, the governing body of the Issuer is authorized by law to issue general obligation bonds to pay a portion of 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 it is desirable and in the interest of the issuer that such funds be raised by the issuance of temporary notes of the Issuer; and WHEREAS, the Issuer· has previously authorized certain internal improvements described as follows (the "Bond Improvements," and together with the Note Improvements, the "Improvements"): Project Description Iron A venue Reconstruction North Ohio Street Fire Headquarters Centennial Road Ordinance/ Resolution No. Res. 15-7240 Res. 15-7183 Res. 15-7189 Res. 16-7325 Authority K.S.A. 12-685 et seq. K.S.A. 12-685 et seq. K.S.A. 12-1736 et seq. K.S.A. 12-685 et seq. Total: Estimated Improvement Fund Deposit· $2,279,568 1,723,452 2,020,342 500,000 $6,523,362 WHEREAS, the Issuer desires to issue its general obligation bonds in order to permanently finance 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"): ; and Series 2015-1 Dated Date July 29, 2015 Maturity Date August I, 2016 Original Amount $5,995,000 WHEREAS, the Issuer has previously issued and has outstanding general obligation bonds; and WHEREAS, due to the current interest rate environment, the Issuer has the opportunity to issue its general obligation refunding bonds in order to achieve an interest cost savings on all or a portion of the debt represented by such general obligation bonds described as follows (collectively, the "Refunded Bonds"): Represents estimated amount of Bond or Note proceeds to be deposited into the Improvement Fund; excludes costs of issuance and interest on any temporary financing. II) II) z D. w .. ,: ~ U) 'O Cl) 1ii ;g 0 .. ,: 0 0 Description Series Dated Date Years Amount General Obligation 2006-B July 15, 2006 2016 to 2021 $255,000 Internal Improvement General Obligation 2007-A June 15, 2007 2016 to 2027 3,645,000 Internal Improvement General Obligation 2008-A July 15, 2008 2016to2023 2,000,000 Internal Improvement General Obligation 2009-A July 15, 2009 2016 to 2029 13,485,000 Internal Improvement General Obligation Internal 2010-A May 1, 2010 2016 to 2025 3,375,000 Improvement and Refunding General Obligation 2011-A July 15, 2011 2016to2031 5,385,000 Internal Improvement ; and WHEREAS, the Issuer has selected the firm of George K. Baum & Co., Kansas City, Missouri ("Financial Advisor"), as financial advisor for one or more series of general obligation bonds of the Issuer to be issued in order to provide funds to permanently finance the Bond Improvements, retire the Refunded Notes, and refund the Refunded Bonds, 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 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 Gilmore & Bell, P.C., Kansas City, Missouri, the Issuer's bond counsel ("Bond Counsel"), in conjunction with the Clerk, to proceed with the preparation and distribution of a preliminary official statement and notice of sale and to authorize the distribution thereof and all other preliminary action necessary to sell said general 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 2016-A, General Obligation Refunding Bonds, Series 2016-B (collectively, the "Bonds"), and General Obligation Temporary Notes, Series 2016-2 (the "Notes," and together with the Bonds, the "Obligations") described in the Notice of Sale, which is to be prepared by Bond Counsel in conjunction with the Financial Advisor and ~he Issuer. 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. Section 3. The Clerk, in conjunction with the Financial Advisor and Bond Counsel, is hereby authorized and directed to give notice of sale of the Obligations 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 2 "' "' 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-l 2 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 5. 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, Finance Director 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: (a) carry out the sale of the Obligations; (b) make provision for payment and/or redemption of the Refunded Notes from proceeds of the Bonds; ( c) provide for notice of redemption .of the Refunded Bonds; and (d) purchase or subscribe for the securities to be deposited in the escrow for the Refunded Bonds. Section 7. This Resolution shall be in full force and ~ffect from and after its adoption. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 3 I I "' "' z 0.. w m C ~ ~ ~ m :!l j C u ADOPTED by the governing body on June 20, 2016. (SEAL) ATIEST: (Signature Page to Sale Resolution) "' "' z ll. w .. . 5 .; V, t :s! g C: 0 0 o: EXHIBIT A CERTIFICATE DEEMING PRELIMINARY OFFICIAL STATEMENT FINAL June 20, 2016 Re: General Obligation Internal Improvement Bonds, Series 2016-A; General Obligation Refunding Bonds, Series 2016-B; General Obligation Temporary Notes, Series 2016-2 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 previously 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)(l) 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 BOND SALE CITY OF SALINA, KANSAS $6,745,000' GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2016-A $14,315,000' GENERAL OBLIGATION REFUNDING BONDS SERIES 2016-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 General Obligation Internal Improvement Bonds, Series 2016-A (the "Series 2016-A Bonds") and General Obligation Refunding Bonds, Series 2016-B (the "Series 2016-B Bonds," and together with the Series 2016-A Bonds, the "Bonds") 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 11, 2016 (the "Sale Date") until the following times (the "Submittal Hour"): SERIES Series 2016-ABonds and Series 2016-B Bonds SUBMITTAL HOUR (Central Time) 12:00Noon All bids will be publicly evaluated at said time and place and the award of the Bonds to the successful bidders (the "Successful Bidders") will be acted upon by the governing body of the Issuer 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 Bonds. THE SERIES 2016-A BONDS Terms of the Series 2016-A Bonds. The Series 2016-A Bonds will consist of fully registered bonds in the denomination of $5,000 or any integral multiple thereof (the "Authorized Denomination''). The Series 2016-A Bonds will be dated July 26, 2016 (the "Dated Date"), and will become due in principal installments on October I in the years as follows: * Preliminary; subject to change as provided in "Adjustment of Issue Size, " herein. Principal Principal Year Amounf Year Amount' 2017 $235,000 2027 $335,000 2018 275,000 2028 340,000 2019 280,000 2029 350,000 2020 285,000 2030 360,000 2021 290,000 2031 375,000 2022 300,000 2032 385,000 2023 305,000 2033 395,000 2024 315,000 2034 410,000 2025 320,000 2035 425,000 2026 325,000 2036 440,000 The Series 2016-A Bonds will bear interest from the Dated Date at rates to be determined when the Series 2016-A 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, 2017 (the "Interest Payment Dates"). Authority, Purpose and Security for the Series 2016-A Bonds. The Series 2016-A Bonds are being issued pursuant to K.S.A. 10-101 et seq., K.S.A. 12-685 et seq., and K.S.A. 12-1736 et seq., all as amended, and an ordinance passed and a resolution adopted by the governing body of the Issuer (collectively, the "Series 2016-A Bond Resolution") for the purpose of fmancing certain capital improvements within the boundaries of the Issuer. The Series 2016-A Bonds shall be general obligations of the Issuer payable as to both principal and interest from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the Issuer. The full faith, credit and resources of the Issuer are irrevocably pledged for the prompt payment of the principal of and interest on the Series 2016-A Bonds as the same become due. THE SERIES 2016-B BONDS Terms of the Series 2016-B Bonds. The Series 2016-B Bonds will consist of fully registered bonds in the Authorized Denomination. The Series 2016-B Bonds will be dated the Dated Date, and will become due in principal installments on October 1 in the years as follows: Principal Principal Year Amount" Year Amount" 2017 $160,000 2025 $1,380,000 2018 575,000 2026 995,000 2019 815,000 2027 770,000 2020 800,000 2028 555,000 2021 1,410,000 2029 570,000 2022 2,120,000 2030 185,000 2023 2,010,000 2031 190,000 2024 1,780,000 The Series 2016-B Bonds will bear interest from the Dated Date at rates to be determined when the Series 2016-B 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, 2017 (the "Interest Payment Dates"). Authority, Purpose and Security for the Series 2016-B Bonds. The Series 2016-B Bonds are being issued pursuant to K.S.A. 10-101 et seq. and K.S.A. 10-427 et seq., as amended, and an ordinance * Preliminary; subject to change as pruvided in "Adjustment of Issue Size," herein. passed and a resolution adopted by the governing body of the Issuer (collectively, the "Series 2016-B Bond Resolution," and together with the Series 2016-A Bond Resolution, the "Bond Resolutions") for the purpose of refunding certain outstanding general obligation bonds of the Issuer ( collectively, the "Refunded Bonds"). The Series 2016-B 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 financed by the Refunded Bonds, and if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the Issuer. The full faith, credit and resources of the Issuer are irrevocably pledged for the prompt payment of the principal and interest on the Series 2016-B Bonds as the same become due. THE SERIES 2016-A BONDS AND THE SERIES 2016-B BONDS Redemption of the 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, 2024, and thereafter, will be subject to redemption and payment prior to maturity on October 1, 2023, 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 either series 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 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. 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. 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 (the "Paying Agent" and "Bond Registrar''). The principal of each Bond will be payable at maturity or earlier 2 redemption to the owners thereof whose names are on the registration books (the "Bond Register") of the Bond Registrar ( the "Registered Owner") upon presentation and surrender at the principal office of the Paying Agent. Interest on each Bond will be payable to the Registered Owner of such Bonds 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. Adjustment of Issue Size. The Issuer reserves the right to increase or decrease the total principal amount of either series of the Bonds and the principal amount of any maturity in order to properly size the Bonds based on the required funding needs and offering prices and interest rates bid on the Bonds. The Successful Bidders may not withdraw their bid or change the interest rates bid as a result of any changes made to the principal amount of the Bonds or principal of any maturity as described herein, provided, however, that the total principal amount of the Bonds will not be changed by more than 15% without the consent of the Successful Bidder(s). If there is an increase or decrease in the fmal aggregate principal amount of the Bonds or the schedule of principal payments as described above, the Issuer will notify the Successful Bidder by means of telephone or facsimile transmission, subsequently confrrmed 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 Bonds generated from the bid(s) of the Successful Bidder(s) will not be decreased as a result of any change in the total principal amount of the Bonds. 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 blank securities. 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 Depository Trust Company, New York, New York ("DTC"), will act as securities depository for the Bonds. The Bonds will initially be issued exclusively in "book entry" form and shall be initially registered in the name of Cede & Co., as the nominee of DTC and no beneficial owner will receive certificates representing their interests in the Bonds. During the term of the Bonds, so long as the book-entry-only system is continued, the Issuer will make payments of principal of, premium, if any, and interest on the Bonds to DTC or its nominee as the Registered Owner of the Bonds, DTC will make book-entry-only transfers among its participants and receive and transmit payment of principal of, premium, if any, and interest on the Bonds to its participants who shall be responsible for transmitting payments to beneficial owners of the Bonds in accordance with agreements between such participants and the beneficial owners. The Issuer will not be responsible for maintaining, supervising or reviewing the records maintained by DTC, its participants or persons acting through such participants. In the event that: (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. 3 Submission of Bids. Written bids must be made on fonns which may be procured from the Clerk or the Financial Advisor and shall be addressed to the undersigned, and marked "Proposal for General Obligation Internal Improvement Bonds, Series 2016-A" or "Proposal for General Obligation Refunding Bonds, Series 2016-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 Bond Sale. If provisions of this Notice of Bond Sale conflict with those of PARITY®, this Notice of Bond Sale shall control. Bids must be received prior to the Submittal Hour on the Sale Date accompanied by the Deposit ( as hereinafter defmed), which may be submitted separately as described below. 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 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: For the Series 2016-A Bonds: Proposals will be received on the Series 2016-A Bonds 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 Series 2016-A Bonds of the same maturity year; (b) no interest rate may exceed 5.00%; (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. No bid for less than 100.00% of the principal amount of the Series 2016-A Bonds and accrued interest thereon to the date of delivery will be considered. Each bid shall specify the total interest cost (expressed in dollars) duriog the term of the Series 2016-A Bonds on the basis of such bid, 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 defmed) on the basis of such bid. For the Series 2016-B Bonds: Proposals will be received on the Series 2016-B 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 Series 2016-B Bonds of the same maturity year; (b) no interest rate may exceed 5.00%; (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. No bid for less than 99.00% of the principal amount of the Series 2016-B 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 Series 2016-B 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 defmed) on the basis of such bid. For Both Series of Bonds: 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 either series of 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. A good faith deposit (the "Deposit") in the amount of 2.00% of the respective principal amount of the respective series of the Bonds payable to the order of the Issuer is required in order to secure the Issuer from any loss resulting from the failure of the bidder to comply with the terms of its bid for either series of the Bonds. The Deposit, which must be received by the Issuer prior to the Submittal Hour, unless such Deposit is submitted by wire transfer as described below, in 4 which case the Deposit must be received by 4:00 p.m. Central lime on the Sale Date, 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) 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. 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. 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. Subject to the timely receipt of the Deposit for the respective series of the Bonds as set forth above, the award of each series 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 fmal. The Issuer reserves the right to reject any and/or all bids and to waive any irregularities in a submitted bid. Auy bid received after the Submittal Hour on the Sale Date will be returned to the bidder. Auy 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 Bonds in accordance with this Notice of Bond 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. 5 Ratings. The outstanding general obligation bonds of the Issuer are rated "Aa3" by Moody's Investors Service. The Issuer has applied to Moody's Investors Service for a rating on the Bonds herein offered for sale. Optional Bond Insurance. The Issuer has not applied for any policy of municipal bond insurance with respect to the Bonds. If the Bonds 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 TIC to the Issuer. If the Successful Bidder elects to purchase the Bonds with municipal bond insurance, certain rating agencies will assign their ratings to the Bonds with the understanding that upon delivery of the Bonds, a policy insuring the payment when due of the principal of and interest on the Bonds will be issued by such bond insurer. All costs associated with the purchase and issuance of such municipal bond insurance 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 Bonds shall not constitute cause for failure or refusal by the Successful Bidder to accept delivery of the Bonds. CUSIP Numbers. CUSIP identification numbers will be assigned and printed on the Bonds, but neither the failure to print such number on any Bond nor any error with respect thereto shall constitute cause for failure or refusal by the purchaser thereof to accept delivery of and pay for the Bonds in accordance with the terms of this Notice. All expenses in relation to the assignment and printing of CUSIP numbers on the Bonds will be paid by the Issuer. Delivery and Payment. The Issuer will pay for preparation of the Bonds and will deliver the Bonds properly prepared, executed and registered without cost on or about July 26, 2016 (the "Closing Date"), to DTC for the account of the Successful Bidder(s ). The Successful Bidder(s) will be furnished with a certified transcript of the proceedings evidencing the authorization and issuance of the Bonds and the usual closing documents, including a certificate that there is no litigation pending or threatened at the tirue of delivery of the Bonds affecting their validity and a certificate regarding the completeness and accuracy of the Official Statement. Payment for the Bonds shall be made in federal reserve funds, immediately available for use by the Issuer. The Issuer will deliver one Bond of each maturity registered in the nominee name of DTC. Certification as to Offering Prices. Iu order to provide the Issuer with information necessary for compliance with Section 148 of the Internal Revenue Code of 1986, as amended (the "Code"), the Successful Bidder(s) will be required to complete, execute and deliver to the Issuer prior to the delivery of the Bonds, a written certification (the "Issue Price Certificate") containing the following: (a) the initial offering price and interest rate for each maturity of the Bonds; (b) that all of the Bonds 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(s) reasonably expected that at least 10% of each maturity of the Bonds 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(s) has purchased the Bonds for its own account in a capacity other than as an underwriter or wholesaler, and currently has no intent to reoffer the Bonds for sale to the public. 6 Subsequent to the Submittal Hour, such initial offering prices to the public shall be pruvided to the Issuer or the Financial Advisor not nwre than 20 minutes after requested by the Issuer or the Financial Advisor. At the request of the Issuer, the Successful Bidder(s) will provide information explaining the factual basis for the Successful Bidder's Issue Price Certificate. This agreement by the Successful Bidder(s) 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 July 5, 2016, "deemed fmal" 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 Bonds, the Issuer will adopt the final Official Statement and will furnish the Successful Bidder(s), 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(s) to comply with the requirements of Rule G-32. Additional copies may be ordered by the Successful Bidder( s) at its expense. Continuing Disclosure. The SEC has promulgated amendments to the Rule requiring continuous secondary market disclosure for certain issues. In the Bond Resolutions, 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 Rulernaking Board. This covenant is for the benefit of and is enforceable by any registered owner of the Bonds. 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 2015 was $463,030,260. The total general obligation indebtedness of the Issuer as of the Dated Date, including the Bonds being sold but excluding the Refunded Bonds, is $75,710,000. Legal Opinion. The Bonds will be sold subject to the approving legal opinion of Gilmore & Bell, P.C., Kansas City, Missouri, Bond Counsel to the Issuer, which opinion will be furnished and paid for by the Issuer, will be printed on the Bonds, if the Bonds are printed, and will be delivered to the Successful Bidder(s) when the Bonds are delivered. Said opinion will also include the opinion of Bond Counsel relating to the interest on the Bonds being excludable 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 State income tax matters relating to the interest on the Bonds. Additional Information. Additional information regarding the Bonds may be obtained from the undersigned, or from the Financial Advisor, at the addresses set forth below: 7 DATED: July 5, 2016. CITY OF SALINA, KANSAS By Shandi Wicks, Clerk Written and Facsimile Bid and Good Faith Deposit Delwery Address: Michelle Meyer, Finance Director City of Salina, Kansas 300WestAsh Salina, Kansas 67402 Phone No.: (785) 309-5735 Fax No.: (785) 309-5738 Email: michelle.meyer@salina.org Financial Advisor: George K. Baum & Company 4801 Main Street, Suite 500 Kansas City, Missouri 64112 Attn: David Artebeny Phone No.: (816) 474-1100 Fax No.: (816) 283-5326 Email: artebeny@gkbaum.com 8 TO: OFFICIAL BID FORM PROPOSAL FOR THE PURCHASE OF CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS, SERIES 2016-A Shandi Wicks, Clerk City of Salina, Kansas JULY 11, 2016 For $6,745,000' principal amount of General Obligation Internal Improvement Bnnds, Series 2016-A, of the City of Salioa, Kansas, to be dated July 26, 2016, as described in the Notice of Bond Sale dated July 5, 2016, 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 Amounf Interest 2017 $235,000 % 2027 $335,000 % 2018 275,000 % 2028 340,000 % 2019 280,000 % 2029 350,000 % 2020 285,000 % 2030 360,000 % 2021 290,000 % 2031 375,000 % 2022 300,000 % 2032 385,000 % 2023 305,000 % 2033 395,000 % 2024 315,000 % 2034 410,000 % 2025 320,000 % 2035 425,000 % 2026 325,000 % 2036 440,000 % the lllldersigned will pay the purchase price for the Bonds set forth below, plus accrued interest to the date of delivery. Principal Amount ........................................................................................................................................................ $6,745,000.00' Plus Premium (if any) . Total Purchase Price ........................................................................................................................... $ ________ _ Total interest cost to maturity at the rates specified ............................................................................ $ ________ _ Net interest cost (adjusted for Premium) ............................................................................................. $ ________ _ Troe Interest Cost . _____ % D 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 cnnditions contained in the Notice, and if the undersigned is the Successful Bidder, the undersigned will comply with all of the provisions contained in the Notice. A cashier's or certified check or a wire transfer in the amount of 2.00o/o of the principal amount of the Series 2016-ABonds payable to the order of the lssoer, submitted in the manner set forth in the Notice accompaoies this proposal as an evidence of good faith. The acceptance of this proposal by the Issuer by execution below shall constitute a contract between the lssoer and the Successful Bidder for purposes of complying with Rule 15c2-12 of the Securities and Exchange Commission aod a bond purchase agreement for purposes of the laws of the State of Kansas. (LIST ACCOUNT MEMBERS ON REVERSE) Submitted by: ____________ _ By:--,-----,----------- Telephone No. '---'------------ ACCEPTANCE Pursoantto action duly taken by the Goveroing Body of the City of Salina, Kansas, the above proposal is hereby accepted nn July 11, 2016. 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, Shandi Wicks, 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 P~, at or prior to 12:00 Noon, Central T=e, on July 11, 2016. Any bid received after soch time will not be accepted or shall be returned to the bidder. * Preliminary; subject to change as described in the Notice of Bond Sale TO: Shandi Wicks, Clerk City of Salina, Kansas OFFICIAL BID FORM PROPOSAL FOR THE PURCHASE OF CITY OF SALINA, KANSAS GENERAL OBLIGATION REFUNDING BONDS, SERIES 2016-B JULY 11, 2016 For $14,315,000' principal amount of General Obligation Refunding Bonds, Series 2016-B, of the City of Salina, Kansas, to be dated July 26, 2016, as described in the Notice of Bond Sale dated July 5, 2016, 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 Amounf Interest 2017 $160,000 % 2025 $1,380,000 % 2018 575,000 % 2026 995,000 % 2019 815,000 % 2027 770,000 % 2020 800,000 % 2028 555,000 % 2021 1,410,000 % 2029 570,000 % 2022 2,120,000 % 2030 185,000 % 2023 2,010,000 % 2031 190,000 % 2024 1,780,000 % the lllldersigned will pay the purchase price for the Bonds set forth below, plus accrued interest to the date of delivery. Principal Amount ...................................................................................................................................................... $14,315,000.00' Plus Premium (if any) . Less Discount (not to exceed 99.00%) Total Purchase Price ........................................................................................................................... $ _________ _ Total interest cost to maturity at the rates specified ............................................................................ $ _________ _ Net interest cost (adjusted for Premium) ............................................................................................. $ ________ _ True Interest Cost . _____ % D 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 the Notice, and if the undersigned is the Successfol Bidder, the undersigned will comply with all of the provisions contained in the Notice. A cashier's or certified check or a wire transfer in the amount of 2.00o/o of the principal amount of the Series 2016-B Bonds payable to the order of the Issuer, submitted in the manner set forth in the Notice accompanies this proposal as an evidence of good faith. The acceptance of this proposal by the Issuer by execution below shall constitute a contract between the Issuer and the Successfol 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 Pursuantto action duly taken by the Governing Body of the City of Salina, Kansas, the above proposal is hereby accepted on July 11, 2016. 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, Shandi Wicks, 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 P~, at or prior to 12:00 Noon, Central T=e, on July 11, 2016. 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 Bond Sale <1J ~ -5 0 ~ +-' <1J ~ ""O ~ C: b :, C: C: 0 <1l ·.:; ~ <1l u :, ~ +-' "iii ·.:; V, :, C: O" 0 ~ u 0 +-' C: C: <1J 0 E ·.:; <1J ~ +-' +-' .!:l V, Vl "tii, .cQ ~ u E iE 0 0 ~ ·.::: Q. <1l C: :, -~ '+-;;: w <1l c a: :, V, <1J £ .0 ""O <1l :, .r:; 0 V, V, ;;: <1J <1J u "iii C: V, ,; .!:l ~ "Cl V, 0 C E C: 0 :, 0 ca -~ ·.:; Oi .!:l ..c u +-' 0 ~ Oi "' C: 0 "' ai ..c V, ~ ""O ai ::, C: Q. ::J t§ 0 +-' ..:; .r:; "' C: u "Cl <1J :, :.0 E V, ""O .r:; "' C: ·" :-e <1J .r:; 5 E ;;: 0 <1l ""O C: C C: C: 0 ·.;::; <1l 0 .Cl C: ·.:; 0 u ] j '6 0 V, "' Q. ·.::: 0 E .:!, ..... 0 > > u C: w 0 <1l 0 +-' C: "' +-' u ii) "Cl <1J Oi £ ·.:; "Cl :, "§ C V, ~ <1J u C oi <1J ·-V, ."'.' C: <1J +-' "iii V, C <1J Oi ai .r:; E +-' .r:; '+-~ ""O 0 .Cl <1J !!! V1 C: "i§ <1l "' V, ·u C: > ij:: 0 C: u <1l 0 C: <1J ~ 0 .0 "' ·.:; <1J C <1l ai ] E .r:; .E +-' ~ C: <1l 0.. .r:; ."'.' <1J V, ..c .r:; 0 I-+-' ""O C: C: C: <1l > .Q +-' :, ..... C: .0 ·" <1J 0 ~ E +-' ·.::: <1J ai .:!, +-' .!:l ii= .r:; Vl 0 u C: :, .cQ <1l V, ~ b > C: <1l 0 C: b ~ 0 ·.:; ~ <1l -~ C: ·--"' E ·" 0 V, w V, .!!! a: <1J ..... ·.::: ."'.' -5 :, u .r:; 0 ~ I- PRELIMINARY OFFICIAL STATEMENT DATED JULY 5, 2016 In the opinion of Gilmore & Bell, P.C., Kansas City, Missouri, Bond Counsel, to the City 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 Bonds (including any original issue discount properly allocable to an owner thereof) is exc/udable 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 Bonds is exempt from income taxation by the State of Kansas, and (3) the Bonds have not been designated 0qualified tax-exempt obligations0 within the meaning of Code Section 265{b)(3). See TAX MATTERS-"Opinion of Bond Counser herein. New Issues Book-Entry Only $6,745,000* CITY OF SALINA, KANSAS Moody's Ratings: "Applied FoiP $14,315,000* General Obligation Internal Improvement Bonds Series 2016-A General Obligation Refunding Bonds Series 2016-B Dated Date: July 26, 2016 Due: As Shown Herein The Series 2016-A Bonds (the useries 2016-A Bonds") and the Series 2016-B Bonds (the "Series 2016-B Bonds" and, together with the Series 2016-A Bonds, the "Bonds") will be issued as fully registered bonds in the denomination of $5,000 or any integral multiple thereof. The Bonds shall be initially registered in the name of Cede & Co., as nominee of DTC to which payment of principal and interest will be made. Individual purchases of Bonds will be made in book-entry only form. Purchasers will not receive certificates representing their interest in the Bonds purchased. Principal on the Bonds will be payable on each October 1 in the years shown herein. Interest on the Bonds will be payable semiannually on April 1 and October 1 of each year until maturity, commencing on April 1, 2017. 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 "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 Bonds as the same becomes due. See THE BONDS -uSecurity" herein. The 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: both series of Bonds will be available for delivery through the facilities of DTC on or aboutJ uly 26, 2016. BIDS FOR THE PURCHASE OF THE BONDS WILL BE RECEIVED PURSUANT TO THE NOTICE OF SALE: On or before 12:00 p.m. Noon, Central Daylight Time On Monday, July 11, 2016 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 OFAN INFORMED INVESTMENT DECISION . •subject to change Maturity 10-01-17 10-01-18 10-01-19 10-01-20 10-01-21 10-01-22 10-01-23 10-01-24111 10-01-25111 10-01-26111 10-01-27111 10-01-28111 10-01-29111 10-01-30111 10-01-31111 10-01-32111 10-01-33111 10-01-34111 10-01-35111 10-01-36111 Maturity 10-01-17 10-01-18 10-01-19 10-01-20 10-01-21 10-01-22 10-01-23 10-01-24111 10-01-25111 10-01-26111 10-01-27111 10-01-28111 10-01-29111 10-01-30111 10-01-31111 MATURITY SCHEDULES $6,745,000* GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2016-A Amount Rate Yield $235,000 275,000 280,000 285,000 290,000 300,000 305,000 315,000 320,000 325,000 335,000 340,000 350,000 360,000 375,000 385,000 395,000 410,000 425,000 440,000 $14,315,000* GENERAL OBLIGATION REFUNDING BONDS SERIES 2016-B Amount Rate Yield $160,000 575,000 815,000 800,000 1,410,000 2,120,000 2,010,000 1,780,000 1,380,000 995,000 770,000 555,000 570,000 185,000 190,000 Base cus1p!2l 794743 Base cus1p!2l 794743 111The Bonds maturing on or after October 1, 2024, will be subject to redemption prior to maturity at the option of the City on October 1, 2023, 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 subject to mandatory redemption as further described herein. See THE BONDS -NRedemption Provisions" herein. !2!CLJSIP 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 Bonds. Neither the City nor the Underwriters shall be responsible for the selection or correctness of the CUSIP numbers set forth above. *Subject to change CITY OF SALINA, KANSAS City/County Building -Room 206 300West Ash P. 0. Box 736 Salina, Kansas 67402-0736 CITY COMMISSION Kaye J. Crawford, Mayor Karl Ryan, Vice Mayor Jon R. Blanchard, Commissioner Trent Davis, Commissioner Randall Hardy, Commissioner CITY STAFF Jason Gage, City Manager Mike Schrage, Deputy City Manager Michelle Meyer, Director of Finance and Administration Shandi Wicks, 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 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 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 THEOON~......................................................................................................................................... 2 THE DEPOSITORY TRUST COMPANY................................................................................................... 6 THE FINANCING PLAN......................................................................................................................... 8 SOURCES AND USES OF FUNDS.......................................................................................................... 10 CONCURRENT Fl NANCI ING................................................................................................................. 11 RISK FACTORS AND INVESTMENT CONSIDERATIONS......................................................................... 11 LEGAL MATTERS................................................................................................................................. 13 TAX MA HERS..................................................................................................................................... 13 RATINGS.............................................................................................................................................. 15 FINANCIAL ADVISOR........................................................................................................................... 15 UNDERWRITING................................................................................................................................. 15 ABSENCE OF MATERIAL LITIGATION................................................................................................... 15 CONTINUING DISCLOSURE................................................................................................................. 16 CERTIFICATION OF OFFICIAL STATEMENT.......................................................................................... 16 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-13 APPENDIX B: OMNIBUS CONTINUING DISCLOSURE UNDERTAKING APPENDIX C: AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDING DECEMBER 31, 2014 APPENDIX D: UNAUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDING DECEMBER 31, 2015 General OFFICIAL STATEMENT CITY OF SALINA, KANSAS $6,745,000* GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2016-A $14,315,000* GENERAL OBLIGATION REFUNDING BONDS SERIES 2016-B INTRODUCTORY STATEMENT The purpose of this Official Statement is to present certain information concerning the City of Salina, Kansas (the "City" or "Issuer"), and the issuance of its $6,745,000* General Obligation Internal Improvement Bonds, Series 2016-A (the "Series 2016-A Bonds"), and its $14,315,000* General Obligation Refunding Bonds, Series 2016-B (the "Series 2016-B Bonds" and collectively with the Series 2016-A Bonds, the "Bonds"). The Series 2016-A Bonds and the Series 2016-B Bonds will be dated July 26, 2016 (the "Dated Date"). The Bonds are being issued to provide funds to finance certain street improvements and building renovations within the City and to refund portions of several outstanding bond issues of the City. See THE FINANCING PLAN herein. The full faith, credit, and resources of the City are irrevocably pledged for the prompt payment of the principal and interest on the Bonds as the same becomes due. See THE 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 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 each series of the Bonds (collectively, the "Bond Resolution"), as applicable. Copies of the Bond Resolution are available upon request to the City, the Financial Advisor, or Bond Counsel. Additional Information Additional information regarding the City, or the Bonds may be obtained from George K. Baum & Company, 4801 Main Street, Kansas City, Missouri 64112, telephone 816-474-1100. *Subject to change 1 THE BONDS Authority The Series 2016-A Bonds are issued pursuant to and in full compliance with the Constitution and statutes of the State of Kansas, including without limitation K.S.A. 10-101 et seq., K.S.A. 10-620 et seq., K.S.A. 12-685 et seq., K.S.A. 12-1736 et seq., all as amended, and an ordinance passed and resolution adopted by the City on July_, 2016, authorizing the issuance of the Series 2016-A Bonds. The Series 2016-B Bonds are issued pursuant to and in full compliance with the Constitution and statutes of the State of Kansas, including without limitation K.S.A. 10-101 et seq., K.S.A. 10-427 et seq., K.S.A. 10-620 et seq., all as amended, and an ordinance passed and resolution adopted by the City on July_, 2016, authorizing the issuance of the Series 2016-B Bonds. Security The Series 2016-A Bonds shall be general obligations of the City, payable as to both principal and interest from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real or personal, within the territorial limits of the City. The Series 2016-B 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 financed by the Refunded Bonds, as defined herein, 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 both series of Bonds as the same become due. Levy and Collection of Annual Tax, Transfer to Debt Service Account 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, to the extent necessary, 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. Such taxes and/or assessments 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 City 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 City, 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. 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 26, 2016, 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. 2 Redemption Provisions Optional Redemption. At the option of the City, Bonds or portions thereof maturing on October 1, 2024 and thereafter may be called forredemption and payment prior to their Stated Maturity on October 1, 2023, 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. 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 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 Bond Registrar. 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 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 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 Paying Agent is also directed to comply with any mandatory or voluntary standards then 3 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 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 Resolution. 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 uBond Registrar" and uPaying 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 Resolutions. 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 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. 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 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 intentto pay Defaulted Interest and endingatthe 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 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 4 $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. "Record Date" means, for the interest payable on any Interest Payment Date, the fifteenth day (whether or not a Business Day) of the calendar month next preceding such Interest Payment Date. 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 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 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 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 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 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 OTC (or a successor Securities Depository), and the following provisions of this section to discontinue use of the system of book-entry transfers through OTC (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 5 such effect by the Securities Depository), that the continuation of a book-entry system to the exclusion of any Bonds being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Bonds, then the Bond Registrar shall notify the Owners of such determination or such notice and of the availability of certificates to owners requesting the same, and the Bond Registrar shall register in the name of and authenticate and deliver Replacement Bonds to the Beneficial Owners or their nominees in principal amounts representing the interest of each, making such adjustments as it may find necessary or appropriate as to accrued interest and previous calls for redemption; provided, that in the case of a determination under (a)(l) or (a)(2) of this section, the City, with the consent of the Bond Registrar, may select a successor securities depository as hereinafter provided to effect book-entry transfers. In such event, all references to the Securities Depository herein shall relate to the period of time when the Securities Depository has possession of at least one Bond. Upon the issuance of Replacement Bonds, all references herein to obligations imposed upon or to be performed by the Securities Depository shall be deemed to be imposed upon and performed by the Bond Registrar, to the extent applicable with respect to such Replacement Bonds. If the Securities Depository resigns 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 Bonds. The Bonds will be issued as fully registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of OTC. One fully registered bond certificate will be issued for each maturity of such series of the Bonds, in the aggregate principal amount of such maturity, and will be deposited with OTC. DTC, the world's largest depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law; a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code; and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 85 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. OTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of OTC and Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the OTC 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 6 a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The OTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about OTC can be found at www.dtcc.com. Purchases of Bonds under the OTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from OTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with OTC are registered in the name of DTCs partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of OTC. The deposit of Bonds with OTC and their registration in the name of Cede & Co. or such other OTC nominee do not affect any change in beneficial ownership. OTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by OTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to OTC. 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 OTC nor Cede & Co. (nor any other OTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTCs Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTCs practice is to credit Direct Participants' accounts upon DTCs receipt of funds and corresponding detail information from the City or Paying Agent, on payable date in accordance with their respective holdings shown on DTCs 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 OTC nor its nominee, Paying Agent, or City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of OTC) is the responsibility of the City or Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of OTC, 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 Bonds purchased or tendered, through its Participant, to the Paying Agent, and shall effect delivery of such Bonds by causing the Direct Participant to transfer the Participant's interest in the Bonds, on DTCs records, to the Paying Agent. The requirement for physical delivery of Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Bonds are transferred by Direct Participants on DTC's records and followed by a book-entry credit of tendered Bonds to the Paying Agent's DTC account. 7 OTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the City or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book-entry transfers through OTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered. The information in this section concerning DTC and DTC's book-entry system has been obtained /ram sources that the City, Band Counsel, and the Financial Advisor believe ta be reliable, but the City, Band Counsel, and the Financial Advisor take no responsibility for the accuracy thereof, and neither the OTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters but should instead confirm the same with OTC or the OTC Participants, as the case may be. THE Fl NANCI NG PLAN The 2016-A Bond Projects Proceeds from the sale of the Series 2016-A 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 Series 2016-A Bonds. The projects to be financed with the Series 2016-A Bonds are as follows: Project Description Iron Avenue Reconstruction North Ohio Street Fire Headquarters Centennial Road Ordinance/ Resolution No. Res. 15-7240 Res. 15-7183 Res. 15-7189 Res. 16-7325 Authority K.S.A. 12-685 et seq. K.S.A. 12-685 et seq. K.S.A. 12-1736 et seq. K.S.A. 12-685 et seq. Estimated Improvement Fund Deposit !1l $2,279,568 121 1,723,452121 2,020,342 121 500,000 !1l Represents estimated amount of Series 2016-A Bond proceeds to be deposited into the Improvement Fund. 121 The cost of these improvements was financed by the issuance of the City's General Obligation Temporary Notes, Series 2015-1 (the "Series 2015-1 Notes"), which will be retired with proceeds from the sale of the Series 2016-A Bonds. The Refunding Plan The Refunded Bonds. Proceeds from the sale of the Series 2016-B Bonds and certain other funds of the City will be used to refund portions of the City's outstanding general obligation bonds described below (collectively the "Refunded Bonds"). The following is a summary of the Refunded Bonds. The maturities, amounts to be refunded, and redemption dates of the Refunded Bonds listed below are preliminary and subject to change. General Obligation Internal Improvement Bonds. Series 2006-B. dated July 15. 2006 (Current Refunding) Stated Maturity Date Principal Principal Refunded Bonds of Bonds Amount Amount Redemption to be Refunded Outstanding to be Refunded Date 10-01-21 $185,000 $185,000 10-01-16 General Obligation Internal Improvement Bonds, Series 2007-A, dated July 15, 2007 (Advance Refunding) Stated Maturity Date of Bonds to be Refunded 10-01-18 Principal Amount Outstanding $360,000 8 Principal Amount to be Refunded $360,000 Refunded Bonds Redemption Date 10-01-17 10-01-19 360,000 360,000 10-01-17 10-01-20 360,000 360,000 10-01-17 10-01-21 360,000 360,000 10-01-17 10-01-22 360,000 360,000 10-01-17 10-01-23 225,000 225,000 10-01-17 10-01-27 900,000 900,000 10-01-17 General Obligation Internal Improvement Bonds, Series 2008-A, dated July 15, 2008 (Advance Refunding) Stated Maturity Date Principal Principal Refunded Bonds of Bonds Amount Amount Redemption to be Refunded Outstanding to be Refunded Date 10-01-19 $250,000 $250,000 10-01-17 10-01-20 250,000 250,000 10-01-17 10-01-21 250,000 250,000 10-01-17 10-01-22 250,000 250,000 10-01-17 10-01-23 250,000 250,000 10-01-17 General Obligation Internal Improvement Bonds, Series 2009-A, dated July 15, 2009 (Advance Refunding) Stated Maturity Date Principal Principal Refunded Bonds of Bonds Amount Amount Redemption to be Refunded Outstanding to be Refunded Date 10-01-21 $620,000 $620,000 10-01-18 10-01-24 2,040,000 2,040,000 10-01-18 10-01-27 1,010,000 1,010,000 10-01-18 10-01-29 755,000 755,000 10-01-18 General Obligation Internal Improvement and Refunding Bonds, Series 2010-A, dated May 1, 2010 (Advance Refunding) Stated Maturity Date of Bonds to be Refunded 10-01-22 10-01-25 Principal Amount Outstanding $350,000 1,135,000 Principal Refunded Bonds Amount Redemption to be Refunded Date $350,000 10-01-18 1,135,000 10-01-18 General Obligation Internal Improvement Bonds, Series 2011-A, dated July 15, 2011 (Advance Refunding) Stated Maturity Date Principal Principal Refunded Bonds of Bonds Amount Amount Redemption to be Refunded Outstanding to be Refunded Date 10-01-22 $385,000 $385,000 10-01-18 10-01-23 400,000 400,000 10-01-18 10-01-24 415,000 415,000 10-01-18 10-01-25 430,000 430,000 10-01-18 10-01-26 445,000 445,000 10-01-18 10-01-27 220,000 220,000 10-01-18 10-01-28 230,000 230,000 10-01-18 10-01-29 240,000 240,000 10-01-18 10-01-31 510,000 510,000 10-01-18 9 According to the terms of the Refunding Plan, a portion of the proceeds from the sale of the Series 2016-B Bonds and other available funds will be deposited into an irrevocable escrow account (the "Escrow Fund") which will provide funds to pay the interest due on the Refunded Bonds up to and including payments due on their respective redemption dates, and to pay the principal on the Refunded Bonds on such date. All Refunded Bonds are expected to be redeemed at their first optional redemption date at a price equal to 100% of the par value thereof, without premium. The Refunding Plan is being undertaken in order to provide interest cost savings for the City. Proceeds of the Series 2016-B Bonds will also be applied to pay the costs and expenses incurred in connection with the issuance of the Series 2016-B Bonds. The Escrow Trust Agreement. The Escrow Fund will be established for the Refunded Bonds pursuant to the terms of an Escrow Trust Agreement dated as of July 26, 2016, by and between the City and -----------~Kansas (the "Escrow Agent"). A portion of the proceeds from the Series 2016-B Bonds will be deposited in the Escrow Fund and used to acquire direct, non-callable obligations of the United States of America (the "Escrowed Securities"). The Escrowed Securities will mature at such times and in such amounts as necessary to pay the principal of and interest on the Refunded Bonds as described in the preceding section. Mathematical Verification. The mathematical accuracy of (a) the computations made by George K. Baum & Company on the adequacy of the maturing principal and interest earned on the Escrowed Securities to be purchased with the proceeds from the Series 2016-B Bonds, together with uninvested funds to be held by the Escrow Agent, in accordance with the Escrow Trust Agreement, to provide for the payment of the interest on the Refunded Bonds up to and including their earliest optional redemption date, and to redeem the Refunded Bonds on such dates; and (b) the yield computations made by George K. Baum & Company supporting the conclusion by Bond Counsel that the Bonds are not "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, will be verified by Robert Thomas CPA, LLC, Shawnee Mission, Kansas. Such verification of the accuracy of such mathematical computations will be based upon information supplied by the Financial Advisor and on interpretations of the Code provided by Bond Counsel. 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. Sources of Funds: Principal Amount of Bonds Reoffering Premium Total Sources of Funds Uses of Funds: Deposit to Improvement Fund -Project Costs Deposit to Escrow Fund Costs of Issuance Underwriter's Discount( __ ) Total Application of Funds Series Series 2016-A Bonds 2016-B Bonds CONCURRENT FINANCING On July 1, 2016, the City entered into a Note Purchase Agreement to sell its General Obligation Temporary Notes, Series 2016-2 (the "Series 2016-2 Notes") in the principal amount of $4,615,000, with closing anticipated to occur on or about July 20, 2016. The resolution approving sale and issuance of the Series 2016-2 Notes is anticipated to be approved by the governing body of the City on July 11, 2016. A copy of the resolution, containing all of the 10 terms and conditions applicable to the Series 2016-2 Notes, is available upon request to the City or its Financial Advisor. Proceeds of the Series 2016-2 Notes will fund a portion of the costs to construct a new fieldhouse. For additional information regarding the project, see APPENDIX A -GENERAL INFORMATION REGARDING THE CITY; Fieldhouse Project. RISK FACTORS AND INVESTMENT CONSIDERATIONS A PROSPECTIVE PURCHASER OF THE BONDS DESCRIBED HEREIN SHOULD BE AWARE THAT THERE ARE CERTAIN RISKS ASSOCIATED WITH THE BONDS 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 BONDS. PROSPECTIVE PURCHASERS OF THE BONDSSHOULD 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. Legal Matters Various state and federal laws, regulations and constitutional provisions apply to the obligations created by the Bonds. 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 Bonds The enforceability of the rights and remedies of the owners of Bonds, and the obligations incurred by the City in issuing the Bonds, 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 Bonds 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. Kansas Public Employees Retirement System As described in "APPENDIX A-FINANCIAL INFORMATION -Pension and Employee Retirement Plans," the City participates in the Kansas Public Employees Retirement System ("KPERS"), as an instrumentality of the State to provide retirement and related benefits to public employees in Kansas. KPERS administers three statewide defined benefit retirement plans for public employees which are separate and distinct with different membership groups, actuarial assumptions, experience, contribution rates and benefit options. The City participates in the Public Employees Retirement System -Local Group and the Police and Firemen's Retirement System ("KP&F") (the "Plan"). Under existing law, employees make contributions and the City makes all employer contributions to the Plan; neither the employees nor the City are directly responsible for any unfunded accrued actuarial liability ("UAAL"); however, Plan contribution rates may be adjusted by legislative action over time to address any UAAL. According to KPERS' Valuation Report, dated as of December 31, 2014, the Local Group had an UAAL of $1.488 billion and KP&F had an UAAL of $726 million. 11 Taxation of Interest on the Bonds An opinion of Bond Counsel will be obtained to the effect that interest earned on the Bondsis excludable from gross income for federal income tax purposes under current provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and applicable rulings and regulations under the Code; however, an application for a ruling has not been made and an opinion of counsel is not binding upon the Internal Revenue Service. There can be no assurance that the present provisions of the Code, or the rules and regulations thereunder, will not be adversely amended or modified, thereby rendering the interest earned on the Bondsincludable in gross income for federal income tax purposes. The City has covenanted in the Bond Resolutions and in other documents and certificates to be delivered in connection with the issuance of the Bonds to comply with the provisions of the Code, including those which require the City to take or omit to take certain actions after the issuance of the Bonds. Because the existence and continuation of the excludability of the interest on the Bonds depends upon events occurring after the date of issuance of the Bonds, the opinion of Bond Counsel described under "TAX MATTERS" assumes the compliance by the City with the provisions of the Code described above and the regulations relating thereto. No opinion is expressed by Bond Counsel with respect to the excludability of the interest on the Bonds in the event of noncompliance with such provisions. The failure of the City to comply with the provisions described above may cause the interest on the Bonds to become includable in gross income as of the date of issuance. Premium on Bonds The initial offering prices of certain maturities of the Bonds that are subject to optional redemption may be in excess of the respective principal amounts thereof. Any person who purchases such a Bond, 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 The Bond Resolutions do not provide for the payment of additional interest or penalty on the Bonds or the mandatory redemption thereof if the interest thereon becomes includable in gross income for federal income tax purposes. Likewise, the Bond Resolutions do not provide for the payment of any additional interest or penalty on the Bonds if the interest thereon becomes includable in gross income for Kansas income tax purposes. Suitability of Investment The tax exempt feature of the Bonds 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 Bonds are an appropriate investment. Market for the Bonds Ratings. The Bonds 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 Bonds. Secondary Market. There is no assurance that a secondary market will develop for the purchase and sale of the Bonds. Prices of securities traded in the secondary market, though, are subject to adjustment upward and 12 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 Bondsas 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 Bonds 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 periodically work 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 Bonds by the City are subject to the approval of Gilmore & Bell, P.C., Kansas City, Missouri, Bond Counsel to the City. 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 BONDS, LEGAL MATTERS, TAX MATTERS, CONTINUING DISCLOSURE, and APPENDIX B -OMNIBUS CONTINUING DISCLOSURE UNDERTAKING. TAX MATTERS General disposing of the Bonds. 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 Bonds 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 Bonds 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 Bonds. Opinion of Bond Counsel In the opinion of Bond Counsel, under the law existing as of the issue date of the Bonds: Federal Tax Exemption: The interest on the Bonds [(including any original issue discount properly allocable to an owner thereof)] is excludable from gross income for federal income tax purposes. Alternative Minimum Tax. Interest on the Bonds 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. 13 Bank Qualification. The Bonds have not been designated as "qualified tax-exempt obligations" within the meaning of Code §265(b)(3). Kansas Tax Exemption. The interest on the Bonds is exempt from income taxation by the State of Kansas. Na Other Opinions. Bond Counsel's opinions are provided as of the date of the original issue of the Bonds. subject to the condition that the City comply with all requirements of 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 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 Bonds in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. Bond Counsel is expressing no opinion regarding other federal, state or local tax consequences arising with respect to the Bonds. 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 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). Under Code § 1288, OID on tax-exempt bonds accrues on a compound basis. The amount of OID that accrues to an owner of a Bond during any accrual period generally equals: (a) the issue price of that Bond, plus the amount of OID accrued in all prior accrual periods; multiplied by (b) the yield to maturity on that Bond (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 Bond 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 Bond. Prospective investors should consult their own tax advisors concerning the calculation and accrual of 010.] 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. Sa/e1 Exchange or Retirement of Bonds. 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 Bondsare 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 Bonds, and to the proceeds paid on the sale of Bonds, 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. 14 Collateral Federal Income Tax Consequences. Prospective purchasers of the Bonds should be aware that ownership of the Bonds 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 Bonds. Bond Counsel expresses no opinion regarding these tax consequences. Purchasers of Bonds 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 Bonds, including the possible application of state, local, foreign and other tax laws. RATINGS The Bonds and the City's other outstanding general obligation bonds have been rated "Aa3", by Moody's Investors Service rMoody'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 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 Bonds. The Financial Advisor has assisted the City in the preparation of this Official Statement and in other matters relating to the issuance of the Bonds. The fees of the Financial Advisor are contingent upon the issuance of the Bonds. UNDERWRITING The Series 2016-A Bonds have been sold at a public sale on [ __ ], 2016, by I ] (the "Series 2016-A Bonds Underwriter") at a price equal to the par amount of the Series 2016-A Bonds, [plus a premium of $ , [less an underwriting discount of$ ]. The Series 2016-B Bonds have been sold at a public sale on [ __ ], 2016, by I ] (the "Series 2016-B Bonds Underwriter") at a price equal to the par amount of the Series 2016-B Bonds, [plus a premium of $ , [less an underwriting discount of$ ___ ~ The Series 2016-A Bonds Underwriter and the Series 2016-B Bonds Underwriter are collectively referred to herein as the uunderwriters". 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 Bonds or the constitutionality or validity of the obligation represented by the Bonds or the means provided for the payment of the Bonds. CONTINUING DISCLOSURE The Securities and Exchange Commission (the "SEC") has promulgated amendments to Rule 1Sc2-12 (the uRule"), requiring continuous secondary market disclosure. The Issuer adopted in 2013 an Omnibus Continuing Disclosure Undertaking (the "Disclosure Undertaking") wherein the Issuer covenants to provide annually certain 15 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. The Disclosure Undertaking modified previous undertakings the Issuer entered into pursuant to the Rule (the "Prior Undertakings"), in order to promote future compliance with its undertakings under the Rule. In Bond Resolutions, hereinafter defined, the Issuer covenants with the Underwriter and the Beneficial Owners to apply the provisions of the Disclosure Undertaking to the Bonds. This covenant is for the benefit of and is enforceable by the Beneficial Owners of the Bonds. For more information regarding the Disclosure Undertaking, see "APPENDIX B-OMNIBUS CONTINUING DISCLOSURE UNDERTAKING." The Issuer believes it has complied during the past five years with its prior undertakings under the Rule, except as follows: 1. For the fiscal years ended December 31, 2012, and December 31, 2013, the Issuer failed to timely file certain operating data, including the "Current Water Rate Structure" and "Current Sewage Rate Structure." The required operating data for fiscal year ended December 31, 2012 was subsequently included in the Issuer's Comprehensive Annual Financial Report filed on December 31, 2013. For the fiscal year ended December 31, 2013, this operating data was filed in a supplemental operating data filing dated July 8, 2014. A notice of failure to file such operating data was filed on July 15, 2015. 2. Due to administrative oversight in implementation of the new Disclosure Undertaking, for the fiscal year ended December 31, 2013, the Issuer failed to timely file certain operating data, including a "Financial Overview." This operating data was filed in a supplemental operating data filing on July 8, 2014. A notice of failure to file such operating data was filed on July 15, 2015. During the past five years, the Issuer has made filings of event notices on EMMA with respect to certain bond calls, defeasances, and rating changes, however, during said time period, the Issuer did not make timely filings of event notices on EMMA relating to all bond calls, defeasances or rating changes. The Issuer believes this information was disseminated or available through other sources. 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. CITY OF SALINA, KANSAS Director of Finance and Administration ATTEST: City Clerk 16 APPENDIX A INFORMATION CONCERNING THE CITY APPENDIX A FINANCIAL OVERVIEW OF THE CITY 2015 Estimated Actual Valuation (1) 2015 Estimated Assessed Valuation Outstanding General Obligation Bonds (2) Population (2015 U.S. Census Bureau Estimate) General Obligation Debt Per Capita Ratio of General Obligation Debt to Estimated Actual Valuation Ratio of General Obligation Debt to Estimated Assessed Valuation Outstanding Temporary Notes (3) Outstanding State Loans (4) Outstanding Lease Purchase Obligations Outstanding Revenue Bonds Overlapping General Obligation Debt (5) Direct and Overlapping General Obligation Debt (6) Direct and Overlapping General Obligation Debt Per Capita Ratio of Direct and Overlapping Debt to Estimated Actual Valuation Ratio of Direct and Overlapping Debt to Estimated Assessed Valuation $ 2,957,531,741 $ 463,030,260 $ 64,205,000 $ $ $ $ $ $ $ $ 47,867 1,341 2.17% 13.87% 11,505,000 13,008,482 1,497,943 13,890,000 143,717,714 232,436,196 4,856 7.86% 50.20% (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; excludes the Refunded Bonds. (3) Does not include notes to be retired with proceeds from the sale of the Series 2016-A Bonds. Includes the Series 2016-2 Notes expected to be issued on or aboutJuly 20, 2016. (4) The City intends to repay such loans from the net revenues of its municipal water system. However, such loans are ultimately secured by the City's full faith and credit. See Debt Summary OF THE CITY-"Current Indebtedness -State Loans". (5) For a more detailed explanation of the overlapping debt of the other jurisdictions, see DEBT SUMMARY OF THE CITY -"Overlapping Debt". (6) Includes outstanding general obligation bonds, temporary notes and state loans of the City and general obligation bonds of 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 2015 U.S. Census Bureau estimate of 47,707. The City is the county seat for Saline County which had an estimated 2015 U.S. Census Bureau population of 55,691. 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: PoE!ulation Name Kaye Crawford Karl Ryan Jon R. Blanchard Randall Hardy Trent Davis Title Term ExE!ires Mayor 2018 Vice Mayor 2020 Commissioner 2018 Commissioner 2020 Commissioner 2018 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 years in 2015. The following table and graph show the population for the City for selected years as provided by the U.S. Census Bureau. Police and Fire Protection Vear 2015 2014 2013 2012 2011 U.S. Census Bureau PoE!ulation 47,707 47,867 47,846 47,901 47,910 The City of Salina provides police and fire protection services to residents of the City and surrounding areas. The two departments employ 166 full-time employees out of the 425 total employed by the City. Firefighting services are provided from four stations located throughout the City with 88 full-time firefighters. The fire department A-2 operates 35 vehicles and provides emergency medical services. The Department was recently upgraded to an Insurance Services Office rating of 2. The police department employs 119 personnel, of which 78 a re sworn positions. The Department operates 37 police vehicles, including patrol vehicles, motorcycles, and scooters. Both Departments are accredited by their respective professional organizations. 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 7,369. 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 1,000 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 850 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. Multiple cellular phone companies provide service to the City. A-3 Health Facilities The City is served by Salina Regional Health Center ("SRHC"), a 394-bed (223 staffed) regional facility. 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 Four banks are headquartered in the City and reported combined deposits in excess of $518 million as of December 31, 2015. A savings bank has a branch office in the City. There are several credit unions available in the city. Source: Kansas Bank Directory Pension and Employee Retirement Plans The Issuer 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, which 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 December 31, 2014, KPERS serves over 295,000 members and approximately 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 "TIM 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 Issuer's employees currently annually contribute 6% of their gross salary to the plan if such employees are KPERS Tier 1 members (covered employment prior to July 1, 2009) or KPERS Tier 2 members (covered employment on or after July 1, 2009). In 2012, the 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 member 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: (a) 3% for less than 5 years; (b) 4% for at least 5 years but less than 12 years; (c) 5% for at least 12 years but less than 24 years; and (d) 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 member, upon retirement, shall receive a single life annuity benefit. Also in 2012, the 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 in 2017 and thereafter, (b) eliminating COLA adjustments for Tier 2 member with corresponding benefit adjustments (effective January 1, 2014), (c) providing additional flexibility for alternative investments for the plan, and (d) providing additional contribution flexibility for Tier 1 members with corresponding benefit adjustments effective January 1, 2014, subject to approval by the IRS (the I RS issued a private letter ruling stating the election granted to Tier 1 members was impermissible; therefore, employee contributions for Tier 1 members increased to 5% of compensation effective January 1, 2014, and to 6% of compensation effective January 1, 2015). In 2015, the Legislature authorized, subject to certain conditions, the issuance of revenue bonds in an amount not to exceed $1 billion (plus associated costs of issuance) (the "Revenue Bonds"), the proceeds of which must be applied to the unfunded actuarial pension liability as directed by KPERS. The repayment of the Revenue Bonds shall be subject to legislative annual appropriation, shall not be an obligation of the KPERS system, and the full faith and credit or taxing power of the State shall not be pledged to the repayment of the Revenue Bonds. Additionally, the statutory maximum annual increases to employer contributions for State/School Group and certain employees of the State department of corrections were modified as follows: (a) if the Revenue Bonds are issued and finance capitalized interest, an increase of 1.1% in 2015 and 1.2% in 2016 and thereafter; or (b) if such Revenue Bonds are not issued to finance capitalized interest, such rate of contribution shall be 10.91% in 2015 and 10.81% in 2016. The Revenue Bonds in the aggregate principal amount of $1,005,180,000 were issued on August 20, 2015, to finance a portion of the unfunded actuarial pension liability and costs of issuance, but did not finance capitalized interest. The Issuer's contribution varies from year to year based upon the annual actuarial valuation and appraisal made by KPERS, subject to legislative caps on percentage increases. The Issuer's contribution is 9.18% beginning January 1, 2016. In addition, the Issuer contributes 1% of the employee's gross salary for Death and Disability Insurance for covered employees for the period beginning July 1, 2015, through June 30, 2016. According to the Valuation Report as of December 31, 2014 (the "2014 Valuation Report") the KPERS Local Group, of which the Issuer is a member, carried an unfunded accrued actuarial liability ("UAAL") of $1.488 billion at the end of 2014. The 2014 Valuation Report includes additional information relating to the funded status of the KPERS Local Group, including recent trends in the funded status of the KPERS Local Group, and is available on the KPERS website at kpers.org/about/reports.html. The Issuer has no means to independently verify any of the information set forth on the KPERS website or in the 2014 Valuation Report, which is the most recent financial and actuarial information available on the KPERS website relating to the funded status of the KPERS Local Group. The 2014 Valuation Report sets the employer contribution rate for the period beginning January 1, 2017, for the KPERS Local Group, and KPERS' actuaries identified that an employer contribution rate of 8.46% 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. The statutory contribution rate of employers currently equals the 2014 Valuation Report's actuarial rate. As a result, members of the Local Group are adequately funding their projected actuarial liabilities A-5 and the UAAL can be expected to diminish over time. KPERS' actuaries project the required employer contribution rate to increase by the maximum statutorily allowed rate, which is currently 0.9% in fiscal year 2014, then 1.0% in fiscal year 2015, 1.1% in fiscal year 2016 and 1.2% in fiscal year 2017 and thereafter. The Issuer has established membership in the Kansas Police and Fire Retirement System ("KP&F") for its police and fire personnel. KP&F 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. According to the 2014 Valuation Report, KP&F carried an UAAL of $726 million at the end of 2014. For the year beginning January 1, 2015, employees contributed 7.15% of gross compensation and the Issuer contributed 23.56% of employees' gross compensation. Beginning January 1, 2016, the Issuer's contribution will change to 22.29% of gross compensation. In 2013, the Legislature adopted a number of changes to the KP&F which included (a) raising the cap on maximum KP&F benefits from 80% to 90% of final average salary and (b) permitting certain active KP&F members to pay a lump sum amount prior to or on their retirement date to enhance the individual retirement benefit at their own cost. In 2015, the Issuer was required to implement GASB 68 -Accounting and Financial Reporting for Pensions. According to KPERS' Schedule of Employer and Nonemployer Allocations and Schedules of Pension Amounts by Employer and Nonemployer for the fiscal years ended June 30, 2015 (the "GASB 68 Report'') the net pension liability allocated to the Issuer is $16,395,794. The GASB 68 Report is available on the KPERS website at kpers.org/about/reports.html. The Issuer has no means to independently verify any of the information set forth on the KPERS website or in the GASB 68 Report. It is important to note that under existing State law, the Issuer has no legal obligation for the UAAL or the net pension liability calculated by KPERS, and such figures are for informational purposes only. 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. 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. Fieldhouse Project [Add paragraph describing fieldhouse project, anticipated financing plans, etc.? Cross-reference to Concurrent Financing Section.] ECONOMIC INFORMATION CONCERNING THE CllY 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, A-6 GeoProbe, Bergkamp, Kasa Industrial Controls, Premier Pneumatics, Great Plains Manufacturing, PKM Steel, Crestwood Cabinets, McShares, Inc., Pepsi Cola, EIDorado 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 2012, 674 farms were located on 364,468 acres. Farm crops were valued at over $84 million harvested on 215,740 acres. Cattle and milk produced was valued at over $24 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 opened a facility formerly occupied by Sutherland Lumber Company. The location is shared with a Marshalls clothing store. In addition, several new restaurants have opened, including Olive Garden, Longhorn Steakhouse, Starbucks and Taco Bell. Daimaru steakhouse doubled in size at a new location. Unified School District No. 305 recently received voter approval for and issued $110,700,000 of general obligation bonds to fund a wide variety of improvements. 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. 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, UAS, airport management and avionics technology. A-7 Scheduled air service is provided by SeaPort Airlines. The airline offers multiple weekday and weekend flights to the Kansas City International Airport. In 2015, the Airport enplaned 10,389 passengers and also accommodates a wide variety of aircraft including business jets, military, flight training and general aviation aircraft. In 2015, the Salina Air Traffic Control Tower logged over 96,350 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 Airports' full service FBO, Avflight, specializing in aviation fuel delivered nearly 2.5 million gallons of fuel to the wide variety of aircraft utilizing the Airport in 2015. As of December 31, 2014, over 100 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 Oil Ion Stores Solomon Corporation Great Plains Manufacturing El Dorado National Crestwood, Inc. Advance Auto Parts Source: Salina Chamber of Commerce Income Product/Business Frozen Pizza School System Health Care Battery Manufacturer Fluorescent Lamps City Government Discount Retail Grocery Electrical Equipment Agricultural & Landscaping Equipment Transit and Shuttle Busses Wooden Cabinets Distribution Center Estimated Employment 1,800 1,659 1,300 750 490 465 421 343 324 258 221 219 195 The following table shows the per capita personal income for residents of Saline County and the State during the years indicated: Saline State of Vear County Kansas 2014 N/A $45,546 2013 $42,480 44,417 2012 41,070 43,015 2011 39,910 40,883 2010 39,974 38,977 2009 38,752 38,301 2008 40,675 40,466 2007 36,781 37,663 A-8 Source: Kansas Statistical Abstract Labor Force The following tables show the labor force figures for the City of Salina and the State of Kansas. City of Salina: Vear 2016 (Mar) 2015 2014 2013 2012 2011 2010 State of Kansas: Vear 2016 (Mar) 2015 2014 2013 2012 2011 2010 Total Labor Force 26,539 26,353 26,303 25,458 25,808 26,004 26,156 Total Labor Force 1,501,817 1,499,009 1,500,353 1,491,745 1,489,320 1,498,872 1,506,229 Employed 25,484 25,313 25,159 24,515 24,241 24,349 24,434 Employed 1,441,091 1,435,884 1,432,359 1,405,036 1,403,866 1,401,055 1,399,805 Source: Kansas Department of Labor DEBT SUMMARY OF THE CITY Current Indebtedness Unemployment Unemploy:ed Rate 1,055 4.0% 1,040 3.9 1,144 4.3 1,459 5.6 1,567 6.1 1,655 6.4 1,722 6.6 Unemployment Unemploy:ed Rate 60,726 4.0% 63,125 4.2 67,994 4.5 86,709 5.8 85,454 5.7 97,817 6.5 106,424 7.1 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 Issued Series Purpose 07-15-06 2006-B Internal Improvements 06-15-07 2007-A Internal Improvements 07-15-08 2008-A Internal Improvements 12-15-08 2008-B Internal Improvements 07-15-09 2009-A Internal Improvements 05-01-10 2010-A Refunding & Improvement 10-15-10 2010-B Refunding 07-15-11 2011-A Internal Improvements 07-15-12 2012-A Internal Improvements 07-15-12 2012-B Refunding 02-15-13 2013-A Taxable Improvements A-9 Amount of Issue $885,000 6,545,000 3,720,000 3,525,000 23,695,000 6,875,000 7,860,000 6,565,000 2,365,000 3,785,000 1,360,000 Final Maturity 10-01-16 10-01-17 10-01-18 07-01-26 10-01-20 10-01-21 10-01-23 10-01-21 10-01-27 10-01-20 10-01-28 Amount Outstandingl1l $ 70,000 720,000 750,000 [2,025,000] 9,060,000 1,890,000 3,735,000 2,110,000 1,950,000 1,835,000 1,240,000 07-15-13 2013-B Improvements 07-30-14 2014-A Improvements 07-29-15 2015-A Revenue and Internal Imp. 07-27-16 2016-A Internal Improvements 07-27-16 2016-B Refunding Total l1l1ncludes the Bonds; excludes the Refunded Bonds. !2lPreliminary, Subject to change 4,330,000 7,570,000 6,825,000 6,745,000121 14,315,000121 10-01-33 10-01-34 10-01-35 10-01-36 10-01-31 3,890,000 7,045,000 6,825,000 6,745,000121 14,315,000121 $64,205,000 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 & Bldg Imp. 2015-1 07-29-15 08-01-16 $5,995,000 $ Q(l) Bicentennial Center 2016-1 02-10-16 08-01-17 6,890,000 6,890,000 Field House 2016-2 07-20-16 09-01-19 4,615,000 4 615 000121 $11,505,000 l1ITo be paid at maturity with proceeds from the sale of the Series 2016-A Bonds. See THE FINANCING PLAN herein. !2l The City has entered into a Note Purchase Agreement and expects to issue the Series 2016-2 Notes on or about July 20, 2016. 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 Issued 04-15-11 Purpose Improvements Amount of Issue $16,120,000 Lease Obligations (as of December 31, 2015): Vear Original Item Issued Amount ERP System 2014 $ 456,370 Defibrillators 2014 146,235 Toro Fairway Mower 2014 30,000 HVAC System 2012 1,100,000 State Loans Final Maturity 10-01-31 Final Amount Outstanding $13,890,000 Amount Vear Outstanding 2018 $ 347,594 2018 111,426 2017 20,346 2027 1,018,577 $1,497,943 The following is a list of outstanding loans the City has taken out through the Kansas Department of Health and Environment ("KDHE") or Kansas Department of Transpiration ("KDOr') revolving loan fund programs. KDHE loans are typically repaid by net revenues from municipal water or sewer systems. KDOT loans can be repaid from a variety of sources including, but not limited to, property taxes, special assessments, special highway fund allocations and A-10 sales taxes. Regardless of the intended source of repayment, the loans are ultimately secured by the City's ability to levy unlimited ad valorem property taxes. Project Number KDHE 2629 KDHE 2841 * Purpose Water Water Vear Originated 2014 Pending Final Payment Date 08-01-34 08-01-35 Original Amount Amount Outstanding $9,330,000 $ 8,758,482 4,250,000 4,250,000 $13,008,482 * The City completed the associated project in 2016, with first payment in 2017. Overlapping Debt According to the Saline County Clerk's office and bond offering documents, the following table shows the overlapping general obligation indebtedness of the City. The percent of an overlapping jurisdiction's debt that is applicable to the City is calculated by dividing the assessed valuation of that portion of the jurisdiction's boundaries which overlap those of the City by the total assessed valuation of such jurisdiction. Jurisdiction Salina Airport Authority Unified School District No. 305 Saline County *As of June 30, 2016 Annual Debt Payments Amount Outstanding $ 23,010,000 129,470,000 237,740* Estimated Share of the City Amount $ 23,010,000 120,528,227 179 487 $143,717,714 Percentage 100.00% 93.09 75.32 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. Existing Bonds Series 2016-A Bonds Series 2016-B Bonds Vear Princieal Interest Princieal Interest Princieal Interest Total 2016* $ 6,000,000 $ 648,701 2017 5,960,000 1,207,438 2018 5,705,000 1,000,370 2019 5,375,000 794,482 2020 3,225,000 634,853 2021 2,390,000 538,782 2022 1,720,000 463,723 2023 1,585,000 413,867 2024 1,500,000 366,698 2025 1,545,000 320,172 2026 1,545,000 270,160 2027 1,260,000 219,110 2028 1,115,000 180,365 2029 775,000 144,708 2030 640,000 120,245 2031 605,000 99,220 2032 625,000 78,388 A-11 2033 2034 2035 655,000 590,000 330 000 $43,145,000 55,525 32,200 11550 $7,600,556 *Excludes payments made prior to the closing date of the Bonds. Historical Debt Information The following table shows historical balances of outstanding general obligation bonds for the City during the most recent five-year period. Bonds Debt to Debtto U.S. Debt Outstanding Assessed Estimated Actual Census Per Vear December31 Valuation Valuation Po~ulation Capita 2015 $57,535,000 12.47% 1.95% 47,867 $1,201.98 2014 63,805,000 13.98 2.19 47,707 1,337.43 2013 64,515,000 14.21 2.23 48,045 1,342.80 2012 57,355,000 12.71 1.99 47,901 1,197.37 2011 61,045,000 13.57 2.11 47,910 1,274.16 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. Over the next two years the City anticipates issuing general obligation bonds to retire its outstanding Series 2016-1 Temporary Note as well as providing general obligation note and/or bond funding for approximately $4 million of street improvements. Borrowing amounts described above do not include future subdivision improvement projects financed with general obligation bonds payable as to both principal and interest in part from special assessments levied upon the benefitted property. 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. The Consent Decree settlement is in relation to an investigation to determine the extent and severity of the contamination and to determine the best method of remediation. It does not include any funding for actual remediation, but the investigation is fully funded by the settlement. Once the investigation is completed, there will be another round of negotiations with the Federal Government to determine respective financial responsibilities for remediating the contamination. 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. A-12 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. 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. Audited Audited Audited Audited Revenues: 2011 2012 2013 2014 Property Taxes $ 8,671,423 $ 9,125,179 $ 8,959,066 $ 9,278,832 Sales Tax 11,767,400 12,165,281 12,259,556 12,688,980 Other Taxes 5,083,919 5,057,100 5,264,277 5,636,239 Intergovernmental 813,185 1,080,291 1,255,203 1,162,384 Charges for Services 7,822,307 7,678,288 7,981,078 7,826,289 Investment Revenue 28,972 9,000 0 11,536 Miscellaneous 501 260 425,970 525 923 629 259 Total Revenues $34,688,466 $35,541,109 $36,245,103 $37,233,769 Expenditures: General Government $ 3,461,488 $ 3,574,626 $ 4,268,824 $ 3,986,212 Public Safety 18,117,827 18,564,988 19,155,034 19,558,487 Public Works 6,132,020 6,541,848 6,826,214 6,949,477 Public Health and Sanitation 1,176,082 1,188,836 1,183,970 146,178 Culture and Recreation 2,734,957 2,157,195 2,277,146 2,697,564 Planning and Development 2,319,300 2,267,262 2,335,233 2,209,836 Capital Outlay 555 048 721,079 694 750 843 975 Total Expenditures $34,496,722 $35,015,834 $36,741,161 $36,391,729 Revenues Over (Under) $ 191,744 $ 525,275 $(496,058) $842,040 Other Sources (Uses) (129,111) (534,403) 93 313 (137,351) Net Change in Fund Balance $ (62,633) $ (9,128) $(402,745) $704,689 Fund Balance January 1 $ 3,617,181 $3,836,238 $3,827,110 $3,549,740 Restatement of Prior Year Balance 156,424 3,836,238 3,952,485 0 Fund Balance December 31 $ 3,836,238 $3,827,110 $3,549,740 $4,254,429 A-13 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. State Total Real Personal Assessed Motor Assessed Vear Estate ProE!e!!Y * Utilities Vehicle Valuation 2015 $381,087,426 $12,607,815 $18,984,453 $50,350,566 $463,030,260 2014 376,131,346 13,652,885 17,670,147 48,865,900 456,320,278 2013 370,390,092 17,769,120 16,948,264 48,882,411 453,989,887 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 *Personal property valuations began to decline in 2006 as a result of legislative action that removed significant portions of industrial machinery and equipment from the property tax rolls. 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. Vear 2015 2014 2013 2012 2011 2010 2009 2008 2007 SE!ecial Assessments Residential Real Estate Equalization Ratio N/A N/A 11.55% 11.95 12.04 11.89 11.67 11.66 11.68 Estimated Actual Value $2,957,531,741 2,917,267,724 2,889,385,914 2,884,188,981 2,891,461,447 2,888,659,004 2,893,359,541 2,914,775,730 2,833,709,391 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. A-14 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. 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. Current Current and Delinquent Levy Tax Taxes Tax Collections Tax Collections Vear Rate Levied Amount .2! Amount .2! 2015 27.311 $11,316,065 $ 8,281,396 72.8% $ 8,292,308 72.86% 2014 27.080 10,918,300 10,126,040 92.7 10,790,494 98.8 2013 26.927 10,868,694 9,781,920 90.0 10,807,943 99.4 2012 26.190 10,513,472 9,433,059 89.7 10,482,828 99.7 2011 26.272 10,355,328 9,463,715 91.4 10,309,325 99.5 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 *Collections as of April 2016 Tax Levies Nov Nov Nov Nov Nov 2011 2012 2013 2014 2015 Levy Levy Levy Levy Levy City of Salina 26.272 26.190 26.927 27.080 27.311 Salina Library 5.292 5.452 5.761 6.034 5.895 State Education & Other 1.500 1.500 1.500 1.500 1.500 A-15 Unified School District No. 305 Airport Authority Central Kansas Extension District Saline County Total Largest Taxpayers 58.820 4.007 1.179 32.576 129.646 58.649 4.007 1.176 34.823 131.797 58.116 4.504 1.176 37.895 135.879 55.605 4.486 1.285 38.047 134.037 56.120 4.396 1.502 38.275 134.999 According to the Saline County Clerk's Office, the following table lists the largest taxpayers in the City, their November 2014 assessed valuations, and the percentage each taxpayer comprised of the total assessed valuation of the City. %of Type of Assessed Total Company Business Valuation Valuation Westar Energy Utility 11,025,004 2.37 Schwan's Global Supply Chain Inc Manufacturing 7,175,013 1.55 Garrison Salina Owner, LLC Regional Shopping Center 6,330,144 1.37 RAF Salina LLC Retail-Shopping Center 4,478,080 0.97 Salina Regional Health Properties Medical 4,318,078 0.93 Kansas Gas Service Utility 3,669,878 0.79 Menard Inc Home Improvement Store 2,896,599 0.63 Collier Dennis Mulitfamily 2,428,117 0.52 Union Pacific Railroad 2,399,813 0.52 Great Plains Manufacturing Manufacturing 2,378,176 0.51 Total $47,098,902 10.17% 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: Vear Value 2015 $14,523,773 2014 24,214,432 2013 29,285,213 2012 54,863,040 2011 19,752,335 2010 52,358,547 2009 12,192,481 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. 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. Both of these taxes were approved in perpetuity. A-16 In November 2008, voters in the City of Salina approved an additional .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. In May of 2016, voters approved a .75% citywide retailers sales tax that will replace the 2008 sales tax on October 1, 2016 and will be used for capital improvements and economic development. The total sales tax for goods and services in the City is 8.40%, which consists of6.5% imposed by the State, 1% countywide local option sales tax, and .90% citywide local option sales tax. The following table lists the local- option sales tax receipts of the City of Salina in the years indicated. Vear 2016 2015 2014 2013 2012 2011 2010 * As of June, 2016 Source: City Clerk Budgeting Procedures 2008 .40% Citywide Local Option Sales Tax Receipts $2,240,677 4,610,032 4,488,672 4,313,345 4,244,974 4,111,910 3,886,733 1992 .50% Citywide Local Option Sales Tax Receipts $2,800,846 5,762,541 5,610,840 5,391,681 5,306,218 5,139,888 4,858,416 City's Portion of 1% Countywide Local Option Sales Tax Receipts $3,676,174 7,376,708 7,188,934 6,998,806 6,992,853 6,755,629 6,394,838 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. The City may levy taxes in accordance with the requirements of its adopted budget. Property tax levies are based on the adopted budget of the City and the assessed valuations provided by the County appraiser. The Kansas Legislature passed legislation in 2015 and 2016 that, among other things, imposes an additional limit on the aggregate amount of property taxes that may be imposed by cities and counties, without a majority vote of qualified electors of the city or county (the "Tax Lid"). The Tax Lid has an effective date of January 1, 2017 (and thus applies only to budgets adopted for fiscal years ended in 2018 and thereafter), and provides that, subject to certain exceptions, no city or county may approve an appropriation or budget which provides for funding by property tax revenues in an amount exceeding that of the immediately prior year, as adjusted to reflect the average changes in the consumer price index for the preceding five calendar years and provided that such average shall not be less than zero, unless approved by a majority vote of electors. The Tax Lid does not require an election in the following situations: "(1) Increased property tax revenues that, in the current year, are produced and attributable to the taxation of: (A) The construction of any new structures or improvements or the remodeling or renovation of any existing structures or improvements on real property, which shall not include any ordinary maintenance or A-17 repair of any existing structures or improvements on the property; (B) increased personal property valuation; (C) real property located within added jurisdictional territory; (D) real property which has changed in use; (E) expiration of any abatement of property from property tax; or (F) expiration of a tax increment financing district, rural housing incentive district, neighborhood revitalization area or any other similar property tax rebate or redirection program. (2) Increased property tax revenues that will be spent on: (A) Bond, temporary notes, no fund warrants, state infrastructure loans and interest payments not exceeding the amount of ad valorem property taxes levied in support of such payments, and payments made to a public building commission and lease payments but only to the extent such payments were obligations that existed prior to July 1, 2016; (B) payment of special assessments not exceeding the amount of ad valorem property taxes levied in support of such payments; (C) court judgments or settlements of legal actions against the city or county and legal costs directly related to such judgments or settlements; (D) expenditures of city or county funds that are specifically mandated by federal or state law with such mandates becoming effective on or after July 1, 2015, and loss of funds from federal sources after January 1, 2017, where the city or county is contractually obligated to provide a service; (E) expenses relating to a federal, state or local disaster or federal, state or local emergency, including, but not limited to, a financial emergency, declared by a federal or state official. The board of county commissioners may request the governor to declare such disaster or emergency; or (F) increased costs above the consumer price index for law enforcement, fire protection or emergency medical services. (3) Any increased property tax revenues generated for law enforcement, fire protection or emergency medical services shall be expended exclusively for these purposes but shall not be used for the construction or remodeling of buildings. (4) The property tax revenues levied by the city or county have declined: (A) In one or more of the next preceding three calendar years and the increase in the amount of funding for the budget or appropriation from revenue produced from property taxes does not exceed the average amount of funding from such revenue of the next preceding three calendar years, adjusted to reflect changes in the consumer price index for all urban consumers as published by the United States department of labor for the preceding calendar year; or (B) the increase in the amount of ad valorem tax to be levied is less than the change in the consumer price index plus the loss of assessed property valuation that has occurred as the result of legislative action, judicial action or a ruling by the board of tax appeals.". The Tax Lid also provides that "[w]henever a city or county is required by law to levy taxes for the financing of the budget of any political or governmental subdivision of this state that is not authorized by law to levy taxes on its own behalf, and the governing body of such city or county is not authorized or empowered to modify or reduce the amount of taxes levied therefore, the tax levies of the political or governmental subdivision shall not be included in or considered in computing the aggregate limitation upon the property tax levies of the city or county." Because of ambiguities in the Tax Lid, it is unclear how the various exceptions will be interpreted and how the Tax Lid will be implemented. As a result, is unclear how the Tax Lid will impact the City. However, as described above, the Tax Lid provides a specific exception for "[b]ond, temporary notes, no fund warrants, state infrastructure loans, and interest payments not exceeding the amount of ad valorem property taxes levied in support of such payments" as well as certain lease payments. Therefore, the City is permitted under the Tax Lid to levy unlimited ad valorem taxes as necessary to pay principal of and interest on the Bonds, as required by the Bond Resolutions. The City cannot predict the impact of the Tax Lid on the ratings on the Bonds, or the general rating of the City. A change in the rating on the Bonds or a change in the general rating of the City may adversely impact the market price of the Bonds in the secondary market. A-18 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 Commercial and Industrial- Real Property Agricultural Land (1) Agricultural Improvements Vacant Lots Not-for-Profit (2) All Other Personal Property: (3) Mobile Homes Mineral Leaseholds (large) Mineral Leaseholds (small) Commercial & Industrial Machinery & Equipment All Other Utilities: Railroads All Other Public Utilities Motor Vehicles: Property Exempt: 11.5% 25.0 30.0 25.0 12.0 12.0 30.0 11.5% 30.0 25.0 25.0 30.0 federally mandated rate 33.0% 20.0% Property used for the following purposes, or portions thereof, are exempt from taxation A-19 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 2013 Kansas Appraisal/Sales Ratio Study, the equalization ratio for residential real property in Saline County was 11.55%, and commercial and industrial property was 25.23%. REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY A-20 APPENDIX B Omnibus Continuing Disclosure Undertaking 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 defmed 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 defmitions set forth in the Bond Resolution, which apply to any capitaliz.ed 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, Sedion 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. 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 wntmg 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)(l) hereof. "Fiscal Year" means the one-year period ending December 31, or such other date or dates as may be adopted by the Issuer for its general accounting purposes. "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: (I) Financial Information. The fmancial 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). 3 (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 ExhibitB. (c) Pursuant to Section (d)(3) of the SEC Rule, the provisions of Section 2(a)(l) 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: (I) 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 fmancial 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 fmal 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 defmitive 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. 4 (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. (I) 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)(l) 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, lnununities 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 5 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 prov1s10ns 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 6 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 fmancial 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 Chereto. 