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Transcript of Preceedings 2017-ATRANSCRIPT OF PROCEEDINGS AUTHORIZING THE ISSUANCE OF $9,310,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2017-A Legal Opinion Gilmore & Bell, P.C. Kansas City, Missouri DATED JULY 27, 2017 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2017-A DATED JULY 27, 2017 CLOSING LIST Copies of the transcript of proceedings for the above referenced issue (the "Bonds"), will be prepared and distributed as follows: 1. City of Salina, Kansas ( the "Issuer") 2. Attorney General of the State of Kansas 3. Robert W. Baird & Co., Inc., Red Bank, New Jersey (the "Original Purchaser") 4. George K. Baum & Company, Kansas City, Missouri (the "Municipal Advisor") 5. Gilmore & Bell, P.C., Kansas City, Missouri ("Bond Counsel") Document Number PROCEEDINGS AUTHORIZING THE IMPROVEMENTS 1. Bicentennial Center 2. Country Club Road 3. Smoky Hill River Renewal PROCEEDINGS AUTHORIZING THE SALE AND ISSUANCE OF THE BONDS 4. Excerpt of Minutes of the governing body meeting evidencing adoption of Resolution No. 17-7457 5. Resolution No. 17-7457 authorizing the offering for sale of the Bonds 6. Notice of Sale, Preliminary Official Statement and Certificate Deeming Preliminary Official Statement Final 7. Official Statement 8. Omnibus Continuing Disclosure Undertaking 2 9.Excerpt of Minutes of the governing body meeting evidencing adoption of first reading of Ordinance No. 17-10886 10.Excerpt of Minutes of the governing body meeting evidencing acceptance of the best bid of the Original Purchaser and passage of Ordinance No. 17-10886 and adoption of Resolution No. 17-7466 11.Ordinance No. 17-10886 authorizing the Issuance of the Bonds 12.Summary of Ordinance No. 17-10886 and Affidavit of Publication of Summary Ordinance No. 17-10886; City Attorney Certificate 13.Resolution No. 17-7466 prescribing the form and details of the Bonds CLOSING DOCUMENTS 14.Transcript Certificate Exhibit A – Schedule of Outstanding General Obligation Indebtedness 15.Uniform Facsimile of Signature Certificates 16.Specimen Bond 17.Agreement Between Issuer and Agent 18.DTC Documents Blanket Letter of Representations Underwriting Safekeeping Agreement 19.Rating Letter - Moody’s 20.Closing Certificate 21.Federal Tax Certificate with attachments as follows: Exhibit A-1 – Expected Expenditure of Bond Proceeds & Investment Proceeds Exhibit A-2 – Form of Close Out Exhibit B – Internal Revenue Service Form 8038-G and evidence of filing Exhibit C – Table of Funds and Restricted Money Investment Restriction Exhibit D – Computation of Debt Service Schedule, Proof of Bond Yield, Weighted Average Maturity of the Bonds, and Remaining Weighted Average Maturity of the Refunded Notes Exhibit E-1 – Description of Property Comprising the Financed Property Exhibit E-2 – Records of Expenditures of the Refinanced Property Exhibit F-1 – List of Existing Contracts and Agreements with Parties other than Eligible Users Approved by Bond Counsel Exhibit F-2 – Form of Annual Compliance Checklist Form Exhibit G – Underwriter’s Receipt for Bonds and Issue Price Certificate 22. Certificate of Municipal Advisor PROCEEDINGS AUTHORIZING THE REFUNDED