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 prov1s10n 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 TIIIS PAGE INTENTIONALLY LEFT BLANK] 8 IN WITNESS WHEREOF, the Issuer has caused this Disclosure Undertaking to be executed as of July 15, 2013. CITY OF SALINA, KANSAS (SEAL) Mayor Clerk (Signature Page to Continuing Disclosure Undertaking) SCHEDULE I DESCRIPTION OF BONDS SUBJECT TO DISCLOSURE UNDERTAKING General Obligation Bonds (Base CUSIP No.: 794743) Description of Indebtedness General Obligation Internal hnprovement Bonds, Series 2006-B General Obligation Internal hnprovement Bonds, Series 2007-A General Obligation Internal hnprovement Bonds, Series 2008-A General Obligation Internal hnprovement Bonds, Series 2008-B General Obligation Internal hnprovement Bonds, Series 2009-A General Obligation Refunding and Improvement Bonds, Series 2010-A General Obligation Refunding Bonds, Series 2010-B General Obligation Internal hnprovement Bonds, Series 2011-A General Obligation Internal hnprovement Bonds, Series 2012-A General Obligation Refunding Bonds, Series 2012-B General Obligation Taxable Improvement Bonds, Series 2013-A General Obligation Internal Improvement Bonds, Series 2013-B General Obligation Internal Improvement Bonds, Series 2014-A General Obligation Refunding & Internal Improvement Bonds, Series 2015-A General Obligation Internal Improvement Bonds, Series 2016-A General Obligation Refunding Bonds, Series 2016-B Dated Date 07-15-06 06-15-07 07-15-08 12-15-08 07-15-09 05-01-10 10-15-10 07-15-11 07-15-12 07-15-12 02-15-13 07-15-13 07-30-14 07-29-15 07-26-16 07-26-16 Temporar;i: Notes (Base CUSIP No.: 794743) Description of Indebtedness General Obligation Temporary Notes, Series 2015-1 General Obligation Temporary Notes, Series 2016-1 Dated Date 07-29-15 02-10-16 Revenue Bonds (Base CUSIP No.: 794811) Description of Indebtedness Water and Sewage System Revenue Bonds, Series 2011 S-1 Dated Date 04-15-11 Final Maturit;i: 10-01-21 10-01-27 10-01-23 07-01-28 10-01-29 10-01-25 10-01-23 10-01-31 10-01-27 10-01-20 10-01-28 10-01-33 10-01-34 10-01-35 10-01-36 10-01-31 Final Maturit;i: 08-01-16 08-01-17 Final Maturit;i: 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 fmancials) 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 fmal Official Statement concerning Property Valuations and Pension and Employee Retirement Plans. A-1 EXHIBITB NOTICE TO REPOSITORY OF FAILURE TO FILE ANNUAL REPORT Name oflssuer: Name of Bond Issue: Name of Obligated Person: Date oflssuance: City of Salina, Kansas [Description of Bonds], Series [__J, 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: CITY OF SALINA, KANSAS By _____________ ~ as Dissemination Agent cc: City of Salina, Kansas B-1 EXHIBITC ACCEPTANCE OF DISSEMINATION AGENT Name oflssuer: City of Salina, Kansas Name of Bond Issue: [Description of Bonds], Series [__J, 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, 2014 Comprehensive Annual Financial Report The following is the Comprehensive Annual Financial Report for the City of Salina, Kansas for the fiscal year ended December 31, 2014, including financial statements as audited by the firm of Mize Houser & Company, P.A., Certified Public Accountants, Topeka, Kansas. COMPREHENSIVE ANNUAL FINANCIAL REPORT OF CITY OF SALINA, KANSAS 300 West Ash Street P.O. Box736 Salina, Kansas 67 402--0736 For the Fiscal Year Ended December 31, 2014 Prepared by Department of Finance and Administration of City of Salina, Kansas CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2014 Letter of Transmittal Organizational Chart List of Principal Officials TABLE OF CONTENTS INTRODUCTORY SECTION FINANCIAL SECTION Independent Auditor's Report Management's Discussion and Analysis Basic Financial Statements: Government-wide Financial Statements Statement of Net Position Statement of Activities Fund Financial Statements Balance Sheet -Governmental Funds Reconciliation of the Total Governmental Fund Balance to Net Position of Governmental Activities Statement of Revenues, Expenditures, and Changes in Fund Balance -Governmental Funds Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance with the Government-Wide Statement of Activities Statement of Revenues, Expenditures and Changes in Fund Balance Budget and Actual (Non-GAAP Basis) General Fund Tourism and Convention Fund Special Gas Fund Sales Tax Capital Fund Statement of Net Position -Proprietary Funds Statement of Revenues, Expenses, and Changes in Fund Net Position -Proprietary Funds Statement of Cash Flows -Proprietary Funds Statement of Assets and Liabilities -Agency Funds i -iv V vi 1 - 2 3-13 14 15 16 17 18 19 20-22 23 24 25 26 27 28-29 30 CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2014 TABLE OF CONTENTS -CONTINUED FINANCIAL SECTION -CONTINUED Notes to the Basic Financial Statements Required Supplementary Information Schedule of Funding Progress and Schedule of Employer Contributions Combining Statements and Individual Fund Schedules Combining Statements -Nonmajor Funds Fund Descriptions Combining Balance Sheet -Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Governmental Funds Combining Balance Sheet -Nonmajor Special Revenue Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Special Revenue Funds Combining Balance Sheet -Nonmajor Permanent Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Permanent Funds Individual Fund Schedules of Revenues, Expenditures and Changes in Fund Balance -Budget and Actual (Non-GAAP Basis): Bicentennial Center Fund Business Improvement City Fund Neighborhood Park Fund Special Parks and Recreation Fund Special Alcohol Fund Sales Tax Economic Development Fund Fair Housing Fund Arts & Humanities Fund Debt Service Fund Solid Waste Disposal Fund Water and Sewer Fund Sanitation Fund Golf Course Fund Risk Management Fund Workers' Compensation Reserve Fund 31 -58 59 60-61 62 63 64-65 66-67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2014 TABLE OF CONTENTS -CONTINUED FINANCIAL SECTION -CONTINUED Individual Fund Schedules of Revenues, Expenditures and Changes in Fund Balance -Budget and Actual (Non-GMP Basis) -Continued: Health Insurance Fund Central Garage Fund Information Systems Fund Internal Service Fund Descriptions Combining Statement of Net Position -Internal Service Funds Combining Statement of Revenues, Expenses, and Changes in Net Position -Internal Service Funds Combining Statement of Cash Flows -Internal Service Funds Fiduciary Fund Descriptions -Agency Funds Combining Balance Sheet -Agency Funds Combining Statement of Changes in Assets and Liabilities -Agency Funds STATISTICAL SECTION Net Position by Component -Last Ten Years Changes in Net Position -Last Ten Years Fund Balances, Governmental Fund -Last Ten Years Changes in Fund Balances, Governmental Funds -Last Ten Years Tax Revenues by Source, Governmental Funds -Last Ten Years Assessed and Estimated Actual Value of Taxable Property-Last Ten Years Direct and Overlapping Property Tax Rates -Last Ten Years Principal Property Tax Payers Property Tax Levies and Distributions Direct Sales Rate by Taxing Entity Water Sales by Class of Customer Ratio of Outstanding Debt by Type 85 86 87 88 89 90 91 -92 93 94 95 Schedule 1 96 2 97 3 98 4 99 5 100 6 101 7 102 8 103 9 104 10 105 11 106 12 107 CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2014 TABLE OF CONTENTS -CONTINUED STATISTICAL SECTION -CONTINUED Ratio of Net General Bonded Debt Outstanding Direct and Overlapping Governmental Activities Debt Legal Debt Margin Pledged Revenue Coverage Demographic and Economic Statistics Principal Employers GOVERNMENTAL AUDIT SECTION Schedule of Expenditures of Federal Awards Notes to Schedule of Expenditures of Federal Awards Schedule of Findings and Questioned Costs Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with "Government Auditing Standards" Independent Auditor's Report on Compliance for Each Major Program and on Internal Control over Compliance required by 0MB Circular A-133 Schedule 13 14 15 16 17 18 108 109 110 111 112 113 114 115 116-117 118-119 120 -121 INTRODUCTORY SECTION DEPARTMENT OF FINANCE AND ADMINISTRATION Rodney Franz, Director 300 West Ash, P.O. Box 736 Saliaa Kaosas 6Z402-0Z36 October 22, 2015 Cityof ~ 5alina To the Citizens of the City of Salina, Kansas: TELEPHONE (785) 309-5735 FAX(785)309-5738 TDD (785) 309-5747 E-MAIL rod.franz@salina.org WebsifP" www saliaa-ks gav The Comprehensive Annual Financial Report of the City of Salina, Kansas (the "City") for the year ended December 31, 2014, is hereby submitted. The City's Finance Department prepared the report. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of all various funds and account groups of the City. We believe that all disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. Report Fonnat The Comprehensive Annual Financial Report is presented in three sections: Introductory, Financial and Statistical. The introductory section includes a description of the City, including services provided, and explanation of the City's accounting system and budgetary controls, and a brief discussion of the City's economic condition and outlook. The City's organizational chart is also included to assist the reader in understanding the structure of the City. The financial section includes the Independent auditor's report, Management's discussion & analysis, Government wide financial statements, Fund financial statements, Notes to the financial statements, and Individual and combining statements and schedules. The statistical section includes selected financial and demographic information, generally presented on a multi-year basis. The reader is specifically directed to Management's Discussion and Analysis (MD&A) which immediately follows the independent auditor's report. MD&A provides a narrative explanation and overview of significant features and trends reflected by data in the financial statements. Accounting Systems and lntemal Controls A critical part of the control system is the City's comprehensive Budgetary and Financial Policies, which establish guidelines for budgetary and financial practices. The Budgetary and Financial Policies are reviewed by the City Commission and updated each year as a part of the budget process. City staff is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft or misuse and that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits require estimates and judgment by management. 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. However, management control is maintained at the department level. The City uses an encumbrance accounting system, in which estimated purchase amounts are recorded prior to the release of purchase orders to vendors. Open encumbrances are reported as reservations of fund balance at December 31, 2014 in the general fund and the special revenue funds. Various internal compliance procedures are implemented to insure proper implementation of the budget as well as to maintain a degree of accountability for both revenues and expenditures. Independent Audit Kansas Statutes Annotated 75-1122 requires an annual audit of the books of account, financial records and transactions of all administrative departments of the City by independent certified public accountants selected by the City Commission. This requirement has been complied with and the auditor's opinion has been included in this report. Profile of the Community The Town of Salina was organized in 1858 under the Town and Village Act in the State of Kansas, and became a City of the First Class on July 9, 1920. The City has had a Commission-City Manager form of government since 1921. The Commission is comprised of five members elected at large. Each year the commission chooses one member to act as Mayor. The City Manager is appointed by the Commission, and acts as its primary agent in accordance with state statute. Other city officers and employees are appointed by the City Manager. The current population of the City is 47,867. The reporting entity includes the City of Salina as well as two discretely presented component units, both proprietary fund types. The Salina Airport Authority operates the Salina Municipal Airport and Airport Industrial Center, and the Salina Housing Authority administers public housing programs within the City of Salina. In addition, the City of Salina participates in a joint venture with Saline County and the City-County Building Authority. This report includes all funds and account groups of the City. The City provides a full range of services including police and fire protection, development services, construction and maintenance of streets, drainage facilities and other infrastructure; recreational activities and cultural events; emergency medical services and convention facilities. In addition to general government activities, the City also provides water, wastewater, sanitation, and solid waste services; therefore, these activities are included in the reporting entity. Economic Outlook and Strength The City 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 community. Such companies include Pepsi-cola, Exide Battery, Philips Lighting, EIDorado Bus, and Schwans. Currently manufacturing, retail trade, and service industries rank as the three primary employers in the City. No single industry is dominant. The City of Salina retains its position near the top of a list of first class cities with respect to 'trade pull factor." The pull factor measures the degree to which a city or county area captures retail trade from outside the jurisdiction. A pull factor of greater than 1 indicates that a city is attracting more retail trade from outside the city/county than it is losing to other counties. It is apparent from this that Salina continues to serve as a regional economic hub in 2015. Major Initiatives In November, 2008, voters elected to increase the Y. cent tax to .40 cent, and extend the sunset for an additional ten years. until March 31, 2019. Ninety-three percent (93%) of the tax is to be used for capital improvements and tax stabilization. The remaining tax is to be used for economic development programs. In 2014 several major projects were initiated, including the reconstruction of East Iron Avenue, reconstruction of the Ohio and North Street and the g'" and Cloud Intersections, the final phase of remodeling on Fire Station #1, construction of an additional landfill cell, and continuation of water system distribution improvements and the next phase of Bicentennial Center remodeling. Solid Waste disposal is becoming a stable operation, with 90,000 to 100,000 tons being disposed of each year. The community remains committed to recycling and resource conservation, with several initiatives that began in 1997, including a yard waste recycling and composting program in addition to continuing a mulching mower rebate program. The community currently has about 4,700 yard carts placed to encourage recycling of yard waste as an alternative to disposal. A Pilot residential recycling program was continued in 2004. The curbside recycling program was converted to a permanent service in 2005, with 900 households participating. ii For several years McPherson County has used the Salina solid waste facility to dispose of a portion of their solid waste stream. This provided approximately 20,000 tons per year and a concomitant revenue stream. During 2014, they opened their own disposal facility, and as a result, the Salina facility has experienced a reduction in tonnage and associated revenues. Several adjustments to operations have been made in order to accommodate these changes. 2014 saw the dissolution of the City-County Health Department. As a result, the City of Salina terminated contributions to the consolidated operation, saving $1,018,031 in expenditures (budgetary basis) and absorbed the cost of operating the Animal Control operations, including operation of the Animal Shelter. This added $505,232 in expenditures (budgetary basis) to the General Fund, as well as 6 staff positions. Addressing fiduciary pressures generated by a recessionary economy has also been a challenge. The primary approach has been to reduce staffing through attrition, after careful evaluation of each vacancy. By the end of 2014, full time staffing had been reduced from 511 to 473. The freeze on salaries was removed in 2011, with an allowance granted for an average 2% merit review. However, general adjustments to the pay plan for cost of living changes have not been resumed. Capital Improvement Planning The City's Capital Improvement Plan (CIP) consists of two components. One component consists of "routine" capital-including vehicle and equipment replacement, technology replacement, building repair and improvement, routine pavement maintenance activity, utility system enhancements and similar items. The amount of funding for these projects may fluctuate based on needs and funding availability, however, planned amounts are allocated over a multi-year period. Source of funding for routine capital is current cash resources from the fund appropriate to the nature of the purchase. The second component of the CIP includes major projects that typically require issuance of bonds or notes, although these projects may also be supplemented with available cash and grant financing. The plan is updated each year after an extensive evaluation of the demands on future financial resources. The Capital Improvement program is scheduled for a major revision as the result of the sales tax to be used for that purpose. Construction Initiated': 2015 2016 2017 2018 2019 General Fund $ 550,000 $ 550,000 $ 550,000 $ 550,000 $ 550,000 Sales Tax• 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 Special Park Fund 150,000 150,000 150,000 150,000 150,000 Gas Tax Fund 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 Solid Waste Fund 50,000 50,000 50,000 50,000 50,000 Sanitation Fund 160,000 160,000 160,000 160,000 160,000 Water & Wastewater Fund 2,500,000 4,500,000 2,500,000 2,500,000 2,500,000 General Obligation Bonds 11,700,000 1,400,000 1,140,000 1,600,000 800,000 Re1Rnue Bonds 11,100,000 5,600,000 4,000,000 4,000,000 4,000,000 Other Sources 50,000 50,000 50,000 50,000 50,000 Total $ 30,060,000 $ 16,260,000 $12,400,000 $12,860,000 $ 12,060,000 'The year a project is scheduled reflects the year that construction is initiated. Preliminary work (design, acquisition) may precede this date by one or more years, and permanent financing may not occur until one (or more years depending on project magnitude) subsequent to this date. iii Financial Policies The City has adopted a formal set of Budgetary and Financial Policies, addressing such items as fund balances, capital improvements, operating budgets, long term debt management, accounting, auditing and financial reporting, revenues, cash management and investments. Financial policies contribute to financial stability by: 1. Providing consistent guidance in decision making 2. Establishing appropriate levels of fund balances 3. Governing the use of one time or unanticipated resources 4. Providing a multi-year capital improvements process 5. Establishing responsibilities and deadlines for budget preparation 6. Providing for a balanced annual operating budget 7. Providing guidelines on the use of debt, including appropriate purposes and terms 8. Provide a linkage between capital improvement scheduling and long term debt management planning 9. Require annual audits and financial reporting in conformance with Generally Accepted Accounting Procedures 10. Require timely and regular interim financial reporting to the Governing body 11. Insure the safety of cash and near cash resources (timely collection of Accounts Receivable, etc.). Acknowledgments The preparation of the Comprehensive Annual Financial Report was made possible by the dedicated, professional advice and effort of the Mize Houser auditing team. A special thank you needs to be given to Valerie Gebhardt, City Accountant, who is responsible for much of the data assembly and reconciliation. Finally, preparation of this report would not have been possible without the support of the City Commission. Sincerely, ~{/~ Jason A. Gage City Manager ~5 Director of Finance iv ( City of Salina ) 11 CITIZENS 11 CITY COMMISSION Jon Blanchard, Mayor Kaye J. Crawford Karl Ryan Trent Davi~· Randall Hardy City Manager Jason Gage Municipal Court I 1 ...•..•..•..•..•..•..•..•..•..•..•. -...................................................... I ! Legal Services Clark Mize & Linville Chartered* I Risk Management I Gre:z Benf!.tson I Deputy City Manager Michael Schrage Development Services I Gary Hobbie I Continuous Process Improvement Building Services Bryon Johnson Neighborhood Services Planning & Zoning I Parks & Recreation I Public Works I Utilities Finance/ Administration Fire I Police I Dion Louthnn vacant Martha Tasker Rod Franz Larr)' Mullikin Brad Nelson I I r Parks Division tngineering r Water Plant Division City Clerk Fire Administration Administration Recreation Division Public Services Wastewater Plant Water Customer Fire Suppression Patrol Division Golf Course Streets Division Accounting Fire Prevention Support Division Facility Maintenance Traffic Control Utility Division Finance EMS Investigative Division Animal Services Flood Control Water Distribution Bicentennial Center Sanitation Wastewater ~ Solid Waste Collection Central Garage I I Computer Technology I Community Relations I I Arts & Humanities I I Human Resources .lack Rolf~ Gina McDonald Brad Anderson Natalie Fischer I [ Human Relations Community Engagement l [ Smoky Hill Museum l * Contract Position V City of Salina, Kansas List of Principal Officials City Commission Jon Blanchard, Mayor Kaye J. Crawford, Vice Mayor Trent Davis, Commissioner Randall Hardy, Commissioner Karl Ryan, Commissioner City Executive Staff Jason Gage, City Manager Michael Schrage, Deputy City Manager Rodney Franz, Director of Finance and Administration Jack Rolfs, Director of Computer Technology Natalie Fischer, Director of Human Resources Greg Bengston, City Attorney Brad Nelson, Chief of Police Larry Mullikin, Fire Chief Daniel Stack, City Engineer James Teutsch, Interim Director of Public Works Martha Tasker, Director of Utilities Dion Louthan, Director of Parks and Recreation Gary Hobbie, Director of Development Services Brad Anderson, Director of Arts and Humanities Gina McDonald, Director of Human Relations vi FINANCIAL SECTION INDEPENDENT AUDITOR'S REPORT Mayor and City Commissioners City of Salina, Kansas Report on the Financial statamants 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 infonnation of the City of Salina, Kansas, as of and for the year ended December 31, 2014, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. M•nagement's Raponslblllty for the Flnanclal Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United states of America; this indudes the design, implementation, and maintenance of intamal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud c,r e1TOr. Auditor's Responsibility Our responsibility is to express an opinion on the financial statement based on our audil We conducted our audit in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Government Auditing standards, issued by the Comptroller General of the United States and the Kal188s Municipal Audit end Accounting Guide. Those standards require we plan and perfonn the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. We did not audit the financial statements of the Salina Airport Authority which statements reflect total assets of $48,066,222 as of December 31, 2014 and total revenues of $4,754,345 for the year then ended, and the Housing Authority of the City of Salina which statements reflect total assets of $7,598,529 as of June 30, 2014 and total revenues of $2,136,062 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 induded for the Salina Airport Authority and the Housing Authority of the City of Salina is based solely on the report's of the other auditors. An audit involves perfonning 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. Opinions In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fair1y, 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 infonnation of the City of Salina, Kansas, as of December 31, 2014, and the respective changes in financial position and cash flows, where applicable, 1hereof and the respective budgetary comparison for the General, Tourism and Convention, Special Gas and Sales Tax Capital Funds for the year then ended in accordance with accounting principles generally accepted in the United States of America. www,D1abPYIILSPOO • mhcoOmlzahou.r.com 5M S Kanaas Ave, Sule 700 • TopekQ. KS 66403-8465 • 785.233.0586 p • 785.233.10781 5M S Kanaas Ave, Sule <IOO • Topeka. KS U603-8454 • 785.234.5573 p • 715.234.10371 7101 Colleg9 llvd, Suit. 900 • Ovaland Palk, KS 6621~1984 • 913.461.1812 p • 913..461.2211 f 211 E Bghlh Suh NI LGWNNtce, KS U044•2771 • 785 .. 84U844 p • 785.142.9049 I 1 Emphasis of Matter Prior Period Restatement As discussed in Note 3 to the financial statements, certain errors resulting in amounts previously reported as expenses and capital assets as of December 31, 2013, were discovered by management of the City during the current year. Accordingly, these amounts have been restated in the December 31, 2014, financial statements now presented, and adjustments have been made to net position to correct the error. Our opinion is not modified with respect to these matters. 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 59 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. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The introductory section, combining and individual nonmajor fund financial statements and schedules, and statistical tables as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements, budgetary comparison schedules and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate direcUy to the under1ying 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 under1ying account and other records used to prepare the basic 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. Other Reporting Required by Government Auditing standards In accordance with Government Auditing Standards, we have also issued our report dated October 22, 2015, on our consideration of the City's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. Certified Public Accountants Lawrence, Kansas October 22, 2015 /J4 2 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (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, 2014. 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 • The City's net position increased by $4.5 million from current operations. Governmental net position decreased by $1.0 million and Business-Type net position increased by $5.5 million. • The change in net position was primarily due to spend-down of previously received funds for the abatement of groundwater contamination in the Schilling Industrial complex. • At the close of 2014, the City's governmental funds reported combined ending fund balances of $18,330,169, an increase of $702,586 over the prior year. This resulted from a combination of factors, the most notable of which were an increase in Capital Projects fund balances ($2, 135,485) and a decrease in the Schilling Groundwater Abatement Capital project ($1,627,511). General Fund balances increased from $3,549,740 to $4,254,429, an increase of $704,689 (19.8%) • At the close of 2014, the City's enterprise funds reported combined ending Net Position of $82,778,234, an increase of $6,328,769 over the prior year. Positive performance was shared by all enterprise funds, with, of course, the Water and Sewer Fund providing the bulk of the change ($4,060,679). • Total revenues decreased by $6,472,000, due to a change in grant revenue resulting from the Schilling groundwater contamination project. • Investment revenues continue to be very minimal. • The City-County Joint Health Department was dissolved at the close of 2013; with the City of Salina assuming responsibility for operations (and expenses) of the Animal Control operation. This added 6 staff positions and $505,232 (budgetary basis) in expenses for 2014. However, the additional expense was more than offset by a reduction in contractual service expenses of $1,018,031 (budgetary basis) compared to 2013. 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 Position reports all of the City's assets and liabilities. Net position, the difference between assets and deferred outflows of resources and liabilities, are an important measure of the City's overall financial health. Net position represents the total accumulated and unused resources available to the City for the purpose of providing services. Over time, the increases and decreases in net position can be monitored to determine if the City's financial position is improving or deteriorating. The Statement of Activities shows how net position has 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, 3 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (Unaudited) 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 Authonty as discretely presented component units of the City. Note 1, item A in the Notes to the Financial Statements provides a more complete explanation of the relationship between these entities and the City of Salina. Fund Financial Statements The City uses three types of funds to manage its resources: governmental funds, proprietary funds, and fiduciary funds. A fund is a fiscal entity with a set of self-balancing accounts recording financial resources together with all related liabilities and residual equities and balances, and the changes therein. These accounting entities are 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 categones: enterpnse 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. Enterpnse 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 enterpnse 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 Services activity and for the Central Garage operation. A combining statement for these internal service funds can be found in the supplementary information following the notes to the financial statements. Fiduciary funds are used by the City to account for resources held by the City for a third party. Agency funds are a special class of fiduciary fund in which liabilities always equal assets, and thus there is no net position. 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 restncted to the extent that only earnings, not pnncipal, may be used. Permanent funds operated by the City include the Citizenship Trust, Cemetery and Mausoleum Endowments, and the Tri-centennial Commission fund. Notes to the Financial Statements The notes to the financial statements are an integral part of the basic financial statements since they contain valuable additional information necessary for gaining a complete understanding of the City's financial statements. 4 Other Information CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (Unaudited) In addition to the basic financial statements and the notes described above, this report also presents the general fund and major special revenue fund's budgetary statements as required supplementary information directly following the notes to the basic financial statements. The combining statements for the non-major funds are shown after the required supplementary information. Finally, the statistical section includes selected statistical data about the City's operations and economy. The City as a Whole This section will identify, discuss, and analyze significant differences and trends that will enhance the reader's understanding of the City's financial position. Tax Base and Economy The City of Salina relies on three major groups of revenues to support its' operations. Each of these revenue streams has a different revenue base. In declining order of magnitude, they are charges for services, sales taxes, and property taxes. Sales taxes and property taxes apply primarily to governmental activities, while charges for services apply to both governmental (32%) and business-type (68%) activities. Charges for Services account for about 47% ($37,014,000) of the City's revenue stream. Charges for service depend on both the rate that is set for the activity, as well as the volume of services provided. The following table illustrates service volume and rate adjustments for some of the more significant services for the year ending December 31, 2014. Description 2013 Volume 2014 Volume Change Rate Comments Golf Course: Rounds, 18 Hole 35,926 36,352 426 Rounds, Par 3 2,500 3,144 644 Annual Golf Members 298 291 (7) Development Services Inspections: Building 5,421 4,779 (642) Inspections: Minimum Housing Code 7,299 6,858 (443) Permits Issued 1,954 1,932 (22) Finance/Administration EMS Runs Billed 4,271 4,593 322 Licenses Issued 827 (827) Water Billings Issued 236,649 241,334 4,685 Water Metered (in Billion Gallons) 1.79 1.80 0.01 Parks and Reaeation Kenwood Cove Attendance 75,276 81,596 6,320 No fee increase Youth Teams 172 169 (3) Adult Teams 245 268 23 Special Pops Programs 140 144 4 Trips/Tours offered 15 37 22 Youth Tournament Teams 368 410 42 Adult Tournament Teams 116 98 (18) Public Works Sanitation Customers 14,869 14,936 67 Landfill Tonnage 105,006 99,309 (5,697) Street Cut and Excavation Permits 215 216 1 Conaete Permits 152 158 4 Water and Wastewater Water Treated (Billion Gallons) 2.10 2.00 (0.10) Wastewater Treated (Billion Gallons) 1.36 1.30 (0.06) ''In general, if not specified in the table, rates were adjusted an average of about 2% for most services. 5 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (Unaudited) Sales taxes are the next largest component of the revenue mix, providing 22% ($17,150,033) of the total revenues. The City receives a .90% City-wide sales tax, and also a portion of the County-wide 1 % sales tax. Forty-four percent, (a rate of .4%) of the City-wide sales tax is required to be used for special purposes. The remaining .5%, along with the City portion of the County-wide tax is available for general purposes. Total revenue from the sales tax in 2014 was up from$ 16,540,435 in 2013. This 3.7% increase follows a 1.0% increase for 2013. 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 4.3%, compared to .8% in 2013. 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 decreased for 2014, the City's allocated portion of the County-wide sales tax was also decreased from 60.86% in 2012 to 60.22% in 2014. The decline in the City of Salina share of Countywide sales tax is a long term trend. As a matter of comparison, five years ago (2009) the City share was 62.47%. 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, 2019. The tax was also modestly re-purposed, for Capital and Economic Development purposes only, as well as retaining a property tax stabilization component. Property Taxes are the third major component of the revenue mix, accounting for 15% ($12,143,105) 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 .6%. The total City mill levy increased by 3.8%. The overlapping levy also increased, by 3.1%. Tax delinquency decreased from 4.1% to 3.5%. 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 $13.7 million from its' peak of $39.7 million in 2007. At the 2014 tax rate, this exemption is equivalent to $701,146 in lost revenue for 2014. Motor vehicle value was stable, however, it is still well below 2010 values. Motor vehicle taxes are distributed based on a formula using prior year's tax effort (similar to the Countywide Sales Tax Distribution). The following table summarizes the comparative property assessed values and tax levy rates: Fiscal (Budget) Year Comparative Property Values and Tax Levy Rates 2013 Real Estate and Personal Property Assessed Valuation City Mill Levy($ per $1,000) Operating (General Fund) Debt Service Total City Rate Total Overlapping Levy Percent of Total Taxes Collected Ratio ofTotal Taxes (including delinquent collections) to taxes levied Motor Vehicle Valuation $405,107,476 20.242 5.948 26.190 131.797 95.9% 98.3% $ 48,882,411 2014 Change $407,454,378 $2,346,902 20.539 0.297 6.388 0.440 26.927 0.737 135.879 4.082 97.5% 1.6% 102.3% 4.0% $ 48,865,900 $ (16,511) The unemployment rate in Salina increased slightly from 5.1 % in 2013 to 5.3% in 2014, reflecting general economic conditions. This is still slightly below the statewide and significantly below the national unemployment rate. The total labor force declined to 26,303, a change of .5%. In 2014, the top ten property taxpayers accounted for 7.19% of total assessed value. This is less concentrated than ten years ago (at 10.87%). 6 Statement of Net Position CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (Unaudited) Net position may, over time, provide an indicator of a government's financial position. In the case of the City of Salina, assets and deferred outflows of resources exceeded liabilities by $210,656,000 at December 31, 2014. This represents an increase in net assets of $4,784,000 over 2013. A comparative condensed Statement of Net Position at December 31, 2013 and 2014: Condensed Statement of Net Position As of December 31 (In $000) Governmental Activities Business-Type Activities Total Primary Government % of %of 2013-2014 2013 2014 2013 2014 2013 Total 2014 Total Change Cash and investments $ 23,462 $ 23,801 $ 24,175 $ 29,896 $ 47,637 15% $ 53,697 17% $ 6,060 Other current assets $ 13,065 $ 13,599 $ 2,125 $ 2,024 $ 15,190 5% $ 15,623 5% $ 433 Noncurrent (capital) assets $ 166,217 $ 165,623 $ 80,849 $ 85,901 $ 247,066 ~ $ 251,524 nm s 4458 Total Assets $ 202,744 $ 203,023 $ 107,149 $ 117,821 $ 309,893 l..!m, $ 320,844 l..!m, $ 10,951 Total deferred outflows of resources $ 414 $ 344 $ 311 $ 293 $ 725 100% $ 637 100% $ 88 Current liabilities $ 23,922 $ 24,932 $ 5,636 $ 4,553 $ 29,558 28% $ 29,485 27% $ (73) Noncurrent liabilities $ 49,813 $ 50,557 $ 25,375 $ 30,783 $ 75,188 ~$ 81,340 illi. $ 6,152 Total liabilities $ 73,735 $ 75,489 $ 31,011 $ 35,336 $ 104,746 100% $ 110,825 100% $ 6 079 Net position: Net investment in capital assets $ 116,585 $ 115,589 $ 57,103 $ 61,721 $ 173,688 84% $ 177,310 84% $ 3,622 Restricted for pennanent funds $ 452 $ 468 $ $ $ 452 0% $ 468 0% $ 16 Restricted for debt service $ 758 $ 408 $ 1,553 $ 1,512 $ 2,311 1% $ 1,920 1% $ (391) Unrestricted $ 11,628 $ 11 413 $ 17,793 $ 19,545 $ 29,421 14% $ 30,958 15% $ 1 537 Total net position $ 129,423 $ 127,878 $ 76449 $ 82,778 $ 205,872 1Jllll:f, $ 210,656 1Jllll:f, $ 4 784 Percent of total net position 63% 61% 37% 39% 100% 100% casn and investments as a percentage of current liabilities 98% 95% 429% 657% 161% 182% The largest segment of the City's net position (85%) 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 cannot 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 position (1 %) is restricted for debt service and permanent funds . The remainder (unrestricted) of net position (15%) may be used to meet the City's obligations to citizens and creditors. This represents slight growth in this component compared to 2013. In 2014, the amount of net investment in capital assets increased by $3,622,000. Unrestricted net position increased by $1,537,000. These represent diverse changes throughout the financial statement. However, it is clear that for 2014, the City experienced an increase in current assets, including cash and investments. Total liabilities increased in governmental activities and in business-type activities. In governmental activities, the increase was distributed between current and non-current liabilities. In business type activities current liabilities decreased, while non-current liabilities increased substantially. The increase in non-current liabilities is largely related to completion of projects financed by the Kansas Water Supply Loan Fund. 7 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (Unaudited) During the year ended December 31, 2014, there were several significant events that changed the balance of net position. Governmental Activities: Governmental were relatively stable, with only minor changes in 2014, reflecting overall balanced operations .. Business-type Activities: The water and sewer fund has a dominant influence on the increase in business-type activities net position. 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 Statement of Activities For the Year Ended December31 {In $()()O's) Governmental Activities Business-Tn!e Activities Total Prima~ Government 2013 2014 2013 2014 2013 % 2014 % 2013-2014 Program Revenues: Change Charges for Services $ 12,141 $ 11,885 $ 24.309 $ 25,130 $ 36.450 43% $ 37,015 47% $ 565 Operating Grants and ContrtbuUons $ 4,200 $ 4,015 $ $ $ 4,200 5% $ 4,015 5% $ (185) Capital Grants and ContrtbuUons $ $ $ $ 115 $ 0% $ 115 0% $ 115 General Revenues: Property Taxes $ 11,593 $ 12,143 $ $ $ 11,593 14% $ 12,143 15% $ 550 Sales Taxes $ 16,540 $ 17,150 $ $ $ 16,540 19% $ 17,150 22% $ 610 Other Taxes $ 8.830 $ 7,231 $ $ $ 8.830 8% $ 7,231 9% $ 801 Investment Revenue $ 67 $ 97 $ 49 $ 51 $ 118 0% $ 148 0% $ 32 Other Miscellaneous $ 9919 $ 1160 $ 279 $ 277 $ 10198 ll% $ 1437 ~$ {8.J61) Total Revenues: $ 61090 $ 53 681 $ 241637 $ 251573 $ 85727 1.22% $ 79254 ~$ {61473) Expenses: $ General Government $ 10,978 $ 12,550 $ $ $ 10,978 15% $ 12,550 17% $ 1,572 Public Safety $ 19,849 $ 20,208 $ $ $ 19,649 28% $ 20.208 27% $ 669 Public works $ 11,064 $ 11,400 $ $ $ 11,064 15% $ 11,400 15% $ 336 Public Health and Sannatlon $ 1,369 $ 347 $ $ $ 1,369 2% $ 347 0% $ (1,022) Culture and Recreation $ 4.809 $ 5,158 $ $ $ 4,809 8% $ 5,158 7% $ 347 Planning and Development $ 3,399 $ 3,238 $ $ $ 3.399 5% $ 3.236 4% $ (183) Solid waste Disposal $ $ 3.532 $ 1,870 $ 3,532 5% $ 1,870 3% $ (1.882) Water and Sewer $ $ 15,418 $ 14,903 $ 15,418 21% $ 14,903 20% $ (515) Sanitation $ $ 2,237 $ 2,399 $ 2,237 3% $ 2,399 3% $ 182 GolfCounse $ $ 768 $ 843 $ 768 1% $ 843 1% $ 75 Interest on Long Term Debt $ 1953 $ 1 817 $ $ $ 1953 ~% $ 1817 ~$ {138) Total Expense& $ 531221 $ 54 714 $ 211955 $ 201015 $ 75178 !22% $ 74 729 122% $ {44!) lnaeaae in net 888el8 before tran&fera $ 7,869 $ (1.033) $ 2.682 $ 5.558 $ 10,551 $ 4,525 $ (8.028) Transfers and other extraordinary items $ 1 000 $ 1 $ (960) $ $ $ 1 $ 1 Change in Net Position $ 81869 $ {11032) $ 11732 $ 51558 $ 10!601 $ 41526 $ {6!075) Net Position January 1 $ 119,522 $ 129,423 $ 73.880 $ 78,449 $ 193,382 $ 205,872 $ 12,490 Prior Period Adjustment $ 1 032 $ {513) $ 857 $ 771 $ 1 889 $ 268 $ {11631) Net Position January 1, reatatecl $ 120,554 $ 128,910 $ 74,717 $ 77,220 $ 195,271 $ 206,130 $ 10,859 Net Position December 31 $ 129,423 $ 127,878 $ 76,449 $ 82,778 $ 205,872 $ 210,656 $ 4,784 Governmental Activities. Total expenses for governmental activities for the year ending December 31, 2014 were $54,714,000 compared to $53,221,000 in 2013. Governmental activities represent 73% of the City's total expenses. The largest element of governmental activity expense was public safety, accounting for 27% of the total. Governmental Activity expenses were also affected by the dissolution of the Joint City-County Health Department, which provided a net savings to the City of about $500,000 for the year. Charges for service attributable to governmental activities totaled $11,885,000 and operating grants for those purposes were $4,015,000. Both have declined slightly from 2013. The balance was funded by general revenues. Sales taxes accounted for $17,150,000 of the general revenues, with property taxes providing $12,143,000. Net assets decreased by $1,032,000 as a result of governmental activities. Business Type Activities. Total expenses for business-type activities for the year were $20,015,000, or 27% of the City's total expense. The majority of this expense ($14,903,000) is attributable to water and sewer operations, with the other activities costing a combined total of $5,112,000. These activities are primarily supported by user charges, with only $328,000 coming from investment and miscellaneous revenues. Net position increased by $5,558,000 as a result of business-type activity operations. 8 Fund Financial Analysis Governmental Funds Fund Balances: CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (Unaudited) The table below shows the Governmental Fund balances for major funds as of December 31, 2013 and December 31, 2014. Governmental Fund Balances as of December 31, Fund 2013 2014 Change General $ 3,549,740 $ 4,254,429 $ 704,689 Tourism and Convention $ 435,734 $ 551,123 $ 115,389 Special Gas $ 1,289,302 $ 929,729 $ (359,573) Bicentennial Center $ 1,942,519 $ 1,914,462 $ (28,057) Sales Tax Capital $ 9,223,212 $ 7,595,701 $ (1,627,511) Debi Service $ 757,726 $ 407,864 $ (349,862) Capital Projects $ (2,416,104) $ (280,619) $ 2,135,485 Other Governmental Funds $ 2,845,454 $ 2,957,480 $ 112,026 Total $ 17,627,583 $18,330,169 $ 702,586 Total governmental fund balances increased by $702,586. The main reasons for these changes are varied. The Schilling Capital Improvement Fund, which was created to account for U.S. Government and other funds received for the abatement of groundwater contamination, decreased significantly as the City uses funds previously distributed. The Capital Projects Fund increase was largely the result of Bond and Note proceeds received. The General Fund balances grew noticeably. 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, 2013 and 2014. Consolidated Statement of Revenues and Expenditures for Major Governmental Funds For the years ended December 31 Modified Aca\Jal Basis Fund 2013 2014 Change Revenues (lnduding Other Financing Sources) General $ 36,925,292 $ 37,233,769 $ 308,477 Tourism and Convention $ 1,366,229 $ 1,595,079 $ 228,850 Special Gas $ 1,540,781 $ 1,562,783 $ 22,002 Sales Tax Capital $ 3,954,780 $ 4,119,653 $ 164,873 Schilling Capital Improvement $ 9,370,097 $ 23,199 $ (9,346,898) Debt Service $ 6,576,384 $ 6,374,558 $ (201,826) Capital Projects $ 6,986,719 $ 6,107,577 $ (879,142) other Governmental Funds* $ 3134 461 $ 3 055 714 $ (Z8,747) Total Revenues $ 69,854,743 $ 60,072,332 $ (9,782,411) Less Other Sources l! 10,782,677 l! 8,225,695 l! (2,556,982) Revenues, net of other sources $ 59,072,066 $ 51,846,637 $ (rl2251429) Expenditures (lnduding Other Financing Uses) General $ 37,328,037 $ 36,529,080 $ (798,957) Tourism and Convention $ 1,350,000 $ 1,479,690 $ 129,690 Special Gas $ 1,626,654 $ 1,922,356 $ 295,702 Sales Tax Capital $ 4,022,400 $ 4,147,710 $ 125,310 Schilling Capital Improvement $ 146,885 $ 1,650,710 $ 1,503,825 Debt Service $ 6,457,982 $ 6,724,420 $ 266,438 Capital Projects $ 8,489,127 $ 4,047,673 $ (4,441,454) Other Governmental Funds* l! 3,658,243 l! 3,021,553 l! (636,690) Total Expenditures $ 63,079,328 $ 59,523,192 $ (3,556,136) Less Other Uses $ 3 907114 $ 2,557,408 $ (1,349,706) Expenditures, net of other uses $ 59,172,214 $ 56,965,784 $ (2,206,430) 9 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (Unaudited) Total revenues and other sources decreased by $9,782,411 from 2013 to 2014. The largest components of this change were in the Schilling Capital Improvement Fund (for which a large one-time grant was received in 2013) and the Capital Projects Fund. Other changes include an increase in General and Tourism Fund revenues. Expenditures generally increased, with the notable exception of the General and Capital Projects Funds. General Fund expenditures were, of course, affected by the dissolution of the Joint City-County Health Department, which provided a net savings to the Fund of about $500,000 for the year. Proprietary Funds The City of Salina operates four enterprise funds as well as five internal service funds. A summarized comparative Statement of Net Position follows for each enterprise fund: Comparative Summary Statement of Net Position as of December 31 (in $000's) Solid Waste Disposal Water and Sewer 2013 2014 Change 2013 2014 Change Current Assets $ 5,400 $ 6,291 $ 891 $19,883 $ 24,399 $ 4,516 Capital Assets $ 2,495 $ 4,230 $1,735 $77,310 $ 80,650 $ 3,340 Deferred Outflows $ $ L..:_ $ 311 $ 293 $ (18) Total Assets and Deferred Outflows of Resources $ 7,895 $10,521 $2,626 $97,504 $105,342 $ 7,838 Current Liabilities $ 630 $ 963 $ 333 $ 4,895 $ 3,458 $(1,437) Noncurrent Liabilities $ 2,788 $ 3,764 $ 976 $22,463 $ 26,884 $ 4,421 Total Liabilities $ 3,418 $ 4,727 $1,309 $27,358 $ 30,342 $ 2,984 Net investment in capital assets $ 2,083 $ 2,025 $ (58) $53,976 $ 58,675 $ 4,699 Restricted $ $ $ -$ 1,553 $ 1,512 $ (41) Unrestricted $ 2,393 $ 3,769 $1,376 $14,617 $ 14,813 $ 196 Total Net Position $ 4,476 $ 5,794 $1,318 $70,146 $ 75,000 $ 4,854 Current Assets as a percentage of current liabilities 857% 653% 406% 706% Sanitation Golf Course 2013 2014 Change 2013 2014 Change Current Assets $ 928 $ 1,083 $ 155 $ 89 $ 146 $ 57 Capital Assets $ 688 $ 703 !......1§. $ 356 $ 319 $ (37) Total Assets and Deferred Outflows of Resources $ 1,616 $ 1,786 $ 170 $ 445 $ 465 $ 20 Current Liabilities $ 62 $ 82 $ 20 $ 49 $ 50 $ 1 Noncurrent Liabilities $ 50 $ 54 L_i $ 73 $ 81 $ 8 Total Liabilities $ 112 $ 136 ~ $ 122 $ 131 $ 9 Net investment in capital assets $ 688 $ 703 $ 15 $ 356 $ 319 $ (37) Restricted $ $ $ $ Unrestricted $ 816 $ 947 !.....ill $ (33) $ 15 $ 48 Total Net Position $ 1,504 $ 1,650 $ 146 $ 323 $ 334 $ 11 Current Assets as a percentage of current liabilities 1497% 1321% 182% 292% The Solid Waste Disposal Fund shows an increase in liabilities related to landfill post-closure. All Enterprise funds show increases in net position, driven largely by increases in current assets. 10 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (Unaudited) Revenues, Expenses, and Changes in Net Position All enterprise funds show healthy results, with increases in net position. The decline in expenses in the Solid Waste Fund are largely due to the deferral of some internal transfers (to capital improvement reserves) pending assessment of operational changes. Other enterprise funds experienced good revenue production and controlled expenses, resulting in positive outcomes. Comparative Summary of Revenues, Expenses and Changes in Net Position Solid Waste Disposal Water and Sewer 2013 2014 Change 2013 2014 Change Operating Revenues $3,171 $3,062 $ (109) $18,132 $18,931 $ 799 Operating Expenses $3,522 $1,853 $ (1,669) $14,524 $14,002 $ (522) Operating Income $ (351) $1,209 $ 1,560 $ 3,608 $ 4,929 $1,321 Non-operating revenues (expenses) $ 1 $ (1) $ (2) $ (858) $ (869) $ (11) Income (Loss) before Transfers $ (350) $1,208 $ 1,558 $ 2,750 $ 4,061 $1,311 Transfers in (out) $ -$ -$ $ (950) $ $ 950 Capital Contributions $ -$ 115 $ $ $ $ - Change in Net Position $ (350) $1,323 $ 1,673 $ 1,800 $ 4,061 $2,261 Net Position January 1 $4,740 $4,476 $ (264) $67,543 $70,146 $2,603 Restatement $ 86 $ (5) $ (91) $ 803 $ 793 $ (10) Net Position January 1, restated $4,826 $4,471 $ (355) $68,346 $70,939 $2,593 Net Position December 31 $4,476 $5,794 $ 1,318 $70,146 $75,000 $4,854 Sanitation Golf Course 2013 2014 Change 2013 2014 Change Operating Revenues $2,514 $2,553 $ 39 $ 770 $ 861 $ 91 Operating Expenses $2,236 $2,400 $ 164 $ 768 $ 845 $ 77 Operating Income $ 278 $ 153 $ (125) $ 2 $ 16 $ 14 Non-operating revenues (expenses) ~$ __ 2 ~$ __ 3 ~$ __ 1 ~$ __ $ 2 $ 2 ~--~-- Income (Loss) before Transfers Transfers in (out) Change in Net Position Net Position January 1 Restatement Net Position January 1, restated Net Position December 31 $ 280 $ - $ 156 $ - $ (124) $ 2 $ 18 $ 16 $ $ $ $ - $ 280 $ 156 $ (124) ~$ __ 2 ~$ __ 1_8 $ 16 $1,255 $1,504 $ 249 $ 321 $ 323 $ $ (31) $ (10) "-$ ---=2'-'-1 "-$ --z..$ _ _,(C.J7) $ $1,224 $1,494 $ 270 $ 321 $ 316 $ $1 504 $1650 $ 146 $ 323 $ 334 $ 11 2 (7) (5) 11 Budgetary Highlights CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (Unaudited) The objective of budgetary controls is to ensure compliance with legal prov1s1ons 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, 2014. 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. The City experienced a number of significant variances from budgeted items in the General Fund, however, the total fund was within budgeted expenses. Several expenditure items were also significantly over or under budget. Several Departments exceeded budgeted expenditures. Capital Assets and Debt Administration Capital Assets The total amount invested in Capital Assets for the City at December 31, 2014 was $251,524,000 net of accumulated depreciation. The following table illustrates the Capital Asset balance by various classes of assets at December 31, 2013 and 2014: Capital Asset Balances Net of Depreciation as of December 31 (In OOO's) Governmental Activity Business-type Total 2013 2014 2013 2014 2013 2014 Equipment, Furniture and Fixtures $ 1,214 $ 1,123 $ 1,801 $ 1,584 $ 3,015 $ 2,707 Vehicles $ 3,177 $ 3,308 $ 802 $ 780 $ 3,979 $ 4,088 Buildings and Improvements $ 23,434 $ 22,509 $11,051 $10,629 $ 34,485 $ 33,138 Land $ 22,640 $ 22,640 $ 1,542 $ 1,542 $ 24,182 $ 24,182 Infrastructure $ 104,768 $ 106,048 $43,191 $43,501 $ 147,959 $ 149,549 Construction in Progress $ 10,318 $ 9,995 $23,387 $27,865 $ 33,705 $ 37,860 Total $ 165,551 $ 165,623 $81,774 $85,901 $ 247,325 $ 251,524 * Net of Accumulated Depreciation 12 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (Unaudited) Changes to capital assets may be summarized as follows: Changes to Capital Assets, 2014 (in OOO's) Governmental Business-Type Activity Activity Additions $ 10,385 $ 8,769 Retirements $ 5,752 $ 2,115 Adjustments $ (1,033) $ 900 Net Additions $ 15 104 $ 11 784 Depreciation Expense Applied $ 5 457 $ 2,622 Total $19,154 $ 7,867 $ (133) $26,888 $ 8,079 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 1 O 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 12/31/2014 totaled $50,033,555. In addition, there were temporary notes outstanding in the amount of $5,000,000, as well as a financing lease in the amount of $176,235. Business-type activities had $14,592,836 in revenue bonds outstanding, as well as $9,587,351 in general obligation bonds. Revenues generated by user fees are pledged to retire all of the bonds issued by business-type activities. In addition, a loan payable is outstanding in the amount of $6,208,102. The City engaged in several debt transactions during 2014. On August 1st, the City issued 2014-A, $7,570,000 of internal improvement bonds. The proceeds were used to finance lighting in the downtown area, construction of a new landfill cell, provide public improvements to a residential subdivision, and for intersection improvements Also on August 191, the City issued $5,000,000 in temporary notes to finance phase 2 (of 3) improvements to the City Bicentennial Center. This note will be refinanced into a long term bond issue in August 2015. 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, 67 401. 13 BASIC FINANCIAL STATEMENTS CITY OF SALINA, KANSAS STATEMENT OF NET POSmON December 31, 2014 Prima~ Government Total Total Total Governmental Business-type Primary Activities Activities Government ASSETS AND DEFERRED OUTLFOWS OF RESOURCES Current assets: Cash and inves1ments $ 23,801,166 $ 29,895,674 $ 53,696,840 Receivables {net of allowance for uncollectibles) Accounts 1,765,744 1,520,521 3,286,265 Taxes 11,519,012 11,519,012 Interest 18,717 16 18,733 Inventory 295,393 503,093 798,486 Restricted cash and investments Prepaid expenses Total current assets 37 400 032 31919304 69 319 336 Noncurrent assets: Capital assets, nondepreciable Construction in progress 9,994,512 27,865,017 37,859,529 Land 22,639,800 1,541,806 24,181,606 Capital assets, depreciable 233,957,333 110,335,963 344,293,296 Less: Accumulated depreciation 100,968,830 53 841 314 154 810 144 Total noncurrent assets 1651622 815 85 901 472 251 5241287 Total assets 203,022,847 111,820,n6 320,843,823 Deferred outnows of resources: Deferred charge on bond issuance 344 313 292,999 637 312 Total deferred outnows of resources 344 313 292,999 637 312 Total assets and deferred outnows of resources $ 2031367 160 $118 113 775 $ 321 4801935 Liabilities: Current liabilities: Accounts payable $ 1,074,116 $ 1,309,786 $ 2,383,902 Retainage payable 35,147 384,597 429,744 Accrued liabilities 706,776 706,776 Matured bond principal and interest 145 145 Accrued interest payable 468,632 286,924 755,556 Deposits payable 171,116 171,116 Unearned revenue 10,982,435 10,982,435 Current portion of compensated absences 1,479,918 319,894 1,799,810 Current portion of temporary notes payable 5,000,000 5,000,000 Current portion of loans payable 379,000 379,000 Current portion of revenue bonds payable 843,696 843,896 Current portion of financing leases payable 44,463 44,463 Current portion of special assessment debt payable Current portion of general obligation bonds payable 5140611 1047580 6188 191 Total current liabilities 24,932,241 4,552,593 29,484,834 Noncurrent liabilities: Accrued liabilities 164,801 184,801 Compensated absences 1,416,234 306,128 1,722,362 Security deposits returnable Net OPEB obligation 3,950,840 385,780 4,338,620 Loans payable 5,829,102 5,829,102 Revenue bonds payable 13,949,140 13,949,140 Financing leases payable 131,772 131,772 Special assessment debt payable General obligation bonds payable 44,892,944 8,539,771 53,432,715 Landfill post-closure care liabilities 1773027 1 773 027 Total noncurrent liabilities 50,556,591 30,782,948 81,339,539 Total liabilities $ 75,488,832 $ 35,335,541 $ 110,824,373 Net Position Net invesbnent in capital assets $ 115,589,260 $ 61,721,285 $177,310,545 Restricted for: Permanent funds: Expendable 467,597 467,597 Debt service 407,864 1,511,793 1,919,657 Unrestricted 11413607 19 545156 30 958 763 Total net position $ 1271878 328 $ 82?781234 $ 210 6561562 The notes to the basic financial statements are an integral part of this statement 14 Com~nent Units Salina Salina Housing Airport Authori!l Autho~ $1,575,034 $ 290,742 19,318 107,939 25,628 146,885 35786 5067 1 802 651 403 748 143,475 834,733 1,456,891 9,823,047 7,985,895 71,203,893 3,790,383 34,199,199 5 795 878 47662474 7,598,529 48,066,222 $ 715981529 $ 4810661222 $ 37,553 $ 143,803 34,836 146,057 347,798 82,383 11,559 28,950 1,956 52,190 18,484 955 000 168,287 1,692,282 39,588 17,606 20,624 55,n6 30,465 22,019,555 57174 22,126,420 $ 225,461 $ 23,818,702 $5,795,878 $ 24,510,104 24,934 115521256 [2621584) $ 713731068 $ 2412471520 Governmental actlvlUes: General government Public safety Public works Publlc health and sanitation Culture and recreation Planning and development Interest on long-tenn debt Total governmental actlvlHes Buslneu-type actlvltlas: Solid Waste Disposal Water and Sewer Sanitation Golf Course Total business-type activities Total primary govemment Component unlta: Salina Housing Authortty Salina Airport Authority Total component units CITY OF SALINA, KANSAS STATEMENT OF ACTIVITIES For the Year Ended December 31, 2014 Net (Expenses] Revenue and Changes In Net Position P~ram Revenues Pri!!!!!l Govemment Comeonent Units Operating Capital Total Total Charges for Grants and Grants and Govemrnental Business-type ~nses Services Contributions Conbibutions Activities Activities $12,550,394 $ 5,661,659 $ 936,443 $ $ [5,952,292] $ 20,207,952 4,222,006 877,163 (15,108,783] 11,400,085 254,784 1,566,992 [9,578,309] 347,342 46,153 172,643 (128,546] 5,155,551 1,532,506 172,893 (3,450,152] 3,235,999 167,778 288,809 [2,779,414] 1 817 424 [11817~24] 54,714,747 11,884,884 4,014,943 (38,814,920] 1,889,884 3,024,048 115,000 1,269,164 14,903,485 18,742,029 3,838,544 2,399,092 2,552,723 153,831 8431296 811 049 @2124!] 20 015 757 2511291849 115000 512291092 $74,730,504 $37,014,733 $ 4,014,943 $ 115,000 13818141920] 512291092 $ 2,278,524 $ 331,628 $ 1,675,140 $ 77,315 5 735 244 1858854 799 762 $ 810131768 $ 2,190,482 $ 1,675,140 $ 877 U17 General Revenuu: Property taxes levled for General purposes 8,314,920 Debt service 2,578,095 Motor vehlde tax General purposes 1,250,090 Sales tax General purposes 12,688,980 Selective purposes 4,481,053 Other taxes General purposes 7,231,112 Investment revenues 97,805 51,330 Reimbursements 179,900 Mlscelaneous 1,160,019 97,165 Transfers, net 787 Subtotal general revenues 37!782!881 3281395 Change In net position [110321059] 515571487 Net position -beginning 129,423,463 78,449,465 Prior period adjustment [513!076] n1202 Net posttlon -beginning, restated 12819101387 7712201747 Net position -ending $12718781328 s 021n81234 The notes to the basic financial statements are an integral part of this statement. 15 Total Salina Salina Primary Housing Airport Govemment Authori!l Auth~ $ [5,952,292) $ $ [15,108,783) [9,578,309) (128,546( (3,450,152( [2,n9,414J [118171424) [38,814,920) 1,269,164 3,838,544 153,631 [321247) 512291092 @315851828) (194,441] @10761628] [194~1] @1076!828] 8,314,920 1,993,889 2,578,095 1,250,090 12,688,980 4,461,053 7,231,112 149,135 8,428 437 179,900 1,257,184 43,551 101,403 787 3811111256 51979 2!095!729 415251428 [142~62] [!!801899] 205,872,928 7,515,530 25,228,419 2581206 20611311134 715151530 2512281419 $210,856,582 $713731088 $ 24124 71520 CITY OF SALINA, KANSAS BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2014 Tourism and Special General Convention Gas ASSETS Cash and investments $ 3,472,829 $ 24,394 $ 713,047 Receivables (net) Accounts 906,050 526,729 Taxes 8,394,651 310,745 Interest 18,717 Inventory 107,033 Due from other funds 44,751 Cash with fiscal agent Total assets $ 12,944,031 $ 551,123 $ 1,023,792 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable $ 467,208 $ -$ 85,777 Retainage payable 8,286 Due to other funds Matured principal and interest Temporary notes payable Total liabilities 467,208 94 063 Deferred inflows of resources Unavailable revenue -property taxes 8,222,394 Total deferred inflows of resources 8,222,394 Fund balance: Nonspendable 107,033 Restricted 551,123 686,804 Committed Assigned 239,311 242,925 Unassigned 3,908,085 Total fund balances 4,254,429 551,123 929,729 Total liabilities, deferred inflows of resources and fund balances $ 12,944,031 $ 551,123 $ 1,023,792 $ $ $ $ Schilling Other Total Sales Tax Capital Debt Capital Governmental Governmental Capital Improvement Service Projects Funds Funds 1,941,353 $ 7,826,005 $ 354,289 $ 4,530,042 $ 3,040,313 $ 21,902,272 278,219 54,746 1,765,744 2,813,616 11,519,012 18,717 107,033 44,751 145 145 1,941,353 $ 7,826,005 $ 3,168,050 $ 4,808,261 $ 3,095,059 $ 35,357,674 17,130 $ 230,304 $ -$ 71,780 $ 92,828 $ 965,027 9,761 17,100 35,147 44,751 44,751 145 145 5,000,000 5,000,000 26 891 230,304 145 5,088,880 137 579 6,045,070 2,760,041 10,982,435 2,760,041 10,982,435 107,033 407,864 1,264,489 2,910,280 1,023,469 7,327,347 1,534,716 9,885,532 890,993 268,354 [280,619] 158,275 1,519,239 3,908,085 1,914,462 7,595,701 407,864 [280,619] 2,957,480 18,330,169 1,941,353 $ 7,826,005 $ 3,168,050 $ 4,808,261 $ 3,095,059 $ 35,357,674 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, 2014 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 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 Financing leases payable Accrued interest on the bonds Net Position of Governmental Activities 265,740,284 100, 135,940 2,801,524 3,950,840 50,033,555 176,235 468,632 The notes to the basic financial statements are an integral part of this statement. 17 $ 18,330, 169 344,313 165,604,344 1,030,288 [57,430,786] $ 127,878,328 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS For the Year Ended December 31, 2014 Tourism and Special General Convention Gas REVENUES: Taxes Real estate taxes $ 8,135,091 $ $ Delinquent taxes 179,829 Motor vehicle taxes 963,912 General sales taxes 12,688,980 Selective sales taxes Other taxes 5,636,239 1,594,873 Intergovernmental 1,162,634 1,559,693 Special assessments Licenses and permits Charges for services 7,826,289 Investment revenue 11,536 206 3,090 Reimbursements Donations Miscellaneous 629,259 Total revenues 37,233,769 1,595,079 1,562,783 EXPENDITURES: Current General government 3,986,212 Public safety 19,558,487 Public works 6,949,477 493,527 Public health and sanitation 146,178 Culture and recreation 2,697,564 Planning and development 2,209,836 819,633 Miscellaneous Capital outlay 843,975 1,428,829 Debt service Principal retirement Interest and other charges Total expenditures 36,391,729 819,633 1,922,356 Excess [deficiency] of revenue and other sources 36,529,080 1,479,690 over [under] expenditures and other [uses] 842 040 775 446 [359,573] OTHER FINANCING SOURCES [USES] Issuance of bonds 53,469 Bond premium Transfers in 370,765 Transfers [out] [561,585) [660,05ZJ Total other financing sources [uses] [137,351) [660,05ZJ Net change in fund balance 704,689 115,389 [359,573) Fund balance -Beginning of year 3,549,740 435,734 1,289,302 Restatement of prior year fund balance Fund balance -Beginning of year, as restated 3,549,740 435,734 1,289,302 Fund balance -End of year $ 4,254,429 $ 551,123 $ 929,729 Schilling Other Total Sales Tax Capital Debi Capital Governmental Governmental Capital Improvement Service Projects Funds Funds $ $ $ 2,522,111 $ $ $ 10,657,202 55,984 235,813 286,178 1,250,090 12,688,980 4,113,828 347,225 4,461,053 7,231,112 488,448 818,868 4,007,643 1,809,992 1,809,992 7,300 7,300 450,005 8,276,294 5,825 23,199 244 8,971 5,526 58,597 123,302 123,302 240,699 240,699 9,061 25,000 135,240 798,560 4,119,653 23,199 4,683,570 623,721 2,004,863 51,846,637 3,986,212 19,558,487 7,443,004 173,259 319,437 1,594,764 4,292,328 203,037 3,232,506 35 35 2,387,710 1,650,710 3,929,485 768,378 11,009,087 5,120,417 140,000 5,260,417 1,604,003 118188 142,080 1,864,271 2,387,710 1,650,710 6,724,420 4,047,873 3,021,553 56,965,784 4,147,710 1 731 943 [1,627,511] [2,040,850] [3,423,952] [1,016,690] [5,119,147] 115,000 5,196,531 5,365,000 302,500 302,500 1,575,988 1,053,969 3,000,722 [1,760,000] [15,175] [3,118] [2,999,935] [1,760,000] 1,690,988 5,483,856 1,050,851 5,668,287 B8,057] [1,627,511] [349,882] 2,059,904 34,161 549,140 1,942,519 9,223,212 757,726 [2,416, 104] 2,845,454 17,627,583 75 581 77 865 153 446 1,942,519 9,223,212 757,726 B,340,523) 2,923,319 17,781,029 $ 1,914,462 $ 7,595,701 $ 407,864 $ B80,619] $ 2,957,480 $ 18,330,169 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, 2014 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 Proceeds from sale of assets Capital outlays Depreciation expense Interest on long-term debt in the statement of activities differs from the amount reported in the governmental funds because interest is recorded as an expenditure in the funds when it is due, and thus requires the use of current financial resources. In the statement of activities, however, interest expense is recognized as the interest accrues, regardless of when it is due. This is the amount by which interest decreased. An internal service fund is used by the city's management to charge the costs of certain activities to the individual funds. The revenues and expenses of certain internal service fund is reported with governmental activities. Some expenses reported in the statement of activities, such as compensated absences and other post employment benefits, do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. Bond, temporary note and lease proceeds 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 66,032 [89,492] 5,553,033 [5,452,848] The notes to the basic financial statements are an integral part of this statement. 19 $ 549,140 76,725 46,847 [744,359] [313,072] [5,907,757] 5,260,417 $ [1,032,059] CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) GENERAL FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Revenues Ta,ces Real estate taxes $ 8,135,093 $ 8,260,367 Delinquent taxes 179,829 177,337 Motor vehicle taxes 962,452 876,743 General sales tax 12,688,980 12,406,661 other taxes 4,686,239 4,996,000 Total taxes 26,652,593 26,717,108 Charges for services General charges 82,871 General government 390 Public safety 4,006,989 4,190,907 Public works 254,784 301,000 Health and sanitation 60,043 54,000 Culture and recreation 1,178,512 1,291,745 Community and economic development 19648 10 500 Total charges for services 5,603,237 5,848,152 Operating grants, restricted General grants 172,643 190,000 Public safety 877,163 919,759 Community and economic development 112 578 30,000 Total operating grants, restricted 1,162,384 1,139,759 Operating grants, unrestricted General grants 1,000 Public works 500 3,000 Culture and recreation 4,017 5,000 Total operating grants, unrestricted 5,517 8,000 Interest income General interest 10,375 20,000 Total interest income 10,375 20,000 lnterfund services provided General services 1,281,752 1,070,000 General government 2,075,000 2,175,000 Community and economic development 66000 66000 Total interfund services provided 3,422,752 3,311,000 Miscellaneous revenues General miscellaneous revenues 402,938 115,130 General government 260 Public safety 129,572 199,000 Public works 10,000 Culture and recreation 17,665 17,600 Total miscellaneous revenues 550,435 341,730 Total revenues 37,407,293 37,385,749 See independent audito(s report on the financial statements. 20 Final $ 8,260,367 177,337 876,743 12,406,661 4,996,000 26,717,108 4,190,907 301,000 54,000 1,291,745 10 500 5,848,152 190,000 919,759 30,000 1,139,759 3,000 5,000 8,000 20,000 20,000 1,070,000 2,175,000 66 000 3,311,000 115,130 199,000 10,000 17,600 341,730 37,385,749 Variance with Final Budget Positive [Negative] $ [125,274] 2,492 85,709 282,319 [309,761] [64,515] 82,871 390 [183,918] [46,216] 6,043 [113,233] 9148 [244,915] [17,357] [42,596] 82,578 22,625 1,000 [2,500] [983] [2,483] [9,625] [9,625] 211,752 [100,000] 111 752 287,808 260 [69,428] [10,000] 65 208,705 21 544 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE· BUDGET AND ACTUAL (NON • GAAP BASIS) GENERAL FUND (Continued) For the Year Ended December 31, 2014 Budgeted Amounts 8!;!!,!i! Qrism! Expenditures General Government City commission $ 76,081 $ 81,383 City manager 697,271 705,238 Legal 669,048 405,250 Finance 665,027 668,083 Human resources 390,737 364,503 Other general government 968,157 1,040,000 Contingencies 28849 50000 Total general government 3 495170 3 314 457 Public Safety Police 8,758,428 9,264,109 Municipal court 1,623,008 1,505,209 Fire 9,187,800 9,038,624 Total public safety 19,569,236 19,807,942 Public Works Buildings and general improvements 1,134,298 1,138,333 Engineering Streets Flood works Traffic control ADA compliance Total public works Public Health and Sanitation Cemetery Total public health and sanitation Culture and Recreation Parks Swimming pools Neighborhood centers Recreation Animal shelter Smoky Hill museum Total culture and recreation Community Development Community relations Development services Agency contracts Total community development Capital Outlay Capital outlay Cash Reserve Total expenditures Excess[deficiency]ofrevenues over [under] expenditures 1,099,895 1,120,320 1,878,585 1,934,559 261,501 248,211 911,735 870,759 17,520 15,000 5,303,534 5,327,182 146,178 165,303 146,178 165,303 1,727,690 1,782,284 383,190 453,768 56,196 45,954 1,276,720 1,410,182 505,233 595,765 494 041 512 766 4 443 070 4,800,719 287,304 334,045 1,322,120 1,363,757 628,304 748,995 2,237,728 2,446,797 608 763 600,000 200,000 3,473,848 36,003,679 39,936,248 1,403,614 [2,550,499] See independent audito(s report on the financial statements. 21 Final $ 81,383 705,238 405,250 668,083 364,503 1,040,000 50 000 3 314 457 9,264,109 1,505,209 9,038,624 19,807,942 1,138,333 1,120,320 1,934,559 248,211 870,759 15,000 5,327,182 165,303 165,303 1,782,284 453,768 45,954 1,410,182 595,765 512 766 4 800 719 334,045 1,363,757 748,995 2,446,797 600,000 3,473,848 39,936,248 [2,550,499] Variance with Final Budget Positive [N~ggti~] $ 5,302 7,967 [263,798] 3,056 [26,234] 71,843 21 151 [180,713] 505,681 [117,799] [149,176] 238,706 4,035 20,425 55,974 [13,290] [40,976] [2,520] 23,648 19,125 19,125 54,594 70,578 [10,242] 133,462 90,532 18 725 357 649 46,741 41,637 120,691 209,069 [8,763] 3,273,848 3,932,569 3,954,113 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) GENERAL FUND (Continued) For the Year Ended December 31, 2014 Budgeted Amounts Other financing sources [uses] Transfer in Transfer [out] Total other financing sources [uses] Excess[deficiency]ofrevenues and other sources over [under] expenditures and other [uses] Unreserved fund balance, January 1 Prior year cancelled encumbrances $ Actual Original 1,017 $ [561,585] [580,000] [560,568] [580,000] 843,046 [3, 130,499] 1,965,726 3,130,499 2,289 Unreserved fund balance, December 31 2,811,061 $ Reconciliation to GAAP Interest receivable Accounts receivable Taxes receivable Inventory Deferred revenue Current year encumbrances GAAP Fund Balance, December 31 18,717 906,050 8,394,651 107,033 [8,222,394] 239,311 $ 4,254,429 See independent audito(s report on the financial statements. 22 Final $ [580,000] [580,000] [3,130,499] 3,130,499 $ Variance with Final Budget Positive [Negative] $ 1,017 18,415 19,432 3,973,545 [1,164,773] 2 289 $ 2,811,061 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) TOURISM AND CONVENTION FUND Revenues Taxes Other taxes Interest income General interest Total revenues Expenditures Community Development Tourism Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses) Transfer (out) Excess (deficiency) of revenues and other sources over (under) expenditures and other (uses) For the Year Ended December 31, 2014 $ Actual 1,417,582 206 1,417,788 819,633 819,633 598,155 [660,057] (61,902) 86,296 $ Budgeted Amounts Original 1,420,000 1,420,000 788,810 788,810 631 190 [631,190] 2 $ Final 1,420,000 1,420,000 788,810 788,810 631 190 [631,190] 2 Variance with Final Budget $ Positive (Negative) (2,418) 206 [2,212] [30,823] [30,823] [33,035] [28,867] (61,902) 86,294 Unreserved fund balance, January 1 Unreserved fund balance, December 31 Reconciliation to GAAP 24,394 .._$ ___ .;;.2 .._$ ___ .;;;.2 $"-----'2~4._;;,3;.;;;9.;;;.2 Accounts receivable 526,729 GAAP Fund Balance, December 31 $ 551,123 See independent auditor's report on the financial statements. 23 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) SPECIAL GAS FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Final Revenues Operating grants, restricted Public works $ 1,388,638 $ 1,377,030 $ 1,377,030 Interest income General interest 3 090 6000 6 000 Total revenues 1,391,728 1,383,030 1,383,030 Expenditures Public Works Streets 2,093,837 1,658,472 1,658,472 Cash Reserve 500,000 500,000 Total expenditures 2,093,837 2,158,472 2,158,472 Excess [deficiency] of revenues over [under] expenditures [702,109] [775,442] [775,442] Other financing sources [uses] Transfer in 170,000 180,000 180,000 Total other financing sources [uses] 170,000 180,000 180,000 Excess [deficiency] of revenues and other sources over [under] [532,109] [595,442] [595,442] expenditures and other [uses] Unreserved fund balance, January 1 903,531 595,442 595,442 Prior year cancelled encumbrances 4637 Unreserved fund balance, December 31 376,059 $ -$ - Reconciliation to GAAP Taxes receivable 310,745 Current year encumbrances 242,925 GAAP Fund Balance, December 31 $ 929,729 See independent auditor's report on the financial statements. 24 Variance with Final Budget Positive [Negative] $ 11,608 [2,910] 8 698 [435,365] 500,000 64,635 73 333 [10,000] [10,000] 63,333 308,089 4637 $ 376,059 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) SALES TAX CAPITAL FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Final Revenues Taxes Selective sales tax $ 4,113,828 $ 3,697,576 $ 3,697,576 Interest income General interest 5826 5 000 5 000 Total revenues 4,119,654 3,702,576 3,702,576 Expenditures Capital Outlay 3,159,043 2,345,000 2,345,000 Cash Reserve 149,422 149,422 Total expenditures 3,159,043 2,494,422 2,494,422 Excess [deficiency] of revenues over [under] expenditures 960,611 1,208,154 1,208,154 Other financing sources [uses] Transfer [out] [1,760,000) [1,735,000) [1,735,000) Total other financing sources [uses] [1,760,000) [1,735,000) [1,735,000) Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [799,389] [526,846] [526,846] Unreserved fund balance, January 1 1,796,162 1,760,770 1,760,770 Prior year cancelled encumbrances 26,696 Unreserved fund balance, December 31 1,023,469 $ 1,233,924 $ 1,233,924 Reconciliation to GAAP Current year encumbrances 890,993 GAAP Fund Balance, December 31 $ 1,914,462 See independent auditor's report on the financial statements. 25 Variance with Final Budget Positive [Negative] $ 416,252 826 417 078 [814,043] 149,422 [664,621] [247,543) [25,000) [25,000) [272,543] 35,392 26,696 $ [210,455) CITY OF SALINA, KANSAS STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31, 2014 Business-Type ActMties: Ente!E:rise Funds Solid Waste Water and Assets and deferred outflows of resources: DiSE!OSal Sewer Sanitation Golf Course Current assets: Cash and investments $ 6,041,010 $ 22,799,833 $ 928,960 $ 125,871 Receivables (net of allowance for uncollectibles) Accounts 250,156 1,116,065 154,300 Interest 16 Inventory and prepaid supplies 482,960 20,133 Total current assets 6,291,182 24,398,858 1,083,260 146,004 Capital assets: Nondepreciable capital assets: Construction in progress 2,296,324 25,568,693 Land 682,000 844,806 15,000 Depreciable capital assets: Capital assets 8,376,543 98,884,658 2,018,705 1,056,057 Less: accumulated depreciation 7,125,439 44647 897 1,316,346 751,632 Total capital assets 4,229,428 80,650,260 702,359 319,425 Deferred outflows of resources: Deferred charge on bond issuance 292,999 Total deferred outflows of resources 292,999 Total assets and deferred outflows of resources $10,520,610 $ 105,342,117 $1,785,619 $ 465,429 Liabilities: Current liabilities Accounts payable $ 565,447 $ 712,359 $ 26,421 $ 5,559 Retainage payable 15,000 379,597 Interest payable 14,445 272,479 Meter deposits payable 171,116 Currant portion of compensated absences payable 38,109 181,811 55,956 44,018 Current portion of accrued daims payable Current portion of loans payable 379,000 Current portion of general obligation bonds payable 330,000 717,580 Current portion of revenue bonds payable 643696 Total current liabilities 963 001 3,457,638 82 377 49577 NonC\Jrrent liabilities: Compensated absences payable 36,469 173,988 53,547 42,124 Accrued claims payable Net OPEB Obligation 79,270 267,468 39,042 Payable from restrided assets Loans payable 5,829,102 General obligation bonds payable 1,875,000 6,664,771 Revenue bonds payable 13,949,140 Landfill post-closure care liabilities 1,773,027 Total nonC\Jrrent liabilities 3,763,766 26,884,469 53 547 81186 Total liabilities $ 4,726,767 $ 30,342,107 $ 135,924 $ 130,743 Net position Net investment in capital assets $ 2,024,428 $ 58,675,073 $ 702,359 $ 319,425 Restrided Restricted for bond retirement 1,511,793 Unrestricted 3,769,415 14,813,144 947,336 15,261 Total net position $ 5,793,843 $ 75,000,010 $1,649,695 $ 334,686 The notes to the basic financial statements are an integral part of this statement. 26 Total Internal Enterprise Service Funds Funds $ 29,895,674 $1,898,749 1,520,521 16 503,093 188,360 31,919,304 2,087,109 27,865,017 1,541,806 110,335,963 851,361 53,841,314 832,890 85,901,472 18471 292,999 292,999 $118,113,775 $2,105,580 $ 1,309,786 $ 109,089 394,597 286,924 171,116 319,894 48,353 706,776 379,000 1,047,580 643,696 4,552,593 864,218 306,128 46,273 164,801 385,780 5,829,102 8,539,771 13,949,140 1,773,027 30,782,948 211 074 $ 35,335,541 $1,075,292 $ 61,721,285 $ 18,471 1,511,793 19,545,156 1,011,817 $ 82,778,234 $1,030,288 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the Year Ended December 31, 2014 Business-Type Activities: Entemrise Funds Solid Waste Water and Diseosal Sewer Sanitation Golf Course Operating revenues Charges for services $3,024,048 $18,742,029 $2,552,723 $ 811,049 Reimbursements 179,900 Miscellaneous 37,540 9,395 50,230 Total operating revenues 3,061,588 18,931,324 2,552,723 861,279 Operating expenses General government Public works 1,286,770 12,112,288 2,265,204 Recreation 814,511 Depreciation 566,554 1,889,800 134 807 30 410 Total operating expenses 1,853,324 14,002,088 2,400,011 844 921 Operating income [loss] 1,208,264 4,929,236 152,712 16,358 Nonoperating revenues [expenses] Investment revenue 15,679 32,840 2,549 262 Debt service [19,610] [901,130] Gain/[loss] on disposal of flX8d assets 3,050 6,645 919 1,625 Accretion of bond premium 11,560 Amortization of bond issuance costs [18,472] Total nonoperating revenues [expenses] [881] [868,557] 3,468 1,887 Income [loss] before transfers 1,207,383 4,060,679 156,180 18,245 Capital contributions 115 000 Change in net position 1,322,383 4,060,679 156,180 18,245 Net position, January 1 4,476,397 70,146,203 1,503,942 322,923 Restatement [4,937] 793,128 [10,427] [6,482] Net position, January 1, restated 4,471,460 70,939,331 1,493,515 316 441 Net position, December 31 $5,793,843 $ 75,000,010 $1,649,695 $ 334,686 The notes to the basic financial statements are an integral part of this statement. 27 Total Internal Enterprise Service Funds .El!!!Ql $25,129,849 $9,517,634 179,900 97,165 86,950 25,406,914 9,604,584 10,350,238 15,664,262 814,511 2,621,571 4462 19,100,344 10,354,700 6,306,570 [750,116] 51,330 5,757 [920,740] 12,239 11,560 [18,472] [864,083] 5,757 5,442,487 [744,359] 115 000 5,557,487 [744,359] 76,449,465 1,782,982 771,282 [8,335] 77,220,747 1774647 $ 82,778,234 $1,030,288 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 Proceeds from loans Proceeds from issuance of general obligation bonds 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 Net increase [decrease] in cash and cash equivalents Cash and cash equivalents, January 1 Restatement Cash and cash equivalents, January 1, restated Cash and cash equivalents, December 31 CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2014 Business-Type Activities: Enterprise Funds Total Internal Solid Waste Water and Enterprise Service Funds Disposal Sewer Sanitation Golf Course Funds $3,023,259 $18,970,874 $2,560,989 [1,307,878] [11,245,985] [1,549,850] [474,666] [2,721,328] [691,889] 37,540 9,395 1,278,255 5,012,956 319,250 [2,306,224] [4,283,121] 115,000 3,050 6,645 6,208,102 2,205,000 [411,960] [717,624] [630,000] [8,239] [865,818] [403,373] [281,816] 15,679 32,840 890,561 4,763,980 5, 150,449 18, 189,299 [159,877] 919 [158,958] 2,549 162 841 766,119 [153,446] ---- 5,150,449 18,035,653 766119 $ 811,046 $25,366,170 $9,447,310 [455,951] [14,559,664] [9,771,335] [350,670] [4,236,553] [614,197] 50,230 97,165 66,950 54 657 6,665.116 [651,272] 1,625 1 625 263 56,545 69,326 69,326 [6,749,222] 115,000 12,239 6,206,102 2,205,000 [1,129,584] [630,000] [874,057] [842,522] 51,331 5,873,927 24,175,193 [153,446] 24,021,747 5,756 [845,516] 2,744,265 2,744,265 $6,041,010 $22,799,633 $ 926,960 $ 125,671 $29,695,674 $1,698,749 The notes to the basic financial statements are an integral part of this statement. 26 CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (Continued) For the Year Ended December 31, 2014 Business-Type Activities: Enterprise Funds Total Internal Reconciliation of operating poss] income to net cash provided by [used in] operating activities Solid Waste Water and Enterprise Disposal Sewer Sanitation Golf Course Funds Service Funds Operating income [loss] $ 1,208,264 $ 4,929,236 $152,712 $ 16,358 $ 6,306,570 $ [750, 116] 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 lnaease [deaease] in retainage payable Increase [decrease] in accrued compensated absences Increase [decrease] in daims payable lnaease [deaease] in landfill postclosure liabilities Increase [deaease] in net OBEB obligation Increase [decrease] in meter deposits payable Net cash provided by [used in] operating adivities 566,554 [789] 387,045 15,000 3,028 [903,300] 2,453 $ 1,278,255 $ 1,889,800 134,807 30,410 47,206 8,266 46,986 [664] [320,417] 17,117 161 [1,517,744] [29,216] 6,348 1,894 [34,634] 6,498 1 739 5,012,956 $319,250 $ 54,657 The notes to the basic financial statements are an integral part of this statement. 29 2,621,571 4,462 54,683 46,322 [48,219] 83,906 8,231 [1,502,744] [17,946] 4,695 [70,325] [903,300] [25,683] 1 739 $ 6,665,118 $ [851,272) ASSETS CITY OF SALINA, KANSAS STATEMENT OF ASSETS AND LIABILITIES AGENCY FUNDS December 31, 2014 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. 30 $ 208,084 $ 208,084 $ 208,084 $ 208,084 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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, 2014. Complete financial statements for each of the individual component units may be obtained at the entity's administrative offices. Salina Airport Authority 3237 Arnold Ave. Salina, KS Joint Ventures Housing Authority of the City of Salina 469 s. 5th Salina, KS The City of Salina also participates with Saline County in one joint venture. 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 venture. Separate financial statements are available from the governing board of the joint venture. Total unencumbered cash, December 31, 2014 Total change in unencumbered cash, year ended December 31, 2014 Total cash receipts, year ended December 31, 2014 Total cash receipts from City of Salina 31 (Kansas Regulatory Basis) Building Authority (Audited) $ 594,514 111,165 1,196,343 400,492 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) A Reporting Entity (Continued) Joint Ventures (Continued} Complete financial statements for the joint venture may be obtained at the entity's administrative office. Salina County-City Building Authority 300 West Ash Street Salina, KS B. Government-wide and fund financial statements The statement of net position 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. 32 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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. ExpenditurEKlriven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in net position. 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. 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. Sales tax capital fund -To account for 87.5% of the 1/4 cent sales tax designated for capital, debt, and human services purposes. Schilling capital improvement fund -To account for the funding provided by U.S. Government and Public Entities and the remedial investigation, feasibility study and expenditures necessary to abate groundwater contamination beneath the property formerly identified as Schilling Air Force Base. 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. Capital projects fund -To account for the acquisition and construction of major capital facilities other than those financed by proprietary funds and trust funds. 33 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) 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 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 the financial statements as "Cash and Investments." The city's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Investments in the Kansas Municipal Pool are carried at fair value. Cash balances from all funds are invested to the extent available in certificates of deposit and other authorized investments. Investments with maturity dates greater than three months are stated separately. Earnings from these investments, unless specifically designated, are allocated monthly to the investing fund based on the percentage of funds invested to total investments. All investments are carried at fair value. 2. Receivables and Payables Transactions between funds that are representative of 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 2015. 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. 34 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 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 Buildings other equipment Vehicles Infrastructure 35 Years 50 5-15 6-10 30-50 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 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 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. 36 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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, granters, 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: Major Governmental Funds Tourism Schilling Other Total and Special Sales Tax Capltal Debt Capltal Governmental Governmental General convention ll!! Capital lmRrovernent Service Projects Funds Funds Fund Balances: Nonspendable for: Inventory $ 107,033 $ $ $ $ $ $ $ $ 107,033 Restricted for: Publlc works 686,804 686,804 Public heatth and sanitation 42,456 42,456 cunure and recreation 182,600 182,600 Planning and development 551,123 232,059 783,182 Debt payments 407,864 807,374 1,215,238 Committed for: Public safety 21,541 21,541 CuHure and recreation 433,626 433,626 Planning and development 50,191 50,191 Cemetery 461,846 461,846 C&pllal Improvements 1,023,469 7,327,347 567,512 8,918,328 Assigned for: General government 43,535 43,535 Public safety 10,749 9,283 20,032 Public works 49,638 49,838 cunure and recreation 17,816 22,577 40,393 Planning and development 58,837 58,837 Capital improvements 58,738 242,925 890,993 268,354 [280,619] 126,415 1,306,806 Unassigned: 3,908,085 ------3,908,085 Total Fund Balances $4,254,429 $551,123 $ 929,729 $1,914,462 $ 7,595,701 $407,864 $ [280,61!1 $ 2,957,480 $ 18,330,169 37 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, Fund Balance, and Net Position (Continued) 9. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred oufflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The government only has one item that qualifies for reporting in this category. It is the deferred charge on bond issuance reported in the government-wide statement of net position. A deferred charge on bond issuance results from the difference in the carrying value of the debt and its reacquisition price. This amount is deferred and amortized over the life of the - debt. 10. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 11. Net Position Net position represents the difference between assets and liabilities. Net investment in capital assets 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 position is 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, granters 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 2014 budget was not amended. 38 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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, HOME 2012, KDOT Signals 91J'o Street, Flood & Drainage Improvement, CDBG ED, Kenwood Cover Capital, Special Law Enforcement, Police Grants, DARE Donations, War Memorial Maintenance, Federal CARE Grant, Police Department Federal Forfeiture, Homeowners' Assistance and Animal Shelter Donations Funds. A legal operating budget is not required for the following Enterprise funds: Solid Waste Disposal, Water and Sewer, Sanitation and Golf Course 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, 2014 in the Tourism and Convention Fund, Sales Tax Capital Fund, Bicentennial Center Fund, Sales Tax Economic Development Fund and Fair Housing 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, 2014, the statutory limit for the City was $136,896,083, providing a debt margin of $82,270,392. 39 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 and that the allocation of net position/fund balance between funds had been recorded incorrectly. Accordingly, the beginning net position/fund balances were restated, the effects of which are as follows: KDOT Capital Signals Solid Waste Water and Governmental Projects 9th Street Disposal Sewer Sanitation Golf Course Activities Fund Fund Fund Fund Fund Fund Net Position/Fund Balance, December 31, 2013 $ 129,423,463 s 12,416,104] s 1n.865J s 4,476,397 $ 70, 146,203 $ 1,503,942 $ 322,923 Capital Asset Adjustment 1666,522] 14,937] 946,574 110,427] 16,482] Fund Redassification 153 446 75581 77,885 [153,446] Net Position/Fund Balance, December 31, 2013, Restated $ 128,910,387 $ [2,340,523) $ $ 4,471,460 $ 70,939,331 $ 1,493,515 $ 316,441 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, 2014, the City has the following investments: Investment Type Kansas Municipal Investment Pool U.S. Government Securities Total fair value 40 Fair Value $ 305,300 S&P AAAf/S1+ 20,001,182 N/A $ 20,306,482 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 1 O 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. 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. 41 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) B. C. Receivables Receivables as of year end, including the applicable allowances for doubtful accounts, are as follows: Tourism and Special Debt capital Other General Convention Gas Service Projects Governmental Primary Government Receivables: Accounts $ 4,383,246 $ 526,729 $ $ $ 278,219 $ 55,562 Taxes 8,394,651 310,745 2,813,616 Interest 18 717 Gross receivables 12,796,614 526,729 310,745 2,813,616 55,562 Less: allowance for uncollectibles ~,477,19~ ~16] Total $ 9,319,418 $ 526,729 $ 310,745 $ 2,813,616 $ $ 54 746 Solid Water Waste and Sanitation DiS!;!2sal Sewer Primary Government Receivables: Accounts $ 267,512 $ 250,156 $ 1,934,932 Taxes Interest 16 Gross receivables 267,512 250,172 1,934,932 Less: allowance for uncollectibles 1113,21!1] 1818,86:1] Total ! 154,300 ! 250,172 ! 1,116,065 Component Units Salina Airport Authority Accounts Less: allowance for uncollectibles Total Salina Airport Authority Salina Housing Authority Accounts Less: allowance for uncollectibles Interest Total Salina Housing Authority Total lnterfund Receivables and Payables The composition of interfund balances as of December 31, 2014, is as follows: Fund Types General Fund Other Government Funds Due From Due To $ 44,751 $ 44,751 $ 44,751 $ 44,751 Subtotal $ 5,243,756 11,519,012 18 717 16,781,485 13,476,01!1] $ 13,303,473 Total $ 7,696,356 11,519,012 18 733 19,234,101 14,410,091] ! 14,824,010 $ 109,439 [1150QJ 107 939 19,758 [950] 510 19 318 $ 127 257 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. 42 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) D. Capital Assets Capital asset activity for the year ended December 31, 2014, was as follows: Balance Adj. Bal. Balance 12/31/2013 Adjustments 12/31/2013 Additions Retirements 12/31/2014 City governmental activities: Governmental activities: Capital assets, not being depreciated ConstnJctlon In progress $ 11,350,806 $ [1,033,264] $ 10,317,542 $ 4,509,119 $ 4,832,149 $ 9,994,512 Land 22,639,800 22,639,800 22,639,800 Capital assets, being depreciated Infrastructure 175,050,357 175,050,357 4,826,175 179,876,532 Buildings and improvements 39,290,515 39,290,515 60,527 39,351,042 Vehldes 8,940,190 8,940,190 874,939 783,514 9,031,615 Equipment, furniture and fixtures 5 720 087 5 720 087 114 422 136 365 5 698 144 Total capital assets 262,991,755 [1,033,264] 261,958,491 10,385,182 5,752,028 266,591,645 L888 accumulated depreciation for: Infrastructure 70,655,778 [373.957] 70,281,821 3,546,889 73,828,690 Buildings and improvements 15,827,083 29,450 15,856,533 985,898 16,842,231 Vehlcles 5,791,206 [27,558] 5,763,648 727,314 767,951 5,723,011 Equipment, furniture and fixtures 4 500 614 5 323 4 505 937 197 428 128 467 4 574 898 Total accumulated depreciation 96 774 681 ~66,742] 98 407 939 5 457 309 896 418 100 968 830 Govemmental activities capital assets, net $ 166 217 074 $ m661522J $ 18515501552 $ 4 927 873 $ 4 855 810 $ 16518221815 Business-type activities: Capttal assets, not being depreciated ConstnJctlon In progress $ 22,486,696 $ 900,264 $ 23,386,960 $ 6,497,482 $ 2,019,425 $ 27,865,017 Land 1,541,806 1,541,806 1,541,806 Capital assets, being depreciated Infrastructure 77,241,673 77,241,873 2,019,425 79,261,098 Buildings and improvements 22,579,933 22,579,933 22,579,933 Vehldes 3,324,991 3,324,991 159,877 52,264 3,432,604 Equipment, furniture and fixtures 5 013 565 5 013 565 91 862 43 099 5,062,328 Total capital assets 132 188 664 900 264 133,088,928 8 768 846 2 114 788 139 742 786 Less accumulated depreciation for: Infrastructure 34,050,809 185 34,050,994 1,708,717 35,759,711 Bulldlngs and Improvements 11,528,712 11,528,712 422,642 11,951,354 Vehlcles 2,514,731 8,052 2,522,783 181,958 52,264 2,652,477 Equipment, furniture and fixtures 3 245 319 [32,701] 3 212 618 308 254 43100 3 477 772 Total accumulated depreciation 51 339 571 [24,484] 51315107 2 621 571 95 364 53 841 314 Business-type acUYIUes capttal assets, net $ 8018491093 $ 9241728 $ 81.7731821 $ 611471075 $ 210191424 $ 6519011472 43 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 $ 6,702 Public safety 703,049 Public works 3,835,917 Public health 27,905 Culture and recreation 880,243 Planning and development 3493 Total depreciation $ 5,457,309 Business-type Activities: Solid Waste Disposal $ 566,554 Water and Sewer 1,889,800 Sanitation 134,807 Golf Course Division 30410 Total depreciation $ 2,621,571 E. Long-Term Debt Following is a summary of changes in long-term debt for fiscal year 2014: Balance Balance January 1, December 31, 2014 Addnions Deletions 2014 Governmental activities: General obligation bonds $ 49,631,795 $ 5,634,050 $ 5,232,290 $ 50,033,555 Financing lease 176,235 176,235 Accrued compensation 2,953,944 1,422,122 1,479,916 2,896,150 Temporary notes 3,800,000 5,000,000 3,800,000 5,000,000 Total $ 56,385,739 $ 12,232,407 $ 10,512,206 $ 58,105,940 Business-type activities: General obligation bonds $ 8,519,799 $ 2,205,000 $ 1,137,448 $ 9,587,351 Revenue bonds 15,226,532 633,696 14,592,836 Loans payable 6,208,102 6,208,102 Accrued compensation 643,967 301,949 319,894 626,022 Total $ 24,390,298 $ 8,715,051 $ 2,091,038 $ 31,014,311 Component Units: General obligation bonds $ 24,185,000 $ $ 925,000 $ 23,260,000 Less unamortized discount 1304,339] [18,894] 1285,445] Financing lease 156,791 48,825 107,966 Special assessment debt 66,746 17,797 48,949 Total component units $ 24,104,198 $ $ 972,728 $ 23,131,470 44 Amounts DueWijhin One Year $ 5,140,611 44,463 1,479,916 5,000,000 $ 11,664,990 $ 1,047,580 643,696 379,000 319,894 $ 2,390.170 $ 955,000 52,190 18,484 $ 1,025,674 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 Refunding 2004A, due 8/1/2015 Internal Improvements 2006A, due 10/1/2026 Internal Improvements 20068, 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 201 OA, due 10/1/2025 Internal Improvements 201 OB, due 10/1/2023 Internal Improvements 2011A, due 10/1/2031 Internal Improvements 2012A, due 10/1/2027 Refunding 20128, due 10/1/2020 Internal Improvements 2013A, due 10/1/28 Internal Improvements 20138, due 10/1/33 Internal Improvements 2014A, due 10/1/34 Total general obligation bonds Revenue Bonds Revenue 2011, due 10/1/31 Total revenue bonds Temporary Notes Series 2014-1, due 8/1/2015 Total temporary notes Loans Payable Kansas Public Water Supply, due 8/1/2034 Total loans payable Financing Lease, due 2/10/2017 Equipment, due 2/10/17 Equipment, due 5/8/18 45 Original Issue $ 5,585,000 2,200,000 885,000 6,545,000 3,720,000 3,525,000 23,695,000 6,916,592 7,973,044 6,587,985 2,383,903 3,817,108 1,369,380 4,485,073 7,570,000 $ 16,193,925 $ 5,000,000 $ 9,330,000 $ 30,000 146,235 Interest Rates 2.10%to4.00% 3.55% to 5.50% 4.00% to 4.50% 4.25% to 4.625% 3.25% to 4.00% 3.65% to 5.00% 2.00% to 5.00% 2.00% to 3.875% 0.50% to 3.00% 2.00% to 5.00% 1.00% to 2.45% 1.00% to 1.40% 3.00% to 4.00% 0.60% to 3.65% 2.50% to 3.75% 2.00% to 4.60% 1.00% 2.12% 3.54% 3.28% Bonds Outstanding $ 115,000 1,320,000 325,000 4,005,000 2,250,000 3,025,000 16,397,020 3,690,500 4,738,260 5,724,539 2,111,383 2,484,080 1,323,755 4,272,319 7,839,050 $ 59,620,906 $ 14,592,836 $ 14,592,836 $ 5,000,000 $ 5,000,000 $ 6,208,102 $ 6,208,102 $ 30,000 146,235 $ 176,235 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 20098, 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 Total special assessment debt Financing Lease, due 2016 Total Original Issue $ 3,635,000 1,005,000 2,025,000 6,080,000 11,820,000 2,505,000 565,235 27,599 425,000 Interest Rates 4.75% to 5.25% 4.60% to 6.00% 4.31% 3.00% to 5.50% 4.64% 4.28% 3.79% 4.47% 6.609% Bonds Outstanding $ 2,110,000 630,000 2,025,000 4,690,000 11,300,000 2,505,000 [285,445] 22,974,555 33,820 15,129 48 949 107,966 $23,131,470 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 2015 $ 6,188,191 $ 2,021,775 $ 8,209,966 2016 6,088,191 1,801,960 7,890,151 2017 5,883,190 1,618,821 7,502,011 2018 5,988,190 1,415,603 7,403,793 2019 5,893,190 1,200,606 7,093,796 2020-2024 17,176,196 3,958,932 21,135,128 2025-2029 10,238,168 1,373,514 11,611,682 2030-2034 2,165,590 201 763 2,367,353 Total $ 59,620,906 $ 13,592,974 $ 73,213,880 46 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) General Obligation -Component Units Bonds Interest Year Outstanding Due Total 2015 $ 955,000 $ 1,036,264 $ 1,991,264 2016 990,000 1,001,531 1,991,531 2017 1,030,000 963,874 1,993,874 2018 1,070,000 923,756 1,993,756 2019 1,115,000 878,519 1,993,519 2020-2024 6,370,000 3,600,036 9,970,036 2025-2029 7,985,000 1,985,411 9,970,411 2030-2031 3,745,000 244,325 3,989,325 Total $ 23,260,000 $ 10,633,716 $ 33,893,716 Annual debt service requirements to maturity for revenue bonds to be paid with utility revenues: Revenue Bonds -Prima!l'. Government Bonds Interest Year Outstanding Due Total 2015 $ 643,696 $ 565,191 $ 1,208,887 2016 663,696 549,191 1,212,887 2017 678,696 529,391 1,208,087 2018 708,696 509,141 1,217,837 2019 728,696 487,991 1,216,687 2020-2024 4,013,480 2,053,183 6,066,663 2025-2029 4,888,480 1,179,207 6,067,687 2030-2031 2,267,396 157 090 2,424,486 Total $ 14,592,836 $ 6,030,385 $ 20,623,221 Annual debt service requirements to maturity for temporary notes -to be paid through the issuance of general obligation bonds: Year 2015 Tempora!l'. Notes -Prima!l'. Government Bonds Interest Outstanding Due Total s 510001000 s 501139 '"'s_ ....... 5._.o5""0"", 1""'3""'9 47 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Annual debt service requirements to maturity for financing leases -to be paid from revenues: Year 2015 2016 2017 2018 Total 2015 2016 Total Capital Lease -Primary Government Lease Interest Outstanding Due $ 44,463 $ 45,946 47,479 38347 $ 176,235 $ 5,858 $ 4,375 2,842 1 258 14,333 $ Total 50,321 50,321 50,321 39 605 190,568 Financing Lease -Component Units Lease Interest Outstanding Due Total $ 52,190 $ 6,282 58,472 55776 2696 58 472 $ 107,966 $ 8 978 $ 116 944 The City has engaged in a loan with the Kansas Public Water Supply Fund. The following displays annual debt service requirements to maturity for the loan payable to be paid from service revenues, for the full proceeds amount: Loans -Primary Government Loans Interest Year Outstanding Due Total 2015 $ 379,000 $ 195,797 $ 309,572 2016 387,077 187,720 620,187 2017 395,326 179,471 621,622 2018 403,752 171,045 623,119 2019 412,357 162,440 624,682 2020-2024 2,197,416 676,569 3,149,263 2025-2029 2,441,771 432,214 3,149,263 2030-2034 2 713 301 160 696 1 415 883 Total $ 9,330,000 $ 2,165,952 $ 10,513,591 48 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Annual debt service requirement to maturity for Special Assessment Debt to be paid from rental revenue: Special Assessment Debt -Component Units Assessment Interest Year Outstanding Due Total 2015 $ 18,484 $ 1,958 $ 20,442 2016 19,197 1,245 20,442 2017 2,061 504 2,565 2018 2,153 412 2,565 2019 2,249 315 2,564 2020-2021 4805 325 5130 Total $ 48949 $ 4 759 $ 53 708 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, 2014, total outstanding conduit debt was $60,442,007. 49 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) F. Operating Leases On December 20, 2012, the City and Saline County jointly entered into a non-<:ancelable lease to finance a $2,750,000 heating, ventilation and air conditioning (HVAC) upgrade at the Saline County-City Building Authority. The City's share of the lease agreement is 40% and will pay the lessor $1,100,000, plus interest, through monthly payments of $7,827 over a term of 180 months. Total costs for this lease was $93,926 for the year ended December 31, 2014. The future minimum lease payments for the lease are as follows: Year 2015 2016 2017 2018 2019 2020-2024 2025-2027 $ Amount 93,926 93,926 93,926 93,926 93,926 469,633 281,780 Total $ 1,221,043 G. Reconciliation of Transfers A reconciliation of interfund transfers follows: Major Funds: General fund Tourism and convention fund Sales tax capital fund Debt service Capital projects fund Other governmental funds Agency funds Total Transfers Transfer In $ 370,765 1,575,988 1,053,969 $ 3,000,722 Transfer Out $ 561,585 660,057 1,760,000 15,175 3,118 787 $ 3,000,722 The City uses interfund transfers to share administrative costs between funds. 50 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 establishes 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 KPERS (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 5% of covered salary for all employees hired prior to July 1, 2009. K.S.A. 74-49,210 establishes the KPERS rate at 6% of covered salary for all employees hired after July 1, 2009. 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 9.32% from January 1 to December 31, 2014. The City employer contributions to KPERS for the years ending December 31, 2014, 2013, and 2012 were $1,357,291, $1,192,221 and $1,081,438, respectively, equal to the required contributions for each year. The KP&F employer rate established for fiscal years beginning in 2014 is 24. 75%. 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, 2014, 2013, and 2012 were $2,611,038, $2,338,786 and $2,007,908, 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.RC. 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. 51 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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, $177,561 is considered to be due within one year. Changes in the balances of claims liabilities during the past two years are as follows: 2014 2013 Unpaid claims, January 1 $ 569,755 $ 493,170 Incurred claims (including IBNRs) 660,413 882,663 Claim payments [887,806] [806,078] Unpaid claims, December 31 $ 342,362 $ 569,755 The City established a limited risk management program for employee health and dental insurance in 1997. The program covers eligible City employees. Premiums are paid into the health insurance fund by all other funds and are available to pay claims, claim reserves and administrative costs of the program. An excess coverage insurance policy covers individual claims in excess of $50,000. Incurred claims, including incurred but not reported claims, have been accrued based primarily upon subsequent payments. Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amounts of payouts and other economic and social factors. The liability for claims and judgments is reported in the Health Insurance Fund because it is expected to be liquidated with expendable available 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: Unpaid claims, January 1 Incurred claims (including IBNRs) Claim payments Unpaid claims, December 31 52 2014 2013 $ 372,147 $ 367,424 5,447,940 4,656,961 [5,290,872] [4,652,238] $ 529,215 $ 372,147 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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, 2014. Project Markley, Magnolia, Valleyview Sanitary Sewer Improvements and Manhole and Wastewater Pump Station Rehabilitation East Magnolia Road Replacement Fire Station #1 Quail Meadows Estates, IV Downtown Wellfield Improvements Advanced Meter Infrastructure Downtown Lighting Replacement Pheasant Ridge Addition #2 Ninth and Cloud Intersection Realignment Magnolia Hills Subdivision Bicentennial Center Improvements Fire Department Apparatus Bay Addition Landfill Cell 19 and Leachate Pond Ohio Street Improvements Iron Avenue Reconstruction Magnolia Hills Subdivision Phase Ill KPWSLF 2841 Water Line Replacement F. Contingent Liabilities Authorization $ 5,150,000 4,500,000 2,600,000 408,745 9,330,000 39,850,000 4,110,000 1,162,890 1,100,000 824,902 10,200,000 2,096,654 2,300,000 1,700,000 2,250,000 1,460,979 4,250,000 Expenditures $ 1,072,377 3,513,900 2,556,489 2,000 7,650,454 17,734,029 4,210,492 835,583 1,053,776 786 1,605,107 182,258 2,330,240 206,492 149,753 266,921 1,907,925 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 , 2014. 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 $1,773,027 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. 53 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 $4,378,208 as the remaining estimated capacity is filled over the remaining life expectancy of 145 years. These amounts are based on what it would cost to perform all closure and postclosure care in 2014. 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 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. 54 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 Ill 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 Ill 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). 55 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 Public Entities will be paid by the City. Also, the claims and counterclaims in the lawsuit have been dismissed without prejudice with provisions tolling any and all statutes of limitation. No party is obligated under the settlement agreement to implement the Corrective Action Decision upon its entry by KDHE, and the parties will either negotiate an agreement to implement such Corrective Action Decision or refile their claims in court. The Salina Public Entities have entered into a Consent Agreement and Final Order ("CAFO") with KDHE, which is conditioned upon the U.S.'s payment to the City. On May 2, 2013, the U.S. District Court for 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 U.S. wire transferred $8,426,700 to the account of the City, and the City added the share of the Salina Public Entities in the amount of $936,300 to the account. Although the claims and counterclaims in the lawsuit have been dismissed without prejudice, the City intends to vigorously pursue its claims that the U.S. should implement the Corrective Action Decision upon its entry by KDHE and its defenses against any 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 conbibution is based on projected pay-as-you-go financing requirements. Plan participants contributed approximately $185,000 to the Plan (approximately 100% of total premiums) through their required contribution of $507 per month for retiree-only coverage and $1,360 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. 56 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 Interest on Net OPEB Obligation Adjustment to Annual Required Contribution Annual OPEB cost (expense) Benefit payments Change in net OPEB obligation Net OPEB obligation -beginning of year Net OPEB obligation -end of year $ 548,166 119,602 [132,891] 534,877 [185,000] 349,877 3,986,743 $4,336,620 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, 2014 was as follows: 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 December 31, 2012 546,426 124,000 3,564,309 December 31, 2013 570,434 148,000 3,986,743 December 31, 2014 534,877 185,000 4,336,620 Funding Status and Funding Progress. As of the year ended December 31, 2014, the most recent actuarial valuation date, the Plan was not funded. The actuarial accrued liability for benefits was $5,538,770 and the actuarial value of asset was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $5,538,770. The covered payroll (annual payroll of active employees covered by the plan) was $22,156,127, and the ratio of the UAAL to the covered payroll was 25.00%. 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. 57 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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, 2014, actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions include a 3.00% 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 6.60%, reduced by decrements to an ultimate rate 4.50% after eighty years. The UAAL is being amortized as a level dollar over an open thirty-year period. J. Deficit Fund Balance The following nonmajor funds maintained deficit fund balances at December 31, 2014: HOME 2012 Fund - $[10,850], Police Grants Fund -$[27,819], Federal CARE Grant Fund -$[6,082] K Subsequent Events On January 9, 2014, the City entered into a $4,250,000 loan agreement with the Kansas Department of Health and Environment. However, the City did not make its first draw on the loan until 2015. The loan proceeds will be used to fund various capital projects related to achieving and maintaining compliance with the Safe Drinking Water Acl The City will be obligated to make semi-annual payments of $139,229 from February 1, 2016 to August 1, 2035. These payments will include a gross interest rate of 2.43% plus a .35% service fee. On July 17, 2015, the City issued Series 2015-A general obligation refunding and internal improvement bonds in the amounts of $6,825,000. The bonds will be used to retire the Series 2014-1 temporary note and to finance a portion of the improvements to the Bicentennial Center. The City will make the first payment on the bonds on April 1, 2016 and the last payment on October 1, 2035. The interest rate on the bonds ranges from 2.00% to 4.00%. On August 1, 2015, the City issued Series 2015-1 temporary notes in the amounts of $5,995,000. The temporary notes will be used to partially finance improvements to Iron Avenue and North Ohio Street and to complete the renovation of Fire Station #1. The maturity date of the temporary notes is August 1, 2016 and the interest rate on the notes is 1.25%. 58 REQUIRED SUPPLEMENTARY INFORMATION CITY OF SALINA, KANSAS OTHER POST-EMPLOYMENT BENEFITS REQUIRED SUPPLEMENTARY INFORMATION December 31, 2014 Schedule of Employer Contributions: 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 December 31, 2012 546,426 124,000 3,564,309 December 31, 2013 570,434 148,000 3,986,743 December 31, 2014 534,877 185,000 4,336,620 Schedule of Funding Progress: Actuarial Actuarial Actuarial Unfunded Funded Covered Valuation Value of Accrued AAL Ratio Payroll Date Assets {a) Liabili~ {bl {bl -{a) {alb) .{i;)_ 12/31/2008 $ $ 8,917,346 $ 8,917,346 0.0% $ 21,874,112 12/31/2009 8,917,346 8,917,346 0.0% 22,397,996 12/31/2010 9,019,806 9,019,806 0.0% 22,613,236 12/31/2011 9,019,806 9,019,806 0.0% 21,942,428 12/31/2012 5,171,261 5,171,261 0.0% 21,937,142 12/31/2013 5,579,912 5,579,912 0.0% 22,283,185 12/31/2014 5,538,770 5,538,770 0.0% 22,156,127 59 UAALas Percent of Payroll {b-a)/{c) 40.77% 39.81% 39.89% 41.11% 23.57% 25.04% 25.00% COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES CITY OF SALINA, KANSAS COMBINING STATEMENTS -NONMAJOR FUNDS NON MAJOR SPECIAL REVENUE FUNDS Special revenue funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes. Bicentennial center fund -To account for the activities of the City's convention center. Business improvement district fund -State law allows businesses within an area to voluntarily establish an improvement City. This fund is used to account for the assessments made on the District. All revenues are to be used within the Business Improvement District. Neighborhood park fund -To account for fees collected from new residential building projects in Salina. Expenditures are for acquisition or development of neighborhood parks in the growing areas of the community. Special parks and recreation fund -To account for liquor tax revenues, which must be used for park maintenance and improvements. Special alcohol fund -To account for liquor tax revenues, which must be used for programs, which address prevention, education or intervention for drug and alcohol abuse. Bicentennial center event fund -To account for the revenues and expenses associated with special events (concerts, shows, etc.) at the City's convention center. HUD community development fund -To account for grants received from the state to be used for housing or economic development purposes. Community development revolving fund -To account for funds, which may be loaned for housing and economic development, purposes, to later be repaid and reused on a revolving basis. Heritage commission fund -To account for revenues and expenses associated with heritage preservation activities. Sales tax economic development fund -To account for 12.5% of the 1/4 cent sales tax designated for economic Development purposes. HOME 2012 -To account for grants received from the federal government to be used for housing rehabilitation. KDOT Signals 9"' Street -To account for funds received from the Kansas Department of Transportation for 9"' Street signal replacement Fair housing fund -To account for grants received from the federal government to be used to monitor and mediate fair housing complaints. 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. CDBG ED fund -To account for grants received from the federal government to be used for economic development loans to qualifying businesses. Kenwood cover capital fund -To account for the Special Sales Tax proceeds to be used to provide for long-term capital maintenance activity at the facility. Special law enforcement fund -To account for revenues received from the sale of forfeited assets acquired during drug enforcement activities. Expenses are limited to capital items to be used for further drug enforcement activities. Police grants fund -To account for revenues from grants, which are to be used for special police activities, including the D.A.R.E. program D.A.R.E. donations fund -To account for donations to the D.A.R.E. program. War memorial maintenance fund -To account for monies to be used for maintenance of the local war memorial. Arts & humanities fund -To account for revenues and expenses associated with arts and humanities activities. Federal CARE Grant-To account for revenue and expenses associated with the CARE Grant. Police Department federal forfeiture funds -To account for revenue and expenses associated with federal Equitable Sharing Program funds. Homeowners' assistance fund -To receive donations and/or other funds to assist low and moderate income persons in improving their homes. Animal shelter donations fund -To accumulate donations and account for expenses to benefit the animal shelter. 60 CITY OF SALINA, KANSAS COMBINING STATEMENTS -NONMAJOR FUNDS NONMAJOR PERMANENT FUNDS Permanent funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the reporting government's programs. Cemetery endowment fund -To account for amounts expended for perpetual care of the City cemetery. Interest earnings are used for cemetery maintenance. Mausoleum endowment fund -To account for amounts charged for perpetual care of the City mausoleum. Interest earnings are used for mausoleum maintenance. Tricentennial commission fund -To account for donations to be used to celebrate the nation's tricentennial in the year 2076. 61 CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2014 Total Total Nonmajor Nonmajor Nonmajor Debt Special Revenue Permanent Service Funds Funds Fund ASSETS Cash and investments $ 1,704,634 $ 467,597 $ 868,082 Receivables Accounts 54 746 Total assets $ 1,759,380 $ 467,597 $ 868,082 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 32,120 $ -$ Due to other funds 44 751 Total liabilities 76 871 Fund balances: Restricted 457,115 Committed 1,067,119 467,597 Assigned 158,275 Total fund balances 1,682,509 467 597 Total liabilities and fund balances $ 1,759,380 $ 467,597 $ See independent auditor's report on the financial statements. 62 60,708 60,708 807,374 807 374 868,082 Total Nonmajor Governmental Funds $ 3,040,313 54 746 $ 3,095,059 $ 92,828 44 751 137,579 1,264,489 1,534,716 158,275 2,957,480 $ 3,095,059 REVENUES CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended December 31, 2014 Total Nonmajor Special Revenue Funds Total Nonmajor Permanent Funds Nonmajor Debt Service Fund Total Nonmajor Governmental Funds Taices Intergovernmental Charges for services Licenses and permits Investment revenue Donations Miscellaneous $ 347,225 $ 521,518 436,115 - $ - $ 347,225 818,868 450,005 Total revenues EXPENDITURES Current Culture and recreation Public health and sanitation Planning and development Miscellaneous Debt service Principal retirement Interest and other charges Capital outlay Total expenditures Excess [deficiency] of revenues over [under] expenditures Other financing sources [uses] Transfers in Transfers [out] Total other financing sources [uses] Net change in fund balance Fund balance -Beginning of year Restatement of prior year fund balance 7,300 4,234 240,699 135 240 1,692,331 1,594,764 173,259 203,037 768,378 2,739,438 [1,047,107] 1,053,969 [3,118] 1,050,851 3744 1,600,900 77 865 1,678,765 297,350 13,890 1,218 74 15 108 297,424 35 140,000 142,080 ----=3-=-5 282,080 15,073 15,344 15 073 15 344 452,524 792,030 452,524 792,030 7,300 5,526 240,699 135,240 2,004,863 1,594,764 173,259 203,037 35 140,000 142,080 768,378 3,021,553 [1,016,690] 1,053,969 [3,118] 1,050,851 34 161 2,845,454 77 865 2,923,319 Fund balance -Beginning of year, as restated Fund balance -End of year $ 1,682,509 $ 467,597 $807,374 $ 2,957,480 See independent auditor's report on the financial statements. 63 ASSETS Cash and investments Receivables Accounts Total assets CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS December 31, 2014 Business Bicentennial Improvement Neighborhood Center District Park $ 25,916 $ 1,524 $ 117,959 54,746 $ 25,916 $ 56,270 $ 117,959 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 25,916 $ 1,961 $ Due to other funds Total liabilities 25,916 1 961 Fund balance: Restricted 54,309 Committed 95,382 Assigned 22,577 Total fund balance [deficit] 54 309 117959 Total liabilities and fund balances $ 25,916 $ 56,270 $ 117,959 Special Parks & Special Recreation Alcohol $ 182,834 $ 42,456 $ 182,834 $ 42,456 $ 234 $ 234 182,600 42,456 182,600 42456 $ 182,834 $ 42,456 Bicentennial HUD Community Sales Tax Center Community Development Heritage Economic HOME Event $ 500 $ $ 500 $ $ - $ 500 500 $ 500 $ Dev. Revolving Commission Development 74,578 $ 109,254 $ 4 $ 675,154 $ 74,578 $ 109,254 $ 4 $ 675,154 $ $ $ - $ - $ 74,578 109,254 4 675,154 74 578 109 254 4 675 154 74 578 $ 109,254 $ 4 $ 675 154 $ 2012 -$ -$ - $ 10,850 10 850 [137,265] 126,415 [10,850] $ See independent auditor's report on the financial statements. 64 KDOT Signals 9th Street ASSETS Cash and investments Receivables Accounts CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS (Continued) December 31, 2014 Fair Housing Flood & Drainage Improvement CDBG ED Kenwood Cover Capital Special Law Enforcement $ 46,590 $ - $ - $ 27,568 $ 2,877 $ Police Grants Total assets s 46,s9o ... s __ _ L.._: $ 27,568 $ 2,811 ... s __ _ LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Due to other funds Total liabilities Fund balance: Restricted Committed Assigned Total fund balance [deficit] Total liabilities and fund balances $ - $ $ - $ - $ 46,590 27,568 46,590 27,568 s 46,s9o _s ____ L_ s 21,sa8 s $ 2,877 2 877 27,819 27 819 [27,819] [27,819] 2811 ..,s __ _ DARE Donations $ 3,597 $ 3,597 $ 3,597 3 597 $ 3,597 Police War Federal Department Homeowners• Memorial Arts& CARE Federal Assistance Maintenance Humanities Grant Forfeiture Funds Fund $ 34,008 $ 103,898 $ $ 55,766 $ 2,055 $ 34,008 $ 103,898 $ $ 55,766 $ 2,055 $ - $ 3,877 $ $ $ 34,008 34 008 $ 34,008 6,082 __ 3~8_7_7 6,082 [6,082] 100,021 46,483 2,055 9,283 100,021 [6,082] 55 766 2 055 $ 103,898 $ -$ 55 766 $ 2,055 See independent auditor's report on the financial statements. 65 Animal Shelter Donations $ 198,096 $ $ 198,096 $ $ 132 $ 132 197,964 197,964 $ 198,096 $ Totals 1,704,634 54,746 1,759,380 32,120 44,751 76 871 457,115 1,067,119 158,275 1,682,509 1,759,380 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS For the Year Ended December 31, 2014 Business Bicentennial Improvement Neighborhood Center District Park Revenues Taxes $ -$ -$ - Intergovernmental Charges for services 374 82,129 Licenses and permits 7,300 Investment revenue 14 342 Donations Miscellaneous Total Revenues 374 82,143 7642 Expenditures Current Culture and recreation 618,900 Public health and sanitation Planning and development 82,945 Capital outlay 25,700 40,033 Total Expenditures 644,600 82,945 40 033 Excess [deficiency] of revenues over [under] expenditures [644,226] [802] [32,391] Other financing sources [uses] Transfers in 635,852 Transfers [out] Total other financing sources [uses] 635,852 Net change in fund balance [8,374] [802] [32,391] Fund balance, beginning of year 8,374 55,111 150,350 Restatement of prior year fund balance Fund balance, beginning of year, as restated 8,374 55,111 150,350 Fund balance, end of year $ -$ 54,309 $ 117,959 Special Parks & Special Recreation Alcohol $ -$ 172,643 172,643 361 41 0 173,004 172,684 130,433 118,982 118,982 130,433 54,022 42,251 54,022 42,251 128,578 205 128,578 205 $182,600 $ 42,456 Bicentennial Center Event HUD Community Development Community Development Revolving Heritage Commission Sales Tax Economic Development HOME 2012 $ - $ $ - $ $ 347,225 $ - $ 500 500 $ 500 $ 191 289 1,748 191 289 348,973 281,708 281 708 191 289 67,265 2,101 2 101 2,292 289 67,265 72,286 108,965 4 607,889 72,286 108,965 4 607,889 74,578 $ 109,254 $ 4 $ 675,154 $ See independent audito~s report on the financial statements. 66 [10,850] [10,850] [10,850) $ KDOT Signals 9th Street [77,865] 77 865 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS (Continued) For the Year Ended December 31, 2014 Flood & Kenwood Fair Drainage CDBG Cover Housing lm11rovement ED Ca11ital Revenues Taxes $ -$ -$ $ Intergovernmental 84,573 Charges for services Licenses and permits Investment revenue 158 Donations Miscellaneous -- Total Revenues 84,731 Expenditures Current Culture and recreation Public health and sanitation Planning and development 66,000 Capital outlay 12 50,999 -- Total Expenditures 66,000 12 50,999 Excess [deficiency] of revenues over [under] expenditures 18,731 [12] [50,999] Other financing sources [uses] Transfers in 50,000 Transfers [out] [646] [2,472] Total other financing sources [uses] [646] [2,472] 50,000 Net change in fund balance 18,085 [12] [2,472] [999] Fund balance, beginning of year 28,505 12 2,472 28,567 Restatement of prior year fund balance -- Fund balance, beginning of year, as restated 28,505 12 2,472 28,567 Fund balance, end of year $46,590 $ -_$_ $27,568 Special Law Police Enforcement Grants $ $ 6 6 27,819 27,819 6 [27,819] 6 [27,819] 2,871 2,871 $ 2,877 $ [27,819] DARE Donations $ - 6 864 870 870 870 2,727 2,727 $ 3,597 Police War Federal Department Homeowners' Animal Memorial Arts & CARE Federal Assistance Shelter Maintenance Humanities Grant Forfeiture Funds Fund Donations $ $ -$ -$ -$ $ $ - 91,659 353,612 91 445 449 2 91 240,699 132,587 1 789 91 486,644 91,659 449 1 791 240,790 1,128 974,736 42,826 54,092 223,125 1 128 974,736 54,092 223,125 42,826 [1,037] [488,092] 37,567 [222,676] 1,791 197,964 366,016 366,016 [1,037] [122,076] 37,567 [222,676] 1,791 197,964 35,045 222,097 [43,649] 278,442 264 35,045 222,097 [43,649] 278,442 264 34,008 $ 100,021 $ [6,082] $ 55,766 $ 2,055 $197,964 See independent auditor's report on the financial statements. 67 Totals $ 347,225 521,518 436,115 7,300 4,234 240,699 135,240 1,692,331 1,594,764 173,259 203,037 768,378 2,739,438 [1,047,107] 1,053,969 [3,118] 1,050,851 3,744 1,600,900 77 865 1,678,765 $1,682,509 ASSETS Cash and investments Total assets LIABILITIES AND FUND BALANCES Liabilities Accounts payable Total liabilities Fund balances Committed Total liabilities and fund balances CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR PERMANENT FUNDS December 31, 2014 Cemetery Mausoleum Tricentennial Endowment Endowment Commission Total $ 459,833 $ 2,013 .._$_---'5""7""5-'-1 $ 467,597 $ 459,833 $ 2,013 ;.,$ _ __;5:.,,;,7c;:5;.:.1 $ 467,597 ... $ ____ -... $ ____ -... $ ____ -.._$ ___ _ 459,833 2 013 5 751 467 597 $ 459,833 $ 2,013 ""'$---'5""7""5""'1 $ 467,597 See independent auditor's report on the financial statements. 68 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR PERMANENT FUNDS For the Year Ended December 31, 2014 Cemetery Mausoleum Tricentennial Endowment Endowment Commission Revenues Charges for services $ 13,890 $ -$ Investment revenue 1,198 5 Total revenues 15,088 5 Expenditures Miscellaneous 35 Total expenditures 35 Net change in fund balance 15,053 5 Fund balances -beginning of year 444,780 2,008 Fund balances -end of year $ 459,833 $ 2 013 $ See independent auditor's report on the financial statements. 69 - 15 15 15 5,736 5 751 Total $ 13,890 1,218 15,108 35 35 15,073 452,524 $ 467,597 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) BICENTENNIAL CENTER FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Revenues Charges for services Culture and recreation $ 374 $ -$ Total revenues 374 Expenditures Culture and Recreation Bicentennial Center 644,600 450,000 Cash Reserve 18 395 Total expenditures 644,600 468,395 Excess [deficiency] of revenues over [under] expenditures [644,226] [468,395] Other financing sources [uses] Transfer in 635,853 501,190 Total other financing sources [uses] 635,853 501 190 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [8,373] 32,795 Unreserved fund balance, January 1 35,672 Prior year cancelled encumbrances 8 373 Unreserved fund balance/GAAP fund balance December 31 $ -$ 68,467 $ See independent auditor's report on the financial statements. 70 Final - 450,000 18 395 468,395 [468,395] 501,190 501 190 32,795 35,672 68,467 Variance with Final Budget Positive [Negative] $ 374 374 [194,600] 18 395 [176,205] [175,831] 134,663 134 663 [41,168] [35,672] 8 373 $ [68,467] CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) BUSINESS IMPROVEMENT CITY FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Revenues Charges for services Community and economic development $ 82,630 $ 90,000 $ Interest income General interest 14 500 Total revenues 82644 90 500 Expenditures Community Development Business Improvement District 82 945 90 500 Total expenditures 82,945 90,500 Excess [deficiency] of revenues over [under] expenditures [301] Unreserved fund balance, January 1 [136] 2 Unreserved fund balance, December 31 [437] $ 2 $ Reconciliation to GAAP Accounts receivable 54,746 GAAP Fund Balance, December 31 $ 54,309 See independent auditor's report on the financial statements. 71 Final 90,000 500 90 500 90 500 90,500 2 2 Variance with Final Budget Positive [Negative] $ [7,370] [486] [7,856] 7 555 7 555 [301] [138] $ [439] CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) NEIGHBORHOOD PARK FUND For the Year Ended December 31, 2014 Budgeted Amounts Revenues Charges for services Public works Interest income General interest Total revenues Expenditures Public Works Parks Total expenditures Excess [deficiency) of revenues over [under) expenditures Unreserved fund balance, January 1 Prior year cancelled encumbrances Unreserved fund balance, December 31 Reconciliation to GAAP Current year encumbrances GAAP Fund Balance, December 31 $ $ Actual Original 7,300 $ 20,000 $ 342 4000 7642 24,000 22,948 24,000 22,948 24,000 [15,306) 110,260 428 95,382 $ -$ 22,577 117,959 See independent auditor's report on the financial statements. 72 Final 20,000 4000 24,000 24,000 24,000 - Variance with Final Budget Positive [Negative) $ [12,700) [3,658) [16,358] 1 052 1,052 [15,306) 110,260 428 $ 95,382 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) SPECIAL PARKS AND RECREATION FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Final Revenues Operating grants, restricted Culture and recreation $ 172,642 $ 160,000 $ Interest income General interest 362 4000 Total revenues 173,004 164,000 Expenditures Public Works Parks 100,982 152,909 Cash Reserve 131,303 Total expenditures 100,982 284,212 Excess [deficiency] of revenues over [under] expenditures 72,022 [120,212] Unreserved fund balance, January 1 110,578 120,212 Unreserved fund balance/GAAP fund balance December 31 $ 182,600 $ -$ See independent auditor's report on the financial statements. 73 160,000 4000 164,000 152,909 131,303 284,212 [120,212] 120,212 - Variance with Final Budget Positive [Negative] $ 12,642 [3,638) 9,004 51,927 131,303 183,230 192,234 [9,634) $ 182,600 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) SPECIAL ALCOHOL FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Revenues Operating grants, restricted Health and sanitation $ 172,643 $ 160,000 $ Interest income General interest 41 Total revenues 172,684 160,000 Expenditures Public Health and Sanitation Special alcohol 130,433 160,000 Total expenditures 130,433 160,000 Excess [deficiency] of revenues over [under] expenditures 42,251 Unreserved fund balance, January 1 205 21 Unreserved fund balance/GAAP fund balance December 31 $ 42,456 $ 21 $ See independent auditor's report on the financial statements. 74 Final 160,000 160,000 160,000 160,000 21 21 Variance with Final Budget Positive [Negative] $ 12,643 41 12,684 29,567 29,567 42,251 184 $ 42,435 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) SALES TAX ECONOMIC DEVELOPMENT FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Revenues Taxes Selective sales tax $ 347,225 $ 300,966 $ Interest income General interest 1 748 5 000 Total revenues 348,973 305,966 Expenditures Community Development Economic development 281,708 218,829 Cash Reserve 50,000 Total expenditures 281,708 268,829 Excess [deficiency] of revenues over [under] expenditures 67,265 37,137 Unreserved fund balance, January 1 607,889 Unreserved fund balance/GAAP fund balance December 31 $ 675,154 $ 37,137 $ See independent auditor's report on the financial statements. 75 Final 300,966 5 000 305,966 218,829 50,000 268,829 37,137 37,137 Variance with Final Budget Positive [Negative] $ 46,259 [3,252] 43 007 [62,879] 50,000 [12,879] 30,128 607,889 $ 638,017 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) FAIR HOUSING FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Revenues Operating grants, restricted Community and economic development $ 84,573 $ 65,000 $ Interest income General interest 158 1 000 Total revenues 84 731 66,000 Expenditures Community Development Human relations 66,000 66,000 Total expenditures 66,000 66,000 Excess [deficiency] of revenues over [under] expenditures 18 731 Other financing sources [uses] Transfer [out] [646] Total other financing sources [uses] [646] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 18,085 Unreserved fund balance, January 1 28,505 646 Unreserved fund balance/GAAP fund balance December 31 $ 46,590 $ 646 $ See independent auditor's report on the financial statements. 76 Final 65,000 1 000 66,000 66 000 66,000 646 646 Variance with Final Budget Positive [Negative] $ 19,573 [842] 18 731 18 731 [646] [646] 18,085 27,859 $ 45,944 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) ARTS & HUMANITIES FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Revenues Charges for services Culture and recreation $ 486,198 $ 465,350 $ Interest income General interest 445 2,000 Miscellaneous revenues Culture and recreation 500 Total revenues 486 643 467 850 Expenditures Culture and Recreation Arts and humanities 619,887 669,263 Smoky Hill River Festival 354,848 361,450 Cash Reserve 108,802 Total expenditures 974 735 1,139,515 Excess [deficiency] of revenues over [under] expenditures [488,092J [671,665J other financing sources [uses] Transfer in 366,016 508,426 Total other financing sources [uses] 366,016 508,426 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [122,076] [163,239] Unreserved fund balance, January 1 222,097 163,239 Unreserved fund balance/GAAP fund balance December 31 $ 100,021 $ -$ See independent auditor's report on the financial statements. 77 Final 465,350 2,000 500 467 850 669,263 361,450 108,802 1,139,515 [671,665J 508,426 508,426 [163,239] 163,239 - Variance with Final Budget Positive [Negative] $ 20,848 [1,555] [500J 18 793 49,376 6,602 108,802 164 780 183,573 [142.41 OJ [142,41 OJ 41,163 58,858 $ 100,021 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) DEBT SERVICE FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Revenues Taxes Real estate taxes $ 2,522,112 $ 2,563,887 Delinquent taxes 55,984 55,000 Motor vehicle taxes 282,567 257,626 Total taxes 2,860,663 2,876,513 Charges for services Special assessments 1,809,992 1,555,000 Interest income General interest 244 5,000 Miscellaneous revenues General miscellaneous revenues 9,060 126,800 Other financing sources General sources 219,773 210,000 Total revenues 4,899,732 4,773,313 Expenditures Debt Service Principal 5,005,417 5,004,419 Interest and other charges 1,604,003 1,676,659 Cash Reserve 200,000 Total expenditures 6,609,420 6,881,078 Excess [deficiency] of revenues over [under] expenditures [1,709,668] [2,107,765] Other financing sources [uses] Transfer in 1,356,214 1,350,000 Total other financing sources [uses] 1,356,214 1,350,000 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [353,474] [757,765] Unreserved fund balance, January 1 707 763 757 765 Unreserved fund balance December31 354,289 $ - Reconciliation to GAAP Taxes receivable 2,813,616 Deferred revenue [2,760,041] GAAP Fund Balance, December 31 $ 407,864 See independent auditor's report on the financial statements. 78 Final $ 2,563,887 55,000 257,626 2,876,513 1,555,000 5,000 126,800 210,000 4,773,313 5,004,419 1,676,659 200,000 6,881,078 [2,107,765] 1,350,000 1,350,000 [757,765] 757 765 $ - Variance with Final Budget Positive [Negative] $ [41,775] 984 24,941 [15,850] 254,992 [4,756] [117,740] 9,773 126 419 [998] 72,656 200,000 271,658 398,077 6,214 6214 404,291 [50,002] $ 354,289 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS -BUDGET AND ACTUAL (NON -GAAP BASIS) SOLID WASTE DISPOSAL FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Revenues Charges for services Health and sanitation $ 2,595,476 $ 1,957,000 Interest income General interest 5,991 7,000 lnterfund services provided Health and sanitation 430,834 463,989 Miscellaneous revenues Health and sanitation 37540 42310 Total revenues 3,069,841 2,470,299 Expenditures Public Health and Sanitation Solid waste 1,907,668 2,052,983 Hazardous waste disposal 106,068 114,787 Total public health and sanitation 2,013,736 2,167,770 Debt Service Principal 411,959 Interest and other charges 8240 Total debt service 420,199 Cash Reserve 1,135,000 Total expenditures 2,433,935 3,302,770 Excess [deficiency] of revenues over [under] expenditures 635,906 [832,471] Unreserved fund balances, January 1 1,449,612 898,962 Unreserved fund balances, December 31 $ 2,085,518 $ 66,491 See independent auditofs report on the financial statements. 79 Final $ 1,957,000 7,000 463,989 42 310 2,470,299 2,052,983 114,787 2,167,770 1,135,000 3,302,770 [832,471] 898,962 $ 66,491 Variance with Final Budget Positive [Negative] $ 638,476 [1,009] [33,155] [4,770] 599,542 145,315 8,719 154 034 [411,959] [8,240] [420,199] 1,135,000 868,835 1,468,377 550,650 $ 2,019,027 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS -BUDGET AND ACTUAL (NON -GAAP BASIS) WATER AND SEWER FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Revenues Charges for services Water and wastewater $ 18, 169,259 $ 19,095,060 Interest income General interest 29,270 25,000 lnterfund services provided General services 28,654 37,570 Water and wastewater 88,480 Total interfund services 117,134 37,570 Miscellaneous revenues General miscellaneous revenues 180,185 Water and wastewater 331,876 470,000 Total miscellaneous revenues 512,061 470,000 Total revenues 18,827,724 19,627,630 Expenditures Water and Wastewater Water 8,986,115 13,237,394 Sewer 2,519,815 2,869,914 Total water and wastewater 11,505,930 16,107,308 Capital Outlay 2,286,483 2,793,000 Cash Reserve 5,339,455 Total expenditures 13,792,413 24,239,763 Excess [deficiency] of revenues over [under] expenditures 5,035,311 [4,612,133] Other financing sources [uses] Transfers in 2,007,482 Transfers [out] [2,574,000] [2,478,000] Total other financing sources [uses] [566,518] [2,478,000] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 4,468,793 [7,090,133] Unreserved fund balances, January 1 3,513,743 7,090,133 Prior year cancelled encumbrances 8,258 Residual equity transfer in 1,315,704 Unreserved fund balances, December 31 $ 9,306,498 $ See independent audito~s report on the financial statements. 80 Final $ 19,095,060 25,000 37,570 37,570 470,000 470,000 19,627,630 13,237,394 2,869,914 16,107,308 2,793,000 5,339,455 24,239,763 [4,612,133] ~,478,000] ~,478,000] [7,090,133] 7,090,133 $ Variance with Final Budget Positive [Negative] $ [925,801] 4,270 [8,916] 88,480 79,564 180,185 [138,124] 42,061 [799,906] 4,251,279 350,099 4,601,378 506,517 5,339,455 10,447,350 9 647 444 2,007,482 [96,000] 1,911,482 11,558,926 [3,576,390] 8,258 1,315,704 $ 9,306,498 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS -BUDGET AND ACTUAL (NON -GMP BASIS) SANITATION FUND For the Year Ended December 31, 2014 Revenues Charges for services Health and sanitation Interest income General interest Total revenues Expenditures Public Health and Sanitation Sanitation Cash Reserve Total expenditures Excess [deficiency) of revenues over [under) expenditures Unreserved fund balance, January 1 Unreserved fund balances, December 31 Actual $ 2,536,794 $ 2 549 2,539,343 2,399,146 2,399,146 140,197 756,816 $ 897,013 $ Budgeted Amounts Original Final 2,527,287 $ 2,527,287 3 500 3 500 2,530,787 2,530,787 2,515,608 2,515,608 706 132 706,132 3,221,740 3,221,740 [690,953) [690,953) 690,953 690,953 -$ - See independent auditor's report on the financial statements. 81 Variance with Final Budget Positive [Negative) $ 9,507 [951) 8,556 116,462 706,132 822,594 [814,038) 65,863 $ [748,175) CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS -BUDGET AND ACTUAL (NON -GMP BASIS) GOLF COURSE FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Revenues Taxes General sales tax $ 25,437 $ 27,000 $ Charges for services Culture and recreation 785,613 745,500 Operating grants, unrestricted General grants 656 Interest income General interest 258 Miscellaneous revenues General miscellaneous revenues 275 Culture and recreation 47 774 51 045 Total miscellaneous revenues 48 049 51 045 Total revenues 860,013 823,545 Expenditures Culture and Recreation Golf course 806,783 768,546 Cash Reserve 85,000 Total expenditures 806,783 853,546 Excess [deficiency] of revenues over [under] expenditures 53,230 [30,001] Unreserved fund balances, January 1 63,928 63,391 Unreserved fund balances, December 31 $ 117158 $ 33,390 $ See independent auditor's report on the financial statements. 82 Final 27,000 745,500 51 045 51 045 823,545 768,546 85,000 853,546 [30,001] 63,391 33,390 Variance with Final Budget Positive [Negative] $ [1,563] 40 113 656 258 275 [3,271] [2,996] 36,468 [38,237] 85,000 46,763 83,231 537 $ 83,768 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) RISK MANAGEMENT FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Revenues lnterfund services provided General services $ 453,845 $ 453,844 $ Interest income General interest 62 Miscellaneous revenues General miscellaneous revenues 57,103 92,940 Total revenues 511 010 546 784 Expenditures Other Risk management 533 117 502,957 Total expenditures 533,117 502,957 Excess [deficiency] of revenues over [under] expenditures [22,107] 43,827 Unreserved fund balance, January 1 47,700 32,705 Unreserved fund balance, December 31 $ 25,593 $ 76,532 $ See independent auditor's report on the financial statements. 83 Final 453,844 92,940 546 784 502,957 502,957 43,827 32,705 76,532 Variance with Final Budget Positive [Negative] $ 1 62 [35,837] [35,774] [30,160] [30,160] [65,934] 14,995 $ [50,939] CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) WORKERS' COMPENSATION RESERVE FUND For the Year Ended December 31, 2014 Budgeted Amounts Revenues Interest income General interest lnterfund services provided General services Miscellaneous revenues General miscellaneous revenues Total revenues Expenditures Other Worker's compensation Cash Reserve Actual $ 1,941 329,336 4 703 335,980 350,035 Original Final $ 2,500 $ 2,500 440,330 440,330 442,830 442,830 401,030 401,030 753,275 753,275 Total expenditures 350,035 1,154,305 1,154,305 Excess [deficiency) of revenues over [under) expenditures Unreserved fund balance, January 1 Unreserved fund balance, December 31 $ [14,055) 635,700 621,645 [711,475) 717 017 $ 5542 $ See independent auditor's report on the financial statements. 84 [711,475) 717017 5,542 Variance with Final Budget Positive [Negative) $ (559) [110,994) 4 703 [106,850] 50,995 753,275 804,270 697,420 [81,317] $ 616,103 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) HEAL TH INSURANCE FUND For the Year Ended December 31, 2014 Revenues Interest income General interest lnterfund Services Provided General services Miscellaneous revenues General miscellaneous revenues Total revenues Expenditures Other Health insurance Cash Reserve Total expenditures Excess [deficiency) of revenues over [under) expenditures Unreserved fund balance, January 1 Unreserved fund balance, December 31 Actual $ 2,981 5,968,460 19 343 5,990,784 6,678,718 6,678,718 [687,934) 1,584,790 $ 896,856 Budgeted Amounts Original Final $ 5,000 $ 5,000 6,064,066 6,064,066 10 000 10 000 6,079,066 6,079,066 6,785,208 6,785,208 750,000 750,000 7,535,208 7,535,208 [1,456,142) [1,456,142) 1,874,729 1,874,729 $ 418,587 $ 418,587 See independent auditor's report on the financial statements. 85 Variance with Final Budget Positive [Negative) $ [2,019) [95,606) 9 343 (88,282] 106,490 750,000 856,490 768,208 [289,939] $ 478,269 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) CENTRAL GARAGE FUND For the Year Ended December 31, 2014 Budgeted Amounts Original Final Variance with Final Budget Positive [Negative] Revenues Interest income General interest $ 219 $ 40 $ 40 $ 179 lnterfund services provided General services Miscellaneous revenues General miscellaneous revenues Total revenues Expenditures Other Central garage Cash Reserve Total expenditures Excess [deficiency] of revenues over [under] expenditures Other financing sources [uses] Transfers in Total other financing sources [uses] Excess [deficiency] of revenues and other financing sources over [under] expenditures and other financing [uses] 1,668,077 5,800 1,674,096 1,682,191 1,682,191 [8,095] [8,095] 24 536 1,755,000 12,782 1,767,822 1,799,371 89,816 1,889,187 [121,365] 30,000 30,000 [91,365] 91 365 1,755,000 12,782 1,767,822 1,799,371 89,816 1,889,187 [121,365] 30,000 30 000 [91,365] 91 365 [86,923] [6,982] [93,726] 117,180 89,816 206,996 113,270 [30,000] [30,000] 83,270 [66,829] Unreserved fund balance, January 1 Unreserved fund balance, December 31 $ 16 441 _$ _____ $______ -$--""'16.4""'4""1 See independent auditor's report on the financial statements. 86 Revenues CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) INFORMATION SYSTEMS FUND For the Year Ended December 31, 2014 Budgeted Amounts Original Final Variance with Final Budget Positive [Negative] Charges for services General charges $ 34,289 $ 40,000 $ 40,000 $ [5,711] Interest income General interest lnterfund services provided General services Miscellaneous revenues General miscellaneous revenues Total revenues Expenditures Other Information services Cash Reserve Total expenditures Excess [deficiency] of revenues over [under] expenditures 554 1,063,627 1,098,470 1,158,488 1,158,488 [60,018] 160,156 255 668 1,293,000 2,889 1,336,557 1,271,359 100,000 1,371,359 [34,802] 173,524 668 1,293,000 2,889 1,336,557 1,271,359 100,000 1,371,359 [34,802] 173,524 [114] [229,373] [2,889] [238,087] 112,871 100,000 212,871 [25,216] [13,368] 255 Unreserved fund balance, January 1 Prior year cancelled encumbrances Unreserved fund balance, December 31 $ 100,393 $ 138,722 $ 138,722 ,..$ _ _.,[3;.;;8.,3 .. 29_,] See independent auditor's report on the financial statements. 87 CITY OF SALINA, KANSAS INTERNAL SERVICE FUNDS Internal service funds are used to account for the financing of goods or services provided by one agency to other departments or agencies of the government and to other governmental units on a cost reimbursement basis. Risk management fund -To account for the accumulation and allocation of costs associated with risk management activities and the purchase of various forms of insurance. Workers' compensation reserve fund -To account for the costs of providing a partially self-insured workers' compensation plan and for accumulating the necessary reserve amounts. Health insurance fund -To account for the costs of providing a partially self-insured health insurance and for accumulating the necessary reserve amounts. Central garage fund -To account for the accumulation and allocation for costs associated with the City's centralized vehicle repair shop. Information services fund -To account for the accumulation and allocation of costs associated with electronic data processing. 88 CllY OF SALINA, KANSAS COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS December 31, 2014 Workers' Risk Compensation Health Central ASSETS Management Reserve Insurance Garage Current assets: Cash and investments $ 62,853 $ 751,196 $ 897,026 $ 61,323 Inventory and prepaid supplies 188,360 Total current assets 62,853 751196 897,026 249,683 Capital assets: Capital assets 201,425 Less: accumulated depreciation 186,971 Total capital assets 14 454 Total assets $ 62,853 $ 751196 $ 897,026 $ 264,137 Liabilities: Current liabilities (payable from current assets): Accounts payable $ 37,260 $ 566 $ 170 $ Current portion of compensated absences payable Current portion of accrued claims payable 177 561 529,215 Total current liabilities (payable from current assets) 37,260 178127 529,385 Noncurrent liabilities: Compensated absences payable Accrued claims payable 164 801 Total nona.irrent liabilities 164 801 Total liabilities $ 37,260 $ 342,928 $ 529,385 $ Net Position Invested in capital assets, net of related debt $ $ $ $ Unrestricted 25,593 408,268 367,641 Total net position $ 25,593 $ 408,268 $ 367,641 $ See independent auditor's report on the financial statements. 89 44,880 17,311 62.191 16,567 16,567 78,758 14,454 170,925 185,379 Total Internal lnfonnation Service Svstems Funds $ 126,351 $1,898,749 188,360 126,351 2,087.109 649,936 851,361 645,919 832,890 4 017 18 471 $ 130,368 $2,105,580 $ 26,213 $ 109,089 31,042 48,353 706,776 57,255 864,218 29,706 46,273 164 801 29,706 211 074 $ 86,961 $1,075,292 $ 4,017 $ 18,471 39,390 1,011,817 $ 43,407 $1,030,288 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION INTERNAL SERVICE FUND For the Year Ended December 31, 2014 Workers' Risk Compensation Health Central Management Reserve Insurance Garage Operating revenues Charges for services $ 453,844 $ 329,336 $ 5,968,460 $ 1,668,077 Miscellaneous 57104 4 703 19342 5 801 Total operating revenues 510,948 334,039 5,987,802 1,673,878 Operating expenses General government 533,117 122,642 6,835,786 1,636,872 Depreciation 4,319 Total operating expenses 533117 122,642 6,835,786 1 641191 Operating income [loss] [22.169] 211 397 [847,984] 32 687 Other operaijng revenues [expenses] Investment income 62 1 941 2 981 219 Total other operaijng revenues [expenses] 62 1 941 2 981 219 Change in net position Net position, January 1 Restatement Net position, January 1, restated Net posiijon, December 31 122.10n 213,338 [845,003] 32,906 47,700 194,930 1,212,644 160,808 [8,335] 47700 194 930 1,212,644 152 473 $ 25,593 $ 408,268 $ 367,641 $ 185,379 See independent audito(s report on the financial statements. 90 Total Internal Information Service S:t:stems Funds $1,097,917 $ 9,517,634 86 950 1,097,917 9,604,584 1,221,821 10,350,238 143 4,462 1,221,964 10,354,700 [124,047] [750,116] 554 5757 554 5757 [123,493] [744,359] 166,900 1,782,982 [8,335] 166,900 1774647 $ 43,407 $ 1,030,288 CITY OF SALINA, KANSAS COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNOS For the Year Ended December 31, 2014 Workers' Risk Compensation Health Management Reserve Insurance Cash flows from operating activities Cash received from customers and users $ 453,844 $ 101,943 $6,125,528 Cash paid to suppliers of goods or services [498,704] [129,790] [6,835,716] Cash paid to employees other operating receipts 57104 4 703 19 342 Net cash provided by [used in] operating activities 12244 [23,144] [890,84'1] Cash flows from investing activities Interest received 62 1 941 2 981 Net inaease [decrease] in cash and cash equivalents 12,306 [21,203] [687,865] Cash and cash equivalents, January 1 50547 772 399 1,584,891 Cash and cash equivalents, December 31 $ 62853 $ 751 196 $ 8971026 See independent auditor's report on the financial statements. 91 Total Internal Cenb'al lnfonnation Service Ga!'.§e Services Funds $1,668,078 $1,097,917 $9,447,310 [1,502,397] [804,728] [9,771,335] [193,518] [420,679] [614,197] 5801 86,950 [22,038] [127,490] [851,27~ 218 554 5756 [21,818] [126,936] [845,516] 83141 253,287 2,744,285 $ 61 323 $ 126 351 $1898749 CITY OF SALINA, KANSAS COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS (Continued) For the Year Ended December 31, 2014 Reconciliation of operating poss] income to net cash provided by [used in] operating adivities Workers' Risk Compensation Health Management Reserve Insurance Total Internal Central Information Service Garage Services Funds Operating income [loss] $ [22,169] $ 211,397 $ [847,984] $ 32,687 $ [124,047] $ [750,116] Adjusbllents to reconcile operating income [loss] to net cash provided by [used in] operating adMties Depredation expense [Increase] decrease in inventory Increase [deaease] in accounts payable Increase [decrease] in acaued compensated absences Increase [decrease] in claims payable Net cash provided by [used in] operating activities 34,413 $ 12,244 [7,148] 70 [227,393] 157,068 $ [23,144) $ [690,846) See independent auditor's report on the financial statements. 92 4,319 143 4,462 [48,219] [48,219] [13,725] [5,379] 8,231 2,902 1,793 4,695 [70,325] $ [22,036) $ [127,490) $ [851,272) CITY OF SALINA, KANSAS AGENCY FUNDS Agency funds are used to account for assets held by the government as an agent for individuals, private organizations, other governments and/or other funds. Special assessment escrow agency fund -To account for property owners' prepayment on outstanding special assessments. Fire insurance proceeds agency fund -To account for insurance proceeds received for severely damaged buildings the insurance proceeds, plus interest, are returned to the property owners when the buildings are repaired or demolished. PEGS access agency fund -To account for revenues collected on behalf of the community access television system for public, educational and governmental programming. Payroll clearing agency fund -To account for interfund payroll receivables and payables for all City funds. Court bond and restitution agency fund -To account for bonds and restitution remitted to the court and awaiting court orders for distribution. Police investigation account agency fund -To account for monies held by the police department for use in investigations. Fire cam agency fund -To account for donations received and used for fire equipment. Citizenship agency fund -To account for donations received and used for the citizenship fund. Section 125 plan agency fund -To account for monies held for the Section 125 plan. 93 Special Assessment Escrow ASSETS: Cash and investments $ 121,157 Total assets $ 121,157 LIABILITIES: Accounts payable $ 121,157 Total liabilities $ 121,157 CITY OF SALINA, KANSAS COMBINING BALANCE SHEET AGENCY FUNDS December 31, 2014 Fire Court Police Insurance PEGS Payroll Bond and Investigation Fire Proceeds Access Clearing Restitution Account Cam $ 53 _$ __ 1 $ [273,632) $ 35,899 $ 4 014 _$ - $ 53 _$ __ 1 $ [273,632) $ 35,899 $ 4 014 _$ - $ 53 _$ __ 1 $ [273,632) $ 35,899 $ 4 014 _$ - $ 53 _$ __ 1 $ [273,632) $ 35,899 $ 4 014 _$ - See independent auditor's report on the financial statements. 94 Section 125 CitizenshiJ2 Plan Totals $ 3,729 $316,863 $208,084 $ 3,729 $316,863 $208,084 $ 3,729 $316,863 $208,084 $ 3,729 $316,863 $208,084 CITY OF SALINA, KANSAS COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS For the Year Ended December 31, 2014 Balance December 31, 2013 Additions Deductions Cash and investments Special Assessment Escrow $ 93,278 $ 27,879 $ Fire Insurance Proceeds 20,468 22,743 PEGS Access 5,132 223,701 Payroll Clearing [256,295] Court Bond and Restitution 69,627 Police Investigation Account 4,013 1 Fire Cam Fund 787 Citizenship Trust 3,722 7 Section 125 Plan Fund 317,755 287,555 Total Assets $ 258,487 $ 561,886 $ Accounts Payable Special Assessment Escrow $ 93,278 $ 27,879 $ Fire Insurance Proceeds 20,468 22,743 PEGS Access 5,132 223,701 Payroll Clearing [256,295] Court Bond and Restitution 69,627 Police Investigation Account 4,013 1 Fire Cam Fund 787 Citizenship Trust 3,722 7 Section 125 Plan Fund 317 755 287,555 Total liabilities $ 258,487 $ 561,886 $ See independent auditor's report on the financial statements. 95 - 43,158 228,832 17,337 33,728 787 288,447 612,289 - 43,158 228,832 17,337 33,728 787 288447 612,289 Balance December 31, 2014 $ 121,157 53 1 [273,632] 35,899 4,014 3,729 316,863 $ 208,084 $ 121,157 53 1 [273,632] 35,899 4,014 3,729 316.863 $ 208,084 STATISTICAL SECTION Schedule 1 City of Salina, Kansas Net Position by Component Last Ten Flscal Yeal'1il (accrual basis of accaunting) {in OOO's) Fiscal Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Amount % Amount % Amount % Amount % Amount % Amount % Amount % Amount % Amount % Amount % Governmental actlvlUes Net investment in capital ...... $110,184 92% $117,810 93% $115,029 90% $118,965 93% $101,974 85% $113,001 96% $109,289 93% $112,929 94% $116,585 90% $ 115,589 90% R-cted $ 1,642 1% $ 1,108 1% $ 1,809 1% $ 1,212 1% $ 1,174 1% $ 988 1% $ 1,712 1% $ 1,082 1% $ 1,210 1% $ 878 1% Unrestricted $ 7,422 8% $ 7,678 8% $ 11,356 9% $ 7,745 8% $ 16,706 14% $ 3,808 3% $ 6,333 5% ~ 5% $ 11,628 9% $ 11,413 9% Total gavemmental activities net position $119,248 100% $126,594 100% $127,994 100% $127,922 100% $119,854 100% $117,797 100% $117,334 100% $119,522 100% $129,423 100% $ 127,878 100% Business-type activities Net Investment In capltal ...... $ 40,968 79% $ 43,510 81% $ 45,435 80% $ 45,931 79% $ 48,234 79% $ 48,078 75% $ 44,227 83% $ 50,857 89% $ 57,103 75% $ 81,721 75% R-cted $ 1,109 2% $ 1,123 2% $ 1,151 2% $ 1,211 2% $ 1,553 3% $ 1,553 2% $ 1,553 2% $ 1,553 2% $ 1,553 2% $ 1,512 2% Unrestricted $ 9,821 19% $ 9,300 17% $ 10,412 18% $ 11,197 19% $ 11,482 19% $ 14,306 22% $ 24,528 35% $ 21,450 29% $ 17,794 23% $ 19,545 24% Tatal business-type activities net position $ 51 897 100% $ 53,933 100% $ 58,998 100% $ 58,339 100% $ 81,269 100% $ 83,937 100% $ 70,308 100% $ 73,eeo 100% $ 76,450 100% $ 82,778 100% Primary gavernment Net investment in capital ill ...... $151,152 88% $181,320 89% $180,464 87% $164,898 89% $150,208 83% $181,080 89% $153,518 82% $183,788 85% $173,888 84% $ 177,311 84% Resbicled $ 2,750 2% $ 2,229 1% $ 2,781 1% $ 2,423 1% $ 2,727 2% $ 2,541 1% $ 3,216 2% $ 2,635 1% $ 2,783 1% $ 2,388 1% Unrestricted $ 17243 10% $ 16 978 9% $ 21,768 12% $ 18,942 10% $ 28,188 16% $ 18115 10% $ 30,867 16% $ 26,961 14% $ 29,422 14% $ 30,959 15% Tatal prtmary government net position $171,144 100% $180,527 100% $184,992 100% $188,281 100% $181,123 100% $181,738 100% $187,599 100% $193,382 100% $205,873 100% $ 210,858 100% Source: City of Sallna Comprehensive Annual Flnanclal Reparts, 2005-2014 Scheclul92 City of Salina, Kansas Changes in Net Position Last Ten FISCIII Years (accrual basis of accounUng) (in OOO's) FlscalYear 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 --Govemmental activities: General govemment 4,904 $ 6,319 6,732 $ 6,791 $ 14,864 $ 10,845 $ 13,614 $ 11,278 $ 10,978 $ 12,550 Public safety 14,159 $ 14,621 16,877 $ 18,440 $ 18,539 $ 18,592 $ 18,579 $ 19,066 $ 19,649 $ 20,208 Publicwol1cs 8,420 $ 8,609 9,258 $ 9,706 $ 9,781 $ 9,792 $ 9,858 $ 10,957 $ 11,064 $ 11,401 Public health encl sanitation 1,102 $ 1,214 1,281 $ 1,310 $ 1,390 $ 1,365 $ 1,368 $ 1,383 $ 1,369 $ 347 ClA.1111 encl IVCl9Btian 5,071 $ 4,961 5,858 $ 5,582 $ 5,397 $ 8,572 $ 6,693 $ 5,338 $ 4,809 $ 5,156 Planning ancl clevelapment 2,714 $ 2,697 2,814 $ 3,481 $ 3,375 $ 3,718 $ 3,450 $ 3,362 $ 3,399 $ 3,236 lnterNt an long tsrm clebt 742 $ 972 1295 $ 1454 _$ __ $ 2,256 $ 1650 $ 1914 $ 1953 !.......!!!I Total gavemmental activities expenses 37112 $ 39393 43918 $ 46764 $ 51146 $ 55,128 $ 55,212 $ 53,298 $ 53,221 $ 54,715 Business-type activities: Saiki waste clispasal 2,606 $ 2,471 2,088 $ 2,008 $ 2,287 $ 3,010 $ 2,945 $ 2,067 $ 3,532 $ 1,870 Water encl sewer 11,262 $ 11,676 12,227 $ 13,284 $ 12,995 $ 14,050 $ 13,597 $ 14,897 $ 15,418 $ 14,904 Sanitation 1,689 $ 1,945 2,038 $ 2,184 $ 2,.224 $ 2,261 $ 2,261 $ 2,441 $ 2,237 $ 2,399 Galfcaurae 693 $ 652 864 $ 864 !._____fil L____ill $ 825 $ 723 $ 766 ~ Total busine11&-type activities expenses 18,852 $ 16944 17236 $ 18,360 $ 18,403 $ 20,138 $ 19,628 $ 20,128 $ 21,955 $ 20,016 Total primary gavemment expenses 53764 $ 56337 81153 $ 85,124 $ 69,549 $ 75,266 $ 74840 $ 73,428 $ 75178 $ 74 731 Program Reffnuas Govemmental activities: Charges far services General govemment $ 3,926 $ 4,177 $ 4,309 $ 4,581 $ 4,599 $ 5,143 $ 6,106 $ 6,328 $ 5,548 $ 5,652 Public safety $ 3,366 $ 3,603 $ 3,539 $ 3,588 $ 2,913 $ 3,969 $ 3,766 $ 4,290 $ 4,656 $ 4,222 Publicwol1cs $ 163 $ 169 $ 457 $ 120 $ 164 $ 196 $ 262 $ 306 $ 277 $ 255 Public health encl sanitation $ 31 $ 36 $ 33 $ 39 $ 42 $ 37 $ 43 $ 46 $ 34 $ 46 ClA.1111 ancl IVCl9Btian $ 2,276 $ 1,883 $ 2,050 $ 2,139 $ 1,936 $ 2,817 $ 3,140 $ 1,728 $ 1,466 $ 1,533 Planning ancl development $ 95 $ 114 $ 101 $ 240 $ 267 $ 144 $ 153 $ 156 $ 161 $ 167 Operating grants ancl cantibutians $ 2,796 $ 3,145 $ 3,381 $ 3,752 $ 3,163 $ 3,415 $ 2,907 $ 4,495 $ 4,200 $ 4,015 Capital grante ancl conbibutians I 13875 I 3091 I L__:_ L....:_ I I I L....:_ Total gavemmental activitiea program revenuas I 26532 I 16216 I 13871 I 14458 ~ $ 15 723 I 16377 I 17351 I 16342 $ 15 900 Buainess-type activities: Charges far services Saiki waste disposal $ 2,344 $ 2,674 $ 2,789 $ 2,749 $ 2,903 $ 2,853 $ 2,904 $ 3,137 $ 3,138 $ 3,024 Water and sewer $ 12,704 $ 12,949 $ 14,054 $ 14,073 $ 14,880 $ 16,520 $ 17,904 $ 19,099 $ 17,938 $ 18,742 Sanitation $ 1,881 $ 1,988 $ 2,112 $ 2,172 $ 2,292 $ 2,310 $ 2,334 $ 2,462 $ 2,514 $ 2,553 Galfcaurae $ 769 $ 773 $ 723 $ 751 $ 757 $ 736 $ 636 $ 783 $ 719 $ 611 Operating grants ancl contributions $ $ $ $ $ $ 202 $ $ Capital grante ancl conbibutiana I L__:_ L....:_ I 3604 I 274 ~ Total busineu-type activitiea program revenuas I 17728 I 18385 I 19678 I 19744 ~ $ .22 419 I 27784 I 25755 I 24309 $ 25 245 Total primary gavemment program revenues I 44260 I 34601 I 33549 I 34202 ~ $ 38142 I 44161 I 43106 I 40651 $ 41145 Net (Expenae) R&Yenua Govemmental activities $ (10,580) $ (23,176) $ (30,048) $ (32,306) $ (38,082) $ (39,405) $ (38,835) $ (35,947) $ (36,879) $ (38,815) Business-type activities I 1 076 I 1441 I 2442 I 1364 ~ L..12fil. I 8156 I 5627 I 2354 ~ Total primary gavemment net expense I !9 504) $ 121 736) s '27604) s !30 9.22) ~ $ '37124) $ !30679) $ !30320) $ !34 525) s 133 586) General Reffnuu and other Changes In Net Poaltlan Govemmental activities: T""' Property taxes, general purpose $ 8,788 $ 7,144 $ 7,378 $ 7,818 $ 9,019 $ 7,803 $ 7,783 $ 8,272 $ 8,031 $ 8,315 Property taxes, debt service $ 1,351 $ 1,402 $ 1,471 $ 1,529 $ 1,711 $ 2,230 $ 2,779 $ 2,439 $ 2,362 $ 2,578 Ma!Dr vehicle taxea $ 1,079 $ 1,105 $ 1,131 $ 1,195 $ 1,135 $ 1,145 $ 1,150 $ 1,153 $ 1,200 $ 1,250 Sales tax, general pull)088 $ 10,556 $ 11,137 $ 11,472 $ 11,966 $ 11,869 $ 11,118 $ 11,767 $ 12,165 $ 12,260 $ 12,689 Selective sales tax $ 2,280 $ 2,417 $ 2,464 $ 2,589 $ 3,330 $ 4,108 $ 4,080 $ 4,210 $ 4,281 $ 4,481 Olhertaxea $ 3,557 $ 5,076 $ 5,445 $ 5,747 $ 5,791 $ 6,298 $ 6,390 $ 6,466 $ 6,630 $ 7,231 Investment revenues $ 544 $ 1,123 $ 1,255 $ 805 $ Z77 $ 81 $ 77 $ 68 $ 67 $ 98 Miscellaneous $ 1,209 $ 1,044 $ 890 $ 812 $ 505 $ 585 $ 872 $ 680 $ 9,918 $ 1,180 Transfers, net $ 114 $ 330 $ 672 $ 60 !.______ill L____.!1. $ 199 $ 30 $ 999 _$ __ 1 Total governmental activities $ 27458 $ 30779 $ 32195 $ 32540 $ 33 742 $ 33440 $ 35097 $ 35481 $ 45748 $ 37 783 Buainess-type activities: Investment revenues $ 328 $ 453 $ 641 $ 300 $ 242 $ 67 $ 84 $ 79 $ 49 $ 51 Miscellaneous $ 150 $ 217 $ 201 $ 118 $ 352 $ 341 $ 330 $ 434 $ 279 $ 97 Reimbursements $ $ $ $ $ $ $ $ $ $ 160 Transfers, net I !114) I (330) I (672) I (BO)~ L...fil) I (199) I (30) I (950) L......:..... Total business-type actlvlUes $ 364 $ 340 $ 170 $ 358 ~ L___M! $ 215 $ 483 $ (622)~ Total primary government $ 27820 $ 31119 $ 32366 $ 32896 $ 34 081 $ 33 756 $ 35312 $ 35984 $ 45126 $ 38111 Change In Net PoaNlan Govemmental activities $ 18,877 $ 7,602 $ 2,150 $ 234 $ (4,320) $ (5,965) $ (3,738) $ (466) $ 8,869 $ (1,032) Business-type acllvltles $ 1440 $ 1760 $ 2612 $ 1742 ~ $ 2,597 $ 8371 $ 6110 $ 1732 $ 5,557 Total primary government $ 18316 $ 9383 $ 4 792 $ 1976 ~~$ 4633 $ 5644 $ 10801 $ 4525 Saurai: City of Salina Comprehensive Annual Financial Reparta, 2005-2014 97 General Fund Reserved Nonspendable Restricted Committed Assigned Unreserved/unassigned Total general fund Restatement Restated fund balance All other governmental funds Reserved Nonspendable Restricted Committed Assigned Unreserved/unassigned Total all other governmental funds Schedule 3 City of Salina, Kansas Fund Balances, Governmental Funds Last Ten Fiscal Years (modified acaual basis of accounting) (in OOO's) Fiscal Year 2005 2006 2007 2008 2010 $ 421 $ 242 $ 396 $ 274 $ 508 $ 99 $ 6,646 $ 7,983 $ 6,935 $ 5,756 $ 4,580 $ 3,518 $ 1 061 $ a,225 $ 1 331 $ e1030 $ 5,oaa $ 3 e11 $ 158 $ 3,773 2011 (Note 11 $ $ 90 $ $ $ 293 $ 3,454 $ 3837 $ 2,369 $ 2,469 $ 2,796 $ 3,951 $ 11,092 $ 6,413 $ $ $ 3,611 $ 127 $ 4,323 ~ L___.B $ 2,948 ~ $ 4,024 $ (1,130) _$ __ $ 2,525 !.....l.fil $ 5,742 $ 4 305 $ 15 116 $ 5,283 $ 8 061 Note 1: Prior year amounts have not been restated for the implementation of GASB Statement 54 in fiscal year 2011. Source: City of Salina Comprehensive Annual Financial Reports, 2005-2014 98 2012 2013 2014 $ $ $ $ 118 $ 81 $ 107 $ $ $ $ $ $ $ 540 $ 331 $ 239 $ 3,172 $ 3,138 $ 3,908 $ 3,828 $ 3,550 $ 4254 $ $ $ $ $ $ $ 3,319 $ 3,448 $ 2,910 $ (516) $ 12,572 $ 9,886 $ 4,087 $ (1,940) $ 1,280 _ $ __ _$ __ $ $ 6,890 $ 14078 $ 14 076 Schedule4 City of Salina, Kansas Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in OOO's) Fiscal Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Revenues Taxes (see Schedule 5) $ 25,590 $ 28,282 $ 29,379 $ 30,788 $ 32,706 $ 32,702 $ 33,949 $ 34,724 $34,764 $ 36,523 Intergovernmental $ 2,785 $ 3,127 $ 3,363 $ 3,741 $ 3,153 $ 3,404 $ 2,901 $ 4,487 $ 4,192 $ 4,008 Special assessments $ 1,143 $ 1,207 $ 1,444 $ 1,178 $ 1,269 $ 1,385 $ 1,535 $ 2,315 $ 1,706 $ 1,810 Licenses and permits $ 14 $ 18 $ 18 $ 10 $ 10 $ 11 $ 6 $ 8 $ 9 $ 7 Charges for services $ 7,225 $ 7,099 $ 7,131 $ 7,415 $ 6,767 $ 8,934 $ 9,730 $ 8,484 $ 8,536 $ 8,276 Investment revenue $ 486 $ 1,021 $ 983 $ 490 $ 210 $ 64 $ 69 $ 47 $ 40 $ 59 Reimbursements $ 650 $ 406 $ 153 $ 39 $ 140 $ 70 $ 32 $ 36 $ 9,015 $ 123 Donations $ 241 Miscellaneous $ 501 $ 488 $ 650 $ 597 $ 438 $ 448 $ 599 $ 537 L..filQ $ 799 Total revenues $ 38,392 $ 41,648 $ 43,120 $ 44,258 $ 44,693 $ 47,018 $ 48,821 $ 50,638 $59,072 $ 51,846 Expendkures General government $ 2,706 $ 2,721 $ 2,842 $ 3,600 $ 3,007 $ 3,549 $ 3,461 $ 3,574 $ 4,269 $ 3,986 Public safety $ 13,673 $ 14,309 $ 16,175 $ 17,945 $ 17,883 $ 18,229 $ 18,118 $ 18,584 $19,155 $ 19,559 Public works $ 5,508 $ 5,712 $ 6,171 $ 6,593 $ 6,643 $ 6,634 $ 6,589 $ 7,004 $ 7,220 $ 7,443 Public health and sanitation $ 1,067 $ 1,178 $ 1,245 $ 1,276 $ 1,353 $ 1,332 $ 1,330 $ 1,343 $ 1,344 $ 319 Culture and recreation $ 4,776 $ 4,653 $ 5,204 $ 5,142 $ 4,947 $ 5,777 $ 5,900 $ 4,449 $ 3,939 $ 4,292 Planning and development $ 2,607 $ 2,588 $ 2,707 $ 3,377 $ 3,269 $ 3,609 $ 3,344 $ 3,256 $ 3,293 $ 3,233 Miscellaneous $ $ $ $ $ $ 32 $ $ $ $ Capital outlay $ 8,580 $ 10,783 $ 7,615 $ 10,581 $ 17,707 $ 18,603 $ 9,847 $ 7,327 $13,047 $ 11,009 Debt service Principal $ 2,534 $ 2,625 $ 4,806 $ 2,812 $ 4,687 $ 5,959 $ 4,411 $ 8,592 $ 5,038 $ 5,260 Interest $ 755 $ 1,009 $ 1,266 $ 1,587 $ 1,596 $ 2,258 $ 2,084 $ 2,103 $ 1,867 $ 1,864 Deposit to escrow $ $ $ $ $ $ 107 $ $ 92 _$ __ $ Total expenditures $ 42,208 $ 45,578 $ 48,031 $ 52,892 $ 61,072 $ 66,089 $ 55,064 $ 56,304 $59,172 $ 56,965 other financing sources (uaea) Bonds and notes issued $ 4,210 $ 4,885 $ 6,545 $ 7,245 $ 23,695 $ 7,034 $ 6,585 $ 6,150 $ 5,690 $ 5,365 Bond and note premium $ 80 $ 1,369 $ 47 $ 23 $ 60 $ 185 $ 302 Transfers in $ 1,399 $ 2,245 $ 2,349 $ 2,823 $ 3,617 $ 5,076 $ 7,994 $ 3,488 $ 4,907 $ 3,001 Transfers out $ (1,365) $ (2,055) $ (1,737) $ (2,763) $ (3,422) $ (4,984) $ (5,692) $ (3,458) $ (3,907) $ (3,000) Issuance costs $ $ $ $ $ $ $ $ $ Other $ $ $ 91 $ $ $ $ 156 $ _$ __ $ Total other financing sources (uses) $ 4.244 $ 5.075 $ 7.248 $ 7.385 $ 25.259 $ 7.173 $ 9.046 $ 6.240 $ 6.875 $ 5.688 Net change in fund balance $ 428 $ 1,145 $ 2,337 $ (1,250) $ 8,880 $(11,898) $ 2,803 $ 574 $ 6,775 $ 549 Debt service as a percentage of non-capital expenditures 11% 12% 18% 12% 17% 21% 17% 28% 18% 18% Source: City of Salina Comprehensive Annual Financial Reports, 2005 -2014 99 Schedule 5 City of Salina, Kansas Tax Revenues by Source, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in OOO's) Fiscal Year ~ ~ ~ ~ ~ w.Q Wi 2012 ~ 2014 Real estate $ 7,904 $ 8,373 $ 8,662 $ 9,084 $ 9,971 $ 9,756 $10,288 $10,466 $10,145 $ 10,657 Delinquent $ 213 $ 173 $ 185 $ 263 $ 760 $ 278 $ 274 $ 245 $ 248 $ 235 Motor vehicle $ 1,079 $ 1,105 $ 1,131 $ 1,120 $ 1,135 $ 1,145 $ 1,150 $ 1,153 $ 1,200 $ 1,250 General sales $ 10,556 $ 11,137 $ 11,472 $11,986 $11,669 $11,117 $11,767 $12,165 $ 12,260 $ 12,689 Selective sales $ 2,280 $ 2,417 $ 2,484 $ 2,589 $ 3,380 $ 4,108 $ 4,080 $ 4,210 $ 4,281 $ 4,461 other taxes $ 3,557 $ 5,076 $ 5,445 $ 5,747 $ 5,791 $ 6,298 $ 6,390 $ 6,485 $ 6,630 $ 7,231 Total taxes $ 25,590 $ 28,282 $ 29,379 $30,788 $32,706 $32,702 $33,949 $34,724 $34,764 $ 36,523 Source: City of Salina Comprehensive Annual Financial Reports, 2005 -2014 100 Schedule6 City of Salina, Kansas Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years Assessed Value Fiscal Estimated Total Assessed (Budget) Personal Total, Excluding Motor Vehicle Total, Taxable Market Value Value to Est. Year Real Estate Property State Assessed Motor Vehicles Tax Rate (Note 1) Assessed Value (Note 2) Market Value 2004 277,456,813 35,386,133 15,750,780 328,593,726 24.013 46,679,982 375,273,018 2,368,264,683 15.85 2005 282,517,284 35,410,526 17,334,372 335,262, 182 24.063 48,687,121 383,949,303 2,529,377,135 15.18 2006 298,537,399 38,862,356 17,624,030 352,823,785 23.999 49,367,870 402, 191,655 2,229,131,633 18.04 2007 321,695,326 39,691,690 16,530,171 377,917,187 23.789 50,551,299 428,468,486 2,416,543,103 17.73 2008 342,045,389 35,089,042 15,594,056 392,728,487 23.959 50,548,706 443,277,193 2,612,229,468 16.97 2009 356,678,712 28,373,980 14,929,456 399,982,148 25.886 51,351,656 451,333,804 2,914,775,730 15.48 2010 358,979,211 24,760,806 13,730,609 397,470,626 25.855 50,330,252 447,800,878 2,893,359,541 15.48 2011 367,750,803 19,918,188 14,685,585 402,354,576 26.022 47,406,062 449,760,638 2,869,531,746 15.67 2012 369,416,422 18,654,394 15,779,466 403,850,282 26.272 47,553,744 451,404,026 2,884,188,981 15.65 2013 370,390,092 17,769,120 16,948,264 405,107,476 26.927 48,882,411 453,989,887 2,889,385,914 15.71 2014 376,131,346 13,652,885 17,670,147 407,454,378 27.080 48,865,900 456,320,278 2,917,267,724 15.64 ~ Note 1: The tax rate for motor vehicles is set based on the average countywide tax rate. The City of Salina then receives a share of that based on tax effort Note 2: The estimated market value excludes the value of the State assessed properties. Market value information is not available for those properties. However, state assessed property is generally assessed at 33% of market value, except for railroads, which are assessed at 15% of market value. Note 3: The Direct rate is expressed in dollars per thousand dollars of assessed value. Source: Saline County Clerk Fiscal (Budget) Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Operating Millage 20.055 20.001 19.835 20.047 21.749 20.082 19.236 20.326 20.242 20.274 City of Salina Debt Service Millage 4.008 3.989 3.954 3.912 4.137 5.773 6.786 5.946 5.948 6.806 Source: Saline County Clerk Total City Millage 24.063 23.990 23.789 23.959 25.886 25.855 26.022 26.272 26.190 27.080 Schedule? City of Salina, Kansas Direct and Overlapping Property Tax Rates Last Ten Fiscal Years (rate per $1,()()() of assessed value) Saline Couniy Debt Total Operating Service County Operating Millage Millage Millage Millage 28.874 28.874 42.175 28.579 28.579 40.136 27.955 27.955 41.903 27.435 27.435 42.761 29.347 29.347 46.339 31.303 31.303 45.341 31.432 31.432 45.818 32.576 32.576 47.127 34.823 34.823 47.133 38.047 38.047 41.763 USD 305 (2) Other (1) Total Debt Service Total USD Millage Millage Other 17.491 59.666 10.984 123.587 15.046 55.182 10.960 118.711 13.349 55.252 10.726 117.722 12.229 54.990 10.775 117.159 12.208 58.547 10.971 124.751 13.155 58.496 12.401 128.055 13.095 58.913 12.131 128.498 11.693 58.820 11.989 129.657 11.516 58.649 12.135 131.797 13.842 55.605 11.805 132.537 (1) The "Other'' column includes the State of Kansas, the Salina Airport Authority, and the Salina Public Library. Beginning in 2005, this also includes Kansas State Extension District #3. (2) A small portion of Salina is covered by USD 306, USD 307, or USD 400. Total Tax Rates are different in the areas covered by these jurisdictions. Schedule 8 City of Salina, Kansas Principal Property Taxpayers Current Year and Ten Years Ago 2005 (2004 Assessed Value) Assessed % of Total Taxpayer Westar Energy (Western Resources) Schwan's Logistics LLC (Sales) Warmack, Salina Partnership (IPFOA) (Now Garrison Salina) Gateway Properties Kansas Gas Service Menard Inc. Salina Regional Health Center fl Great Plains Manufacturing Collier, Dennis D. Dillon's Wal-Mart Stores, Inc. Southwestern Bell Lowe's Home Center Western Wireless Type of Business Utility Pizza Manufacturing Retail Shopping Mall Shopping Mall (Midstate) Utility Home Improvement Hospital and Medical Offices Manufacturing Commercial and Residential Grocery Chain Discount Retail Stores Telephone Utility Building supply Center Microwave Transmission Combined Valuation of the Ten Largest Taxpayers City Valuation Percent of Total City Assessed Valuation (1) Source: Saline County Clerk's Office Valuation $ 8,036,664 7,938,775 6,064,998 3,058,959 4,967,556 2,415,729 3,979,960 5,265,830 2,015,463 2,218,381 $ 45,962,315 $ 383,949,303 Valuation 2.09% 2.07% 1.58% 0.00% 0.80% 0.00% 1.29% 0.63% 0.00% 0.00% 1.04% 1.37% 0.52% 0.58% 10.87% Rank 1 2 3 7 5 8 6 4 10 9 2015 ~014 Assessed Value) Assess % of Total Valuation $ 9,980,609 7,980,031 4,950,001 4,478,018 3,553,735 2,629,399 2,550,905 2,357,071 2,163,976 2,160,125 $ 42,803,870 $ 456,320,278 Valuation 2.19% 1.75% 1.08% 0.98% 0.78% 0.58% 0.56% 0.52% 0.47% 0.47% 7.19% Rank 1 2 3 4 5 6 7 8 9 10 Schedule 9 City of Salina, Kansas Property Tax Levies and Distributions Last Ten Fiscal Years Current Year Tax Distributions Total Tax Distributions Fiscal Taxes Levied (Budget) for the fiscal Delinquent Percentage of Year year Amount Percentage Collections ( 1 ) Amount levy 2005 8,067,300 7,904,231 98.0% 382,236 8,286,467 102.7% 2006 8,467,343 8,373,363 98.9% 173,093 8,546,456 100.9% 2007 8,990,268 8,661,700 96.3% 185,488 8,847,188 98.4% 2008 9,409,338 9,083,917 96.5% 262,511 9,346,428 99.3% 2009 10,354,161 9,923,959 95.8% 759,764 10,683,723 103.2% 2010 10,276,905 9,704,937 94.4% 278,656 9,983,593 97.1% 2011 10,415,491 10,287,770 98.8% 273,843 10,561,613 101.4% 2012 10,570,420 10,411,299 98.5% 245,086 10,656,385 100.8% 2013 10,576,448 10,145,404 95.9% 248,184 10,393,588 98.3% 2014 10,908,147 10,776,688 98.8% 398,820 11,175,508 102.5% (1) Delinquent collections are reported in the aggregate for all previous years. Data is not currently available for "collected in subsequent years" Source: Saline County Treasurer's Office 104 ~ 0 u, 2005 City Direct Tax Rate General 0.50% Special purpose 0.25% County-wide Tax Rate 1.00% Portion of County-wide tax allocated to City (July Percentage) 61.60% In addition to the direct tax, the City receives a portion of the Countywide sales tax, based on a formula distribution. The formula is based on property tax effort and population, and is adjusted in January and July of each year. In November 2008, the voters approved an increase in the Special Purpose Tax rate from .25% to .40%, to be effective April 1, 2009. Source: Kansas Department of Revenue Schedule 10 City of Salina, Kansas Direct Sales Rate by Taxing Entity Last Ten Fiscal Years Fiscal Year 2006 2007 2008 2009 2010 0.50% 0.50% 0.50% 0.50% 0.50% 0.25% 0.25% 0.25% 0.25%/0.40 0.40% 1.00% 1.00% 1.00% 1.00% 1.00% 61.81% 61.92% 62.31% 62.46% 61.58% 2011 2012 2013 2014 0.50% 0.50% 0.50% 0.50% 0.40% 0.40% 0.40% 0.40% 1.00% 1.00% 1.00% 1.00% 63.34% 61.72% 60.86% 60.23% Sc:hedule 11 City or Sallna, Kan ... water Sal• by Class of custom• Lot Ten Fhlcal Yean .... -2007 -2009 2010 2011 2012 2013 2014 -..... -wato, -...... -...... -..... -..... -...... -...... -...... ,.. ... ..... RateCIUa BIiied .... BIiied Sold BIiied Sold BIiied Sold BIiied .... BIiied .... BIiied Sold BIiied Sold BIiied Sold BIiied .... Resldentlal 17,576 1,187,130 17,637 1,164,293 17,750 1,080,015 17,813 994,875 17,792 1,043,774 17,838 1,127,864 17,899 1,194,629 17,893 1,225,931 17,966 989,788 18,042 1,003,100 Commercial 1,680 358,669 1,568 357,488 1,592 331,440 1,591 333,720 1,689 339,507 1,568 350,633 1,574 372,499 1,565 38,547 1,579 348,968 1,599 353,875 Industrial 43 181,325 43 180,900 .. 237,698 .. 203,491 .. 152,910 44 183,166 44 180,277 42 174,595 40 182,529 42 193,233 Government 146 102,994 150 74,768 151 58,568 152 SS,366 104 41,793 85 42,714 "' 55,910 99 54,618 .. 46,484 "' 45,346 Apartment 195 56,359 187 56,340 184 55,500 182 64,703 182 71,503 172 71,121 1SS 72,562 189 70,263 1SS 87,155 188 80,865 Sohool• 81 41,187 81 44,925 80 38,953 81 38,835 .. 39,815 85 48,388 85 53,879 81 57,02.7 .. 44,187 .. 45,328 lndustrtal speclal 1 39,551 1 37,508 1 35,813 1 42,574 1 32,934 1 44,457 1 44,051 1 40,448 1 20,439 • 0 Coosumed in production 21 31,570 19 28,583 18 26,070 18 28,699 18 26,223 17 32,604 13 22,728 12 19,268 12 18,665 12 19,264 Rural water 1 28,889 1 28,395 1 23,963 1 24,798 1 22,824 1 23,854 1 28,821 1 25,930 1 21,530 1 22,993 H ...... , 15 17,126 15 13,088 15 13,755 15 18,723 13 20,488 12 18,503 10 15,874 10 17,896 9 28,462 10 32,184 Rellglouslnon proflt 40 9,521 39 8,888 41 7,463 40 6,913 39 7,312 39 5,589 38 5,690 38 5,399 37 4,810 37 4,m Other taxable deductions 5 8,995 5 6,630 5 9,975 4 8,02.3 899 0 0 -0 Engineering studies 8 6,283 8 6,135 8 5,805 8 5,327 8 6,178 8 5,266 7 3,754 8 6,104 8 6,822 8 5,085 Providing taxable service 2 5,677 2 5,850 2 5,010 2 4,883 2 4,889 2 5,494 2 4,827 2 6,118 2 3,495 1 3,561 Sale of component perts 8 5,473 8 5,280 8 5,040 8 5,748 8 5,200 8 5,851 8 5,454 8 5,726 • 5,972 • 8,850 Fire hydrant 4 5,232 3 1,598 2 495 3 1,147 2 1,032 3 2,424 3 1,389 4 2,533 3 1,922 2 1,474 lndustrtal consumed In productloo 3 2,350 3 3,510 3 3,593 3 3,230 3 2,314 3 4,063 3 3,280 3 3,543 3 4,417 3 3,568 Sales of farm equipment 1 213 1 308 1 180 1 256 1 205 1 213 1 56 1 83 1 107 1 48 19,730 2,088,634 19,789 2,024,483 19,908 1,937,333 19,971 1,864,091 19,893 1,818,879 19,887 1,970,202 19,964 2,086,7&9 19,937 2,100,966 20,018 1,793,771 20,111 1,801,578 water Rate Schedule: Moothly meter charge (518'1 $ 3.21 $ 3.38 $3.57 $ 3.75 $ 4.44 $ 4.51 $4.60 $4.74 $4.88 $5.03 § Commodity charge (per 000 gal.): 0 -2000gal. $ 2.16 $ 2.21 $2.42 $ 2.54 $ 2.34 $ 2.55 $3.77 $3.88 $4.04 $4.24 2001 -10,000 gal $ 1.94 $ 1.99 $2.20 $ 2.31 Over 10,000 gal. $ 1.73 $ 1.77 $1.97 $ 2.07 Excess use charge $ 4.SS $ 5.10 $7.54 $7.76 $8.08 $8.48 Wutewatar Rate Schedule: Moothly base charge $ 3.03 $ 3.18 $3.34 $ 3.51 $ 6.31 $ 6.42 $6.57 $6.77 $6.97 $7.11 Unit cost (per 000 gal.): $ 2.23 $ 2.38 $2.50 $ 2.83 $ 2.88 $ 3.08 $4.48 $4.61 $4.79 $4.94 water sold is expreaaecl in thousands of gallons. Number of Accounts blled Is the annual number of billings for each dass divided by 12. Monthly meter charge increases with the size of the meter. Residential wastewater is calc..Aated besecl oo Winter Quarter water consumption. Other accounts ere based on monthly water consumption. 2008 water ConsumpUoo Rate structure changed from a decreasing tier structure to one rate and Excess Use Charge which Is double the consumption rate "'In 2011, basis for measurement was switched from cubic: feet to gelloos. The adjus1ments and conversions necessary for this table have not yet been completed. Source: City of Salina water Customer Accounting Office. Schedule 12 City of Salina, Kansas Ratio of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities Business-Tfe Activities General General Wa er Percentage Obligation Capital Temporary Obligation Revenue Loans Total Primary of Personal Fiscal Year Bonds Lease Notes Bonds Bonds Payable Government Income Per Capita 2005 21,202,921 20,944 2,700,000 6,258,456 4,990,000 7,460,602 42,632,923 2.9% 927.53 2006 21,497,408 9,200,000 5,175,780 4,350,000 7,130,852 47,354,040 2.9% 1,030.42 2007 25,436,632 7,625,000 3,888,368 3,710,000 6,786,743 47,446,743 2.8% 1,010.80 2008 29,869,930 5,005,000 2,780,069 3,030,000 6,428,759 47,113,758 2.5% 1,014.12 2009 52,067,590 2,320,000 2,320,000 5,862,516 62,570,106 3.5% 1,346.09 2010 53,120,952 2,500,000 8,614,576 1,580,000 65,815,528 3.8% 1,425.20 2011 55,225,670 3,400,000 7,417,907 16,193,925 82,237,502 4.3% 1,723.80 2012 49,109,575 1,485,000 9,613,926 15,850,228 76,058,729 3.8% 1,583.07 ~ 2013 49,631,797 3,800,000 8,519,799 15,226,532 77,178,128 3.7% 1,613.05 0 2014 50,033,555 176,235 5,000,000 9,587,351 14,592,836 6,208,102 85,598,079 4.1% 1,788.25 -< Source: City of Salina Comprehensive Annual Financial Reports, 2005 -2014 Schedule 13 City of Salina, Kansas Ratio of Net General Bonded Debt Outstanding Last Ten Fiscal Years General Bonded Debt Outstanding enera Percentage of Obligation Temporary Less Debt Net General Actual Taxable Fiscal Year Bonds Capital Lease Notes Total Service Fund Bonded Debt Value of Per Capita 2005 27,461,377 20,944 2,700,000 30,182,321 1,407,529 28,774,792 7.5% 626.03 2006 26,673,188 9,200,000 35,873,188 1,494,320 34,378,868 8.5% 748.08 2007 29,325,000 7,625,000 36,950,000 1,210,457 35,739,543 8.3% 761.39 2008 32,649,999 5,005,000 37,654,999 792,744 36,862,255 8.3% 793.45 2009 54,387,590 54,387,590 735,291 53,652,299 11.9% 1,154.23 2010 61,735,528 2,500,000 64,235,528 571,873 63,663,655 14.2% 1,378.60 2011 62,443,577 3,400,000 65,843,577 1,236,026 64,607,551 14.4% 1,354.26 2012 58,723,501 1,485,000 60,208,501 582,412 59,626,089 13.2% 1,241.05 2013 58,151,596 3,800,000 61,951,596 707,763 61,243,833 13.5% 1,280.02 ~ 2014 59,620,906 176,235 5,000,000 64,797,141 407,864 64,389,277 14.1% 1,345.17 0 co Source: City of Salina Comprehensive Annual Financial Reports, 2005 -2014 Schedule 14 City of Salina, Kansas Direct and Overlapping Governmental Activities Debt As of December 31, 2014 Jurisdiction Direct: City of Salina Overlapping: Salina Airport Authority Saline County USD 305 Net General Obligation Bonded Debt Outstanding $ 64,389,277 23,260,000 237,740 135,785,000 Total Overlapping Debt 159,282,740 Total Direct and Overlapping Debt 223,672,017 Per Capita Direct and Overlapping debt Percentage Applicable to City of Salina Amount Applicable to the City of Salina 100% $ 64,389,277 100% 23,260,000 76% 179,494 94% 127,135,496 150,574,989 214,964,266 $ 4,492.84 Percentage of debt applicable to the City of Salina is based on the proportion that the assessed valuation of the City of Salina bears to the assessed valuation of the overlapping entity. Source: Saline County Clerk 109 0 Legal Debt Margin Calculation for 2014 Assessed Valuation: Debt Limit (30% of Assessed Value) Debt Applicable to limit: Total Bonded Debt Less GO Debt Attributable to Exempt Purposes Less Revenue Bonds Less Capital Leases Less Loans Payable Less Fund Balance designated for Debt Service Total Debt Applicable to Limitation Legal debt margin Debt Limit $ 115,184,791 Total net debt applicable to limit 28,774,792 Legal debt margin 86,409,999 Total net debt applicable to the limit as a percentage of debt limit 25% $120,657,497 28,774,792 91,882,705 24% $456,320,278 136,896,083 85,598,079 9,587,351 14,592,836 176,235 6,208,102 407,864 54,625,691 82,270,392 $128,539,768 35,739,543 92,800,225 28% Schedule 15 City of Salina, Kansas Legal Debt Margin Last Ten Fiscal Years Fiscal Year $ 133,224,043 $ 135,400,141 $ 134,340,263 36,862,255 53,652,299 58,411,185 96,361,788 81,747,842 75,929,078 28% 40% 43% $134,928,191 $135,421,208 57,747,032 49,309,445 77,181,159 86,111,763 43% 36% $ 2013 136,196,966 52,724,034 83,472,932 39% 2014 136,896,083 54,625,691 82,270,392 40% Utility Service Fiscal Year Charges 2005 12,703,953 2006 12,949,169 2007 14,054,466 2008 14,072,513 2009 14,980,874 2010 16,520,055 2011 17,905,056 2012 19,098,626 2013 17,938,288 2014 18,742,029 Schedule 16 City of Salina, Kansas Pledged Revenue Coverage Last Ten Fiscal Years Water/Sewer Revenue Bonds ess: Operating Net Available Expenses Revenue Principal 10,468,771 2,235,182 941,662 10,894,968 2,054,201 969,748 11,545,842 2,508,624 983,479 12,754,057 1,318,456 1,038,000 12,524,390 2,456,484 1,276,243 13,571,098 2,948,957 740,000 12,963,891 4,941,165 1,580,000 13,963,941 5,134,685 340,000 14,524,148 3,414,140 620,000 14,002,088 4,739,941 630,000 Interest 542,722 461,470 589,288 515,459 455,294 91,450 496,760 596,992 590,191 577,791 Source: City of Salina Comprehensive Annual Financial Reports, 2005 -2014 City of Salina Debt Service Schedules 111 Coverage 151% 144% 160% 85% 142% 355% 238% 548% 282% 392% --"' Per Capita Personal Income (Saline Fiscal Year Population County) 2005 45,964 32,365 2006 45,956 35,543 2007 46,940 36,707 2008 46,458 40,351 2009 46,483 38,392 2010 46,180 37,880 2011 47,707 40,512 2012 48,045 41,762 2013 47,846 43,078 2014 47,867 43,736 Sources: Population: Kansas Division of the Budget. Employment: Kansas Department of Labor Personal Income, Salina (interpolated) $1,487,624,860 $1,633,414,108 $ 1,723,026,580 $1,874,626,758 $ 1,784,575,336 $1,749,298,400 $1,932,705,984 $ 2,006,455,290 $2,061,109,988 $2,093,511,112 Schedule 17 City of Salina, Kansas Demographic and Economic Statistics Last Ten Fiscal Years Unemployment Labor Force, USD305 Rate City of Salina Headcount 4.7% 25,663 4.0% 25,777 3.6% 25,400 3.8% 26,343 7,348 6.0% 26,769 7,432 6.7% 26,379 7,346 6.7% 26,258 7,289 6.3% 26,185 7,305 5.1% 26,441 7,305 5.3% 26,303 7,388 Personal income for Salina is derived from the population and per capita personal income for Saline County Per Capita Personal income as reported by the Bureau of Economic Analysis, as of 09/30/2015 2014 Per Capita Personal Income staff projection 2005 -2014 Employment City of Salina USD305 headcount and free and reduced lunch data derived from Kansas Department of Education. Free and Reduced Lunch percentage is an average of the percentages for each building reported. School Data is reported at beginning of school year, eg 2014-2015 school year is reported as 2014 Percentage Asa%of Free and Per Capita per capita Reduced City .5 cent .5 cent sales personal Lunch sales tax Tax income $ 4,560,772 $ 99.22 0.307% $ 4,834,367 $ 105.20 0.296% $ 4,967,468 $ 105.83 0.288% 56.3% $ 5,177,461 $ 111.44 0.276% 58.7% $ 4,965,147 $ 106.82 0.278% 57.8% $ 4,803,553 $ 104.02 0.275% 58.7% $ 5,076,751 $ 106.42 0.263% 59.1% $ 5,241,205 $ 109.09 0.261% 60.7% $ 5,326,723 $ 111.33 0.258% 61.3% $ 5,555,601 $ 116.06 0.265% Increase in per capita Sales Tax (10 years) 17.0% Increase in per capita Personal Income 35.1% ~ ~ "' Employer Schwan's Global Supply Chain USD#305 Salina Regional Health Center Exide Technologies Phiilips Lighting Co. City of Salina Walmart Dillon Stores Solomon Corp El Dorado National Raytheon Aircraft Lock/line Total Schedule 18 City of Salina, Kansas Principal Employers Current Year and Nine Years Ago Type of Business Employees Frozen Pizza Manufacturing 2,000 Public School System 935 Health Care 1,082 Automotive Battery Manufacturer 800 Fluorescent Lamps 600 City Government 482 Retail Retail (Grocery) Electrical Equipment Buses/Recreational Vehicles Aircraft Manufacturing 274 Cellular Phone Insurance 490 6,663 Source: Salina Chamber of Commerce 2005 2014 Percentage Percentage of Labor of Labor Rank Force Employees Rank Force 1 6.8% 1,800 1 6.8% 3 3.2% 1,659 2 6.3% 2 3.7% 1,300 3 4.9% 4 2.7% 750 4 2.8% 5 2.1% 490 5 1.9% 7 1.6% 465 6 1.8% 421 7 1.6% 343 8 1.3% 324 9 1.2% 0.0% 8 0.9% 6 1.7% 22.8% 7,552 28.7% GOVERNMENTAL AUDIT SECTION CITY OF SALINA, KANSAS SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended December 31, 2014 Federal Federal Granter/Pass-Through CFDA Granter/Program Title Number Revenues De11artment of Housing and Urban Develo11ment Fair Housing Assistance Program 14.401 $ 84,573 Passed through Kansas Housing Resources Corporation Emergency Solutions Grant 14.231 112,578 Total Department of Housing and Urban Development 197,151 De11artment of Trans11ortation Passed Through the Kansas Department of Transportation: State and Community Highway Safety 20.600 6,266 Alcohol Traffic Safety and Drunk Driving Prevention Incentive Grant 20.601 6,482 Occupant Protection Incentive Grant 20.602 4561 Total Department of Transportation 17,309 Environmental Protection Agency Community Action for a Renewed Environment (CARE) Program 66.035 91,658 Passed Through the Kansas Department of Health and Environment Capitalization Grants for Drinking Water State Revolving Funds 66.468 6,208,102 Total Environmental Protection Agency 6,299,760 Total Expenditures of Federal Awards $6,514,220 Exeenditures $ 66,000 112,578 178,578 6,266 6,482 4 561 17 309 54,092 3,295,170 3,349,262 $ 3,545,149 See independent audito~s report on the financial statements and notes to the schedule of expenditures of federal awards. 114 1. General CITY OF SALINA, KANSAS NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended December 31, 2014 The accompanying Schedule of Expenditures of Federal Awards presents the expenditures of all federal financial assistance programs of the City of Salina, Kansas. All expenditures of federal financial assistance received directly from federal agencies as well as federal financial assistance passed through other governmental agencies are included on the schedule. 2. Basis of Accounting The accompanying Schedule of Expenditures of Federal Awards is presented in accordance with accounting principles generally accepted in the United States of America. 115 CITY OF SALINA, KANSAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2014 Section I -Summary of Auditor's Results Financial Statements Type of auditor's report issued: Internal control over financial reporting: Material weakness(es) identified? Significant deficiency(ies) identified that are not considered to be material weaknesses? Noncompliance material to financial statements noted? Federal Awards Internal control over major programs: Material weakness( es) identified? Significant deficiency(ies) identified that are not considered to be material weaknesses? Type of auditor's report issued on compliance for major programs: Any audit findings disclosed that are required to be reported in accordance with section 51 O(a) of Circular A-133? Identification of major programs: CFDA Number{s) 66.468 Dollar threshold used to distinguish between type A and type B programs: Auditee qualified as low-risk auditee? 116 Yes --- X Yes Yes --- Yes --- ___ Yes Yes --- Unmodified X No -'-'--- ___ None reported ~X'-'---No X No --- _x'-'---None reported Unmodified X No --- Name of Federal Program or Cluster Capitalization Grants for Drinking Water State Revolving Funds $300 000 Yes X No --- --- Current Year Findings CITY OF SALINA, KANSAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS ForU'leYear Ended December 31, 2014 Condition Questioned l,Q!ll! Recommendation Not applicable 2014-1 During our audit of municipal courts accounts Recommended Not We recommend that U'le City Prior Year Findings None Noted receivable balances we noted the following: Practices a) The City was unable to produce an accounts receivable aging report or accounts receivable subledger U'lat agreed to U'le municipal courts accounts receivable balance as of December 31, 2014 Municipal Court MonU'lly Report. b) Per a comparison of the 2014 and 2013 Municipal Court Monthly Reports, the number of municipal court cases filed and the amount of cost and fine revenues collected decreased by approximately 15% durina 2014. c) Pera comparison of the 2014 and 2013 Municipal Court Monthly Reports, the number of case dosed decreased by 23% during 2014 and the number of pending cases at December 31, 2014 was 68% higher than at December 31, 2013. 117 detennined process and save a detailed accounts receivable aging report at U'le end of each monU'I that agrees to U'le Municipal Court MonU'lly Report Additionally, we recommend that U'le City designate an appropriate individual to review and approve these reports each month and to dosely monitor U'le number of cases dosed and cases pending in order to detennine if sufficient progress is being made to dose cases and collect related revenues. Additionally, we recommend the City evaluate its ticket issuance policies to determine if the number of tickets issued and potential revenues generated by U'lese tickets are in line wiU'I the City's projections and Management Response Agrees • MIZE,..,JIOUSER \..../OMPANYP.A. INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH "GOVERNMENT AUDITING STANDARDS" Mayor and City Commissioners City of Salina, Kansas We have audited, in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Government Auditing standards issued by the Comptroller General of the United states, and the Kansas Municipal Audit and Accounting, the financial statements of the govemmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund infonnation of the City of Salina, Kansas, (the City) as of and for the year ended December 31, 2014, and the related notes to the financial statements, which collectively comprise the City's financial statements, and have issued our report thereon dated October 22, 2015. Our report includes a reference to other auditors who audited the financial statements of the Salina Airport Authority and the Housing Authority of the City of Salina, as described in our report on the City of Salina's financial statements. This report does not include the results of the ether auditors' testing of internal control ever financial reporting or compliance and ether matters that are reported on separately by those auditors. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal controls exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent. or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charge with governance. Our consideration of internal control was far the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We did identify certain deficiencies in internal control, described in the accompanying schedule of findings and questioned costs as Finding 2014-1 that we consider to be significant deficiencies. www.rrighoMlt(,com • mhcoOmzehouse,.com SM S KonSGI Ave, Suh 700 • Topeka, KS 66603-WS • 785.233.0536 p • 76Snl.1078 f 534 S Kansas Ave, Suh "400 • Topeka. KS 66603-3454 • 785.234.5573 p • 786.234..1 DS7 f 7101 College Blvd, Suh 900 • Ovaland Park, KS 66210-1984 • 911451.1882 p • 911451.2211 f 211 E Bghlh Suh M lawranc:•, KS 66044·2771 • 71U42..8844 p • 715.842.9049 f 118 Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. However, we noted certain other matters that we reported to management of the City in a separate letter dated October 22, 2015. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Certified Public Accountants Lawrence, Kansas October22,2015 Pt+ 119 • MIZE0 HOUSER OMPANYPA. INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY 0MB CIRCULAR A-133 Mayor and City Commissioners City of Salina, Kansas Report en Compliance for Each Major Federal Program We have audited the compliance of Iha City of Salina, Kansas, {the City) with Iha types of compliance requirements desaibed in Iha 0MB Circular A-133 Compliance Supplement that. could have a direct and material effect on each of the City's major federal programs for the year ended December 31, 2014. The City's major federal financial programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance for each of the City's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compiance in accordance with auditing standards generally accepted in the United states of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; 0MB Circular A-133, Audits of states, Local Governments, and Non-Prottt Organizations, and the Kansas Municipal Audit and Accounting Guide. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance wittl those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination on the City's compliance. Opinion on Each Major Federal Program In our opinion, ttie City complied, in all material respects, with U'le types of compliance requirements referred to above ttiat could have a direct and material effect on each of its major federal programs for the year ended December 31, 2014. www.mfMhoUftLCOffl. mhco9mlzehoUNr.COffl U4 S Kan-Ave, Suh 700 • Topeka, KS "603-3465 • 781.23!..0IS6 p • 7a&.m..1078 I SM S KanlGI Ave, Suh 400 • Topaka. KS 6'603-3454 • 785.234.5573 p • 715.234.10371 7101 College Blvd. Sule 900 • Otefland Park. KS 66210-1984 • '13.ASl.1882 p • '13.451.2211 f 211 E Bghlh Suh .All UIWl9llce, KS 66044-2771 • 785.142.8844 p • 785.142.904, I 120 Report on I ntemal Control Over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program in order to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with 0MB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charge with governance. Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of 0MB Circular A-133. Accordingly, this report is not suitable for any other purpose. Certified Public Accountants Lawrence, Kansas October 22, 2015 /J4 121 APPENDIX D December 31, 2015 Unaudited Financial Statements The City's 2015 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, 2015, prepared by the firm of Mize Houser & Company, P.A., Certified Public Accountants, Topeka, Kansas. Gtnerat Fund JOO Revenues Expenditures Variance (Unfavorable) 12/3 1 Fund BaJance E,t GAAP blsls 81\anc« Arts and Humanities Revenues Expenditures Balance l2/31 Fund Balance Spt<, Slits l ax Capita! Revenues Expenditures Balance 12/31 fund Balance Spt<, Sale, T111 Eco!'lomlc 01 Revenues Expenditures Sala.nee 12/31 fund Balance ausinen Imp. District itl Revonuu Expenditures Balance l2/31 Fund BaJance Tourl$m Revonun Expenditures Balance. 12/31 Fund Balance Special Partcs Revenues hp,endlcures Balance ll/31 Fund Balance 1 of 3 6/7/2016 100 210 220 230 140 250 City of Sanna 2017 Budget Request f und Balance Summaries 2014Act1.11il 1015 Actu,t 2016&uct1et $ (39,326,225) $ (38,533,746) $ ('1,929,468) $ 38,567,348 $ 38,097,181 $ 41,847,984 $ 758,878 5 436,S66 $ 81,484 $ 2,816,21M s 3,448,702 $ 3,801,133 $ 4,254,429 s 5,173,053 $ (851,659) $ (933,611} $ (1,089,884} $ 974,736 5 895,550 $ 1,003,334 $ (122,077} $ 38/>61 $ 86,550 $ 100,020 $ 138,081 $ 167,701 $ (4,119,654} $ (4,207,511) $ (4,382,500) $ ,4,991,975 $ 3,7U,571 $ •,977,469 $ (872,322) $ 495,940 $ (594,969) $ 1,023,469 $ 1,SS8,286 $ 27;\,588 $ (348,974) S (354,636) $ (332,276) $ 281,708 $ 133,391 $ 378,704 $ 67,265 $ 221,245 $ (46,428) $ 675,154 s 896,399 $ 50,000 $ (82,643) $ [83,141) $ (90,$00) $ 82,945 $ 78,837 $ 90,500 $ (302) $ 4,304 $ $ 436 s 3,867 s (1,417,788) S 11.859,163) S (1,420,000) $ J,09,690 $ 1,883,~8 $ 1,420,000 $ (61,902) $ (24.225) $ $ 24,395 s $ $ (173,005) S (184,749) $ (184,000) s 100,982 s 292.929 s 239,932 $ 72,023 $ (108,L80) $ (S5,93l) $ 182,600 $ 14,420 $ 103,236 T:\finance\Budget W<ITT:tng files\2017 Department Requests\2017 Consok>dated 8udget Request City of Salina 2017 Budget Request Ft.ind Balance Summarfe$ 20UActu1I 2015 Actual 2016Bud111 Spe<lal Alcohol 260 Revenues s (172,684) $ 1184,6051 5 (180,000) Expenditures s 130,433 s 227,0lS s 217,252 Balance s 42,251 $ 142,410) s (37,252) 12/31 Fund Balance s 21).4 $ 47 s S.poci al Ga.1; Tax 110 Revenues s (1,561,727) S 11,589,538) S (1,549,070) Expenditures s 2,093,837 $ 1,717,871 s 1,391,158 81lance $ (532,110) S (128,333) S 157,912 12/31 Fund Balance s 595,442 s 298,027 s 500,000 Neighborhood Parks 280 Revenues s (7,642) S (9,661) S ll4,000) Expenditures s 22,948 s 6,631 s 24.000 Balance s (15,306) $ 3,030 s 12/31 Fund Balal'l(;e s 95,382 s 98,413 $ BlctJUtnnlal Con tor 290 Revenues $ (636,226) s (756,556) $ (SS0,000) Expenditures s 619,253 $ 755,038 $ 450,000 Balance s 16,973 s l,518 s 100,000 t?/31 Fund 8ilance s s 3,164 s Sanitation 300 Revenues s (2,539,344) S [2,544,646) 5 (2,553,500) Expenditures $ 2,399,146 s 2,408,537 s 2,821,579 8alanct s 140,198 $ 136.109 $ (268,079) U/31 Fund Balance s 897,013 s 1,033,121 s 679,874 Solid Waste 320 Revenue, s (3.069,84 l) S (2,646.LS41 S (2,546,997) Expenditures s 2,433,934 $ 2,449,663 s 3,634,921 8ala,nce s 635,906 s 196,491 s (1,087,924) 12/31 Fund Balance $ 2,08S,S18 s 2,216.403 s 1,244,763 Solld W.ttte C:apital Reserve Balance s 2,185,981 Golf Course l40 Revenues s (860,012) $ (862,425) $ (888,750) ExpenditUftl $ 806,783 s 81S,90l s 836,785 Balance $ 53,230 s 46,522 s 51,965 12/31 Fund ~lance $ 117,157 s 163,680 s 215,435 Water ind Wastewater 370 Revenues S (20,835,207) S (19,00l,6S2) S [20,666,850) Expenditures $ 16,3-66,45S s .18,070,330 S 23,529,216 Balance s 4,468,?Sl s 931,322 S (2,862,366) L2/31 Fund Balance $ 9,306,498 s 9,448,147 s 7,000,000 Wat«/WiiStewater Capital Reserve $ 10,796,628 2of 3 6/7/2016 1 :\f1nan,e\t1uo,:et Wol1Cmg t11es\J.Ol/ O~panment Kequests\Wl/ t:onsotoaateo tSudget Kequest Workers Compensation Revenues Expenditures Balance 12/31 Fund Balance Health Insurance Revenues Expenditures Balance 12/31 Fund Balance Central Garage Revenues fxpenditures Balance 12/31 Fund Balance Bond and Interest Revenues Expenditures Balance- 12/31 Fund Balance 3of3 6/7/2016 410 420 450 500 C'rty of Sa!ina 2017 Budget Request f und Balance Summaries 2014Actual 2.01S Actual 20168udget $ (335,9801 5 (304,270) S (459,9901 s 350,035 s 304,889 s 409,667 s (14,05SI $ (619) 5 50,323 s 749,644 s 7S0~011 s 730,927 s (5,990,7841 5 (6,386,1671 s (6,735.3501 s 6,678,718 s 6,121,023 s 6,588,000 s (687,934) S 265,14A s 1417,350 s 896,856 $ 1,.161,999 s 1,278,258 s (1,674,0071 S (1,358,2841 s (1,767,8221 $ 1,682,191 s 1,389,585 s 1,696,948 $ (S.0941 S (31,301) 5 70,874 s 16,441 s (14,860) S 110,634 s (6,255,9461 S (6,460,285) s (6,640.2291 s 6,609A20 s 6,628,922 $ 6,685,520 $ (353,4741 S (168,6371 $ (45,2911 s :3414,671 s 176,034 s 200,000 T:\finance\Budget Working Files\2017 OepattmentRequests\2017 Consolodated Budget Request CERTIFICATE DEEMING PRELIMINARY OFFICIAL STATEMENT FINAL June 20, 2016 To: Robert W. Baird & Co. , Inc. Milwaukee, Wisconsin Re: General Obligation Internal Improvement Bonds, Series 2016-A; General Obligation Refunding Bonds, Series 2016-B 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 previously caused to be delivered to the Purchaser(s) copies of the Preliminary Official Statement (the "Pre! im inary Official Statement") relating to the above-referenced bonds (the "Obligations"). For the purpose of enabling the Purchaser(s) to comply with the requirements of Rule l 5c2- 12(b )(J) of the Securities and Exchange Commission (the "Rule"), the lssuer hereby deems the information regarding the Issuer contained in the Prelin1inary 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: M@,yor By: Qru<di {1 ){.OU Title: Clerk Amendmentto Final Official Statement: $6,570,000 General Obligation Internal Improvement Bonds Series 2016-A $13,750,000 General Obligation Refunding Bonds Series 2016-B Of the City of Salina, Kansas The following portions of the Official Statement dated July 11, 2016 for the above-referenced Bonds are amended as follows: Inside Front Cover The CUSIP number that is referenced to the Series 2016-A Term Bond maturing October 1, 2028, should be 794743 7E8. Page 11-Sources and Uses of Funds Sources of Funds: Principal Amount of Bonds Net Reoffering Premium Transfers from Prior Issue Debt Service Funds Cash Balance After Encumbrances Total Sources of Funds Uses of Funds: Series 2016-A Bonds $6,570,000.00 111,766.35 0.00 32,278.82 $6,714,045.17 Deposit to Improvement Fund -Project Costs $500,000.00 Deposit to Escrow Fund for Refunded Bonds 0.00 Deposit to Redemp. Fund (2015-1 Note redemp.) 6,070,353.82 Underwriter's Discount 98,945.71 Costs of Issuance 44 745.64 Total Application of Funds $6,714,045.17 Page A-6 Series 2016-B Bonds $13,750,000.00 1,391,004.20 284,699.38 0.00 $15,425,703.58 $0.00 15,179,082.99 0.00 154,824.86 91.795. 73 $15,425,703.58 The following subsection should be added to the section entitled GENERAL INFORMATION CONCERNING THE CITY: Fieldhouse Project The City is currently in the process of working with a group of local investors to undertake a significant redevelopment of the City's downtown core. The improvements include a new 67,000 square foot multisport athletic facility (the "Fieldhouse") to be operated by the City. The Fieldhouse cost is approximately $11. 7 million, with funding provided by the City in part with proceeds of the sale of the Series 2016-2 Notes, contributions from local investors of $4.5 million and the anticipated sale of new market tax credits. In the opinion of Gilmore & Bell, P.C., Kansas City, Missouri, Bond Counsel, to the City 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 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 Bonds is exempt from income taxation by the State of Kansas, and (3) the Bonds have not been designated "qualified tax-exempt obligations0 within the meaning of Code Section 265/b}/3). See TAX MATTERS -"Opinion of Bond Counsel" herein. New Issues Book-Entry Only Dated Date: July 26, 2016 CITY OF SALINA, KANSAS $6,570,000 General Obligation Internal Improvement Bonds Series 2016-A $13,750,000 General Obligation Refunding Bonds Series 2016-B Moody's Ratings: "Aa3" Due: As Shown Herein The Series 2016-A Bonds (the "Series 2016-A Bonds") and the Series 2016-B Bonds (the "Series 2016-B Bonds" and, together with the Series 2016-A Bonds, the "Bonds") will be issued as fully registered bonds in the denomination of $5,000 or any integral multiple thereof. The Bonds shall be initially registered in the name of Cede & Co., as nominee of DTC to which payment of principal and interest will be made. Individual purchases of Bonds will be made in book-entry only form. Purchasers will not receive certificates representing their interest in the Bonds purchased. Principal on the Bonds will be payable on each October 1 in the years shown herein. Interest on the Bonds will be payable semiannually on April 1 and October 1 of each year until maturity, commencing on April 1, 2017. 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 "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 Bonds as the same becomes due. See THE BONDS -uSecurity'' herein. The Bonds are offered when, as and if issued by the City and received by the Underwriter subject to the approval of Bond Counsel. It is expected that: both series of Bonds will be available for delivery through the facilities of DTC on or about July 26, 2016. This date of this Official Statement is dated July 11, 2016. BAIRD THIS COVER PAGE CONTAINS INFORMATION FOR QUICK REFERENCE ONLY. IT IS .!iQIA 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 $6,570,000 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2016-A SERIAL BONDS Base cus1p!2l Maturity Amount Rate Yield 794743 10-01-17 $240,000 2.000% 0.650% 6T6 10-01-18 270,000 2.000 0.780 6U3 10-01-19 275,000 2.000 0.850 6Vl 10-01-20 280,000 2.000 0.950 6W9 10-01-21 285,000 3.000 1.100 6X7 10-01-22 295,000 3.000 1.230 6YS 10-01-23 305,000 3.000 1.330 6Z2 10-01-24111 315,000 2.000 1.450 7A6 10-01-25111 320,000 2.000 1.570 784 10-01-26111 325,000 2.000 1.700 7(2 10-01-29111 345,000 2.000 2.100 7FS 10-01-30111 355,000 2.125 2.200 7G3 10-01-31111 360,000 2.250 2.300 7Hl 10-01-32111 370,000 2.250 2.400 7J7 10-01-33111 375,000 2.375 2.500 7K4 10-01-34111 385,000 2.500 2.550 7L2 10-01-35111 395,000 2.500 2.600 7MO 10-01-36111 405,000 2.500 2.650 7N8 TERM BONDS Base cus1p!2l Maturity Amount Rate Yield 794743 10-01-28 $670,000 2.000% 2.000% 7FS $13,750,000 GENERAL OBLIGATION REFUNDING BONDS SERIES 2016-B SERIAL BONDS Base cus1p!2l Maturity Amount Rate Yield 794743 10-01-18 $ 670,000 2.000% 0.780% 7Ql 10-01-19 650,000 3.000 0.850 7R9 10-01-20 645,000 3.000 0.950 757 10-01-21 1,595,000 4.000 1.100 7TS 10-01-22 1,985,000 5.000 1.230 7U2 10-01-23 1,935,000 5.000 1.330 7VO 10-01-24111 1,770,000 2.000 1.450 7W8 10-01-25111 1,370,000 2.000 1.570 7X6 10-01-26111 980,000 2.000 1.700 7Y4 10-01-29111 545,000 2.000 2.100 883 10-01-30111 155,000 2.125 2.200 8(1 10-01-31111 160,000 2.125 2.300 8D9 TERM BONDS Base cus1p!2l Maturity Amount Rate Yield 794743 10-01-28111 $1,290,000 2.000% 2.000% SAS 111The Bonds maturing on or after October 1, 2024, will be subject to redemption prior to maturity at the option of the City on October 1, 2023, 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 subject to mandatory redemption as further described herein. See THE BONDS -HRedemption Provisions" herein. !2!CUSIP numbers have been assigned to this issue by Standard & Poof's CUSIP Service Bureau, a division ojthe McGraw-Hill Financial., and are included solely for the convenience of the Owners of the 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 300West Ash P. 0. Box 736 Salina, Kansas 67402-0736 CITY COMMISSION Kaye J. Crawford, Mayor Karl Ryan, Vice Mayor Jon R. Blanchard, Commissioner Trent Davis, Commissioner Randall Hardy, Commissioner CITY STAFF Jason Gage, City Manager Mike Schrage, Deputy City Manager Michelle Meyer, Director of Finance and Administration Shandi Wicks, 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 Underwriter to give any information or to make any representations with respect to 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 Underwriter. 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 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 THEOON~......................................................................................................................................... 2 THE DEPOSITORY TRUST COMPANY................................................................................................... 7 THE FINANCING PLAN......................................................................................................................... 8 SOURCES AND USES OF FUNDS.......................................................................................................... 11 CONCURRENT Fl NANCI ING................................................................................................................. 11 RISK FACTORS AND INVESTMENT CONSIDERATIONS......................................................................... 11 LEGAL MATTERS................................................................................................................................. 13 TAX MA HERS..................................................................................................................................... 14 RATINGS.............................................................................................................................................. 15 FINANCIAL ADVISOR........................................................................................................................... 15 UNDERWRITING................................................................................................................................. 16 ABSENCE OF MATERIAL LITIGATION................................................................................................... 16 CONTINUING DISCLOSURE................................................................................................................. 16 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-13 APPENDIX B: OMNIBUS CONTINUING DISCLOSURE UNDERTAKING APPENDIX C: AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDING DECEMBER 31, 2014 APPENDIX D: UNAUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDING DECEMBER 31, 2015 General OFFICIAL STATEMENT CITY OF SALINA, KANSAS $6,570,000 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2016-A $13,750,000 GENERAL OBLIGATION REFUNDING BONDS SERIES 2016-B INTRODUCTORY STATEMENT The purpose of this Official Statement is to present certain information concerning the City of Salina, Kansas (the "City" or "Issuer"), and the issuance of its $6,570,000 General Obligation Internal Improvement Bonds, Series 2016-A (the "Series 2016-A Bonds"), and its $13,750,000 General Obligation Refunding Bonds, Series 2016-B (the "Series 2016-B Bonds" and collectively with the Series 2016-A Bonds, the "Bonds"). The Series 2016-A Bonds and the Series 2016-B Bonds will be dated July 26, 2016 (the "Dated Date"). The Bonds are being issued to provide funds to finance certain street improvements and building renovations within the City and to refund portions of several outstanding bond issues of the City. See THE FINANCING PLAN herein. The full faith, credit, and resources of the City are irrevocably pledged for the prompt payment of the principal and interest on the Bonds as the same becomes due. See THE 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 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 each series of the Bonds (collectively, the "Bond Resolution"), as applicable. Copies of the Bond Resolution are available upon request to the City, the Financial Advisor, or Bond Counsel. Additional Information Additional information regarding the City, or the Bonds may be obtained from George K. Baum & Company, 4801 Main Street, Kansas City, Missouri 64112, telephone 816-474-1100. 1 THE BONDS Authority The Series 2016-A Bonds are issued pursuant to and in full compliance with the Constitution and statutes of the State of Kansas, including without limitation K.S.A. 10-101 et seq., K.S.A. 10-620 et seq., K.S.A. 12-685 et seq., K.S.A. 12-1736 et seq., all as amended, and an ordinance passed and resolution adopted by the City on July 11, 2016, authorizing the issuance of the Series 2016-A Bonds. The Series 2016-B Bonds are issued pursuant to and in full compliance with the Constitution and statutes of the State of Kansas, including without limitation K.S.A. 10-101 et seq., K.S.A. 10-427 et seq., K.S.A. 10-620 et seq., all as amended, and an ordinance passed and resolution adopted by the City on July 11, 2016, authorizing the issuance of the Series 2016-B Bonds. Security The Series 2016-A Bonds shall be general obligations of the City, payable as to both principal and interest from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real or personal, within the territorial limits of the City. The Series 2016-B 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 financed by the Refunded Bonds, as defined herein, 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 both series of Bonds as the same become due. Levy and Collection of Annual Tax, Transfer to Debt Service Account 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, to the extent necessary, 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. Such taxes and/or assessments 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 City 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 City, 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. 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 26, 2016, 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. 2 Redemption Provisions Optional Redemption. At the option of the City, Bonds or portions thereof maturing on October 1, 2024 and thereafter may be called forredemption and payment prior to their Stated Maturity on October 1, 2023, 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 -Series 2016-A Bonds. The Series 2016-A Bonds maturing in the year 2028 shall be subject to mandatory redemption and payment prior to 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 payments 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 Series 2016-A Bonds maturing in the year 2028: *Final Maturity Principal Amount $330,000 340,000 Vear 2027 2028* Mandatory Redemption -Series 2016-B Bonds. The Series 2016-B Bonds maturing in the year 2028 shall be subject to mandatory redemption and payment prior to 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 payments 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 Series 2016-B Bonds maturing in the year 2028: *Final Maturity Principal Amount $755,000 535,000 Vear 2027 2028* 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 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 Bond Registrar. 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. 3 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 City 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. 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 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 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 Resolution. 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 uBond Registrar'' and uPaying 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 atthe 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 Resolutions. The City shall pay the fees 4 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 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. 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 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 intentto pay Defaulted Interest and endingatthe 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 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. "Record Date" means, for the interest payable on any Interest Payment Date, the fifteenth day (whether or not a Business Day) of the calendar month next preceding such Interest Payment Date. 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 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 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 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 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 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 5 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 OTC (or a successor Securities Depository), and the following provisions of this section to discontinue use of the system of book-entry transfers through OTC (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)(l) or (a)(2) of this section, the City, with the consent of the Bond Registrar, may select a successor securities depository as hereinafter provided to effect book-entry transfers. In such event, all references to the Securities Depository herein shall relate to the period of time when the Securities Depository has possession of at least one Bond. Upon the issuance of Replacement Bonds, all references herein to obligations imposed upon or to be performed by the Securities Depository shall be deemed to be imposed upon and performed by the Bond Registrar, to the extent applicable with respect to such Replacement Bonds. If the Securities Depository resigns 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. 6 THE DEPOSITORY TRUST COMPANY The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of OTC. One fully registered bond certificate will be issued for each maturity of such series of the Bonds, in the aggregate principal amount of such maturity, and will be deposited with OTC. OTC, the world's largest depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law; a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code; and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 85 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. OTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of OTC and Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the OTC 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 OTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about OTC can be found at www.dtcc.com. Purchases of Bonds under the OTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from OTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with OTC 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 OTC. The deposit of Bonds with OTC and their registration in the name of Cede & Co. or such other OTC nominee do not affect any change in beneficial ownership. OTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by OTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to OTC. 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. 7 Neither OTC nor Cede & Co. (nor any other OTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the City or Paying 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 OTC nor its nominee, Paying Agent, or City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of OTC) is the responsibility of the City or Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of OTC, 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 Bonds purchased or tendered, through its Participant, to the Paying Agent, and shall effect delivery of such Bonds by causing the Direct Participant to transfer the Participant's interest in the Bonds, on DTC's records, to the Paying Agent. The requirement for physical delivery of Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Bonds are transferred by Direct Participants on DTC's records and followed by a book-entry credit of tendered Bonds to the Paying Agent's DTC account. OTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the City or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book-entry transfers through OTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered. The information in this section concerning DTC and DTC's book-entry system has been obtained /ram sources that the City, Band Counsel, and the Financial Advisor believe ta be reliable, but the City, Band Counsel, and the Financial Advisor take no responsibility for the accuracy thereof, and neither the OTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters but should instead confirm the same with OTC or the OTC Participants, as the case may be. The 2016-A Bond Projects Project Description Iron Avenue Reconstruction North Ohio Street Fire Headquarters Centennial Road THE Fl NANCI NG PLAN Ordinance/ Resolution No. Res. 15-7240 Res. 15-7183 Res. 15-7189 Res. 16-7325 Authority K.S.A. 12-685 et seq. K.S.A. 12-685 et seq. K.S.A. 12-1736 et seq. K.S.A. 12-685 et seq. Allocable Principal Amount $2,290,699.35 (l( 1,731,867.4711( 2,044,991.70 (l( 502,441.48 111 The cost of these improvements was financed by the issuance of the City's General Obligation Temporary Notes, Series 2015-1 {the "Series 2015-1 Notes"), which will be retired with proceeds from the sale of the Series 2016-A Bonds. 8 The Refunding Plan The Refunded Bonds. Proceeds from the sale of the Series 2016-B Bonds and certain other funds of the City will be used to refund portions of the City's outstanding general obligation bonds described below (collectively the "Refunded Bonds"). The following is a summary of the Refunded Bonds. General Obligation Internal Improvement Bonds. Series 2006-B. dated July 15. 2006 (Current Refunding) Stated Maturity Date Principal Principal Refunded Bonds of Bonds Amount Amount Redemption to be Refunded Outstanding to be Refunded Date 10-01-21 $185,000 $185,000 10-01-16 General Obligation Internal Improvement Bonds, Series 2007-A, dated July 15, 2007 (Advance Refunding) Stated Maturity Date Principal Principal Refunded Bonds of Bonds Amount Amount Redemption to be Refunded Outstanding to be Refunded Date 10-01-18 $360,000 $360,000 10-01-17 10-01-19 360,000 360,000 10-01-17 10-01-20 360,000 360,000 10-01-17 10-01-21 360,000 360,000 10-01-17 10-01-22 360,000 360,000 10-01-17 10-01-23 225,000 225,000 10-01-17 10-01-27 900,000 900,000 10-01-17 General Obligation Internal Improvement Bonds. Series 2008-A. dated July 15. 2008 (Advance Refunding) Stated Maturity Date Principal Principal Refunded Bonds of Bonds Amount Amount Redemption to be Refunded Outstanding to be Refunded Date 10-01-18 $250,000 $250,000 10-01-17 10-01-19 250,000 250,000 10-01-17 10-01-20 250,000 250,000 10-01-17 10-01-21 250,000 250,000 10-01-17 10-01-22 250,000 250,000 10-01-17 10-01-23 250,000 250,000 10-01-17 General Obligation Internal Improvement Bonds. Series 2009-A. dated July 15. 2009 (Advance Refunding) Stated Maturity Date Principal Principal Refunded Bonds of Bonds Amount Amount Redemption to be Refunded Outstanding to be Refunded Date 10-01-21 $620,000 $620,000 10-01-18 10-01-24 2,040,000 2,040,000 10-01-18 10-01-27 1,010,000 1,010,000 10-01-18 10-01-29 755,000 755,000 10-01-18 9 General Obligation Internal Improvement and Refunding Bonds, Series 2010-A, dated May 1, 2010 (Advance Refunding) Stated Maturity Date Principal Principal Refunded Bonds of Bonds Amount Amount Redemption to be Refunded Outstanding to be Refunded Date 10-01-21 $340,000 $340,000 10-01-18 10-01-22 350,000 350,000 10-01-18 10-01-25 1,135,000 1,135,000 10-01-18 General Obligation Internal Improvement Bonds, Series 2011-A, dated July 15, 2011 (Advance Refunding) Stated Maturity Date Principal Principal Refunded Bonds of Bonds Amount Amount Redemption to be Refunded Outstanding to be Refunded Date 10-01-22 $385,000 $385,000 10-01-18 10-01-23 400,000 400,000 10-01-18 10-01-24 415,000 415,000 10-01-18 10-01-25 430,000 430,000 10-01-18 10-01-26 445,000 445,000 10-01-18 10-01-27 220,000 220,000 10-01-18 10-01-28 230,000 230,000 10-01-18 10-01-29 240,000 240,000 10-01-18 10-01-31 510,000 510,000 10-01-18 According to the terms of the Refunding Plan, a portion of the proceeds from the sale of the Series 2016-B Bonds and other available funds will be deposited into an irrevocable escrow account (the "Escrow Fund") which will provide funds to pay the interest due on the Refunded Bonds up to and including payments due on their respective redemption dates, and to pay the principal on the Refunded Bonds on such date. All Refunded Bonds are expected to be redeemed at their first optional redemption date at a price equal to 100% of the par value thereof, without premium. The Refunding Plan is being undertaken in order to provide interest cost savings for the City. Proceeds of the Series 2016-B Bonds will also be applied to pay the costs and expenses incurred in connection with the issuance of the Series 2016-B Bonds. The Escrow Trust Agreement. The Escrow Fund will be established for the Refunded Bonds pursuant to the terms of an Escrow Trust Agreement dated as of July 26, 2016, by and between the City and Security Bank of Kansas City, Kansas City, Kansas (the "Escrow Agent"). A portion of the proceeds from the Series 2016-B Bonds will be deposited in the Escrow Fund and used to acquire direct, non-callable obligations of the United States of America (the "Escrowed Securities"). The Escrowed Securities will mature at such times and in such amounts as necessary to pay the principal of and interest on the Refunded Bonds as described in the preceding section. Mathematical Verification. The mathematical accuracy of (a) the computations made by George K. Baum & Company on the adequacy of the maturing principal and interest earned on the Escrowed Securities to be purchased with the proceeds from the Series 2016-B Bonds, together with uninvested funds to be held by the Escrow Agent, in accordance with the Escrow Trust Agreement, to provide for the payment of the interest on the Refunded Bonds up to and including their earliest optional redemption date, and to redeem the Refunded Bonds on such dates; and (b) the yield computations made by George K. Baum & Company supporting the conclusion by Bond Counsel that the Bonds are not "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, will be verified by Robert Thomas CPA, LLC, Shawnee Mission, Kansas. Such verification of the accuracy of such mathematical computations will be based upon information supplied by the Financial Advisor and on interpretations of the Code provided by Bond Counsel. 10 SOURCES AND USES OF FUNDS Funds to be used in the Financing Plan will be provided and applied approximately as follows, exclusive of accrued interest. Sources of Funds: Principal Amount of Bonds Net Reoffering Premium Transfers from Prior Issue Debt Service Funds Cash Balance After Encumbrances Total Sources of Funds Uses of Funds: Series 2016-A Bonds $6,570,000.00 111,766.35 0.00 32,278.82 $6,714,045.17 Deposit to Improvement Fund -Project Costs $ 500,000.00 Deposit to Escrow Fund for Refunded Bonds 0.00 Deposit to Redemption Fund (2015-1 Note redemp.)6,070,353.82.00 Underwriter's Discount 98,945.71 Costs of Issuance 44 745.64 Total Application of Funds $6,714,045.17 CONCURRENT FINANCING Series 2016-B Bonds $13,750,000.00 1,391,004.20 284,699.39 0.00 $15,425,703.58 $0.00 15,179,082.99 0.00 154,824.86 91.795.73 $15,425,703.58 On July 1, 2016, the City entered into a Note Purchase Agreement to sell its General Obligation Temporary Notes, Series 2016-2 (the "Series 2016-2 Notes") in the principal amount of $4,615,000, with closing anticipated to occur on or about July 20, 2016. The resolution approving sale and issuance of the Series 2016-2 Notes was approved by the governing body of the City on July 11, 2016. A copy of the resolution, containing all of the terms and conditions applicable to the Series 2016-2 Notes, is available upon request to the City or its Financial Advisor. Proceeds of the Series 2016-2 Notes will fund a portion of the costs to construct a new fieldhouse. For additional information regarding the project, see APPENDIX A -GENERAL INFORMATION REGARDING THE CITY; Fieldhouse Project. RISK FACTORS AND INVESTMENT CONSIDERATIONS A PROSPECTIVE PURCHASER OF THE BONDS DESCRIBED HEREIN SHOULD BE AWARE THAT THERE ARE CERTAIN RISKS ASSOCIATED WITH THE BONDS 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 BONDS. PROSPECTIVE PURCHASERS OF THE BONDSSHOULD 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. Legal Matters Various state and federal laws, regulations and constitutional provisions apply to the obligations created by the Bonds. 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. 11 Limitations on Remedies Available to Owners of Bonds The enforceability of the rights and remedies of the owners of Bonds, and the obligations incurred by the City in issuing the Bonds, 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 Bonds 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. Kansas Public Employees Retirement System As described in "APPENDIX A-FINANCIAL INFORMATION -Pension and Employee Retirement Plans," the City participates in the Kansas Public Employees Retirement System ("KPERS"), as an instrumentality of the State to provide retirement and related benefits to public employees in Kansas. KPERS administers three statewide defined benefit retirement plans for public employees which are separate and distinct with different membership groups, actuarial assumptions, experience, contribution rates and benefit options. The City participates in the Public Employees Retirement System -Local Group and the Police and Firemen's Retirement System ("KP&F") (the "Plan"). Under existing law, employees make contributions and the City makes all employer contributions to the Plan; neither the employees nor the City are directly responsible for any unfunded accrued actuarial liability ("UAAL"); however, Plan contribution rates may be adjusted by legislative action over time to address any UAAL. According to KPERS' Valuation Report, dated as of December 31, 2014, the Local Group had an UAAL of $1.488 billion and KP&F had an UAAL of $726 million. Taxation of Interest on the Bonds An opinion of Bond Counsel will be obtained to the effect that interest earned on the Bonds is excludable from gross income for federal income tax purposes under current provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and applicable rulings and regulations under the Code; however, an application for a ruling has not been made and an opinion of counsel is not binding upon the Internal Revenue Service. There can be no assurance that the present provisions of the Code, or the rules and regulations thereunder, will not be adversely amended or modified, thereby rendering the interest earned on the Bonds includable in gross income for federal income tax purposes. The City has covenanted in the Bond Resolutions and in other documents and certificates to be delivered in connection with the issuance of the Bonds to comply with the provisions of the Code, including those which require the City to take or omit to take certain actions after the issuance of the Bonds. Because the existence and continuation of the excludability of the interest on the Bonds depends upon events occurring after the date of issuance of the Bonds, the opinion of Bond Counsel described under "TAX MATTERS" assumes the compliance by the City with the provisions of the Code described above and the regulations relating thereto. No opinion is expressed by Bond Counsel with respect to the excludability of the interest on the Bonds in the event of noncompliance with such provisions. The failure of the City to comply with the provisions described above may cause the interest on the Bonds to become includable in gross income as of the date of issuance. Premium on Bonds The initial offering prices of certain maturities of the Bonds that are subject to optional redemption may be in excess of the respective principal amounts thereof. Any person who purchases such a Bond, 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.» 12 No Additional Interest or Mandatory Redemption upon Event of Taxability The Bond Resolutions do not provide for the payment of additional interest or penalty on the Bonds or the mandatory redemption thereof if the interest thereon becomes includable in gross income for federal income tax purposes. Likewise, the Bond Resolutions do not provide for the payment of any additional interest or penalty on the Bonds if the interest thereon becomes includable in gross income for Kansas income tax purposes. Suitability of Investment The tax exempt feature of the Bonds 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 Bonds are an appropriate investment. Market for the Bonds Ratings. The Bonds 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 Bonds. Secondary Market. There is no assurance that a secondary market will develop for the purchase and sale of the Bonds. 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 Bondsas 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 Bonds 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 periodically work 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 Bonds by the City are subject to the approval of Gilmore & Bell, P.C., Kansas City, Missouri, Bond Counsel to the City. 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 BONDS, LEGAL MATTERS, TAX MATTERS, CONTINUING DISCLOSURE, and APPENDIX B -OMNIBUS CONTINUING DISCLOSURE UNDERTAKING. 13 TAX MATTERS General disposing of the Bonds. 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 Bonds 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 Bonds 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 Bonds. Opinion of Bond Counsel In the opinion of Bond Counsel, under the law existing as of the issue date of the Bonds: Federal Tax Exemption: The interest on the Bonds (including any original issue discount properly allocable to an owner thereof) is excludable from gross income for federal income tax purposes. Alternative Minimum Tax. Interest on the Bonds 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 Bonds have not been designated as •qualified tax-exempt obligations• within the meaning of Code §265(b)(3). Kansas Tax Exemption. The interest on the Bonds 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 Bonds, subject to the condition that the City comply with all requirements of 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 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 Bonds in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. Bond Counsel is expressing no opinion regarding other federal, state or local tax consequences arising with respect to the Bonds. Other Tax Consequences Original Issue Oiswunt. For Federal income tax purposes, original issue discount roio"J 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). Under Code § 1288, OID on tax-exempt bonds accrues on a compound basis. The amount of OID that accrues to an owner of a Bond during any accrual period generally equals: (a) the issue price of that Bond, plus the amount of OID accrued in all prior accrual periods; multiplied by (b) the yield to maturity on that Bond (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 Bond 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 Bond. 14 Prospective investors should consult their own tax advisors concerning the calculation and accrual of 010. 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. Sa/e1 Exchange or Retirement of Bonds. 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 Bonds 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 Bonds, and to the proceeds paid on the sale of Bonds, 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 Bonds should be aware that ownership of the Bonds 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 Bonds. Bond Counsel expresses no opinion regarding these tax consequences. Purchasers of Bonds 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 Bonds, including the possible application of state, local, foreign and other tax laws. RATINGS The Bonds and the City's other outstanding general obligation bonds have been rated "Aa3", 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 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 Bonds. The Financial Advisor has assisted the City in the preparation of this Official Statement and in other matters relating to the issuance of the Bonds. The fees of the Financial Advisor are contingent upon the issuance of the Bonds. 15 UNDERWRITING The Series 2016-A Bonds have been sold at a public sale on July 11, 2016, by Robert W. Baird & Co. Inc. (the "Series 2016-A Bonds Underwriter") at a price equal to the par amount of the Series 2016-A Bonds, plus a net premium of $111,766.35, less an underwriting discount of $98,945.71. The Series 2016-B Bonds have been sold at a public sale on July 11, 2016, by Robert W. Baird & Co. Inc. (the "Series 2016-B Bonds Underwriter") at a price equal to the par amount of the Series 2016-B Bonds, plus a net premium of $1,391,004.20, less an underwriting discount of $154,824.86. The Series 2016-A Bonds Underwriter and the Series 2016-B Bonds Underwriter are collectively referred to herein as the "Underwriter". 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 Bonds or the constitutionality or validity of the obligation represented by the Bonds or the means provided for the payment of the 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 adopted in 2013 an Omnibus Continuing Disclosure Undertaking (the "Disclosure Undertaking") wherein the Issuer covenants 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. The Disclosure Undertaking modified previous undertakings the Issuer entered into pursuant to the Rule (the "Prior Undertakings"), in order to promote future compliance with its undertakings under the Rule. In Bond Resolutions, hereinafter defined, the Issuer covenants with the Underwriter and the Beneficial Owners to apply the provisions of the Disclosure Undertaking to the Bonds. This covenant is for the benefit of and is enforceable by the Beneficial Owners of the Bonds. For more information regarding the Disclosure Undertaking, see "APPENDIX B-OMNIBUS CONTINUING DISCLOSURE UNDERTAKING." The Issuer believes it has complied during the past five years with its prior undertakings under the Rule, except as follows: 1. For the fiscal years ended December 31, 2012, and December 31, 2013, the Issuer failed to timely file certain operating data, including the "Current Water Rate Structure" and "Current Sewage Rate Structure." The required operating data for fiscal year ended December 31, 2012 was subsequently included in the Issuer's Comprehensive Annual Financial Report filed on December 31, 2013. For the fiscal year ended December 31, 2013, this operating data was filed in a supplemental operating data filing dated July 8, 2014. A notice of failure to file such operating data was filed on July 15, 2015. 2. Due to administrative oversight in implementation of the new Disclosure Undertaking, for the fiscal year ended December 31, 2013, the Issuer failed to timely file certain operating data, including a "Financial Overview." This operating data was filed in a supplemental operating data filing on July 8, 2014. A notice of failure to file such operating data was filed on July 15, 2015. 16 During the past five years, the Issuer has made filings of event notices on EMMA with respect to certain bond calls, defeasances, and rating changes, however, during said time period, the Issuer did not make timely filings of event notices on EMMA relating to all bond calls, defeasances or rating changes. The Issuer believes this information was disseminated or available through other sources. 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/~~~~~"-Sh"'a'"n"d,.,_i_,VV'"'i"'c"'ks,..__~~~~- City Clerk 17 CITY OF SALINA, KANSAS By/s.~~~~~~M~ic~h~e~l~le~M~e~y~e~r~~~~~ Director of Finance and Administration APPENDIX A INFORMATION CONCERNING THE CITY APPENDIX A FINANCIAL OVERVIEW OF THE CITY 2015 Estimated Actual Valuation (1) 2015 Estimated Assessed Valuation Outstanding General Obligation Bonds (2) Population (2015 U.S. Census Bureau Estimate) General Obligation Debt Per Capita Ratio of General Obligation Debt to Estimated Actual Valuation Ratio of General Obligation Debt to Estimated Assessed Valuation Outstanding Temporary Notes (3) Outstanding State Loans (4) Outstanding Lease Purchase Obligations Outstanding Revenue Bonds Overlapping General Obligation Debt (5) Direct and Overlapping General Obligation Debt (6) Direct and Overlapping General Obligation Debt Per Capita Ratio of Direct and Overlapping Debt to Estimated Actual Valuation Ratio of Direct and Overlapping Debt to Estimated Assessed Valuation $ 2,957,531,741 $ 463,030,260 $ 62,875,000 $ $ $ $ $ $ $ $ 47,867 1,314 2.13% 13.58% 11,505,000 13,008,482 1,497,943 13,890,000 143,717,714 231,106,196 4,828 7.81% 49.91% (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; excludes the Refunded Bonds. (3) Does not include notes to be retired with proceeds from the sale of the Series 2016-A Bonds. Includes the Series 2016-2 Notes expected to be issued on or about July 20, 2016. (4) The City intends to repay such loans from the net revenues of its municipal water system. However, such loans are ultimately secured by the City's full faith and credit. See Debt Summary OF THE CITY-"Current Indebtedness -State Loans". (5) For a more detailed explanation of the overlapping debt of the other jurisdictions, see DEBT SUMMARY OF THE CITY -"Overlapping Debt". (6) Includes outstanding general obligation bonds, temporary notes and state loans of the City and general obligation bonds of 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 2015 U.S. Census Bureau estimate of 47,707. The City is the county seat for Saline County which had an estimated 2015 U.S. Census Bureau population of 55,691. 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: PoE!ulation Name Kaye Crawford Karl Ryan Jon R. Blanchard Randall Hardy Trent Davis Title Term ExE!ires Mayor 2018 Vice Mayor 2020 Commissioner 2018 Commissioner 2020 Commissioner 2018 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 years in 2015. The following table and graph show the population for the City for selected years as provided by the U.S. Census Bureau. Police and Fire Protection Vear 2015 2014 2013 2012 2011 U.S. Census Bureau PoE!ulation 47,707 47,867 47,846 47,901 47,910 The City of Salina provides police and fire protection services to residents of the City and surrounding areas. The two departments employ 166 full-time employees out of the 425 total employed by the City. Firefighting services are provided from four stations located throughout the City with 88 full-time firefighters. The fire department A-2 operates 35 vehicles and provides emergency medical services. The Department was recently upgraded to an Insurance Services Office rating of 2. The police department employs 119 personnel, of which 78 are sworn positions. The Department operates 37 police vehicles, including patrol vehicles, motorcycles, and scooters. Both Departments are accredited by their respective professional organizations. 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 7,369. 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 1,000 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 850 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. Multiple cellular phone companies provide service to the City. A-3 Health Facilities The City is served by Salina Regional Health Center ("SRHC"), a 394-bed (223 staffed) regional facility. 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 Four banks are headquartered in the City and reported combined deposits in excess of $518 million as of December 31, 2015. A savings bank has a branch office in the City. There are several credit unions available in the city. Source: Kansas Bank Directory Pension and Employee Retirement Plans The Issuer 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, which 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 December 31, 2014, KPERS serves over 295,000 members and approximately 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 "TIM 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 Issuer's employees currently annually contribute 6% of their gross salary to the plan if such employees are KPERS Tier 1 members (covered employment prior to July 1, 2009) or KPERS Tier 2 members (covered employment on or after July 1, 2009). In 2012, the 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 member 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: (a) 3% for less than 5 years; (b) 4% for at least 5 years but less than 12 years; (c) 5% for at least 12 years but less than 24 years; and (d) 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 member, upon retirement, shall receive a single life annuity benefit. Also in 2012, the 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 in 2017 and thereafter, (b) eliminating COLA adjustments for Tier 2 member with corresponding benefit adjustments (effective January 1, 2014), (c) providing additional flexibility for alternative investments for the plan, and (d) providing additional contribution flexibility for Tier 1 members with corresponding benefit adjustments effective January 1, 2014, subject to approval by the IRS (the I RS issued a private letter ruling stating the election granted to Tier 1 members was impermissible; therefore, employee contributions for Tier 1 members increased to 5% of compensation effective January 1, 2014, and to 6% of compensation effective January 1, 2015). In 2015, the Legislature authorized, subject to certain conditions, the issuance of revenue bonds in an amount not to exceed $1 billion (plus associated costs of issuance) (the "Revenue Bonds"), the proceeds of which must be applied to the unfunded actuarial pension liability as directed by KPERS. The repayment of the Revenue Bonds shall be subject to legislative annual appropriation, shall not be an obligation of the KPERS system, and the full faith and credit or taxing power of the State shall not be pledged to the repayment of the Revenue Bonds. Additionally, the statutory maximum annual increases to employer contributions for State/School Group and certain employees of the State department of corrections were modified as follows: (a) if the Revenue Bonds are issued and finance capitalized interest, an increase of 1.1% in 2015 and 1.2% in 2016 and thereafter; or (b) if such Revenue Bonds are not issued to finance capitalized interest, such rate of contribution shall be 10.91% in 2015 and 10.81% in 2016. The Revenue Bonds in the aggregate principal amount of $1,005,180,000 were issued on August 20, 2015, to finance a portion of the unfunded actuarial pension liability and costs of issuance, but did not finance capitalized interest. The Issuer's contribution varies from year to year based upon the annual actuarial valuation and appraisal made by KPERS, subject to legislative caps on percentage increases. The Issuer's contribution is 9.18% beginning January 1, 2016. In addition, the Issuer contributes 1% of the employee's gross salary for Death and Disability Insurance for covered employees for the period beginning July 1, 2015, through June 30, 2016. According to the Valuation Report as of December 31, 2014 (the "2014 Valuation Report") the KPERS Local Group, of which the Issuer is a member, carried an unfunded accrued actuarial liability ("UAAL") of $1.488 billion at the end of 2014. The 2014 Valuation Report includes additional information relating to the funded status of the KPERS Local Group, including recent trends in the funded status of the KPERS Local Group, and is available on the KPERS website at kpers.org/about/reports.html. The Issuer has no means to independently verify any of the information set forth on the KPERS website or in the 2014 Valuation Report, which is the most recent financial and actuarial information available on the KPERS website relating to the funded status of the KPERS Local Group. The 2014 Valuation Report sets the employer contribution rate for the period beginning January 1, 2017, for the KPERS Local Group, and KPERS' actuaries identified that an employer contribution rate of 8.46% of covered payrol I would be necessary, in addition to statutory contributions by covered employees, to eliminate the UAAL by 2033, the end of the actuarial period. The statutory contribution rate of employers currently equals the 2014 Valuation Report's actuarial rate. As a result, members of the Local Group are adequately funding their projected actuarial liabilities A-5 and the UAAL can be expected to diminish over time. KPERS' actuaries project the required employer contribution rate to increase by the maximum statutorily allowed rate, which is currently 0.9% in fiscal year 2014, then 1.0% in fiscal year 2015, 1.1% in fiscal year 2016 and 1.2% in fiscal year 2017 and thereafter. The Issuer has established membership in the Kansas Police and Fire Retirement System ("KP&F") for its police and fire personnel. KP&F 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. According to the 2014 Valuation Report, KP&F carried an UAAL of $726 million at the end of 2014. For the year beginning January 1, 2015, employees contributed 7.15% of gross compensation and the Issuer contributed 23.56% of employees' gross compensation. Beginning January 1, 2016, the Issuer's contribution will change to 22.29% of gross compensation. In 2013, the Legislature adopted a number of changes to the KP&F which included (a) raising the cap on maximum KP&F benefits from 80% to 90% of final average salary and (b) permitting certain active KP&F members to pay a lump sum amount prior to or on their retirement date to enhance the individual retirement benefit at their own cost. In 2015, the Issuer was required to implement GASB 68 -Accounting and Financial Reporting for Pensions. According to KPERS' Schedule of Employer and Nonemployer Allocations and Schedules of Pension Amounts by Employer and Nonemployer for the fiscal years ended June 30, 2015 (the "GASB 68 Report") the net pension liability allocated to the Issuer is $16,395,794. The GASB 68 Report is available on the KPERS website at kpers.org/about/reports.html. The Issuer has no means to independently verify any of the information set forth on the KPERS website or in the GASB 68 Report. It is important to note that under existing State law, the Issuer has no legal obligation for the UAAL or the net pension liability calculated by KPERS, and such figures are for informational purposes only. 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. 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, EIDorado 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. A-6 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 2012, 674 farms were located on 364,468 acres. Farm crops were valued at over $84 million harvested on 215,740 acres. Cattle and milk produced was valued at over $24 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 opened a facility formerly occupied by Sutherland Lumber Company. The location is shared with a Marshalls clothing store. In addition, several new restaurants have opened, including Olive Garden, Longhorn Steakhouse, Starbucks and Taco Bell. Daimaru steakhouse doubled in size at a new location. Unified School District No. 305 recently received voter approval for and issued $110,700,000 of general obligation bonds to fund a wide variety of improvements. 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. 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, UAS, airport management and avionics technology. Scheduled air service is provided by SeaPort Airlines. The airline offers multiple weekday and weekend flights to the Kansas City International Airport. In 2015, the Airport enplaned 10,389 passengers and also accommodates a wide variety of aircraft including business jets, military, flight training and general aviation aircraft. In 2015, the Salina Air Traffic Control Tower logged over 96,350 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 Airports' full service FBO, Av/light, specializing in aviation fuel delivered nearly 2.5 million gallons of fuel to the A-7 wide variety of aircraft utilizing the Airport in 2015. As of December 31, 2014, over 100 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 Oil Ion Stores Solomon Corporation Great Plains Manufacturing El Dorado National Crestwood, Inc. Advance Auto Parts Source: Salina Chamber of Commerce Income Product/Business Frozen Pizza School System Health Care Battery Manufacturer Fluorescent Lamps City Government Discount Retail Grocery Electrical Equipment Agricultural & Landscaping Equipment Transit and Shuttle Busses Wooden Cabinets Distribution Center Estimated Employment 1,800 1,659 1,300 750 490 465 421 343 324 258 221 219 195 The following table shows the per capita personal income for residents of Saline County and the State during the years indicated: Saline State of Vear County Kansas 2014 N/A $45,546 2013 $42,480 44,417 2012 41,070 43,015 2011 39,910 40,883 2010 39,974 38,977 2009 38,752 38,301 2008 40,675 40,466 2007 36,781 37,663 Source: Kansas Statistical Abstract A-8 Labor Force The following tables show the labor force figures for the City of Salina and the State of Kansas. City of Salina: Vear 2016 (Mar) 2015 2014 2013 2012 2011 2010 State of Kansas: Vear 2016 (Mar) 2015 2014 2013 2012 2011 2010 Total Labor Force 26,539 26,353 26,303 25,458 25,808 26,004 26,156 Total Labor Force 1,501,817 1,499,009 1,500,353 1,491,745 1,489,320 1,498,872 1,506,229 Employed 25,484 25,313 25,159 24,515 24,241 24,349 24,434 Employed 1,441,091 1,435,884 1,432,359 1,405,036 1,403,866 1,401,055 1,399,805 Source: Kansas Department of Labor DEBT SUMMARY OF THE CITY Current Indebtedness Unemployment Unemploy:ed Rate 1,055 4.0% 1,040 3.9 1,144 4.3 1,459 5.6 1,567 6.1 1,655 6.4 1,722 6.6 Unemployment Unemploy:ed Rate 60,726 4.0% 63,125 4.2 67,994 4.5 86,709 5.8 85,454 5.7 97,817 6.5 106,424 7.1 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 Issued 07-15-06 06-15-07 07-15-08 12-15-08 07-15-09 05-01-10 10-15-10 07-15-11 07-15-12 07-15-12 02-15-13 07-15-13 07-30-14 07-29-15 Series 2006-B 2007-A 2008-A 2008-B 2009-A 2010-A 2010-B 2011-A 2012-A 2012-B 2013-A 2013-B 2014-A 2015-A Purpose Internal Improvements Internal Improvements Internal Improvements Internal Improvements Internal Improvements Refunding & Improvement Refunding Internal Improvements Internal Improvements Refunding Taxable Improvements Improvements Improvements Revenue and Internal Imp. A-9 Amount of Issue $885,000 6,545,000 3,720,000 3,525,000 23,695,000 6,875,000 7,860,000 6,565,000 2,365,000 3,785,000 1,360,000 4,330,000 7,570,000 6,825,000 Final Maturity 10-01-16 10-01-17 10-01-17 07-01-26 10-01-20 10-01-20 10-01-23 10-01-21 10-01-27 10-01-20 10-01-28 10-01-33 10-01-34 10-01-35 Amount Outstanding* $ 70,000 720,000 500,000 2,025,000 9,060,000 1,550,000 3,735,000 2,110,000 1,950,000 1,835,000 1,240,000 3,890,000 7,045,000 6,825,000 07-27-16 07-27-16 Total 2016-A 2016-B Internal Improvements Refunding 'Includes the Bonds; excludes the Refunded Bonds. 6,570,000 13,750,000 10-01-36 10-01-31 6,570,000 13,750,000 $62,875,000 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 & Bldg Imp. 2015-1 07-29-15 08-01-16 $5,995,000 $ Q(l) Bicentennial Center 2016-1 02-10-16 08-01-17 6,890,000 6,890,000 Field House 2016-2 07-20-16 09-01-19 4,615,000 4 615 000121 $11,505,000 l1ITo be paid at maturity with proceeds from the sale of the Series 2016-A Bonds. See THE FINANCING PLAN herein. !2l The City has entered into a Note Purchase Agreement and expects to issue the Series 2016-2 Notes on or about July 20, 2016. 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 Issued 04-15-11 Purpose Improvements Amount of Issue $16,120,000 Lease Obligations (as of December 31, 2015): Vear Original Item Issued Amount ERP System 2014 $ 456,370 Defibrillators 2014 146,235 Toro Fairway Mower 2014 30,000 HVAC System 2012 1,100,000 State Loans Final Maturity 10-01-31 Final Amount Outstanding $13,890,000 Amount Vear Outstanding 2018 $ 347,594 2018 111,426 2017 20,346 2027 1.018.577 $1,497,943 The following is a list of outstanding loans the City has taken out through the Kansas Department of Health and Environment ("KDHE") or Kansas Department of Transpiration ("KDOT") revolving loan fund programs. KDHE loans are typically repaid by net revenues from municipal water or sewer systems. KDOT loans can be repaid from a variety of sources including, but not limited to, property taxes, special assessments, special highway fund allocations and sales taxes. Regardless of the intended source of repayment, the loans are ultimately secured by the City's ability to levy unlimited ad valorem property taxes. A-10 Project Vear Final Original Amount Number Pureose Originated Payment Date Amount Outstanding KDHE 2629 Water 2014 08-01-34 $9,330,000 $ 8,758,482 KDHE 2841 * Water Pending 08-01-35 4,250,000 4,250,000 $13,008,482 * The City completed the associated project in 2016, with first payment in 2017. Overlaeeing Debt According to the Saline County Clerk's office and bond offering documents, the following table shows the overlapping general obligation indebtedness of the City. The percent of an overlapping jurisdiction's debt that is applicable to the City is calculated by dividing the assessed valuation of that portion of the jurisdiction's boundaries which overlap those of the City by the total assessed valuation of such jurisdiction. Jurisdiction Salina Airport Authority Unified School District No. 305 Saline County *As of June 30, 2016 Annual Debt Payments Amount Outstanding $ 23,010,000 129,470,000 237,740* Estimated Share of the City Amount $ 23,010,000 120,528,227 179 487 $143,717,714 Percentage 100.00% 93.09 75.32 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. Existing Bonds Series 2016-A Bonds Series 2016-B Bonds Vear Princieal Interest Princieal Interest Princieal Interest Total 2016* $ 6,000,000 $ 638,404 $ 6,638,701 2017 5,960,000 1,186,842 $ 240,000 $ 176,906 $ 516,899 8,808,647 2018 5,455,000 979,775 270,000 145,050 $ 670,000 437,844 7,957,669 2019 5,375,000 783,263 275,000 139,650 650,000 424,444 7,647,357 2020 3,225,000 623,632 280,000 134,150 645,000 404,944 5,312,726 2021 2,050,000 527,563 285,000 128,550 1,595,000 385,594 4,971,707 2022 1,720,000 463,723 295,000 120,000 1,985,000 321,794 4,905,517 2023 1,585,000 413,868 305,000 111,150 1,935,000 222,544 4,572,562 2024 1,500,000 366,698 315,000 102,000 1,770,000 125,794 4,179,492 2025 1,545,000 320,172 320,000 95,700 1,370,000 90,394 3,741,266 2026 1,545,000 270,160 325,000 89,300 980,000 62,994 3,272,454 2027 1,260,000 219,110 330,000 82,800 755,000 43,394 2,690,304 2028 1,115,000 180,365 340,000 76,200 535,000 28,293 2,274,858 2029 775,000 144,707 345,000 69,400 545,000 17,593 1,896,700 2030 640,000 120,245 355,000 62,500 155,000 6,693 1,339,438 2031 605,000 99,220 360,000 54,957 160,000 3,400 1,282,577 2032 625,000 78,387 370,000 46,856 1,120,243 2033 655,000 55,525 375,000 38,531 1,124,056 2034 590,000 32,200 385,000 29,625 1,036,825 2035 330,000 11,550 395,000 20,000 756,550 A-11 2036 405 000 10 125 $42,555,000 $7,515,409 $6,570,000 $1,733,450 $13,750,000 *Excludes payments made prior to the closing date of the Bonds. Historical Debt Information 415 125 $3,092,618 $75,216,477 The following table shows historical balances of outstanding general obligation bonds for the City during the most recent five-year period. Bonds Debt to Debtto U.S. Debt Outstanding Assessed Estimated Actual Census Per Vear December31 Valuation Valuation Poeulation Capita 2015 $57,535,000 12.47% 1.95% 47,867 $1,201.98 2014 63,805,000 13.98 2.19 47,707 1,337.43 2013 64,515,000 14.21 2.23 48,045 1,342.80 2012 57,355,000 12.71 1.99 47,901 1,197.37 2011 61,045,000 13.57 2.11 47,910 1,274.16 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. Over the next two years the City anticipates issuing general obligation bonds to retire its outstanding Series 2016-1 Temporary Note as well as providing general obligation note and/or bond funding for approximately $4 million of street improvements. Borrowing amounts described above do not include future subdivision improvement projects financed with general obligation bonds payable as to both principal and interest in part from special assessments levied upon the benefitted property. 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 United 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. The Consent Decree settlement is in relation to an investigation to determine the extent and severity of the contamination and to determine the best method of remediation. It does not include any funding for actual remediation, but the investigation is fully funded by the settlement. Once the investigation is completed, there will be another round of negotiations with the Federal Government to determine respective financial responsibilities for remediating the contamination. 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. A-12 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. 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. Audited Audited Audited Audited Revenues: 2011 2012 2013 2014 Property Taxes $ 8,671,423 $ 9,125,179 $ 8,959,066 $ 9,278,832 Sales Tax 11,767,400 12,165,281 12,259,556 12,688,980 Other Taxes 5,083,919 5,057,100 5,264,277 5,636,239 Intergovernmental 813,185 1,080,291 1,255,203 1,162,384 Charges for Services 7,822,307 7,678,288 7,981,078 7,826,289 Investment Revenue 28,972 9,000 0 11,536 Miscellaneous 501 260 425,970 525 923 629 259 Total Revenues $34,688,466 $35,541,109 $36,245,103 $37,233,769 Expenditures: General Government $ 3,461,488 $ 3,574,626 $ 4,268,824 $ 3,986,212 Public Safety 18,117,827 18,564,988 19,155,034 19,558,487 Public Works 6,132,020 6,541,848 6,826,214 6,949,477 Public Health and Sanitation 1,176,082 1,188,836 1,183,970 146,178 Culture and Recreation 2,734,957 2,157,195 2,277,146 2,697,564 Planning and Development 2,319,300 2,267,262 2,335,233 2,209,836 Capital Outlay 555 048 721,079 694 750 843 975 Total Expenditures $34,496,722 $35,015,834 $36,741,161 $36,391,729 Revenues Over (Under) $ 191,744 $ 525,275 $(496,058) $842,040 Other Sources (Uses) (129,111) (534,403) 93 313 (137,351) Net Change in Fund Balance $ (62,633) $ (9,128) $(402,745) $704,689 Fund Balance January 1 $ 3,617,181 $3,836,238 $3,827,110 $3,549,740 Restatement of Prior Year Balance 156,424 3,836,238 3,952,485 0 Fund Balance December 31 $ 3,836,238 $3,827,110 $3,549,740 $4,254,429 A-13 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. State Total Real Personal Assessed Motor Assessed Vear Estate ProE!e!!Y * Utilities Vehicle Valuation 2015 $381,087,426 $12,607,815 $18,984,453 $50,350,566 $463,030,260 2014 376,131,346 13,652,885 17,670,147 48,865,900 456,320,278 2013 370,390,092 17,769,120 16,948,264 48,882,411 453,989,887 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 *Personal property valuations began to decline in 2006 as a result of legislative action that removed significant portions of industrial machinery and equipment from the property tax rolls. 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. Vear 2015 2014 2013 2012 2011 2010 2009 2008 2007 SE!ecial Assessments Residential Real Estate Equalization Ratio N/A N/A 11.55% 11.95 12.04 11.89 11.67 11.66 11.68 Estimated Actual Value $2,957,531,741 2,917,267,724 2,889,385,914 2,884,188,981 2,891,461,447 2,888,659,004 2,893,359,541 2,914,775,730 2,833,709,391 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. A-14 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. 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. Current Current and Delinquent Levy Tax Taxes Tax Collections Tax Collections Vear Rate Levied Amount .2! Amount .2! 2015 27.311 $11,316,065 $ 8,281,396 72.8% $ 8,292,308 72.86% 2014 27.080 10,918,300 10,126,040 92.7 10,790,494 98.8 2013 26.927 10,868,694 9,781,920 90.0 10,807,943 99.4 2012 26.190 10,513,472 9,433,059 89.7 10,482,828 99.7 2011 26.272 10,355,328 9,463,715 91.4 10,309,325 99.5 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 *Collections as of April 2016 A-15 Tax Levies Nov Nov Nov Nov Nov 2011 2012 2013 2014 2015 Levy Levy Levy Levy Levy City of Salina 26.272 26.190 26.927 27.080 27.311 Salina Library 5.292 5.452 5.761 6.034 5.895 State Education & Other 1.500 1.500 1.500 1.500 1.500 Unified School District No. 305 58.820 58.649 58.116 55.605 56.120 Airport Authority 4.007 4.007 4.504 4.486 4.396 Central Kansas Extension District 1.179 1.176 1.176 1.285 1.502 Saline County 32.576 34.823 37.895 38.047 38.275 Total 129.646 131.797 135.879 134.037 134.999 Largest Taxpayers According to the Saline County Clerk's Office, the following table lists the largest taxpayers in the City, their November 2014 assessed valuations, and the percentage each taxpayer comprised of the total assessed valuation of the City. Company Westar Energy Schwan's Global Supply Chain Inc Garrison Salina Owner, LLC RAF Salina LLC Salina Regional Health Properties Kansas Gas Service Menard Inc Collier Dennis Union Pacific Great Plains Manufacturing Total Building Permits Issued Type of Business Utility Manufacturing Regional Shopping Center Retail-Shopping Center Medical Utility Home Improvement Store Mulitfamily Railroad Manufacturing %of Assessed Total Valuation Valuation 11,025,004 2.37 7,175,013 1.55 6,330,144 1.37 4,478,080 0.97 4,318,078 0.93 3,669,878 0.79 2,896,599 0.63 2,428,117 0.52 2,399,813 0.52 2,378,176 0.51 $47,098,902 10.17% 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: Vear Value 2015 $14,523,773 2014 24,214,432 2013 29,285,213 2012 54,863,040 2011 19,752,335 2010 52,358,547 2009 12,192,481 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 A-16 relative tax levies. Citywide local option sales taxes are distributed solely to the levying city. Statewide sales taxes are retained entirely by the state. 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. Both of these taxes were approved in perpetuity. In November 2008, voters in the City of Salina approved an additional .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. In May of 2016, voters approved a .75% citywide retailers sales tax that will replace the 2008 sales tax on October 1, 2016 and will be used for capital improvements and economic development. The total sales tax for goods and services in the City is 8.40%, which consists of 6.5% imposed by the State, 1% countywide local option sales tax, and .90% citywide local option sales tax. The following table lists the local- option sales tax receipts of the City of Salina in the years indicated. Vear 2016 2015 2014 2013 2012 2011 2010 * As of June, 2016 Source: City Clerk Budgeting Procedures 2008 .40% Citywide Local Option Sales Tax Receipts $2,240,677 4,610,032 4,488,672 4,313,345 4,244,974 4,111,910 3,886,733 1992 .50% Citywide Local Option Sales Tax Receipts $2,800,846 5,762,541 5,610,840 5,391,681 5,306,218 5,139,888 4,858,416 City's Portion of 1% Countywide Local Option Sales Tax Receipts $3,676,174 7,376,708 7,188,934 6,998,806 6,992,853 6,755,629 6,394,838 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. The City may levy taxes in accordance with the requirements of its adopted budget. Property tax levies are based on the adopted budget of the City and the assessed valuations provided by the County appraiser. The Kansas Legislature passed legislation in 2015 and 2016 that, among other things, imposes an additional limit on the aggregate amount of property taxes that may be imposed by cities and counties, without a majority vote of qualified electors of the city or county (the "Tax Lid"). The Tax Lid has an effective date of January 1, 2017 (and thus applies only to budgets adopted for fiscal years ended in 2018 and thereafter), and provides that, subject to certain exceptions, no city or county may approve an appropriation or budget which provides for funding by property tax revenues in an amount exceeding that of the immediately prior year, as adjusted to reflect the average changes A-17 in the consumer price index for the preceding five calendar years and provided that such average shall not be less than zero, unless approved by a majority vote of electors. The Tax Lid does not require an election in the following situations: u(l) Increased property tax revenues that, in the current year, are produced and attributable to the taxation of: (A) The construction of any new structures or improvements or the remodeling or renovation of any existing structures or improvements on real property, which shall not include any ordinary maintenance or repair of any existing structures or improvements on the property; (B) increased personal property valuation; (C) real property located within added jurisdictional territory; (D) real property which has changed in use; (E) expiration of any abatement of property from property tax; or (F) expiration of a tax increment financing district, rural housing incentive district, neighborhood revitalization area or any other similar property tax rebate or redirection program. (2) Increased property tax revenues that will be spent on: (A) Bond, temporary notes, no fund warrants, state infrastructure loans and interest payments not exceeding the amount of ad valorem property taxes levied in support of such payments, and payments made to a public building commission and lease payments but only to the extent such payments were obligations that existed prior to July 1, 2016; (B) payment of special assessments not exceeding the amount of ad valorem property taxes levied in support of such payments; (C) court judgments or settlements of legal actions against the city or county and legal costs directly related to such judgments or settlements; (D) expenditures of city or county funds that are specifically mandated by federal or state law with such mandates becoming effective on or after July 1, 2015, and loss of funds from federal sources after January 1, 2017, where the city or county is contractually obligated to provide a service; (E) expenses relating to a federal, state or local disaster or federal, state or local emergency, including, but not limited to, a financial emergency, declared by a federal or state official. The board of county commissioners may request the governor to declare such disaster or emergency; or (F) increased costs above the consumer price index for law enforcement, fire protection or emergency medical services. (3) Any increased property tax revenues generated for law enforcement, fire protection or emergency medical services shall be expended exclusively for these purposes but shall not be used for the construction or remodeling of buildings. (4) The property tax revenues levied by the city or county have declined: (A) In one or more of the next preceding three calendar years and the increase in the amount of funding for the budget or appropriation from revenue produced from property taxes does not exceed the average amount of funding from such revenue of the next preceding three calendar years, adjusted to reflect changes in the consumer price index for all urban consumers as published by the United States department of labor for the preceding calendar year; or (B) the increase in the amount of ad valorem tax to be levied is less than the change in the consumer price index plus the loss of assessed property valuation that has occurred as the result of legislative action, judicial action or a ruling by the board of tax appeals.". The Tax Lid also provides that "[w]henever a city or county is required by law to levy taxes for the financing of the budget of any political or governmental subdivision of this state that is not authorized by law to levy taxes on its own behalf, and the governing body of such city or county is not authorized or empowered to modify or reduce the amount of taxes levied therefore, the tax levies of the political or governmental subdivision shall not be included in or considered in computing the aggregate limitation upon the property tax levies of the city or county." Because of ambiguities in the Tax Lid, it is unclear how the various exceptions will be interpreted and how the Tax Lid will be implemented. As a result, is unclear how the Tax Lid will impact the City. However, as described above, the Tax Lid provides a specific exception for u[b]ond, temporary notes, no fund warrants, state infrastructure loans, and interest payments not exceeding the amount of ad valorem property A-18 taxes levied in support of such payments" as well as certain lease payments. Therefore, the City is permitted under the Tax Lid to levy unlimited ad valorem taxes as necessary to pay principal of and interest on the Bonds, as required by the Bond Resolutions. The City cannot predict the impact of the Tax Lid on the ratings on the Bonds, or the general rating of the City. A change in the rating on the Bonds or a change in the general rating of the City may adversely impact the market price of the Bonds in the secondary market. 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 Commercial and Industrial- Real Property Agricultural Land (1) Agricultural Improvements Vacant Lots Not-for-Profit (2) All Other Personal Property: {3} Mobile Homes Mineral Leaseholds (large) Mineral Leaseholds (small) Commercial & Industrial Machinery & Equipment All Other 11.5% 25.0 30.0 25.0 12.0 12.0 30.0 11.5% 30.0 25.0 25.0 30.0 A-19 Utilities: Railroads All Other Public Utilities Motor Vehicles: federally mandated rate 33.0% 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 2013 Kansas Appraisal/Sales Ratio Study, the equalization ratio for residential real property in Saline County was 11.55%, and commercial and industrial property was 25.23%. REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY A-20 APPENDIX B Omnibus Continuing Disclosure Undertaking 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 defmed 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 defmitions set forth in the Bond Resolution, which apply to any capitaliz.ed 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, Sedion 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. 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 wntmg 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)(l) hereof. "Fiscal Year" means the one-year period ending December 31, or such other date or dates as may be adopted by the Issuer for its general accounting purposes. "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: (I) Financial Information. The fmancial 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). 3 (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 ExhibitB. (c) Pursuant to Section (d)(3) of the SEC Rule, the provisions of Section 2(a)(l) 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: (I) 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 fmancial 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 fmal 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 defmitive 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. 4 (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. (I) 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)(l) 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, lnununities 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 5 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 prov1s10ns 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 6 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 fmancial 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 Chereto. 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 prov1s10n 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 TIIIS PAGE INTENTIONALLY LEFT BLANK] 8 IN WITNESS WHEREOF, the Issuer has caused this Disclosure Undertaking to be executed as of July 15, 2013. CITY OF SALINA, KANSAS (SEAL) Mayor Clerk (Signature Page to Continuing Disclosure Undertaking) SCHEDULE I DESCRIPTION OF BONDS SUBJECT TO DISCLOSURE UNDERTAKING General Obligation Bonds (Base CUSIP No.: 794743) Description of Indebtedness General Obligation Internal hnprovement Bonds, Series 2006-B General Obligation Internal hnprovement Bonds, Series 2007-A General Obligation Internal hnprovement Bonds, Series 2008-A General Obligation Internal hnprovement Bonds, Series 2008-B General Obligation Internal hnprovement Bonds, Series 2009-A General Obligation Refunding and Improvement Bonds, Series 2010-A General Obligation Refunding Bonds, Series 2010-B General Obligation Internal hnprovement Bonds, Series 2011-A General Obligation Internal hnprovement Bonds, Series 2012-A General Obligation Refunding Bonds, Series 2012-B General Obligation Taxable Improvement Bonds, Series 2013-A General Obligation Internal Improvement Bonds, Series 2013-B General Obligation Internal Improvement Bonds, Series 2014-A General Obligation Refunding & Internal Improvement Bonds, Series 2015-A General Obligation Internal Improvement Bonds, Series 2016-A General Obligation Refunding Bonds, Series 2016-B Dated Date 07-15-06 06-15-07 07-15-08 12-15-08 07-15-09 05-01-10 10-15-10 07-15-11 07-15-12 07-15-12 02-15-13 07-15-13 07-30-14 07-29-15 07-26-16 07-26-16 Temporar;i: Notes (Base CUSIP No.: 794743) Description of Indebtedness General Obligation Temporary Notes, Series 2015-1 General Obligation Temporary Notes, Series 2016-1 Dated Date 07-29-15 02-10-16 Revenue Bonds (Base CUSIP No.: 794811) Description of Indebtedness Water and Sewage System Revenue Bonds, Series 2011 S-1 Dated Date 04-15-11 Final Maturit;i: 10-01-21 10-01-27 10-01-23 07-01-28 10-01-29 10-01-25 10-01-23 10-01-31 10-01-27 10-01-20 10-01-28 10-01-33 10-01-34 10-01-35 10-01-36 10-01-31 Final Maturit;i: 08-01-16 08-01-17 Final Maturit;i: 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 fmancials) 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 fmal Official Statement concerning Property Valuations and Pension and Employee Retirement Plans. A-1 EXHIBITB NOTICE TO REPOSITORY OF FAILURE TO FILE ANNUAL REPORT Name oflssuer: Name of Bond Issue: Name of Obligated Person: Date oflssuance: City of Salina, Kansas [Description of Bonds], Series [__J, 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: CITY OF SALINA, KANSAS By _____________ ~ as Dissemination Agent cc: City of Salina, Kansas B-1 EXHIBITC ACCEPTANCE OF DISSEMINATION AGENT Name oflssuer: City of Salina, Kansas Name of Bond Issue: [Description of Bonds], Series [__J, 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, 2014 Comprehensive Annual Financial Report The following is the Comprehensive Annual Financial Report for the City of Salina, Kansas for the fiscal year ended December 31, 2014, including financial statements as audited by the firm of Mize Houser & Company, P.A., Certified Public Accountants, Topeka, Kansas. COMPREHENSIVE ANNUAL FINANCIAL REPORT OF CITY OF SALINA, KANSAS 300 West Ash Street P.O. Box736 Salina, Kansas 67 402--0736 For the Fiscal Year Ended December 31, 2014 Prepared by Department of Finance and Administration of City of Salina, Kansas CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2014 Letter of Transmittal Organizational Chart List of Principal Officials TABLE OF CONTENTS INTRODUCTORY SECTION FINANCIAL SECTION Independent Auditor's Report Management's Discussion and Analysis Basic Financial Statements: Government-wide Financial Statements Statement of Net Position Statement of Activities Fund Financial Statements Balance Sheet -Governmental Funds Reconciliation of the Total Governmental Fund Balance to Net Position of Governmental Activities Statement of Revenues, Expenditures, and Changes in Fund Balance -Governmental Funds Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance with the Government-Wide Statement of Activities Statement of Revenues, Expenditures and Changes in Fund Balance Budget and Actual (Non-GAAP Basis) General Fund Tourism and Convention Fund Special Gas Fund Sales Tax Capital Fund Statement of Net Position -Proprietary Funds Statement of Revenues, Expenses, and Changes in Fund Net Position -Proprietary Funds Statement of Cash Flows -Proprietary Funds Statement of Assets and Liabilities -Agency Funds i -iv V vi 1 - 2 3-13 14 15 16 17 18 19 20-22 23 24 25 26 27 28-29 30 CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2014 TABLE OF CONTENTS -CONTINUED FINANCIAL SECTION -CONTINUED Notes to the Basic Financial Statements Required Supplementary Information Schedule of Funding Progress and Schedule of Employer Contributions Combining Statements and Individual Fund Schedules Combining Statements -Nonmajor Funds Fund Descriptions Combining Balance Sheet -Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Governmental Funds Combining Balance Sheet -Nonmajor Special Revenue Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Special Revenue Funds Combining Balance Sheet -Nonmajor Permanent Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Permanent Funds Individual Fund Schedules of Revenues, Expenditures and Changes in Fund Balance -Budget and Actual (Non-GAAP Basis): Bicentennial Center Fund Business Improvement City Fund Neighborhood Park Fund Special Parks and Recreation Fund Special Alcohol Fund Sales Tax Economic Development Fund Fair Housing Fund Arts & Humanities Fund Debt Service Fund Solid Waste Disposal Fund Water and Sewer Fund Sanitation Fund Golf Course Fund Risk Management Fund Workers' Compensation Reserve Fund 31 -58 59 60-61 62 63 64-65 66-67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2014 TABLE OF CONTENTS -CONTINUED FINANCIAL SECTION -CONTINUED Individual Fund Schedules of Revenues, Expenditures and Changes in Fund Balance -Budget and Actual (Non-GMP Basis) -Continued: Health Insurance Fund Central Garage Fund Information Systems Fund Internal Service Fund Descriptions Combining Statement of Net Position -Internal Service Funds Combining Statement of Revenues, Expenses, and Changes in Net Position -Internal Service Funds Combining Statement of Cash Flows -Internal Service Funds Fiduciary Fund Descriptions -Agency Funds Combining Balance Sheet -Agency Funds Combining Statement of Changes in Assets and Liabilities -Agency Funds STATISTICAL SECTION Net Position by Component -Last Ten Years Changes in Net Position -Last Ten Years Fund Balances, Governmental Fund -Last Ten Years Changes in Fund Balances, Governmental Funds -Last Ten Years Tax Revenues by Source, Governmental Funds -Last Ten Years Assessed and Estimated Actual Value of Taxable Property-Last Ten Years Direct and Overlapping Property Tax Rates -Last Ten Years Principal Property Tax Payers Property Tax Levies and Distributions Direct Sales Rate by Taxing Entity Water Sales by Class of Customer Ratio of Outstanding Debt by Type 85 86 87 88 89 90 91 -92 93 94 95 Schedule 1 96 2 97 3 98 4 99 5 100 6 101 7 102 8 103 9 104 10 105 11 106 12 107 CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2014 TABLE OF CONTENTS -CONTINUED STATISTICAL SECTION -CONTINUED Ratio of Net General Bonded Debt Outstanding Direct and Overlapping Governmental Activities Debt Legal Debt Margin Pledged Revenue Coverage Demographic and Economic Statistics Principal Employers GOVERNMENTAL AUDIT SECTION Schedule of Expenditures of Federal Awards Notes to Schedule of Expenditures of Federal Awards Schedule of Findings and Questioned Costs Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with "Government Auditing Standards" Independent Auditor's Report on Compliance for Each Major Program and on Internal Control over Compliance required by 0MB Circular A-133 Schedule 13 14 15 16 17 18 108 109 110 111 112 113 114 115 116-117 118-119 120 -121 INTRODUCTORY SECTION DEPARTMENT OF FINANCE AND ADMINISTRATION Rodney Franz, Director 300 West Ash, P.O. Box 736 Saliaa Kaosas 6Z402-0Z36 October 22, 2015 Cityof ~ 5alina To the Citizens of the City of Salina, Kansas: TELEPHONE (785) 309-5735 FAX(785)309-5738 TDD (785) 309-5747 E-MAIL rod.franz@salina.org WebsifP" www saliaa-ks gav The Comprehensive Annual Financial Report of the City of Salina, Kansas (the "City") for the year ended December 31, 2014, is hereby submitted. The City's Finance Department prepared the report. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of all various funds and account groups of the City. We believe that all disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. Report Fonnat The Comprehensive Annual Financial Report is presented in three sections: Introductory, Financial and Statistical. The introductory section includes a description of the City, including services provided, and explanation of the City's accounting system and budgetary controls, and a brief discussion of the City's economic condition and outlook. The City's organizational chart is also included to assist the reader in understanding the structure of the City. The financial section includes the Independent auditor's report, Management's discussion & analysis, Government wide financial statements, Fund financial statements, Notes to the financial statements, and Individual and combining statements and schedules. The statistical section includes selected financial and demographic information, generally presented on a multi-year basis. The reader is specifically directed to Management's Discussion and Analysis (MD&A) which immediately follows the independent auditor's report. MD&A provides a narrative explanation and overview of significant features and trends reflected by data in the financial statements. Accounting Systems and lntemal Controls A critical part of the control system is the City's comprehensive Budgetary and Financial Policies, which establish guidelines for budgetary and financial practices. The Budgetary and Financial Policies are reviewed by the City Commission and updated each year as a part of the budget process. City staff is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft or misuse and that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits require estimates and judgment by management. 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. However, management control is maintained at the department level. The City uses an encumbrance accounting system, in which estimated purchase amounts are recorded prior to the release of purchase orders to vendors. Open encumbrances are reported as reservations of fund balance at December 31, 2014 in the general fund and the special revenue funds. Various internal compliance procedures are implemented to insure proper implementation of the budget as well as to maintain a degree of accountability for both revenues and expenditures. Independent Audit Kansas Statutes Annotated 75-1122 requires an annual audit of the books of account, financial records and transactions of all administrative departments of the City by independent certified public accountants selected by the City Commission. This requirement has been complied with and the auditor's opinion has been included in this report. Profile of the Community The Town of Salina was organized in 1858 under the Town and Village Act in the State of Kansas, and became a City of the First Class on July 9, 1920. The City has had a Commission-City Manager form of government since 1921. The Commission is comprised of five members elected at large. Each year the commission chooses one member to act as Mayor. The City Manager is appointed by the Commission, and acts as its primary agent in accordance with state statute. Other city officers and employees are appointed by the City Manager. The current population of the City is 47,867. The reporting entity includes the City of Salina as well as two discretely presented component units, both proprietary fund types. The Salina Airport Authority operates the Salina Municipal Airport and Airport Industrial Center, and the Salina Housing Authority administers public housing programs within the City of Salina. In addition, the City of Salina participates in a joint venture with Saline County and the City-County Building Authority. This report includes all funds and account groups of the City. The City provides a full range of services including police and fire protection, development services, construction and maintenance of streets, drainage facilities and other infrastructure; recreational activities and cultural events; emergency medical services and convention facilities. In addition to general government activities, the City also provides water, wastewater, sanitation, and solid waste services; therefore, these activities are included in the reporting entity. Economic Outlook and Strength The City 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 community. Such companies include Pepsi-cola, Exide Battery, Philips Lighting, EIDorado Bus, and Schwans. Currently manufacturing, retail trade, and service industries rank as the three primary employers in the City. No single industry is dominant. The City of Salina retains its position near the top of a list of first class cities with respect to 'trade pull factor." The pull factor measures the degree to which a city or county area captures retail trade from outside the jurisdiction. A pull factor of greater than 1 indicates that a city is attracting more retail trade from outside the city/county than it is losing to other counties. It is apparent from this that Salina continues to serve as a regional economic hub in 2015. Major Initiatives In November, 2008, voters elected to increase the Y. cent tax to .40 cent, and extend the sunset for an additional ten years. until March 31, 2019. Ninety-three percent (93%) of the tax is to be used for capital improvements and tax stabilization. The remaining tax is to be used for economic development programs. In 2014 several major projects were initiated, including the reconstruction of East Iron Avenue, reconstruction of the Ohio and North Street and the g'" and Cloud Intersections, the final phase of remodeling on Fire Station #1, construction of an additional landfill cell, and continuation of water system distribution improvements and the next phase of Bicentennial Center remodeling. Solid Waste disposal is becoming a stable operation, with 90,000 to 100,000 tons being disposed of each year. The community remains committed to recycling and resource conservation, with several initiatives that began in 1997, including a yard waste recycling and composting program in addition to continuing a mulching mower rebate program. The community currently has about 4,700 yard carts placed to encourage recycling of yard waste as an alternative to disposal. A Pilot residential recycling program was continued in 2004. The curbside recycling program was converted to a permanent service in 2005, with 900 households participating. ii For several years McPherson County has used the Salina solid waste facility to dispose of a portion of their solid waste stream. This provided approximately 20,000 tons per year and a concomitant revenue stream. During 2014, they opened their own disposal facility, and as a result, the Salina facility has experienced a reduction in tonnage and associated revenues. Several adjustments to operations have been made in order to accommodate these changes. 2014 saw the dissolution of the City-County Health Department. As a result, the City of Salina terminated contributions to the consolidated operation, saving $1,018,031 in expenditures (budgetary basis) and absorbed the cost of operating the Animal Control operations, including operation of the Animal Shelter. This added $505,232 in expenditures (budgetary basis) to the General Fund, as well as 6 staff positions. Addressing fiduciary pressures generated by a recessionary economy has also been a challenge. The primary approach has been to reduce staffing through attrition, after careful evaluation of each vacancy. By the end of 2014, full time staffing had been reduced from 511 to 473. The freeze on salaries was removed in 2011, with an allowance granted for an average 2% merit review. However, general adjustments to the pay plan for cost of living changes have not been resumed. Capital Improvement Planning The City's Capital Improvement Plan (CIP) consists of two components. One component consists of "routine" capital-including vehicle and equipment replacement, technology replacement, building repair and improvement, routine pavement maintenance activity, utility system enhancements and similar items. The amount of funding for these projects may fluctuate based on needs and funding availability, however, planned amounts are allocated over a multi-year period. Source of funding for routine capital is current cash resources from the fund appropriate to the nature of the purchase. The second component of the CIP includes major projects that typically require issuance of bonds or notes, although these projects may also be supplemented with available cash and grant financing. The plan is updated each year after an extensive evaluation of the demands on future financial resources. The Capital Improvement program is scheduled for a major revision as the result of the sales tax to be used for that purpose. Construction Initiated': 2015 2016 2017 2018 2019 General Fund $ 550,000 $ 550,000 $ 550,000 $ 550,000 $ 550,000 Sales Tax• 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 Special Park Fund 150,000 150,000 150,000 150,000 150,000 Gas Tax Fund 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 Solid Waste Fund 50,000 50,000 50,000 50,000 50,000 Sanitation Fund 160,000 160,000 160,000 160,000 160,000 Water & Wastewater Fund 2,500,000 4,500,000 2,500,000 2,500,000 2,500,000 General Obligation Bonds 11,700,000 1,400,000 1,140,000 1,600,000 800,000 Re1Rnue Bonds 11,100,000 5,600,000 4,000,000 4,000,000 4,000,000 Other Sources 50,000 50,000 50,000 50,000 50,000 Total $ 30,060,000 $ 16,260,000 $12,400,000 $12,860,000 $ 12,060,000 'The year a project is scheduled reflects the year that construction is initiated. Preliminary work (design, acquisition) may precede this date by one or more years, and permanent financing may not occur until one (or more years depending on project magnitude) subsequent to this date. iii Financial Policies The City has adopted a formal set of Budgetary and Financial Policies, addressing such items as fund balances, capital improvements, operating budgets, long term debt management, accounting, auditing and financial reporting, revenues, cash management and investments. Financial policies contribute to financial stability by: 1. Providing consistent guidance in decision making 2. Establishing appropriate levels of fund balances 3. Governing the use of one time or unanticipated resources 4. Providing a multi-year capital improvements process 5. Establishing responsibilities and deadlines for budget preparation 6. Providing for a balanced annual operating budget 7. Providing guidelines on the use of debt, including appropriate purposes and terms 8. Provide a linkage between capital improvement scheduling and long term debt management planning 9. Require annual audits and financial reporting in conformance with Generally Accepted Accounting Procedures 10. Require timely and regular interim financial reporting to the Governing body 11. Insure the safety of cash and near cash resources (timely collection of Accounts Receivable, etc.). Acknowledgments The preparation of the Comprehensive Annual Financial Report was made possible by the dedicated, professional advice and effort of the Mize Houser auditing team. A special thank you needs to be given to Valerie Gebhardt, City Accountant, who is responsible for much of the data assembly and reconciliation. Finally, preparation of this report would not have been possible without the support of the City Commission. Sincerely, ~{/~ Jason A. Gage City Manager ~5 Director of Finance iv ( City of Salina ) 11 CITIZENS 11 CITY COMMISSION Jon Blanchard, Mayor Kaye J. Crawford Karl Ryan Trent Davi~· Randall Hardy City Manager Jason Gage Municipal Court I 1 ...•..•..•..•..•..•..•..•..•..•..•. -...................................................... I ! Legal Services Clark Mize & Linville Chartered* I Risk Management I Gre:z Benf!.tson I Deputy City Manager Michael Schrage Development Services I Gary Hobbie I Continuous Process Improvement Building Services Bryon Johnson Neighborhood Services Planning & Zoning I Parks & Recreation I Public Works I Utilities Finance/ Administration Fire I Police I Dion Louthnn vacant Martha Tasker Rod Franz Larr)' Mullikin Brad Nelson I I r Parks Division tngineering r Water Plant Division City Clerk Fire Administration Administration Recreation Division Public Services Wastewater Plant Water Customer Fire Suppression Patrol Division Golf Course Streets Division Accounting Fire Prevention Support Division Facility Maintenance Traffic Control Utility Division Finance EMS Investigative Division Animal Services Flood Control Water Distribution Bicentennial Center Sanitation Wastewater ~ Solid Waste Collection Central Garage I I Computer Technology I Community Relations I I Arts & Humanities I I Human Resources .lack Rolf~ Gina McDonald Brad Anderson Natalie Fischer I [ Human Relations Community Engagement l [ Smoky Hill Museum l * Contract Position V City of Salina, Kansas List of Principal Officials City Commission Jon Blanchard, Mayor Kaye J. Crawford, Vice Mayor Trent Davis, Commissioner Randall Hardy, Commissioner Karl Ryan, Commissioner City Executive Staff Jason Gage, City Manager Michael Schrage, Deputy City Manager Rodney Franz, Director of Finance and Administration Jack Rolfs, Director of Computer Technology Natalie Fischer, Director of Human Resources Greg Bengston, City Attorney Brad Nelson, Chief of Police Larry Mullikin, Fire Chief Daniel Stack, City Engineer James Teutsch, Interim Director of Public Works Martha Tasker, Director of Utilities Dion Louthan, Director of Parks and Recreation Gary Hobbie, Director of Development Services Brad Anderson, Director of Arts and Humanities Gina McDonald, Director of Human Relations vi FINANCIAL SECTION INDEPENDENT AUDITOR'S REPORT Mayor and City Commissioners City of Salina, Kansas Report on the Financial statamants 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 infonnation of the City of Salina, Kansas, as of and for the year ended December 31, 2014, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. M•nagement's Raponslblllty for the Flnanclal Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United states of America; this indudes the design, implementation, and maintenance of intamal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud c,r e1TOr. Auditor's Responsibility Our responsibility is to express an opinion on the financial statement based on our audil We conducted our audit in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Government Auditing standards, issued by the Comptroller General of the United States and the Kal188s Municipal Audit end Accounting Guide. Those standards require we plan and perfonn the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. We did not audit the financial statements of the Salina Airport Authority which statements reflect total assets of $48,066,222 as of December 31, 2014 and total revenues of $4,754,345 for the year then ended, and the Housing Authority of the City of Salina which statements reflect total assets of $7,598,529 as of June 30, 2014 and total revenues of $2,136,062 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 induded for the Salina Airport Authority and the Housing Authority of the City of Salina is based solely on the report's of the other auditors. An audit involves perfonning 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. Opinions In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fair1y, 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 infonnation of the City of Salina, Kansas, as of December 31, 2014, and the respective changes in financial position and cash flows, where applicable, 1hereof and the respective budgetary comparison for the General, Tourism and Convention, Special Gas and Sales Tax Capital Funds for the year then ended in accordance with accounting principles generally accepted in the United States of America. www,D1abPYIILSPOO • mhcoOmlzahou.r.com 5M S Kanaas Ave, Sule 700 • TopekQ. KS 66403-8465 • 785.233.0586 p • 785.233.10781 5M S Kanaas Ave, Sule <IOO • Topeka. KS U603-8454 • 785.234.5573 p • 715.234.10371 7101 Colleg9 llvd, Suit. 900 • Ovaland Palk, KS 6621~1984 • 913.461.1812 p • 913..461.2211 f 211 E Bghlh Suh NI LGWNNtce, KS U044•2771 • 785 .. 84U844 p • 785.142.9049 I 1 Emphasis of Matter Prior Period Restatement As discussed in Note 3 to the financial statements, certain errors resulting in amounts previously reported as expenses and capital assets as of December 31, 2013, were discovered by management of the City during the current year. Accordingly, these amounts have been restated in the December 31, 2014, financial statements now presented, and adjustments have been made to net position to correct the error. Our opinion is not modified with respect to these matters. 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 59 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. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The introductory section, combining and individual nonmajor fund financial statements and schedules, and statistical tables as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements, budgetary comparison schedules and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate direcUy to the under1ying 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 under1ying account and other records used to prepare the basic 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. Other Reporting Required by Government Auditing standards In accordance with Government Auditing Standards, we have also issued our report dated October 22, 2015, on our consideration of the City's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. Certified Public Accountants Lawrence, Kansas October 22, 2015 /J4 2 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (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, 2014. 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 • The City's net position increased by $4.5 million from current operations. Governmental net position decreased by $1.0 million and Business-Type net position increased by $5.5 million. • The change in net position was primarily due to spend-down of previously received funds for the abatement of groundwater contamination in the Schilling Industrial complex. • At the close of 2014, the City's governmental funds reported combined ending fund balances of $18,330,169, an increase of $702,586 over the prior year. This resulted from a combination of factors, the most notable of which were an increase in Capital Projects fund balances ($2, 135,485) and a decrease in the Schilling Groundwater Abatement Capital project ($1,627,511). General Fund balances increased from $3,549,740 to $4,254,429, an increase of $704,689 (19.8%) • At the close of 2014, the City's enterprise funds reported combined ending Net Position of $82,778,234, an increase of $6,328,769 over the prior year. Positive performance was shared by all enterprise funds, with, of course, the Water and Sewer Fund providing the bulk of the change ($4,060,679). • Total revenues decreased by $6,472,000, due to a change in grant revenue resulting from the Schilling groundwater contamination project. • Investment revenues continue to be very minimal. • The City-County Joint Health Department was dissolved at the close of 2013; with the City of Salina assuming responsibility for operations (and expenses) of the Animal Control operation. This added 6 staff positions and $505,232 (budgetary basis) in expenses for 2014. However, the additional expense was more than offset by a reduction in contractual service expenses of $1,018,031 (budgetary basis) compared to 2013. 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 Position reports all of the City's assets and liabilities. Net position, the difference between assets and deferred outflows of resources and liabilities, are an important measure of the City's overall financial health. Net position represents the total accumulated and unused resources available to the City for the purpose of providing services. Over time, the increases and decreases in net position can be monitored to determine if the City's financial position is improving or deteriorating. The Statement of Activities shows how net position has 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, 3 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (Unaudited) 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 Authonty as discretely presented component units of the City. Note 1, item A in the Notes to the Financial Statements provides a more complete explanation of the relationship between these entities and the City of Salina. Fund Financial Statements The City uses three types of funds to manage its resources: governmental funds, proprietary funds, and fiduciary funds. A fund is a fiscal entity with a set of self-balancing accounts recording financial resources together with all related liabilities and residual equities and balances, and the changes therein. These accounting entities are 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 categones: enterpnse 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. Enterpnse 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 enterpnse 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 Services activity and for the Central Garage operation. A combining statement for these internal service funds can be found in the supplementary information following the notes to the financial statements. Fiduciary funds are used by the City to account for resources held by the City for a third party. Agency funds are a special class of fiduciary fund in which liabilities always equal assets, and thus there is no net position. 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 restncted to the extent that only earnings, not pnncipal, may be used. Permanent funds operated by the City include the Citizenship Trust, Cemetery and Mausoleum Endowments, and the Tri-centennial Commission fund. Notes to the Financial Statements The notes to the financial statements are an integral part of the basic financial statements since they contain valuable additional information necessary for gaining a complete understanding of the City's financial statements. 4 Other Information CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (Unaudited) In addition to the basic financial statements and the notes described above, this report also presents the general fund and major special revenue fund's budgetary statements as required supplementary information directly following the notes to the basic financial statements. The combining statements for the non-major funds are shown after the required supplementary information. Finally, the statistical section includes selected statistical data about the City's operations and economy. The City as a Whole This section will identify, discuss, and analyze significant differences and trends that will enhance the reader's understanding of the City's financial position. Tax Base and Economy The City of Salina relies on three major groups of revenues to support its' operations. Each of these revenue streams has a different revenue base. In declining order of magnitude, they are charges for services, sales taxes, and property taxes. Sales taxes and property taxes apply primarily to governmental activities, while charges for services apply to both governmental (32%) and business-type (68%) activities. Charges for Services account for about 47% ($37,014,000) of the City's revenue stream. Charges for service depend on both the rate that is set for the activity, as well as the volume of services provided. The following table illustrates service volume and rate adjustments for some of the more significant services for the year ending December 31, 2014. Description 2013 Volume 2014 Volume Change Rate Comments Golf Course: Rounds, 18 Hole 35,926 36,352 426 Rounds, Par 3 2,500 3,144 644 Annual Golf Members 298 291 (7) Development Services Inspections: Building 5,421 4,779 (642) Inspections: Minimum Housing Code 7,299 6,858 (443) Permits Issued 1,954 1,932 (22) Finance/Administration EMS Runs Billed 4,271 4,593 322 Licenses Issued 827 (827) Water Billings Issued 236,649 241,334 4,685 Water Metered (in Billion Gallons) 1.79 1.80 0.01 Parks and Reaeation Kenwood Cove Attendance 75,276 81,596 6,320 No fee increase Youth Teams 172 169 (3) Adult Teams 245 268 23 Special Pops Programs 140 144 4 Trips/Tours offered 15 37 22 Youth Tournament Teams 368 410 42 Adult Tournament Teams 116 98 (18) Public Works Sanitation Customers 14,869 14,936 67 Landfill Tonnage 105,006 99,309 (5,697) Street Cut and Excavation Permits 215 216 1 Conaete Permits 152 158 4 Water and Wastewater Water Treated (Billion Gallons) 2.10 2.00 (0.10) Wastewater Treated (Billion Gallons) 1.36 1.30 (0.06) ''In general, if not specified in the table, rates were adjusted an average of about 2% for most services. 5 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (Unaudited) Sales taxes are the next largest component of the revenue mix, providing 22% ($17,150,033) of the total revenues. The City receives a .90% City-wide sales tax, and also a portion of the County-wide 1 % sales tax. Forty-four percent, (a rate of .4%) of the City-wide sales tax is required to be used for special purposes. The remaining .5%, along with the City portion of the County-wide tax is available for general purposes. Total revenue from the sales tax in 2014 was up from$ 16,540,435 in 2013. This 3.7% increase follows a 1.0% increase for 2013. 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 4.3%, compared to .8% in 2013. 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 decreased for 2014, the City's allocated portion of the County-wide sales tax was also decreased from 60.86% in 2012 to 60.22% in 2014. The decline in the City of Salina share of Countywide sales tax is a long term trend. As a matter of comparison, five years ago (2009) the City share was 62.47%. 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, 2019. The tax was also modestly re-purposed, for Capital and Economic Development purposes only, as well as retaining a property tax stabilization component. Property Taxes are the third major component of the revenue mix, accounting for 15% ($12,143,105) 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 .6%. The total City mill levy increased by 3.8%. The overlapping levy also increased, by 3.1%. Tax delinquency decreased from 4.1% to 3.5%. 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 $13.7 million from its' peak of $39.7 million in 2007. At the 2014 tax rate, this exemption is equivalent to $701,146 in lost revenue for 2014. Motor vehicle value was stable, however, it is still well below 2010 values. Motor vehicle taxes are distributed based on a formula using prior year's tax effort (similar to the Countywide Sales Tax Distribution). The following table summarizes the comparative property assessed values and tax levy rates: Fiscal (Budget) Year Comparative Property Values and Tax Levy Rates 2013 Real Estate and Personal Property Assessed Valuation City Mill Levy($ per $1,000) Operating (General Fund) Debt Service Total City Rate Total Overlapping Levy Percent of Total Taxes Collected Ratio ofTotal Taxes (including delinquent collections) to taxes levied Motor Vehicle Valuation $405,107,476 20.242 5.948 26.190 131.797 95.9% 98.3% $ 48,882,411 2014 Change $407,454,378 $2,346,902 20.539 0.297 6.388 0.440 26.927 0.737 135.879 4.082 97.5% 1.6% 102.3% 4.0% $ 48,865,900 $ (16,511) The unemployment rate in Salina increased slightly from 5.1 % in 2013 to 5.3% in 2014, reflecting general economic conditions. This is still slightly below the statewide and significantly below the national unemployment rate. The total labor force declined to 26,303, a change of .5%. In 2014, the top ten property taxpayers accounted for 7.19% of total assessed value. This is less concentrated than ten years ago (at 10.87%). 6 Statement of Net Position CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (Unaudited) Net position may, over time, provide an indicator of a government's financial position. In the case of the City of Salina, assets and deferred outflows of resources exceeded liabilities by $210,656,000 at December 31, 2014. This represents an increase in net assets of $4,784,000 over 2013. A comparative condensed Statement of Net Position at December 31, 2013 and 2014: Condensed Statement of Net Position As of December 31 (In $000) Governmental Activities Business-Type Activities Total Primary Government % of %of 2013-2014 2013 2014 2013 2014 2013 Total 2014 Total Change Cash and investments $ 23,462 $ 23,801 $ 24,175 $ 29,896 $ 47,637 15% $ 53,697 17% $ 6,060 Other current assets $ 13,065 $ 13,599 $ 2,125 $ 2,024 $ 15,190 5% $ 15,623 5% $ 433 Noncurrent (capital) assets $ 166,217 $ 165,623 $ 80,849 $ 85,901 $ 247,066 ~ $ 251,524 nm s 4458 Total Assets $ 202,744 $ 203,023 $ 107,149 $ 117,821 $ 309,893 l..!m, $ 320,844 l..!m, $ 10,951 Total deferred outflows of resources $ 414 $ 344 $ 311 $ 293 $ 725 100% $ 637 100% $ 88 Current liabilities $ 23,922 $ 24,932 $ 5,636 $ 4,553 $ 29,558 28% $ 29,485 27% $ (73) Noncurrent liabilities $ 49,813 $ 50,557 $ 25,375 $ 30,783 $ 75,188 ~$ 81,340 illi. $ 6,152 Total liabilities $ 73,735 $ 75,489 $ 31,011 $ 35,336 $ 104,746 100% $ 110,825 100% $ 6 079 Net position: Net investment in capital assets $ 116,585 $ 115,589 $ 57,103 $ 61,721 $ 173,688 84% $ 177,310 84% $ 3,622 Restricted for pennanent funds $ 452 $ 468 $ $ $ 452 0% $ 468 0% $ 16 Restricted for debt service $ 758 $ 408 $ 1,553 $ 1,512 $ 2,311 1% $ 1,920 1% $ (391) Unrestricted $ 11,628 $ 11 413 $ 17,793 $ 19,545 $ 29,421 14% $ 30,958 15% $ 1 537 Total net position $ 129,423 $ 127,878 $ 76449 $ 82,778 $ 205,872 1Jllll:f, $ 210,656 1Jllll:f, $ 4 784 Percent of total net position 63% 61% 37% 39% 100% 100% casn and investments as a percentage of current liabilities 98% 95% 429% 657% 161% 182% The largest segment of the City's net position (85%) 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 cannot 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 position (1 %) is restricted for debt service and permanent funds . The remainder (unrestricted) of net position (15%) may be used to meet the City's obligations to citizens and creditors. This represents slight growth in this component compared to 2013. In 2014, the amount of net investment in capital assets increased by $3,622,000. Unrestricted net position increased by $1,537,000. These represent diverse changes throughout the financial statement. However, it is clear that for 2014, the City experienced an increase in current assets, including cash and investments. Total liabilities increased in governmental activities and in business-type activities. In governmental activities, the increase was distributed between current and non-current liabilities. In business type activities current liabilities decreased, while non-current liabilities increased substantially. The increase in non-current liabilities is largely related to completion of projects financed by the Kansas Water Supply Loan Fund. 7 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (Unaudited) During the year ended December 31, 2014, there were several significant events that changed the balance of net position. Governmental Activities: Governmental were relatively stable, with only minor changes in 2014, reflecting overall balanced operations .. Business-type Activities: The water and sewer fund has a dominant influence on the increase in business-type activities net position. 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 Statement of Activities For the Year Ended December31 {In $()()O's) Governmental Activities Business-Tn!e Activities Total Prima~ Government 2013 2014 2013 2014 2013 % 2014 % 2013-2014 Program Revenues: Change Charges for Services $ 12,141 $ 11,885 $ 24.309 $ 25,130 $ 36.450 43% $ 37,015 47% $ 565 Operating Grants and ContrtbuUons $ 4,200 $ 4,015 $ $ $ 4,200 5% $ 4,015 5% $ (185) Capital Grants and ContrtbuUons $ $ $ $ 115 $ 0% $ 115 0% $ 115 General Revenues: Property Taxes $ 11,593 $ 12,143 $ $ $ 11,593 14% $ 12,143 15% $ 550 Sales Taxes $ 16,540 $ 17,150 $ $ $ 16,540 19% $ 17,150 22% $ 610 Other Taxes $ 8.830 $ 7,231 $ $ $ 8.830 8% $ 7,231 9% $ 801 Investment Revenue $ 67 $ 97 $ 49 $ 51 $ 118 0% $ 148 0% $ 32 Other Miscellaneous $ 9919 $ 1160 $ 279 $ 277 $ 10198 ll% $ 1437 ~$ {8.J61) Total Revenues: $ 61090 $ 53 681 $ 241637 $ 251573 $ 85727 1.22% $ 79254 ~$ {61473) Expenses: $ General Government $ 10,978 $ 12,550 $ $ $ 10,978 15% $ 12,550 17% $ 1,572 Public Safety $ 19,849 $ 20,208 $ $ $ 19,649 28% $ 20.208 27% $ 669 Public works $ 11,064 $ 11,400 $ $ $ 11,064 15% $ 11,400 15% $ 336 Public Health and Sannatlon $ 1,369 $ 347 $ $ $ 1,369 2% $ 347 0% $ (1,022) Culture and Recreation $ 4.809 $ 5,158 $ $ $ 4,809 8% $ 5,158 7% $ 347 Planning and Development $ 3,399 $ 3,238 $ $ $ 3.399 5% $ 3.236 4% $ (183) Solid waste Disposal $ $ 3.532 $ 1,870 $ 3,532 5% $ 1,870 3% $ (1.882) Water and Sewer $ $ 15,418 $ 14,903 $ 15,418 21% $ 14,903 20% $ (515) Sanitation $ $ 2,237 $ 2,399 $ 2,237 3% $ 2,399 3% $ 182 GolfCounse $ $ 768 $ 843 $ 768 1% $ 843 1% $ 75 Interest on Long Term Debt $ 1953 $ 1 817 $ $ $ 1953 ~% $ 1817 ~$ {138) Total Expense& $ 531221 $ 54 714 $ 211955 $ 201015 $ 75178 !22% $ 74 729 122% $ {44!) lnaeaae in net 888el8 before tran&fera $ 7,869 $ (1.033) $ 2.682 $ 5.558 $ 10,551 $ 4,525 $ (8.028) Transfers and other extraordinary items $ 1 000 $ 1 $ (960) $ $ $ 1 $ 1 Change in Net Position $ 81869 $ {11032) $ 11732 $ 51558 $ 10!601 $ 41526 $ {6!075) Net Position January 1 $ 119,522 $ 129,423 $ 73.880 $ 78,449 $ 193,382 $ 205,872 $ 12,490 Prior Period Adjustment $ 1 032 $ {513) $ 857 $ 771 $ 1 889 $ 268 $ {11631) Net Position January 1, reatatecl $ 120,554 $ 128,910 $ 74,717 $ 77,220 $ 195,271 $ 206,130 $ 10,859 Net Position December 31 $ 129,423 $ 127,878 $ 76,449 $ 82,778 $ 205,872 $ 210,656 $ 4,784 Governmental Activities. Total expenses for governmental activities for the year ending December 31, 2014 were $54,714,000 compared to $53,221,000 in 2013. Governmental activities represent 73% of the City's total expenses. The largest element of governmental activity expense was public safety, accounting for 27% of the total. Governmental Activity expenses were also affected by the dissolution of the Joint City-County Health Department, which provided a net savings to the City of about $500,000 for the year. Charges for service attributable to governmental activities totaled $11,885,000 and operating grants for those purposes were $4,015,000. Both have declined slightly from 2013. The balance was funded by general revenues. Sales taxes accounted for $17,150,000 of the general revenues, with property taxes providing $12,143,000. Net assets decreased by $1,032,000 as a result of governmental activities. Business Type Activities. Total expenses for business-type activities for the year were $20,015,000, or 27% of the City's total expense. The majority of this expense ($14,903,000) is attributable to water and sewer operations, with the other activities costing a combined total of $5,112,000. These activities are primarily supported by user charges, with only $328,000 coming from investment and miscellaneous revenues. Net position increased by $5,558,000 as a result of business-type activity operations. 8 Fund Financial Analysis Governmental Funds Fund Balances: CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (Unaudited) The table below shows the Governmental Fund balances for major funds as of December 31, 2013 and December 31, 2014. Governmental Fund Balances as of December 31, Fund 2013 2014 Change General $ 3,549,740 $ 4,254,429 $ 704,689 Tourism and Convention $ 435,734 $ 551,123 $ 115,389 Special Gas $ 1,289,302 $ 929,729 $ (359,573) Bicentennial Center $ 1,942,519 $ 1,914,462 $ (28,057) Sales Tax Capital $ 9,223,212 $ 7,595,701 $ (1,627,511) Debi Service $ 757,726 $ 407,864 $ (349,862) Capital Projects $ (2,416,104) $ (280,619) $ 2,135,485 Other Governmental Funds $ 2,845,454 $ 2,957,480 $ 112,026 Total $ 17,627,583 $18,330,169 $ 702,586 Total governmental fund balances increased by $702,586. The main reasons for these changes are varied. The Schilling Capital Improvement Fund, which was created to account for U.S. Government and other funds received for the abatement of groundwater contamination, decreased significantly as the City uses funds previously distributed. The Capital Projects Fund increase was largely the result of Bond and Note proceeds received. The General Fund balances grew noticeably. 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, 2013 and 2014. Consolidated Statement of Revenues and Expenditures for Major Governmental Funds For the years ended December 31 Modified Aca\Jal Basis Fund 2013 2014 Change Revenues (lnduding Other Financing Sources) General $ 36,925,292 $ 37,233,769 $ 308,477 Tourism and Convention $ 1,366,229 $ 1,595,079 $ 228,850 Special Gas $ 1,540,781 $ 1,562,783 $ 22,002 Sales Tax Capital $ 3,954,780 $ 4,119,653 $ 164,873 Schilling Capital Improvement $ 9,370,097 $ 23,199 $ (9,346,898) Debt Service $ 6,576,384 $ 6,374,558 $ (201,826) Capital Projects $ 6,986,719 $ 6,107,577 $ (879,142) other Governmental Funds* $ 3134 461 $ 3 055 714 $ (Z8,747) Total Revenues $ 69,854,743 $ 60,072,332 $ (9,782,411) Less Other Sources l! 10,782,677 l! 8,225,695 l! (2,556,982) Revenues, net of other sources $ 59,072,066 $ 51,846,637 $ (rl2251429) Expenditures (lnduding Other Financing Uses) General $ 37,328,037 $ 36,529,080 $ (798,957) Tourism and Convention $ 1,350,000 $ 1,479,690 $ 129,690 Special Gas $ 1,626,654 $ 1,922,356 $ 295,702 Sales Tax Capital $ 4,022,400 $ 4,147,710 $ 125,310 Schilling Capital Improvement $ 146,885 $ 1,650,710 $ 1,503,825 Debt Service $ 6,457,982 $ 6,724,420 $ 266,438 Capital Projects $ 8,489,127 $ 4,047,673 $ (4,441,454) Other Governmental Funds* l! 3,658,243 l! 3,021,553 l! (636,690) Total Expenditures $ 63,079,328 $ 59,523,192 $ (3,556,136) Less Other Uses $ 3 907114 $ 2,557,408 $ (1,349,706) Expenditures, net of other uses $ 59,172,214 $ 56,965,784 $ (2,206,430) 9 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (Unaudited) Total revenues and other sources decreased by $9,782,411 from 2013 to 2014. The largest components of this change were in the Schilling Capital Improvement Fund (for which a large one-time grant was received in 2013) and the Capital Projects Fund. Other changes include an increase in General and Tourism Fund revenues. Expenditures generally increased, with the notable exception of the General and Capital Projects Funds. General Fund expenditures were, of course, affected by the dissolution of the Joint City-County Health Department, which provided a net savings to the Fund of about $500,000 for the year. Proprietary Funds The City of Salina operates four enterprise funds as well as five internal service funds. A summarized comparative Statement of Net Position follows for each enterprise fund: Comparative Summary Statement of Net Position as of December 31 (in $000's) Solid Waste Disposal Water and Sewer 2013 2014 Change 2013 2014 Change Current Assets $ 5,400 $ 6,291 $ 891 $19,883 $ 24,399 $ 4,516 Capital Assets $ 2,495 $ 4,230 $1,735 $77,310 $ 80,650 $ 3,340 Deferred Outflows $ $ L..:_ $ 311 $ 293 $ (18) Total Assets and Deferred Outflows of Resources $ 7,895 $10,521 $2,626 $97,504 $105,342 $ 7,838 Current Liabilities $ 630 $ 963 $ 333 $ 4,895 $ 3,458 $(1,437) Noncurrent Liabilities $ 2,788 $ 3,764 $ 976 $22,463 $ 26,884 $ 4,421 Total Liabilities $ 3,418 $ 4,727 $1,309 $27,358 $ 30,342 $ 2,984 Net investment in capital assets $ 2,083 $ 2,025 $ (58) $53,976 $ 58,675 $ 4,699 Restricted $ $ $ -$ 1,553 $ 1,512 $ (41) Unrestricted $ 2,393 $ 3,769 $1,376 $14,617 $ 14,813 $ 196 Total Net Position $ 4,476 $ 5,794 $1,318 $70,146 $ 75,000 $ 4,854 Current Assets as a percentage of current liabilities 857% 653% 406% 706% Sanitation Golf Course 2013 2014 Change 2013 2014 Change Current Assets $ 928 $ 1,083 $ 155 $ 89 $ 146 $ 57 Capital Assets $ 688 $ 703 !......1§. $ 356 $ 319 $ (37) Total Assets and Deferred Outflows of Resources $ 1,616 $ 1,786 $ 170 $ 445 $ 465 $ 20 Current Liabilities $ 62 $ 82 $ 20 $ 49 $ 50 $ 1 Noncurrent Liabilities $ 50 $ 54 L_i $ 73 $ 81 $ 8 Total Liabilities $ 112 $ 136 ~ $ 122 $ 131 $ 9 Net investment in capital assets $ 688 $ 703 $ 15 $ 356 $ 319 $ (37) Restricted $ $ $ $ Unrestricted $ 816 $ 947 !.....ill $ (33) $ 15 $ 48 Total Net Position $ 1,504 $ 1,650 $ 146 $ 323 $ 334 $ 11 Current Assets as a percentage of current liabilities 1497% 1321% 182% 292% The Solid Waste Disposal Fund shows an increase in liabilities related to landfill post-closure. All Enterprise funds show increases in net position, driven largely by increases in current assets. 10 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (Unaudited) Revenues, Expenses, and Changes in Net Position All enterprise funds show healthy results, with increases in net position. The decline in expenses in the Solid Waste Fund are largely due to the deferral of some internal transfers (to capital improvement reserves) pending assessment of operational changes. Other enterprise funds experienced good revenue production and controlled expenses, resulting in positive outcomes. Comparative Summary of Revenues, Expenses and Changes in Net Position Solid Waste Disposal Water and Sewer 2013 2014 Change 2013 2014 Change Operating Revenues $3,171 $3,062 $ (109) $18,132 $18,931 $ 799 Operating Expenses $3,522 $1,853 $ (1,669) $14,524 $14,002 $ (522) Operating Income $ (351) $1,209 $ 1,560 $ 3,608 $ 4,929 $1,321 Non-operating revenues (expenses) $ 1 $ (1) $ (2) $ (858) $ (869) $ (11) Income (Loss) before Transfers $ (350) $1,208 $ 1,558 $ 2,750 $ 4,061 $1,311 Transfers in (out) $ -$ -$ $ (950) $ $ 950 Capital Contributions $ -$ 115 $ $ $ $ - Change in Net Position $ (350) $1,323 $ 1,673 $ 1,800 $ 4,061 $2,261 Net Position January 1 $4,740 $4,476 $ (264) $67,543 $70,146 $2,603 Restatement $ 86 $ (5) $ (91) $ 803 $ 793 $ (10) Net Position January 1, restated $4,826 $4,471 $ (355) $68,346 $70,939 $2,593 Net Position December 31 $4,476 $5,794 $ 1,318 $70,146 $75,000 $4,854 Sanitation Golf Course 2013 2014 Change 2013 2014 Change Operating Revenues $2,514 $2,553 $ 39 $ 770 $ 861 $ 91 Operating Expenses $2,236 $2,400 $ 164 $ 768 $ 845 $ 77 Operating Income $ 278 $ 153 $ (125) $ 2 $ 16 $ 14 Non-operating revenues (expenses) ~$ __ 2 ~$ __ 3 ~$ __ 1 ~$ __ $ 2 $ 2 ~--~-- Income (Loss) before Transfers Transfers in (out) Change in Net Position Net Position January 1 Restatement Net Position January 1, restated Net Position December 31 $ 280 $ - $ 156 $ - $ (124) $ 2 $ 18 $ 16 $ $ $ $ - $ 280 $ 156 $ (124) ~$ __ 2 ~$ __ 1_8 $ 16 $1,255 $1,504 $ 249 $ 321 $ 323 $ $ (31) $ (10) "-$ ---=2'-'-1 "-$ --z..$ _ _,(C.J7) $ $1,224 $1,494 $ 270 $ 321 $ 316 $ $1 504 $1650 $ 146 $ 323 $ 334 $ 11 2 (7) (5) 11 Budgetary Highlights CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (Unaudited) The objective of budgetary controls is to ensure compliance with legal prov1s1ons 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, 2014. 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. The City experienced a number of significant variances from budgeted items in the General Fund, however, the total fund was within budgeted expenses. Several expenditure items were also significantly over or under budget. Several Departments exceeded budgeted expenditures. Capital Assets and Debt Administration Capital Assets The total amount invested in Capital Assets for the City at December 31, 2014 was $251,524,000 net of accumulated depreciation. The following table illustrates the Capital Asset balance by various classes of assets at December 31, 2013 and 2014: Capital Asset Balances Net of Depreciation as of December 31 (In OOO's) Governmental Activity Business-type Total 2013 2014 2013 2014 2013 2014 Equipment, Furniture and Fixtures $ 1,214 $ 1,123 $ 1,801 $ 1,584 $ 3,015 $ 2,707 Vehicles $ 3,177 $ 3,308 $ 802 $ 780 $ 3,979 $ 4,088 Buildings and Improvements $ 23,434 $ 22,509 $11,051 $10,629 $ 34,485 $ 33,138 Land $ 22,640 $ 22,640 $ 1,542 $ 1,542 $ 24,182 $ 24,182 Infrastructure $ 104,768 $ 106,048 $43,191 $43,501 $ 147,959 $ 149,549 Construction in Progress $ 10,318 $ 9,995 $23,387 $27,865 $ 33,705 $ 37,860 Total $ 165,551 $ 165,623 $81,774 $85,901 $ 247,325 $ 251,524 * Net of Accumulated Depreciation 12 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (Unaudited) Changes to capital assets may be summarized as follows: Changes to Capital Assets, 2014 (in OOO's) Governmental Business-Type Activity Activity Additions $ 10,385 $ 8,769 Retirements $ 5,752 $ 2,115 Adjustments $ (1,033) $ 900 Net Additions $ 15 104 $ 11 784 Depreciation Expense Applied $ 5 457 $ 2,622 Total $19,154 $ 7,867 $ (133) $26,888 $ 8,079 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 1 O 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 12/31/2014 totaled $50,033,555. In addition, there were temporary notes outstanding in the amount of $5,000,000, as well as a financing lease in the amount of $176,235. Business-type activities had $14,592,836 in revenue bonds outstanding, as well as $9,587,351 in general obligation bonds. Revenues generated by user fees are pledged to retire all of the bonds issued by business-type activities. In addition, a loan payable is outstanding in the amount of $6,208,102. The City engaged in several debt transactions during 2014. On August 1st, the City issued 2014-A, $7,570,000 of internal improvement bonds. The proceeds were used to finance lighting in the downtown area, construction of a new landfill cell, provide public improvements to a residential subdivision, and for intersection improvements Also on August 191, the City issued $5,000,000 in temporary notes to finance phase 2 (of 3) improvements to the City Bicentennial Center. This note will be refinanced into a long term bond issue in August 2015. 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, 67 401. 13 BASIC FINANCIAL STATEMENTS CITY OF SALINA, KANSAS STATEMENT OF NET POSmON December 31, 2014 Prima~ Government Total Total Total Governmental Business-type Primary Activities Activities Government ASSETS AND DEFERRED OUTLFOWS OF RESOURCES Current assets: Cash and inves1ments $ 23,801,166 $ 29,895,674 $ 53,696,840 Receivables {net of allowance for uncollectibles) Accounts 1,765,744 1,520,521 3,286,265 Taxes 11,519,012 11,519,012 Interest 18,717 16 18,733 Inventory 295,393 503,093 798,486 Restricted cash and investments Prepaid expenses Total current assets 37 400 032 31919304 69 319 336 Noncurrent assets: Capital assets, nondepreciable Construction in progress 9,994,512 27,865,017 37,859,529 Land 22,639,800 1,541,806 24,181,606 Capital assets, depreciable 233,957,333 110,335,963 344,293,296 Less: Accumulated depreciation 100,968,830 53 841 314 154 810 144 Total noncurrent assets 1651622 815 85 901 472 251 5241287 Total assets 203,022,847 111,820,n6 320,843,823 Deferred outnows of resources: Deferred charge on bond issuance 344 313 292,999 637 312 Total deferred outnows of resources 344 313 292,999 637 312 Total assets and deferred outnows of resources $ 2031367 160 $118 113 775 $ 321 4801935 Liabilities: Current liabilities: Accounts payable $ 1,074,116 $ 1,309,786 $ 2,383,902 Retainage payable 35,147 384,597 429,744 Accrued liabilities 706,776 706,776 Matured bond principal and interest 145 145 Accrued interest payable 468,632 286,924 755,556 Deposits payable 171,116 171,116 Unearned revenue 10,982,435 10,982,435 Current portion of compensated absences 1,479,918 319,894 1,799,810 Current portion of temporary notes payable 5,000,000 5,000,000 Current portion of loans payable 379,000 379,000 Current portion of revenue bonds payable 843,696 843,896 Current portion of financing leases payable 44,463 44,463 Current portion of special assessment debt payable Current portion of general obligation bonds payable 5140611 1047580 6188 191 Total current liabilities 24,932,241 4,552,593 29,484,834 Noncurrent liabilities: Accrued liabilities 164,801 184,801 Compensated absences 1,416,234 306,128 1,722,362 Security deposits returnable Net OPEB obligation 3,950,840 385,780 4,338,620 Loans payable 5,829,102 5,829,102 Revenue bonds payable 13,949,140 13,949,140 Financing leases payable 131,772 131,772 Special assessment debt payable General obligation bonds payable 44,892,944 8,539,771 53,432,715 Landfill post-closure care liabilities 1773027 1 773 027 Total noncurrent liabilities 50,556,591 30,782,948 81,339,539 Total liabilities $ 75,488,832 $ 35,335,541 $ 110,824,373 Net Position Net invesbnent in capital assets $ 115,589,260 $ 61,721,285 $177,310,545 Restricted for: Permanent funds: Expendable 467,597 467,597 Debt service 407,864 1,511,793 1,919,657 Unrestricted 11413607 19 545156 30 958 763 Total net position $ 1271878 328 $ 82?781234 $ 210 6561562 The notes to the basic financial statements are an integral part of this statement 14 Com~nent Units Salina Salina Housing Airport Authori!l Autho~ $1,575,034 $ 290,742 19,318 107,939 25,628 146,885 35786 5067 1 802 651 403 748 143,475 834,733 1,456,891 9,823,047 7,985,895 71,203,893 3,790,383 34,199,199 5 795 878 47662474 7,598,529 48,066,222 $ 715981529 $ 4810661222 $ 37,553 $ 143,803 34,836 146,057 347,798 82,383 11,559 28,950 1,956 52,190 18,484 955 000 168,287 1,692,282 39,588 17,606 20,624 55,n6 30,465 22,019,555 57174 22,126,420 $ 225,461 $ 23,818,702 $5,795,878 $ 24,510,104 24,934 115521256 [2621584) $ 713731068 $ 2412471520 Governmental actlvlUes: General government Public safety Public works Publlc health and sanitation Culture and recreation Planning and development Interest on long-tenn debt Total governmental actlvlHes Buslneu-type actlvltlas: Solid Waste Disposal Water and Sewer Sanitation Golf Course Total business-type activities Total primary govemment Component unlta: Salina Housing Authortty Salina Airport Authority Total component units CITY OF SALINA, KANSAS STATEMENT OF ACTIVITIES For the Year Ended December 31, 2014 Net (Expenses] Revenue and Changes In Net Position P~ram Revenues Pri!!!!!l Govemment Comeonent Units Operating Capital Total Total Charges for Grants and Grants and Govemrnental Business-type ~nses Services Contributions Conbibutions Activities Activities $12,550,394 $ 5,661,659 $ 936,443 $ $ [5,952,292] $ 20,207,952 4,222,006 877,163 (15,108,783] 11,400,085 254,784 1,566,992 [9,578,309] 347,342 46,153 172,643 (128,546] 5,155,551 1,532,506 172,893 (3,450,152] 3,235,999 167,778 288,809 [2,779,414] 1 817 424 [11817~24] 54,714,747 11,884,884 4,014,943 (38,814,920] 1,889,884 3,024,048 115,000 1,269,164 14,903,485 18,742,029 3,838,544 2,399,092 2,552,723 153,831 8431296 811 049 @2124!] 20 015 757 2511291849 115000 512291092 $74,730,504 $37,014,733 $ 4,014,943 $ 115,000 13818141920] 512291092 $ 2,278,524 $ 331,628 $ 1,675,140 $ 77,315 5 735 244 1858854 799 762 $ 810131768 $ 2,190,482 $ 1,675,140 $ 877 U17 General Revenuu: Property taxes levled for General purposes 8,314,920 Debt service 2,578,095 Motor vehlde tax General purposes 1,250,090 Sales tax General purposes 12,688,980 Selective purposes 4,481,053 Other taxes General purposes 7,231,112 Investment revenues 97,805 51,330 Reimbursements 179,900 Mlscelaneous 1,160,019 97,165 Transfers, net 787 Subtotal general revenues 37!782!881 3281395 Change In net position [110321059] 515571487 Net position -beginning 129,423,463 78,449,465 Prior period adjustment [513!076] n1202 Net posttlon -beginning, restated 12819101387 7712201747 Net position -ending $12718781328 s 021n81234 The notes to the basic financial statements are an integral part of this statement. 15 Total Salina Salina Primary Housing Airport Govemment Authori!l Auth~ $ [5,952,292) $ $ [15,108,783) [9,578,309) (128,546( (3,450,152( [2,n9,414J [118171424) [38,814,920) 1,269,164 3,838,544 153,631 [321247) 512291092 @315851828) (194,441] @10761628] [194~1] @1076!828] 8,314,920 1,993,889 2,578,095 1,250,090 12,688,980 4,461,053 7,231,112 149,135 8,428 437 179,900 1,257,184 43,551 101,403 787 3811111256 51979 2!095!729 415251428 [142~62] [!!801899] 205,872,928 7,515,530 25,228,419 2581206 20611311134 715151530 2512281419 $210,856,582 $713731088 $ 24124 71520 CITY OF SALINA, KANSAS BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2014 Tourism and Special General Convention Gas ASSETS Cash and investments $ 3,472,829 $ 24,394 $ 713,047 Receivables (net) Accounts 906,050 526,729 Taxes 8,394,651 310,745 Interest 18,717 Inventory 107,033 Due from other funds 44,751 Cash with fiscal agent Total assets $ 12,944,031 $ 551,123 $ 1,023,792 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable $ 467,208 $ -$ 85,777 Retainage payable 8,286 Due to other funds Matured principal and interest Temporary notes payable Total liabilities 467,208 94 063 Deferred inflows of resources Unavailable revenue -property taxes 8,222,394 Total deferred inflows of resources 8,222,394 Fund balance: Nonspendable 107,033 Restricted 551,123 686,804 Committed Assigned 239,311 242,925 Unassigned 3,908,085 Total fund balances 4,254,429 551,123 929,729 Total liabilities, deferred inflows of resources and fund balances $ 12,944,031 $ 551,123 $ 1,023,792 $ $ $ $ Schilling Other Total Sales Tax Capital Debt Capital Governmental Governmental Capital Improvement Service Projects Funds Funds 1,941,353 $ 7,826,005 $ 354,289 $ 4,530,042 $ 3,040,313 $ 21,902,272 278,219 54,746 1,765,744 2,813,616 11,519,012 18,717 107,033 44,751 145 145 1,941,353 $ 7,826,005 $ 3,168,050 $ 4,808,261 $ 3,095,059 $ 35,357,674 17,130 $ 230,304 $ -$ 71,780 $ 92,828 $ 965,027 9,761 17,100 35,147 44,751 44,751 145 145 5,000,000 5,000,000 26 891 230,304 145 5,088,880 137 579 6,045,070 2,760,041 10,982,435 2,760,041 10,982,435 107,033 407,864 1,264,489 2,910,280 1,023,469 7,327,347 1,534,716 9,885,532 890,993 268,354 [280,619] 158,275 1,519,239 3,908,085 1,914,462 7,595,701 407,864 [280,619] 2,957,480 18,330,169 1,941,353 $ 7,826,005 $ 3,168,050 $ 4,808,261 $ 3,095,059 $ 35,357,674 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, 2014 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 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 Financing leases payable Accrued interest on the bonds Net Position of Governmental Activities 265,740,284 100, 135,940 2,801,524 3,950,840 50,033,555 176,235 468,632 The notes to the basic financial statements are an integral part of this statement. 17 $ 18,330, 169 344,313 165,604,344 1,030,288 [57,430,786] $ 127,878,328 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS For the Year Ended December 31, 2014 Tourism and Special General Convention Gas REVENUES: Taxes Real estate taxes $ 8,135,091 $ $ Delinquent taxes 179,829 Motor vehicle taxes 963,912 General sales taxes 12,688,980 Selective sales taxes Other taxes 5,636,239 1,594,873 Intergovernmental 1,162,634 1,559,693 Special assessments Licenses and permits Charges for services 7,826,289 Investment revenue 11,536 206 3,090 Reimbursements Donations Miscellaneous 629,259 Total revenues 37,233,769 1,595,079 1,562,783 EXPENDITURES: Current General government 3,986,212 Public safety 19,558,487 Public works 6,949,477 493,527 Public health and sanitation 146,178 Culture and recreation 2,697,564 Planning and development 2,209,836 819,633 Miscellaneous Capital outlay 843,975 1,428,829 Debt service Principal retirement Interest and other charges Total expenditures 36,391,729 819,633 1,922,356 Excess [deficiency] of revenue and other sources 36,529,080 1,479,690 over [under] expenditures and other [uses] 842 040 775 446 [359,573] OTHER FINANCING SOURCES [USES] Issuance of bonds 53,469 Bond premium Transfers in 370,765 Transfers [out] [561,585) [660,05ZJ Total other financing sources [uses] [137,351) [660,05ZJ Net change in fund balance 704,689 115,389 [359,573) Fund balance -Beginning of year 3,549,740 435,734 1,289,302 Restatement of prior year fund balance Fund balance -Beginning of year, as restated 3,549,740 435,734 1,289,302 Fund balance -End of year $ 4,254,429 $ 551,123 $ 929,729 Schilling Other Total Sales Tax Capital Debi Capital Governmental Governmental Capital Improvement Service Projects Funds Funds $ $ $ 2,522,111 $ $ $ 10,657,202 55,984 235,813 286,178 1,250,090 12,688,980 4,113,828 347,225 4,461,053 7,231,112 488,448 818,868 4,007,643 1,809,992 1,809,992 7,300 7,300 450,005 8,276,294 5,825 23,199 244 8,971 5,526 58,597 123,302 123,302 240,699 240,699 9,061 25,000 135,240 798,560 4,119,653 23,199 4,683,570 623,721 2,004,863 51,846,637 3,986,212 19,558,487 7,443,004 173,259 319,437 1,594,764 4,292,328 203,037 3,232,506 35 35 2,387,710 1,650,710 3,929,485 768,378 11,009,087 5,120,417 140,000 5,260,417 1,604,003 118188 142,080 1,864,271 2,387,710 1,650,710 6,724,420 4,047,873 3,021,553 56,965,784 4,147,710 1 731 943 [1,627,511] [2,040,850] [3,423,952] [1,016,690] [5,119,147] 115,000 5,196,531 5,365,000 302,500 302,500 1,575,988 1,053,969 3,000,722 [1,760,000] [15,175] [3,118] [2,999,935] [1,760,000] 1,690,988 5,483,856 1,050,851 5,668,287 B8,057] [1,627,511] [349,882] 2,059,904 34,161 549,140 1,942,519 9,223,212 757,726 [2,416, 104] 2,845,454 17,627,583 75 581 77 865 153 446 1,942,519 9,223,212 757,726 B,340,523) 2,923,319 17,781,029 $ 1,914,462 $ 7,595,701 $ 407,864 $ B80,619] $ 2,957,480 $ 18,330,169 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, 2014 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 Proceeds from sale of assets Capital outlays Depreciation expense Interest on long-term debt in the statement of activities differs from the amount reported in the governmental funds because interest is recorded as an expenditure in the funds when it is due, and thus requires the use of current financial resources. In the statement of activities, however, interest expense is recognized as the interest accrues, regardless of when it is due. This is the amount by which interest decreased. An internal service fund is used by the city's management to charge the costs of certain activities to the individual funds. The revenues and expenses of certain internal service fund is reported with governmental activities. Some expenses reported in the statement of activities, such as compensated absences and other post employment benefits, do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. Bond, temporary note and lease proceeds 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 66,032 [89,492] 5,553,033 [5,452,848] The notes to the basic financial statements are an integral part of this statement. 19 $ 549,140 76,725 46,847 [744,359] [313,072] [5,907,757] 5,260,417 $ [1,032,059] CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) GENERAL FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Revenues Ta,ces Real estate taxes $ 8,135,093 $ 8,260,367 Delinquent taxes 179,829 177,337 Motor vehicle taxes 962,452 876,743 General sales tax 12,688,980 12,406,661 other taxes 4,686,239 4,996,000 Total taxes 26,652,593 26,717,108 Charges for services General charges 82,871 General government 390 Public safety 4,006,989 4,190,907 Public works 254,784 301,000 Health and sanitation 60,043 54,000 Culture and recreation 1,178,512 1,291,745 Community and economic development 19648 10 500 Total charges for services 5,603,237 5,848,152 Operating grants, restricted General grants 172,643 190,000 Public safety 877,163 919,759 Community and economic development 112 578 30,000 Total operating grants, restricted 1,162,384 1,139,759 Operating grants, unrestricted General grants 1,000 Public works 500 3,000 Culture and recreation 4,017 5,000 Total operating grants, unrestricted 5,517 8,000 Interest income General interest 10,375 20,000 Total interest income 10,375 20,000 lnterfund services provided General services 1,281,752 1,070,000 General government 2,075,000 2,175,000 Community and economic development 66000 66000 Total interfund services provided 3,422,752 3,311,000 Miscellaneous revenues General miscellaneous revenues 402,938 115,130 General government 260 Public safety 129,572 199,000 Public works 10,000 Culture and recreation 17,665 17,600 Total miscellaneous revenues 550,435 341,730 Total revenues 37,407,293 37,385,749 See independent audito(s report on the financial statements. 20 Final $ 8,260,367 177,337 876,743 12,406,661 4,996,000 26,717,108 4,190,907 301,000 54,000 1,291,745 10 500 5,848,152 190,000 919,759 30,000 1,139,759 3,000 5,000 8,000 20,000 20,000 1,070,000 2,175,000 66 000 3,311,000 115,130 199,000 10,000 17,600 341,730 37,385,749 Variance with Final Budget Positive [Negative] $ [125,274] 2,492 85,709 282,319 [309,761] [64,515] 82,871 390 [183,918] [46,216] 6,043 [113,233] 9148 [244,915] [17,357] [42,596] 82,578 22,625 1,000 [2,500] [983] [2,483] [9,625] [9,625] 211,752 [100,000] 111 752 287,808 260 [69,428] [10,000] 65 208,705 21 544 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE· BUDGET AND ACTUAL (NON • GAAP BASIS) GENERAL FUND (Continued) For the Year Ended December 31, 2014 Budgeted Amounts 8!;!!,!i! Qrism! Expenditures General Government City commission $ 76,081 $ 81,383 City manager 697,271 705,238 Legal 669,048 405,250 Finance 665,027 668,083 Human resources 390,737 364,503 Other general government 968,157 1,040,000 Contingencies 28849 50000 Total general government 3 495170 3 314 457 Public Safety Police 8,758,428 9,264,109 Municipal court 1,623,008 1,505,209 Fire 9,187,800 9,038,624 Total public safety 19,569,236 19,807,942 Public Works Buildings and general improvements 1,134,298 1,138,333 Engineering Streets Flood works Traffic control ADA compliance Total public works Public Health and Sanitation Cemetery Total public health and sanitation Culture and Recreation Parks Swimming pools Neighborhood centers Recreation Animal shelter Smoky Hill museum Total culture and recreation Community Development Community relations Development services Agency contracts Total community development Capital Outlay Capital outlay Cash Reserve Total expenditures Excess[deficiency]ofrevenues over [under] expenditures 1,099,895 1,120,320 1,878,585 1,934,559 261,501 248,211 911,735 870,759 17,520 15,000 5,303,534 5,327,182 146,178 165,303 146,178 165,303 1,727,690 1,782,284 383,190 453,768 56,196 45,954 1,276,720 1,410,182 505,233 595,765 494 041 512 766 4 443 070 4,800,719 287,304 334,045 1,322,120 1,363,757 628,304 748,995 2,237,728 2,446,797 608 763 600,000 200,000 3,473,848 36,003,679 39,936,248 1,403,614 [2,550,499] See independent audito(s report on the financial statements. 21 Final $ 81,383 705,238 405,250 668,083 364,503 1,040,000 50 000 3 314 457 9,264,109 1,505,209 9,038,624 19,807,942 1,138,333 1,120,320 1,934,559 248,211 870,759 15,000 5,327,182 165,303 165,303 1,782,284 453,768 45,954 1,410,182 595,765 512 766 4 800 719 334,045 1,363,757 748,995 2,446,797 600,000 3,473,848 39,936,248 [2,550,499] Variance with Final Budget Positive [N~ggti~] $ 5,302 7,967 [263,798] 3,056 [26,234] 71,843 21 151 [180,713] 505,681 [117,799] [149,176] 238,706 4,035 20,425 55,974 [13,290] [40,976] [2,520] 23,648 19,125 19,125 54,594 70,578 [10,242] 133,462 90,532 18 725 357 649 46,741 41,637 120,691 209,069 [8,763] 3,273,848 3,932,569 3,954,113 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) GENERAL FUND (Continued) For the Year Ended December 31, 2014 Budgeted Amounts Other financing sources [uses] Transfer in Transfer [out] Total other financing sources [uses] Excess[deficiency]ofrevenues and other sources over [under] expenditures and other [uses] Unreserved fund balance, January 1 Prior year cancelled encumbrances $ Actual Original 1,017 $ [561,585] [580,000] [560,568] [580,000] 843,046 [3, 130,499] 1,965,726 3,130,499 2,289 Unreserved fund balance, December 31 2,811,061 $ Reconciliation to GAAP Interest receivable Accounts receivable Taxes receivable Inventory Deferred revenue Current year encumbrances GAAP Fund Balance, December 31 18,717 906,050 8,394,651 107,033 [8,222,394] 239,311 $ 4,254,429 See independent audito(s report on the financial statements. 22 Final $ [580,000] [580,000] [3,130,499] 3,130,499 $ Variance with Final Budget Positive [Negative] $ 1,017 18,415 19,432 3,973,545 [1,164,773] 2 289 $ 2,811,061 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) TOURISM AND CONVENTION FUND Revenues Taxes Other taxes Interest income General interest Total revenues Expenditures Community Development Tourism Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses) Transfer (out) Excess (deficiency) of revenues and other sources over (under) expenditures and other (uses) For the Year Ended December 31, 2014 $ Actual 1,417,582 206 1,417,788 819,633 819,633 598,155 [660,057] (61,902) 86,296 $ Budgeted Amounts Original 1,420,000 1,420,000 788,810 788,810 631 190 [631,190] 2 $ Final 1,420,000 1,420,000 788,810 788,810 631 190 [631,190] 2 Variance with Final Budget $ Positive (Negative) (2,418) 206 [2,212] [30,823] [30,823] [33,035] [28,867] (61,902) 86,294 Unreserved fund balance, January 1 Unreserved fund balance, December 31 Reconciliation to GAAP 24,394 .._$ ___ .;;.2 .._$ ___ .;;;.2 $"-----'2~4._;;,3;.;;;9.;;;.2 Accounts receivable 526,729 GAAP Fund Balance, December 31 $ 551,123 See independent auditor's report on the financial statements. 23 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) SPECIAL GAS FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Final Revenues Operating grants, restricted Public works $ 1,388,638 $ 1,377,030 $ 1,377,030 Interest income General interest 3 090 6000 6 000 Total revenues 1,391,728 1,383,030 1,383,030 Expenditures Public Works Streets 2,093,837 1,658,472 1,658,472 Cash Reserve 500,000 500,000 Total expenditures 2,093,837 2,158,472 2,158,472 Excess [deficiency] of revenues over [under] expenditures [702,109] [775,442] [775,442] Other financing sources [uses] Transfer in 170,000 180,000 180,000 Total other financing sources [uses] 170,000 180,000 180,000 Excess [deficiency] of revenues and other sources over [under] [532,109] [595,442] [595,442] expenditures and other [uses] Unreserved fund balance, January 1 903,531 595,442 595,442 Prior year cancelled encumbrances 4637 Unreserved fund balance, December 31 376,059 $ -$ - Reconciliation to GAAP Taxes receivable 310,745 Current year encumbrances 242,925 GAAP Fund Balance, December 31 $ 929,729 See independent auditor's report on the financial statements. 24 Variance with Final Budget Positive [Negative] $ 11,608 [2,910] 8 698 [435,365] 500,000 64,635 73 333 [10,000] [10,000] 63,333 308,089 4637 $ 376,059 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) SALES TAX CAPITAL FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Final Revenues Taxes Selective sales tax $ 4,113,828 $ 3,697,576 $ 3,697,576 Interest income General interest 5826 5 000 5 000 Total revenues 4,119,654 3,702,576 3,702,576 Expenditures Capital Outlay 3,159,043 2,345,000 2,345,000 Cash Reserve 149,422 149,422 Total expenditures 3,159,043 2,494,422 2,494,422 Excess [deficiency] of revenues over [under] expenditures 960,611 1,208,154 1,208,154 Other financing sources [uses] Transfer [out] [1,760,000) [1,735,000) [1,735,000) Total other financing sources [uses] [1,760,000) [1,735,000) [1,735,000) Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [799,389] [526,846] [526,846] Unreserved fund balance, January 1 1,796,162 1,760,770 1,760,770 Prior year cancelled encumbrances 26,696 Unreserved fund balance, December 31 1,023,469 $ 1,233,924 $ 1,233,924 Reconciliation to GAAP Current year encumbrances 890,993 GAAP Fund Balance, December 31 $ 1,914,462 See independent auditor's report on the financial statements. 25 Variance with Final Budget Positive [Negative] $ 416,252 826 417 078 [814,043] 149,422 [664,621] [247,543) [25,000) [25,000) [272,543] 35,392 26,696 $ [210,455) CITY OF SALINA, KANSAS STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31, 2014 Business-Type ActMties: Ente!E:rise Funds Solid Waste Water and Assets and deferred outflows of resources: DiSE!OSal Sewer Sanitation Golf Course Current assets: Cash and investments $ 6,041,010 $ 22,799,833 $ 928,960 $ 125,871 Receivables (net of allowance for uncollectibles) Accounts 250,156 1,116,065 154,300 Interest 16 Inventory and prepaid supplies 482,960 20,133 Total current assets 6,291,182 24,398,858 1,083,260 146,004 Capital assets: Nondepreciable capital assets: Construction in progress 2,296,324 25,568,693 Land 682,000 844,806 15,000 Depreciable capital assets: Capital assets 8,376,543 98,884,658 2,018,705 1,056,057 Less: accumulated depreciation 7,125,439 44647 897 1,316,346 751,632 Total capital assets 4,229,428 80,650,260 702,359 319,425 Deferred outflows of resources: Deferred charge on bond issuance 292,999 Total deferred outflows of resources 292,999 Total assets and deferred outflows of resources $10,520,610 $ 105,342,117 $1,785,619 $ 465,429 Liabilities: Current liabilities Accounts payable $ 565,447 $ 712,359 $ 26,421 $ 5,559 Retainage payable 15,000 379,597 Interest payable 14,445 272,479 Meter deposits payable 171,116 Currant portion of compensated absences payable 38,109 181,811 55,956 44,018 Current portion of accrued daims payable Current portion of loans payable 379,000 Current portion of general obligation bonds payable 330,000 717,580 Current portion of revenue bonds payable 643696 Total current liabilities 963 001 3,457,638 82 377 49577 NonC\Jrrent liabilities: Compensated absences payable 36,469 173,988 53,547 42,124 Accrued claims payable Net OPEB Obligation 79,270 267,468 39,042 Payable from restrided assets Loans payable 5,829,102 General obligation bonds payable 1,875,000 6,664,771 Revenue bonds payable 13,949,140 Landfill post-closure care liabilities 1,773,027 Total nonC\Jrrent liabilities 3,763,766 26,884,469 53 547 81186 Total liabilities $ 4,726,767 $ 30,342,107 $ 135,924 $ 130,743 Net position Net investment in capital assets $ 2,024,428 $ 58,675,073 $ 702,359 $ 319,425 Restrided Restricted for bond retirement 1,511,793 Unrestricted 3,769,415 14,813,144 947,336 15,261 Total net position $ 5,793,843 $ 75,000,010 $1,649,695 $ 334,686 The notes to the basic financial statements are an integral part of this statement. 26 Total Internal Enterprise Service Funds Funds $ 29,895,674 $1,898,749 1,520,521 16 503,093 188,360 31,919,304 2,087,109 27,865,017 1,541,806 110,335,963 851,361 53,841,314 832,890 85,901,472 18471 292,999 292,999 $118,113,775 $2,105,580 $ 1,309,786 $ 109,089 394,597 286,924 171,116 319,894 48,353 706,776 379,000 1,047,580 643,696 4,552,593 864,218 306,128 46,273 164,801 385,780 5,829,102 8,539,771 13,949,140 1,773,027 30,782,948 211 074 $ 35,335,541 $1,075,292 $ 61,721,285 $ 18,471 1,511,793 19,545,156 1,011,817 $ 82,778,234 $1,030,288 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the Year Ended December 31, 2014 Business-Type Activities: Entemrise Funds Solid Waste Water and Diseosal Sewer Sanitation Golf Course Operating revenues Charges for services $3,024,048 $18,742,029 $2,552,723 $ 811,049 Reimbursements 179,900 Miscellaneous 37,540 9,395 50,230 Total operating revenues 3,061,588 18,931,324 2,552,723 861,279 Operating expenses General government Public works 1,286,770 12,112,288 2,265,204 Recreation 814,511 Depreciation 566,554 1,889,800 134 807 30 410 Total operating expenses 1,853,324 14,002,088 2,400,011 844 921 Operating income [loss] 1,208,264 4,929,236 152,712 16,358 Nonoperating revenues [expenses] Investment revenue 15,679 32,840 2,549 262 Debt service [19,610] [901,130] Gain/[loss] on disposal of flX8d assets 3,050 6,645 919 1,625 Accretion of bond premium 11,560 Amortization of bond issuance costs [18,472] Total nonoperating revenues [expenses] [881] [868,557] 3,468 1,887 Income [loss] before transfers 1,207,383 4,060,679 156,180 18,245 Capital contributions 115 000 Change in net position 1,322,383 4,060,679 156,180 18,245 Net position, January 1 4,476,397 70,146,203 1,503,942 322,923 Restatement [4,937] 793,128 [10,427] [6,482] Net position, January 1, restated 4,471,460 70,939,331 1,493,515 316 441 Net position, December 31 $5,793,843 $ 75,000,010 $1,649,695 $ 334,686 The notes to the basic financial statements are an integral part of this statement. 27 Total Internal Enterprise Service Funds .El!!!Ql $25,129,849 $9,517,634 179,900 97,165 86,950 25,406,914 9,604,584 10,350,238 15,664,262 814,511 2,621,571 4462 19,100,344 10,354,700 6,306,570 [750,116] 51,330 5,757 [920,740] 12,239 11,560 [18,472] [864,083] 5,757 5,442,487 [744,359] 115 000 5,557,487 [744,359] 76,449,465 1,782,982 771,282 [8,335] 77,220,747 1774647 $ 82,778,234 $1,030,288 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 Proceeds from loans Proceeds from issuance of general obligation bonds 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 Net increase [decrease] in cash and cash equivalents Cash and cash equivalents, January 1 Restatement Cash and cash equivalents, January 1, restated Cash and cash equivalents, December 31 CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2014 Business-Type Activities: Enterprise Funds Total Internal Solid Waste Water and Enterprise Service Funds Disposal Sewer Sanitation Golf Course Funds $3,023,259 $18,970,874 $2,560,989 [1,307,878] [11,245,985] [1,549,850] [474,666] [2,721,328] [691,889] 37,540 9,395 1,278,255 5,012,956 319,250 [2,306,224] [4,283,121] 115,000 3,050 6,645 6,208,102 2,205,000 [411,960] [717,624] [630,000] [8,239] [865,818] [403,373] [281,816] 15,679 32,840 890,561 4,763,980 5, 150,449 18, 189,299 [159,877] 919 [158,958] 2,549 162 841 766,119 [153,446] ---- 5,150,449 18,035,653 766119 $ 811,046 $25,366,170 $9,447,310 [455,951] [14,559,664] [9,771,335] [350,670] [4,236,553] [614,197] 50,230 97,165 66,950 54 657 6,665.116 [651,272] 1,625 1 625 263 56,545 69,326 69,326 [6,749,222] 115,000 12,239 6,206,102 2,205,000 [1,129,584] [630,000] [874,057] [842,522] 51,331 5,873,927 24,175,193 [153,446] 24,021,747 5,756 [845,516] 2,744,265 2,744,265 $6,041,010 $22,799,633 $ 926,960 $ 125,671 $29,695,674 $1,698,749 The notes to the basic financial statements are an integral part of this statement. 26 CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (Continued) For the Year Ended December 31, 2014 Business-Type Activities: Enterprise Funds Total Internal Reconciliation of operating poss] income to net cash provided by [used in] operating activities Solid Waste Water and Enterprise Disposal Sewer Sanitation Golf Course Funds Service Funds Operating income [loss] $ 1,208,264 $ 4,929,236 $152,712 $ 16,358 $ 6,306,570 $ [750, 116] 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 lnaease [deaease] in retainage payable Increase [decrease] in accrued compensated absences Increase [decrease] in daims payable lnaease [deaease] in landfill postclosure liabilities Increase [deaease] in net OBEB obligation Increase [decrease] in meter deposits payable Net cash provided by [used in] operating adivities 566,554 [789] 387,045 15,000 3,028 [903,300] 2,453 $ 1,278,255 $ 1,889,800 134,807 30,410 47,206 8,266 46,986 [664] [320,417] 17,117 161 [1,517,744] [29,216] 6,348 1,894 [34,634] 6,498 1 739 5,012,956 $319,250 $ 54,657 The notes to the basic financial statements are an integral part of this statement. 29 2,621,571 4,462 54,683 46,322 [48,219] 83,906 8,231 [1,502,744] [17,946] 4,695 [70,325] [903,300] [25,683] 1 739 $ 6,665,118 $ [851,272) ASSETS CITY OF SALINA, KANSAS STATEMENT OF ASSETS AND LIABILITIES AGENCY FUNDS December 31, 2014 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. 30 $ 208,084 $ 208,084 $ 208,084 $ 208,084 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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, 2014. Complete financial statements for each of the individual component units may be obtained at the entity's administrative offices. Salina Airport Authority 3237 Arnold Ave. Salina, KS Joint Ventures Housing Authority of the City of Salina 469 s. 5th Salina, KS The City of Salina also participates with Saline County in one joint venture. 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 venture. Separate financial statements are available from the governing board of the joint venture. Total unencumbered cash, December 31, 2014 Total change in unencumbered cash, year ended December 31, 2014 Total cash receipts, year ended December 31, 2014 Total cash receipts from City of Salina 31 (Kansas Regulatory Basis) Building Authority (Audited) $ 594,514 111,165 1,196,343 400,492 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) A Reporting Entity (Continued) Joint Ventures (Continued} Complete financial statements for the joint venture may be obtained at the entity's administrative office. Salina County-City Building Authority 300 West Ash Street Salina, KS B. Government-wide and fund financial statements The statement of net position 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. 32 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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. ExpenditurEKlriven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in net position. 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. 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. Sales tax capital fund -To account for 87.5% of the 1/4 cent sales tax designated for capital, debt, and human services purposes. Schilling capital improvement fund -To account for the funding provided by U.S. Government and Public Entities and the remedial investigation, feasibility study and expenditures necessary to abate groundwater contamination beneath the property formerly identified as Schilling Air Force Base. 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. Capital projects fund -To account for the acquisition and construction of major capital facilities other than those financed by proprietary funds and trust funds. 33 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) 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 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 the financial statements as "Cash and Investments." The city's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Investments in the Kansas Municipal Pool are carried at fair value. Cash balances from all funds are invested to the extent available in certificates of deposit and other authorized investments. Investments with maturity dates greater than three months are stated separately. Earnings from these investments, unless specifically designated, are allocated monthly to the investing fund based on the percentage of funds invested to total investments. All investments are carried at fair value. 2. Receivables and Payables Transactions between funds that are representative of 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 2015. 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. 34 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 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 Buildings other equipment Vehicles Infrastructure 35 Years 50 5-15 6-10 30-50 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 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 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. 36 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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, granters, 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: Major Governmental Funds Tourism Schilling Other Total and Special Sales Tax Capltal Debt Capltal Governmental Governmental General convention ll!! Capital lmRrovernent Service Projects Funds Funds Fund Balances: Nonspendable for: Inventory $ 107,033 $ $ $ $ $ $ $ $ 107,033 Restricted for: Publlc works 686,804 686,804 Public heatth and sanitation 42,456 42,456 cunure and recreation 182,600 182,600 Planning and development 551,123 232,059 783,182 Debt payments 407,864 807,374 1,215,238 Committed for: Public safety 21,541 21,541 CuHure and recreation 433,626 433,626 Planning and development 50,191 50,191 Cemetery 461,846 461,846 C&pllal Improvements 1,023,469 7,327,347 567,512 8,918,328 Assigned for: General government 43,535 43,535 Public safety 10,749 9,283 20,032 Public works 49,638 49,838 cunure and recreation 17,816 22,577 40,393 Planning and development 58,837 58,837 Capital improvements 58,738 242,925 890,993 268,354 [280,619] 126,415 1,306,806 Unassigned: 3,908,085 ------3,908,085 Total Fund Balances $4,254,429 $551,123 $ 929,729 $1,914,462 $ 7,595,701 $407,864 $ [280,61!1 $ 2,957,480 $ 18,330,169 37 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, Fund Balance, and Net Position (Continued) 9. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred oufflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The government only has one item that qualifies for reporting in this category. It is the deferred charge on bond issuance reported in the government-wide statement of net position. A deferred charge on bond issuance results from the difference in the carrying value of the debt and its reacquisition price. This amount is deferred and amortized over the life of the - debt. 10. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 11. Net Position Net position represents the difference between assets and liabilities. Net investment in capital assets 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 position is 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, granters 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 2014 budget was not amended. 38 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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, HOME 2012, KDOT Signals 91J'o Street, Flood & Drainage Improvement, CDBG ED, Kenwood Cover Capital, Special Law Enforcement, Police Grants, DARE Donations, War Memorial Maintenance, Federal CARE Grant, Police Department Federal Forfeiture, Homeowners' Assistance and Animal Shelter Donations Funds. A legal operating budget is not required for the following Enterprise funds: Solid Waste Disposal, Water and Sewer, Sanitation and Golf Course 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, 2014 in the Tourism and Convention Fund, Sales Tax Capital Fund, Bicentennial Center Fund, Sales Tax Economic Development Fund and Fair Housing 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, 2014, the statutory limit for the City was $136,896,083, providing a debt margin of $82,270,392. 39 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 and that the allocation of net position/fund balance between funds had been recorded incorrectly. Accordingly, the beginning net position/fund balances were restated, the effects of which are as follows: KDOT Capital Signals Solid Waste Water and Governmental Projects 9th Street Disposal Sewer Sanitation Golf Course Activities Fund Fund Fund Fund Fund Fund Net Position/Fund Balance, December 31, 2013 $ 129,423,463 s 12,416,104] s 1n.865J s 4,476,397 $ 70, 146,203 $ 1,503,942 $ 322,923 Capital Asset Adjustment 1666,522] 14,937] 946,574 110,427] 16,482] Fund Redassification 153 446 75581 77,885 [153,446] Net Position/Fund Balance, December 31, 2013, Restated $ 128,910,387 $ [2,340,523) $ $ 4,471,460 $ 70,939,331 $ 1,493,515 $ 316,441 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, 2014, the City has the following investments: Investment Type Kansas Municipal Investment Pool U.S. Government Securities Total fair value 40 Fair Value $ 305,300 S&P AAAf/S1+ 20,001,182 N/A $ 20,306,482 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 1 O 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. 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. 41 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) B. C. Receivables Receivables as of year end, including the applicable allowances for doubtful accounts, are as follows: Tourism and Special Debt capital Other General Convention Gas Service Projects Governmental Primary Government Receivables: Accounts $ 4,383,246 $ 526,729 $ $ $ 278,219 $ 55,562 Taxes 8,394,651 310,745 2,813,616 Interest 18 717 Gross receivables 12,796,614 526,729 310,745 2,813,616 55,562 Less: allowance for uncollectibles ~,477,19~ ~16] Total $ 9,319,418 $ 526,729 $ 310,745 $ 2,813,616 $ $ 54 746 Solid Water Waste and Sanitation DiS!;!2sal Sewer Primary Government Receivables: Accounts $ 267,512 $ 250,156 $ 1,934,932 Taxes Interest 16 Gross receivables 267,512 250,172 1,934,932 Less: allowance for uncollectibles 1113,21!1] 1818,86:1] Total ! 154,300 ! 250,172 ! 1,116,065 Component Units Salina Airport Authority Accounts Less: allowance for uncollectibles Total Salina Airport Authority Salina Housing Authority Accounts Less: allowance for uncollectibles Interest Total Salina Housing Authority Total lnterfund Receivables and Payables The composition of interfund balances as of December 31, 2014, is as follows: Fund Types General Fund Other Government Funds Due From Due To $ 44,751 $ 44,751 $ 44,751 $ 44,751 Subtotal $ 5,243,756 11,519,012 18 717 16,781,485 13,476,01!1] $ 13,303,473 Total $ 7,696,356 11,519,012 18 733 19,234,101 14,410,091] ! 14,824,010 $ 109,439 [1150QJ 107 939 19,758 [950] 510 19 318 $ 127 257 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. 42 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) D. Capital Assets Capital asset activity for the year ended December 31, 2014, was as follows: Balance Adj. Bal. Balance 12/31/2013 Adjustments 12/31/2013 Additions Retirements 12/31/2014 City governmental activities: Governmental activities: Capital assets, not being depreciated ConstnJctlon In progress $ 11,350,806 $ [1,033,264] $ 10,317,542 $ 4,509,119 $ 4,832,149 $ 9,994,512 Land 22,639,800 22,639,800 22,639,800 Capital assets, being depreciated Infrastructure 175,050,357 175,050,357 4,826,175 179,876,532 Buildings and improvements 39,290,515 39,290,515 60,527 39,351,042 Vehldes 8,940,190 8,940,190 874,939 783,514 9,031,615 Equipment, furniture and fixtures 5 720 087 5 720 087 114 422 136 365 5 698 144 Total capital assets 262,991,755 [1,033,264] 261,958,491 10,385,182 5,752,028 266,591,645 L888 accumulated depreciation for: Infrastructure 70,655,778 [373.957] 70,281,821 3,546,889 73,828,690 Buildings and improvements 15,827,083 29,450 15,856,533 985,898 16,842,231 Vehlcles 5,791,206 [27,558] 5,763,648 727,314 767,951 5,723,011 Equipment, furniture and fixtures 4 500 614 5 323 4 505 937 197 428 128 467 4 574 898 Total accumulated depreciation 96 774 681 ~66,742] 98 407 939 5 457 309 896 418 100 968 830 Govemmental activities capital assets, net $ 166 217 074 $ m661522J $ 18515501552 $ 4 927 873 $ 4 855 810 $ 16518221815 Business-type activities: Capttal assets, not being depreciated ConstnJctlon In progress $ 22,486,696 $ 900,264 $ 23,386,960 $ 6,497,482 $ 2,019,425 $ 27,865,017 Land 1,541,806 1,541,806 1,541,806 Capital assets, being depreciated Infrastructure 77,241,673 77,241,873 2,019,425 79,261,098 Buildings and improvements 22,579,933 22,579,933 22,579,933 Vehldes 3,324,991 3,324,991 159,877 52,264 3,432,604 Equipment, furniture and fixtures 5 013 565 5 013 565 91 862 43 099 5,062,328 Total capital assets 132 188 664 900 264 133,088,928 8 768 846 2 114 788 139 742 786 Less accumulated depreciation for: Infrastructure 34,050,809 185 34,050,994 1,708,717 35,759,711 Bulldlngs and Improvements 11,528,712 11,528,712 422,642 11,951,354 Vehlcles 2,514,731 8,052 2,522,783 181,958 52,264 2,652,477 Equipment, furniture and fixtures 3 245 319 [32,701] 3 212 618 308 254 43100 3 477 772 Total accumulated depreciation 51 339 571 [24,484] 51315107 2 621 571 95 364 53 841 314 Business-type acUYIUes capttal assets, net $ 8018491093 $ 9241728 $ 81.7731821 $ 611471075 $ 210191424 $ 6519011472 43 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 $ 6,702 Public safety 703,049 Public works 3,835,917 Public health 27,905 Culture and recreation 880,243 Planning and development 3493 Total depreciation $ 5,457,309 Business-type Activities: Solid Waste Disposal $ 566,554 Water and Sewer 1,889,800 Sanitation 134,807 Golf Course Division 30410 Total depreciation $ 2,621,571 E. Long-Term Debt Following is a summary of changes in long-term debt for fiscal year 2014: Balance Balance January 1, December 31, 2014 Addnions Deletions 2014 Governmental activities: General obligation bonds $ 49,631,795 $ 5,634,050 $ 5,232,290 $ 50,033,555 Financing lease 176,235 176,235 Accrued compensation 2,953,944 1,422,122 1,479,916 2,896,150 Temporary notes 3,800,000 5,000,000 3,800,000 5,000,000 Total $ 56,385,739 $ 12,232,407 $ 10,512,206 $ 58,105,940 Business-type activities: General obligation bonds $ 8,519,799 $ 2,205,000 $ 1,137,448 $ 9,587,351 Revenue bonds 15,226,532 633,696 14,592,836 Loans payable 6,208,102 6,208,102 Accrued compensation 643,967 301,949 319,894 626,022 Total $ 24,390,298 $ 8,715,051 $ 2,091,038 $ 31,014,311 Component Units: General obligation bonds $ 24,185,000 $ $ 925,000 $ 23,260,000 Less unamortized discount 1304,339] [18,894] 1285,445] Financing lease 156,791 48,825 107,966 Special assessment debt 66,746 17,797 48,949 Total component units $ 24,104,198 $ $ 972,728 $ 23,131,470 44 Amounts DueWijhin One Year $ 5,140,611 44,463 1,479,916 5,000,000 $ 11,664,990 $ 1,047,580 643,696 379,000 319,894 $ 2,390.170 $ 955,000 52,190 18,484 $ 1,025,674 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 Refunding 2004A, due 8/1/2015 Internal Improvements 2006A, due 10/1/2026 Internal Improvements 20068, 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 201 OA, due 10/1/2025 Internal Improvements 201 OB, due 10/1/2023 Internal Improvements 2011A, due 10/1/2031 Internal Improvements 2012A, due 10/1/2027 Refunding 20128, due 10/1/2020 Internal Improvements 2013A, due 10/1/28 Internal Improvements 20138, due 10/1/33 Internal Improvements 2014A, due 10/1/34 Total general obligation bonds Revenue Bonds Revenue 2011, due 10/1/31 Total revenue bonds Temporary Notes Series 2014-1, due 8/1/2015 Total temporary notes Loans Payable Kansas Public Water Supply, due 8/1/2034 Total loans payable Financing Lease, due 2/10/2017 Equipment, due 2/10/17 Equipment, due 5/8/18 45 Original Issue $ 5,585,000 2,200,000 885,000 6,545,000 3,720,000 3,525,000 23,695,000 6,916,592 7,973,044 6,587,985 2,383,903 3,817,108 1,369,380 4,485,073 7,570,000 $ 16,193,925 $ 5,000,000 $ 9,330,000 $ 30,000 146,235 Interest Rates 2.10%to4.00% 3.55% to 5.50% 4.00% to 4.50% 4.25% to 4.625% 3.25% to 4.00% 3.65% to 5.00% 2.00% to 5.00% 2.00% to 3.875% 0.50% to 3.00% 2.00% to 5.00% 1.00% to 2.45% 1.00% to 1.40% 3.00% to 4.00% 0.60% to 3.65% 2.50% to 3.75% 2.00% to 4.60% 1.00% 2.12% 3.54% 3.28% Bonds Outstanding $ 115,000 1,320,000 325,000 4,005,000 2,250,000 3,025,000 16,397,020 3,690,500 4,738,260 5,724,539 2,111,383 2,484,080 1,323,755 4,272,319 7,839,050 $ 59,620,906 $ 14,592,836 $ 14,592,836 $ 5,000,000 $ 5,000,000 $ 6,208,102 $ 6,208,102 $ 30,000 146,235 $ 176,235 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 20098, 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 Total special assessment debt Financing Lease, due 2016 Total Original Issue $ 3,635,000 1,005,000 2,025,000 6,080,000 11,820,000 2,505,000 565,235 27,599 425,000 Interest Rates 4.75% to 5.25% 4.60% to 6.00% 4.31% 3.00% to 5.50% 4.64% 4.28% 3.79% 4.47% 6.609% Bonds Outstanding $ 2,110,000 630,000 2,025,000 4,690,000 11,300,000 2,505,000 [285,445] 22,974,555 33,820 15,129 48 949 107,966 $23,131,470 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 2015 $ 6,188,191 $ 2,021,775 $ 8,209,966 2016 6,088,191 1,801,960 7,890,151 2017 5,883,190 1,618,821 7,502,011 2018 5,988,190 1,415,603 7,403,793 2019 5,893,190 1,200,606 7,093,796 2020-2024 17,176,196 3,958,932 21,135,128 2025-2029 10,238,168 1,373,514 11,611,682 2030-2034 2,165,590 201 763 2,367,353 Total $ 59,620,906 $ 13,592,974 $ 73,213,880 46 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) General Obligation -Component Units Bonds Interest Year Outstanding Due Total 2015 $ 955,000 $ 1,036,264 $ 1,991,264 2016 990,000 1,001,531 1,991,531 2017 1,030,000 963,874 1,993,874 2018 1,070,000 923,756 1,993,756 2019 1,115,000 878,519 1,993,519 2020-2024 6,370,000 3,600,036 9,970,036 2025-2029 7,985,000 1,985,411 9,970,411 2030-2031 3,745,000 244,325 3,989,325 Total $ 23,260,000 $ 10,633,716 $ 33,893,716 Annual debt service requirements to maturity for revenue bonds to be paid with utility revenues: Revenue Bonds -Prima!l'. Government Bonds Interest Year Outstanding Due Total 2015 $ 643,696 $ 565,191 $ 1,208,887 2016 663,696 549,191 1,212,887 2017 678,696 529,391 1,208,087 2018 708,696 509,141 1,217,837 2019 728,696 487,991 1,216,687 2020-2024 4,013,480 2,053,183 6,066,663 2025-2029 4,888,480 1,179,207 6,067,687 2030-2031 2,267,396 157 090 2,424,486 Total $ 14,592,836 $ 6,030,385 $ 20,623,221 Annual debt service requirements to maturity for temporary notes -to be paid through the issuance of general obligation bonds: Year 2015 Tempora!l'. Notes -Prima!l'. Government Bonds Interest Outstanding Due Total s 510001000 s 501139 '"'s_ ....... 5._.o5""0"", 1""'3""'9 47 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Annual debt service requirements to maturity for financing leases -to be paid from revenues: Year 2015 2016 2017 2018 Total 2015 2016 Total Capital Lease -Primary Government Lease Interest Outstanding Due $ 44,463 $ 45,946 47,479 38347 $ 176,235 $ 5,858 $ 4,375 2,842 1 258 14,333 $ Total 50,321 50,321 50,321 39 605 190,568 Financing Lease -Component Units Lease Interest Outstanding Due Total $ 52,190 $ 6,282 58,472 55776 2696 58 472 $ 107,966 $ 8 978 $ 116 944 The City has engaged in a loan with the Kansas Public Water Supply Fund. The following displays annual debt service requirements to maturity for the loan payable to be paid from service revenues, for the full proceeds amount: Loans -Primary Government Loans Interest Year Outstanding Due Total 2015 $ 379,000 $ 195,797 $ 309,572 2016 387,077 187,720 620,187 2017 395,326 179,471 621,622 2018 403,752 171,045 623,119 2019 412,357 162,440 624,682 2020-2024 2,197,416 676,569 3,149,263 2025-2029 2,441,771 432,214 3,149,263 2030-2034 2 713 301 160 696 1 415 883 Total $ 9,330,000 $ 2,165,952 $ 10,513,591 48 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Annual debt service requirement to maturity for Special Assessment Debt to be paid from rental revenue: Special Assessment Debt -Component Units Assessment Interest Year Outstanding Due Total 2015 $ 18,484 $ 1,958 $ 20,442 2016 19,197 1,245 20,442 2017 2,061 504 2,565 2018 2,153 412 2,565 2019 2,249 315 2,564 2020-2021 4805 325 5130 Total $ 48949 $ 4 759 $ 53 708 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, 2014, total outstanding conduit debt was $60,442,007. 49 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) F. Operating Leases On December 20, 2012, the City and Saline County jointly entered into a non-<:ancelable lease to finance a $2,750,000 heating, ventilation and air conditioning (HVAC) upgrade at the Saline County-City Building Authority. The City's share of the lease agreement is 40% and will pay the lessor $1,100,000, plus interest, through monthly payments of $7,827 over a term of 180 months. Total costs for this lease was $93,926 for the year ended December 31, 2014. The future minimum lease payments for the lease are as follows: Year 2015 2016 2017 2018 2019 2020-2024 2025-2027 $ Amount 93,926 93,926 93,926 93,926 93,926 469,633 281,780 Total $ 1,221,043 G. Reconciliation of Transfers A reconciliation of interfund transfers follows: Major Funds: General fund Tourism and convention fund Sales tax capital fund Debt service Capital projects fund Other governmental funds Agency funds Total Transfers Transfer In $ 370,765 1,575,988 1,053,969 $ 3,000,722 Transfer Out $ 561,585 660,057 1,760,000 15,175 3,118 787 $ 3,000,722 The City uses interfund transfers to share administrative costs between funds. 50 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 establishes 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 KPERS (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 5% of covered salary for all employees hired prior to July 1, 2009. K.S.A. 74-49,210 establishes the KPERS rate at 6% of covered salary for all employees hired after July 1, 2009. 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 9.32% from January 1 to December 31, 2014. The City employer contributions to KPERS for the years ending December 31, 2014, 2013, and 2012 were $1,357,291, $1,192,221 and $1,081,438, respectively, equal to the required contributions for each year. The KP&F employer rate established for fiscal years beginning in 2014 is 24. 75%. 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, 2014, 2013, and 2012 were $2,611,038, $2,338,786 and $2,007,908, 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.RC. 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. 51 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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, $177,561 is considered to be due within one year. Changes in the balances of claims liabilities during the past two years are as follows: 2014 2013 Unpaid claims, January 1 $ 569,755 $ 493,170 Incurred claims (including IBNRs) 660,413 882,663 Claim payments [887,806] [806,078] Unpaid claims, December 31 $ 342,362 $ 569,755 The City established a limited risk management program for employee health and dental insurance in 1997. The program covers eligible City employees. Premiums are paid into the health insurance fund by all other funds and are available to pay claims, claim reserves and administrative costs of the program. An excess coverage insurance policy covers individual claims in excess of $50,000. Incurred claims, including incurred but not reported claims, have been accrued based primarily upon subsequent payments. Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amounts of payouts and other economic and social factors. The liability for claims and judgments is reported in the Health Insurance Fund because it is expected to be liquidated with expendable available 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: Unpaid claims, January 1 Incurred claims (including IBNRs) Claim payments Unpaid claims, December 31 52 2014 2013 $ 372,147 $ 367,424 5,447,940 4,656,961 [5,290,872] [4,652,238] $ 529,215 $ 372,147 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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, 2014. Project Markley, Magnolia, Valleyview Sanitary Sewer Improvements and Manhole and Wastewater Pump Station Rehabilitation East Magnolia Road Replacement Fire Station #1 Quail Meadows Estates, IV Downtown Wellfield Improvements Advanced Meter Infrastructure Downtown Lighting Replacement Pheasant Ridge Addition #2 Ninth and Cloud Intersection Realignment Magnolia Hills Subdivision Bicentennial Center Improvements Fire Department Apparatus Bay Addition Landfill Cell 19 and Leachate Pond Ohio Street Improvements Iron Avenue Reconstruction Magnolia Hills Subdivision Phase Ill KPWSLF 2841 Water Line Replacement F. Contingent Liabilities Authorization $ 5,150,000 4,500,000 2,600,000 408,745 9,330,000 39,850,000 4,110,000 1,162,890 1,100,000 824,902 10,200,000 2,096,654 2,300,000 1,700,000 2,250,000 1,460,979 4,250,000 Expenditures $ 1,072,377 3,513,900 2,556,489 2,000 7,650,454 17,734,029 4,210,492 835,583 1,053,776 786 1,605,107 182,258 2,330,240 206,492 149,753 266,921 1,907,925 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 , 2014. 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 $1,773,027 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. 53 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 $4,378,208 as the remaining estimated capacity is filled over the remaining life expectancy of 145 years. These amounts are based on what it would cost to perform all closure and postclosure care in 2014. 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 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. 54 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 Ill 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 Ill 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). 55 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 Public Entities will be paid by the City. Also, the claims and counterclaims in the lawsuit have been dismissed without prejudice with provisions tolling any and all statutes of limitation. No party is obligated under the settlement agreement to implement the Corrective Action Decision upon its entry by KDHE, and the parties will either negotiate an agreement to implement such Corrective Action Decision or refile their claims in court. The Salina Public Entities have entered into a Consent Agreement and Final Order ("CAFO") with KDHE, which is conditioned upon the U.S.'s payment to the City. On May 2, 2013, the U.S. District Court for 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 U.S. wire transferred $8,426,700 to the account of the City, and the City added the share of the Salina Public Entities in the amount of $936,300 to the account. Although the claims and counterclaims in the lawsuit have been dismissed without prejudice, the City intends to vigorously pursue its claims that the U.S. should implement the Corrective Action Decision upon its entry by KDHE and its defenses against any 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 conbibution is based on projected pay-as-you-go financing requirements. Plan participants contributed approximately $185,000 to the Plan (approximately 100% of total premiums) through their required contribution of $507 per month for retiree-only coverage and $1,360 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. 56 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 Interest on Net OPEB Obligation Adjustment to Annual Required Contribution Annual OPEB cost (expense) Benefit payments Change in net OPEB obligation Net OPEB obligation -beginning of year Net OPEB obligation -end of year $ 548,166 119,602 [132,891] 534,877 [185,000] 349,877 3,986,743 $4,336,620 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, 2014 was as follows: 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 December 31, 2012 546,426 124,000 3,564,309 December 31, 2013 570,434 148,000 3,986,743 December 31, 2014 534,877 185,000 4,336,620 Funding Status and Funding Progress. As of the year ended December 31, 2014, the most recent actuarial valuation date, the Plan was not funded. The actuarial accrued liability for benefits was $5,538,770 and the actuarial value of asset was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $5,538,770. The covered payroll (annual payroll of active employees covered by the plan) was $22,156,127, and the ratio of the UAAL to the covered payroll was 25.00%. 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. 57 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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, 2014, actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions include a 3.00% 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 6.60%, reduced by decrements to an ultimate rate 4.50% after eighty years. The UAAL is being amortized as a level dollar over an open thirty-year period. J. Deficit Fund Balance The following nonmajor funds maintained deficit fund balances at December 31, 2014: HOME 2012 Fund - $[10,850], Police Grants Fund -$[27,819], Federal CARE Grant Fund -$[6,082] K Subsequent Events On January 9, 2014, the City entered into a $4,250,000 loan agreement with the Kansas Department of Health and Environment. However, the City did not make its first draw on the loan until 2015. The loan proceeds will be used to fund various capital projects related to achieving and maintaining compliance with the Safe Drinking Water Acl The City will be obligated to make semi-annual payments of $139,229 from February 1, 2016 to August 1, 2035. These payments will include a gross interest rate of 2.43% plus a .35% service fee. On July 17, 2015, the City issued Series 2015-A general obligation refunding and internal improvement bonds in the amounts of $6,825,000. The bonds will be used to retire the Series 2014-1 temporary note and to finance a portion of the improvements to the Bicentennial Center. The City will make the first payment on the bonds on April 1, 2016 and the last payment on October 1, 2035. The interest rate on the bonds ranges from 2.00% to 4.00%. On August 1, 2015, the City issued Series 2015-1 temporary notes in the amounts of $5,995,000. The temporary notes will be used to partially finance improvements to Iron Avenue and North Ohio Street and to complete the renovation of Fire Station #1. The maturity date of the temporary notes is August 1, 2016 and the interest rate on the notes is 1.25%. 58 REQUIRED SUPPLEMENTARY INFORMATION CITY OF SALINA, KANSAS OTHER POST-EMPLOYMENT BENEFITS REQUIRED SUPPLEMENTARY INFORMATION December 31, 2014 Schedule of Employer Contributions: 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 December 31, 2012 546,426 124,000 3,564,309 December 31, 2013 570,434 148,000 3,986,743 December 31, 2014 534,877 185,000 4,336,620 Schedule of Funding Progress: Actuarial Actuarial Actuarial Unfunded Funded Covered Valuation Value of Accrued AAL Ratio Payroll Date Assets {a) Liabili~ {bl {bl -{a) {alb) .{i;)_ 12/31/2008 $ $ 8,917,346 $ 8,917,346 0.0% $ 21,874,112 12/31/2009 8,917,346 8,917,346 0.0% 22,397,996 12/31/2010 9,019,806 9,019,806 0.0% 22,613,236 12/31/2011 9,019,806 9,019,806 0.0% 21,942,428 12/31/2012 5,171,261 5,171,261 0.0% 21,937,142 12/31/2013 5,579,912 5,579,912 0.0% 22,283,185 12/31/2014 5,538,770 5,538,770 0.0% 22,156,127 59 UAALas Percent of Payroll {b-a)/{c) 40.77% 39.81% 39.89% 41.11% 23.57% 25.04% 25.00% COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES CITY OF SALINA, KANSAS COMBINING STATEMENTS -NONMAJOR FUNDS NON MAJOR SPECIAL REVENUE FUNDS Special revenue funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes. Bicentennial center fund -To account for the activities of the City's convention center. Business improvement district fund -State law allows businesses within an area to voluntarily establish an improvement City. This fund is used to account for the assessments made on the District. All revenues are to be used within the Business Improvement District. Neighborhood park fund -To account for fees collected from new residential building projects in Salina. Expenditures are for acquisition or development of neighborhood parks in the growing areas of the community. Special parks and recreation fund -To account for liquor tax revenues, which must be used for park maintenance and improvements. Special alcohol fund -To account for liquor tax revenues, which must be used for programs, which address prevention, education or intervention for drug and alcohol abuse. Bicentennial center event fund -To account for the revenues and expenses associated with special events (concerts, shows, etc.) at the City's convention center. HUD community development fund -To account for grants received from the state to be used for housing or economic development purposes. Community development revolving fund -To account for funds, which may be loaned for housing and economic development, purposes, to later be repaid and reused on a revolving basis. Heritage commission fund -To account for revenues and expenses associated with heritage preservation activities. Sales tax economic development fund -To account for 12.5% of the 1/4 cent sales tax designated for economic Development purposes. HOME 2012 -To account for grants received from the federal government to be used for housing rehabilitation. KDOT Signals 9"' Street -To account for funds received from the Kansas Department of Transportation for 9"' Street signal replacement Fair housing fund -To account for grants received from the federal government to be used to monitor and mediate fair housing complaints. 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. CDBG ED fund -To account for grants received from the federal government to be used for economic development loans to qualifying businesses. Kenwood cover capital fund -To account for the Special Sales Tax proceeds to be used to provide for long-term capital maintenance activity at the facility. Special law enforcement fund -To account for revenues received from the sale of forfeited assets acquired during drug enforcement activities. Expenses are limited to capital items to be used for further drug enforcement activities. Police grants fund -To account for revenues from grants, which are to be used for special police activities, including the D.A.R.E. program D.A.R.E. donations fund -To account for donations to the D.A.R.E. program. War memorial maintenance fund -To account for monies to be used for maintenance of the local war memorial. Arts & humanities fund -To account for revenues and expenses associated with arts and humanities activities. Federal CARE Grant-To account for revenue and expenses associated with the CARE Grant. Police Department federal forfeiture funds -To account for revenue and expenses associated with federal Equitable Sharing Program funds. Homeowners' assistance fund -To receive donations and/or other funds to assist low and moderate income persons in improving their homes. Animal shelter donations fund -To accumulate donations and account for expenses to benefit the animal shelter. 60 CITY OF SALINA, KANSAS COMBINING STATEMENTS -NONMAJOR FUNDS NONMAJOR PERMANENT FUNDS Permanent funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the reporting government's programs. Cemetery endowment fund -To account for amounts expended for perpetual care of the City cemetery. Interest earnings are used for cemetery maintenance. Mausoleum endowment fund -To account for amounts charged for perpetual care of the City mausoleum. Interest earnings are used for mausoleum maintenance. Tricentennial commission fund -To account for donations to be used to celebrate the nation's tricentennial in the year 2076. 61 CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2014 Total Total Nonmajor Nonmajor Nonmajor Debt Special Revenue Permanent Service Funds Funds Fund ASSETS Cash and investments $ 1,704,634 $ 467,597 $ 868,082 Receivables Accounts 54 746 Total assets $ 1,759,380 $ 467,597 $ 868,082 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 32,120 $ -$ Due to other funds 44 751 Total liabilities 76 871 Fund balances: Restricted 457,115 Committed 1,067,119 467,597 Assigned 158,275 Total fund balances 1,682,509 467 597 Total liabilities and fund balances $ 1,759,380 $ 467,597 $ See independent auditor's report on the financial statements. 62 60,708 60,708 807,374 807 374 868,082 Total Nonmajor Governmental Funds $ 3,040,313 54 746 $ 3,095,059 $ 92,828 44 751 137,579 1,264,489 1,534,716 158,275 2,957,480 $ 3,095,059 REVENUES CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended December 31, 2014 Total Nonmajor Special Revenue Funds Total Nonmajor Permanent Funds Nonmajor Debt Service Fund Total Nonmajor Governmental Funds Taices Intergovernmental Charges for services Licenses and permits Investment revenue Donations Miscellaneous $ 347,225 $ 521,518 436,115 - $ - $ 347,225 818,868 450,005 Total revenues EXPENDITURES Current Culture and recreation Public health and sanitation Planning and development Miscellaneous Debt service Principal retirement Interest and other charges Capital outlay Total expenditures Excess [deficiency] of revenues over [under] expenditures Other financing sources [uses] Transfers in Transfers [out] Total other financing sources [uses] Net change in fund balance Fund balance -Beginning of year Restatement of prior year fund balance 7,300 4,234 240,699 135 240 1,692,331 1,594,764 173,259 203,037 768,378 2,739,438 [1,047,107] 1,053,969 [3,118] 1,050,851 3744 1,600,900 77 865 1,678,765 297,350 13,890 1,218 74 15 108 297,424 35 140,000 142,080 ----=3-=-5 282,080 15,073 15,344 15 073 15 344 452,524 792,030 452,524 792,030 7,300 5,526 240,699 135,240 2,004,863 1,594,764 173,259 203,037 35 140,000 142,080 768,378 3,021,553 [1,016,690] 1,053,969 [3,118] 1,050,851 34 161 2,845,454 77 865 2,923,319 Fund balance -Beginning of year, as restated Fund balance -End of year $ 1,682,509 $ 467,597 $807,374 $ 2,957,480 See independent auditor's report on the financial statements. 63 ASSETS Cash and investments Receivables Accounts Total assets CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS December 31, 2014 Business Bicentennial Improvement Neighborhood Center District Park $ 25,916 $ 1,524 $ 117,959 54,746 $ 25,916 $ 56,270 $ 117,959 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 25,916 $ 1,961 $ Due to other funds Total liabilities 25,916 1 961 Fund balance: Restricted 54,309 Committed 95,382 Assigned 22,577 Total fund balance [deficit] 54 309 117959 Total liabilities and fund balances $ 25,916 $ 56,270 $ 117,959 Special Parks & Special Recreation Alcohol $ 182,834 $ 42,456 $ 182,834 $ 42,456 $ 234 $ 234 182,600 42,456 182,600 42456 $ 182,834 $ 42,456 Bicentennial HUD Community Sales Tax Center Community Development Heritage Economic HOME Event $ 500 $ $ 500 $ $ - $ 500 500 $ 500 $ Dev. Revolving Commission Development 74,578 $ 109,254 $ 4 $ 675,154 $ 74,578 $ 109,254 $ 4 $ 675,154 $ $ $ - $ - $ 74,578 109,254 4 675,154 74 578 109 254 4 675 154 74 578 $ 109,254 $ 4 $ 675 154 $ 2012 -$ -$ - $ 10,850 10 850 [137,265] 126,415 [10,850] $ See independent auditor's report on the financial statements. 64 KDOT Signals 9th Street ASSETS Cash and investments Receivables Accounts CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS (Continued) December 31, 2014 Fair Housing Flood & Drainage Improvement CDBG ED Kenwood Cover Capital Special Law Enforcement $ 46,590 $ - $ - $ 27,568 $ 2,877 $ Police Grants Total assets s 46,s9o ... s __ _ L.._: $ 27,568 $ 2,811 ... s __ _ LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Due to other funds Total liabilities Fund balance: Restricted Committed Assigned Total fund balance [deficit] Total liabilities and fund balances $ - $ $ - $ - $ 46,590 27,568 46,590 27,568 s 46,s9o _s ____ L_ s 21,sa8 s $ 2,877 2 877 27,819 27 819 [27,819] [27,819] 2811 ..,s __ _ DARE Donations $ 3,597 $ 3,597 $ 3,597 3 597 $ 3,597 Police War Federal Department Homeowners• Memorial Arts& CARE Federal Assistance Maintenance Humanities Grant Forfeiture Funds Fund $ 34,008 $ 103,898 $ $ 55,766 $ 2,055 $ 34,008 $ 103,898 $ $ 55,766 $ 2,055 $ - $ 3,877 $ $ $ 34,008 34 008 $ 34,008 6,082 __ 3~8_7_7 6,082 [6,082] 100,021 46,483 2,055 9,283 100,021 [6,082] 55 766 2 055 $ 103,898 $ -$ 55 766 $ 2,055 See independent auditor's report on the financial statements. 65 Animal Shelter Donations $ 198,096 $ $ 198,096 $ $ 132 $ 132 197,964 197,964 $ 198,096 $ Totals 1,704,634 54,746 1,759,380 32,120 44,751 76 871 457,115 1,067,119 158,275 1,682,509 1,759,380 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS For the Year Ended December 31, 2014 Business Bicentennial Improvement Neighborhood Center District Park Revenues Taxes $ -$ -$ - Intergovernmental Charges for services 374 82,129 Licenses and permits 7,300 Investment revenue 14 342 Donations Miscellaneous Total Revenues 374 82,143 7642 Expenditures Current Culture and recreation 618,900 Public health and sanitation Planning and development 82,945 Capital outlay 25,700 40,033 Total Expenditures 644,600 82,945 40 033 Excess [deficiency] of revenues over [under] expenditures [644,226] [802] [32,391] Other financing sources [uses] Transfers in 635,852 Transfers [out] Total other financing sources [uses] 635,852 Net change in fund balance [8,374] [802] [32,391] Fund balance, beginning of year 8,374 55,111 150,350 Restatement of prior year fund balance Fund balance, beginning of year, as restated 8,374 55,111 150,350 Fund balance, end of year $ -$ 54,309 $ 117,959 Special Parks & Special Recreation Alcohol $ -$ 172,643 172,643 361 41 0 173,004 172,684 130,433 118,982 118,982 130,433 54,022 42,251 54,022 42,251 128,578 205 128,578 205 $182,600 $ 42,456 Bicentennial Center Event HUD Community Development Community Development Revolving Heritage Commission Sales Tax Economic Development HOME 2012 $ - $ $ - $ $ 347,225 $ - $ 500 500 $ 500 $ 191 289 1,748 191 289 348,973 281,708 281 708 191 289 67,265 2,101 2 101 2,292 289 67,265 72,286 108,965 4 607,889 72,286 108,965 4 607,889 74,578 $ 109,254 $ 4 $ 675,154 $ See independent audito~s report on the financial statements. 66 [10,850] [10,850] [10,850) $ KDOT Signals 9th Street [77,865] 77 865 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS (Continued) For the Year Ended December 31, 2014 Flood & Kenwood Fair Drainage CDBG Cover Housing lm11rovement ED Ca11ital Revenues Taxes $ -$ -$ $ Intergovernmental 84,573 Charges for services Licenses and permits Investment revenue 158 Donations Miscellaneous -- Total Revenues 84,731 Expenditures Current Culture and recreation Public health and sanitation Planning and development 66,000 Capital outlay 12 50,999 -- Total Expenditures 66,000 12 50,999 Excess [deficiency] of revenues over [under] expenditures 18,731 [12] [50,999] Other financing sources [uses] Transfers in 50,000 Transfers [out] [646] [2,472] Total other financing sources [uses] [646] [2,472] 50,000 Net change in fund balance 18,085 [12] [2,472] [999] Fund balance, beginning of year 28,505 12 2,472 28,567 Restatement of prior year fund balance -- Fund balance, beginning of year, as restated 28,505 12 2,472 28,567 Fund balance, end of year $46,590 $ -_$_ $27,568 Special Law Police Enforcement Grants $ $ 6 6 27,819 27,819 6 [27,819] 6 [27,819] 2,871 2,871 $ 2,877 $ [27,819] DARE Donations $ - 6 864 870 870 870 2,727 2,727 $ 3,597 Police War Federal Department Homeowners' Animal Memorial Arts & CARE Federal Assistance Shelter Maintenance Humanities Grant Forfeiture Funds Fund Donations $ $ -$ -$ -$ $ $ - 91,659 353,612 91 445 449 2 91 240,699 132,587 1 789 91 486,644 91,659 449 1 791 240,790 1,128 974,736 42,826 54,092 223,125 1 128 974,736 54,092 223,125 42,826 [1,037] [488,092] 37,567 [222,676] 1,791 197,964 366,016 366,016 [1,037] [122,076] 37,567 [222,676] 1,791 197,964 35,045 222,097 [43,649] 278,442 264 35,045 222,097 [43,649] 278,442 264 34,008 $ 100,021 $ [6,082] $ 55,766 $ 2,055 $197,964 See independent auditor's report on the financial statements. 67 Totals $ 347,225 521,518 436,115 7,300 4,234 240,699 135,240 1,692,331 1,594,764 173,259 203,037 768,378 2,739,438 [1,047,107] 1,053,969 [3,118] 1,050,851 3,744 1,600,900 77 865 1,678,765 $1,682,509 ASSETS Cash and investments Total assets LIABILITIES AND FUND BALANCES Liabilities Accounts payable Total liabilities Fund balances Committed Total liabilities and fund balances CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR PERMANENT FUNDS December 31, 2014 Cemetery Mausoleum Tricentennial Endowment Endowment Commission Total $ 459,833 $ 2,013 .._$_---'5""7""5-'-1 $ 467,597 $ 459,833 $ 2,013 ;.,$ _ __;5:.,,;,7c;:5;.:.1 $ 467,597 ... $ ____ -... $ ____ -... $ ____ -.._$ ___ _ 459,833 2 013 5 751 467 597 $ 459,833 $ 2,013 ""'$---'5""7""5""'1 $ 467,597 See independent auditor's report on the financial statements. 68 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR PERMANENT FUNDS For the Year Ended December 31, 2014 Cemetery Mausoleum Tricentennial Endowment Endowment Commission Revenues Charges for services $ 13,890 $ -$ Investment revenue 1,198 5 Total revenues 15,088 5 Expenditures Miscellaneous 35 Total expenditures 35 Net change in fund balance 15,053 5 Fund balances -beginning of year 444,780 2,008 Fund balances -end of year $ 459,833 $ 2 013 $ See independent auditor's report on the financial statements. 69 - 15 15 15 5,736 5 751 Total $ 13,890 1,218 15,108 35 35 15,073 452,524 $ 467,597 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) BICENTENNIAL CENTER FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Revenues Charges for services Culture and recreation $ 374 $ -$ Total revenues 374 Expenditures Culture and Recreation Bicentennial Center 644,600 450,000 Cash Reserve 18 395 Total expenditures 644,600 468,395 Excess [deficiency] of revenues over [under] expenditures [644,226] [468,395] Other financing sources [uses] Transfer in 635,853 501,190 Total other financing sources [uses] 635,853 501 190 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [8,373] 32,795 Unreserved fund balance, January 1 35,672 Prior year cancelled encumbrances 8 373 Unreserved fund balance/GAAP fund balance December 31 $ -$ 68,467 $ See independent auditor's report on the financial statements. 70 Final - 450,000 18 395 468,395 [468,395] 501,190 501 190 32,795 35,672 68,467 Variance with Final Budget Positive [Negative] $ 374 374 [194,600] 18 395 [176,205] [175,831] 134,663 134 663 [41,168] [35,672] 8 373 $ [68,467] CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) BUSINESS IMPROVEMENT CITY FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Revenues Charges for services Community and economic development $ 82,630 $ 90,000 $ Interest income General interest 14 500 Total revenues 82644 90 500 Expenditures Community Development Business Improvement District 82 945 90 500 Total expenditures 82,945 90,500 Excess [deficiency] of revenues over [under] expenditures [301] Unreserved fund balance, January 1 [136] 2 Unreserved fund balance, December 31 [437] $ 2 $ Reconciliation to GAAP Accounts receivable 54,746 GAAP Fund Balance, December 31 $ 54,309 See independent auditor's report on the financial statements. 71 Final 90,000 500 90 500 90 500 90,500 2 2 Variance with Final Budget Positive [Negative] $ [7,370] [486] [7,856] 7 555 7 555 [301] [138] $ [439] CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) NEIGHBORHOOD PARK FUND For the Year Ended December 31, 2014 Budgeted Amounts Revenues Charges for services Public works Interest income General interest Total revenues Expenditures Public Works Parks Total expenditures Excess [deficiency) of revenues over [under) expenditures Unreserved fund balance, January 1 Prior year cancelled encumbrances Unreserved fund balance, December 31 Reconciliation to GAAP Current year encumbrances GAAP Fund Balance, December 31 $ $ Actual Original 7,300 $ 20,000 $ 342 4000 7642 24,000 22,948 24,000 22,948 24,000 [15,306) 110,260 428 95,382 $ -$ 22,577 117,959 See independent auditor's report on the financial statements. 72 Final 20,000 4000 24,000 24,000 24,000 - Variance with Final Budget Positive [Negative) $ [12,700) [3,658) [16,358] 1 052 1,052 [15,306) 110,260 428 $ 95,382 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) SPECIAL PARKS AND RECREATION FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Final Revenues Operating grants, restricted Culture and recreation $ 172,642 $ 160,000 $ Interest income General interest 362 4000 Total revenues 173,004 164,000 Expenditures Public Works Parks 100,982 152,909 Cash Reserve 131,303 Total expenditures 100,982 284,212 Excess [deficiency] of revenues over [under] expenditures 72,022 [120,212] Unreserved fund balance, January 1 110,578 120,212 Unreserved fund balance/GAAP fund balance December 31 $ 182,600 $ -$ See independent auditor's report on the financial statements. 73 160,000 4000 164,000 152,909 131,303 284,212 [120,212] 120,212 - Variance with Final Budget Positive [Negative] $ 12,642 [3,638) 9,004 51,927 131,303 183,230 192,234 [9,634) $ 182,600 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) SPECIAL ALCOHOL FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Revenues Operating grants, restricted Health and sanitation $ 172,643 $ 160,000 $ Interest income General interest 41 Total revenues 172,684 160,000 Expenditures Public Health and Sanitation Special alcohol 130,433 160,000 Total expenditures 130,433 160,000 Excess [deficiency] of revenues over [under] expenditures 42,251 Unreserved fund balance, January 1 205 21 Unreserved fund balance/GAAP fund balance December 31 $ 42,456 $ 21 $ See independent auditor's report on the financial statements. 74 Final 160,000 160,000 160,000 160,000 21 21 Variance with Final Budget Positive [Negative] $ 12,643 41 12,684 29,567 29,567 42,251 184 $ 42,435 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) SALES TAX ECONOMIC DEVELOPMENT FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Revenues Taxes Selective sales tax $ 347,225 $ 300,966 $ Interest income General interest 1 748 5 000 Total revenues 348,973 305,966 Expenditures Community Development Economic development 281,708 218,829 Cash Reserve 50,000 Total expenditures 281,708 268,829 Excess [deficiency] of revenues over [under] expenditures 67,265 37,137 Unreserved fund balance, January 1 607,889 Unreserved fund balance/GAAP fund balance December 31 $ 675,154 $ 37,137 $ See independent auditor's report on the financial statements. 75 Final 300,966 5 000 305,966 218,829 50,000 268,829 37,137 37,137 Variance with Final Budget Positive [Negative] $ 46,259 [3,252] 43 007 [62,879] 50,000 [12,879] 30,128 607,889 $ 638,017 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) FAIR HOUSING FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Revenues Operating grants, restricted Community and economic development $ 84,573 $ 65,000 $ Interest income General interest 158 1 000 Total revenues 84 731 66,000 Expenditures Community Development Human relations 66,000 66,000 Total expenditures 66,000 66,000 Excess [deficiency] of revenues over [under] expenditures 18 731 Other financing sources [uses] Transfer [out] [646] Total other financing sources [uses] [646] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 18,085 Unreserved fund balance, January 1 28,505 646 Unreserved fund balance/GAAP fund balance December 31 $ 46,590 $ 646 $ See independent auditor's report on the financial statements. 76 Final 65,000 1 000 66,000 66 000 66,000 646 646 Variance with Final Budget Positive [Negative] $ 19,573 [842] 18 731 18 731 [646] [646] 18,085 27,859 $ 45,944 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) ARTS & HUMANITIES FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Revenues Charges for services Culture and recreation $ 486,198 $ 465,350 $ Interest income General interest 445 2,000 Miscellaneous revenues Culture and recreation 500 Total revenues 486 643 467 850 Expenditures Culture and Recreation Arts and humanities 619,887 669,263 Smoky Hill River Festival 354,848 361,450 Cash Reserve 108,802 Total expenditures 974 735 1,139,515 Excess [deficiency] of revenues over [under] expenditures [488,092J [671,665J other financing sources [uses] Transfer in 366,016 508,426 Total other financing sources [uses] 366,016 508,426 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [122,076] [163,239] Unreserved fund balance, January 1 222,097 163,239 Unreserved fund balance/GAAP fund balance December 31 $ 100,021 $ -$ See independent auditor's report on the financial statements. 77 Final 465,350 2,000 500 467 850 669,263 361,450 108,802 1,139,515 [671,665J 508,426 508,426 [163,239] 163,239 - Variance with Final Budget Positive [Negative] $ 20,848 [1,555] [500J 18 793 49,376 6,602 108,802 164 780 183,573 [142.41 OJ [142,41 OJ 41,163 58,858 $ 100,021 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) DEBT SERVICE FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Revenues Taxes Real estate taxes $ 2,522,112 $ 2,563,887 Delinquent taxes 55,984 55,000 Motor vehicle taxes 282,567 257,626 Total taxes 2,860,663 2,876,513 Charges for services Special assessments 1,809,992 1,555,000 Interest income General interest 244 5,000 Miscellaneous revenues General miscellaneous revenues 9,060 126,800 Other financing sources General sources 219,773 210,000 Total revenues 4,899,732 4,773,313 Expenditures Debt Service Principal 5,005,417 5,004,419 Interest and other charges 1,604,003 1,676,659 Cash Reserve 200,000 Total expenditures 6,609,420 6,881,078 Excess [deficiency] of revenues over [under] expenditures [1,709,668] [2,107,765] Other financing sources [uses] Transfer in 1,356,214 1,350,000 Total other financing sources [uses] 1,356,214 1,350,000 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [353,474] [757,765] Unreserved fund balance, January 1 707 763 757 765 Unreserved fund balance December31 354,289 $ - Reconciliation to GAAP Taxes receivable 2,813,616 Deferred revenue [2,760,041] GAAP Fund Balance, December 31 $ 407,864 See independent auditor's report on the financial statements. 78 Final $ 2,563,887 55,000 257,626 2,876,513 1,555,000 5,000 126,800 210,000 4,773,313 5,004,419 1,676,659 200,000 6,881,078 [2,107,765] 1,350,000 1,350,000 [757,765] 757 765 $ - Variance with Final Budget Positive [Negative] $ [41,775] 984 24,941 [15,850] 254,992 [4,756] [117,740] 9,773 126 419 [998] 72,656 200,000 271,658 398,077 6,214 6214 404,291 [50,002] $ 354,289 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS -BUDGET AND ACTUAL (NON -GAAP BASIS) SOLID WASTE DISPOSAL FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Revenues Charges for services Health and sanitation $ 2,595,476 $ 1,957,000 Interest income General interest 5,991 7,000 lnterfund services provided Health and sanitation 430,834 463,989 Miscellaneous revenues Health and sanitation 37540 42310 Total revenues 3,069,841 2,470,299 Expenditures Public Health and Sanitation Solid waste 1,907,668 2,052,983 Hazardous waste disposal 106,068 114,787 Total public health and sanitation 2,013,736 2,167,770 Debt Service Principal 411,959 Interest and other charges 8240 Total debt service 420,199 Cash Reserve 1,135,000 Total expenditures 2,433,935 3,302,770 Excess [deficiency] of revenues over [under] expenditures 635,906 [832,471] Unreserved fund balances, January 1 1,449,612 898,962 Unreserved fund balances, December 31 $ 2,085,518 $ 66,491 See independent auditofs report on the financial statements. 79 Final $ 1,957,000 7,000 463,989 42 310 2,470,299 2,052,983 114,787 2,167,770 1,135,000 3,302,770 [832,471] 898,962 $ 66,491 Variance with Final Budget Positive [Negative] $ 638,476 [1,009] [33,155] [4,770] 599,542 145,315 8,719 154 034 [411,959] [8,240] [420,199] 1,135,000 868,835 1,468,377 550,650 $ 2,019,027 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS -BUDGET AND ACTUAL (NON -GAAP BASIS) WATER AND SEWER FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Revenues Charges for services Water and wastewater $ 18, 169,259 $ 19,095,060 Interest income General interest 29,270 25,000 lnterfund services provided General services 28,654 37,570 Water and wastewater 88,480 Total interfund services 117,134 37,570 Miscellaneous revenues General miscellaneous revenues 180,185 Water and wastewater 331,876 470,000 Total miscellaneous revenues 512,061 470,000 Total revenues 18,827,724 19,627,630 Expenditures Water and Wastewater Water 8,986,115 13,237,394 Sewer 2,519,815 2,869,914 Total water and wastewater 11,505,930 16,107,308 Capital Outlay 2,286,483 2,793,000 Cash Reserve 5,339,455 Total expenditures 13,792,413 24,239,763 Excess [deficiency] of revenues over [under] expenditures 5,035,311 [4,612,133] Other financing sources [uses] Transfers in 2,007,482 Transfers [out] [2,574,000] [2,478,000] Total other financing sources [uses] [566,518] [2,478,000] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 4,468,793 [7,090,133] Unreserved fund balances, January 1 3,513,743 7,090,133 Prior year cancelled encumbrances 8,258 Residual equity transfer in 1,315,704 Unreserved fund balances, December 31 $ 9,306,498 $ See independent audito~s report on the financial statements. 80 Final $ 19,095,060 25,000 37,570 37,570 470,000 470,000 19,627,630 13,237,394 2,869,914 16,107,308 2,793,000 5,339,455 24,239,763 [4,612,133] ~,478,000] ~,478,000] [7,090,133] 7,090,133 $ Variance with Final Budget Positive [Negative] $ [925,801] 4,270 [8,916] 88,480 79,564 180,185 [138,124] 42,061 [799,906] 4,251,279 350,099 4,601,378 506,517 5,339,455 10,447,350 9 647 444 2,007,482 [96,000] 1,911,482 11,558,926 [3,576,390] 8,258 1,315,704 $ 9,306,498 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS -BUDGET AND ACTUAL (NON -GMP BASIS) SANITATION FUND For the Year Ended December 31, 2014 Revenues Charges for services Health and sanitation Interest income General interest Total revenues Expenditures Public Health and Sanitation Sanitation Cash Reserve Total expenditures Excess [deficiency) of revenues over [under) expenditures Unreserved fund balance, January 1 Unreserved fund balances, December 31 Actual $ 2,536,794 $ 2 549 2,539,343 2,399,146 2,399,146 140,197 756,816 $ 897,013 $ Budgeted Amounts Original Final 2,527,287 $ 2,527,287 3 500 3 500 2,530,787 2,530,787 2,515,608 2,515,608 706 132 706,132 3,221,740 3,221,740 [690,953) [690,953) 690,953 690,953 -$ - See independent auditor's report on the financial statements. 81 Variance with Final Budget Positive [Negative) $ 9,507 [951) 8,556 116,462 706,132 822,594 [814,038) 65,863 $ [748,175) CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS -BUDGET AND ACTUAL (NON -GMP BASIS) GOLF COURSE FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Revenues Taxes General sales tax $ 25,437 $ 27,000 $ Charges for services Culture and recreation 785,613 745,500 Operating grants, unrestricted General grants 656 Interest income General interest 258 Miscellaneous revenues General miscellaneous revenues 275 Culture and recreation 47 774 51 045 Total miscellaneous revenues 48 049 51 045 Total revenues 860,013 823,545 Expenditures Culture and Recreation Golf course 806,783 768,546 Cash Reserve 85,000 Total expenditures 806,783 853,546 Excess [deficiency] of revenues over [under] expenditures 53,230 [30,001] Unreserved fund balances, January 1 63,928 63,391 Unreserved fund balances, December 31 $ 117158 $ 33,390 $ See independent auditor's report on the financial statements. 82 Final 27,000 745,500 51 045 51 045 823,545 768,546 85,000 853,546 [30,001] 63,391 33,390 Variance with Final Budget Positive [Negative] $ [1,563] 40 113 656 258 275 [3,271] [2,996] 36,468 [38,237] 85,000 46,763 83,231 537 $ 83,768 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) RISK MANAGEMENT FUND For the Year Ended December 31, 2014 Budgeted Amounts Actual Original Revenues lnterfund services provided General services $ 453,845 $ 453,844 $ Interest income General interest 62 Miscellaneous revenues General miscellaneous revenues 57,103 92,940 Total revenues 511 010 546 784 Expenditures Other Risk management 533 117 502,957 Total expenditures 533,117 502,957 Excess [deficiency] of revenues over [under] expenditures [22,107] 43,827 Unreserved fund balance, January 1 47,700 32,705 Unreserved fund balance, December 31 $ 25,593 $ 76,532 $ See independent auditor's report on the financial statements. 83 Final 453,844 92,940 546 784 502,957 502,957 43,827 32,705 76,532 Variance with Final Budget Positive [Negative] $ 1 62 [35,837] [35,774] [30,160] [30,160] [65,934] 14,995 $ [50,939] CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) WORKERS' COMPENSATION RESERVE FUND For the Year Ended December 31, 2014 Budgeted Amounts Revenues Interest income General interest lnterfund services provided General services Miscellaneous revenues General miscellaneous revenues Total revenues Expenditures Other Worker's compensation Cash Reserve Actual $ 1,941 329,336 4 703 335,980 350,035 Original Final $ 2,500 $ 2,500 440,330 440,330 442,830 442,830 401,030 401,030 753,275 753,275 Total expenditures 350,035 1,154,305 1,154,305 Excess [deficiency) of revenues over [under) expenditures Unreserved fund balance, January 1 Unreserved fund balance, December 31 $ [14,055) 635,700 621,645 [711,475) 717 017 $ 5542 $ See independent auditor's report on the financial statements. 84 [711,475) 717017 5,542 Variance with Final Budget Positive [Negative) $ (559) [110,994) 4 703 [106,850] 50,995 753,275 804,270 697,420 [81,317] $ 616,103 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) HEAL TH INSURANCE FUND For the Year Ended December 31, 2014 Revenues Interest income General interest lnterfund Services Provided General services Miscellaneous revenues General miscellaneous revenues Total revenues Expenditures Other Health insurance Cash Reserve Total expenditures Excess [deficiency) of revenues over [under) expenditures Unreserved fund balance, January 1 Unreserved fund balance, December 31 Actual $ 2,981 5,968,460 19 343 5,990,784 6,678,718 6,678,718 [687,934) 1,584,790 $ 896,856 Budgeted Amounts Original Final $ 5,000 $ 5,000 6,064,066 6,064,066 10 000 10 000 6,079,066 6,079,066 6,785,208 6,785,208 750,000 750,000 7,535,208 7,535,208 [1,456,142) [1,456,142) 1,874,729 1,874,729 $ 418,587 $ 418,587 See independent auditor's report on the financial statements. 85 Variance with Final Budget Positive [Negative) $ [2,019) [95,606) 9 343 (88,282] 106,490 750,000 856,490 768,208 [289,939] $ 478,269 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) CENTRAL GARAGE FUND For the Year Ended December 31, 2014 Budgeted Amounts Original Final Variance with Final Budget Positive [Negative] Revenues Interest income General interest $ 219 $ 40 $ 40 $ 179 lnterfund services provided General services Miscellaneous revenues General miscellaneous revenues Total revenues Expenditures Other Central garage Cash Reserve Total expenditures Excess [deficiency] of revenues over [under] expenditures Other financing sources [uses] Transfers in Total other financing sources [uses] Excess [deficiency] of revenues and other financing sources over [under] expenditures and other financing [uses] 1,668,077 5,800 1,674,096 1,682,191 1,682,191 [8,095] [8,095] 24 536 1,755,000 12,782 1,767,822 1,799,371 89,816 1,889,187 [121,365] 30,000 30,000 [91,365] 91 365 1,755,000 12,782 1,767,822 1,799,371 89,816 1,889,187 [121,365] 30,000 30 000 [91,365] 91 365 [86,923] [6,982] [93,726] 117,180 89,816 206,996 113,270 [30,000] [30,000] 83,270 [66,829] Unreserved fund balance, January 1 Unreserved fund balance, December 31 $ 16 441 _$ _____ $______ -$--""'16.4""'4""1 See independent auditor's report on the financial statements. 86 Revenues CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) INFORMATION SYSTEMS FUND For the Year Ended December 31, 2014 Budgeted Amounts Original Final Variance with Final Budget Positive [Negative] Charges for services General charges $ 34,289 $ 40,000 $ 40,000 $ [5,711] Interest income General interest lnterfund services provided General services Miscellaneous revenues General miscellaneous revenues Total revenues Expenditures Other Information services Cash Reserve Total expenditures Excess [deficiency] of revenues over [under] expenditures 554 1,063,627 1,098,470 1,158,488 1,158,488 [60,018] 160,156 255 668 1,293,000 2,889 1,336,557 1,271,359 100,000 1,371,359 [34,802] 173,524 668 1,293,000 2,889 1,336,557 1,271,359 100,000 1,371,359 [34,802] 173,524 [114] [229,373] [2,889] [238,087] 112,871 100,000 212,871 [25,216] [13,368] 255 Unreserved fund balance, January 1 Prior year cancelled encumbrances Unreserved fund balance, December 31 $ 100,393 $ 138,722 $ 138,722 ,..$ _ _.,[3;.;;8.,3 .. 29_,] See independent auditor's report on the financial statements. 87 CITY OF SALINA, KANSAS INTERNAL SERVICE FUNDS Internal service funds are used to account for the financing of goods or services provided by one agency to other departments or agencies of the government and to other governmental units on a cost reimbursement basis. Risk management fund -To account for the accumulation and allocation of costs associated with risk management activities and the purchase of various forms of insurance. Workers' compensation reserve fund -To account for the costs of providing a partially self-insured workers' compensation plan and for accumulating the necessary reserve amounts. Health insurance fund -To account for the costs of providing a partially self-insured health insurance and for accumulating the necessary reserve amounts. Central garage fund -To account for the accumulation and allocation for costs associated with the City's centralized vehicle repair shop. Information services fund -To account for the accumulation and allocation of costs associated with electronic data processing. 88 CllY OF SALINA, KANSAS COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS December 31, 2014 Workers' Risk Compensation Health Central ASSETS Management Reserve Insurance Garage Current assets: Cash and investments $ 62,853 $ 751,196 $ 897,026 $ 61,323 Inventory and prepaid supplies 188,360 Total current assets 62,853 751196 897,026 249,683 Capital assets: Capital assets 201,425 Less: accumulated depreciation 186,971 Total capital assets 14 454 Total assets $ 62,853 $ 751196 $ 897,026 $ 264,137 Liabilities: Current liabilities (payable from current assets): Accounts payable $ 37,260 $ 566 $ 170 $ Current portion of compensated absences payable Current portion of accrued claims payable 177 561 529,215 Total current liabilities (payable from current assets) 37,260 178127 529,385 Noncurrent liabilities: Compensated absences payable Accrued claims payable 164 801 Total nona.irrent liabilities 164 801 Total liabilities $ 37,260 $ 342,928 $ 529,385 $ Net Position Invested in capital assets, net of related debt $ $ $ $ Unrestricted 25,593 408,268 367,641 Total net position $ 25,593 $ 408,268 $ 367,641 $ See independent auditor's report on the financial statements. 89 44,880 17,311 62.191 16,567 16,567 78,758 14,454 170,925 185,379 Total Internal lnfonnation Service Svstems Funds $ 126,351 $1,898,749 188,360 126,351 2,087.109 649,936 851,361 645,919 832,890 4 017 18 471 $ 130,368 $2,105,580 $ 26,213 $ 109,089 31,042 48,353 706,776 57,255 864,218 29,706 46,273 164 801 29,706 211 074 $ 86,961 $1,075,292 $ 4,017 $ 18,471 39,390 1,011,817 $ 43,407 $1,030,288 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION INTERNAL SERVICE FUND For the Year Ended December 31, 2014 Workers' Risk Compensation Health Central Management Reserve Insurance Garage Operating revenues Charges for services $ 453,844 $ 329,336 $ 5,968,460 $ 1,668,077 Miscellaneous 57104 4 703 19342 5 801 Total operating revenues 510,948 334,039 5,987,802 1,673,878 Operating expenses General government 533,117 122,642 6,835,786 1,636,872 Depreciation 4,319 Total operating expenses 533117 122,642 6,835,786 1 641191 Operating income [loss] [22.169] 211 397 [847,984] 32 687 Other operaijng revenues [expenses] Investment income 62 1 941 2 981 219 Total other operaijng revenues [expenses] 62 1 941 2 981 219 Change in net position Net position, January 1 Restatement Net position, January 1, restated Net posiijon, December 31 122.10n 213,338 [845,003] 32,906 47,700 194,930 1,212,644 160,808 [8,335] 47700 194 930 1,212,644 152 473 $ 25,593 $ 408,268 $ 367,641 $ 185,379 See independent audito(s report on the financial statements. 90 Total Internal Information Service S:t:stems Funds $1,097,917 $ 9,517,634 86 950 1,097,917 9,604,584 1,221,821 10,350,238 143 4,462 1,221,964 10,354,700 [124,047] [750,116] 554 5757 554 5757 [123,493] [744,359] 166,900 1,782,982 [8,335] 166,900 1774647 $ 43,407 $ 1,030,288 CITY OF SALINA, KANSAS COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNOS For the Year Ended December 31, 2014 Workers' Risk Compensation Health Management Reserve Insurance Cash flows from operating activities Cash received from customers and users $ 453,844 $ 101,943 $6,125,528 Cash paid to suppliers of goods or services [498,704] [129,790] [6,835,716] Cash paid to employees other operating receipts 57104 4 703 19 342 Net cash provided by [used in] operating activities 12244 [23,144] [890,84'1] Cash flows from investing activities Interest received 62 1 941 2 981 Net inaease [decrease] in cash and cash equivalents 12,306 [21,203] [687,865] Cash and cash equivalents, January 1 50547 772 399 1,584,891 Cash and cash equivalents, December 31 $ 62853 $ 751 196 $ 8971026 See independent auditor's report on the financial statements. 91 Total Internal Cenb'al lnfonnation Service Ga!'.§e Services Funds $1,668,078 $1,097,917 $9,447,310 [1,502,397] [804,728] [9,771,335] [193,518] [420,679] [614,197] 5801 86,950 [22,038] [127,490] [851,27~ 218 554 5756 [21,818] [126,936] [845,516] 83141 253,287 2,744,285 $ 61 323 $ 126 351 $1898749 CITY OF SALINA, KANSAS COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS (Continued) For the Year Ended December 31, 2014 Reconciliation of operating poss] income to net cash provided by [used in] operating adivities Workers' Risk Compensation Health Management Reserve Insurance Total Internal Central Information Service Garage Services Funds Operating income [loss] $ [22,169] $ 211,397 $ [847,984] $ 32,687 $ [124,047] $ [750,116] Adjusbllents to reconcile operating income [loss] to net cash provided by [used in] operating adMties Depredation expense [Increase] decrease in inventory Increase [deaease] in accounts payable Increase [decrease] in acaued compensated absences Increase [decrease] in claims payable Net cash provided by [used in] operating activities 34,413 $ 12,244 [7,148] 70 [227,393] 157,068 $ [23,144) $ [690,846) See independent auditor's report on the financial statements. 92 4,319 143 4,462 [48,219] [48,219] [13,725] [5,379] 8,231 2,902 1,793 4,695 [70,325] $ [22,036) $ [127,490) $ [851,272) CITY OF SALINA, KANSAS AGENCY FUNDS Agency funds are used to account for assets held by the government as an agent for individuals, private organizations, other governments and/or other funds. Special assessment escrow agency fund -To account for property owners' prepayment on outstanding special assessments. Fire insurance proceeds agency fund -To account for insurance proceeds received for severely damaged buildings the insurance proceeds, plus interest, are returned to the property owners when the buildings are repaired or demolished. PEGS access agency fund -To account for revenues collected on behalf of the community access television system for public, educational and governmental programming. Payroll clearing agency fund -To account for interfund payroll receivables and payables for all City funds. Court bond and restitution agency fund -To account for bonds and restitution remitted to the court and awaiting court orders for distribution. Police investigation account agency fund -To account for monies held by the police department for use in investigations. Fire cam agency fund -To account for donations received and used for fire equipment. Citizenship agency fund -To account for donations received and used for the citizenship fund. Section 125 plan agency fund -To account for monies held for the Section 125 plan. 93 Special Assessment Escrow ASSETS: Cash and investments $ 121,157 Total assets $ 121,157 LIABILITIES: Accounts payable $ 121,157 Total liabilities $ 121,157 CITY OF SALINA, KANSAS COMBINING BALANCE SHEET AGENCY FUNDS December 31, 2014 Fire Court Police Insurance PEGS Payroll Bond and Investigation Fire Proceeds Access Clearing Restitution Account Cam $ 53 _$ __ 1 $ [273,632) $ 35,899 $ 4 014 _$ - $ 53 _$ __ 1 $ [273,632) $ 35,899 $ 4 014 _$ - $ 53 _$ __ 1 $ [273,632) $ 35,899 $ 4 014 _$ - $ 53 _$ __ 1 $ [273,632) $ 35,899 $ 4 014 _$ - See independent auditor's report on the financial statements. 94 Section 125 CitizenshiJ2 Plan Totals $ 3,729 $316,863 $208,084 $ 3,729 $316,863 $208,084 $ 3,729 $316,863 $208,084 $ 3,729 $316,863 $208,084 CITY OF SALINA, KANSAS COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS For the Year Ended December 31, 2014 Balance December 31, 2013 Additions Deductions Cash and investments Special Assessment Escrow $ 93,278 $ 27,879 $ Fire Insurance Proceeds 20,468 22,743 PEGS Access 5,132 223,701 Payroll Clearing [256,295] Court Bond and Restitution 69,627 Police Investigation Account 4,013 1 Fire Cam Fund 787 Citizenship Trust 3,722 7 Section 125 Plan Fund 317,755 287,555 Total Assets $ 258,487 $ 561,886 $ Accounts Payable Special Assessment Escrow $ 93,278 $ 27,879 $ Fire Insurance Proceeds 20,468 22,743 PEGS Access 5,132 223,701 Payroll Clearing [256,295] Court Bond and Restitution 69,627 Police Investigation Account 4,013 1 Fire Cam Fund 787 Citizenship Trust 3,722 7 Section 125 Plan Fund 317 755 287,555 Total liabilities $ 258,487 $ 561,886 $ See independent auditor's report on the financial statements. 95 - 43,158 228,832 17,337 33,728 787 288,447 612,289 - 43,158 228,832 17,337 33,728 787 288447 612,289 Balance December 31, 2014 $ 121,157 53 1 [273,632] 35,899 4,014 3,729 316,863 $ 208,084 $ 121,157 53 1 [273,632] 35,899 4,014 3,729 316.863 $ 208,084 STATISTICAL SECTION Schedule 1 City of Salina, Kansas Net Position by Component Last Ten Flscal Yeal'1il (accrual basis of accaunting) {in OOO's) Fiscal Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Amount % Amount % Amount % Amount % Amount % Amount % Amount % Amount % Amount % Amount % Governmental actlvlUes Net investment in capital ...... $110,184 92% $117,810 93% $115,029 90% $118,965 93% $101,974 85% $113,001 96% $109,289 93% $112,929 94% $116,585 90% $ 115,589 90% R-cted $ 1,642 1% $ 1,108 1% $ 1,809 1% $ 1,212 1% $ 1,174 1% $ 988 1% $ 1,712 1% $ 1,082 1% $ 1,210 1% $ 878 1% Unrestricted $ 7,422 8% $ 7,678 8% $ 11,356 9% $ 7,745 8% $ 16,706 14% $ 3,808 3% $ 6,333 5% ~ 5% $ 11,628 9% $ 11,413 9% Total gavemmental activities net position $119,248 100% $126,594 100% $127,994 100% $127,922 100% $119,854 100% $117,797 100% $117,334 100% $119,522 100% $129,423 100% $ 127,878 100% Business-type activities Net Investment In capltal ...... $ 40,968 79% $ 43,510 81% $ 45,435 80% $ 45,931 79% $ 48,234 79% $ 48,078 75% $ 44,227 83% $ 50,857 89% $ 57,103 75% $ 81,721 75% R-cted $ 1,109 2% $ 1,123 2% $ 1,151 2% $ 1,211 2% $ 1,553 3% $ 1,553 2% $ 1,553 2% $ 1,553 2% $ 1,553 2% $ 1,512 2% Unrestricted $ 9,821 19% $ 9,300 17% $ 10,412 18% $ 11,197 19% $ 11,482 19% $ 14,306 22% $ 24,528 35% $ 21,450 29% $ 17,794 23% $ 19,545 24% Tatal business-type activities net position $ 51 897 100% $ 53,933 100% $ 58,998 100% $ 58,339 100% $ 81,269 100% $ 83,937 100% $ 70,308 100% $ 73,eeo 100% $ 76,450 100% $ 82,778 100% Primary gavernment Net investment in capital ill ...... $151,152 88% $181,320 89% $180,464 87% $164,898 89% $150,208 83% $181,080 89% $153,518 82% $183,788 85% $173,888 84% $ 177,311 84% Resbicled $ 2,750 2% $ 2,229 1% $ 2,781 1% $ 2,423 1% $ 2,727 2% $ 2,541 1% $ 3,216 2% $ 2,635 1% $ 2,783 1% $ 2,388 1% Unrestricted $ 17243 10% $ 16 978 9% $ 21,768 12% $ 18,942 10% $ 28,188 16% $ 18115 10% $ 30,867 16% $ 26,961 14% $ 29,422 14% $ 30,959 15% Tatal prtmary government net position $171,144 100% $180,527 100% $184,992 100% $188,281 100% $181,123 100% $181,738 100% $187,599 100% $193,382 100% $205,873 100% $ 210,858 100% Source: City of Sallna Comprehensive Annual Flnanclal Reparts, 2005-2014 Scheclul92 City of Salina, Kansas Changes in Net Position Last Ten FISCIII Years (accrual basis of accounUng) (in OOO's) FlscalYear 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 --Govemmental activities: General govemment 4,904 $ 6,319 6,732 $ 6,791 $ 14,864 $ 10,845 $ 13,614 $ 11,278 $ 10,978 $ 12,550 Public safety 14,159 $ 14,621 16,877 $ 18,440 $ 18,539 $ 18,592 $ 18,579 $ 19,066 $ 19,649 $ 20,208 Publicwol1cs 8,420 $ 8,609 9,258 $ 9,706 $ 9,781 $ 9,792 $ 9,858 $ 10,957 $ 11,064 $ 11,401 Public health encl sanitation 1,102 $ 1,214 1,281 $ 1,310 $ 1,390 $ 1,365 $ 1,368 $ 1,383 $ 1,369 $ 347 ClA.1111 encl IVCl9Btian 5,071 $ 4,961 5,858 $ 5,582 $ 5,397 $ 8,572 $ 6,693 $ 5,338 $ 4,809 $ 5,156 Planning ancl clevelapment 2,714 $ 2,697 2,814 $ 3,481 $ 3,375 $ 3,718 $ 3,450 $ 3,362 $ 3,399 $ 3,236 lnterNt an long tsrm clebt 742 $ 972 1295 $ 1454 _$ __ $ 2,256 $ 1650 $ 1914 $ 1953 !.......!!!I Total gavemmental activities expenses 37112 $ 39393 43918 $ 46764 $ 51146 $ 55,128 $ 55,212 $ 53,298 $ 53,221 $ 54,715 Business-type activities: Saiki waste clispasal 2,606 $ 2,471 2,088 $ 2,008 $ 2,287 $ 3,010 $ 2,945 $ 2,067 $ 3,532 $ 1,870 Water encl sewer 11,262 $ 11,676 12,227 $ 13,284 $ 12,995 $ 14,050 $ 13,597 $ 14,897 $ 15,418 $ 14,904 Sanitation 1,689 $ 1,945 2,038 $ 2,184 $ 2,.224 $ 2,261 $ 2,261 $ 2,441 $ 2,237 $ 2,399 Galfcaurae 693 $ 652 864 $ 864 !._____fil L____ill $ 825 $ 723 $ 766 ~ Total busine11&-type activities expenses 18,852 $ 16944 17236 $ 18,360 $ 18,403 $ 20,138 $ 19,628 $ 20,128 $ 21,955 $ 20,016 Total primary gavemment expenses 53764 $ 56337 81153 $ 85,124 $ 69,549 $ 75,266 $ 74840 $ 73,428 $ 75178 $ 74 731 Program Reffnuas Govemmental activities: Charges far services General govemment $ 3,926 $ 4,177 $ 4,309 $ 4,581 $ 4,599 $ 5,143 $ 6,106 $ 6,328 $ 5,548 $ 5,652 Public safety $ 3,366 $ 3,603 $ 3,539 $ 3,588 $ 2,913 $ 3,969 $ 3,766 $ 4,290 $ 4,656 $ 4,222 Publicwol1cs $ 163 $ 169 $ 457 $ 120 $ 164 $ 196 $ 262 $ 306 $ 277 $ 255 Public health encl sanitation $ 31 $ 36 $ 33 $ 39 $ 42 $ 37 $ 43 $ 46 $ 34 $ 46 ClA.1111 ancl IVCl9Btian $ 2,276 $ 1,883 $ 2,050 $ 2,139 $ 1,936 $ 2,817 $ 3,140 $ 1,728 $ 1,466 $ 1,533 Planning ancl development $ 95 $ 114 $ 101 $ 240 $ 267 $ 144 $ 153 $ 156 $ 161 $ 167 Operating grants ancl cantibutians $ 2,796 $ 3,145 $ 3,381 $ 3,752 $ 3,163 $ 3,415 $ 2,907 $ 4,495 $ 4,200 $ 4,015 Capital grante ancl conbibutians I 13875 I 3091 I L__:_ L....:_ I I I L....:_ Total gavemmental activitiea program revenuas I 26532 I 16216 I 13871 I 14458 ~ $ 15 723 I 16377 I 17351 I 16342 $ 15 900 Buainess-type activities: Charges far services Saiki waste disposal $ 2,344 $ 2,674 $ 2,789 $ 2,749 $ 2,903 $ 2,853 $ 2,904 $ 3,137 $ 3,138 $ 3,024 Water and sewer $ 12,704 $ 12,949 $ 14,054 $ 14,073 $ 14,880 $ 16,520 $ 17,904 $ 19,099 $ 17,938 $ 18,742 Sanitation $ 1,881 $ 1,988 $ 2,112 $ 2,172 $ 2,292 $ 2,310 $ 2,334 $ 2,462 $ 2,514 $ 2,553 Galfcaurae $ 769 $ 773 $ 723 $ 751 $ 757 $ 736 $ 636 $ 783 $ 719 $ 611 Operating grants ancl contributions $ $ $ $ $ $ 202 $ $ Capital grante ancl conbibutiana I L__:_ L....:_ I 3604 I 274 ~ Total busineu-type activitiea program revenuas I 17728 I 18385 I 19678 I 19744 ~ $ .22 419 I 27784 I 25755 I 24309 $ 25 245 Total primary gavemment program revenues I 44260 I 34601 I 33549 I 34202 ~ $ 38142 I 44161 I 43106 I 40651 $ 41145 Net (Expenae) R&Yenua Govemmental activities $ (10,580) $ (23,176) $ (30,048) $ (32,306) $ (38,082) $ (39,405) $ (38,835) $ (35,947) $ (36,879) $ (38,815) Business-type activities I 1 076 I 1441 I 2442 I 1364 ~ L..12fil. I 8156 I 5627 I 2354 ~ Total primary gavemment net expense I !9 504) $ 121 736) s '27604) s !30 9.22) ~ $ '37124) $ !30679) $ !30320) $ !34 525) s 133 586) General Reffnuu and other Changes In Net Poaltlan Govemmental activities: T""' Property taxes, general purpose $ 8,788 $ 7,144 $ 7,378 $ 7,818 $ 9,019 $ 7,803 $ 7,783 $ 8,272 $ 8,031 $ 8,315 Property taxes, debt service $ 1,351 $ 1,402 $ 1,471 $ 1,529 $ 1,711 $ 2,230 $ 2,779 $ 2,439 $ 2,362 $ 2,578 Ma!Dr vehicle taxea $ 1,079 $ 1,105 $ 1,131 $ 1,195 $ 1,135 $ 1,145 $ 1,150 $ 1,153 $ 1,200 $ 1,250 Sales tax, general pull)088 $ 10,556 $ 11,137 $ 11,472 $ 11,966 $ 11,869 $ 11,118 $ 11,767 $ 12,165 $ 12,260 $ 12,689 Selective sales tax $ 2,280 $ 2,417 $ 2,464 $ 2,589 $ 3,330 $ 4,108 $ 4,080 $ 4,210 $ 4,281 $ 4,481 Olhertaxea $ 3,557 $ 5,076 $ 5,445 $ 5,747 $ 5,791 $ 6,298 $ 6,390 $ 6,466 $ 6,630 $ 7,231 Investment revenues $ 544 $ 1,123 $ 1,255 $ 805 $ Z77 $ 81 $ 77 $ 68 $ 67 $ 98 Miscellaneous $ 1,209 $ 1,044 $ 890 $ 812 $ 505 $ 585 $ 872 $ 680 $ 9,918 $ 1,180 Transfers, net $ 114 $ 330 $ 672 $ 60 !.______ill L____.!1. $ 199 $ 30 $ 999 _$ __ 1 Total governmental activities $ 27458 $ 30779 $ 32195 $ 32540 $ 33 742 $ 33440 $ 35097 $ 35481 $ 45748 $ 37 783 Buainess-type activities: Investment revenues $ 328 $ 453 $ 641 $ 300 $ 242 $ 67 $ 84 $ 79 $ 49 $ 51 Miscellaneous $ 150 $ 217 $ 201 $ 118 $ 352 $ 341 $ 330 $ 434 $ 279 $ 97 Reimbursements $ $ $ $ $ $ $ $ $ $ 160 Transfers, net I !114) I (330) I (672) I (BO)~ L...fil) I (199) I (30) I (950) L......:..... Total business-type actlvlUes $ 364 $ 340 $ 170 $ 358 ~ L___M! $ 215 $ 483 $ (622)~ Total primary government $ 27820 $ 31119 $ 32366 $ 32896 $ 34 081 $ 33 756 $ 35312 $ 35984 $ 45126 $ 38111 Change In Net PoaNlan Govemmental activities $ 18,877 $ 7,602 $ 2,150 $ 234 $ (4,320) $ (5,965) $ (3,738) $ (466) $ 8,869 $ (1,032) Business-type acllvltles $ 1440 $ 1760 $ 2612 $ 1742 ~ $ 2,597 $ 8371 $ 6110 $ 1732 $ 5,557 Total primary government $ 18316 $ 9383 $ 4 792 $ 1976 ~~$ 4633 $ 5644 $ 10801 $ 4525 Saurai: City of Salina Comprehensive Annual Financial Reparta, 2005-2014 97 General Fund Reserved Nonspendable Restricted Committed Assigned Unreserved/unassigned Total general fund Restatement Restated fund balance All other governmental funds Reserved Nonspendable Restricted Committed Assigned Unreserved/unassigned Total all other governmental funds Schedule 3 City of Salina, Kansas Fund Balances, Governmental Funds Last Ten Fiscal Years (modified acaual basis of accounting) (in OOO's) Fiscal Year 2005 2006 2007 2008 2010 $ 421 $ 242 $ 396 $ 274 $ 508 $ 99 $ 6,646 $ 7,983 $ 6,935 $ 5,756 $ 4,580 $ 3,518 $ 1 061 $ a,225 $ 1 331 $ e1030 $ 5,oaa $ 3 e11 $ 158 $ 3,773 2011 (Note 11 $ $ 90 $ $ $ 293 $ 3,454 $ 3837 $ 2,369 $ 2,469 $ 2,796 $ 3,951 $ 11,092 $ 6,413 $ $ $ 3,611 $ 127 $ 4,323 ~ L___.B $ 2,948 ~ $ 4,024 $ (1,130) _$ __ $ 2,525 !.....l.fil $ 5,742 $ 4 305 $ 15 116 $ 5,283 $ 8 061 Note 1: Prior year amounts have not been restated for the implementation of GASB Statement 54 in fiscal year 2011. Source: City of Salina Comprehensive Annual Financial Reports, 2005-2014 98 2012 2013 2014 $ $ $ $ 118 $ 81 $ 107 $ $ $ $ $ $ $ 540 $ 331 $ 239 $ 3,172 $ 3,138 $ 3,908 $ 3,828 $ 3,550 $ 4254 $ $ $ $ $ $ $ 3,319 $ 3,448 $ 2,910 $ (516) $ 12,572 $ 9,886 $ 4,087 $ (1,940) $ 1,280 _ $ __ _$ __ $ $ 6,890 $ 14078 $ 14 076 Schedule4 City of Salina, Kansas Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in OOO's) Fiscal Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Revenues Taxes (see Schedule 5) $ 25,590 $ 28,282 $ 29,379 $ 30,788 $ 32,706 $ 32,702 $ 33,949 $ 34,724 $34,764 $ 36,523 Intergovernmental $ 2,785 $ 3,127 $ 3,363 $ 3,741 $ 3,153 $ 3,404 $ 2,901 $ 4,487 $ 4,192 $ 4,008 Special assessments $ 1,143 $ 1,207 $ 1,444 $ 1,178 $ 1,269 $ 1,385 $ 1,535 $ 2,315 $ 1,706 $ 1,810 Licenses and permits $ 14 $ 18 $ 18 $ 10 $ 10 $ 11 $ 6 $ 8 $ 9 $ 7 Charges for services $ 7,225 $ 7,099 $ 7,131 $ 7,415 $ 6,767 $ 8,934 $ 9,730 $ 8,484 $ 8,536 $ 8,276 Investment revenue $ 486 $ 1,021 $ 983 $ 490 $ 210 $ 64 $ 69 $ 47 $ 40 $ 59 Reimbursements $ 650 $ 406 $ 153 $ 39 $ 140 $ 70 $ 32 $ 36 $ 9,015 $ 123 Donations $ 241 Miscellaneous $ 501 $ 488 $ 650 $ 597 $ 438 $ 448 $ 599 $ 537 L..filQ $ 799 Total revenues $ 38,392 $ 41,648 $ 43,120 $ 44,258 $ 44,693 $ 47,018 $ 48,821 $ 50,638 $59,072 $ 51,846 Expendkures General government $ 2,706 $ 2,721 $ 2,842 $ 3,600 $ 3,007 $ 3,549 $ 3,461 $ 3,574 $ 4,269 $ 3,986 Public safety $ 13,673 $ 14,309 $ 16,175 $ 17,945 $ 17,883 $ 18,229 $ 18,118 $ 18,584 $19,155 $ 19,559 Public works $ 5,508 $ 5,712 $ 6,171 $ 6,593 $ 6,643 $ 6,634 $ 6,589 $ 7,004 $ 7,220 $ 7,443 Public health and sanitation $ 1,067 $ 1,178 $ 1,245 $ 1,276 $ 1,353 $ 1,332 $ 1,330 $ 1,343 $ 1,344 $ 319 Culture and recreation $ 4,776 $ 4,653 $ 5,204 $ 5,142 $ 4,947 $ 5,777 $ 5,900 $ 4,449 $ 3,939 $ 4,292 Planning and development $ 2,607 $ 2,588 $ 2,707 $ 3,377 $ 3,269 $ 3,609 $ 3,344 $ 3,256 $ 3,293 $ 3,233 Miscellaneous $ $ $ $ $ $ 32 $ $ $ $ Capital outlay $ 8,580 $ 10,783 $ 7,615 $ 10,581 $ 17,707 $ 18,603 $ 9,847 $ 7,327 $13,047 $ 11,009 Debt service Principal $ 2,534 $ 2,625 $ 4,806 $ 2,812 $ 4,687 $ 5,959 $ 4,411 $ 8,592 $ 5,038 $ 5,260 Interest $ 755 $ 1,009 $ 1,266 $ 1,587 $ 1,596 $ 2,258 $ 2,084 $ 2,103 $ 1,867 $ 1,864 Deposit to escrow $ $ $ $ $ $ 107 $ $ 92 _$ __ $ Total expenditures $ 42,208 $ 45,578 $ 48,031 $ 52,892 $ 61,072 $ 66,089 $ 55,064 $ 56,304 $59,172 $ 56,965 other financing sources (uaea) Bonds and notes issued $ 4,210 $ 4,885 $ 6,545 $ 7,245 $ 23,695 $ 7,034 $ 6,585 $ 6,150 $ 5,690 $ 5,365 Bond and note premium $ 80 $ 1,369 $ 47 $ 23 $ 60 $ 185 $ 302 Transfers in $ 1,399 $ 2,245 $ 2,349 $ 2,823 $ 3,617 $ 5,076 $ 7,994 $ 3,488 $ 4,907 $ 3,001 Transfers out $ (1,365) $ (2,055) $ (1,737) $ (2,763) $ (3,422) $ (4,984) $ (5,692) $ (3,458) $ (3,907) $ (3,000) Issuance costs $ $ $ $ $ $ $ $ $ Other $ $ $ 91 $ $ $ $ 156 $ _$ __ $ Total other financing sources (uses) $ 4.244 $ 5.075 $ 7.248 $ 7.385 $ 25.259 $ 7.173 $ 9.046 $ 6.240 $ 6.875 $ 5.688 Net change in fund balance $ 428 $ 1,145 $ 2,337 $ (1,250) $ 8,880 $(11,898) $ 2,803 $ 574 $ 6,775 $ 549 Debt service as a percentage of non-capital expenditures 11% 12% 18% 12% 17% 21% 17% 28% 18% 18% Source: City of Salina Comprehensive Annual Financial Reports, 2005 -2014 99 Schedule 5 City of Salina, Kansas Tax Revenues by Source, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in OOO's) Fiscal Year ~ ~ ~ ~ ~ w.Q Wi 2012 ~ 2014 Real estate $ 7,904 $ 8,373 $ 8,662 $ 9,084 $ 9,971 $ 9,756 $10,288 $10,466 $10,145 $ 10,657 Delinquent $ 213 $ 173 $ 185 $ 263 $ 760 $ 278 $ 274 $ 245 $ 248 $ 235 Motor vehicle $ 1,079 $ 1,105 $ 1,131 $ 1,120 $ 1,135 $ 1,145 $ 1,150 $ 1,153 $ 1,200 $ 1,250 General sales $ 10,556 $ 11,137 $ 11,472 $11,986 $11,669 $11,117 $11,767 $12,165 $ 12,260 $ 12,689 Selective sales $ 2,280 $ 2,417 $ 2,484 $ 2,589 $ 3,380 $ 4,108 $ 4,080 $ 4,210 $ 4,281 $ 4,461 other taxes $ 3,557 $ 5,076 $ 5,445 $ 5,747 $ 5,791 $ 6,298 $ 6,390 $ 6,485 $ 6,630 $ 7,231 Total taxes $ 25,590 $ 28,282 $ 29,379 $30,788 $32,706 $32,702 $33,949 $34,724 $34,764 $ 36,523 Source: City of Salina Comprehensive Annual Financial Reports, 2005 -2014 100 Schedule6 City of Salina, Kansas Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years Assessed Value Fiscal Estimated Total Assessed (Budget) Personal Total, Excluding Motor Vehicle Total, Taxable Market Value Value to Est. Year Real Estate Property State Assessed Motor Vehicles Tax Rate (Note 1) Assessed Value (Note 2) Market Value 2004 277,456,813 35,386,133 15,750,780 328,593,726 24.013 46,679,982 375,273,018 2,368,264,683 15.85 2005 282,517,284 35,410,526 17,334,372 335,262, 182 24.063 48,687,121 383,949,303 2,529,377,135 15.18 2006 298,537,399 38,862,356 17,624,030 352,823,785 23.999 49,367,870 402, 191,655 2,229,131,633 18.04 2007 321,695,326 39,691,690 16,530,171 377,917,187 23.789 50,551,299 428,468,486 2,416,543,103 17.73 2008 342,045,389 35,089,042 15,594,056 392,728,487 23.959 50,548,706 443,277,193 2,612,229,468 16.97 2009 356,678,712 28,373,980 14,929,456 399,982,148 25.886 51,351,656 451,333,804 2,914,775,730 15.48 2010 358,979,211 24,760,806 13,730,609 397,470,626 25.855 50,330,252 447,800,878 2,893,359,541 15.48 2011 367,750,803 19,918,188 14,685,585 402,354,576 26.022 47,406,062 449,760,638 2,869,531,746 15.67 2012 369,416,422 18,654,394 15,779,466 403,850,282 26.272 47,553,744 451,404,026 2,884,188,981 15.65 2013 370,390,092 17,769,120 16,948,264 405,107,476 26.927 48,882,411 453,989,887 2,889,385,914 15.71 2014 376,131,346 13,652,885 17,670,147 407,454,378 27.080 48,865,900 456,320,278 2,917,267,724 15.64 ~ Note 1: The tax rate for motor vehicles is set based on the average countywide tax rate. The City of Salina then receives a share of that based on tax effort Note 2: The estimated market value excludes the value of the State assessed properties. Market value information is not available for those properties. However, state assessed property is generally assessed at 33% of market value, except for railroads, which are assessed at 15% of market value. Note 3: The Direct rate is expressed in dollars per thousand dollars of assessed value. Source: Saline County Clerk Fiscal (Budget) Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Operating Millage 20.055 20.001 19.835 20.047 21.749 20.082 19.236 20.326 20.242 20.274 City of Salina Debt Service Millage 4.008 3.989 3.954 3.912 4.137 5.773 6.786 5.946 5.948 6.806 Source: Saline County Clerk Total City Millage 24.063 23.990 23.789 23.959 25.886 25.855 26.022 26.272 26.190 27.080 Schedule? City of Salina, Kansas Direct and Overlapping Property Tax Rates Last Ten Fiscal Years (rate per $1,()()() of assessed value) Saline Couniy Debt Total Operating Service County Operating Millage Millage Millage Millage 28.874 28.874 42.175 28.579 28.579 40.136 27.955 27.955 41.903 27.435 27.435 42.761 29.347 29.347 46.339 31.303 31.303 45.341 31.432 31.432 45.818 32.576 32.576 47.127 34.823 34.823 47.133 38.047 38.047 41.763 USD 305 (2) Other (1) Total Debt Service Total USD Millage Millage Other 17.491 59.666 10.984 123.587 15.046 55.182 10.960 118.711 13.349 55.252 10.726 117.722 12.229 54.990 10.775 117.159 12.208 58.547 10.971 124.751 13.155 58.496 12.401 128.055 13.095 58.913 12.131 128.498 11.693 58.820 11.989 129.657 11.516 58.649 12.135 131.797 13.842 55.605 11.805 132.537 (1) The "Other'' column includes the State of Kansas, the Salina Airport Authority, and the Salina Public Library. Beginning in 2005, this also includes Kansas State Extension District #3. (2) A small portion of Salina is covered by USD 306, USD 307, or USD 400. Total Tax Rates are different in the areas covered by these jurisdictions. Schedule 8 City of Salina, Kansas Principal Property Taxpayers Current Year and Ten Years Ago 2005 (2004 Assessed Value) Assessed % of Total Taxpayer Westar Energy (Western Resources) Schwan's Logistics LLC (Sales) Warmack, Salina Partnership (IPFOA) (Now Garrison Salina) Gateway Properties Kansas Gas Service Menard Inc. Salina Regional Health Center fl Great Plains Manufacturing Collier, Dennis D. Dillon's Wal-Mart Stores, Inc. Southwestern Bell Lowe's Home Center Western Wireless Type of Business Utility Pizza Manufacturing Retail Shopping Mall Shopping Mall (Midstate) Utility Home Improvement Hospital and Medical Offices Manufacturing Commercial and Residential Grocery Chain Discount Retail Stores Telephone Utility Building supply Center Microwave Transmission Combined Valuation of the Ten Largest Taxpayers City Valuation Percent of Total City Assessed Valuation (1) Source: Saline County Clerk's Office Valuation $ 8,036,664 7,938,775 6,064,998 3,058,959 4,967,556 2,415,729 3,979,960 5,265,830 2,015,463 2,218,381 $ 45,962,315 $ 383,949,303 Valuation 2.09% 2.07% 1.58% 0.00% 0.80% 0.00% 1.29% 0.63% 0.00% 0.00% 1.04% 1.37% 0.52% 0.58% 10.87% Rank 1 2 3 7 5 8 6 4 10 9 2015 ~014 Assessed Value) Assess % of Total Valuation $ 9,980,609 7,980,031 4,950,001 4,478,018 3,553,735 2,629,399 2,550,905 2,357,071 2,163,976 2,160,125 $ 42,803,870 $ 456,320,278 Valuation 2.19% 1.75% 1.08% 0.98% 0.78% 0.58% 0.56% 0.52% 0.47% 0.47% 7.19% Rank 1 2 3 4 5 6 7 8 9 10 Schedule 9 City of Salina, Kansas Property Tax Levies and Distributions Last Ten Fiscal Years Current Year Tax Distributions Total Tax Distributions Fiscal Taxes Levied (Budget) for the fiscal Delinquent Percentage of Year year Amount Percentage Collections ( 1 ) Amount levy 2005 8,067,300 7,904,231 98.0% 382,236 8,286,467 102.7% 2006 8,467,343 8,373,363 98.9% 173,093 8,546,456 100.9% 2007 8,990,268 8,661,700 96.3% 185,488 8,847,188 98.4% 2008 9,409,338 9,083,917 96.5% 262,511 9,346,428 99.3% 2009 10,354,161 9,923,959 95.8% 759,764 10,683,723 103.2% 2010 10,276,905 9,704,937 94.4% 278,656 9,983,593 97.1% 2011 10,415,491 10,287,770 98.8% 273,843 10,561,613 101.4% 2012 10,570,420 10,411,299 98.5% 245,086 10,656,385 100.8% 2013 10,576,448 10,145,404 95.9% 248,184 10,393,588 98.3% 2014 10,908,147 10,776,688 98.8% 398,820 11,175,508 102.5% (1) Delinquent collections are reported in the aggregate for all previous years. Data is not currently available for "collected in subsequent years" Source: Saline County Treasurer's Office 104 ~ 0 u, 2005 City Direct Tax Rate General 0.50% Special purpose 0.25% County-wide Tax Rate 1.00% Portion of County-wide tax allocated to City (July Percentage) 61.60% In addition to the direct tax, the City receives a portion of the Countywide sales tax, based on a formula distribution. The formula is based on property tax effort and population, and is adjusted in January and July of each year. In November 2008, the voters approved an increase in the Special Purpose Tax rate from .25% to .40%, to be effective April 1, 2009. Source: Kansas Department of Revenue Schedule 10 City of Salina, Kansas Direct Sales Rate by Taxing Entity Last Ten Fiscal Years Fiscal Year 2006 2007 2008 2009 2010 0.50% 0.50% 0.50% 0.50% 0.50% 0.25% 0.25% 0.25% 0.25%/0.40 0.40% 1.00% 1.00% 1.00% 1.00% 1.00% 61.81% 61.92% 62.31% 62.46% 61.58% 2011 2012 2013 2014 0.50% 0.50% 0.50% 0.50% 0.40% 0.40% 0.40% 0.40% 1.00% 1.00% 1.00% 1.00% 63.34% 61.72% 60.86% 60.23% Sc:hedule 11 City or Sallna, Kan ... water Sal• by Class of custom• Lot Ten Fhlcal Yean .... -2007 -2009 2010 2011 2012 2013 2014 -..... -wato, -...... -...... -..... -..... -...... -...... -...... ,.. ... ..... RateCIUa BIiied .... BIiied Sold BIiied Sold BIiied Sold BIiied .... BIiied .... BIiied Sold BIiied Sold BIiied Sold BIiied .... Resldentlal 17,576 1,187,130 17,637 1,164,293 17,750 1,080,015 17,813 994,875 17,792 1,043,774 17,838 1,127,864 17,899 1,194,629 17,893 1,225,931 17,966 989,788 18,042 1,003,100 Commercial 1,680 358,669 1,568 357,488 1,592 331,440 1,591 333,720 1,689 339,507 1,568 350,633 1,574 372,499 1,565 38,547 1,579 348,968 1,599 353,875 Industrial 43 181,325 43 180,900 .. 237,698 .. 203,491 .. 152,910 44 183,166 44 180,277 42 174,595 40 182,529 42 193,233 Government 146 102,994 150 74,768 151 58,568 152 SS,366 104 41,793 85 42,714 "' 55,910 99 54,618 .. 46,484 "' 45,346 Apartment 195 56,359 187 56,340 184 55,500 182 64,703 182 71,503 172 71,121 1SS 72,562 189 70,263 1SS 87,155 188 80,865 Sohool• 81 41,187 81 44,925 80 38,953 81 38,835 .. 39,815 85 48,388 85 53,879 81 57,02.7 .. 44,187 .. 45,328 lndustrtal speclal 1 39,551 1 37,508 1 35,813 1 42,574 1 32,934 1 44,457 1 44,051 1 40,448 1 20,439 • 0 Coosumed in production 21 31,570 19 28,583 18 26,070 18 28,699 18 26,223 17 32,604 13 22,728 12 19,268 12 18,665 12 19,264 Rural water 1 28,889 1 28,395 1 23,963 1 24,798 1 22,824 1 23,854 1 28,821 1 25,930 1 21,530 1 22,993 H ...... , 15 17,126 15 13,088 15 13,755 15 18,723 13 20,488 12 18,503 10 15,874 10 17,896 9 28,462 10 32,184 Rellglouslnon proflt 40 9,521 39 8,888 41 7,463 40 6,913 39 7,312 39 5,589 38 5,690 38 5,399 37 4,810 37 4,m Other taxable deductions 5 8,995 5 6,630 5 9,975 4 8,02.3 899 0 0 -0 Engineering studies 8 6,283 8 6,135 8 5,805 8 5,327 8 6,178 8 5,266 7 3,754 8 6,104 8 6,822 8 5,085 Providing taxable service 2 5,677 2 5,850 2 5,010 2 4,883 2 4,889 2 5,494 2 4,827 2 6,118 2 3,495 1 3,561 Sale of component perts 8 5,473 8 5,280 8 5,040 8 5,748 8 5,200 8 5,851 8 5,454 8 5,726 • 5,972 • 8,850 Fire hydrant 4 5,232 3 1,598 2 495 3 1,147 2 1,032 3 2,424 3 1,389 4 2,533 3 1,922 2 1,474 lndustrtal consumed In productloo 3 2,350 3 3,510 3 3,593 3 3,230 3 2,314 3 4,063 3 3,280 3 3,543 3 4,417 3 3,568 Sales of farm equipment 1 213 1 308 1 180 1 256 1 205 1 213 1 56 1 83 1 107 1 48 19,730 2,088,634 19,789 2,024,483 19,908 1,937,333 19,971 1,864,091 19,893 1,818,879 19,887 1,970,202 19,964 2,086,7&9 19,937 2,100,966 20,018 1,793,771 20,111 1,801,578 water Rate Schedule: Moothly meter charge (518'1 $ 3.21 $ 3.38 $3.57 $ 3.75 $ 4.44 $ 4.51 $4.60 $4.74 $4.88 $5.03 § Commodity charge (per 000 gal.): 0 -2000gal. $ 2.16 $ 2.21 $2.42 $ 2.54 $ 2.34 $ 2.55 $3.77 $3.88 $4.04 $4.24 2001 -10,000 gal $ 1.94 $ 1.99 $2.20 $ 2.31 Over 10,000 gal. $ 1.73 $ 1.77 $1.97 $ 2.07 Excess use charge $ 4.SS $ 5.10 $7.54 $7.76 $8.08 $8.48 Wutewatar Rate Schedule: Moothly base charge $ 3.03 $ 3.18 $3.34 $ 3.51 $ 6.31 $ 6.42 $6.57 $6.77 $6.97 $7.11 Unit cost (per 000 gal.): $ 2.23 $ 2.38 $2.50 $ 2.83 $ 2.88 $ 3.08 $4.48 $4.61 $4.79 $4.94 water sold is expreaaecl in thousands of gallons. Number of Accounts blled Is the annual number of billings for each dass divided by 12. Monthly meter charge increases with the size of the meter. Residential wastewater is calc..Aated besecl oo Winter Quarter water consumption. Other accounts ere based on monthly water consumption. 2008 water ConsumpUoo Rate structure changed from a decreasing tier structure to one rate and Excess Use Charge which Is double the consumption rate "'In 2011, basis for measurement was switched from cubic: feet to gelloos. The adjus1ments and conversions necessary for this table have not yet been completed. Source: City of Salina water Customer Accounting Office. Schedule 12 City of Salina, Kansas Ratio of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities Business-Tfe Activities General General Wa er Percentage Obligation Capital Temporary Obligation Revenue Loans Total Primary of Personal Fiscal Year Bonds Lease Notes Bonds Bonds Payable Government Income Per Capita 2005 21,202,921 20,944 2,700,000 6,258,456 4,990,000 7,460,602 42,632,923 2.9% 927.53 2006 21,497,408 9,200,000 5,175,780 4,350,000 7,130,852 47,354,040 2.9% 1,030.42 2007 25,436,632 7,625,000 3,888,368 3,710,000 6,786,743 47,446,743 2.8% 1,010.80 2008 29,869,930 5,005,000 2,780,069 3,030,000 6,428,759 47,113,758 2.5% 1,014.12 2009 52,067,590 2,320,000 2,320,000 5,862,516 62,570,106 3.5% 1,346.09 2010 53,120,952 2,500,000 8,614,576 1,580,000 65,815,528 3.8% 1,425.20 2011 55,225,670 3,400,000 7,417,907 16,193,925 82,237,502 4.3% 1,723.80 2012 49,109,575 1,485,000 9,613,926 15,850,228 76,058,729 3.8% 1,583.07 ~ 2013 49,631,797 3,800,000 8,519,799 15,226,532 77,178,128 3.7% 1,613.05 0 2014 50,033,555 176,235 5,000,000 9,587,351 14,592,836 6,208,102 85,598,079 4.1% 1,788.25 -< Source: City of Salina Comprehensive Annual Financial Reports, 2005 -2014 Schedule 13 City of Salina, Kansas Ratio of Net General Bonded Debt Outstanding Last Ten Fiscal Years General Bonded Debt Outstanding enera Percentage of Obligation Temporary Less Debt Net General Actual Taxable Fiscal Year Bonds Capital Lease Notes Total Service Fund Bonded Debt Value of Per Capita 2005 27,461,377 20,944 2,700,000 30,182,321 1,407,529 28,774,792 7.5% 626.03 2006 26,673,188 9,200,000 35,873,188 1,494,320 34,378,868 8.5% 748.08 2007 29,325,000 7,625,000 36,950,000 1,210,457 35,739,543 8.3% 761.39 2008 32,649,999 5,005,000 37,654,999 792,744 36,862,255 8.3% 793.45 2009 54,387,590 54,387,590 735,291 53,652,299 11.9% 1,154.23 2010 61,735,528 2,500,000 64,235,528 571,873 63,663,655 14.2% 1,378.60 2011 62,443,577 3,400,000 65,843,577 1,236,026 64,607,551 14.4% 1,354.26 2012 58,723,501 1,485,000 60,208,501 582,412 59,626,089 13.2% 1,241.05 2013 58,151,596 3,800,000 61,951,596 707,763 61,243,833 13.5% 1,280.02 ~ 2014 59,620,906 176,235 5,000,000 64,797,141 407,864 64,389,277 14.1% 1,345.17 0 co Source: City of Salina Comprehensive Annual Financial Reports, 2005 -2014 Schedule 14 City of Salina, Kansas Direct and Overlapping Governmental Activities Debt As of December 31, 2014 Jurisdiction Direct: City of Salina Overlapping: Salina Airport Authority Saline County USD 305 Net General Obligation Bonded Debt Outstanding $ 64,389,277 23,260,000 237,740 135,785,000 Total Overlapping Debt 159,282,740 Total Direct and Overlapping Debt 223,672,017 Per Capita Direct and Overlapping debt Percentage Applicable to City of Salina Amount Applicable to the City of Salina 100% $ 64,389,277 100% 23,260,000 76% 179,494 94% 127,135,496 150,574,989 214,964,266 $ 4,492.84 Percentage of debt applicable to the City of Salina is based on the proportion that the assessed valuation of the City of Salina bears to the assessed valuation of the overlapping entity. Source: Saline County Clerk 109 0 Legal Debt Margin Calculation for 2014 Assessed Valuation: Debt Limit (30% of Assessed Value) Debt Applicable to limit: Total Bonded Debt Less GO Debt Attributable to Exempt Purposes Less Revenue Bonds Less Capital Leases Less Loans Payable Less Fund Balance designated for Debt Service Total Debt Applicable to Limitation Legal debt margin Debt Limit $ 115,184,791 Total net debt applicable to limit 28,774,792 Legal debt margin 86,409,999 Total net debt applicable to the limit as a percentage of debt limit 25% $120,657,497 28,774,792 91,882,705 24% $456,320,278 136,896,083 85,598,079 9,587,351 14,592,836 176,235 6,208,102 407,864 54,625,691 82,270,392 $128,539,768 35,739,543 92,800,225 28% Schedule 15 City of Salina, Kansas Legal Debt Margin Last Ten Fiscal Years Fiscal Year $ 133,224,043 $ 135,400,141 $ 134,340,263 36,862,255 53,652,299 58,411,185 96,361,788 81,747,842 75,929,078 28% 40% 43% $134,928,191 $135,421,208 57,747,032 49,309,445 77,181,159 86,111,763 43% 36% $ 2013 136,196,966 52,724,034 83,472,932 39% 2014 136,896,083 54,625,691 82,270,392 40% Utility Service Fiscal Year Charges 2005 12,703,953 2006 12,949,169 2007 14,054,466 2008 14,072,513 2009 14,980,874 2010 16,520,055 2011 17,905,056 2012 19,098,626 2013 17,938,288 2014 18,742,029 Schedule 16 City of Salina, Kansas Pledged Revenue Coverage Last Ten Fiscal Years Water/Sewer Revenue Bonds ess: Operating Net Available Expenses Revenue Principal 10,468,771 2,235,182 941,662 10,894,968 2,054,201 969,748 11,545,842 2,508,624 983,479 12,754,057 1,318,456 1,038,000 12,524,390 2,456,484 1,276,243 13,571,098 2,948,957 740,000 12,963,891 4,941,165 1,580,000 13,963,941 5,134,685 340,000 14,524,148 3,414,140 620,000 14,002,088 4,739,941 630,000 Interest 542,722 461,470 589,288 515,459 455,294 91,450 496,760 596,992 590,191 577,791 Source: City of Salina Comprehensive Annual Financial Reports, 2005 -2014 City of Salina Debt Service Schedules 111 Coverage 151% 144% 160% 85% 142% 355% 238% 548% 282% 392% --"' Per Capita Personal Income (Saline Fiscal Year Population County) 2005 45,964 32,365 2006 45,956 35,543 2007 46,940 36,707 2008 46,458 40,351 2009 46,483 38,392 2010 46,180 37,880 2011 47,707 40,512 2012 48,045 41,762 2013 47,846 43,078 2014 47,867 43,736 Sources: Population: Kansas Division of the Budget. Employment: Kansas Department of Labor Personal Income, Salina (interpolated) $1,487,624,860 $1,633,414,108 $ 1,723,026,580 $1,874,626,758 $ 1,784,575,336 $1,749,298,400 $1,932,705,984 $ 2,006,455,290 $2,061,109,988 $2,093,511,112 Schedule 17 City of Salina, Kansas Demographic and Economic Statistics Last Ten Fiscal Years Unemployment Labor Force, USD305 Rate City of Salina Headcount 4.7% 25,663 4.0% 25,777 3.6% 25,400 3.8% 26,343 7,348 6.0% 26,769 7,432 6.7% 26,379 7,346 6.7% 26,258 7,289 6.3% 26,185 7,305 5.1% 26,441 7,305 5.3% 26,303 7,388 Personal income for Salina is derived from the population and per capita personal income for Saline County Per Capita Personal income as reported by the Bureau of Economic Analysis, as of 09/30/2015 2014 Per Capita Personal Income staff projection 2005 -2014 Employment City of Salina USD305 headcount and free and reduced lunch data derived from Kansas Department of Education. Free and Reduced Lunch percentage is an average of the percentages for each building reported. School Data is reported at beginning of school year, eg 2014-2015 school year is reported as 2014 Percentage Asa%of Free and Per Capita per capita Reduced City .5 cent .5 cent sales personal Lunch sales tax Tax income $ 4,560,772 $ 99.22 0.307% $ 4,834,367 $ 105.20 0.296% $ 4,967,468 $ 105.83 0.288% 56.3% $ 5,177,461 $ 111.44 0.276% 58.7% $ 4,965,147 $ 106.82 0.278% 57.8% $ 4,803,553 $ 104.02 0.275% 58.7% $ 5,076,751 $ 106.42 0.263% 59.1% $ 5,241,205 $ 109.09 0.261% 60.7% $ 5,326,723 $ 111.33 0.258% 61.3% $ 5,555,601 $ 116.06 0.265% Increase in per capita Sales Tax (10 years) 17.0% Increase in per capita Personal Income 35.1% ~ ~ "' Employer Schwan's Global Supply Chain USD#305 Salina Regional Health Center Exide Technologies Phiilips Lighting Co. City of Salina Walmart Dillon Stores Solomon Corp El Dorado National Raytheon Aircraft Lock/line Total Schedule 18 City of Salina, Kansas Principal Employers Current Year and Nine Years Ago Type of Business Employees Frozen Pizza Manufacturing 2,000 Public School System 935 Health Care 1,082 Automotive Battery Manufacturer 800 Fluorescent Lamps 600 City Government 482 Retail Retail (Grocery) Electrical Equipment Buses/Recreational Vehicles Aircraft Manufacturing 274 Cellular Phone Insurance 490 6,663 Source: Salina Chamber of Commerce 2005 2014 Percentage Percentage of Labor of Labor Rank Force Employees Rank Force 1 6.8% 1,800 1 6.8% 3 3.2% 1,659 2 6.3% 2 3.7% 1,300 3 4.9% 4 2.7% 750 4 2.8% 5 2.1% 490 5 1.9% 7 1.6% 465 6 1.8% 421 7 1.6% 343 8 1.3% 324 9 1.2% 0.0% 8 0.9% 6 1.7% 22.8% 7,552 28.7% GOVERNMENTAL AUDIT SECTION CITY OF SALINA, KANSAS SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended December 31, 2014 Federal Federal Granter/Pass-Through CFDA Granter/Program Title Number Revenues De11artment of Housing and Urban Develo11ment Fair Housing Assistance Program 14.401 $ 84,573 Passed through Kansas Housing Resources Corporation Emergency Solutions Grant 14.231 112,578 Total Department of Housing and Urban Development 197,151 De11artment of Trans11ortation Passed Through the Kansas Department of Transportation: State and Community Highway Safety 20.600 6,266 Alcohol Traffic Safety and Drunk Driving Prevention Incentive Grant 20.601 6,482 Occupant Protection Incentive Grant 20.602 4561 Total Department of Transportation 17,309 Environmental Protection Agency Community Action for a Renewed Environment (CARE) Program 66.035 91,658 Passed Through the Kansas Department of Health and Environment Capitalization Grants for Drinking Water State Revolving Funds 66.468 6,208,102 Total Environmental Protection Agency 6,299,760 Total Expenditures of Federal Awards $6,514,220 Exeenditures $ 66,000 112,578 178,578 6,266 6,482 4 561 17 309 54,092 3,295,170 3,349,262 $ 3,545,149 See independent audito~s report on the financial statements and notes to the schedule of expenditures of federal awards. 114 1. General CITY OF SALINA, KANSAS NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended December 31, 2014 The accompanying Schedule of Expenditures of Federal Awards presents the expenditures of all federal financial assistance programs of the City of Salina, Kansas. All expenditures of federal financial assistance received directly from federal agencies as well as federal financial assistance passed through other governmental agencies are included on the schedule. 2. Basis of Accounting The accompanying Schedule of Expenditures of Federal Awards is presented in accordance with accounting principles generally accepted in the United States of America. 115 CITY OF SALINA, KANSAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2014 Section I -Summary of Auditor's Results Financial Statements Type of auditor's report issued: Internal control over financial reporting: Material weakness(es) identified? Significant deficiency(ies) identified that are not considered to be material weaknesses? Noncompliance material to financial statements noted? Federal Awards Internal control over major programs: Material weakness( es) identified? Significant deficiency(ies) identified that are not considered to be material weaknesses? Type of auditor's report issued on compliance for major programs: Any audit findings disclosed that are required to be reported in accordance with section 51 O(a) of Circular A-133? Identification of major programs: CFDA Number{s) 66.468 Dollar threshold used to distinguish between type A and type B programs: Auditee qualified as low-risk auditee? 116 Yes --- X Yes Yes --- Yes --- ___ Yes Yes --- Unmodified X No -'-'--- ___ None reported ~X'-'---No X No --- _x'-'---None reported Unmodified X No --- Name of Federal Program or Cluster Capitalization Grants for Drinking Water State Revolving Funds $300 000 Yes X No --- --- Current Year Findings CITY OF SALINA, KANSAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS ForU'leYear Ended December 31, 2014 Condition Questioned l,Q!ll! Recommendation Not applicable 2014-1 During our audit of municipal courts accounts Recommended Not We recommend that U'le City Prior Year Findings None Noted receivable balances we noted the following: Practices a) The City was unable to produce an accounts receivable aging report or accounts receivable subledger U'lat agreed to U'le municipal courts accounts receivable balance as of December 31, 2014 Municipal Court MonU'lly Report. b) Per a comparison of the 2014 and 2013 Municipal Court Monthly Reports, the number of municipal court cases filed and the amount of cost and fine revenues collected decreased by approximately 15% durina 2014. c) Pera comparison of the 2014 and 2013 Municipal Court Monthly Reports, the number of case dosed decreased by 23% during 2014 and the number of pending cases at December 31, 2014 was 68% higher than at December 31, 2013. 117 detennined process and save a detailed accounts receivable aging report at U'le end of each monU'I that agrees to U'le Municipal Court MonU'lly Report Additionally, we recommend that U'le City designate an appropriate individual to review and approve these reports each month and to dosely monitor U'le number of cases dosed and cases pending in order to detennine if sufficient progress is being made to dose cases and collect related revenues. Additionally, we recommend the City evaluate its ticket issuance policies to determine if the number of tickets issued and potential revenues generated by U'lese tickets are in line wiU'I the City's projections and Management Response Agrees • MIZE,..,JIOUSER \..../OMPANYP.A. INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH "GOVERNMENT AUDITING STANDARDS" Mayor and City Commissioners City of Salina, Kansas We have audited, in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Government Auditing standards issued by the Comptroller General of the United states, and the Kansas Municipal Audit and Accounting, the financial statements of the govemmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund infonnation of the City of Salina, Kansas, (the City) as of and for the year ended December 31, 2014, and the related notes to the financial statements, which collectively comprise the City's financial statements, and have issued our report thereon dated October 22, 2015. Our report includes a reference to other auditors who audited the financial statements of the Salina Airport Authority and the Housing Authority of the City of Salina, as described in our report on the City of Salina's financial statements. This report does not include the results of the ether auditors' testing of internal control ever financial reporting or compliance and ether matters that are reported on separately by those auditors. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal controls exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent. or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charge with governance. Our consideration of internal control was far the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We did identify certain deficiencies in internal control, described in the accompanying schedule of findings and questioned costs as Finding 2014-1 that we consider to be significant deficiencies. www.rrighoMlt(,com • mhcoOmzehouse,.com SM S KonSGI Ave, Suh 700 • Topeka, KS 66603-WS • 785.233.0536 p • 76Snl.1078 f 534 S Kansas Ave, Suh "400 • Topeka. KS 66603-3454 • 785.234.5573 p • 786.234..1 DS7 f 7101 College Blvd, Suh 900 • Ovaland Park, KS 66210-1984 • 911451.1882 p • 911451.2211 f 211 E Bghlh Suh M lawranc:•, KS 66044·2771 • 71U42..8844 p • 715.842.9049 f 118 Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. However, we noted certain other matters that we reported to management of the City in a separate letter dated October 22, 2015. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Certified Public Accountants Lawrence, Kansas October22,2015 Pt+ 119 • MIZE0 HOUSER OMPANYPA. INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY 0MB CIRCULAR A-133 Mayor and City Commissioners City of Salina, Kansas Report en Compliance for Each Major Federal Program We have audited the compliance of Iha City of Salina, Kansas, {the City) with Iha types of compliance requirements desaibed in Iha 0MB Circular A-133 Compliance Supplement that. could have a direct and material effect on each of the City's major federal programs for the year ended December 31, 2014. The City's major federal financial programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance for each of the City's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compiance in accordance with auditing standards generally accepted in the United states of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; 0MB Circular A-133, Audits of states, Local Governments, and Non-Prottt Organizations, and the Kansas Municipal Audit and Accounting Guide. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance wittl those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination on the City's compliance. Opinion on Each Major Federal Program In our opinion, ttie City complied, in all material respects, with U'le types of compliance requirements referred to above ttiat could have a direct and material effect on each of its major federal programs for the year ended December 31, 2014. www.mfMhoUftLCOffl. mhco9mlzehoUNr.COffl U4 S Kan-Ave, Suh 700 • Topeka, KS "603-3465 • 781.23!..0IS6 p • 7a&.m..1078 I SM S KanlGI Ave, Suh 400 • Topaka. KS 6'603-3454 • 785.234.5573 p • 715.234.10371 7101 College Blvd. Sule 900 • Otefland Park. KS 66210-1984 • '13.ASl.1882 p • '13.451.2211 f 211 E Bghlh Suh .All UIWl9llce, KS 66044-2771 • 785.142.8844 p • 785.142.904, I 120 Report on I ntemal Control Over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program in order to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with 0MB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charge with governance. Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of 0MB Circular A-133. Accordingly, this report is not suitable for any other purpose. Certified Public Accountants Lawrence, Kansas October 22, 2015 /J4 121 APPENDIX D December 31, 2015 Unaudited Financial Statements The City's 2015 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, 2015, prepared by the firm of Mize Houser & Company, P.A., Certified Public Accountants, Topeka, Kansas. Gtnerat Fund JOO Revenues Expenditures Variance (Unfavorable) 12/3 1 Fund BaJance E,t GAAP blsls 81\anc« Arts and Humanities Revenues Expenditures Balance l2/31 Fund Balance Spt<, Slits l ax Capita! Revenues Expenditures Balance 12/31 fund Balance Spt<, Sale, T111 Eco!'lomlc 01 Revenues Expenditures Sala.nee 12/31 fund Balance ausinen Imp. District itl Revonuu Expenditures Balance l2/31 Fund BaJance Tourl$m Revonun Expenditures Balance. 12/31 Fund Balance Special Partcs Revenues hp,endlcures Balance ll/31 Fund Balance 1 of 3 6/7/2016 100 210 220 230 140 250 City of Sanna 2017 Budget Request f und Balance Summaries 2014Act1.11il 1015 Actu,t 2016&uct1et $ (39,326,225) $ (38,533,746) $ ('1,929,468) $ 38,567,348 $ 38,097,181 $ 41,847,984 $ 758,878 5 436,S66 $ 81,484 $ 2,816,21M s 3,448,702 $ 3,801,133 $ 4,254,429 s 5,173,053 $ (851,659) $ (933,611} $ (1,089,884} $ 974,736 5 895,550 $ 1,003,334 $ (122,077} $ 38/>61 $ 86,550 $ 100,020 $ 138,081 $ 167,701 $ (4,119,654} $ (4,207,511) $ (4,382,500) $ ,4,991,975 $ 3,7U,571 $ •,977,469 $ (872,322) $ 495,940 $ (594,969) $ 1,023,469 $ 1,SS8,286 $ 27;\,588 $ (348,974) S (354,636) $ (332,276) $ 281,708 $ 133,391 $ 378,704 $ 67,265 $ 221,245 $ (46,428) $ 675,154 s 896,399 $ 50,000 $ (82,643) $ [83,141) $ (90,$00) $ 82,945 $ 78,837 $ 90,500 $ (302) $ 4,304 $ $ 436 s 3,867 s (1,417,788) S 11.859,163) S (1,420,000) $ J,09,690 $ 1,883,~8 $ 1,420,000 $ (61,902) $ (24.225) $ $ 24,395 s $ $ (173,005) S (184,749) $ (184,000) s 100,982 s 292.929 s 239,932 $ 72,023 $ (108,L80) $ (S5,93l) $ 182,600 $ 14,420 $ 103,236 T:\finance\Budget W<ITT:tng files\2017 Department Requests\2017 Consok>dated 8udget Request City of Salina 2017 Budget Request Ft.ind Balance Summarfe$ 20UActu1I 2015 Actual 2016Bud111 Spe<lal Alcohol 260 Revenues s (172,684) $ 1184,6051 5 (180,000) Expenditures s 130,433 s 227,0lS s 217,252 Balance s 42,251 $ 142,410) s (37,252) 12/31 Fund Balance s 21).4 $ 47 s S.poci al Ga.1; Tax 110 Revenues s (1,561,727) S 11,589,538) S (1,549,070) Expenditures s 2,093,837 $ 1,717,871 s 1,391,158 81lance $ (532,110) S (128,333) S 157,912 12/31 Fund Balance s 595,442 s 298,027 s 500,000 Neighborhood Parks 280 Revenues s (7,642) S (9,661) S ll4,000) Expenditures s 22,948 s 6,631 s 24.000 Balance s (15,306) $ 3,030 s 12/31 Fund Balal'l(;e s 95,382 s 98,413 $ BlctJUtnnlal Con tor 290 Revenues $ (636,226) s (756,556) $ (SS0,000) Expenditures s 619,253 $ 755,038 $ 450,000 Balance s 16,973 s l,518 s 100,000 t?/31 Fund 8ilance s s 3,164 s Sanitation 300 Revenues s (2,539,344) S [2,544,646) 5 (2,553,500) Expenditures $ 2,399,146 s 2,408,537 s 2,821,579 8alanct s 140,198 $ 136.109 $ (268,079) U/31 Fund Balance s 897,013 s 1,033,121 s 679,874 Solid Waste 320 Revenue, s (3.069,84 l) S (2,646.LS41 S (2,546,997) Expenditures s 2,433,934 $ 2,449,663 s 3,634,921 8ala,nce s 635,906 s 196,491 s (1,087,924) 12/31 Fund Balance $ 2,08S,S18 s 2,216.403 s 1,244,763 Solld W.ttte C:apital Reserve Balance s 2,185,981 Golf Course l40 Revenues s (860,012) $ (862,425) $ (888,750) ExpenditUftl $ 806,783 s 81S,90l s 836,785 Balance $ 53,230 s 46,522 s 51,965 12/31 Fund ~lance $ 117,157 s 163,680 s 215,435 Water ind Wastewater 370 Revenues S (20,835,207) S (19,00l,6S2) S [20,666,850) Expenditures $ 16,3-66,45S s .18,070,330 S 23,529,216 Balance s 4,468,?Sl s 931,322 S (2,862,366) L2/31 Fund Balance $ 9,306,498 s 9,448,147 s 7,000,000 Wat«/WiiStewater Capital Reserve $ 10,796,628 2of 3 6/7/2016 1 :\f1nan,e\t1uo,:et Wol1Cmg t11es\J.Ol/ O~panment Kequests\Wl/ t:onsotoaateo tSudget Kequest Workers Compensation Revenues Expenditures Balance 12/31 Fund Balance Health Insurance Revenues Expenditures Balance 12/31 Fund Balance Central Garage Revenues fxpenditures Balance 12/31 Fund Balance Bond and Interest Revenues Expenditures Balance- 12/31 Fund Balance 3of3 6/7/2016 410 420 450 500 C'rty of Sa!ina 2017 Budget Request f und Balance Summaries 2014Actual 2.01S Actual 20168udget $ (335,9801 5 (304,270) S (459,9901 s 350,035 s 304,889 s 409,667 s (14,05SI $ (619) 5 50,323 s 749,644 s 7S0~011 s 730,927 s (5,990,7841 5 (6,386,1671 s (6,735.3501 s 6,678,718 s 6,121,023 s 6,588,000 s (687,934) S 265,14A s 1417,350 s 896,856 $ 1,.161,999 s 1,278,258 s (1,674,0071 S (1,358,2841 s (1,767,8221 $ 1,682,191 s 1,389,585 s 1,696,948 $ (S.0941 S (31,301) 5 70,874 s 16,441 s (14,860) S 110,634 s (6,255,9461 S (6,460,285) s (6,640.2291 s 6,609A20 s 6,628,922 $ 6,685,520 $ (353,4741 S (168,6371 $ (45,2911 s :3414,671 s 176,034 s 200,000 T:\finance\Budget Working Files\2017 OepattmentRequests\2017 Consolodated Budget Request EXECUTION COPY CITY OF SALINA, KANSAS OMNIBUS CONTINUING DISCLOSURE UNDERTAKING DATED AS OF JUNE 10, 2013 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. 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 m Section 2(a)(l) hereof. "Fiscal Year" means the one-year period ending December 31, or such other date or dates as may be adopted by the Issuer for its general accounting purposes. "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 Sec:tion 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). 3 (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 fonn attached as Exhibit B. (c) Pursuant to Section (d)(3) of the SEC Rule, the provisions of Section 2(a)(l) 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. 4 (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)(l) 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 5 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 Unde11aking. (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 IJ1ade 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 prov1S1ons 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 6 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. 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. Scvcrability. If My prov1s1on 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 Unde1taking shall not in a:ny way be affected or impaired thereby. Section 13. Governing Law. This Disclosure Undertaking shall be governed by and construed in ac'"ordance with the laws of the State of Kansas. [BALANCE OF TH1S PAGE lNTENTIONALLY LEFT BLANK] 8 WHEREOF, the I suer ha caused this Di clo urc Undertaking to be executed as CITY OF SALINA, KANSAS Mayor Shand.i Wicks, CMC, Deputy City CJerk (Signature Page to 'ontinuin g Di closure ndcrtaking) SCHEDULE I DESCRIPTION OF BONDS SUBJECT TO DISCLOSURE UNDERTAKING General Obligation Bonds (Base CUSIP No.: 794743) Description of Indebtedness General Obligation Internal In1provement Bonds, Series 2006-B General Obligation Internal Improvement Bonds, Series 2007-A General Obligation Internal Improvement Bonds, Series 2008-A General Obligation Internal Improvement Bonds, Series 2008-B General Obligation Internal Improvement Bonds, Series 2009-A General Obligation Refunding and Improvement Bonds, Series 2010-A General Obligation Refunding Bonds, Series 2010-B General Obligation Internal Improvement Bonds, Series 2011-A General Obligation Internal Improvement Bonds, Series 2012-A General Obligation Refunding Bonds, Series 2012-B General Obligation Taxable Improvement Bonds, Series 2013-A General Obligation Internal Improvement Bonds, Series 2013-B General Obligation Internal In1provement Bonds, Series 2014-A General Obligation Refunding & Internal Improvement Bonds, Series 2015-A General Obligation Internal Improvement Bonds, Series 2016-A General Obligation Refunding Bonds, Series 2016-B Dated Date 07-15-06 06-15-07 07-15-08 12-15-08 07-15-09 05-01-10 10-15-10 07-15-11 07-15-12 07-15-12 02-15-13 07-15-13 07-30-14 07-29-15 07-26-16 07-26-16 Temporary Notes (Base CUSIP No.: 794743) Description of Indebtedness General Obligation Temporary Notes, Series 2015-1 General Obligation Temporary Notes, Series 2016-1 Dated Date 07-29-15 02-10-16 Revenue Bonds (Base CUSIP No.: 794811) Description of Indebtedness Water and Sewage System Revenue Bonds, Series 2011 S-1 Dated Date 04-15-11 Final Maturity 10-01-21 10-01-27 10-01-23 07-01-28 10-01-29 10-01-25 10-01-23 10-01-31 10-01-27 10-01-20 10-01-28 10-01-33 10-01-34 10-01-35 10-01-36 10-01-31 Final Maturity 08-01-16 08-01-17 Final Maturity 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 EXHIBITB NOTICE TO REPOSITORY OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Name of Bond Issue: Name of Obligated Person: nate of Issuance: City of Salina, Kansas [Description of Bonds], Series L_], dated as of [Bonds Dated Date] City of Salina, Kansas [Bonds Closing Date J NOTJCE IS GIVEN that the City of Salina, KaJ1Sas (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 Repo1t will be filed by _____ _ Dated: _______ _ CITY OF SALINA, KANSAS By ____________ _ By ____________ ~as Dissemination Agent cc: City of Salina, Kansas B-1 EXHIBITC ACCEPTANCE OF DISSEMINATION AGENT Name oflssucr: City of Salina, Kansas Name of Bond Issue: [Description of Bonds], Series L__l, dated a:s 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 faith therein. Dated: C-1 EXCERPT OF MINUTES OF A MEETING OF THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS HELD ON JUNE 20, 2016 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: Present: Mayor Kaye J. Crawford, Commissioners Jon Blanchard, Trent Davis, Randall Hardy, and Karl Ryan. Absent: None. The Mayor declared that a quorum was present and called the meeting to order. * * * * * * * * * * * * * * (Other Proceedings) Thereupon, there was presented for first reading an Ordinance entitled: AN ORDINANCE AUTHORIZING AND PROVIDING FOR THE ISSUANCE OF GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS, SERIES 2016- A, 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 Hardy moved that said Ordinance be approved on first reading. The motion was seconded by Commissioner Davis, Said Ordinance was duly read and considered, and upon being put, the motion for approval was carried by the vote of the governing body, the vote being as follows: Yea: Mayor Kaye .J. Crawford, Commissioners Jon Blanchard, Trent Davis. Randall Hardy, and Karl Ryan. Nay: None. * * * * * * * * * * * * * * [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] (Other Proceedings) * * * * * * * * * * * * * * 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 office. (Signature Page to Excerpt of Minutes -June 20, 2016 -Series 2016-A) EXCERPT OF MINUTES OF A MEETING OF THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS HELD ON JULY 11, 2016 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: Present: Vice-Mayor Karl F. Ryan, Commissioners Jon Blanchard, Trent Davis and Randall Absent: Mayor Kaye J. Crawford The Vice-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 duly given, bids for the purchase of General Obligation Internal Improvement Bonds, Series 2016-A, dated July 26, 2016, of the City had been received. A tabulation of said bids is set forth as EXHIBIT A hereto. Thereupon, the governing body reviewed and considered the bids and it was found and determined that the bid of Robert W. Baird & Co., Inc., Milwaukee, Wisconsin, 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 2016- A, 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 Davis moved that said Ordinance be passed. The motion was seconded by Commissioner Blanchard. Said Ordinance, having been approved by a first reading on June 20, 2016, 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: Vice-Mayor Karl F. Ryan, Commissioners Jon Blanchard, Trent Davis and Randall Hardy. Nay: ---------------------------- Thereupon, the Vice-Mayor declared said Ordinance duly passed and the Ordinance was then duly numbered Ordinance No. 16-10838 was signed and approved by the Vice-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 ThfPROVEMENT BONDS, SERIES 2016-A, OF THE CITY OF SALINA, KANSAS, PREVIOUSLY AUTHORIZED BY ORDINANCE NO. 16-10838 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 Hardy moved that said Resolution be adopted. The motion was seconded by Commissioner Davis. 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: Vice-Mayor Karl F. Ryan, Commissioners Jon Blanchard, Trent Davis and Randall Hardy. Nay:------------------------ Thereupon, the Vice-Mayor declared said Resolution duly adopted and the Resolution was then duly numbered Resolution No. 16-7380 and was signed by the Vice-Mayor and attested by the Clerk. ************** (Other Proceedings) [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 2 On motion duly made, seconded and carried, the meeting thereupon adjourned. CERTIFICATE 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 office. (Signature Page to Excerpt of Minutes -July 11, 2016 -Series 2016-A) EXH.IBITA BID TABULATION CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2016-A A-1 j2:22:52 p.m. COST Upcoming Calendar Overview Compare Summary Bid Results Salina $6,745,000 General Obligation Internal Improvement Bonds, Series 2016-A The following bids were submitted using PARJTv® and displayed ranked by lowest TIC. Click on the name of each bidder to see the respective bids. Bid Award* Bidder Name TIC D Robert W. Baird & Co. Inc. 2.288958 D Hutchinson Shockev Erlev & Co. 2.315394 D Ravmond James & Associates Inc. 2.439457 *Awarding the Bonds to a specific bidder will provide you with the Reoffering Prices and Yields. © 1981-2002 i-Deal LLC, All rights reserved, Trademarks Page 1 of 1 https://www.newissuehome.i-deal.com/Parity /asp/main.asp?frame=content&page=parity Result&c... 7/12/2016 EXHIBITB BID OF PURCHASER B-1 .. TO: Shandi Wlelcs, Clerk OfflCIAL BID FORM PROPOSAL FOR TH£ PURCHASE OF CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVfMENl BONDS. SERIES 2016-A JULY II, 2016 City orSaliDa, Kansu For Sfi, 7•4',000• principal amount of General Obligation Internal Improvement Bonds, Series 2016-A, of the Clay of Salina, Kansas, 10 be doled July 26, 2016, as dcsi:n1icd in fie Nolke ofBond Sale dated July S, 2016, imld Bonds lo bear lntcrcst u follows: SlaCecl AIIDQ( Staccd Aaaaal Mahlrit)' Prillelpal Raaeor Matarlly Prlllclpal Rate•' Qstebcc I Am111111· IDIW!!. Oiillllllt l ~ID!IIIDf Jalma1 1017 $235,000 % 2027 $335,000 % BP 2018 275,000 % 2028 340,000 % ~~ttzw,J 2019 280,000 % 2029 350,000 % 2020 285,000 " 2030 360,000 % oN 2021 290,000 % 2031 375,000 " 2022 300,000 " 2032 385,000 % "1'rlrut£D 2023 305,000 " 2033 395,000 " PM~. 202'4 315,000 % 2034 410,000 % 2025 320,000 % 203S 425,000 % 2026 325,000 % 2036 440.000 "' the undenisncd will pay Che pun:hasc prii:e ror tho Bonds set ronh below, plus accnicd interest to lhc date of delivery. PrincipalAmoWII .•.. _ ...................................................................................................................... -....................... S6,74s,ooo.oo· Phi.I Premium (If any) .......... _ ................................................................................................................ _______ _ Total Purchase Price ....................................................................................... -................................. $~------- Total interest cost to malurity 1t lbc rates specified .......................................................................... s. _______ _ Net inten:tt cost (acijusied tor Premium) ............................................................................................ $. _______ _ True Interest Cost • , ............................................................................................................................................... ___ _ 0 Tbt Bidder elects to have the followins Tenn Bonds: Maturity Dale \0nn Amount* October I, to S ____ _ October I,= lo S __ "wbjcct IP mlllldalol)' redemption requiffmenls in Che amounlS and 11 the limes shown 11bove. Thi, proposal is 1ul!)ecl lo AU 1enns ud conditlom contained In lbc Notice, and if the undcnipcd ii the SuccessJW Bidder, the wulcnisned will comply with all of the provisions contahlcd In Che Notice A cashier', or c:enifted cbci:lt or a Wft tnwf'cr in the amount of2.00% of lb= principal 111DOunt of the Series 2016-A Bonds payable to tho order of the 1D11Cr, submitted in tho manner 1e1 forth ln the 'Notice 11CCOmpanlcs Ibis proposal as an mdcnc:c or good fiaidt. The acceptance of this proposal by tbe Issuer by executlo~below lhaU co 1111 between the Issuer and the S11tX:Csslul Bidder for purposes of complyin1 with Rule ISc:2· 12 of the Secwilies IDd llxc io lb agreement for purpose• of the laws or lhe State of Kansas. ~-- Submitted by: V ~ (Usr ACCOUNT MEMBERS oN REVERSE> ey· ~ r A ~ A Telephone N~. C A 7 to$: =~J ACCEPTANCE Punlllll'lt lo action duly tabn by the Govemin, Body oflhe City of Salina. Kanas, the above proposal is hereby accepted on Jaly 11, 2016. Attest: NOTE: No addldom or olteralions In the above proposal form shall be made. and any cl'lllwes may cause rejection or any bid. Sealed bids may be flied with !ho Clerk. Shandi Wicks, 300 West Ash, Salina, Kansas 67402, &csl.milc bids may be filed with the Clerlt, Fu No. (785) 309• 5738 orclc,tronlc bids may be submitted via PAR/1'r-, ator prior to 12:00Noon, Ceatral Tune, on July II, 2016. Any bid re=vcd afler sucb time will aot be accepeed or shall be returned lo the bidder. • l'n//mlnary; s11bject lo cha11ge as ducrllwd In drt Notice of Band Sule f -.. City of Salina, Kansas General Obligation Internal Improvement Bonds Series 2016-A (New Money Portion) Pricing Summary Maturity Maturity Type of Bond Coupon Yield Value Price YTM Call Date Call Price Dollar Price 10/01/2017 Serial Coupon 2.000% 0.650% 240,000.00 101.584% -- - 243,801.60 10/01/2018 Serial Coupon 2.000% 0.7800/o 270,000.00 102.632% ---277,106.40 10/01/2019 Serial Coupon 2.000% 0.850% 275,000.00 103.600% - - - 284,900.00 10/01/2020 Serial Coupon 2.000% 0.950% 280,000.00 104.293% - - - 292,020.40 10/0 I /2021 Serial Coupon 3.000% 1.100% 285,000.00 109.541% -. . 312,191.85 I 0/0 I /2022 Serial Coupon 3.000% 1.230% 295,000.00 110.501% . . . 32S,9n.9S 10/01/2023 Serial Coupon 3.000% 1.330% 305,000.00 111.399% . . . 339,766.95 10/01/2024 Serial Coupon 2.000% 1.450% 315,000.00 103.736% C 1.513% 10/01/2023 100.000% 326,768.40 10/01/2025 Serial Coupon 2.000% 1.570% 320,000.00 102.908% C 1.657% 10/01/2023 100.000% 329,305.60 10/01/2026 Serial Coue2n 2.000% 1.700% 325,000.00 102.018% C 1.782% 10/01/2023 100.000% 331,558.50 10/01/2028 Tenn 1 Coupon 2.000% 2.000% 670,000.00 100.000% . . . 670,000.00 10/01/2029 Serial Coupon 2.000% 2.100% 345,000.00 98.852% . . . 341,039.40 I 0/01/2030 Serial Coupon 2.125% 2.200% 355,000.00 99.089% . . . 351,765.95 10/01/2031 Serial Coupon 2.250% 2.300% 360,000.00 99.360% . . . 357,696.00 10/01/2032 Serial Coue2n 2.250% 2.400% 370,000.00 97.996% -. . 362,585.20 10/01/2033 Serial Coupon 2.375% 2.500% 375,000.00 98.261% . . . 368,478.75 I 0/01/2034 Serial Coupon 2.5000/o 2.550% 385,000.00 99.274% . . . 382,204.90 10/01/2035 Serial Coupon 2.5000/o 2.600% 395,000.00 98.495% . . -389,055.25 10/01/2036 Serial Coupon 2.5000/o 2.650% 405,000.00 97.665% -. -395,543.25 Total . --$6,570,000.00 -- - - - $6,681,766.35 Bid lnfonnation ~ - Par Amount of Bonds $6,570,000.00 Reofferin~ Premium or (Discount) 111,766.35 Gross Production $6,681,766.35 Total Underwriters Discount (1.506%! !{98,945.71) Bid (100.195%) 6,582,820.64 Total Purchase Price $6,582,820.64 Bond Y car Dollars $75,286.25 Ave!!§e Life 1 l.459 Years Average Coueon 2.3024789% Net Interest Cost (NIC) 2.2854497% True Interest Cost (TIC) 2.2790278% Series2016-A&Bfinal I NewMoney I 7/11/2016 I 2:23PM George K. Baum & Company Public Finance (BH) Page 8 ·- City of Salinai Kansas General Obligation Internal Improvement Bonds Series 2016-A (New Money Portion) Debt Service Schedule Date Prlnclpal Coupon Interest Total P+I Flscal Total 07/26/2016 -. --. 04/01/2017 - - 101,981.25 101,981.25 - 10/01/2017 240,000.00 2.000% 74,925.00 314,925.00 416,906.25 04/01/2018 -. 72,525.00 72,525.00 - 10/01/2018 270,000.00 2.000"/o 72,525.00 342,525.00 415,050.00 04/01/2019 -. 69,825.00 69,825.00 - 10/01/2019 275,000.00 2.000% 69,825.00 344,825.00 414,650.00 04/01/2020 . . 67,075.00 67,075.00 . 10/01/2020 280,000.00 2.000% 67,075.00 347,075.00 414,150.00 04/01/2021 . -64,275.00 64,275.00 . 10/01/2021 285,000.00 3.00(>-lo 64,275.00 349,275.00 413,SS0.00 04/01/2022 . -60,000.00 60,000.00 - 10/01/2022 295,000.00 3.000% 60,000.00 355,000.00 415,000.00 04/01/2023 . -S5,S7S.OO SS,S7S.OO . 10/01/2023 305,000.00 3.000% SS,S7S.OO 360,575.00 416,150.00 04/01/2024 --51,000.00 Sl,000.00 . 10/01/2024 315,000.00 2.000% Sl,000.00 366,000.00 417,000.00 04/0l/202S -. 47,850.00 47,850.00 - I0/01/202S 320,000.00 2.000% 47,850.00 367,850.00 415,700.00 04/01/2026 - -44,650.00 44,650.00 . 10/01/2026 325,000.00 2.000% 44,650.00 369,650.00 414,300.00 04/01/2027 -. 41,400.00 41,400.00 . 10/01/2027 330,000.00 2.000"/o 41,400.00 371,400.00 412,800.00 04/01/2028 -. 38,100.00 38,100.00 - 10/01/2028 340,000.00 2.000"· 38,100.00 378,100.00 416,200.00 04/01/2029 -. 34,700.00 34,700.00 . 10/01/2029 345,000.00 2.000% 34,700.00 379,700.00 414,400.00 04/01/2030 . -31,250.00 31,250.00 - 10/01/2030 355,000.00 2.125% 31,250.00 386,250.00 417,500.00 04/01/2031 . . 27,478.13 27,478.13 . 10/01/2031 360,000.00 2.250% 27,478.13 387,478.13 414,956.26 04/01/2032 -. 23,428.13 23,428.13 - 10/01/2032 370,000.00 2.250% 23,428.13 393,428.13 416,856.26 04/01/2033 - -19,265.63 19,265.63 - 10/01/2033 375,000.00 2.375% 19,265.63 394,265.63 413,531.26 04/01/2034 . -14,812.SO 14,812.50 . 10/01/2034 385,000.00 2.500% 14,812.SO 399,812.SO 414,625.00 04/01/203.S . . 10,000.00 10,000.00 . 10/01/203.S 395,000.00 2.500% 10,000.00 405,000.00 415,000.00 04/01/2036 --S,062.SO S,062.SO . 10/01/2036 405,000.00 2.SOO'lo S,062.50 410,062.SO 415,125.00 Total $6,!570,000.00 . SI, 733,4!50.03 $8,303,4!50.03 . Yield Statistics Bond Year Dollars $75,286.25 Avcral,!e Life I l.4S9 Years AVCrB§C Coue2n 2.3024789"11, Net Interest Cost (NIC) 2.28S4497% True Interest Cost (TIC) 2.2790278% Bond Yield for Arbitrage Purposes 1.7678752% All Inclusive Cost (AIC) 2.3468384% IRS Fonn 8038 Net lntcmt Cost 2.1479913% Weighted Average Maturity 11.299 Years Seriea 2016-A&B fonal I New Money I 7/11/2016 I 2:23 PM George K. Baum & Company Public Finance (BH) Page 9 ORDINANCE N0.16-10838 OF THE CITY OF SALINA, KANSAS PASSED JULY 11, 2016 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2016-A ORDINANCE NO. 16-10838 AN ORDINANCE AUTHORIZING AND PROVIDING FOR THE ISSUANCE OF GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS, SERIES 2016- A, 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 Jaws of the State; and WHEREAS, pursuant to 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: Allocable Project Descri~tion Ord./Res. No. Authority Princi~al Amount Iron A venue Reconstruction Res. 15-7240 K.S.A. 12-685 et seq. $2,290,699.35 North Ohio Street Res. 15-7183 K.S.A. 12-685 et seq. 1,731,867.47 Fire Headquarters Res. 15-7189 K.S.A. 12-1736 et seq. 2,044,991.70 Centennial Road Res. 16-7325 K.S.A. 12-685 et seq. 502,441.48 Total: $6,570,000.00 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. 10-620 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 2016-A, dated July 26, 2016, 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 2015-1 Notes maturing on August 1, 2016 in the aggregate principal amount of $5,995,000. "Series 2015-1 Notes" means the City's General Obligation Temporary Notes, Series 2015-1, dated July 29, 2015. "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 2016-A, of the City in the principal amount of $6,570,000, for the purpose of providing funds to: (a) pay a portion of the costs of the Improvements; (b) retire the Refunded Notes; and (c) pay costs of issuance of the Bonds. Section 3. Security for the Bonds. The Bonds shall be general obligations of the City payable as to both principal and interest from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the City. The full faith, credit and resources of the City are hereby irrevocably pledged for the prompt payment of the principal of and interest on the Bonds as the same become due. 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 upon all of the taxable tangible property within the City in the manner provided by law. 2 The taxes 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 shall be deposited in the Bond and Interest Fund. If at any time said taxes are not collected in time to pay the principal of or interest on the Bonds when due, the Treasurer is hereby authorized and directed to pay 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 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] 3 .. ---· ,.,. ~ V ,-c-1... Mayor , ..So--Q. , c-. (Signature Page to Bond Ordinance-Series 2016-A Bonds) Publisher's Affidavit I, __ _...C ... b ... o .... ·s ... tyr--"F,.in,._k ____ , being duly sworn declare that I am a T,egaJ Cnmdjnator 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 16-10838 Notice has been correctly published in the entire issue of said newspaper one time, publication being given in the issue of July 15, 2016 CJw:~~ ~ ' Subscribed and sworn to before me, this / st:i. day of {)114' A.O. 20 _/_I!_ Printer's Fee $97.50 ~ MELISSA WI. NDHOlZ 3~~-);lo ;]!.ft OF ~I My Appl Exp. (Pooliahed in the SaHna Journal July 15, 2016) PUBLICATION SUM-MARY OF ORDll'<IANCE NO. 16-10838, PASSED BY THE GOVERNING BODY OF THE Cl1Y OF SALINA, l<ANSAS ON THE 11TH DAY OF .nJLY, 2016 SUMMARY On July 1 1, 20161 the Governing Body OT the Cl1y of Selina, Kansas. adopted Ordinance No. 16-10838, authorizing and proYicllng for the Is- suance of $6,570,000 prlnclPBI amount of Gen-eral Obligation Internal Improvement Bonds. Series 2016-A, of the Cl1y of Salina, Kansas. The purpoee of the lslu· ance of the bonds Is to provide funds to finance certain public improve- ' ments in the Cl1y. In ad- dition, the Ordinance provides for 19curlty of 1he bond&, terma, details and conditions for the 18-auance of the bonds and the rate covenanta for the bonds. The complete text of this ordinance may ba obtained or viewed free of charge at the office of the City Clerk, 300 West Asfl Street, Sallna, Kansas, or on the Cl1y's official website address. www.aau:i,~ov, where a uctlon of the original orlflnance will be available for a minimum of one weak following this summary publk:alion. This eummary II certi- fied this 11th day of July, 2016 by the city attor- ney. (11) PUBLICATION SUMMARY OF ORDINANCE NO. 10838, PASSED BY THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS ON THE 11 TH DAY OF JULY, 2016 SUMMARY On July 11, 2016, the Governing Body of the City of Salina, Kansas, adopted Ordinance No. 10838, authorizing and providing for the issuance of $6,570,000 principal amount of General Obligation Internal Improvement Bonds, Series 2016-A, of the City of Salina, Kansas. The purpose of the issuance of the bonds is to provide funds to finance certain public improvements in 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. e ified this 11th day ofJuly, 2016. Publish one time and return one Proof of Publication to the City Clerk and one to the City Attorney. RESOLUTION NO. 16-7380 OF THE CITY OF SALINA, KANSAS ADOPTED JULY 11, 2016 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2016-A Section 101. Section 201. Section 202. Section 203. Section 204. Section 205. Section 206. Section 207. Section 208. Section 209. Section 210. Section 211. Section 212. Section 213. Section 301. Section 302. Section 303. Section 401. Section 402. Section 501. Section 502. Section 503. Section 504. Section 505. Section 506. Section 507. Section 601. Section 602. TABLE OF CONTENTS ARTICLE I DEFINITIONS Definitions of Words and Terms ................................................................................... 1 ARTICLE II AUTHORIZATION AND DETAILS OF THE BONDS Authorization of the Bonds ........................................................................................... 8 Description of the Bonds ............................................................................................... 8 Designation of Paying Agent and Bond Registrar ......................................................... 9 Method and Place of Payment of the Bonds ................................................................ 10 Payments Due on Saturdays, Sundays and Holidays .................................................. 10 Registration, Transfer and Exchange of Bonds ........................................................... 10 Execution, Registration, Authentication and Delivery of Bonds ................................ 11 Mutilated, Lost, Stolen or Destroyed Bonds ............................................................... 12 Cancellation and Destruction of Bonds Upon Payment. ............................................. 12 Book-Entry Bonds; Securities Depository .................................................................. 12 Nonpresentment of Bonds ........................................................................................... 14 Preliminary and Final Official Statement. ................................................................... 14 Sale of the Bonds ......................................................................................................... 14 ARTICLE ill REDEMPTION OF BONDS Redemption by Issuer .................................................................................................. 14 Selection of Bonds to be Redeemed ............................................................................ 15 Notice and Effect of Call for Redemption ................................................................... 16 ARTICLE IV SECURITY FOR BONDS Security for the Bonds ................................................................................................. 18 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 Creation of Funds and Accounts ................................................................................. 18 Deposit of Bond Proceeds ........................................................................................... 19 Application of Moneys in the Improvement Fund; Redemption of Refunded Notes .. 19 Substitution of Improvements; Reallocation of Proceeds ........................................... 19 Application of Moneys in Debt Service Account.. ...................................................... 19 Application of Moneys in the Rebate Fund ................................................................. 20 Deposits and Investment of Moneys ........................................................................... 20 ARTICLE VI DEFAULT AND REMEDIES Remedies ..................................................................................................................... 21 Limitation on Rights of Owners .................................................................................. 21 Section 603. Section 701. Section 801. Section 802. Section 901. Section 902. Section 1001. Section 1002. Section 1003. Section 1004. Section 1005. Section 1006. Section 1007. Section 1008. Section 1009. Remedies Cumulative .................................................................................................. 21 ARTICLE VII DEFEASANCE Defeasance .................................................................................................................... 22 ARTICLE VIII TAX COVENANTS General Covenants ...................................................................................................... 22 Survival of Covenants ................................................................................................. 23 ARTICLE IX CONTINUING DISCLOSURE REQUIREMENTS Disclosure Requirements ............................................................................................. 23 Failure to Comply with Continuing Disclosure Requirements ................................... 23 ARTICLE X MISCELLANEOUS PROVISIONS Annual Audit. .............................................................................................................. 23 Amendments ................................................................................................................ 23 Notices, Consents and Other Instruments by Owners ................................................. 24 Notices ......................................................................................................................... 25 Electronic Transactions ............................................................................................... 25 Further Authority ......................................................................................................... 25 Severability .................................................................................................................. 25 Governing Law ............................................................................................................ 26 Effective Date .............................................................................................................. 26 EXl{]BJT A -FORM OF BONDS ............................................................................................................. A-1 [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 11 RESOLUTION NO. 16-7380 A RESOLUTION PRESCRIBING THE FORM AND DETAILS OF AND AUTHORIZING AND DIRECTING THE SALE AND DELIVERY OF GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS, SERIES 2016-A, OF THE CITY OF SALINA, KANSAS, PREVIOUSLY AUTHORIZED BY ORDINANCE NO. 16-10838 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 City of Salina, Kansas (the "Issuer") has previously passed the Ordinance authorizing the issuance of the Bonds; and WHEREAS, the Ordinance authorized the Governing Body 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. 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. 1 "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 2016-A, authorized and issued by the Issuer pursuant to the Ordinance and this Bond Resolution. "Business Day" means a day other than a Saturday, Sunday or any day designated as a holiday by the Congress of the United States or by the Legislature of the State and on which the Paying Agent is scheduled in the normal course of its operations to be open to the public for conduct of its operations. "Cede & Co." means Cede & Co., as nominee ofDTC and any successor nominee ofDTC. "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 26, 2016. "Debt Service Account" means the Debt Service Account for General Obligation Internal Improvement Bonds, Series 2016-A 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: (a) United States Government Obligations that are not subject to redemption in advance of their maturity dates; or 2 (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 that 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, as may be amended and supplemented, 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 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. "Governing Body" means the City Commission of the Issuer. "Improvement Fund" means the Improvement Fund for General Obligation Internal Improvement Bonds, Series 2016-A 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, 201 7. "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 67 402 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., Inc. 777 East Wisconsin Ave. Milwaukee, Wisconsin 53202 (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. 16-10838 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 Article VII 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); (i) 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 mµnicipality 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 (f), 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 areoffering premium of $111,766.35, less an underwriting discount of$98,945.71. 6 "Purchaser" means Robert W. Baird & Co., Inc., Milwaukee, Wisconsin, 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 2016-A 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 Fund" means the Redemption Fund for Refunded Notes created pursuant to Section 501 hereof. "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 2015-1 Notes maturing on August 1, 2016, in the aggregate principal amount of $5,995,000. "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 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. "Securities Depository" means, initially, DTC, and its successors and assigns. "Series 2015-1 Notes" means the Issuer's General Obligation Temporary Notes, Series 2015-1, dated July 29, 2015. "Special Record Date" means the date fixed by the Paying Agent pursuant to Article II hereof for the payment of Defaulted Interest. "Standard & Poor's" or "S&P" means S&P Global Ratings, a division of S&P Global 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. 7 "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 Article Vhereof. "Term Bonds" means the Bonds scheduled to mature in the year 2028. "2028 Term Bonds" means the Bonds scheduled to mature in the year 2028. "Treasurer" means the duly appointed and/or elected Treasurer of the Issuer or, m 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 previously authorized and directed to be issued pursuant to the Ordinance in the principal amount of $6,570,000, for the purpose of providing funds to: (a) pay a portion of the costs of the Improvements; (b) retire the Refunded Notes; and ( c) pay Costs of Issuance. 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: 8 SERIAL BONDS Stated Maturity Principal Annual Rate Stated Maturity Principal Annual Rate October 1 Amount of Interest October 1 Amount of Interest 2017 $240,000 2.000% 2026 $325,000 2.000% 2018 270,000 2.000% 2029 345,000 2.000% 2019 275,000 2.000% 2030 355,000 2.125% 2020 280,000 2.000% 2031 360,000 2.250% 2021 285,000 3.000% 2032 370,000 2.250% 2022 295,000 3.000% 2033 375,000 2.375% 2023 305,000 3.000% 2034 385,000 2.500% 2024 315,000 2.000% 2035 395,000 2.500% 2025 320,000 2.000% 2036 405,000 2.500% TERM BONDS Stated Maturity Principal Annual Rate October 1 Amount of Interest 2028 $670,000 2.000% 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 ofK.S.A. 10-501 et seq. and K.S.A. 10-620 et seq., respectively. 9 Section 204. Method and Place of Payment of the Bonds. The principal of, or Redemption Price, and interest on the Bonds shall be payable in any coin or currency which, on the respective dates of payment thereof, is legal tender for the payment of public and private debts. The principal or Redemption Price of each Bond shall be paid at Maturity to the Person in whose name such Bond is registered on the Bond Register at the Maturity thereof, upon presentation and surrender of such Bond at the principal office of the Paying Agent. The interest payable on each Bond on any Interest Payment Date shall be paid to the Owner of such Bond as shown on the Bond Register at the close of business on the Record Date for such interest (a) by check or draft mailed by the Paying Agent to the address of such Owner shown on the Bond Register or at such other address as is furnished to the Paying Agent in writing by such Owner; or (b) in the case of an interest payment to Cede & Co. or any Owner of $500,000 or more in aggregate principal amount of Bonds, by electronic transfer to such Owner upon written notice given to the Bond Registrar by such Owner, not less than 15 days prior to the Record Date for such interest, containing the electronic transfer instructions including the bank ABA routing number and account number to which such Owner wishes to have such transfer directed. Notwithstanding the foregoing provisions of this Section, any Defaulted Interest with respect to any Bond shall cease to be payable to the Owner of such Bond on the relevant Record Date and shall be payable to the Owner in whose name such Bond is registered at the close of business on the Special Record Date for the payment of such Defaulted Interest, which Special Record Date· shall be 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. 10 Bonds may be transferred and exchanged only on the Bond Register as provided in this Section. Upon surrender of any Bond at the principal office of the Bond Registrar, the Bond Registrar shall transfer or exchange such Bond for a new Bond or Bonds in any Authorized Denomination of the same Stated Maturity and in the same aggregate principal amount as the Bond that was presented for transfer or exchange. Bonds presented for transfer or exchange shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in a form and with guarantee of signature satisfactory to the Bond Registrar, duly executed by the Owner thereof or by the Owner's duly authorized agent. In all cases in which the privilege of transferring or exchanging Bonds is exercised, the Bond Registrar shall authenticate and deliver Bonds in accordance with the provisions of this Bond Resolution. The Issuer shall pay the fees and expenses of the Bond Registrar for the registration, transfer and exchange of Bonds provided for by this Bond Resolution and the cost of printing a reasonable supply of registered bond blanks. Any additional costs or fees that might be incurred in the secondary market, other than fees of the Bond Registrar, are the responsibility of the Owners of the Bonds. In the event any Owner fails to provide a correct taxpayer identification number to the Paying Agent, the Paying Agent may make a charge against such Owner sufficient to pay any governmental charge required to be paid as a result of such failure. In compliance with Code § 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 Article III 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 this Article II. The Issuer and the Paying Agent may deem and treat the Person in whose name any Bond is registered on the Bond Register as the absolute Owner of such Bond, whether such Bond is overdue or not, for the purpose of receiving payment of, or on account of, the principal or Redemption Price of and interest on said Bond and for all other purposes. All payments so made to any such Owner or upon the Owner's order shall be valid and effective to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid, and neither the Issuer nor the Paying Agent shall be affected by any notice to the contrary. At reasonable times and under reasonable regulations established by the Bond Registrar, the Bond Register may be inspected and copied by the Owners ( or a designated representative thereof) of 10% or more in principal amount of the Bonds then Outstanding or any designated representative of such Owners whose authority is evidenced to the satisfaction of the Bond Registrar. Section 207. Execution, Registration, Authentication and Delivery of Bonds. Each of the Bonds, including any Bonds issued in exchange or as substitutions for the Bonds initially delivered, shall be executed for and on behalf of the Issuer by the manual or facsimile signature of the Mayor, attested by the manual or facsimile signature of the Clerk, and the seal of the Issuer shall be affixed thereto or imprinted thereon. The Mayor and Clerk are hereby authorized and directed to prepare and execute the Bonds in the manner herein specified, and to cause the Bonds to be registered in the office of the Clerk, which registration shall be evidenced by the manual or facsimile signature of the Clerk with the seal of the Issuer affixed thereto or imprinted thereon. The Bonds shall also be registered in the office of the 11 State Treasurer, which registration shall be evidenced by the manual or facsimile signature of the State Treasurer with the seal of the State Treasurer 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 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 & 12 Co., the nominee for the Securities Depository, and no Beneficial Owner will receive certificates representing their respective interests in the Bonds, except in the event the Bond Registrar issues Replacement Bonds as provided in this Section. It is anticipated that during the term of the Bonds, the Securities Depository will make book-entry transfers among its Participants and receive and transmit payment of principal of, premium, if any, and interest on, the Bonds to the Participants until and unless the Bond Registrar authenticates and delivers Replacement Bonds to the Beneficial Owners as described in the following paragraph. The Issuer may decide, subject to the requirements of the Operational Arrangements ofDTC (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)(l) or (a)(2) of this paragraph, the Issuer, with the consent of the Bond Registrar, may select a successor securities depository in accordance with the following paragraph to effect book-entry transfers. In such event, all references to the Securities Depository herein shall relate to the period of time when the Securities Depository has possession of at least one Bond. Upon the issuance of Replacement Bonds, all references herein to obligations imposed upon or to be performed by the Securities Depository shall be deemed to be imposed upon and performed by the Bond Registrar, to the extent applicable with respect to such Replacement Bonds. If the Securities Depository resigns and the Issuer, the Bond Registrar or Owners are unable to locate a qualified successor of the Securities Depository in accordance with the following paragraph, then the Bond Registrar shall authenticate and cause delivery of Replacement Bonds to Owners, as provided herein. The Bond Registrar may rely on information from the Securities Depository and its Participants as to the names of the Beneficial Owners of the Bonds. The cost of printing, registration, authentication, and delivery of Replacement Bonds shall be paid for by the Issuer. In the event the Securities Depository resigns, is unable to properly discharge its responsibilities, or is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, the Issuer may appoint a successor 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 13 receipt of a Bond or Bonds for cancellation shall cause the delivery of Bonds to the successor Securities Depository in an Authorized Denominations and form as provided herein. Section 211. Nonpresentment of Bonds. If any Bond is not presented for payment when the principal thereof becomes due at Maturity, if funds sufficient to pay such Bond have been made available to the Paying Agent all liability of the Issuer to the Owner thereof for the payment of such Bond shall forthwith cease, determine and be completely discharged, and thereupon it shall be the duty of the Paying Agent to hold such funds, without liability for interest thereon, for the benefit of the Owner of such Bond, who shall thereafter be restricted exclusively to such funds for any claim of whatever nature on his part under this Bond Resolution or on, or with respect to, said Bond. If any Bond is not presented for payment within four (4) years following the date when such Bond becomes due at Maturity, the Paying Agent shall repay, without liability for interest thereon, to the Issuer the funds theretofore held by it for payment of such Bond, and such Bond shall, subject to the defense of any applicable statute of limitation, thereafter be an unsecured obligation of the Issuer, and the Owner thereof shall be entitled to look only to the Issuer for payment, and then only to the extent of the amount so repaid to it by the Paying Agent, and the Issuer shall not be liable for any interest thereon and shall not be regarded as a trustee of such money. Section 212. Preliminary and Final Official Statement. The Preliminary Official Statement dated July 5, 2016, 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 Finance Director 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 the SEC Rule and 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 2024, and thereafter, will be subject to redemption and payment prior to their Stated Maturity on October 1, 2023, 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. 2028 Term Bonds. The 2028 Term Bonds shall be subject to mandatory redemption and payment prior to Stated Maturity pursuant to the mandatory redemption requirements of this Section at a Redemption Price equal to 100% of the principal amount thereof plus accrued interest to the Redemption Date. The taxes levied in Article IV 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 2028 Term Bonds: *Final Maturity Principal Amount $330,000 340,000 Year 2027 2028* 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 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 15 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 and the State Treasurer. 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. 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 tum, will notify or cause to be notified the Beneficial Owners. Any failure on the part of the Securities Depository 16 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 ofredemption 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 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; Tran sf er to Debt Service Account. The Governing Body 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 upon all of the taxable tangible property within the Issuer in the manner provided by law. The taxes ref erred 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 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. ARTICLEV 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 2016-A. (b) Redemption Fund for Refunded Notes. ( c) Debt Service Account for General Obligation Internal Improvement Bonds, Series 2016- A (within the Bond and Interest Fund). (d) Rebate Fund for General Obligation Internal Improvement Bonds, Series 2016-A. The Funds and Accounts established herein shall be administered in accordance with the provisions of this Bond Resolution so long as the Bonds are Outstanding. 18 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, if any, shall be deposited in the Debt Service Account. (b) The sum of $6,070,353.82 shall be deposited into the Redemption Fund. (c) The remaining balance of the proceeds derived from the sale of the Bonds shall be deposited in the Improvement Fund. Section 503. Application of Moneys in the Improvement Fund; Redemption of Refunded Notes. Moneys in the hnprovement 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 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; (b) paying interest on the Bonds during construction of the Improvements; ( c) paying Costs of Issuance; and ( d) transferring any amounts to the Rebate Fund required by this Article V. 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 hnprovement and the issuance of general obligation bonds to pay the cost of the Substitute Improvement has been duly authorized by the Governing Body 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 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; (2) the reallocation shall not cause the proceeds of the Bonds allocated to any Improvement to exceed the Financeable Costs of the Improvement; and (3) the reallocation will not adversely affect the tax-exempt status of the Bonds under State or federal law. Section 505. Application of Moneys in the Redemption Fund. Moneys in the Redemption Fund shall be paid and transferred to the Refunded Notes Paying Agent, with irrevocable instructions to apply such amount to the payment of the Refunded Notes at their maturity on August 1, 2016. Any moneys remaining in the Redemption Fund not needed to retire the Refunded Notes shall be transferred to the Debt Service Account. Section 506. 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 19 Paying Agent as and when the same become due, and to forward such sums to the Paying Agent in a manner which ensures that the Paying Agent will receive immediately available funds in such amounts on or before the Business Day immediately preceding the dates when such principal, interest and fees of the Bond Registrar and Paying Agent will become due. If, through the lapse of time or otherwise, the Owners of Bonds are no longer entitled to enforce payment of the Bonds or the interest thereon, the Paying Agent shall return said funds to the Issuer. All moneys deposited with the Paying Agent shall be deemed to be deposited in accordance with and subject to all of the provisions contained in this Bond Resolution and shall be held in trust by the Paying Agent for the benefit of the Owners of the Bonds entitled to payment from such moneys. Any moneys or investments remaining in the Debt Service Account after the retirement of the Bonds shall be transferred and paid into the Bond and Interest Fund. Section 507. Application of Moneys in the Rebate Fund. (a) There shall be deposited in the Rebate Fund such amounts as are required to be deposited therein pursuant to the Federal Tax Certificate. All money at any time deposited in the Rebate Fund shall be held in trust, to the extent required to satisfy the Rebate Amount (as defined in the Federal Tax Certificate), for payment to the United States of America, and neither the Issuer nor the Owner of any Bonds shall have any rights in or claim to such money. All amounts deposited into or on deposit in the Rebate Fund shall be governed by this Section and the Federal Tax Certificate. (b) The Issuer shall periodically determine the arbitrage rebate, if any, under Code § 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 508. 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 20 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. 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 21 duties of the Owners shall continue as if no such suit, action or other proceedings had been brought or taken. ARTICLE VII DEFEASANCE Section 701. Defeasance. When any or all of the Bonds, redemption premium, if any, or scheduled interest payments thereon have been paid and discharged, then the requirements contained in this Bond Resolution and the pledge of the Issuer's faith and credit hereunder and all other rights granted hereby shall terminate with respect to the Bonds or scheduled interest payments thereon so paid and discharged. Bonds, redemption premium, if any, or scheduled interest payments thereon shall be deemed to have been paid and discharged within the meaning of this Bond Resolution if there has been deposited 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 Article III hereof. 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. 22 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. 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 902. Failure to Comply with Continuing Disclosure Requirements. In the event the Issuer fails to comply in a timely manner with its covenants contained in the preceding section, the Purchaser and/or any Beneficial Owner may make demand for such compliance by written notice to the Issuer. In the event the Issuer does not remedy such noncompliance within 10 days of receipt of such written notice, the Purchaser or any Beneficial Owner may in its discretion, without notice or demand, proceed to enforce compliance by a suit or suits in equity for the specific performance of such covenant or agreement contained in the preceding section or for the enforcement of any other appropriate legal or equitable remedy, as the Purchaser and/or any Beneficial Owner shall deem effectual to protect and enforce any of the duties of the Issuer under such preceding section. 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. ARTICLEX 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 shaH 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 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 23 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; (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 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 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 24 and the Paying Agent with regard to any action taken, suffered or omitted under any such instrument, namely: (a) The fact and date of the execution by any person of any such instrument may be proved by a certificate of any officer in any jurisdiction who by law has power to take acknowledgments within such jurisdiction that the person signing such instrument acknowledged before such officer the execution thereof, or by affidavit of any witness to such execution. (b) The fact of ownership of Bonds, the amount or amounts, numbers and other identification of Bonds, and the date of holding the same shall be proved by the Bond Register. In determining whether the Owners of the requisite principal amount of Bonds Outstanding have given any request, demand, authorization, direction, notice, consent or waiver under this Bond Resolution, Bonds owned by the Issuer shall be disregarded and deemed not to be Outstanding under this Bond Resolution, except that, in determining whether the Owners shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Bonds which the Owners know to be so owned shall be so disregarded. Notwithstanding the foregoing, Bonds so owned which 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 confirrnation 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. 25 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. 26 'V1~Mayor 1 $~ (Signature Page to Bond Resolution -Series 2016-A) REGISTERED NUMBER EXHIBIT A (FORM OF BONDS) 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 2016-A Interest Rate: Maturity Date: REGISTERED OWNER: PRINCIPAL AMOUNT: Dated CUSIP: Date: July 26, 2016 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 I and October 1 of each year, commencing April 1, 2017 (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 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 2016-A," aggregating the principal amount of $6,570,000 (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. 12-685 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 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. Redemption Prior to Maturity. The Bonds are subject to redemption prior to maturity, as provided in the Bond Resolution. 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, TIDS 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 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. (Facsimile Seal) ATTEST: By: (facsimile) Clerk CITY OF SALINA, KANSAS By: (facsimile) Mayor CERTIFICATE OF AUTHENTICATION AND REGISTRATION This Bond is one of a series of General Obligation Internal Improvement Bonds, Series 2016-A, 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 By: ____________ _ 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 26, 2016. WITNESS my hand and official seal. (Facsimile Seal) By: ----~(f:~a~cs~itn1_·1~e)~------- 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) By: ------------- 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: By _______________ ~ 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) TRANSCRIPT CERTIFICATE $6,570,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2016-A DATED JULY 26, 2016 The undersigned Vice-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 11, 2016, 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 Kaye Crawford Jon Blanchard Aaron Householter Barbara Shirley Norman M. Jennings Samantha Angell Aaron Peck Luci Larson John K. Vanier, II Debbie Divine Kristin M. Seaton Karl Ryan Kaye Crawford Title Mayor Mayor Mayor Mayor Mayor Mayor Mayor Mayor Mayor Mayor Mayor Vice-Mayor Vice-Mayor Term of Office April 18, 2016 to Present April 20, 2015 to April 18, 2016 April 21, 2014 to April 20, 2015 April 15, 2013 to April 21, 2014 April 19, 2012 to April 15, 2013 April 18, 2011 to April 19, 2012 April 19, 2010 to April 18, 2011 April 13, 2009 to April 19, 2010 April 14, 2008 to April 13, 2009 April 19, 2005 to April I 7, 2006 April 16, 2001 to April 14, 2003 April 18, 2016 to Present April 20, 2015 to April 18, 2016 Jon R. Blanchard Vice-Mayor April 21, 2014 to April 20, 2015 Randall Hardy Commissioner April 15, 2013 to Present Trent Davis Commissioner September 8, 2014 to Present Karl Ryan Commissioner April 20, 2015 to Present Kaye Crawford Commissioner April 18, 2011 to Present Jon Blanchard Commissioner April 15, 2013 to Present Barbara Shirley Commissioner April 18, 2011 to April 20, 2015 Aaron Householter Commissioner April 18, 2011 to April 21, 2014 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 Aaron Peck Commissioner April 16, 2007 to April 18, 2011 TomArpke 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 Shandi Wicks Clerk March 10, 2014 to Present Lieu Ann Elsey Clerk April 1, 2001 to December 16, 2013 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 Vice-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 and Purpose of Bonds. The Bonds are being issued pursuant to and in full compliance with the Constitution and statutes of the State, including particularly K.S.A. 12-685 et seq. and K.S.A. 12-1736 et seq., as amended, Ordinance No. 16-10838 and Resolution No. 16-7380 of the Issuer duly adopted by the governing body of the Issuer on July 11, 2016 (collectively, the "Bond Resolution") of the Issuer for the purpose of: (a) paying a portion of the costs of certain public improvements (the "Improvements"); and (b) retiring on August 1, 2016 the following temporary notes of the Issuer, issued to temporarily finance the Improvements (the "Refunded Notes"): Description General Obligation Temporary Notes Series 2015-1 Dated Date July 29, 2015 Maturity Date August 1, 2016 Amount $5,995,000 The total principal amount of the Bonds does not exceed the cost of the Improvements for which the Bonds are issued. 2 The interest rates on the Bonds on the date of the sale of the Bonds were within the maximum legal limit for interest rates under K. S .A. 10-1009, as amended. 9. Bonded Indebtedness. The currently outstanding applicable indebtedness of the Issuer, including the Bonds, does not exceed any applicable constitutional or statutory limitations. A Schedule of Bonded Indebtedness, which sets forth all currently outstanding general obligation indebtedness of the Issuer, is attached hereto as Exhibit A and made a part hereof by reference as though fully set out herein. 10. Valuation. The total assessed valuation of the taxable tangible property within the Issuer for the year 2015 was $463,030,260. 11. Non-litigation. There is no controversy, suit or other proceedings of any kind pending or threatened wherein or whereby any question is raised or may be raised, questioning, disputing or affecting in any way: (a) the legal organization of the Issuer or its boundaries; (b) the right or title of any of its officers to their respective offices; (c) the legality of any official act shown to have been done in the Transcript; ( d) the constitutionality or validity of the indebtedness represented by the Bonds shown to be authorized in the Transcript; ( e) the validity of the Bonds, or any of the proceedings had in relation to the authorization, issuance or sale thereof; or (f) the levy and collection of a tax to pay the principal of and interest on the Bonds. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 3 '\J't 'c!.Jt Mayor , ~c. (Signature Page to Transcript Certificate -Series 2016-A Bonds) EXHIBIT A SCHEDULE OF OUTSTANDING GENERAL OBLIGATION INDEBTEDNESS (as of July 26, 2016) General Obligation Bonds: Date Amount Final Amount Issued Series Purpose of Issue . Maturitl( Outstanding 07-15-06 2006-B Internal Improvements $885,000 10-01-21 $ 255,000 06-15-07 2007-A Internal Improvements 6,545,000 10-01-27 3,645,000 07-15-08 2008-A Internal Improvements 3,720,000 10-01-23 2,000,000 12-15-08 2008-B Internal Improvements 3,525,000 07-01-28 2,870,000 07-15-09 2009-A Internal Improvements 23,695,000 10-01-29 13,485,000 05-01-10 2010-A Refunding & Improvement 6,875,000 10-01-25 3,375,000 10-15-10 2010-B Refunding 7,860,000 10-01-23 3,735,000 07-15-11 2011-A Internal Improvements 6,565,000 10-01-31 5,385,000 07-15-12 2012-A Internal Improvements 2,365,000 10-01-27 1,950,000 07-15-12 2012-B Refunding 3,785,000 10-01-20 1,835,000 02-15-13 2013-A Taxable Improvements 1,360,000 10-01-28 1,240,000 07-15-13 2013-B Improvements 4,330,000 10-01-33 3,890,000 07-30-14 2014-A Improvements 7,570,000 10-01-34 7,045,000 07-29-15 2015-A Revenue and Internal Imp. 6,825,000 10-01-35 6,825,000 07-27-16 2016-A Internal Improvements 6,570,000 10-01-36 6,570,000 07-27-16 2016-B Refunding 13,570,000 10-01-31 13,750,000 Total $77,825,000 *Includes the Bonds; excludes the Refunded Bonds. Temporary Notes: Final Original Date Maturity Note Amount Project Series Issued Date Amount Outstandin~ Street & Bldg Imp. 2015-1 07-29-15 08-01-16 $5,995,000 $ 0 Bicentennial Center 2016-1 02-10-16 08-01-17 6,890,000 6,890,000 Field House 2016-2 07-20-16 09-01-19 4,615,000 4,615,000 $11,505,000 *To be paid at maturity with proceeds from the sale of the Series 2016-A Bonds. A-1 CERTIFICATE OF MANUAL SIGNATURE OF THE VICE MAYOR OF THE CITY OF SALINA, KANSAS RECEIVED JUL 18 2016 KRIS W. KOB SECRETARY OF i~z.E IN THE OFFICE OF THE SECRETARY OF STATE OF THE STATE OF KANSAS STATE OF KANSAS COUNTY OF SALINE ) ) ss. ) I, the undersigned, Karl F. Ryan, being duly sworn on oath certify that I am the duly qualified Vice 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. Karl F. Ryan £ ,-e_ -+-~- Subscribed and sworn to before me as of July~. 2016. A • SHANDI L. WICKS ~ Notary Public -State of Kansas My Appl. Expires My commission expires: lJ /29 Ir~ CERTIFICATE OF MANUAL SIGNATURE OF THE CLERK OF THE CITY OF SALINA, KANSAS IN THE OFFICE OF THE SECRETARY OF STATE OF THE STATE OF KANSAS STATE OF KANSAS COUNTY OF SALINE ) ) ss. ) I, the undersigned, Shandi Wicks, being duly sworn on oath certify that I am the duly qualified Clerk of the City of Salina, Kansas, and that the signature appearing below is my signature and I file herewith this certificate pursuant to K.S.A. 75-4001 to 75-4007, inclusive. Subscribed and sworn to before me as of July 14, 2014. (SEAL) My commission expires: '(,tlf:11 I-1 Shandi Wicks _fl • MICHELE R. ORR-MUTHS ~ Notary Public • State of Kansas My Appl. Expires ""8' -\ • RECEIVED JUL 2 2 2014 KRIS W. KOBACH SECRETARY OF STATE REGISTERED NUMBERR-1 REGISTERED $240,000 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. Interest UNITED STATES OF AMERICA STATE OF KANSAS COUNTY OF SALINE ~~-mih. CITY OF SALIN GENERAL OBLIGATION INTERN~ SERIES 20 '-A Rate: 2.000% PRINCIPAL AMOUNT: TW mo TY THOUSAND DOLLARS CUSIP: 794743 6T6 TJ SE PRESENTS: That the City of Salina, in the County of Saline, State of Kansas tn 'ls er"), r value received, hereby acknowledges itself to be indebted and pro~ises to pay to 1)ie .egiste ed ?wner sh?w~ above, or registered assigns, but solely ~rom the source and 111 the manner \he:r.em s ec1,d, the Pnnc1pal Amount shown above on the Matunty Date shown above, unless called or rede ptlon prior to said Maturity Date, and to pay interest thereon at the Interest Rate per annum shown a o:v ( 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, 2017 (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 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 2016-A," aggregating the principal amount of $6,570,000 (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 pre ribing the form and details of the Bonds (collectively, the "Bond Resolution"). The Bonds are ·ssued b the authority of and in full compliance with the provisions, restrictions and limitations of t e Omstitution and laws of the State of Kansas, including K.S .A. 12-685 et seq. and K.S.A. 12-1736 ended, and all other provisions of the laws of the State of Kansas applicable thereto. Redemption Prior to Ma provided in the Bond Resolution. Book-Entry System . J'h · ands re being issued by means of a book-entry system with no physical distribution of 011,d c ttificat_e& o be made except as provided in the Bond Resolution. One Bond certificate with : s ec each dafo on which the Bonds are stated to mature or with respect to each form of Bonds, reg·stere in ti¥. no ·nee name of the Securities Depository, is being issued and required to be deposited wit ti S rities Depository and immobilized in its custody. The book-entry system will evidence positions hel in the Bonds by the Securities Depository's participants, beneficial ownership of the Bonds uthorized 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 inifal registration of the Bonds and the cost of a reasonable supply of bond blanks. The Issuer and the Paymg Agent may deem and treat the person in whose name this Bond is registered on the Bond Register as he a olute owner hereof for the purpose of receiving payment of, or on account of, the princip or emptfon price hereof and interest due hereon and for all other purposes. The Bonds are iss d · ful y, registered form in Authorized Denominations. Authentication. entitled to any security or benefit under the here· ,..._~-..--Authentication and Registration hereon shall h !le b n IT IS HEREBY DECLARED 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 Vice-Mayor ATTEST: By: CERTIFICATE OF AUTHENTICATION AND REGISTRATION This Bond is one of a series of General Obligation Internal Improvement Bonds, Series 2016-A, of the City of Salina, Kansas, described in the within-mentioned Bond Resolution. Registration Date _______ _ Registration Number: 0322-085-072616-850 STATE OF KANSAS ) ) SS. COUNTY OF SALINE ) The undersigned, Clerk of the City o has been duly registered in my office accord,ng Office of the State Treasurer, Topeka, Kansas, as Bond Registrar and Paying Agent By:------------- ~·~ By: ------------- Clerk ERTIFICATE 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) By: ------------- Treasurer of the State of Kansas BOND ASSIGNMENT FOR VALUE RECENED, 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 ________ _ 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: Governing Body City of Salina, Kansas Robert W. Baird & Co., Inc. Milwaukee, Wisconsin Re: GILMORE & BELL, P.C. Attorneys at Law 2405 Grand Boulevard Suite 1100 Kansas City, Missouri 64108 July 26, 2016 i.ng, 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 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 (including any original issue discount properly allocable to an owner of a Bond) 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 have not been designated as "qualified tax-exempt obligations" for purposes of Code§ 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_ ·1ml r a s ffecting creditors' rights generally and by equitable principles, whether considered at 1 · eq · This opinion is given as of its date, and we as e no oblig; on to revise or supplement this opinion to reflect any facts or circumstances that may co 1 to om attention or any changes in law that may occur after the date of this opinion. AGREEMENT BETWEEN ISSUER AND AGENT $6,570,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2016-A DATED JULY 26, 2016 TIDS AGREEMENT, dated as of July 26, 2016, 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: I. APPOINTMENT Issuer hereby appoints or has heretofore appointed the State Treasurer of Kansas to act as Paying Agent, Bond Registrar and Transfer Agent for the Securities. The State Treasurer of Kansas hereby accepts its appointment as the Paying Agent, Bond Registrar and Transfer Agent. II. BASIC DUTIES A. Issuer or its duly authorized representative agrees to furnish Agent the name(s) and address(es) of the initial registered owner(s) of the Securities together with such registered owners' tax identification (social security) number(s), the maturity date(s), denomination(s) and interest rate(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. ill. 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 perfonning 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. S~TEMEN~OFOWNERSH~ 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 equaling 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. G. REPLACEMENT OF SECURITIES If the owner of a Security claims that a Security has been lost, destroyed or wrongfully taken, Issuer shall issue and Agent shall authenticate a replacement Security if the requirements of Section 8-405 of the Uniform Commercial Code are met. Only Agent shall perform this function. An indemnity bond and affidavit of loss shall be provided to Agent and Issuer at the expense of the owner of the Security. Such indemnity bond and affidavit of Joss 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 Optio11al Redemptio11. 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 I. Notice of Redemptio11 . 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 tenns of the Bond Resolution, Agent shall not be required to transfer or exchange any Security begim1ing 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] 4 By: ~ L{)L(LU Cerk (SEAL) CITY OF SALINA, KANSAS By: d{~:f. fic- Vr \sa..Mayor I S.. Q.,:..., OFFICE OF THE TREASURER OF THE STATE OF KANSAS By -~ ~ ? ____ _ DIRECTOR BOND SERVICES (Signature Page to Agreement Between Issuer & Agent-Series 2016-A Bonds) ATTACHMENT "A" SAMPLE $5,000.00000 ........................ Bond Unit X .06875 ........................ Interest Rate 343.750000 Rounded to six decimal places I 360 ........................ Days per year .954861 Rounded to six decimal places X 180 ........................ Day in interest period 171.874980 (Rounded to second decimal= $171.87) Unit interest is then multiplied by the number of units in the maturity. A-1 [APPENDIX/ NOTICE OF CALL FOR MANDATORY REDEMPTION TO THE OWNERS OF CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2016-A, DATED JULY 26, 2016 Notice is hereby given that pursuant to the provisions of Article III of Resolution No. 16-7380 (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, 20LJ (the "Called Bonds"), have been called for mandatory redemption and payment on October 1, 20LJ (the "Redemption Date"), at the principal office of the Treasurer of the State of Kansas ( the "Bond Registrar and Paying Agent"). Maturity Date ( Octoberl) Principal Amount Interest Rate CUSIP 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 Treasurer of the State of Kansas, Topeka, Kansas • .. ~ > .·-··1. ·· ... ,.. . ~- .... 1i Blanket Issuer Letter of Representations [TD ,be Con';)leted by lssuarJ .•. ! . ·': . Attention: Underwriting Department -£1Jgibility The Depository 'Irust Company 55 Water Street; 50th Floor New York, l\"Y 10041-0099 Ladies and Gentlemen: This letter sets forth our undemanding with respect to all issues (the ·'Secwitics1 that ~er shall request be made eligi1,le fo~ deposit.by 'nie Depository Trust Company (·OTC,. · To induce PTC to accept the Securities as eligi~le for deposit at OTC, and to act in accorda. ce with DTC's Rules with respect to the Securities, Issuer represents to OTC that Issuer \\ill comply with the requirements stated in DTC~ Operational Arrangements, as they may be amended from time to time. Received and Accepted: THE DEP05nORYTRUSTCOMP~ ~·:Jc~ . Very bulyyoun, City of Sal:iu.,. hnsas (Tnie,mte Nandr'ndd 300 ll. Ash Stxeel: Sa i>;:J~i:na=., ___ XS 67402-0736 cCl!yJ ..,.,.,Stm__,,> __ ____,,l'Zipl,,_,_ __ 913-826-7240 .. ScHEDULEA (ToB!anketlssuc:rl.etterofRq,raemadons) SAMPLE OFFERING DOCUMENT LANGUAGE DESCRIBING BOOK-ENTRY-ONLY ISSUANCE (Prcpa,ed by~ rnn:rill 11111)' be applicable only ll>CCIIIUll im=) 11 The Depositozy Trust Company {"DTC"}, New York, NY, will act as securities depository for the secmities (the .. Securities"). The Securities will be issued' as fully-registered securities registered in the ttame of Cede&. Co. (DTC's parmersbip nominee) or such other name as may be requested by~ authoru:ed representative of DTC. One fully-registered Security c:emficatc will be issDed for [each isme ofj the Securities, [each] in the aggregate principal amount of IIKm issl=, aod WJ11 be deposited with OTC. [I( however, the aggregate principal amount of [any] issue exceeds SSOO million, one certificate wm be issued with respect to each $500 million of ptjncipa1 amount. and an additional certificate will be issued with respect 10 any remaining principal amount of such issue.] 2. OTC, the world's largest securities depositozy, is a limited-pmpose trust company orpmzed under the New York Banking Law, a "banking organization" wi1hin the meaning of the New York Bankmg Law, a member of the Federal Reserve System, a "clearing COIJ)Ol3.tion" within the meaning of the New Yor:k. Uniform Commercial Code, and a "clearing agency'' registered pursuant to the provisions of Section 17 A or the Securities Exchange· Act of 1934. DTC holds and provides asset servicing fur over 3.S million wucs of U.S. and non-U.S. equity issues, coxporate and municipal debt issues, and money market iDslruments (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 dcposimd securities, through electronic computerized book-entry 1rmsfers and pledges between Direct Participants' accounts. This elimina~ the need for physical movement of securities certificates. Direct Participants include both U.S. and P<>n-U.S. securities brokers and dealers, banks, trust companies, clearing coipmatiom, and C%!1ain other organizatiOllS. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ('"DTCC"). DTCC is the holding company for DTC, National Securities Cleating Corpomtion and F'aed Income Clearing Corpomtion, 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 aI1d dealers, banks, trust companies, and clearing cmporations that clear tbrqugb or maintain a custodial relationship with a Direct Participant, either dircctJy or indirectly f'lndin::ct Participantsj. DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants arc on file with the Securities and Exchange Commission. Mon: infomlaticm about DTC can be found atmvw.dtcc.com BDd www.dtc.org. · 3. Purchases of Securities under the DTC sy£tem mui:t be made by or through Direct Participants, which will receive a credit for the Securities on OTC', records. The ownership interest of each actual purchaser of each Security ("Beneficial Owner") is in tum to be recorded on the Direct and Indirect Participants' JCCOrds. Beneficial Owners will not receive written confirmation from OTC of their pmchasc. Beneficial Owners arc, however, expected to :receive written c:onfimJatjons 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 mtercsts in the Securities are to be accomplished by entries made on the boob of Direct and Inclireet Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive c:erti1icates representing their ownership interests in Securities. except in the event that use of the book-entty system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Sec:urilics deposited by Direct Participants with DTC arc registered in the name ofDTC's partnership nominee, Cede & Co., or such other namc·as may be requested by an authorized representative of DTC. The deposit of Securiiies with DTC and their registration in the name of Cede & Co. or such other OTC nominee do not effect any c:hmge in boneficial ownership. DTC has no knowledge of the actDal 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 Duect and Indirect Participants will remain resp01W1>le for keeping account of their holdings on • behalf of their customers. · · BLOR 0Yl5/0B . ScHEDULEA (To Bbn1ccl Issuer ~ofRepraaualions) 5. Conveyance of notices and other communicatiODS 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 statutmy 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 JeSpeCt to the Securities. such as tcdemptions, tenders. defaults. and proposed amendments to the Security documems. 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 altmnativc. Beneficial Owners may wish to provide their mmcs and addresses to the registrar and request that copies of notices be"providcd directly to them.] "[6. Redemption notices sball be sent to OTC. If less than all of the Securities within an issue are being tedeemt:d, DTC's practice is to detemunc 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 o1her DTC nominee) will ~tor vote with respect to Securities unless authorized by a Dired: Participant in accordance with DTC's MMI Procedures. Under its usual procedures. DTC mails an Omnibus Proxy to Issuer as soon as possible after the n:c:o:d date. The Omrulms Proxy assigns Cede & Co.• s consc:ming or voting rights to those Direct Participams to whose accounts Securities are credited on the record date (idc:ntificd in a listing at1ac:bcd to the Omml>us Proxy). 8. Redemption proceeds, dis1noutions, and dividend paymcms on the Securities will 0be made to Cede & Co., or such other nominee as may be requested by an autborlzed representative of OTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail informauon 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 end customary practices, as is 1hc case wi1h sccwitics held for the accounts of customcn fu beam form or registered in "street name," and will be the responsibility of such Participant and not of D'IC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from tiJnc to time. Payment of redemption 'proceeds. distn'butions, and dividend payments to Cede & Co. tor sach other nominee as may be requested by an au1horized representative of OTC) is the responstl>ility of Issuer or Agent. disbursement of such pll)'JDtl1U to Direct Partic:ipants will be the ICSJ)ODSibility ofDTC, and disbmsemmt of such paymen1S to the Beneficial Owners will be the responsibility of Direct and mttirect Partic:ipanU. [9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tmdered, through its Participant, to rrcndcr/Remarketin&) Agent, and shall effect ddiveiy of such Securities.by causing the Direct P,rticipant to transfer the Participant's interest in the Securities, on DTC's records. to {Tender/Remadteting) Agent. The reqwi:cment for physical delivery ·of Securities in connection with an optional tender or a mandatory parcbase will be deemed satisfied when the ownership rights in the Securities me transferred by Direct Participants on DTC's records and followed by a book-entry ciedit of tendered Securities t.o rrender/R.emarketing] 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 circumstanc:es, in the event that a succc:ssor deporitoey 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 ttansfcrs through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to OTC. 12. The information in this section concerning DTC and DTC's book-entry system bas been obtained fi'om sources that Issuer believes to be reliable, but Issoer takes DO responsioility for 1he accuracy thereof. 8LOR 03/25ID8 UNDERWRITING SAFEKEEPING AGREEMENT BY AND BETWEEN DEPOSITORY TRUST COMPAl\TY AND THE CITY OF SALINA, KANSAS AND THE OFFICE OF THE KANSAS STATE TREASURER $6,570,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2016-A DATED JULY 26, 2016 $13,750,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION REFUNDING BONDS SERIES 2016-B DATED JULY 26, 2016 In order to induce the Depository Trust Company (the "DTC") to accept delivery of the above captioned bonds ( collectively, the "Bonds") for safekeeping prior to the delivery of the Bonds on July 26, 2016 (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 the respective underwriter of each series of Bonds (the "Underwriter") in distributing the Bonds. DTC will 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: Shandi Wicks, 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 respective 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. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] CITY OF SALINA, KANSAS Dated: July 11, 2016 (Signature Page to Safekeeping Agreement -Series 2016-A/B) CREDIT OPINION 1 July 2016 New Issue Rate this Research m Contacts Denise Rappmund 214-979-6865 VP-Senior Analyst den1se.rappmund@moodys.com Thomas Jacobs Senior Vice President thomas.Jacobs@moodys.com 212-553-0131 U.S. PUBLIC FINANCE City of Salina, KS New Issue: Moody's Assigns Aa3 to Salina, KS's Series 2016A and 20166 GOs Summary Rating Rationale Moody's Investors Service has assigned a Aa3 rating to the City of Salina, KS's $6 million General Obligation Internal Improvement Bonds, Series 2016-A, and $14.3 million General Obligation Refunding Bonds, Series 2016-B. Moody's maintains a Aa3 rating on the city's outstanding general obligation debt, and a MIG 1 rating on the city's outstanding temporary note financing. The Aa3 rating reflects the large tax base, stability of the economy as a regional economic center, stabilized financial operations with expected reserve increases, above average debt and manageable pension obligations. Credit Strengths » Regional commercial and retail center » Recent surpluses have replenished General Fund reserves Credit Challenges » Reserves reduced by deficit operations in 2010 and earlier » Dependence on economically sensitive sales tax revenues Rating Outlook Moody's generally does not assign outlooks to local government credits with this amount of debt outstanding. Factors that Could Lead to an Upgrade » Substantial growth in tax base without offsetting increase in debt » Growth of General Fund reserves Factors that Could Lead to a Downgrade » Increased de bt without growth in tax base » Erosion of reserves below current leve ls .............................................................................................................. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............. . MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE Key Indicators Exhibit 1 SaLina (City of) KS 2010 2011 2012 2013 2014 Economy/Tax Base Total Full Value ($000) $ 2,888,659 $ 2,891,461 $ 2,884,189 $ 2,889,386 $ 2,917,268 Full Value Per Capita $ 62,552 $ 60,609 $ 60,031 $ 60,389 $ 60,945 Median Family Income(% of US Median) 86.5% 86.5% 84.3% 84.3% 84.3% Finances Operating Revenue ($000) $ 39,406 $ 41,297 $ 41,403 $ 43,251 $ 43,600 Fund Balance as a% of Revenues 8.9% 13.5% 9.0% 11.6% 12.0% Cash Balance as a % of Revenues 11.2% 12.0% 10.7% 9.6% 10.8% Debt/Pensions Net Direct Debt ($000) $ 62,319 $ 58,626 $ 51,410 $ 78,029 $ 80,499 Net Direct Debt/ Operating Revenues (x) 1.6x 1.4x 1.Zx 1.Bx 1.8x Net Direct Debt/ Full Value(%) 2.2% 2.0% 1.8% 2.7% 2.8% Moody's -adjusted Net Pension Liability (3-yr average) to Revenues (x) N/A N/A 1.7x 2.1x 2.Zx Moody's -adjusted Net Pension Liability (3-yr average) to Full Value(%) N/A N/A 2.5% 3.1% 3.3% Source: Moody's Investors Service; district audited financial reports Recent Developments Kansas cities and counties are not pre sently subject to property tax limits, however, property tax limit legislation originally passed in 2015 and amended in 2016 stipulates that increases in property tax dollars levied beyond the rate of inflation will require voter approval. The 2016 amendment moved the date of implementation to January 201 7 (affecting fiscal 2018 budgets), changed the inflation benchmark to a five year average, and added important exemptions like public safety expenses and lease revenue bonds issued prior to July 1, 2016. Under the amended legislation levies for payment of GO bond debt service remain exempt from property tax limits. Given the broadness of the exemptions included, the lid wi ll not present significant financial or operational challenges for the city. Positively, Salina residents passed an additional 0.35% sales tax in April 2016 that will be in place for 20 years. The additional revenue, which is anticipated to be approximately $4.3 million, can be used in a variety of ways including economic development, capital improvements, parks and street improvements, and therefore may offset a portion of the city's ongoing CIP. Detailed Rating Considerations Economy and Tax Base: Moderately-Sized Tax Base; Regional Economic Center As a regional retail hub, Salina's economy will remain relatively stable. The city is located in Saline Co unty approximately 95 miles north of Wichita (Aa1 stable). The City of Salina's $2.96 billion tax base has been stable over the last five years with valuations averaging a modest 0.5% annual increase. Based on preliminary indications from the county, the city expects its tax base to increase by approximately 3% for fiscal 2017, largely based on completion of modest residential and commercial construction. The city's tax base exhibits a mild degree of concentration, with the top ten taxpayers accounting for 11.4% of the fiscal 2016 . The top taxpayer, Westar Energy (Baal/Stable), accounts for 2.7% of AV. The city is located at t he intersection of 1-70 and 1-135 and is a regional retail, commercial, industrial, and medical hub for the largely agricultural communities of north cen tral Kansas (Aa2 negative). Residential income ind ices are below national benchmarks, with 2014 median family income at 84.6% of national levels. At 4.1 % as of March 2016, the city's unemployment rate was below the stat e rate (4.3%) and be low the national rate (5.2%). Th!S ~ublicat,on doe' no• announce a credit rating action For any credit ratings ,eferenced 1n this publ,callon. please see the atings tab on the ,ssuer1ent1ty page on www moodys com for the most updated credi• rating action intormat,on and rating h1>,ory 1 July 2016 c,ty of Salina, KS· New Issue Moody's Assigns Aa3 to Salina, KS's Series 2016A and 20160 GOs MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE Financial Operations and Reserves: Growth in Reserves Expected The city's financial position will likely remain stable over the near term based on recent positive trends, the recently approved increase to the sales tax rate and the city's plan to restore reserves to healthier levels. The city's General Fund balance declined steadily from $7.3 million (29% of revenues) in fiscal 2007 to $3.6 million (11% of revenues) in fiscal 2010 due to budgetary pressures in a variety of areas. Favorably, as a result of a multi-year implementation of cost reductions including a reduction in positions, changes to overtime policies and increased service fees, the city returned to balanced operations in fiscal years 2011 and 2012 and has rebuilt General Fund reserves to $3.8 million, or a satisfactory 10.6% of revenues. While the city planned for a fund balance increase of approximately $600,000 in fiscal 2013, negative variances in franchise fees and sales tax revenues resulted in a slight deficit, bringing General Fund reserves to $3.5 million, or 9.6% of revenues. The city ended 2014 with an expected General Fund surplus of $650,000 increasing reserves to $4.2 million, or 113% of revenues. Unaudited 2015 results show a General Fund balance of approximately $5.0 million, bringing available fund balance to approximately 15% of revenues. Officials have indicated that the city plans to continue to increase its general fund balance over the next two fiscal years. Typical of Kansas cities, sales tax receipts represent the city's primary operating revenue source, comprising 33% of fiscal 2014 General Fund revenues, followed by property taxes at approximately 22% and charges for services at 21%. Sales tax receipts have trended upwards over the past five years. Future credit reviews will focus on the city's financial operations as a key credit factor. The Aa3 rating reflects recent trends and the city's stated goal of building stronger General Fund reserves over the next several years. LIQUIDITY Liquidity in the Operating Funds (General Fund and Debt Service Fund) is narrow with net cash position as of the close of fiscal 2014 totaling $4.7 million or 10.8% of fiscal 2014 operating revenues. Unaudited fiscal 2015 results reflect improved liquidity. Debt and Pensions After completion of the current sale, the city will have $83.6 million of outstanding general obligation bonds, and $13 million in outstanding general obligation temporary notes, which together represent a slightly elevated 3.3% of the fiscal 2016 tax base. Approximately $7.3 million of the GO debt is supported by the water and sewer system. Backing this debt out reduces the net direct debt burden to 3%. The city typically issues general obligation bonds and short-term notes each spring for general capital improvements and plans to continue this practice. Included in the debt burden is a planned $4.6 million GO note issuance that will be purchased directly by a bank. The notes are expected to mature in 38 months, and to be taken out with long term financing under the STAR bond program. The notes will provide interim financing for a new field house in the city. The field house, a multi sport facility, is part of a larger downtown, urban renewal project that is being funded through a number of private and public sources. The city has sufficient liquidity to retire the notes in the event of market disruption. At the close of fiscal 2014, the city's Governmental Fund net cash totaled $10.3 million or over 100% of the face amount of the Series 2016-2 Notes. DEBT STRUCTURE All of the city's outstanding debt is fixed rate. Principal amortization of long term general obligation debt is slightly below average, with 69% retired in ten years. DEBT-RELATED DERIVATIVES The city is not party to any interest rate swaps or other derivative agreements. PENSIONS AND OPEB The city participates in two statewide cost-shari ng plans, and also has a small single employer public safety pension plan that is closed. Salina's participation in two statewide cost-sharing pension plans, the Kansas Public Employees Retirement System (KPERS) and Kansas Police and Fireman's Retirement System (KP&F), is expected to 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. The three year (2012 to 2014) Moody's adjusted net pension liability (ANPL) for the city, under our methodology for adjusting reported pension data, is $96 million, or 2.22 times operating revenues, including the General Fund and Debt Service fund. For more information 1 July 2016 City of Salina, KS New Issue: Moody's Assigns Aa3 to Salina KS's Series 2016A and 201GB GOs 4 MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE on Moody's insights on employee pensions and the related cred it impact on companies, governments, and other entities across the globe please visit Moody's on Pensions at www.moodys.com/pensions. Management and Governance Kansas cities have an institutional framework score of "Aa," or strong. Cities primarily rely on property tax and local option sa les tax revenues, which in combination are moderately predictable. Presently, cities enjoy an unlimited property tax levying ability. In 2018, new legislation will limit property tax revenue increases without voter approval, resulting in a moderate revenue-raising ability. Expenditures are highly predictable and cities have a strong legal ability to reduce major expenditures given that cities are generally not subject to collective bargaining and typically have modest fixed costs Legal Security The bonds and notes are secured by an unlimited ad valorem tax pledge. Use of Proceeds The Series 2016A bonds will provide long term financing for the previously issued Series 2015-1 notes which mature in August 2016. The Series 2016A bonds will also fund a road project. The Series 2016B bonds will refund certain outstanding maturities for debt service savings, which is currently estimated at 7% of the refunded bonds' principal on a present value basis. Obliger Profile The City of Salina is located in north central Kansas, near the geographic center of the contiguous Un ited States. It is the seventh largest city in Kansas, with a 2014 U.S. Census Bureau estimated population of 47,707. The city is the county seat for Saline County which had an estimated 2014 US. Census Bureau population of 55,755. Methodology The principal methodology used in this rating was US Local Government General Obligation Debt published in January 2014. Please see the Ratings Methodologies page on www.moodys.com for a copy of this methodology. Ratings Exhibit 2 Salina (City of) KS Issue General Obligation Internal Improvement Bonds Series 2016-A Rating Type Sale Amount Expected Sale Date Rating Description General Obligation Refunding Bonds Series 2016- B Rating Type Sale Amount Expected Sale Date Rating Description Source: /vloody's Investors Service 1 July 2016 Rating Aa3 Underlying LT $6,000,000 07/11/2016 General Obligation Aa3 Underlying LT $14,300,000 07/11/2016 General Obligation City of Salina, KS New Issue Moody's Assigns Aa3 to Salina, KS's Series 2016A and 2016B GOs MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE ,O 6 Mnooy s 01po1Jt1on "1oody < lnvestc,rs <e,v1ce Im , Moody' Ana,yt1c< Inc an, /o the·r licensor a~d afi,1, ,tes: ollect1ve1y "10()DY\ ) A•l •1 ht •e,erved rnrnr RA TINGS ISSUED BY MOODY c; INVESTORS SERVICE IN( AND ITS RA fl"JGS AFFII IA ff s ( 'Ml' ) ARE MOODY', ( URRENT ':>PINION) OF THF RELA TIV' FLJTLIRE CREDIT l(<;K flf fNTITIES CREDIT COMMITr,<ENH OR DEB. 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KS: New Issue. Moody s Assigns Aa3 to Sali ~ KS-; Series ?016A t1nd 20"68. G01, MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE Contacts Thomas Jacobs Se111or Vice President thomas.jacobs@moodys.com Moooy's INVESTORS SERVICE 6 1 July 2016 212-553-0131 Denise Rappmund 214-979-6865 VP-Senior Analyst denise.rappmund@moodys.com CLIENT SERVICES Americas Asia Pacific Japan EMEA 1-212-553-1653 852-3551-3077 81-3-5408-4100 44-20-7772-5454 City of Salina, KS New Issue. Moody's Assigns Aa3 to Salina, KS's Series 2016A and 20166 GOs CLOSING CERTIFICATE $5,955,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2016-A DATED JULY 26, 2016 The undersigned Vice-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 26, 2016 (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 11 , 2016 are true and correct as of this date and are incorporated in this Certificate by reference. 3. Authorization and Purpose of the Bonds. 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. 12-685 et seq. and K.S.A. 12-1736 et seq. as amended, Ordinance No. 16-10838 and Resolution No. 16-7380 of the Issuer duly adopted by the governing body of the Issuer on July 11, 2016 ( collectively, 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, 2016 the following temporary notes of the Issuer, issued to temporarily finance the Improvements (the "Refunded Notes"): Description General Obligation Temporary Notes Series 2015-1 Dated Date July 29, 2015 Maturity Date August 1, 2016 Amount $5,995,000 5. Security for the Bonds. The Bonds are general obligations of the Issuer 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 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 July 5, 2016 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 know ledge, 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 · WIT N.W~~ our hands and the seal of the Issuer . .....-<:S~~ ..... Official Title \)'t!..~Mayor U1t0.U Clerk (Signature Page to Closing Certificate -Series 2016-A Bonds) FEDERAL TAX CERTIFICATE Dated as of July 26, 2016 OF CITY OF SALINA, KANSAS $6,570,000 GENERAL OBLIGATION INTERNAL Th1PROVEMENT BONDS SERIES 2016-A $13,750,000 GENERAL OBLIGATION REFUNDING BONDS SERIES 2016-B Section 1.01 Section 2.01 Section 2.02 Section 3.01 Section 3.02 Section 3.03 Section 3.04 Section 3.05 Section 3.06 Section 3.07 Section 3.08 Section 3.09 Section 3.10 Section 3.11 Section 3.12 Section 3.13 Section 3.14 Section 4.01 Section 4.02 Section 4.03 Section 4.04 Section 4.05 Section 4.06 Section 5.01 Section 5.02 Section 5.03 Section 5.04 Section 5.05 Section 5.06 Section 5.07 FEDERAL TAX CERTIFICATE TABLE OF CONTENTS ARTICLE I DEFINITIONS Definitions of Words and Terms .................................................................................... 1 ARTICLE II GENERAL REPRESENTATIONS AND COVENANTS Representations and Covenants of the Issuer ................................................................ 8 Continuing Application of Representations and Covenants ........................................ 11 ARTICLE III ARBITRAGE CERTIFICATIONS AND COVENANTS General. ....................................................................................................................... 12 Reasonable Expe.ctations ............................................................................................. 12 Purpose of Financing ................................................................................................... 12 Funds and Accounts ..................................................................................................... 12 Amount and Use of Bond Proceeds and Other Money ................................................ 12 Multipurpose Issue ...................................................................................................... 13 Refunding .................................................................................................................... 13 Completion of Financed Improvements ...................................................................... 14 Sinking Funds .............................................................................................................. 15 Reserve, Replacement and Pledged Funds .................................................................. 15 Purpose Investment Yield ............................................................................................ 15 Offering Prices and Yield on Bonds ............................................................................ 15 Miscellaneous Arbitrage Matters ................................................................................ 15 Conclusion ................................................................................................................... 16 ARTICLE IV TAX COMPLIANCE POLICIES AND PROCEDURES General. ....................................................................................................................... 16 Record Keeping; Use of Bond Proceeds and Use of Financed Improvements ........... 16 Restrictions on Investment Yield ................................................................................ 17 Procedures for Establishing Fair Market Value of Investments .................................. 18 Certain Gross Proceeds Exempt from the Rebate Requirement. ....... '. ......................... 20 Computation and Payment of Arbitrage Rebate .......................................................... 22 ARTICLE V MISCELLANEOUS PROVISIONS Term of Tax Certificate ............................................................................................... 23 Amendments ................................................................................................................ 23 Opinion of Bond Counsel. ........................................................................................... 23 Reliance ....................................................................................................................... 23 Severability .................................................................................................................. 23 Benefit of Certificate ................................................................................................... 24 Default, Breach and Enforcement. .............................................................................. 24 (i) Section 5.08 Section 5.09 Governing Law ............................................................................................................ 24 Electronic Transactions ............................................................................................... 24 LIST OF EXHIBITS TO FEDERAL TAX CERTIFICATE A.. IRS FORM 8038-G Schedule -Attachment to Form 8038-G Evidence of filing B. RECEIPT FOR PURCHASE PRICE C. RECEIPT AND REPRESENTATION D. DESCRIPTION OF FINANCED IMPROVEMENTS; FINAL ALLOCATION Schedule -Attachment to Final Allocation E. SAMPLE ANNUAL COMPLIANCE CHECKLIST F. ALLOCATION OF BONDS -MULTIPURPOSE ISSUE G. NON-QUALIFIED USE ANALYSIS H. CERTIFICATE OF BIDDING AGENT FOR ESCROW FUND Schedule 1 Reimbursement Expenditures * * * (ii) FEDERAL TAX CERTIFICATE TIDS FEDERAL TAX CERTIFICATE (the "Tax Certificate") is executed as of July 26, 2016 (the "Issue Date"), by the City of Salina, Kansas (the "Issuer"). RECITALS 1. This Tax Certificate is being executed and delivered in connection with the issuance by the Issuer of $6,570,000 principal amount of General Obligation Internal Improvement Bonds, Series 2016-A (the "Series 2016-A Bonds") and $13,750,000 General Obligation Refunding Bonds, Series 2016-B (the "Series 2016-B Bonds," and together with the Series 2016-A Bonds, the "Bonds"), under the Bond Resolutions (as herein defined), for the purposes described in this Tax Certificate and in the Bond Resolutions. 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 and Securities Compliance Procedure on June 11, 2012 (the "Tax Compliance Procedure") 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. 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 Resolutions, 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 Project Portion or the Current Refunding Portion, as applicable, reduced by allocable amounts: (a) in a Bona Fide Debt Service Fund or a reasonably required reserve or replacement fund; (b) 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 (c) representing grant repayments or sale or Investment proceeds of any purpose Investment. "Advance Refunded Bonds" means collectively: (a) the Series 2007-A Bonds maturing in the years 2018 to 2027, inclusive, in the aggregate principal amount of $2,925,000; (b) the Series 2008-A Bonds maturing in the years 2018 to 2023, inclusive, in the aggregate principal amount of $1,500,000; (c) the Series 2009-ABonds maturing in the years 2021 to 2029, inclusive, in the aggregate principal amount of $4,425,000; (d) the Series 2010-A Bonds maturing in the years 2021 to 2025, inclusive, in the aggregate principal amount of $1,825,000; and (e) the Series 2011-ABonds maturing in the years 2022 to 2031, inclusive, in the aggregate principal amount of $3,275,000. "Advance Refunding Portion" means the sale proceeds of the Series 2016-B Bonds identified in Section 3.06, together with the remaining Gross Proceeds of the Series 2016-B Bonds properly allocable to the refunding of the Advanced Refunded Bonds. "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 Project Portion, increased by (a) Investment earnings on the sale proceeds, (b) earnings on amounts in a reasonably required reserve or replacement fund for the Project but not funded from the Project, and (c) earnings on such earnings, reduced by sale proceeds (1) in any reasonably required reserve fund or (2) used to pay issuance costs of the Project. "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 of the Series 2016-A Bonds or the Series 2016-B Bonds described in the recitals, authenticated and delivered under the Bond Resolutions. "Bond Compliance Officer" means the Issuer's Director of Finance and Administration 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 Resolutions" means, with respect to the Series 2016-A Bonds, Ordinance No. 16-10838 and Resolution No. 16-7380 and, with respect to the Series 2016-B Bonds, Ordinance No. 16-10839 and Resolution No.16-7381, duly adopted by the governing body of the Issuer on July 11, 2016, as originally executed by the Issuer, as amended and supplemented in accordance with the provisions of the applicable Bond Resolution. 2 "Bond Year" means each one-year period (or shorter period for the first Bond Year) ending October 1 or another one-year period selected by the Issuer. "Code" means the Internal Revenue Code of 1986, as amended. "Computation Date" means each date on which arbitrage rebate for the Bonds is computed. The Issuer may treat any date as a Computation Date, subject to the following limits: (a) The first rebate installment payment must be made for a Computation Date not later than 5 years after the Issue Date; (b) Each subsequent rebate installment payment must be made for a Computation Date not later than 5 years after the previous Computation Date for which an installment payment was made; and ( c) The date the last Bond is discharged is the final Computation Date. The Issuer selects July 1, 2021, as the first Computation Date but reserves the right to select a different date consistent with the Regulations. "Current Refunded Bonds" means the Series 2006-B Bonds maturing in the year 2021 in the aggregate principal amount of $185,000. "Current Refunding Portion" means the sale proceeds of the Series 2016-B Bonds identified in Section 3. 06 together with the remaining Gross Proceeds of the Series 2016-B Bonds properly allocable to the refunding of the Current Refunded Bonds. "Escrow Agent" means Security Bank of Kansas City, Kansas City, Kansas, and its successors and assigns. "Escrow Agreement" means the Escrow Trust Agreement, dated as of July 26, 2016, between the Issuer and the Escrow Agent. "Escrowed Securities" means the direct, noncallable obligations of the United States of America held in the Escrow Fund, as described in the Escrow Agreement. "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 and 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, (e) any other replacement proceeds and (f) any transferred proceeds. Specifically, the term Gross Proceeds includes (but is not limited to) amounts held in the following funds and accounts: 3 (1) Improvement Fund; (2) Redemption Fund; (3) Escrow Fund; (4) Debt Service Accounts (for Series 2016-A Bonds and for Series 2016-B Bonds); (5) Costs oflssuance Account; and (6) Rebate Funds for Series 2016-A Bonds and for Series 2016-B Bonds (to the extent funded with sale, investment or transferred 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 26, 2016. "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 by the Project Portion, the period beginning on the later of (a) the Issue Date or (b) the date the property was or will be placed in service, and ending on the earlier of (1) the final maturity date of the Bonds or (2) the expected economic useful life of the property, or, with respect to each item of property financed by the Original Obligations, the period beginning on the later of (A) the applicable issue date of the Original Obligations or (B) the date the property was or will be placed in service, and ending on the earlier of (i) the final maturity date of the Bonds or (ii) 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, 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. 4 "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 following debt obligations of the Issuer (including any temporary notes directly or indirectly refinanced thereby), which were the initial issues of tax-exempt governmental obligations that financed or refinanced a portion of the Financed Improvements: (a) the Series 2006-B Bonds; (b) the Series 2007-A Bonds; (c) the Series 2008-A Bonds; (d) the Series 2009-A Bonds; (e) the "project portion" of the Series 2010-A Bonds; (f) the Series 1993A Bonds; (g) the Series 2011-A Bonds; and (h) the Series 2015-1 Notes. "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. "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, with respect to each issue compnsmg the Original Obligations: (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 excess of 20% of the sale proceeds of such issue of Original Obligations; and (b) costs incurred in an amount not in excess of the lesser of $100,000 or 5% of the sale proceeds of such issue comprising of Original Obligations. "Project Portion" means the sale proceeds of the Series 2016-A Bonds identified in Section 3.06, together with the remaining Gross Proceeds of the Bonds properly allocable to a "new-money" financing and the refunding of the Series 2015-1 Notes. "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., Inc., Milwaukee, Wisconsin, the original purchaser of the Bonds. "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. 5 (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 Proceeds of the Bonds 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 Bonds" means, collectively: (a) the Refunded Series 2006-B Bonds; (b) the Refunded Series 2007-A Bonds; (c) the Refunded Series 2008-A Bonds; (d) the Refunded Series 2009-A Bonds; (e) the Refunded Series 2010-ABonds; and (f) the Refunded Series 2011-ABonds. "Refunded Obligations" means, collectively, the Refunded Bonds and the Refunded Series 2015-1 Notes. "Refunded Series 2006-B Bonds" means $185,000 principal amount of the outstanding Series 2006-A Bonds maturing in the year 2021. "Refunded Series 2007-A Bonds" means $2,295,000 principal amount of the outstanding Series 2007-A Bonds maturing in the years 2018 through 2027, inclusive. 6 "Refunded Series 2008-A Bonds" means $1,500,000 principal amount of the outstanding Series 2008-A Bonds maturing in the years 2018 through 2023, inclusive. "Refunded Series 2009-A Bonds" means $4,425,000 principal amount of the outstanding Series 2009-A Bonds maturing in the years 2021 through 2029, inclusive. "Refunded Series 2010-A Bonds" means $1,825,000 principal amount of the outstanding Series 2010-A Bonds maturing in the years 2021 through 2025, inclusive. "Refunded Series 2011-A Bonds" means $3,275,000 principal amount of the outstanding Series 2011-A Bonds maturing in the years 2022 through 2031, inclusive. "Refunded Series 2015-1 Notes" means that portion of the Series 2015-1 Notes refunded by the Series 2016-A Bonds. "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 2006-A Bonds" means the City's General Obligation Internal Improvement Bonds, Series 2006-B, dated July 15, 2006. "Series 2007-A Bonds" means the City's General Obligation Internal Improvement Bonds, Series 2007-A, dated June 15, 2007. "Series 2008-A Bonds" means the City's General Obligation Internal Improvement Bonds, Series 2008-A, dated July 15, 2008. "Series 2009-A Bonds" means the City's General Obligation Internal Improvement Bonds, Series 2009-A, dated July 15, 2009. "Series 2010-A Bonds" means the City's General Obligation Internal Improvement and Refunding Bonds, Series 2010-A, dated May 1, 2010. "Series 2011-A Bonds" means the City's General Obligation Internal Improvement Bonds, Series 2011-A, dated July 15, 2011. "Series 2015-1 Notes" means the Issuer's General Obligation Internal Temporary Notes, Series 2015-1, dated July 29, 2015. "Series 2016-A Bonds" means the Issuer's General Obligation Internal Improvement Bonds, Series 2016-A, dated July 26, 2016. "Series 2016-B Bonds" means the Issuer's General Obligation Refunding Bonds, Series 2016-B, dated July 26, 2016. "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. 7 "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 and the Original Obligations, 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 either of the Series 2016-A Bonds or the Series 2016-B Bonds. "Verification Report" means the verification report of Robert Thomas CPA, LLC, Certified Public Accountants, relating to the Bonds and the Refunded Obligations. "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 Resolutions, to enter into, execute and deliver the Bond Resolutions, 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 Resolutions, the Bonds, and this Tax Certificate, acting by and through its duly authorized officials. (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. Except as otherwise shown on Exhibit G of this Tax Certificate (which Non-Qualified Use has not exceeded and will not exceed 10% of the proceeds of the Bonds or the use of the Financed Improvements), throughout the Measurement Period: (1) all of the Financed Improvements have been and are expected to be owned by the Issuer or another Qualified User; (2) no portion of the Financed Improvements has been or is expected to be used in a Non- Qualified Use; and (3) the Issuer will not permit any other 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 8 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. Except with respect to any Non-Qualified use shown on Exhibit G of this Tax Certificate (which private security or payment has not exceeded and will not exceed 10% of the principal of and interest on the Bonds), as of the Issue Date, the Issuer expects that none of the principal of and interest on the Bonds will be, and the payment of principal of and interest on the Original Obligations has 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 foregoing, taxes of general application, including payments· in lieu of taxes, are not treated as private payments or as private security. The Issuer will not permit any private security or payment with respect to the Bonds without first obtaining an Opinion of Bond Counsel. (e) No Private Loan, Special Assessments. Not more than 5% of the Net Proceeds of the Bonds will be loaned directly or indirectly to any Non-Qualified User. The payment of principal of and interest on the Bonds will be funded, and the payment of principal of and interest on the Original Obligations has been funded, in whole or in part, from mandatory special assessments against certain of the property benefiting from the Financed Improvements. The use of the proceeds of the Bonds and the Original Obligations for this purpose is not treated as a "loan" because: (1) the special assessments are enforced contributions for the purpose of raising revenue for specific capital improvements; (2) the assessments do not include any fee for services; (3) the imposition and collection of the assessments is not dependent upon, and does not vary depending on, whether the taxpayer engaged, or the property is used, in a trade or business; ( 4) the assessments are imposed to pay for an essential governmental function; and (5) the terms of payment of the assessments are the same for all owners of property benefitting from the Improvements on which the assessments are imposed. (t) Management Agreements. Except as otherwise described on Exhibit G of this Tax Certificate, as of the Issue Date, the Issuer has no Management Agreements with Non-Qualified Users. During the Measurement Period, the Issuer will not enter into or renew any other 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. 9 (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 of 8.648 years, as computed by Bond Counsel, does not exceed 120% of the average reasonably expected economic life of the Financed Improvements. (j) Reimbursement of Expenditures; Official Intent. (1) Bonds. The governing body of the Issuer adopted several resolutions 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 those obligations. The resolutions are contained in Tabs 1 to 4, inclusive, of the Transcript for the Series 2016-A Bonds. The Issuer expects to reimburse from Bond proceeds for expenditures made for the Financed Improvements prior to the Issue Date in the approximate amount of $ $225,914.78, as shown on Schedule 1 attached to this Tax Certificate; provided that, except as otherwise shown on Schedule 1 and as permitted by Regulations § 1.150-2(f), Bond proceeds may not be used to reimburse the Issuer for expenditures made for the Financed Improvements prior to the Issue Date unless: (1) the expenditure was paid by the Issuer not more than 60 days prior to the date the respective resolution referenced herein was adopted, (2) the reimbursement allocation is made for an expenditure paid not more than 3 years before the date of the reimbursement allocation, and (3) the reimbursement allocation is made not more than 18 months following the later of the date of the expenditure or the date that portion of the Financed Improvements is placed in service. The Issuer will evidence each allocation of the proceeds of the Bonds to an expenditure in writing. (2) Original Obligations. The governing body of the Issuer adopted several resolutions 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 those bonds. The resolutions are contained in the transcripts for the Original Obligations. Except for Preliminary Expenditures or as otherwise described in the federal tax certificate or similar document for the Original Obligations, no proceeds of the Original Obligations were used to reimburse an expenditure paid by the Issuer more than 60 days prior to the date the applicable resolution was adopted, no reimbursement allocation has been or will be made for an expenditure made more than 3 years before the date of the reimbursement allocation, and no reimbursement allocation has been or will be made more than 18 months following the later of the date of the expenditure or the date that portion of the Financed Improvements was placed in service. (k) Registered Bonds. The Bond Resolutions require 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 10 Form 8038-G for 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) No Hedge Bonds. (1) Bonds. At least 85% of the Net Proceeds (the sale proceeds less any sale proceeds invested in a reserve fund) of the Project Portion will used to carry out the governmental purpose of the Project Portion within 3 years after the Issue Date, and not more than 50% of the proceeds of the Project Portion will be invested in Investments having a substantially guaranteed Yield for four years or more. (2) Original Obligations. At least 85% of the Net Proceeds (the sale proceeds less any sale proceeds invested in a reserve fund) of each issue comprising the Original Obligations were used to carry out the governmental purpose of the Original Obligations within 3 years after the applicable issue date thereof, and not more than 50% of the proceeds of each issue comprising the Original Obligations were invested in Investments having a substantially guaranteed Yield for four 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). For purposes of the foregoing, the Issuer sold and is issuing its General Obligation Temporary Notes, Series 2016-1 substantially simultaneously with the Bonds, but such notes were not sold pursuant to the same plan of financing as the Bonds and are not expected to be paid from substantially the same source of funds as the Bonds, and therefore are not part of the same "issue" as the Bonds under Regulations § 1.150-l(c). A separate Federal Tax Certificate and IRS Form 8038-G are being executed in connection with the issuance of the Series 2016-1 Notes. (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 Obligation. The Bonds are not "qualified tax exempt obligations" under Code§ 265(b)(3). 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. 11 ARTICLE ill 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 portion of the costs of refunding the Refunded Obligations. The purpose of the Series 2016-A Bonds is to provide funds to finance certain of the Financed Improvements and to provide permanent financing for certain of the Financed Improvements originally financed by the Series 2015-1 Notes, and the purpose of the Series 2016-B Bonds is to refund the Refunded Bonds for interest cost savings. Section 3.04 Funds and Accounts. The following funds and accounts have been established under the Bond Resolutions: (a) Improvement Fund (for Series 2016-A Bonds). (b) Redemption Fund (for Series 2016-A Bonds and Refunded Series 2015-1 Notes) (c) Costs oflssuance Account (for Series 2016-B Bonds). (d) Debt Service Accounts (for Series 2016-ABonds and for Series 2016-B Bonds). (e) Rebate Fund (for Series 2016-ABonds and for Series 2016-B Bonds). In addition to the Funds and Accounts described above, the Escrow Agreement establishes the Escrow Fund (for Series 2016-B Bonds and the Refunded Bonds) to be held and administered by the Escrow Agent in accordance with the provisions of the Escrow Agreement: 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 Series 2016-A Bond Proceeds and Other Money. The Series 2016-A Bond proceeds and other money contributed by the Issuer are expected to be allocated to expenditures as follows: ( 1) All accrued interest will be deposited in the 2016-A Debt Service Account for the Series 2016-ABonds and allocated to pay interest on the Series 2016-ABonds. 12 (2) The sum of$544,745.64 of Series 2016-ABond proceeds will be deposited in the Improvement Fund, of which: (i) $43,353.26 will be used to pay costs of issuing the Series 2016- A Bonds; and (ii) $501,392.38 will be used to complete certain of the Financed Improvements. (3) The sum of $6,070,353.82 (consisting of $6,038,075.00 of Bond proceeds and $32,278.82 from other amounts contributed by the Issuer) will be paid and transferred to the paying agent for the Refunded Series 2015-1 Notes, with irrevocable instructions to apply such amount to the payment of the Refunded Series 2015-1 Notes. (c) Use of Series 2016-B Bond Proceeds and Other Money. The Series 2016-B Bond proceeds and other money contributed by the Issuer are expected to be allocated to expenditures as follows: (1) All accrued interest will be deposited in the 2016-B Debt Service Account for the Series 2016-B Bonds and allocated to pay interest on the Series 2016-B Bonds. (2) The sum of $91,795.73 of Series 2016-B Bond proceeds will be deposited in the Costs of Issuance Account for the Series 2016-B Bonds and used to pay costs of issuing the Series 2016-B Bonds. (3) The sum of $15,178,545.09 (consisting of $14,894,383.61 of Bond proceeds and $284,699.38 from other amounts contributed by the Issuer), will be transferred to the Escrow Agent for deposit in the Escrow Fund to be applied as provided in the Escrow Agreement. Section 3.06 Multipurpose Issue. The Issuer is applying the arbitrage rules to separate financing purposes of the issue that have the same initial temporary period as if they constitute a single issue for purposes pursuant to Regulations § 1.148-9(h)(3)(i). Under Regulations § 1.148-9(h), the Bonds will be treated as three separate issues ( an Advance Refunding Portion, a Current Refunding Portion and a Project Portion) for purposes of applying certain of the arbitrage restrictions under Code § 148. Pursuant to the debt-service-savings allocation method under Regulations § 1.148-9(h)(4)(v)(B) and as shown on Exhibit F attached to this Tax Certificate, the Series 2016-B Bonds are allocated to the Advance Refunding Portion and the Current Refunding Portion, and the Series 2016-A Bonds are allocated to the Project Portion. Section 3.07 Refunding. (a) Escrow Fund. The remaining debt service requirements on the Refunded Bonds are set forth in the Verification Report. Money in the Escrow Fund aggregating $15,178,545.09 will be used to purchase United States Treasury Securities (the "Escrowed Securities,") as described in the Verification Report, and $537.90 will be held uninvested as the initial cash balance in the Escrow Fund. The maturing principal of and interest on the Escrowed Securities and the initial cash deposit in the Escrow Fund will be expended to pay principal of and interest on the Refunded Bonds. (1) Allocation of Sources to Investments. In addition to Bond proceeds, other money deposited in the Escrow Fund was derived from the debt service accounts for the Refunded Bonds. As shown in the Verification Report, these amounts have been allocated to the earliest maturing Escrowed Securities in the Escrow Fund. (2) Yield On The Escrowed Securities. The Yield on the Escrowed Securities purchased with Bond proceeds (0.64833%) does not exceed the Yield on the Bonds (1.76787%), 13 and the Yield on the Escrowed Securities allocable to other money does not exceed the Yield on the respective series of Refunded Obligations from which derived, all as shown in the Verification Report. (3) Market Prices. All of the Escrowed Securities were purchased at fair market value pursuant to a bona fide solicitation for bids in accordance with Regulations § 1.148- 5( d)( 6)(iii). Attached to this Tax Certificate as Exhibit His a certificate of Causey Demgen & Moore P.C., which acted as bidding agent in connection with the solicitation and acquisition of the Escrowed Securities. (b) Advance Refunding -Advance Refunded Bonds. (1) Limit on Number of Advance Refunding Issues. The issuance of the Advance Refunding Portion constitutes the first advance refunding of the Advance Refunded Bonds. Except for the Series 2010-A Bonds, the Advance Refunded Bonds were issued entirely to finance "new-money" capital expenditures of the Issuer (including directly or indirectly refinancing temporary notes issued for such purposes). The Series 2010-A Bonds were issued to finance "new-money" capital expenditures of the Issuer and to currently refund the Series 2002-A Bonds, which were issued to currently refund the Series 21993-A Bonds. (2) No Transferred Proceeds. There are no unspent proceeds (sale proceeds, Investment proceeds or transferred proceeds) of the Advance Refunded Bonds, and therefore no transferred proceeds of the Advance Refunding Portion. ( c) Current Refunding -Current Refunded Bonds (l) Refunded Series 2006-B Bonds. Proceeds of the Current Refunding Portion will be used to pay principal of and interest on the Refunded Series 2006-B Bonds. All such proceeds shall be spent not later than 90 days after the Issue Date. The Current Refunded Bonds were issued entirely to finance "new-money" capital expenditures of the Issuer (including directly or indirectly refinancing temporary notes issued for such purposes). (2) Refunded Series 2015-1 Notes. Proceeds of the Series 2016-A Bonds will be used to pay principal of and interest on the Refunded Series 2015-1 Notes. All such proceeds shall be spent not later than 90 days after the Issue Date. (3) No Transferred Proceeds. There are no unspent proceeds (sale proceeds, Investment proceeds or transferred proceeds) of the Series 2006-B Bonds or the Series 2015-1 Notes, and therefore no transferred proceeds of the Current Refunding Portion or the Series 2016- A Bonds. (d) Excess Gross Proceeds. There will be no "excess gross proceeds" of the Bonds (within the meaning of Regulations § 1.148-10( c) }. Section 3.08 Completion of Financed Improvements. 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 Project Portion on the Financed Improvements. The completion of the Financed Improvements and the allocation of the Net Proceeds of the Project Portion to expenditures will proceed with due diligence. At least 85% of the Net Proceeds of the Project Portion will be allocated to 14 expenditures on the Financed Improvements within three years after the Issue Date. The Financed Improvements financed by the Original Obligations has previously been completed. 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 Accounts. Except for the Debt Service Accounts, 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 Accounts are 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 Accounts 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. (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, and that instead has been or will be used to acquire higher yielding Investments. Except for the Debt Service Accounts, 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, without 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 $21,822,770.55, without accrued interest. (b) Bond Yield. Based on the Offering Prices, the Yield on the Bonds is 1.76787%, as shown in the Verification Report. The Issuer has not entered into an interest rate swap agreement with respect to any portion of the proceeds of 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. 15 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. 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 Proc(.!dures 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. 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 Resolutions 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 the Bonds or 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 (1) ensure an accurate and complete transfer of the hardcopy records which indexes, stores, preserves, retrieves and reproduces the electronic records, (2) include reasonable controls to ensure integrity, accuracy and reliability of the electronic storage system and to prevent unauthorized alteration or deterioration of electronic records, (3) exhibit a high degree of legibility and readability both electronically and in hardcopy, (4) 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. 16 (b) Accounting and Allocation of Bond Proceeds to Expenditures. The Bond Compliance Officer will account for the investment and expenditure of proceeds of the Bonds and the Original Obligations in the level of detail required by the Tax Compliance Procedure. Bond proceeds and other money contributed by the Issuer are expected to be used as described in Sections 3.05 and 3.07 hereof. The Bond Compliance Officer will maintain accounting records showing the investment and expenditure of this money as part of the Tax-Exempt Bond File. The Bond Compliance Officer has prepared written substantiation records of the allocation of proceeds of the Original Obligations to the Financed Improvements through requisitions from the improvement funds established under the bond resolutions for the Original Obligations. This allocation is summarized on Exhibit D and is intended to constitute the final allocation of proceeds of the Original Obligations to expenditures for the Financed Improvements. (c) Annual Compliance Checklist. Attached as Exhibit Eis a sample Annual Compliance Checklist for the Bonds. The Bond Compliance Officer will prepare and complete one or more Annual Compliance Checklists 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; New-Money. Series 2016-A Bond proceeds deposited in the Improvement Fund allocable to a "new-money" financing of the Financed Improvements may be invested without Yield restriction for 3 years after the Issue Date. (b) Improvement Fund; Current Refunding. Series 2016-A Bond proceeds deposited in the Improvement Fund allocable to a current refunding of the Refunded Series 2015-1 Notes may be invested without Yield restriction for 90 days after the Issue Date. (c) Escrow Fund; Current Refunding. Series 2016-B Bond proceeds deposited in the Escrow Fund allocable to a current refunding of the Refunded Series 2006-B Bonds may be invested without Yield restriction for up to 90 days after the Issue Date. (d) Escrow Fund; Advance Refunding. Series 2016-B Bond proceeds deposited in the Escrow Fund allocable to an advance refunding of the Advance Refunded Bonds are being invested at a Yield less than the Yield on the Bonds. ( e) Cost of Issuance Account. Bond proceeds deposited in the Cost of Issuance Account and Investment earnings on those proceeds may be invested without Yield restriction for 13 months after the Issue Date. (f) Debt Service Accounts. To the extent that the Debt Service Accounts qualify 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. 17 (g) Minor Portion. In addition to the amounts described above, Gross Proceeds not exceeding the Minor Portion may be invested without Yield restriction. (h) Rebate Fund. Money other than sale proceeds or Investment proceeds on deposit in the Rebate Fund 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 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: (l) 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 18 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 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. 19 (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: (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)(l) and 1.148-3(e)(2) but only in accordance with specific written instructions provided by the Rebate Analyst. (b) Applicable Spending Exceptions. The following optional rebate spending exceptions can separately apply to the Project Portion, the Advance Refunding Portion and the Current Refunding Portion: (1) Project Portion: (A) § 1.148-7(c)). (B) (C) § 1.148-7(e)). 6-month spending exception (Code § 148(f)(4)(B) and Regulations 18-month spending exception (Regulations§ 1.148-7(d)). 2-year spending exception (Code § 148(f)(4)(C) and Regulations 20 (2) Current Refunding Portion: 6-month spending exception (Code § 148(f)(4)(B) and Regulations§ l.148-7(c)). (3) Advance Refunding Portion: None (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 Accounts qualify as a Bona Fide Debt Service Fund, Investment earnings therein cannot be taken into account in computjng arbitrage rebate. (e) Documenting Application of Spending Exception. At any time prior to the first Computation Date, the Issuer may engage the Rebate Analyst to determine whether one or more spending 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 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 Project Portion or the Current 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 Project 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: Time Period After the Issue Date 6 months 12 months 18 months Minimum Percentage of Available Construction Proceeds Spent 21 10% 45% 75% 24 months (Final) 100% (5) For purposes of applying the 18-month and 2 year spending exceptions only, the failure to satisfy the final spending requirement is disregarded if the Issuer uses due diligence to complete the Financed Improvements and the failure does not exceed the lesser of 3% of the aggregate issue price the Project Portion or $250,000. (6) For purposes of applying the 18-month and 2-year spending exceptions only, the Bonds meet the applicable spending test even if, at the end of the final spending period, proceeds not exceeding a Reasonable Retainage remain unspent, so long as such Reasonable· Retainage is spent within 30 months 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. 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. (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. 22 (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 Resolutions to the contrary, the obligation to pay arbitrage rebate to the United States will survive the payment or defeasance of the Bonds. ARTICLEV 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 Section 4.06 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 Bond Owners, 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 Resolutions, 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. Section 5.05 Severability. If any prov1s1on 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. 23 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 Resolutions 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 Bond Owners pursuant to the terms of the Bond Resolutions 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 transaction described in this Tax Certificate may be conducted, and related documents may be stored, by electronic means. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 24 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: ~Ultm Clrk By: ____ )Wr~P, 0 I}, tt-.J_ Fina~ (Signature Page to Federal Tax Certificate -Series 2016-A and 2016-B) EXHIBIT A IRS FORM 8038-G A-1 VIA FEDERAL EXPRESS Internal Revenue Service Center Ogden, Utah 84201 /j GILMOR_EBELL GILMORE & BELL PC 2405 GRANO BOULEVARD. SUITE 1100 KANSAS CITY, MISSOURI 64108-2521 816-221-1000 I 816-221-1018 FAX GILMOREBELL.COM August 16, 2016 Ref: 600596.60153&.60 Dale: 16Aug16 Dep: Wgl: 1 .00 LBS DV: Svcs: ** 2DAY ** SHIPPING: SPECIAL: HANDLING: 0.00 TOTAL: TRCK: 6658 3446 8755 11.55 0.29 0.00 11.84 Re: City of Salina, Kansas General Obligation Internal Improvement Bonds, Series 2016-A and General Obligation Refunding Bonds, Series 2016-B Ladies and Gentlemen: Enclosed for filing pursuant to Section 149(e) of the Internal Revenue Code of 1986 Form 8038- G, Information Return for Tax-Exempt Governmental Obligations, being filed with respect to the above- captioned transaction. If you have any questions, please do not hesitate to contact me. GMR:jac Enclosure 600596.60153/60154 Very truly yours, Gina M. Riekhof September 23,2016 Dear Customer: The following is the proof-of-delivery for tracking number 665834468755. Delivery Information: Status: Signed for by: Service type: Special Handling: Shipping Information: Tracking number: Recipient: Delivered R.SCHWINGHAMMER FedEx 2Day Deliver Weekday No Signature Required 665834468755 INTERNAL REVENUE SERVICE CENTER 1973 N. RULON WHITE BLVD. OGDEN, UT 84201 US Reference Thank you for choosing FedEx. Delivered to: Delivery location: Delivery date: Ship date: Weight: Shipper: Gilmore & Bell Gilmore & Bell, P.C. 2405 Grand Boulevard Suite 1100 Kansas City, MO 64108 US 600596.60153&.60154 GMR Shipping/Receiving 1973 RULON WHITE BLVD OGDEN, UT 84201 Aug 17, 2016 09:53 Aug 16, 2016 0.5 lbs/0.2 kg Form8038•G Information Return for Tax-Exempt Governmental Obligations (Rev. September 2011) .,. Under Internal Revenue Code section 149(e) 0MB No. 1545-0720 ... See separate Instructions. Department of the Treasury Internal Revenue Service Caution: If the issue price is under $100,000, use Form 8038-GC. 11!":r.llill. Reporting Authority If Amended Return, check here .,_ D 1 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 .0. box If mail Is not delivered to street address) I Room/suite 5 Report number (For IRS Use Only) 2405 Grand Boulevard 1100 I 3 l.>t;- 6 City, town, or post office, state, and ZIP code 7 Date of issue Kansas City, MO 64108 07/26/2016 8 Name of Issue General Obligation Internal Improvement Bonds, Series 2016-A & General Obligation 9 CUSIP number Refunding Bonds, Series 2016-B 794743 7F5 & 794743 8A5 10a Name and title of officer or other employee of the Issuer whom the IRS may call for more information (see 10b Telephone number of officer or other Instructions) employee shown on 10a Michelle Meyer, Director of Finance and Administration 785-309-5735 ~~-~· Type of Issue (enter the issue price). See the instructions and attach schedule. 11 Education. 11 12 Health and hospital 12 13 Transportation 13 14 Public safety . 14 15 Environment {including sewage bonds) .. 15 16 Housing ·, " • 16 17 Utilities 17 18 Other. Describe .... Public Improvements (Streets, Fire Department, Sewer, Water, Public Buildings) 18 21,822,771 19 If obligations are TANs or RANs, check only box 19a ..,. D l!J!1;0~~1"" . If obligations are BANs, check only box 19b ..,. D 20 If obligations are in the form of a lease or installment sale, check box ""D .. f jJ;tf:11 l~t(ql:. ·~HUI II Description of Obligations. Complete for the entire issue tor which this form is being filed. (a) Final maturity date (bl Issue price (c) Stated redemption (d) Weighted price at maturity average maturity 21 10/01/2036 s; 21,822,771 s; 20,320,000 8.648 vears l!.f:n,• l'• Uses of Proceeds of Bond Issue (including underwriters' discount) 22 Proceeds used for accrued interest 23 Issue price of entire issue {enter amount from line 21, column {b)) 24 Proceeds used for bond issuance costs (including underwriters' discount) • 24 389,248 25 Proceeds used for credit enhancement 25 0 26 Proceeds allocated to reasonably required reserve or replacement fund 26 0 27 Proceeds used to currently refund prior Issues 27 6,038,075 28 Proceeds used to advance refund prior issues 28 14,894,384 29 Total {add lines 24 through 28) • 30 Nonrefunding proceeds of the issue {subtract line 29 from line 23 and enter amount here) •l:#;Tiia•• Description of Refunded Bonds. Complete this part onlv for refundinQ bonds. 31 Enter the remaining weighted average maturity of the bonds to be currently refunded . 32 Enter the remaining weighted average maturity of the bonds to be advance refunded . 33 Enter the last date on which the refunded bonds will be called {MM/DD/YYYY) (e)Yleld 1.7679 % 22 0 23 21,822,771 .:I, :\~ •... ,\'·· .. 29 21,321,707 30 501,064 see attachment years see attachment years see attachment 34 Enter the date(s) the refunded bonds were issued ..,. (MM/DDIYYYY) see attachment For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 637735 Form 8038-G (Rev. 9·2011) Form 8038-G (Rev. 9·2011) Page2 Miscellaneous 35 Enter the amount of the state volume cap allocated to the issue under section 141 (b)(5) 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (GIC) (see instructions) . . . . . . . . . . . . b Enter the final maturity date of the GIC i,,. -------------- Enter the name of the GIC provider.,. ---------------C 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 b If this issue is a loan made from the proceeds of another tax-exempt issue, check box .,. D and enter the following information: 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..,. --------------- 39 If the issuer has designated the issue under section 265(b)(3)(8)0)(111) (small issuer exception), check box 40 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box . . . . . . . , If the issuer has identified a hedge, check here .,. D and enter the following information: 41a 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 D D D according to the requirements under the Code and Regulations (see instructions), check box . . ..,. 0 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 .,. 0 and enter the amount of reimbursement . . . . . . . .,. 255,915 b Enter the date the official intent was adopted..,. _0_21;.:.2.:..21;.:.2...;.o.:..16;.:._ ______________ _ Signature and Consent Paid Preparer Use Only Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. I ·further declare that I consent to the IRS's disclosure of the Issuer's return Information, as necessary to process this ur , to the pars that I have authorized ab ve. PrinVType preparer's name James Dummitt Flnm's name ~ Gilmore & Bell, P.C. Flnm's address ~ 2405 Grand Boulevard, Suite 1100, Kansas Cit , MO 64108 ~ Michelle Meyer, Dir. of Finance and Admin. r Type or print name and title Check D If PTIN se~-employed P01062537 Flnm's EIN ~ 43•1611738 Phone no. 816-221-1000 Form 8038-G (Rev. 9·2011) ATTACHMENT TO IRS FORM 8038-G CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL Th1PROVEMENT BONDS SERIES 2016-A DATED JULY 26, 2016 PART V: Description of Refunded Bonds Line 31 Line 32 Remaining Remaining Weighted Weighted Average Average Maturity of Maturity of Refunded Bonds to be Bonds to be Bond Currently Advance Series Refunded Refunded 2006-B Bonds 3.099 NIA 2007-A Bonds NIA 6.081 2008-A Bonds NIA 4.668 2009-A Bonds NIA 8.561 2010-A Bonds NIA 7.265 2011-A Bonds NIA 10.089 2015-1 Notes 0.014 NIA A-2 CITY OF SALINA, KANSAS GENERAL OBLIGATION REFUNDING BONDS SERIES 2016-B DATED JULY 26, 2016 Line 33 Line 34 Last Date On which Date the Refunded Refunded Bonds will Bonds were Be Called Issued (MM/DDNYYY) (MMIDDNYYY) 10101/2016 0712712006 1010112017 0612712007 1010112017 0713012008 1010112018 0713012009 10101/2018 0510512010 10101/2018 0712812011 0810112016 0712912015 072281 fjn IRS Department of Treasury Internal Revenue Service Ogden UT 84201-0074 Notice Tax period Notice date Employer ID number To contact us CP152 July 31, 2016 September 26, 2016 48-6017288 Phone 1-877-829-5500 FAX 801-620-5555 072281.543100.68495.28633 1 AT 0.399 373 Page 1 of 1 I h I, I I I 111 I 11l I I II I 111 1111 II I I 11 II 111111 I I I I 1I I pl I I 11 1 I I I I I I 111 CITY OF SALINA KANSAS % ROD FRANZ FINANCE DIRECTOR 2405 GRAND BLVD STE 1100 KANSASCITY MO 64108-2521 Acknowledgment of your July 26, 2016 Form 8038-G We received your tax-exempt bond form This notice serves as official acknowledgment that we received your Form 8038-G. If you filed more than one form, you will receive a separate acknowledgment for each one. Important reminders Additional information Tax-exempt bond information Name of issue GENERAL OBLIGATION INTERNAL IMPROVE CUSIP number 794743 7F5 Issue date July 26, 2016 Issue price $21,822,771.00 Maturity date October 1, 2036 • Attach a copy of this notice to all of your correspondence and documents related to this tax-exempt bond. • If a tax practitioner or someone else prepared your form, you may want to give them a copy of this notice. (A copy was automatically sent to all representatives authorized with a Power-of-Attorney for this form.) • Visit www.irs.gov/cp152. • For tax forms, instructions, and publications, visit www.irs.gov or call 1-800-TAX-FORM (1-800-829-3676). • If you have questions about tax-exempt bonds, call TEGE Customer Account Services at 1-877-829-5500. • Keep this notice for your records. If you need assistance, please don't hesitate to contact us. EXHIBIT B-1 RECEIPT FOR PURCHASE PRICE $6,570,000 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2016-A DATED JULY 26, 2016 The undersigned Director of Finance and Administration of the City of Salina, Kansas, this day received from Robert W. Baird & Co., Inc., Milwaukee, Wisconsin, the original purchaser of the above- described bonds (the "Series 2016-A Bonds"), the full purchase price of the Series 2016-B Bonds, said purchase price and net amount received by the Issuer being calculated as follows: Principal Amount. ................................. . Plus Accrued Interest ............................ . Less Underwriting Discount.. ............... . Plus Net Original Issue Premium ......... . Total Purchase Price ................. . Less Good Faith Deposit ...................... . Net Amount Received .............. . DATED: July 26, 2016. B-1-1 $6,570,000.00 0.00 -98,945.71 111 ,766.35 $6,582,820.64 -131 ,400.00 $6,451,420.64 CITY OF SALINA, KANSAS EXHIBITB-2 RECEIPT FOR PURCHASE PRICE $13,750,000 GENERAL OBLIGATION REFUNDING BONDS SERIES 2016-B DATED JULY 26, 2016 The undersigned Director of Finance and Administration of the City of Salina, Kansas, this day received from Robert W. Baird & Co., Inc., Milwaukee, Wisconsin, the original purchaser of the above- described bonds (the "Series 2016-B Bonds"), the full purchase price of the Series 2016-B Bonds, said purchase price and net amount received by the Issuer being calculated as follows: Principal Amount.. ................................ . Plus Accrued Interest.. ......................... .. Less Underwriting Discount.. ............... . Plus Net Original Issue Premium ......... . Total Purchase Price ................ .. Less Good Faith Deposit ..................... .. Net Amount Received .............. . DATED: July 26, 2016. B-2-1 $13,750,000.00 0.00 -154,824.86 1,391,004.20 $14,986,179.34 -275 ,000.00 $14,711,179.34 CITY OF SALINA, KANSAS EXHIBITC RECEIPT AND REPRESENTATION $6,570,000 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2016-A DATED JULY 26, 2016 $13,750,000 GENERAL OBLIGATION REFUNDING BONDS SERIES 2016-8 DATED JULY 26, 2016 This certificate is being delivered by Robert W. Baird & Co., Inc., Milwaukee, Wisconsin (the "Purchaser") in connection with the issuance of the above-described bonds (collectively, the "Bonds"), being issued on the date of this Receipt by the City of Salina, Kansas (the "Issuer"). Based on its records and infonnation 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 Sc/zetlule I attached to this Certificate, without accrued interest (the ·'Offering Prices"). On the basis of information available to us which we believe to be correct, we expect that at least JO percent of the Bonds of each maturity will be sold to the public at offering prices no higher than said Offering Prices. In conjunction with (i) an audit or inquiry by the Internal Revenue Service or the Securities and Exchange Commission relating to the pricing of the Bonds, or (ii) the implementation of future regulation or similar guidance from the Internal Revenue Service, the Securities and Exchange Commission or other federal or state regulatory authority regarding the retention of pricing data for the Bonds, at the request of the Issuer, the Purchaser will provide infonnation explaining the factual basis for the Purchaser's representations in this Receipt relating to the pricing of the Bonds, other than information that would identify customers (e.g., name or account number). This agreement by the Purchaser to provide such information will continue to apply after the Closing Time but shall not extend to any customer data or other confidential or proprietary information of the Purchaser. 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] Dated: July 26, 2016. ROBERT W. BAIRD & CO., INC. :'.LW~ Title:~ (Signature Page to Purchaser's Receipt) SCHEDULE/ Series 2016-A Bonds Maturity Type of Bond Coupon Yield Maturity Value Price 10/01/2017 Serial Coupon 2.000% 0.650% 240,000.00 I 01.584% 10/01/2018 Serial Coupon 2.000% 0.780% 270,000.00 102.632% 10/01/2019 Serial Coupon 2.000% 0.850% 275,000.00 103.600% 10/01/2020 Serial Coupon 2.000% 0.950% 280,000.00 104.293% 10/01/2021 Serial Coupon 3.000% 1.100% 285,000.00 109.541% 10/01/2022 Serial Coupon 3.000% 1.230% 295,000.00 110.501% 10/01/2023 Serial Coupon 3.000% 1.330% 305,000.00 111.399% 10/01/2024 Serial Coupon 2.000% 1.450% 315,000.00 103.736% I 0/01/2025 Serial Coupon 2.000% 1.570% 320,000.00 102.908% 10/01/2026 Serial Coupon 2.000% 1.700% 325,000.00 102.018% 10/01/2028 Tenn I Coupon 2.000% 2.000% 670,000.00 100.000% I 0/01/2029 Serial Coupon 2.000% 2.100% 345,000.00 98.852% 10/01/2030 Serial Coupon 2.125% 2.200% 355,000.00 99.089% 1 O/Ol /2031 Serial Coupon 2.250% 2.300% 360,000.00 99.360% I 0/01/2032 Serial Coupon 2.250% 2.400% 370,000.00 97.996% 10/01/2033 Serial Coupon 2.375% 2.500% 375,000.00 98.261% I 0/01/2034 Serial Coupon 2.500% 2.550% 385,000.00 99.274% 10/01/2035 Serial Coupon 2.500% 2.600% 395,000.00 98.495% I 0/01/2036 Serial Coupon 2.500% 2.650% 405,000.00 97.665% Total $6,570,000.00 Series 2016-B Bonds Maturity Type of Bond Coupon Yield Maturity Value Price 10/01/2018 Serial Coupon 2.000% 0.780% 670,000.00 102.632% 10/01/2019 Serial Coupon 3.000% 0.850% 650,000.00 106.731% 10/01/2020 Serial Coupon 3.000% 0.950% 645,000.00 108.381% I 0/01/2021 Serial Coupon 4.000% 1.100% 1,595,000.00 114.563% 10/01/2022 Serial Coupon 5.000% 1.230% 1,985,000.00 122.369% 10/0 l /2023 Serial Coupon 5.000% 1.330% 1,935,000.00 125.052% I O/Ol /2024 Serial Coupon 2.000% 1.450% I, 770,000.00 103.736% 10/01/2025 Serial Coupon 2.000% 1.570% 1,370,000.00 I 02.908% 10/01/2026 Serial Coupon 2.000% 1.700% 980,000.00 102.018% 10/01/2028 Term I Coupon 2.000% 2.000% 1,290,000.00 100.000% 10/01/2029 Serial Coupon 2.000% 2.100% 545,000.00 98.852% 10/01/2030 Serial Coupon 2.125% 2.200% 155,000.00 99.089% 10/01/2031 Serial Coupon 2.125% 2.300% 160,000.00 97.766% Total -$13,750,000.00 S-1 EXHIBITD DESCRIPTION OF FINANCED IMPROVEMENTS; FINAL ALLOCATION $6,570,000 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2016-A $13,750,000 GENERAL OBLIGATION REFUNDING BONDS SERIES 2016-B DATED JULY 26, 2016 ISSUE DATE: JULY 26, 2016 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 filed 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 26, 2016 (the "Issue Date"). Background. The Bonds were issued pursuant to the Bond Resolutions 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. A portion of the costs of the Improvements were paid from sale proceeds of the Bonds, earnings from the investment of those proceeds and from other money of the Issuer as shown on the attached Schedule to this Final Written Allocation. The portions of the Improvements financed with proceeds of the Bonds and from other money of the Issuer are also shown on the attached Schedule to this Final Written Allocation. D-1 Identification and Timing of Expenditures for Arbitrage Purposes. For purposes of complying with the arbitrage rules, the Issuer allocates the proceeds of the Project Portion to the various expenditures described in the invoices, requisitions or other substantiation supporting the Schedule 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 underwriter's 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 dates set out on the Schedule 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. D-2 SCHEDULE TO FINAL WRITTEN ALLOCATION SOURCES AND USES; IMPROVEMENTS EXHIBIT D TO FEDERAL TAX CERTIFICATE City of Salina, Kansas Final Allocation of Bond Proceeds (Original Obligations) Series 2015-1 Series 2016A and Series 1993A Series 2002A Series 2006-B Series 2007-A Series 2008-A Series 2009-A Series 2010-A Series 2011-A Notes 2016B Sources: Par Amount $ 3,200,000.00 $ 2,045,000.00 $ 885,000.00 $ 6,545,000.00 $3,720,000.00 $ 23,695,000.00 $6,875,000.00 $6,565,000.00 $ 5,995,000.00 $ 20,320,000.00 Original Issue Premium (Discount) (2,743.45) 6,329.00 48,306.35 43,532.00 1,497,076.65 41,592.37 114,184.55 35,910.05 1,502,770.55 Accrued Interest 4,546.21 1,292.50 9,704.58 5,896.88 38,866.15 2,004.46 8,555.28 Prior Issue Debt Service Funds 85,890.83 284,699.38 Remaining Note Proceeds 314,662.72 160,518.26 Prepaid Assessments 57,175.24 134,513.95 141,050.84 Issuer Funds 732,081.17 207,757.50 Cash Balance After Encumberances 32,278.82 Prior Reserve 265,000.00 Total $ 3,200,000.00 $ 2,397,693.59 $ 892,621.50 $ 6,603,010.93 $4,141,266.84 $ 26,097,537.92 $7,126,354.33 $6,989,308.93 $ 6,030,910.05 $ 22,139,748.75 Uses: Project Fund $ 2,896.150.00 $ $ 869,381.00 $ 6,500,965.00 $ 129,669.05 $ 20,767,856.05 $6,248,171.65 $4,301,626.60 $ 6,022,084.92 $ 501,392.38 Escrow Fund 2,348,422.02 3,928,798.91 5,080,478.75 824,340.72 2,512,500.00 21,249,436.81 Debt Service Fund 4,546.21 1,292.50 9,704.58 33,020.48 38,866.15 2,004.46 31,540.13 7,326.38 Cost oflssuance 38,850.00 24,275.36 15,620.25 47,307.50 33,370.00 82,620.92 51,837.50 52,442.50 135,148.99 Underwriter's Discount 20,450.00 6,327.75 45,033.85 16,408.40 127,716.05 91,199.70 1,498.75 253,770.57 Reserve 265,000.00 Total $ 3,200,000.00 $ 2.397,693.59 $ 892,621.50 $ 6.603,010.93 $4,141,266.84 $ 26,097,537.92 $7,126,354.33 $6.989,308.93 $ 6,030,910.05 $ 22,139,748.75 Gilmore & Bell, P.C. D-1 July 26, 2016 EXHIBIT D TO THE FEDERAL TAX CERTIFICATE Description of Property Comprising the Financed Facility Series 1993A Project (Ref11nded by Series 2002A) Estimated Elapsed Estimated Economic Original Placed in Time Remaining Lifex Economic Service from Economic Financed Asset Description Life Date Issue Date Life Cost Cost Acquire Land Treatment plant improvements 45 August-93 O.QJ 45.01 14,747,328 663,777,233 Interceptor improvements 45 August-93 O.QJ 45.01 6,895,117 310,349,216 21,642,445 974,126,449 less land costs Net costs, excluding land 21,642,445 Series 1993 Original Average, Reasonably Expected Economic Life: 45.01 years 120% of Original Economic Life 120% 54.01 years Issue Date of Series 1993A Bonds 7/29/1993 Issue Date of Series 2010-A Bonds 5/5/2010 less Years elapsed (16.77} Remaining permitted weighted average bond maturity 37.24 years 1993A Bond Proceeds Allocated to Project Costs 2,896,150 13.38% Other Money Allocated to Project Costs 18,746,295 86.62% Total Project Costs 21,642,445 100.00% Series io I 0-A Project Estimated Elapsed Estimated Economic Original Placed in Time Remaining Lifex Economic Service from Economic Financed Asset Description Life Date Issue Date Life Cost Cost Acquire Land Landfill 5 May-IO 0.00 5.00 1,587,948 7,939,740 Bicentennial Center 50 September-to 0.32 50.32 2,481,169 124,852,424 Fire Station 50 September-I I 1.32 51.32 1,773,539 91,018,021 Scoular SBD 50 January-IO -0.34 49.66 52,105 2,587,534 Stone Creek SBD 50 August-09 -0.76 49.24 351,433 17,304,561 6,246,194 243,702,281 less land costs Net costs, excluding land 6,246,194 Series 2010-A Original Average, Reasonably Expected Economic Life: 39.02 years 120% of Original Economic Life 120% 46.82 years Gilmore & Bell. P. C. D-2 July 26, 2016 2010-A Bond Proceeds Allocated to Project Costs Other Money Allocated to Project Costs Total Project Costs Description of Property Comprising the Financed Facility Series 2010-A-Determination of Average, Reasonably Expected Economic Life of Financed Facilities Refund Series 2002-A Bonds Series 20 I 0-A Project Total Net Uses: Description Use of Series 2010-A Proceeds 616,583 6,246,193 6,862,776 120% of Series 2010-A Expected Economic Life of Facilities Financed: Gilmore & Bell. P. C. Issue Date of Series 2010-A Bonds Issue Date of Series 2016-B Bonds Less Years elapsed Remaining permitted weighted average bond maturity D-3 120% of Average Life (yrs) 37.24 46.82 5/5/2010 7/25/2016 Proceeds X Life 22,962,784 292,442,690 315,405,474 45.96 years (6.22) 39.74 years 6,246,194 6,246,194 100.00% 0.00% 100.00% July 26, 2016 Description of Proper!)' Comprising the Financed Facilit~· Series 2006-B Project Estimated Elapsed Estimated Economic Original Placed in Time Remaining Lifex Economic Service from Economic Financed Asset Description Life Date Issue Date Life Cost Cost Acquire Land South Ohio Steet Project 30 July-06 0.00 30.00 2,830,000.00 84,900,000 St. Elizabeth Ann Seton Roman Catholic Church Sanitary Sewer Improvements/ Twin Oaks 11 Subdivisions 40 July-06 0.00 40.00 55,010.00 2,200,400 Pioneer Presidents Place and St. John's Lutheran Church Improvements 30 July-06 0.00 30.00 407,477.20 12,224,316 South Marymount Road Improvements 30 July-06 0.00 30.00 282,760.50 8,482,815 3,575,248 107,807,531 Less land costs Net costs, excluding land 3,575,248 Series 2006-B Original Average, Reasonably Expected Economic Life: 30.15 years 120% of Original Economic Life 120% 36.18 years Issue Date of Series 2006-B Bonds 7/27/2006 Issue Date of Series 2016-A Bonds 7/26/2016 Less Years elapsed {10.00} Remaining pennitted weighted average bond maturity 26.18 years 2006-B Bond Proceeds Allocated to Project Costs 869,381 24.32% Other Money Allocated to Project Costs 2,705,867 75.68% Total Pro·ect Costs 3,575,248 100.00% Series 2007-A Pro}ect Estimated Elapsed Estimated Economic Original Placed in Time Remaining Life X Economic Service from Economic Financed Asset Description Life Date Issue Date Life Cost Cost Acquire Land North Ohio Overpass 30 June-07 0.00 30.00 2,240,000.00 67,200,000 North Broadway Boulevard 30 June-07 0.00 30.00 2,257,939.00 67,738,170 Magnolia Hills Subdivision 25 June-07 0.00 25.00 790,029.00 19,750,725 Piercy Addition 30 June-07 0.00 30.00 147,901.00 4,437,030 Golden Eagle #4 35 June-07 0.00 35.00 312,675.00 10,943,625 Eagle Med 40 June-07 0.00 40.00 27,599.00 1,103,960 Quail Meadows Phase II 35 June-07 0.00 35.00 494,675.00 17,313,625 West Grand Water 40 June-07 0.00 40.00 201,950.00 8,078,000 Lakeside Addition 40 June-07 0.00 40.00 72,232.00 2,889,280 6,545,000 199,454,415 Less land costs Net costs, excluding land 6,545,000 Gilmore & Bell. P.C. D-4 July 26, 2016 Description of Property Comprising the Financed Facilit~' Series 2007-A Original Average, Reasonably Expected Economic Life: 120% of Original Economic Life Issue Date of Series 2007-A Bonds Issue Date of Series 2016-B Bonds Less Years elapsed Remaining permitted weighted average bond maturity 2007-A Bond Proceeds Allocated to Project Costs Other Money Allocated to Project Costs Total Pro_ject Costs Gilmore & Bell. P. C. 120% 6/27/2007 7/26/2016 D-5 30.47 years 36.57 years (9.08) 27.49 years 6,500,965 44,035 6,545 000 99.33% 0.67% 100.00% July 26, 2016 Description of Property Comprising the Financed Facility Series 2008-A Project Estimated Elapsed Estimated Economic Original Placed in Time Remaining Life x Economic Service from Economic Financed Asset Description Life Date Issue Date Life Cost Cost Acquire Land Liberty Addition Sewer 40 May-07 -1.19 38.81 483,444.29 18,762,473 Des Moines Avenue 40 October-06 -1.76 38.24 61,917.25 2,367,716 South Ohio Corridor, Part II 40 October-OS 0.25 40.25 1,034,241.77 41,628,231 Liberty Addition #2 Phase m 40 October-07 -0.77 39.23 661,874.04 25,965,319 Magnolia Hills Estates Phase II 40 February-OS -0.42 39.58 548,602.11 21,713,672 Quail Meadows Phase III 40 October-07 -0.77 39.23 246,914.11 9,686,441 Golden Eagle #4 Phase III 40 February,08 -0.42 39.58 308,983.93 12,229,584 Pacific Avenue 40 March-09 0.67 40.67 297,308.87 12,091,552 Glenn A venue 40 April-08 -0.27 39.73 43,343.63 1,722,042 3,686,630 146,167,029 Less land costs Net costs, excluding land 3,686,630 Series 2008-A Original Average, Reasonably Expected Economic Life: 39.65 years 120% of Original Economic Life 120% 47.58 years Issue Date of Series 2008-A Bonds 7/30/2008 Issue Date of Series 2016-B Bonds 7/26/2016 Less Years elapsed (7.99) Remaining permitted weighted average bond maturity 39.59 years 2008-A Bond Proceeds Allocated to Project Costs 3,686,630 100.00% Other Money Allocated to Project Costs 0.00% Total Project Costs 3,686,630 100.00% Gilmore & Bell. P. C. D-6 July 26, 2016 Description of Property Comprising the Financed Facility Series 2009-A Project Estimated Elapsed Estimated Economic Original Placed in Time Remaining Lifex Economic Service from Economic Financed Asset Description Life Date Issue Date Life Cost Cost Acquire Land North Ohio 40 January-OS -1.58 38.42 19,783,065.00 760,065,357 West Diamond Drive 40 June-09 -0.08 39.92 770,887.00 30,773,809 Eagle Crest 40 November-OS -0.67 39.33 602,891.00 23,711,703 Quail Meadows IV 40 October-OS -0.75 39.25 931,831.00 36,574,367 Red Fox 40 December-OS -0.58 39.42 639,259.00 25,199,590 South Nine Phase IV 40 October-to 1.25 41.25 6,500,000.00 268,125,000 Energy Project 20 August-09 0.08 20.08 1,350,000.00 27,108,000 Aquatics Facility 20 May-JO 0.83 20.83 11,500,000.00 239,545,000 Fire Truck 15 July-JO 1.00 16.00 875,000.00 14,000,000 42,952,933 1,425,102,826 Less land costs Net costs, excluding land 42,952,933 Series 2009-A Original Average, Reasonably Expected Economic Life: 33.18 years 120% of Original Economic Life 120% 39.81 years Issue Date of Series 2009-A Bonds 7/30/2009 Issue Date of Series 2016-B Bonds 7/26/2016 Less Years elapsed (6.99) Remaining pennitted weighted average bond maturity 32.82 years 2009-A Bond Proceeds Allocated to ProJect Costs 25,848,335 60.18% Other Money Allocated to Project Costs 17,104,598 39.82% Total Proiect Costs 42,952,933 100.00% Series 2011-A Pro]ect Estimated Elapsed Estimated Economic Original Placed in Time Remaining Life X Economic Service from Economic Financed Asset Description Life Date Issue Date Life Cost Cost Acquire Land Grand Prairie SBD 40 January-I I -0.58 39.42 1,458,635.00 57,499,392 Riffel#2 SBD 40 March-I! -0.41 39.59 965,515.00 38,224,739 Bergkamp SBD 40 March-II -0.41 39.59 165,000.00 6,532,350 Salina Airport Utility/Fire Improvements 50 July-12 0.93 50.93 3,732,315.00 190,086,803 E. Magnolia Design 40 June-13 1.84 41.84 4,500,000.00 188,280,000 10,821,465 480,623,284 Less land costs Net costs, excluding land 10,821,465 Gilmore & Bell. P.C. D-7 July 26, 2016 Description of Property Comprising the Financed Facility Series 2011-A Original Average, Reasonably Expected Economic Life: 120% of Original Economic Life Issue Date of Series 2011-A Bonds Issue Date of Series 2016-B Bonds Less Years elapsed Remaining pennitted weighted average bond maturity 2011-A Bond Proceeds Allocated to Project Costs Other Money Allocated to Project Costs Total Project Costs Series 2016A Project Asset Description Acquire Land Tron Avenue North Ohio Fire HQ Centennial Road Less land costs Net costs, excluding land Series 2016A Original Average, Reasonably Expected Economic Life: 120% of Original Economic Life 120% 7/28/2011 7/26/2016 Original Economic Life 40 40 40 40 120% 44.41 years 53.30 years (4.99} 48.31 years Estimated Elapsed Placed in Time Service from Date Issue Date July-16 0.00 July-16 0.00 July-16 0.00 July-16 0.00 40.00 years 48.00 years Estimated Remaining Economic Life 40.00 40.00 40.00 40.00 Series 2016A and 2016B -Determination of Average, Reasonably Expected Economic Life of Financed Facilities Refund Series 2006-B Bonds Refund Series 2007-A Bonds Refund Series 2008-A Bonds Refund Series 2009-A Bonds Refund Series 20 I 0-A Bonds Refund Series 2011-A Bonds Description Series 2016A Project (includes refinancing Series 2015-1 Notes) Total Net Uses: 120% of Series 2016A and 2016B Expected Economic Life of Facilities Financed: Gilmore & Bell. P.C. Use of Series 2016A and 201 • Proceeds 249,723 3,948,316 2,024,778 5,973,094 2,463,479 519,693 6,571,746 21,750,829 D-8 120% of Average Proceeds Life (yrs) X Life 26.18 6,538,895 27.49 I 08,535,989 39.59 80,155,772 32.82 196,060,187 39.74 97,895,906 48.31 25,104,629 48.00 315,443,818 829,735,195 38.15 6,535,542 60.39% 4,285,923 39.61% 10,821,465 100.00% Economic Life X Financed Cost Cost 2,279,568.00 91,182,720 1,723,452.00 68,938,080 2,020,342.00 80,813,680 544,745.64 21,789,826 6,568,108 262,724,306 6,568,108 July 26, 2016 EXHIBITE FORM OF ANNUAL COMPLIANCE CHECKLIST $6,570,000 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2016-A $13,750,000 GENERAL OBLIGATION REFUNDING BONDS SERIES 2016-B DATED JULY 26, 2016 ISSUE DATE: JULY 26, 2016 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) any obligation issued to refund the Bonds. Bond Compliance Officer Name: ~[ -----~] Bond Compliance Officer Signature: Date of Report: [ l Annual Period Covered by Report: ~[ -----~] **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 0Yes Ownership entire Annual Period? 0No If answer above was "No," was an Opinion of Bond Counsel obtained 0Yes prior to the transfer? 0No 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 0Yes Leases & leased at any time pursuant to a lease or similar agreement for more than 0No Other Rights 50 days? to Possession If answer above was "Yes," was an Opinion of Bond Counsel obtained 0Yes prior to entering into the lease or other arrangement? 0No 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. 3 During the Annual Period, has the management of all or any part of the 0Yes Management operations of the Financed Improvements (e.g., plant operations, 0No or Service concessions, etc.) been assumed by or transferred to another entity? Agreements If answer above was "Yes," was an Opinion of Bond Counsel obtained 0Yes prior to entering into the management agreement? 0No 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. 4 Was any other agreement entered into with an individual or entity that 0Yes Other Use grants special legal rights to the Financed Improvements? 0No If answer above was "Yes," was an Opinion of Bond Counsel obtained 0Yes prior to entering into the agreement? 0No 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. 5 Have any Gross Proceeds of the Bonds been invested in a Guaranteed 0Yes Proceeds & Investment Contract? 0No Investments Has the Issuer entered into an Interest Rate Swap Agreement with 0Yes respect to the Bonds? 0No Has any sinking or reserve fund for the payment of the Bonds been 0Yes established ( other than funds and accounts created in the Bond 0No Resolutions)? Have any of the Bonds been redeemed or refunded in advance of their 0Yes scheduled maturities? 0No 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 6 Arbitrage & Rebate Bond Counsel: Question Have all rebate and yield reduction calculations mandated in the Federal Tax Certificate or Compliance Agreement been prepared for the current year? If No, contact Rebate Analyst and incorporate report description ofresolution in the Tax-Exempt Bond File. Gilmore & Bell, P.C. 2405 Grand Blvd., Suite 1100 Kansas City, MO 64108 Phone: (816) 221-1000 Fax: (816)221-1018 Attn: Gina Riekhof Email: griekhof@gilmorebell.com E-3 or include Response 0Yes 0No EXHIBITF ALLOCATION OF BONDS -MULTIPURPOSE ISSUE F-1 Jul 12, 2016 1:27 pm Prepared by Gilmore && Bell, P.C. Page 2 BOND DEBT SERVICE City of Salina, Kansas General Obligation Improvement and Refunding Bonds, Series 2016-A and 2016-B Period Annual Ending Principal Coupon Interest Debt Service Debt Service 04/01/2017 399,958.25 399,958.25 10/01/2017 240,000 2.000% 293,846.88 533,846.88 933,805.13 04/01/2018 291,446.88 291,446.88 10/01/2018 940,000 2.000% 291,446.88 1,231,446.88 1,522,893.76 04/01/2019 282,046.88 282,046.88 10/01/2019 925,000 ** % 282,046.88 1,207,046.88 1,489,093.76 04/01/2020 269,546.88 269,546.88 10/01/2020 925,000 ** % 269,546.88 1,194,546.88 1,464,093.76 04/01/2021 257,071.88 257,071.88 10/01/2021 1,880,000 ** % 257,071.88 2,137,071.88 2,394,143.76 04/01/2022 220,896.88 220,896.88 10/01/2022 2,280,000 ** % 220,896.88 2,500,896.88 2,721,793.76 04/01/2023 166,846.88 166,846.88 10/01/2023 2,240,000 ** % 166,846.88 2,406,846.88 2,573,693.76 04/01/2024 113,896.88 113,896.88 10/01/2024 2,085,000 2.000% I 13,896.88 2,198,896.88 2,312,793.76 04/01/2025 93,046.88 93,046.88 10/01/2025 1,690,000 2.000% 93,046.88 1,783,046.88 1,876,093.76 04/01/2026 76,146.88 76,146.88 10/01/2026 1,305,000 2.000% 76,146.88 1,381,146.88 1,457,293.76 04/01/2027 63,096.88 63,096.88 10/01/2027 1,085,000 2.000% 63,096.88 I, 148,096.88 1,211,193.76 04/01/2028 52,246.88 52,246.88 10/01/2028 875,000 2.000% 52,246.88 927,246.88 979,493.76 04/01/2029 43,496.88 43,496.88 10/01/2029 890,000 2.000% 43,496.88 933,496.88 976,993.76 04/01/2030 34,596.88 34,596.88 10/01/2030 510,000 2.125% 34,596.88 544,596.88 579,193.76 04/01/2031 29,178.13 29,178.13 10/01/2031 520,000 ** % 29,178.13 549,178.13 578,356.26 04/01/2032 23,428.13 23,428.13 10/01/2032 370,000 2.250% 23,428.13 393,428.13 416,856.26 04/01/2033 19,265.63 19,265.63 10/01/2033 375,000 2.375% 19,265.63 394,265.63 413,531.26 04/01/2034 14,812.50 14,812.50 10/01/2034 385,000 2.500% 14,812.50 399,812.50 414,625.00 04/01/2035 10,000.00 10,000.00 10/01/2035 395,000 2.500% 10,000.00 405,000.00 415,000.00 04/01/2036 5,062.50 5,062.50 10/01/2036 405,000 2.500% 5,062.50 410,062.50 415,125.00 20,320,000 4,826,067.79 25,146,067.79 25,146,067.79 This infonuation is provided based on the factual information and assumptions provided to Gilmore & Bell, P .C. by a party to or fl representative of a party to the proposed transaction. This infonnation is intended to provide facn>al infonmtion only and is provided in conjunction with our legal representation. It is not intended as fin.mcial advice or a financial recommendation lo eny party. Gilmore & BeJJ. P.C. is not a finandal advisor or a "municipal advisor" as defined in the Securities Excban,ge Act of 1934. as am.ended. Jul 12, 2016 1 :27 pm Prepared by Gilmore && Bell, P.C. Page 9 BOND PRICING City of Salina, Kansas General Obligation Improvement and Refunding Bonds, Series 2016-A and 2016-B Maturity Premium Bond Component Date Amount Rate Yield Price (-Discount) General Obligation Internal Improvement Bonds, Series 2016A, Serials: 10/01/2017 240,000 2.000% 0.651% 101.584 3,801.60 10/01/2018 270,000 2.000% 0.780% 102.632 7,106.40 10/01/2019 275,000 2.000% 0.850% 103.600 9,900.00 10/01/2020 280,000 2.000% 0.950% 104.293 12,020.40 10/01/2021 285,000 3.000% 1.100% 109.541 27,191.85 10/01/2022 295,000 3.000% 1.230% 110.501 30,977.95 10/01/2023 305,000 3.000% 1.330% 111.399 34,766.95 10/01/2024 315,000 2.000% 1.450% 103.736 C 11,768.40 10/01/2025 320,000 2.000% 1.570% 102.908 C 9,305.60 10/01/2026 325,000 2.000% 1.700% 102.018 C 6,558.50 2,910,000 153,397.65 General Obligation Internal Improvement Bonds, Series 2016A, Serials2: 10/01/2029 345,000 2.000% 2.100% 98.852 -3,960.60 10/01/2030 355,000 2.125% 2.200% 99.089 -3,234.05 10/01/2031 360,000 2.250% 2.300% 99.360 -2,304.00 10/01/2032 370,000 2.250% 2.400% 97.996 -7,414.80 10/01/2033 375,000 2.375% 2.500% 98.261 -6,521.25 10/01/2034 385,000 2.500% 2.550% 99.274 -2,795.10 10/01/2035 395,000 2.500% 2.600% 98.495 -5,944.75 10/01/2036 405,000 2.500% 2.650% 97.665 -9,456.75 2,990,000 -41,631.30 General Obligation Internal Improvement Bonds, Series 2016A, Term 2028: 10/01/2028 670,000 2.000% 2.000% 100.000 General Obligation Refunding Bonds, Series 2016-B, Serials: 10/01/2018 670,000 2.000% 0.780% 102.632 17,634.40 10/01/2019 650,000 3.000% 0.850% 106. 731 43,751.50 10/01/2020 645,000 3.000% 0.950% 108.381 54,057.45 10/01/2021 1,595,000 4.000% 1.100% 114.563 232,279.85 10/01/2022 1,985,000 5.000% 1.230% 122.369 444,024.65 10/01/2023 1,935,000 5.000% 1.330% 125.052 484,756.20 10/01/2024 1,770,000 2.000% 1.450% 103.736 C 66,127.20 10/01/2025 1,370,000 2.000% 1.570% 102.908 C 39,839.60 10/01/2026 980,000 2.000% 1.700% 102.018 C 19,776.40 11,600,000 1,402,247.25 General Obligation Refunding Bonds, Series 2016-B, TERM 2028: 10/01/2028 1,290,000 2.000% 2.000% 100.000 General Obligation Refunding Bonds, Series 2016-B, Serials: 10/01/2029 545,000 2.000% 2.100% 98.852 -6,256.60 10/01/2030 155,000 2.125% 2.200% 99.089 -1,412.05 10/01/2031 160 000 2.125% 2.300% 97.766 -3,574.40 860,000 -11,243.05 20,320,000 1,502,770.55 This information is provided based on the facrual information and assumptions provided to Gilmore & Bell. P.C. by a party to or a representative ofa party to the proposed transaction. Tb.is infonnation is intended to provide facnJal infonnalion only aud is provided in conjunctjon witll our legal representation. It is not intended as financial advice or a financial recommendation to any party. Gilmore & Bell, P.C. is not a financial advisor or a "'municipal advisor" as defined in the Securities Exchange Act of 1934. as .amended. Jul 12, 2016 1:27 pm Prepared by Gilmore && Bell, P.C. Page 16 BOND PRICJNG City of Salina, Kansas General Obligation Internal Improvement Bonds, Series 2016A Maturity Premium Bond Component Date Amount Rate Yield Price (-Discount) Serials: 10/01/2017 240,000 2.000% 0.651% 101.584 3,801.60 10/01/2018 270,000 2.000% 0.780% 102.632 7,106.40 10/01/2019 275,000 2.000% 0.850% 103.600 9,900.00 10/01/2020 280,000 2.000% 0.950% 104.293 12,020.40 10/01/2021 285,000 3.000% 1.100% 109.541 27,191.85 10/01/2022 295,000 3.000% 1.230% 110.501 30,977.95 10/01/2023 305,000 3.000% 1.330% 111.399 34,766.95 10/01/2024 315,000 2.000% 1.450% 103.736 C 11,768.40 10/01/2025 320,000 2.000% 1.570% 102.908 C 9,305.60 10/01/2026 325,000 2.000% 1.700% 102.018 C 6,558.50 2,910,000 153,397.65 Serials2: 10/01/2029 345,000 2.000% 2.100% 98.852 -3,960.60 10/01/2030 355,000 2.125% 2.200% 99.089 -3,234.05 10/01/2031 360,000 2.250% 2.300% 99.360 -2,304.00 10/01/2032 370,000 2.250% 2.400% 97.996 -7,414.80 10/01/2033 375,000 2.375% 2.500% 98.261 -6,521.25 10/01/2034 385,000 2.500% 2.550% 99.274 -2,795.10 10/01/2035 395,000 2.500% 2.600% 98.495 -5,944.75 10/01/2036 405,000 2.500% 2.650% 97.665 -9,456.75 2,990,000 -41,631.30 Term 2028: 10/01/2028 670,000 2.000% 2.000% 100.000 6,570,000 111,766.35 Dated Date 07/26/2016 Delivery Date 07/26/2016 First Coupon 04/01/2017 Par Amount 6,570,000.00 Premium 111,766.35 Production 6,681,766.35 101.701162% Undervvriter's Discount -98,945.71 -1.506023% Purchase Price 6,582,820.64 100.195139% Accrued Interest Net Proceeds 6,582,820.64 This inforruarion is provided based on the facruaJ information and assumptions provided to Gilmore & Bell, P .C. by a party to or a representative of a party to the proposed transaction. This infonnation is intended to provide facmal infonnation only and is provided in conjunction with our legal s·epresentation. It is not intended as financial advice or a financial reco1D1Dendation to any party. Gilmore & Bell. P.C. is not a financial advisor or a "municipal advisor" as defined in tbe Securities Exchan_ge Act of 1934. as amended. Jul 12, 2016 I :27 pm Prepared by Gilmore && Bell, P .C. Page 18 BOND DEBT SERVICE City of Salina, Kansas General Obligation Internal Improvement Bonds, Series 2016A Period Annual Ending Principal Coupon Interest Debt Service Debt Service , 04/01/2017 101,981.25 101,981.25 10/01/2017 240,000 2.000% 74,925.00 314,925.00 416,906.25 04/01/2018 72,525.00 72,525.00 10/01/2018 270,000 2.000% 72,525.00 342,525.00 415,050.00 04/01/2019 69,825.00 69,825.00 10/01/2019 275,000 2.000% 69,825.00 344,825.00 414,650.00 04/01/2020 67,075.00 67,075.00 10/01/2020 280,000 2.000% 67,075.00 347,075.00 414,150.00 04/01/2021 64,275.00 64,275.00 10/01/2021 285,000 3.000% 64,275.00 349,275.00 413,550.00 04/01/2022 60,000.00 60,000.00 10/01/2022 295,000 3.000% 60,000.00 355,000.00 415,000.00 04/01/2023 55,575.00 55,575.00 10/01/2023 305,000 3.000% 55,575.00 360,575.00 416,150.00 04/01/2024 51,000.00 51,000.00 10/01/2024 315,000 2.000% 51,000.00 366,000.00 417,000.00 04/01/2025 47,850.00 47,850.00 I 0/01/2025 320,000 2.000% 47,850.00 367,850.00 415,700.00 04/01/2026 44,650.00 44,650.00 I 0/01/2026 325,000 2.000% 44,650.00 369,650.00 414,300.00 04/01/2027 41,400.00 41,400.00 10/01/2027 330,000 2.000% 41,400.00 371,400.00 412,800.00 04/01/2028 38,100.00 38,100.00 10/01/2028 340,000 2.000% 38,100.00 378,100.00 416,200.00 04/01/2029 34,700.00 34,700.00 10/01/2029 345,000 2.000% 34,700.00 379,700.00 414,400.00 04/01/2030 31,250.00 31,250.00 10/01/2030 355,000 2.125% 31,250.00 386,250.00 417,500.00 04/01/2031 27,478.13 27,478.13 10/01/203 I 360,000 2.250% 27,478.13 387,478.13 414,956.26 04/01/2032 23,428.13 23,428.13 10/01/2032 370,000 2.250% 23,428.13 393,428.13 416,856.26 04/01/2033 19,265.63 19,265.63 I 0/01/2033 375,000 2.375% 19,265.63 394,265.63 413,531.26 04/01/2034 14,812.50 14,812.50 10/01/2034 385,000 2.500% 14,812.50 399,812.50 414,625.00 04/01/2035 10,000.00 10,000.00 I 0/01/2035 395,000 2.500% 10,000.00 405,000.00 415,000.00 04/01/2036 5,062.50 5,062.50 I 0/01/2036 405,000 2.500% 5,062.50 410,062.50 415,125.00 6,570,000 1,733,450.03 8,303,450.03 8,303,450.03 This information is provided based on the factual information and assumptions provided to Gilmore & Bell, P .C. by a. party to or a representative of n party to the proposed transaction. This infonuation is intended to provide facmal infonnation only and is provided in conjunction with our legal representation. It is not intended as financial advice or a financial recommendation to nny party. Gihnore & Bell. P .C. is not a financial advisor or a "municipal advisor" as defined in the Securities Exchange Act of 1934. as amended. Jul 12, 2016 1:27 pm Prepared by Gilmore && Bell, P.C. Page 22 BOND PRICING City of Salina, Kansas General Obligation Refunding Bonds, Series 2016-B Maturity Premium Bond Component Date Amount Rate Yield Price (-Discount) Serials: 10/01/2018 670,000 2.000% 0.780% 102.632 17,634.40 10/01/2019 650,000 3.000% 0.850% 106.731 43,751.50 10/01/2020 645,000 3.000% 0.950% 108.381 54,057.45 10/01/2021 1,595,000 4.000% 1.100% 114.563 232,279.85 10/01/2022 1,985,000 5.000% 1.230% 122.369 444,024.65 10/01/2023 1,935,000 5.000% 1.330% 125.052 484,756.20 10/01/2024 1,770,000 2.000% 1.450% 103.736 C 66,127.20 10/01/2025 1,370,000 2.000% 1.570% 102.908 C 39,839.60 10/01/2026 980,000 2.000% 1.700% 102.018 C 19,776.40 11,600,000 1,402,247.25 TERM2028: 10/01/2028 1,290,000 2.000% 2.000% 100.000 Serials: 10/01/2029 545,000 2.000% 2.100% 98.852 -6,256.60 10/01/2030 155,000 2.125% 2.200% 99.089 -1,412.05 10/01/2031 160,000 2.125% 2.300% 97.766 -3,574.40 860,000 -11,243.05 13,750,000 1,391,004.20 Dated Date 07/26/2016 Delivery Date 07/26/2016 First Coupon 04/01/2017 Par Amount 13,750,000.00 Premium 1,391,004.20 Production 15,141,004.20 110.116394% Underwriter's Discount -154,824.86 -1.125999% Purchase Price 14,986,179.34 108.990395% Accrued Interest Net Proceeds 14,986,179.34 This information is provided based on the factual information and e.ssuruptfons provided to Gilmore & Bell, P.C. by a party to or a representative of a party to the proposed transaction. This information is intended to provide factual infonnation only and is provided in conjunctfon witb our legal representation. It is not intended as financial advice or a financial 1·ecomme11dation to any party. Gihnore c..'<:. Bell. P.C. is not a financial advisor or a "municipal ad,·isor" as defined in the Securities Exchange Act of 1934. as amended. Jul 12, 2016 1:27 pm Prepared by Gilmore && Bell, P.C. Page 24 BOND DEBT SERVICE City of Salina, Kansas General Obligation Refunding Bonds, Series 2016-B Period Annual Ending Principal Coupon Interest Debt Service Debt Service 04/01/2017 297,977.00 297,977.00 10/01/2017 218,921.88 218,921.88 516,898.88 04/01/2018 218,921.88 218,921.88 10/01/2018 670,000 2.000% 218,921.88 888,921.88 1,107,843.76 04/01/2019 212,221.88 212,221.88 10/01/2019 650,000 3.000% 212,221.88 862,221.88 1,074,443.76 04/01/2020 202,471.88 202,471.88 10/01/2020 645,000 3.000% 202,471.88 847,471.88 1,049,943.76 04/01/2021 192,796.88 192,796.88 10/01/2021 1,595,000 4.000% 192,796.88 1,787,796.88 1,980,593.76 04/01/2022 160,896.88 160,896.88 10/01/2022 1,985,000 5.000% 160,896.88 2,145,896.88 2,306,793.76 04/01/2023 111,271.88 111,271.88 10/01/2023 1,935,000 5.000% 111,271.88 2,046,271.88 2,157,543.76 04/01/2024 62,896.88 62,896.88 10/01/2024 1,770,000 2.000% 62,896.88 1,832,896.88 1,895,793.76 04/01/2025 45,196.88 45,196.88 10/01/2025 1,370,000 2.000% 45,196.88 1,415,196.88 1,460,393.76 04/01/2026 31,496.88 31,496.88 10/01/2026 980,000 2.000% 31,496.88 1,011,496.88 1,042,993.76 04/01/2027 21,696.88 21,696.88 10/01/2027 755,000 2.000% 21,696.88 776,696.88 798,393.76 04/01/2028 14,146.88 14,146.88 10/01/2028 535,000 2.000% 14,146.88 549,146.88 563,293.76 04/01/2029 8,796.88 8,796.88 10/01/2029 545,000 2.000% 8,796.88 553,796.88 562,593.76 04/01/2030 3,346.88 3,346.88 10/01/2030 155,000 2.125% 3,346.88 158,346.88 161,693.76 04/01/2031 1,700.00 1,700.00 10/01/2031 160,000 2.125% 1,700.00 161,700.00 163,400.00 13,750,000 3,092,617.76 16,842,617.76 16,842,617.76 This information is provided based on the facrual infonuation and assumptions provided to Gilmore & Bell, P .C. by a party to or a representative of a party to the proposed transaction. This information is in1ended to provide facnml infonnation only and is provided in conjunction with our legal representation. It is not intended as financial advice or a financial reconunendation to any party. Gilmore & Bell. P.C. is not a financial advisor or a hmunicip<ll ad,·isor" as defined in the Securities Exchange Act of 1934. as amended. Jul 12, 2016 1 :27 pm Prepared by Gilmore && Bell, P.C. SUMMARY OF BONDS REFUNDED City of Salina, Kansas General Obligation Refunding Bonds, Series 2016-B Bond Maturity Date Interest Rate Par Amount General Obligation Internal Improvement Bonds, Series 2006-B: TERM 10/01/2021 4.500% 185,000.00 General Obligation Internal Improvement Bonds, Series 2007-A: TERM 10/01/2027 4.625% 900,000.00 SERIALS 10/01/2018 4.500% 360,000.00 10/01/2019 4.500% 360,000.00 10/01/2020 4.500% 360,000.00 10/01/2021 4.500% 360,000.00 10/01/2022 4.500% 360,000.00 10/01/2023 4.500% 225,000.00 2,925,000.00 General Obligation Internal Improvement Bonds, Series 2008-A: BOND 10/01/2018 3.750% 250,000.00 10/01/2019 3.750% 250,000.00 10/01/2020 4.000% 250,000.00 10/01/2021 4.000% 250,000.00 10/01/2022 4.000% 250,000.00 10/01/2023 4.000% 250,000.00 1,500,000.00 General Obligation Internal Improvement Bonds, Series 2009-A: SERIALS 10/01/2021 3.600% 620,000.00 TERMl 10/01/2024 3.900% 2,040,000.00 TERM2 10/01/2027 4.150% 1,010,000.00 TERM3 10/01/2029 4.250% 755,000.00 4,425,000.00 Call Date 10/01/2016 10/01/2017 10/01/2017 10/01/2017 10/01/2017 10/01/2017 10/01/2017 10/01/2017 10/01/2017 10/01/2017 10/01/2017 10/01/2017 10/01/2017 10/01/2017 10/01/2018 10/01/2018 10/01/2018 10/01/2018 General Obligation Internal Improvement and Refunding Bonds, Series 2010-A: SERIAL 10/01/2021 3.300% 340,000.00 10/01/2018 10/01/2022 3.400% 350,000.00 10/01/2018 TERMl 10/01/2025 3.875% 1,135,000.00 10/01/2018 1,825,000.00 General Obligation Internal Improvement Bonds, Series 2011-A: SERIALS 10/01/2022 3.250% 385,000.00 I 0/01/2023 3.500% 400,000.00 10/01/2024 3.750% 415,000.00 10/01/2025 4.000% 430,000.00 10/01/2026 4.000% 445,000.00 10/01/2027 4.000% 220,000.00 10/01/2028 4.000% 230,000.00 10/01/2029 4.100% 240,000.00 TERM 10/01/2031 4.250% 510,000.00 3,275,000.00 14,135,000.00 10/01/2018 10/01/2018 10/01/2018 10/01/2018 10/01/2018 10/01/2018 10/01/2018 10/01/2018 10/01/2018 Call Price 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 Page 25 This info11uation is provided based on the factual infom1ation .and assumptions provided to Gilmore & Bell, P .C. by a pany to or a representative of a party to the proposed transaction. Tllis info1111ation is intended to provide facn,al infonnation only aud is provided in conjunction witb our legal representation. It is not intended as financial advice or a financial recommendation to any party. GHmore & Bell. P.C. is not n financ.ial advisor or a "municipal advisor·· as defined in the Securities Ex.chan_ge Act of 1934. as amended. Jul 12,2016 1:27 pm Prepared by Gilmore && Bell, P.C. Page 26 SAVINGS City of Salina, Kansas General Obligation Refunding Bonds, Series 2016-B Present Value Prior Refunding Annual to 07/26/2016 Date Debt Service Debt Service Savings Savings @ 2.0109165% 10/01/2016 284,699.38 284,699.38 284,699.38 283,672.71 04/01/2017 284,699.38 297,977.00 -13,277.62 -13,098.04 10/01/2017 324,699.38 218,921.88 105,777.50 92,499.88 103,308.16 04/01/2018 283,799.38 218,921.88 64,877.50 62,732.21 10/01/2018 933,799.38 888,921.88 44,877.50 109,755.00 42,961.59 04/01/2019 270,111.88 212,221.88 57,890.00 54,866.89 10/01/2019 915,111.88 862,221.88 52,890.00 110,780.00 49,629.00 04/01/2020 256,536.88 202,471.88 54,065.00 50,226.55 10/01/2020 901,536.88 847,471.88 54,065.00 108,130.00 49,726.57 04/01/2021 242,649.38 192,796.88 49,852.50 45,395.66 10/01/2021 1,847,649.38 1,787,796.88 59,852.50 109,705.00 53,959.12 04/01/2022 211,991.88 160,896.88 51,095.00 45,605.39 10/01/2022 2,206,991.88 2,145,896.88 61,095.00 112,190.00 53,988.17 04/01/2023 174,010.63 111,271.88 62,738.75 54,888.82 10/01/2023 2,094,010.63 2,046,271.88 47,738.75 110,477.50 41,349.88 04/01/2024 136,616.25 62,896.88 73,719.37 63,217.89 10/01/2024 1,866,616.25 1,832,896.88 33,719.37 107,438.74 28,628.13 04/01/2025 102,424.38 45,196.88 57,227.50 48,103.14 10/01/2025 1,467,424.38 1,415,196.88 52,227.50 109,455.00 43,463.34 04/01/2026 74,425.00 31,496.88 42,928.12 35,368.84 10/01/2026 1,079,425.00 1,011,496.88 67,928.12 110,856.24 55,409.44 04/01/2027 53,370.63 21,696.88 31,673.75 25,579.31 10/01/2027 853,370.63 776,696.88 76,673.75 108,347.50 61,304.33 04/01/2028 36,401.25 14,146.88 22,254.37 17,616.31 10/01/2028 636,401.25 549,146.88 87,254.37 109,508.74 68,382.03 04/01/2029 23,938.75 8,796.88 15,141.87 11,748.69 10/01/2029 648,938.75 553,796.88 95,141.87 110,283.74 73,086.44 04/01/2030 10,837.50 3,346.88 7,490.62 5,696.89 10/01/2030 260,837.50 158,346.88 102,490.62 109,981.24 77,171.96 04/01/2031 5,525.00 1,700.00 3,825.00 2,851.43 10/01/2031 265,525.00 161,700.00 103,825.00 107,650.00 76,628.03 18,754,375.72 16,842,617.76 1,911,757.96 1,911,757.96 I ,673,468.89 Savings Summary PV of savings from cash flow 1,673,468.89 Less: Prior funds on hand -284,699.38 Plus: Refunding funds on hand 1,063.99 Net PV Savings 1,389,833.50 This infonuation is provided based on the factual infom1ation and assumptions provided to Gilmore & Bell, P.C. by a party to or a representative ofa party to the proposed transection. This infonnation is intended to provide facnial infonnation only and is provided in conjunction wHh our legal representation. It is not intended as financial advice OJ' a financial rec,01runendation to any party. GHmore (.\: Bell. P.C. is not a financial advisor or a "municipal ad,·isor" as defined in the Securities Exchange Act of 1934. as amended. EXHIBITG NON-QUALIFIED USE ANALYSIS As part of the "Energy Project" originally financed by the City's Series 2009-A Bonds (which are being refinanced by the Bonds), a portion of the proceeds of the Series 2009-A Bonds (approximately $63,000 of $25,192,077, exclusive of issuance costs financed by the Series 2009-A Bonds, or approximately 0.25%) was used to finance improvements to the Salina Community Theatre. The City has entered into the Community Theatre Maintenance and Operating Agreement, dated December 1 7, 2007, with the Salina Community Theatre Association, a Kansas nonprofit corporation, relating to the operation and maintenance of the Salina Community Theatre, which agreement may give rise to a minimal amount of Non-Qualified Use of a portion of the hnprovements. The Series 2009-A Bonds were issued, in part, to finance the City's aquatic park known as Kenwood Cove, which includes an approximately 1,390 square foot concessions building. A portion of the proceeds of the 2009 Bonds (approximately $417,000 of $25,192,077, exclusive of issuance costs financed by the Series 2009-A Bonds, or approximately 1.66%) was used to finance the concessions building. The City has entered into the Concessions Management Agreement with the Global Spectrum, L.P., a Delaware corporation, relating to the operation and management of the concessions building at Kenwood Cove, which agreement may give rise to a minimal amount of Non-Qualified Use of a portion of the hnprovements. The City has issued various series of tax-exempt obligations to finance or refinance the City's facility known as the Bicentennial Center, including the Series 2010-A Bonds, which are being refinanced by the Bonds. The City has entered into the Management Agreement, dated as of March 1, 2012, with Global Spectrum, L.P., a Delaware corporation, relating to the operation and management of the Bicentennial Center. Bond Counsel has reviewed this agreement and has advised that this agreement does not give rise to Non-Qualified Use of any portion of the hnprovements. G-1 EXHIBITH CERTIFICATE OF BIDDING AGENT FOR ESCROW FUND H-1 BIDDING AGENT CERTIFICATE CERTIFICATE OF BIDDING AGENT This Certificate is being furnished by Causey, Demgen & Moore P.C. (the "Bidding Agent") with respect to the bidding for the purchase of certain securities (the "Escrow Securities") in connection with the issuance by the City of Salina, Kansas (the "Issuer") of the Issuer's General Obligation Refunding Bonds, Series 2016-B (the "Bonds"). Proceeds of the Bonds will be used to defease certain maturities of the Issuer's (1) General Obligation Internal Improvement Bonds, Series 2006-B, (2) General Obligation Internal Improvement Bonds, Series 2007-A, (3) General Obligation Internal Improvement Bonds, Series 2008-A, (4) General Obligation Internal Improvement Bonds, Series 2009-A, (5) General Obligation Internal Improvement and Refunding Bonds, Series 2010-A, and (6) General Obligation Internal Improvement Bonds, Series 2011-A (collectively, the "Prior Bonds"). This Certificate is intended to be used by Gilmore & Bell, P.C., as Bond Counsel with respect to the Bonds, in connection with their opinion regarding the exclusion from gross income for federal income tax purposes of interest payable on the Bonds. The undersigned HEREBY CERTIFIES as follows: 1. On July 11, 2016, the Bidding Agent participated in the solicitation of bids for the purchase of the Escrow Securities, to be held in or credited to the escrow account. In connection with the solicitation of bids, the Bidding Agent timely forwarded to potential bidders a bona fide solicitation for the sale or purchase, as applicable, of the Escrow Securities that specified, in writing, all material terms of such sale or purchase. 2. The terms of the bid specifications were commercially reasonable. Each term was included for a legitimate business reason, other than to increase the purchase price or decrease the yield for the Escrow Securities. 3. The bid specifications contained a notice to potential bidders that submission of a bid is a representation that the potential bidder did not consult with any other potential bidder about its bid, that the bid was determined without regard to any formal or informal agreement that the potential bidder has with the Issuer, the Bidding Agent, or any other person (whether or not in connection with the Bonds or the Prior Bonds), and that the bid is not being submitted solely as a courtesy to the Issuer, the Bidding Agent, or any other person for purposes of satisfying the federal income tax regulations relating to the yield and valuation of investments in connection with tax- exempt bonds. 4. At least three reasonably competitive bidders were solicited for bids of the Escrow Securities. A reasonably competitive bidder is one that has an established industry reputation as a competitive seller of the type of securities being purchased. All potential bidders had an equal opportunity to bid, and no potential bidder was given the opportunity to review other bids before providing a bid. 5. Of the bidders solicited by the Bidding Agent, the Bidding Agent received five bids for the Escrow Securities from bidders meeting the qualifications of the specifications and having no material financial interest (as provided herein) in the Bonds. Each of the bids was from a reasonably competitive provider, and no bid was from the Bidding Agent. As used herein, a bidder with a material financial interest is one who (i) served as a lead underwriter in connection with the Bonds, or (ii) served as a financial advisor in connection with the transaction described herein, or (iii) is a related party to either (i) or (ii) in this sentence. The Bidding Agent did not bid to provide the Escrow Securities. 6. The sale price submitted by Wells Fargo Securities (the "Provider") was the lowest price submitted (including any broker's fees) for which qualifying bids with respect to the purchase of the Escrow Securities were made. The Provider is a reasonably competitive provider of securities such as the Escrow Securities and has no material financial interest in the Bonds, as defined in Section 5 above. 7. The cost of the Escrow Securities was less than the cost of United States Treasury Securities, State and Local Government Series on the bid date of the Escrow Securities. 8. The Bidding Agent was paid a total fee of $3,500 (the "Fee") in connection with the purchase of the Escrow Securities. Except for the Fee, no other amount has been or will be paid to the Bidding Agent by any person in connection with the sale or purchase of the Escrow Securities. The Fee is a reasonable fee for the Bidding Agent's services in connection with soliciting bids for the purchase of the Escrow Securities, and such amount does not exceed the lesser of i) $39,000 or ii) 0.2% of the amount of gross proceeds, as of the date of purchase of the Escrow Securities, initially invested in the Escrow Securities or, if more, $4,000. 9. Attached hereto is documentation that the Bidding Agent provided to the Issuer, which sets forth (i) for each bid that was submitted, the name of the person and entity submitting the bid, the time and date of the bid, and the bid results; and (ii) the bid solicitation form and, if the terms of the bids deviated from the bid solicitation form or a submitted bid was modified, a brief statement explaining the deviation and stating the purpose for the deviation. The undersigned is authorized to execute this certificate on behalf of the Bidding Agent, which is based on one or more of (i) personal knowledge, (ii) inquiry deemed adequate by the undersigned, (iii) institutional knowledge regarding the matters set forth herein, (iii) a certificate executed by the Provider, as the winning bidder, and (iv) details and confirmations of the Escrow Securities. Dated: July 26, 2016 CAUSEY DEMGEN & MOORE P.C. By: Title: REQUEST FOR BIDS FORM -REQUEST FOR BIDS- CITY OF SALINA, KANSAS Security Portfolio City of Salina, Kansas Causey Demgen & Moore P .C., on behalf of the City of Salina, Kansas (the "Issuer"), is soliciting bids to purchase Eligible Securities (defined below) to fund the escrow requirements set forth in Exhibit A hereto (the "Defeasance Escrow"). The Defeasance Escrow will be established in connection with the issuance of the General Obligation Refunding Bonds, Series 2016-B (the "Bonds") by the Issuer. Bid Date: Bid Time:· Bid Award: Settlement Date: Bid Submittal: Eligible Securities: Substitution of Eligible Securities Prior to Settlement: CAUSEY DEMGEN & MOORE P.C. July 11, 2016 2:30 p.m. Eastern Time 2:40 p.m. Eastern Time July 26, 2016 (on the Settlement Date, the Winning Bidder (as defined herein) shall be required to guarantee delivery of the Eligible Securities (as defined herein) by 1:00 p.m. Eastern Time) Bids are to be emailed to Causey Demgen & Moore P.C., Bidding Agent, at investmentbids@causeycpas.com by 2:30 p.m. EDT on July 11, 2016 and followed up by a fax of the bid form provided as Exhibit B attached hereto, to (303) 468-8233. A fax copy of the bid form must be received promptly following the email bid by the bidder. All bids will be considered firm for 10 minutes after the Bid Time. Conditional bids will not be accepted. Eligible Securities are secu1ities that are not subject to redemption in advance of their maturity dates that satisfy the definition of "United States Government Obligations" (which includes REFCORP interest strips). Please note, US Agency for International Development securities are NOT permitted for this escrow. "United States Govemment Obligations" means bond, 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), which obligations are rated in the highest rating category by a nationally recognized rating service. If the Winning Bidder (defined below) cannot deliver the Eligible Securities on the Settlement Date as outlined in its proffered portfolios, the Winning Bidder will have the right to deliver other Eligible Securities for the Defeasance Escrow. Any such substitution must be determined and the details of which must be provided to the Bidding Agent at least 5 business days prior to the Settlement Date. The cost of the new portfolio must not PAGE 1 Structure: Basis of Award: Ties: Identifying Escrow: CAUSEY DEMGEN & MOORE P.C. City of Salina, Kansas exceed the cost of the original portfolio. Additional professional fees incurred by the Issuer due to any such substitution will be at the expense of the Winning Bidder. The Issuer is seeking to purchase Eligible Securities for the Defeasance Escrow to provide sufficient cash-flow to defease certain debt service of the Issuer's (1) General Obligation Internal Improvement Bonds, Series 2006-B, (2) General Obligation Internal Improvement Bonds, Series 2007-A, (3) General Obligation Internal Improvement Bonds, Series 2008-A, (4) General Obligation Internal Improvement Bonds, Series 2009-A, (5) General Obligation Internal Improvement and Refunding Bonds, Series 2010-A, and (6) General Obligation Internal Improvement Bonds, Series 2011-A. The Defeasance Escrow must be funded with Eligible Securities, plus an initial cash deposit, if any, made by the Issuer. The Issuer's required initial cash deposit, if any, and the bidding agent fee must be included in each bidder's Cost of Funding (as defined herein) in order to aJJow direct comparisons between bids. Each bidder will specify a dollar amount required for the Defeasance Escrow, which will be produced by adding the following: (1) the one-time sale by such bidder to the Escrow Agent of Eligible Securities, (2) any initial cash deposit made by the Issuer and (3) the bidding agent fee (herein collectively referred to as the "Cost of Funding"). The Escrow Agent will deliver cash, equal to the purchase price of the Eligible Securities, to the Winning Bidder upon receipt of the Eligible Securities (on a delivery versus payment basis), that together with any initial cash deposit made by the Issuer, will be sufficient to fund the Defeasance Escrow. The final maturity of the Eligible Securities cannot exceed the final payment date of the cash flow requirements set forth in Exhibit A. The award shall be made to the bidder who provides the lowest overall Cost of Funding for funding the Defeasance Escrow (the "Winning Bidder"). Each bidder's Cost of Funding must include the cost of the Eligible Securities, the Issuer's initial cash deposit, if any, required to fund the Defeasance Escrow and the bidding agent fee. The Issuer reserves the right to reject any and all bids in its sole discretion if it determines it is in its best interest to do so. The cost of the most efficient po1tfolio consisting exclusively of State and Local Government Series (SLGS) Securities wi11 be determined at the time that bids are required to be submitted (the "SLGS P01tfolio"). If the lowest cost offer (including any broker's fees) of an open market portfolio received pursuant to these bid specifications is not less than the SLGS Po1tfolio, then all open market offers will be rejected. In the event of a tie in bids, the Winning Bidder will be detennined by the time the bid was submitted, with award being made to the bidder who submitted its bid first. Within one hour of award, the Winning Bidder must detail the specific Eligible Securities to be delivered to the Escrow Agent on the Settlement Date. Portfolio details must be provided to Causey Demgen & Moore P.C. Failure to PAGE2 Bidding Agent: Bond Counsel:· Escrow Agent: Financial Advisor: Confirm Information Enclosures: Comments: City of Salina, Kansas provide portfolio details within the allotted time period may result in the rescission of the Bid Award to the non-complying bidder. Causey Demgen & Moore P.C. Gilmore & Bell, P.C. Security Bank of Kansas City, Kansas City, Kansas George K. Baum & Company Tax ID#: Issuer Legal Name: Issuer Contact: Issuer Address: Escrow Contact DVP Instructions: 48-6017288 City of Salina, Kansas Michelle Meyer, Finance Director 300 West Ash, Salina, Kansas 67402 Lisa Shatto (913) 621-8478 To be provided Exhibit A -Cashflow Requirement Exhibit B -Bid Form Exhibit C -Certificate of the Winning Bidder If for any reason issuance of the Bonds is not completed or the purchase of the Eligible Securities does not take place or is delayed, the Winning Bidder will have no recourse against the Issuer, Underwriter, Bidding Agent, Escrow Agent, or Bond Counsel for any expenses incurred or damages sustained. Award will be subject to escrow verification. Any questions regarding this bid may be directed to Bill Glasso at (303) 672-9886. Other Requirements and Provisions: I. The Winning Bidder must sign and deliver the certification set forth as Exhibit C hereto and must be delivered on or prior to the Settlement Date and dated the Settlement Date. All bidders are hereby notified that submission of a bid is a representation that (A) the potential bidder did not consult with any other potential bidder about its bid, (B) the bid was determined without regard to any other formal or informal agreement that the potential bidder has with the Issuer or any other person (whether or not in connection with the bond issue), and (C) the bid is not being submitted solely as a comtesy to the Issuer or any other person. 2. All payments are to be made in same day funds and will be conducted on a delivery versus payment basis. 3. No fees will be paid and no expenses reimbursed by the Issuer. 4. No exceptions to the terms herein will be permitted. 5. As Bidding Agent in this transaction, Causey Demgen & Moore P.C. will receive a fee payable by the Winning Bidder in the amount of $32500.00. 6. All potential bidders will have an equal opportunity to bid. No potential bidder will have the opportunity to review other bids ("last-look") before submitting a bid. CAUSEY DEMGEN & MOORE P.C. PAGE 3 City of Salina, Kansas 7. The Winning Bidder will guarantee delivery of Eligible Securities and in the event of a failure to deliver the Eligible Securities, shall be required to deliver, at the option of the Issuer (at a cost not to exceed the original portfolio), cash and/or other Eligible Securities necessary to provide sufficient cash-flow to meet the cash-flow requirements as set forth in Exhibit A herein and shall pay any and all additional professional fees and other costs incurred by the Issuer or the Borrower due to any such substitution. In the event that the Winning Bidder is required to deliver cash, the Winning Bidder will retain the right, for a period of thirty (30) calendar days beginning on the Settlement Date, to deliver the failed securities on a daily basis (business days only) in full or in part to the Escrow Agent at the original applicable price offered using the original settlement date and will be credited back in whole or on a pro-rated basis, as applicable, the cash deposit for any or all portions of the failed securities. In the event that the Winning Bidder delivers the failed securities in part, such delivery must occur on the last business day during the thirty (30) day period in which the Winning Bidder retains the right to deliver the failed securities. CAUSEY DEMGEN & MOORE P.C. PAGE4 Key Dates: I. July 11, 2016 2. July 26, 2016 3. September 28, 2018 CAUSEY DEMGEN & MOORE P.C. EXHIBIT A CITY OF SALINA, KANSAS CASHFLOW REQUIREMENTS Payment Date 30-Sep-16 31-Mar-17 29-Sep-17 30-Mar-18 28-Sep-18 Bid Date Total Debt Payment $ 469,699.38 280,536.88 4,705,536.88 184,786.88 . 9,709,786.88 $15,350,346.90 Closing/Settlement Date Cashflow Requirement Maturity City of Salina, Kansas PAGES July 11, 2016 EXHIBITB CITY OF SALINA, KANSAS Security Portfolio BID FORM City of Salina, Kansas Fax: (303) 468-8233 For the Defeasance Escrow evidenced as Exhibit A in the Request for Bids, which is hereby made a part of this bid, we hereby offer to provide Eligible Securities sufficient to fund the Defeasance Escrow, meeting the requirements on the respective dates as reflected in Exhibit A. The bidder acknowledges that if it is the Winning Bidder it must sign and deliver the certificate in the form attached to the Request for Bids as Exhibit C on or prior to the Settlement Date and dated the Settlement Date. The bidder hereby represents that it did not consult. with any other potential bidder about its bid, that the bid was determined without regard to any other fonnal or informal agreement that the potential bidder has with the Issuer, or any other person and that the bid is not being submitted solely as a courtesy to the Issuer or any other person for purposes of satisfying the requirements that (a) at least three bids be obtained from disinterested bidders solicited under a bona fide solicitation, and (b) at least one of the three bids is from a reasonably competitive bidder. Terms used but not defined herein shall have the meaning provided in the Request for Bid to which this Bid Form is attached as Exhibit B. By submitting this bid, we certify that the security or securities provided will be Eligible Securities that, subject to verification, will be sufficient in amount to meet the Cash Flow Requirement as indicated in Exhibit A. Name of Bidder: Contact: Phone: Signature: Cost of Funding:* Bids will be accepted by email at investmentbids@causeycpas.com by 2:30 p.m. Eastern Time and must be followed promptly by a faxed bid form. Please fax bid responses to at Causey Demgen & Moore P.C. at (303) 468-8233. * Cost of Funding must include the cost of the Eligible Securities as well as any initial cash deposit to be made by the Issuer and the bidding agent fee. CAUSEY DEMGEN & MOORE P.C. PAGES EXHIBITC CITY OF SALINA, KANSAS Security Portfolio CERTIFICATE OF THE WINNING BIDDER City of Salina, Kansas The undersigned hereby states and certifies to the City of Salina, Kansas (the "Issuer") as follows: 1. The undersigned is a of (the "Winning Bidder"), and is authorized to execute and deliver this certificate on behalf of the Winning Bidder and is knowledgeable with respect to the matters set forth herein. 2. The Winning Bidder is a reasonably competitive bidder of securities of the type comprising the Eligible Securities, and the Winning Bidder has no material financial interest (within the meaning of Treasury Regulations Section l.148-5(d)(6)(iii)(B)(l)) in the Issuer's General Obligation Refunding Bonds, Series 2016-B (the "Bonds") other than as a bidder to provide Eligible Securities to satisfy the cash flow requirements set forth as Exhibit A to the solicitation described in 4 below. 3. The Winning Bidder is, on the date hereof, delivering securities to Security Bank of Kansas City (the "Escrow Agent") as escrow agent to the Issuer against payment for such securities. 4. The Winning Bidder received a solicitation for bids (the "Solicitation") with respect to the cash flow requirements and submitted its bid to provide Eligible Securities for the cash flow requirements in compliance with the terms of such solicitation. 5. The Solicitation included all material terms of the bid, and the terms of the Solicitation are commercially reasonable. 6. The Winning Bidder represents that the bid was: (1) determined without consultation with any other potential bidder, (2) determined without regard to any other formal or informal agreement with the Issuer or any other person (whether or not in connection with the issuance of the Bonds described herein), and (3) not submitted soiely as a courtesy to the Issuer or any other person for purposes of satisfying the requirement that (a) at least three bids be obtained from disinterested bidders solicited under a bona fide solicitation and (b) at least one of the three bids is from a reasonably competitive bidder. 7. The Winning Bidder did not review other bids submitted by other potential bidders before providing its bid. 8. Other than a bidding agent fee of $3,500.00 paid to Causey Demgen & Moore P.C., the Winning Bidder is not paying, and does not expect to pay, any administrative costs to third parties, including any brokerage or selling commissions, legal and accounting fees, investment advisory fees, recordkeeping, safekeeping, custody and similar costs or expenses, in connection with supplying the Eligible Securities. Dated: July 26, 2016 CAUSEY DEMGEN & MOORE P.C. By:---------- Name: ----------- Title:----------- PAGE7 BIDS RECEIVED AND RES UL TS MEMORANDUM TO: MICHELLE MEYER, CITY OF SALINA FROM: BILL GLASSO, CAUSEY DEMGEN & MOORE P.C. SUBJECT: SUMMARY OF OFFERS FOR THE PURCHASE OF SECURITIES -DEFEASANCE ESCROW DATE: CC: JULY 11, 2016 DAVID ARTEBERRY, GEORGE K. BAUM & COMPANY ROGER EDGAR, GEORGE K. BAUM & COMPANY GINA RIEKHOF, GILMORE & BELL, P.C. GARY ANDERSON, GILMORE & BELL, P.C. KEVIN WEMPE, GILMORE & BELL, P.C. The table below contains the complete list offinns who were solicited to provide securities and the offers they submitted on July I I, 2016 for the sale of securities. PROVIDER NAME BID AMOUNT TIME RECEIVED I Cantor Fitzgerald Chris Cercy $15,186,026.27 2:29 p.m. EDT Incapital Chris Patronis $15,179,314.46 2:30 p.m. EDT PNC Capital Markets Robert DiPasquale $15,181,341.99 2:29 p.m. EDT Wells Fargo Securities (I) Doug Safford $15,179,081.99 2:29 p.m. EDT BB&T Debt Capital Markets Will Ferrell $15,179,462.90 2:29 p.m. EDT Lowest Bid $15,179,081.99 SLG Cost $15,183,287.00 Open Market Savings $4,205.01 Approximate Yield 0.63% (I) Winning Bidder William D Glasso From: Sent: To: safford@wellsfargo.com Monday, July 11, 2016 12:29 PM Investment Bids Cc: Joseph.P.Celentano@wellsfargo.com; eddie.david@wellsfargo.com; Brian.Warden@wellsfargo.com Subject: REVISED -Request for Bids -Salina -MON, JULY 11@ 2:30 EDT 15,179,081.99 Settlement Date: 7/26/16 Total Draws: 15,350,346.90 Bidders Fee: $3,500 Firm Time: 10 Minutes RFP /RFQ Required Disclosure Statement This proposal is submitted in response to your Request for [Proposals/Qualifications/Bids] dated 7/11/16 . The contents of this proposal' and any subsequent discussions between us, including any and all information, recommendations, opinions, indicative pricing, quotations and analysis with respect to any municipal financial product or issuance of municipal securities, are provided to you·in reliance upon the exemption provided for responses to requests for proposals or qualifications under the municipal advisor rules (the "Muni Advisor Rules") of the Securities and Exchange Commission (the "SEC")(the "Municipal Advisor Rule").c1•1240 CFR 1ssa1- 1 et seq .. 11 The Staff of the SEC's Office of Municipal Securities has issued guidance which provides that, in order for a request for proposals to be consistent with this exemption, it must (a) identify a particular objective, (b) be open for not more than a reasonable period of time (up to six months being generally considered as reasonable), and (c) involve a competitive process by (such as by being provided to at least three reasonably competitive service providers or by being publicly posted to your official website). In submitting this proposal, we have relied upon your compliance with this guidance. In submitting this proposal (a) Wells Fargo Securities is not acting as your Municipal Advisor, providing you with municipal advisory services and does not owe a fiduciary duty to you pursuant to Section 15B of the Securities Exchange Act of 1934 to you with respect to the information and material contained in this proposal in the event you are a municipal entity; (b) Wells Fargo Securities is acting for its own interests; and (c) you should discuss any information and material contained in this proposal with any and all internal or external advisors and experts that you deem appropriate before acting on this information or material. Doug Safford, CFA Director Fixed Income Sales and Trading Wells Fargo Securities, LLC 100 West Washington, MAC S4101-17L Phoenix, AZ 85003 602-378-4002-Phone 800-218-3125 602-3 78-4001-Fax We Cannot Accept Trades Submitted by E-mail or Fax. This email is subject to a disclaimer, please click on the following link or cul and paste the link into the address bar of your browser. https://www.wellsfarqo.com/com/disclaimer/ged5 1 July 11, 2016 EXHIBITB CITY OF SALINA, KANSAS Security Portfolio BID FORM City of Salina, Kansas Fax: (303) 468~8233 For the Defeasance Escrow evidenced as Exhibit A in the Request for Bids, which is hereby made a part of this bid, we hereby offer to provide Eligible Securities sufficient to fund the Defeasance Escrow, meeting the requirements on the respective dates as reflected in Exhibit A. The bidder acknowledges that ifit is the Winning Bidder it must sign and deliver the certificate in the form attached to the Request for Bids as Exhibit C on or prior to the Settlement Date and dated the Settlement Date. The bidder hereby represents that it did not consult with any other potential bidder about its bid, that the bid was detennined without regard to any other formal or informal agreement that the potential bidder has with the Issuer, or any other person and that the bid is not being submitted solely as a courtesy to the Issuer or any other person for purposes of satisfying the requirements that (a) at least three bids be obtained from disinterested bidders solicited under a bona fide solicitation, and (b) at least one of the three bids is from a reasonably competitive bidder. Terms used but not defined herein shall have the meaning provided in the Request for Bid to which this Bid Form is attached as ExhibitB. By submitting this bid, we ce1tify that the security or securities provided will be Eligible Securities that, subject to verification, will be sufficient in amount to meet the Cash Flow Requirement as indicated in Exhibit A. Name of Bidder: Contact: Phone: Signature: Cost of Funding:* Bids will be accepted by email at investmentbids@causeycpas.com by 2:30 p.m. Eastern Time and must be followed promptly by a faxed bid form. Please fax bid responses to at Causey Demgen & Moore P.C. at (303) 468-8233. * Cost of Funding must include the cost of the Eligible Securities as well as any initial cash deposit to be made by the Issuer and the bidding agent fee. CAUSEY DEMGEN & MOORE P .C. PAGES William D Glasso From: Sent: To: Cc: Subject: Robert.DiPasquale@pncbank.com Monday, July 11, 2016 12:29 PM William D Glasso; Investment Bids richard.adler@pnc.com; kevin.kleinsmith@pnc.com; charles.black@pnc.com; melanie.paskert@pnc.com Re: REVISED -Request for Bids -Salina -MON, JULY 11@ 2:30 EDT Hi Bill -our level is $15,181,341.99 Robert M. DiPasquale PNC Capital Markets LLC (412) 762-9650 robert.dipasguale@pnc.com From: William D Glasso To: "griekhof@gllmorebell.com", "ganderson@gilmorebell.com", "kwempe@gilmorebell.com", "hart@gkbaum.com", "arteberry@gkbaum.com", "hoover@gkbaum.com", Cc: Hisam K Derani , "Nathan A. Plock" Date: 07/11/2016 01:59 PM Subject: REVISED -Request for Bids • Salina -MON, JULY 11 @ 2:30 EDT REVISED CASH FLOW REQUIREMENTS The City of Salina, Kansas has revised the cash flow requirements. The revised bid form of increased requirements is attached. No other changes to the bid form circulated last week have been made. From: William D Glasso Sent: Friday, July 08, 2016 12:58 PM To: 'griekhof@gilmorebell.com'; 'ganderson@gilmorebell.com'; 'kwempe@gilmorebell.com'; 'hart@gkbaum.com'; 'arteberry@gkbaum.com'; 'hoover@gkbaum.com' Cc: Hisam K Derani; Nathan A. Plock Subject: Request for Bids -Salina -MON, JULY 11 @ 2:30 EDT Attached, please find a Request for Bids form for the City of Salina, Kansas. The City will be accepting bids until 2:30 p.m. EDT, Mo!1day, July 111h. The City expects to revise the cash flow requirements slightly. The revision will be provided to you at least 30 mi'nutes prior to bid time. Thank you and we look forward to receiving your bid. Bill Bill Glasso 1 J I If\, July 11, 2016 EXHIBITB CITY OF SALINA, KANSAS Security Po1tfolio BID FORM City of Salina, Kansas Fax: (303) 468-8233 For the Defeasance Escrow evidenced as Exhibit A in the Request for Bids, which is hereby made a part of this bid, we hereby offer to provide Eligible Securities sufficient to fund the Defeasance Escrow, meeting the requirements on the respective dates as reflected in .Exhibit A. The bidder acknowledges that if it is the Winning Bidder it must sign and deliver the certificate in the form attached to the Request for Bids as Exhibit C on or prior to the Settlement Date and dated the Settlement Date. The bidder hereby represents that it did not consult with any other potential bidder about its bid, that the bid was detennined without regard to any other formal or informal agreement that the potential bidder has with the Issuer, or any other person and that the bid is not being submitted solely as a courtesy to the Issuer or any other person for purposes of satisfying the requirements that (a) at least three bids be obtained from disinterested bidders solicited under a bona fide solicitation, and (b) at least one of the three bids is from a reasonably competitive bidder. Terms used but not defined herein shaI1 have the meaning provided in the Request for Bid to which this Bid Form is attached as ExhibitB. By submitting this bid, we certify that the security or securities prnvided will be Eligible Securities that, subject to verification, will be sufficient in amount to meet the Cash Flow Requirement as indicated in Exhibit A. Name of Bidder: Contact: Phone: Signature: Cost of Funding:* Bids will be accepted by email at investmentbids@causeycpas.com by 2:30 p.m. Eastern Time and must be followed promptly by a faxed bid form. Please fax bid responses to at Causey Demgen & Moore P.C. at (303) 468-8233. * Cost of Funding must include the cost of the Eligible Securities as well as any initial cash deposit to be made by the rssuer end the bidding agent fee. CAUSEY DEMGEN & MOORE P.C. PAGE6 William D Glasso From: Sent: To: Cc: Subject: 15,186,026.27 Cercy, Chris <CCercy@cantor.com> Monday, July 11, 2016 12:29 PM Investment Bids Fabrizio, Stephen; Wang, Alex Salina vs. CONFIDENTIAL: This e-mail, including its contents and attachments, if any, are confidential. If you are not the named recipient please notify the sender and immediately delete it. You may not disseminate, distribute, or forward this e-mail message or disclose its contents to anybody else. 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The FCA is a financial services industry regulator in the United Kingdom and is located at 25 The North Colonnade, Canary Wharf, London, E14 SHS. 1 City of Salina, Kansas EXHIBITB CITY OF SALINA, KANSAS July I 1, 2016 Security Portfolio BID FORM Fax: (303) 468-8233 For the Defeasance Escrow evidenced as Exhibit A in the Request for Bids, which is hereby made a part of this bid, we hereby offer to provide Eligible Securities sufficient to fund the Defeasance Escrow, meeting the requirements on the respective dates as reflected in Exhibit A. The bidder acknowledges that ifit is the Winning Bidder it must sign and deliver the certificate in the fonn attached to the Request for Bids as Exhibit C on or prior to the Settlement Date and dated the Settlement Date. The bidder hereby represents that it did not consult with any other potential bidder about its bid, that the bid was detennined without regard to any other formal or infonnal agreement that the potential bidder has with the Issuer, or any other person and that the bid is not being submitted solely as a courtesy to the Issuer or any other person for purposes of satisfying the requirements that (a) at least three bids be obtained from disinterested bidders solicited under a bona fide solicitation, and (b) at least one of the three bids is from a reasonably competitive bidder. Terms used but not defined herein shall have the meaning provided in the Request for Bid to which this Did Form is attached as Exhibit B. By submitting this bid, we certify that the security or securities provided will be Eligible Securities that, subject to verification, will be sufficient in amount to meet the Cash Flow Requirement as indicated in Exhibit A. Name of Bidder: Cantor Fitzgerald & Co. Contact: Chris Cercy Phone: (212) 829-4713 Signature: _,. .... --~-:: __ ..... -"····"·---:~~-~~=--:.'.:":>--·· ..... ---····"· . ' ',,,, .. Cost of Funding:* ~-~--1 ~lo4:~:o~:i-c;· -.··~ 1 Bids will be accepted by email at investmentbids@causeycpas.com by 2:30 p.m. Eastern Time and must be followed promptly by a faxed bid form. Please fax bid responses to at Causey Demgen & Moore P.C. at (303) 468-8233. * Cost of Funding must include the cost of the Eligible Secu1itics as well as any initial cash deposit to be made by the Issuer and the bidding agent fee. CAUSEY CEMGEN & MOORE P .C. PAGES William D Glasso From: Sent: To: Cc: Patronis, Chris <cpatronis@incapital.com> Monday, July 11, 2016 12:30 PM William D Glasso Investment Bids Subject: 2:30 REVISED -Request for Bids -Salina -MON, JULY 11 @ 2:30 EDT Here it is Bill-thank you 15,179,314.46 Chris Patronis Managing Director J Institutional Sales ~re IN~~PITAL __________ _ 405 Lexington Ave. Suite 50-8, New York, NY 10174 Office/ +1.212.624.5831 chris.patronis@incapital.com j lncapital.com © Copyright 2016 lncapital. All rights reserved. This message is intended only for the addressee. Please notify the sender by e-mail if you are not the intended recipient. If you are not the intended recipient, you may not copy, disclose, or distribute this message or its contents to any other person and any such actions may be unlawful. Please see http://www.incapital.com/Legal/Electronic Communications Disclaimer.aspx for offering documents, risk disclosures, order handling practices and other terms and conditions relating to this email. Inca pita I does not accept time sensitive, action-oriented messages or transaction orders, including orders to purchase or sell securities via e-mail. Inca pita I reserves the right to monitor, maintain and review the content of all messages sent to or from this e-mail address. From: William D Glasso [mailto:Wglasso@causeycpas.com] Sent: Monday, July 11, 2016 1:59 PM ------·-- To: griekhof@gilmorebell.com; ganderson@gilmorebell.com; kwempe@gilmorebell.com; hart@gkbaum.com; arteberry@gkbaum.com; hoover@gkbaum.com Cc: Hisam K Derani; Nathan A. Plock Subject: REVISED -Request for Bids-Salina -MON, JULY 11@ 2:30 EDT REVISED CASH FLOW REQUIREMENTS The City of Salina, Kansas has revised the cash flow requirements. The revised bid form of increased requirements is attached. No other changes to the bid form circulated last week have been made. 1 July 11, 2016 EXHIBITB CITY OF SALINA, KANSAS Security Portfolio BID FORM City of Salina, Kansas Fax: (303} 468-8233 For the Defeasance Escrow evidenced as Exhibit A in the Request for Bids, which is hereby made a part of this bid, we hereby offer to provide Eligible Securities sufficient to fund the Defeasance Escrow, meeting the requirements on the respective dates as reflected in Exhibit A. The bidder acknowledges that ifit is the Winning Bidder it must sign and deliver the certificate in the form attached to the Request for Bids as Exhibit Con or prior to the Settlement Date and dated the Settlement Date. The bidder hereby represents that it did not consult with any other potential bidder about its bid, that the bid was determined without regard to any other formal or infonnal agreement that the potential bidder has with the Issuer, or any other person and that the bid is not being submitted solely as a courtesy to the Issuer or any other person for purposes of satisfying the requirements that (a) at least three bids be obtained from disinterested bidders solicited under a bona fide solicitation, and (b) at least one of the three bids is from a reasonably competitive bidder. Tenns used but not defined herein shall have the meaning provided in the Request for Bid to which this Bid Fonn is attached as ExhibitB. By submitting this bid, we certify that the security or securities provided will be Eligible Securities that, subject to verification, will be sufficient in amount to meet the Cash Flow Requirement as indicated in Exhibit A. Name of Bidder: Contact: ~I Phone: Signature: Cost of Funding:* Bids will be accepted by email at investmentbids/alcauseycpas:com by 2:30 p.m. Eastern Time and must be followed promptly by a faxed bid fonn. Please fax bid responses to at Causey Demgen & Moore P.C. at (303) 468-8233. • Cost of Funding must include the cost of tbc Eligible Securities as well as any initial cash deposit to be made by the Issuer and the bidding agent fee. CAUSEY DEMGEN & MOORE P.C. PAGE6 William D Glasso From: Sent: To: Subject: BB&T 7 /26/16 settle $3.Sk fee Draws $15,350,346.90 Cost $15,179,462.90 Timothy M Behl Managing Director BB&T Capital Markets 901 E. Byrd Street Suite 300 Richmond, Va 23219 (804)649-3920 Phone (804)649-3933 Fax Behl, Timothy <TBEHL@BBANDTCM.COM> Monday, July 11, 2016 12:29 PM Investment Bids Salina This message is intended only for the addressee. BB&T Capital Markets, a division of BB&T Securities, LLC, member FINRA/SIPC, is a wholly-owned nonbank subsidiary of BB&T Corporation. The securities sold, offered or recommended are not a deposit, not FDIC insured, not guaranteed by a bank, not guaranteed by any federal government agency and may go down in value. Please be aware that since the confidentiality of Internet email cannot be guaranteed, do not include private or confidential information such as passwords, account numbers, social security numbers, etc., in emails to us. Additionally, instructions having financial consequences such as trade orders, funds transfer, etc., should not be included in your email communications to us as we cannot act on such instructions received by email. For a list of full disclosures relating to the firm and this communication, please click here http://bbtscottstringfellow.com/aboutus/disclosures . If you no longer wish to receive commercial messages from our organization through electronic means, please email the following address (donotemailcommercial@BBandTCM.com) with the word "stop" in the subject line. 1 "" INBOUND NOTIFICATION : FAA RECEIVED SUCCESSFULLY"* TIME RECEIVED REMOTE CSID DURATION PAGES STATUS July 11, 2016 at 11:32:05 P-M MST 5BT capital Markets 42 l Received 2016-07-11 14:22 BBT Capital Markets 2 » ey Demgen & Moor P 1/1 July ll,2016 EXHIBITB CITY OF SALINA, KANSAS Security Portfolio J31DF0RM City of Salina, Kansas Fax: (303) 468-8233 For the Oefeasnnce Escrow evidenced as Exhibit A In the Request for Bids, which is hereby made a part of this bid, we hereby offer to provide Eligible Securities sufficient to fund the Defeasance Escrow, meeting the rcquiremen~ on the respective dates as reflected in Exhibit A. The bidder acknowledges that if it is the Winning Bidder it must sign and deliver the certificate In the form attached to the Request for Bids as Exhibit C on or prior to the Settlement Date and dated the Settlement .Date. The bidder hereby represents that it did not consult with any other potential bidder about its bid, that the bid was detennined without regard to any other fonnal or infonnal agreement that the potential bidder has with the Jssuer, or any other person and that the bid is not being submitted solely as a courtesy to the Jssuer or any other person for purposes of satisfying the requirements that (a) at least three bids be obtained from disinterested bidders solicited under a bona fide solicitation, Wld (b) at least one of the three bids is from a reasonably competitive bidder. Tenns used but not defined herein shall have the meaning provided in the Request for Bid to which this Bid Form is attached as Exhibit B. By submitting this bid, we certify that the security or securities provided will be Eligible Securities that, subject to verification, will be sufficient in amount to meet the Cash Flow Requirement as indicated in Exhibit A. ...!J fl_ rt/ Name of Bidder: _ll) V...J Tim &tvl Contact: Phone: Signature: ~'7.}0 ~ qo l 51 1-1 91 Lf foJ -Co.st of Funding:"' Bids will be accepted by email at investmentbids@causcycpas.com by 2:30 p.m. Eastern Time and must be followed promptly by a faxed bid fonn. Please fax bid responses to at Causey Demgen & Moore P.C. nt (303) 468-8233. • Cost of' Fundlng must include the co~t of &he: Eligible Scc:uritic8 Wl well ~ IIIIY initiul Ollsh deposit to be made by the: h'lluc:r 1111d the bidding ugent lee. CAIJSl:Y DEMGl;N & MOOR£ P.C. PAGE6 WINNING BIDDER CERTIFICATE EXHIBITC CITY OF SALINA, KANSAS Security Portfolio CERTIFICATE OF THE WINNING BIDDER City of Salina, Kansas The undersigned hereby states and certifies to the City of Salina, Kansas (the "Issuer") as follows: 1. The undersigned is a DI~ . of ' . moo ~the "Winning Bidder"), and is authorizedto~ute and deliver this certi 1c e o behalfofthe Winning Bidder and is knowledgeable with respect to the matters set forth herein. 2. The Winning Bidder is a reasonably competitive bidder of securities of the type comprising the Eligible Securities, and the Winning Bidder has no material financial interest (within the meaning of Treasury Regulations Section I.148-5(d)(6)(iii)(B)(l)) in the Issuer's General Obligation Refunding Bonds, Series 2016-B (the "Bonds") other than as a bidder to provide Eligible Securities to satisfy the cash flow requirements set forth as Exhibit A to the solicitation described in 4 below. 3. The Winning Bidder is, on the date hereof, delivering securities to Security Bank of Kansas City (the "Escrow Agent") as escrow agent to the Issuer against payment for such securities. 4. The Winning Bidder received a solicitation for bids (the "Solicitation") with respect to the cash flow requirements and submitted its bid to provide Eligible Securities for the cash flow requirements in compliance with the terms of such solicitation. 5. The Solicitation included all material terms of the bid, and the terms of the Solicitation are commercially reasonable. 6. The Winning Bidder represents that the bid was: (1) detennined without consultation with any other potential bidder, (2) determined without regard to any other formal or infonnal agreement with the Issuer or any other person (whether or not iri connection with the issuance of the Bonds described herein), and (3) not submitted solely as a courtesy to the Issuer or any other person for purposes of satisfying the requirement that (a) at least three bids be obtained from disinterested bidders solicited under a bona fide solicitation and (b) at least one of the three bids is from a reasonably competitive bidder. 7. The Winning Bidder did not review other bids submitted by other potential bidders before providing its bid. 8. Other than a bidding agent fee of $3,500.00 paid to Causey Demgen & Moore P.C., the Winning Bidder is not paying, and does not expect to pay, any administl'ative costs to third parties, including any brokerage or selling commissions, legal and accounting fees, investment advisory fees, recordkeeping, safekeeping, custody and similar costs or expenses, in connection with supplying the Eligible Securities. Dated: July 26, 2016 CAUSEY DEMGEN & MOORE P.C. By:_~~,q::;;=::..~;:;I---.-\1-- N ame: ----i,_,_i<-""c;..v_....,......._....__ Title: -----+P,,c:+~--- PAGE7 I ·, j ! I I I I· I I l WINNING PORTFOLIO Dellve<y Date 07/26/2016 Requirements 15,350,346.90 15,350,346.90 Requirements Issuer City of Salim, Securities Cost 15,178,545.09 15,125,731.47 Securities maturity 09/28/2018 Cash 536,90 52,813.62 accrued Total Cost 15,179,081.99 15,178,545.09 total Name broncos 15,179,081.99 totalwea$h DATE PRINCIPAL INTEREST REQUIREMENT Sufficiency CUSIP Security Des coupon Maturity Par Amount Price Principal Accrued Int 912796JM2 B 09/29/16 0.000% 09/29/2016 397,000 07/26/2016 536.90 536.90 91282SSM3 T 1 03131/17 1.000% 03/31/2017 207,000 09/15/2016 72,150.00 n,686.90 912828D98 T 1 09115/17 1.000% 09/15/2017 4,633,000 09/29/2016 397,000.00 469,686.90 912828J68 T 103115118 1.000% 03/15/2018 136,000 09/30/2016 1,035.00 489,899.38 1,022.52 912828L40 T 1 09/15/18 1.000% 09115/2018 9,661,000 03115/2017 72,150.00 73,172.52 03/31/2017 207,000.00 1,035.00 280,536.88 670.64 09/15/2017 4.633,000.00 72,150.00 4,705,820.64 09/29/2017 4,705,536.88 283.76 03/15/2018 136,000.00 48,985.00 185,268.76 03/30/2018 184,786.88 481.88 09/15/2018 9,681,000.00 48,305.00 9,709,786.88 09/28/2018 9,709,786.88 (0.00) SLG PORTFOLIO City of Salina2 Kansas General Obligation Refunding Bonds Series 2016-B (Refunding Portion) Current Refunding Escrow Date Prlncieal Rate Interest +Transfers Recelets Disbursements Cash Balance 07/26/2016 . . 0.88 1.85 . 1.85 09/28/2016 179,850.00 0.270%. I S,317.48 274,530.90 469,698.38 469.700.23 10/01/2016 . . . . 469,699.38 O.&S 03/28/2017 236,07&.00 0.420% 44,458.54 . 280,536.54 . 280,537.39 04/01/2017 . . . . . 280 536.88 0.51 09/28/2017 4,661,744.00 0.510% 43,793.00 . 4,705,537.00 . 4,705,537.51 10/01/2017 . . . . . 4,705,536.88 0.63 03/28/2018 152,881.00 0.590% 31,905.56 . 184,786.56 . 184,787.19 04/01/2018 . . . . . 184,786.8& 0.31 09/28/2018 9 678 332.00 0.650% 31 454.57 . 9. 709 786.57 . 9 709 786.88 I 0/01/2018 . . . . . 9,709,786.88 . Total S14,908,88S.00 . $166,929.15 $274,531.78 $15,350,346.90 S 15,350,346.90 . Investment Parameters Investment Model [PV, GJC, or Securities] Securities Default ir1vestment :z:ield target Bond Yield Cost ofl11vestments Purchased with Fund Trnnsfers 274 401.88 Cash Denosit 0.97 Cost oflnvestments Purchased with Bond Proceeds 14 908 885.00 Total Cost of Investments $15.183 287.85 TRrget Cost of Investments Rt bond )!icld $14,604,141.21 Actual eositive or (negaliveJ arbitrage (304,744.762 Yield to Recei~I 0.6197676% Yield for Arbitrage Purposes 1.7675633% State and Local Govcrnrnenl Series (SLGS) rates for 7/11/2016 20161ssue07,11·162 I Refunding I 7111/2016 i 12:30PM George K. Baum & Company Public Finance (BH) Page 1 TRADE TICKETS Hisam K Derani From: Sent: To: Subject: Brian.Warden@wellsfargo.com July 11, 2016 1:22 PM Brian.Warden@wellsfargo.com Trade Confirmation * TRADE TICKET* As Of: 07/11/16 ISIN: US912828L401 TICKET NUMBER: 42471786 ENTRY DATE TIME: 07/11/16 12:16 MATURITY DATE: 09/15/18 SALES PERSON: DOUG SAFFORD (DATED: 09/15/15) CUSTOMER ACCOUNT: POQ PENDING WFS Broadridge#: xxxx0014 SELLS: 9661 (M) of UST 1.00 09/15/2018 CUSIP: 912828L40 PRICE: 100.71807875, PRICE(tics): 100-23, YIELD: .66121510, SPREAD: .0000 SETTLEMENT on 07/26/16 ISSUER: UNITED STA NOTES·: City of Salina ** PRINCIPAL: ** ACCRUED (133 days): ** ADDITIONAL FEE: ** TOTAL: {912828L40 Govt DES} $ 9,730,373.59 34,916.11 $ .00 $ 9,765,289.70 FINRA Rule 4515.0l requires that all accepted orders with the intent to allocate complete that allocation by 12 p.m. EST on the next business day following the trading session. In order to comply with this new rule, we ask for your help to provide your allocations to us with enough time to execute before the noon deadline. Wells Fargo Securities is the trade name for the capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including Wells Fargo Securities, LLC, member FINRA and SIPC. If this communication relates to an offering of US registered securities (i) a registration statement has been filed with the SEC, (ii) before investing you should read the prospectus and other documents the issuer has filed with the SEC, and (iii) you may obtain these documents from your sales representative, by calling 1-800-326-5897 or visiting www.sec.gov. If this communication relates to a securities offering exempt from US registration, you should contact your sales representative for the complete disclosure package. In Japan, see: https://www.wellsfargo.com/com/disclaimer/wfsjbl. This em::iil is subjecl to a disclaimer. please click on t11e following link or cut and paste lhe link into the address bar of your browser. https://www.wellsfargo.com/com/disclaimer/ged 5 1 Hisam K Derani From: Sent: To: Subject: ISIN: US912828J686 Brian.Warden@wellsfargo.com July 11, 2016 1:22 PM Brian.Warden@wellsfargo.com Trade Confirmation * TRADE TICKET* As Of: 07/11/16 TICKET NUMBER: 42471784 ENTRY DATE TIME: 07/11/16 12:16 SALES PERSON: DOUG SAFFORD CUSTOMER ACCOUNT: POQ PENDING WFS MATURITY DATE: 03/15/18 (DATED: 03/16/15) Broadridge#: xxxx0014 912828J68 SELLS: 136 (M) of UST 1.0 03/15/2018 CUSIP: PRICE: 100.55515000, PRICE(tics): 100-17.75, SETTLEMENT on 07/26/16 NOTES: City of Salina YIELD: .65871140, SPREAD: .0000 ISSUER: UNITED STA {912828J68 Govt DES} ** PRINCIPAL: ** ACCRUED (133 days): ** ADDITIONAL FEE: ** TOTAL: $ 136,755.00 491. 52 $ • 00 $ 137,246.52 FINRA Rule 4515.01 requires that all accepted orders with the intent to allocate complete that allocation by 12 p.m. EST on the next business day following the trading session. In order to comply with this new rule, we ask for your help to provide your allocations to us with enough time to execute before the noon deadline. Wells Fargo Securities is the trade name for the capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including Wells Fargo Securities, LLC, member FINRA and SIPC. If this communication relates to an offering of US registered securities (i) a registration statement has been filed with the SEC, (ii) before investing you should read the prospectus and other documents the issuer has filed with the SEC, and (iii) you may obtain these documents from your sales representative, by calling 1-800-326-5897 or visiting www.sec.gov. If this communication relates to a securities offering exempt from US registration, you should contact your sales representative for the complete disclosure package. In Japan, see: https://www.wellsfargo.com/com/disclaimer/wfsjbl. This email is subject to a disclaimer. please click on the following link or cut and paste the link into 1he address bar of your browser. https ://www. wellsfa rg o. com/com/d iscla imer/ged 5 l Hisam K Derani From: Sent: To: Subject: ISIN: US912828SM34 Brian.Warden@wellsfargo.com July 11, 2016 1:22 PM Brian.Warden@wellsfargo.com Trade Confirmation * TRADE TICKET* As Of: 07/11/16 TICKET NUMBER: 42471776 ENTRY DATE TIME: 07/11/16 12:16 SALES PERSON: DOUG SAFFORD MATURITY DATE: 03/31/17 (DATED: 04/02/12) CUSTOMER ACCOUNT: POQ PENDING WFS SELLS: 207 (M) of UST 1.000 03/31/17 CUSIP: PRICE: 100.35271000, PRICE(tics): 100-11.25, SETTLEMENT on 07/26/16 NOTES: City of Salina Broadridge#: xxxx0014 912828SM3 YIELD: .47988660, SPREAD: .0000 ISSUER: US TREASUR {912828SM3 Govt DES} ** PRINCIPAL: ** ACCRUED (117 days): ** ADDITIONAL FEE: ** TOTAL: $ 207,730.11 661. 72 $ • 00 $ 208,391.83 FINRA Rule 4515.01 requires that all accepted orders with the intent to allocate complete that allocation by 12 p.m. EST on the next business day following the trading session. In order to comply with this new rule, we ask for your help to provide your allocations to us with enough time to execute before the noon deadline. Wells Fargo Securities is the trade name for the capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including Wells Fargo Securities, LLC, member FINRA and SIPC. If this communication relates to an offering of US registered securities (i) a registration statement has been filed with the SEC, (ii) before investing you should read the prospectus and other documents the issuer has filed with the SEC, and (iii) you may obtain these documents from your sales representative, by calling 1-800-326-5897 or visiting www.sec.gov. If this communication relates to a securities offering exempt from US registration, you should contact your sales representative for the complete disclosure package. In Japan, see: https://www.wellsfargo.com/com/disclaimer/wfsjbl. ···---.. -··-·· .. --···--.. ··-·-·---··----·--------------·"-··--------·--···--··----·-------- This ernail is subject to a disclaimer. please click on the following link or cut and paste the link into the address bar of your browser. https:/fwww.wellsfargo.com/com/disclaimer/ged5 1 Hisam K Derani From: Sent: To: Subject: Brian.Warden@wellsfargo.com July 11, 2016 1:22 PM Brian.Warden@wellsfargo.com Trade Confirmation * TRADE TICKET* As Of: 07/11/16 ISIN: US912828D986 TICKET NUMBER: 42471777 ENTRY DATE TIME: 07/11/16 12:16 MATURITY DATE: 09/15/17 SALES PERSON: DOUG SAFFORD (DATED: 09/15/14) CUSTOMER ACCOUNT: POQ PENDING WFS Broadridge#: xxxx0014 SELLS: 4633 (M) of UST 1.0 09/15/2017 CUSIP: 912828D98 PRICE: 100.45399000, PRICE(tics): 100-14+, YIELD: .59917800, SPREAD: .0000 SETTLEMENT on 07/26/16 ISSUER: UNITED STA NOTES: City of Salina ** PRINCIPAL: ** ACCRUED (133 days): ** ADDITIONAL FEE: ** TOTAL: {912828D98 Govt DES} $ 4,654,033.36 16,744.27 $ . 00 $ 4,670,777.63 FINRA Rule 4515.01 requires that all accepted orders with the intent to allocate complete that allocation by 12 p.m. EST on the next business day following the trading session. In order to comply with this new rule, we ask for your help to provide your allocations to us with enough time to execute before the noon deadline. Wells Fargo Securities is the trade name for the capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including Wells Fargo Securities, LLC, member FINRA and SIPC. If this communication relates to an offering of US registered securities (i) a registration statement has been filed with the SEC, (ii) before investing you should read the prospectus and other documents the issuer has filed with the SEC, and (iii) you may obtain these documents from your sales representative, by calling 1-800-326-5897 or visiting www.sec.gov. If this communication relates to a securities offering exempt from US registration, you should contact your sales representative for the complete disclosure package. In Japan, see: https://www.wellsfargo.com/com/disclaimer/wfsjbl. This email is sulijec\ to a disclaimer. please click on the following link or cut and paste the link into the address bar of your browser. https://www.wellsfargo.com/com/disclaimer/qed5 1 Hisam K Derani From: Sent: To: Subject: Brian.Warden@wellsfargo.com July 11, 2016 1:22 PM Brian.Warden@wellsfargo.com Trade Confirmation * TRADE TICKET* As Of: 07/11/16 ISIN: US912796JM25 TICKET NUMBER: 42471775 ENTRY DATE TIME: 07/11/16 12:16 MATURITY DATE: 09/29/16 SALES PERSON: DOUG SAFFORD (DATED: 03/31/16) CUSTOMER ACCOUNT: POQ PENDING WFS Broadridge#: xxxx0014 SELLS: 397 (M) of UST TBILL 09/29/2016 CUSIP: 912796JM2 PRICE: 99.95955000, YIELD: .22723422, DISCOUNT: .2240 SETTLEMENT on 07/26/16 ISSUER: UNITED STA NOTES: City of Salina ** PRINCIPAL: ** ACCRUED (days): ** ADDITIONAL FEE: ** TOTAL: {912796JM2 Govt DES} $ 396,839.41 .00 $ . 00 $ 396,839.41 FINRA Rule 4515.01 requires that all accepted orders with the intent to allocate complete that allocation by 12 p.m. EST on the next business day following the trading session. In order to comply with this new rule, we ask for your help to provide your allocations to us with enough time to execute before the noon deadline. Wells Fargo Securities is the trade name for the capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including Wells Fargo Securities, LLC, member FINRA and SIPC. If this communication relates to an offering of US registered securities (i} a registration statement has been filed with the SEC, (ii} before investing you should read the prospectus and other documents the issuer has filed with the SEC, and (iii) you may obtain these documents from your sales representative, by calling 1-800-326-5897 or visiting www.sec.gov. If this communication relates to a securities offering exempt from US registration, you should contact your sales representative for the complete disclosure package. In Japan, see: https://www.wellsfargo.com/com/disclaimer/wfsjbl. ··-··-.. ---·----·-----·-------·-·-·---·-------·------------.. ~----···-··-·--~ --·-·~---···-··--···" _______ ,,_ -- This email is subject to a disclaimer. please click on the following link or cut c1n<J pa.ste the link inio the address b,ir of your browser. https://www.wellsfargo.com/com/disclaimer/ged5 1 Schedule 1 Reimbursement Expenditures S-1 DATE AMOUNT 6/22/2016 $ 49,814.77 5/25/2016 $ 169,127.10 3/30/2016 $ 279.57 2/4/2016 $ 265.50 12/31/2015 $ 831.44 10/29/2015 $ 2,393.46 10/1/2015 $ 3,202.94 $ 225,914.78 Schedule 1 to Federal Tax Certificate Reimbursement Expenditures VDR NAME/ITEM DESC Vogts-Parga Construction LLC Vogts-Parga Construction LLC Salina Blueprint & Micrographi Salina Journal H W Lochner Inc H W Lochner Inc* H W Lochner Inc* COMMENTS Proj #43055 Centennial road im Proj #43055 Centennial Road Im Plans for Vogts-Parga Centennial Roads Improvements Fl-Jan. publications Proj #43055 Centennial Road Improvements Proj #14-3055 Rebuild Centennial Road Proj #14-3055 Rebuild centennial Road * Permitted by Treas. Reg. § l .150-2(f) FTC (Bonds) Sched. 1 (Reimbursements) 1 July 26, 2016 CERTIFICATE OF FINANCIAL ADVISOR CITY OF SALINA, KANSAS $6,570,000 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2016-A $13,750,000 GENERAL OBLIGATION REFUNDING BONDS SERIES 2016-8 DATED JULY 26, 2016 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 bonds (collectively, the "Bonds"). I. Duties. The Financial Advisor rendered certain professional services to the Issuer, including advising the Issuer with respect to the sale of the Bonds, and assisting the Issuer with the preparation of the Preliminary Official Statement dated July 5, 2016 and the Official Statement dated July 11, 2016 including the amendment thereto (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 drafting Appendices B, C, and D 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 26, 2016. GEORGE K. BAUM & COMPANY KANSAS CITY, MISSOURI By: Title: Governing Body City of Salina, Kansas Robert W. Baird & Co., Inc. Milwaukee, Wisconsin GILMOR_EBELL GILMORE & BELL PC 2405 GRAND BOULEVARD, SUITE 1100 KANSAS CITY, MISSOURI 64108-2521 816-221-1000 I 816-221-1018 FAX GILMOREBELL COM July 26, 2016 Re: $6,570,000 General Obligation Internal Improvement Bonds, Series 2016-A, of the City of Salina, Kansas, Dated July 26, 2016 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 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 (including any original issue discount properly allocable to an owner of a Bond) 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 have not been designated as "qualified tax-exempt obligations" for purposes of Code § 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, STATE OF KANSAS OFFICE OF THE ATTORNEY GENERAL DEREK SCHMIDT ATIORNEY GENERAL The Honorable Ron Estes State Treasurer July 26, 2016 Landon State Office Building, Room 201 N Topeka, KS 66612 Dear Mr. Estes: M EMORI/\L HALL 1 20 SW 10TH AVE . 2ND FLOOR TOPEKA. KS 66612· 1 597 1785) 296-2215 • FAX (785) 296-6296 WWW.AG.KS.GOV 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: 2016-A Dated: July 26, 2016 Aggregate Amount: $6,570,000.00 Date of First Payment: April 1, 2017 Fiscal Agent: Kansas State Treasurer RDS:sb cc: Shandi Wicks, Clerk Gilmore & Bell-Kansas City Numbered: Registered Sincerely, OFFICE OF THE ATTORNEY GENERAL DEREK SCHMIDT R14J/ Assistant ~ttorney General (/ TO: FROM: SEE DISTRIBUTION LIST DAVID ARTEBERRY ROGER EDGAR George K. Baum & Company J?\\IS1Ml:.!\T U,\. lif.RS Slf\(I' 19:.!8 July 15, 2016 MEMORANDUM RE: BOND ISSUE CLOSING ARRANGEMENTS NAME OF ISSUER: City of Salina, Kansas AMOUNT, NAME AND DATE OF ISSUE: TIME AND DATE OF CLOSING: SETILEMENT NUMBERS: METHOD OF FUNDS TRANSFER: $6,570,000 City of Salina, Kansas General Obligation Internal Improvement Bonds Series 2016-A Dated July 26, 2016 10:00 a.m. Tuesday, July 26, 2016 Via telephone Par Amount of Bonds Plus Bid Premium Total Less Good Faith Deposit Net Amount Due at Closing Wire Transfer of Federal Funds $6,570,000.00 12,820.64 6,582,820.64 (134,900.00) $6,447,920.64 4801 Main Street • Suite 500 • Kansas City, Missomi 64112 • 816.474.1100 TRANSFER INSTRUCTIONS: {R. W. Baird} DISPOSITION OF BOND PROCEEDS: (City) (State Treasurer) DELIVERY OF TRANSCRIPT AND LEGAL OPINION : BOND DELIVERY INSTRUCTIONS: PAYMENT OF COSTS OF ISSUANCE : On Tuesday, July 26, 2016 R.W. Baird will wire transfer an amount of $377,566.82 to Sunflower Bank, ABA #1011-0062-1, AC #10218 7275 for credit to the City of Salina, Attn: Kayleen Chaput. On Wednesday, July 26, 2016, R.W. Baird sha ll wire transfer an amount of $6,070,353.82 to U.S. Bank N.A., ABA #1010-0018-7, for credit to State Treasurer Operating Account #145592399581, for further credit to the City of Salina, Attn: Stan Jones Upon receipt of $377,566.82 from R.W. Baird, plus the good faith deposit on hand in the amount of $134,900.00 and contributions from the City of $32,278.82 ($544,745.64 total), the City will deposit the funds into the 2016-A Improvement Fund. Upon receipt of $6,070,353.82 from R.W. Baird, the State Treasurer shall use the funds to pay the principal and interest due as of August 1, 2016 on the City's Series 2015-1 Temporary Note issue. Upon receiving confirmation of receipt of funds, Gilmore & Bell will 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. Bonds will be delivered to the offices of the Depository Trust Company, New York, New York at least one day prior to closing. All costs associated with the issuance of the Bonds will be paid after closing by the City from the 2016-A Improvement Fund upon presentation of the proper invoices. Engelman, Heather (G&B} From: Sent: To: Cc: webmaster@treasurer.ks.gov Thursday, July 07, 2016 11 :01 AM Engelman, Heather (G&B) bonds@treasurer.ks.gov Subject: Updated Bond Registration: SALINA July 7, 2016, 11:00:39 This bond issue has been updated in the KST Bond Registration System. Below is the updated information: Registration #: 0322-085-072616-850 Municipality: SALINA Bond Counsel: GILMORE BELL: HEATHER ENGLEMAN Paying Agent: STATE Purpose & Series: GO INTERNAL IMP BDS SR 2016-A Principal: $6,745,000.00 Closing Date: July 26, 2016 The issue was updated by JILL SCHELL. 1