INTEREST 23. Ordinance No. 07-10390 and Resolution No. 07-6403 authorizing the Series 2007-A Bonds LEGAL OPINIONS 24. Approving legal opinion of Gilmore & Bell, P.C. 25. Approval letter of Attorney General MISCELLANEOUS DOCUMENTS 26. Closing Letter 27. Letter from State Treasurer Confirming Registration Number 3 crJ'Y OP SALJN~ ICANSAS REGlJLAllMEETING OP THE BOARD OP COMMISSIONERS Mlfthf, 2013 4IOOp.m. The CifJ Commluiona,nvened at 8:45 p.m. ma SCud.y Session for a Otim.1 OpmPmum. The Regular Meeting of the Board of Co11a1duionen wu called to order at 4:00 p.m. in Room 10'1, City-County Bailding. A m11 c:all WU taken fo~ by the Pledge of ADegianc:e and • moment of lilence. Compming a quorum ol the Board wen: Mayor Norman M. }emdnp (presJdlng officer), Cammlssfnner Kaye J. Crawfor4 ComatiMioner AmmHomeboJter · Abeent: CanuoiAfmler Sammdha P. Angell, Commtadaner Barb Shlrley .• ADMINIBrRATION (8.7) Resolation No. 13-6988 authorizing and prmding for the iawmce of bond, to finance constrw:tim of improvementa 1o the Biaentemlal Center. Rod Pram, Director of Pimnce and Administr~ explained ft!SOJ:utlon and COit · estimates, · . 13-0069 Moved by Commtllloner Houebolter, seoondecl by Commillioner Crawford, to adopt RelolutionNo.18-6988. Aye: (3). Nay: (0). Motioncmied. ADJCKJaNMENT 1S4J'12 Moved by Commlaianer Houeholler, NIXlllded by Commiaioner O:awfo.n:L that the regular meeting ol the Board of CttyCmmnlllslonm be adjomned. Aye: (3). Nay: (0). Motlmc:mied. The meeting adjomned at 6:19 p.m. [SBAL] A1"l'SSI': IJ/Sher4f1Wfd;&, Shandi Mcb, Deputy City Cerk h/Ncn:man,M, r~ NarmanM.Jemdnp, Maym I .bcnby certify that 1be foregoing is a 1n1e conct rmeq,t of 1he action tabn by CbD Oowming Body at its regular meecina m Mamh 4, 2013 repnHng Reaolution No. 13-6988. £:~~ Pqel Cl ·---5~ if IJ BJIJ 'J SI r:ar; JI JI';=> ~~ 1 ~ S! l1 :.-11 (Ill-I f !: ii !Ii.I I "'' ~ I i ~ • I ' ~ -. ~ • ; gi ,~ ifli -111 $1 , a.f t(R 15 I f If i r-1 r if I ~ -11 , t ! I; 111 f ~f~ 1 .. 11 It~ I f11 ~r lJ 11-" ...... 1 9. ~ I i'f lJ f { f I ·~t'' f ~ ilo r r 11 ff! ~J!i! · 1 ! !1if Ji }Ji 1-;a I I i! 1d J'Jh1 I g 1,111 i( •U . gl ! r p. l1P 11 J1I r ij ,,, lt 11! e! ~ i f 111 il~1!! 1· i IJw. I i!t ~i t I r l -na. J IF fg " J J1;1 CITY OF SALINA, KANSAS REGULAJl ME£TING OF THE BOARD OF COMMISSIONERS April 21,2014 4:00p.m. The City Commmion convened at 2:30 p.m. for Se~g Alcohol in the Public Right-of-Way and at 3:45 p.m. for Citizen, Forum. The ReguJu Meeting of the Board of Commiuionen wu called to order at 4:00 p.m. in Room 101, Qty-County Building. Roll call was taken followed by the Pledge of AJ1egianc:e and a moment of silence. Thme present and comprising a quorum: Mayor 'Barb9ra V. Shirley (pra.iding), Commiaionen Jon R. Blanchard, Kaye J. Crawforct Randall R. Hardy, and Aaron Householter. Also pre,ent: Jason A. Gage, Qty Manager; Michael D. Schrage, Deputy City Manager; Greg Bengtson, Oty Attorney; and Shandi Wides, City Clerk. , (7.2) Resolution No. 14-1087 amending Section 2 of Resolution No. 13-6988, authorizing and providing for th, construction of improvemeNs to certain exilling public buildings in the Clt:y of Salina, Kansu; and providing foi the payment of costs theref~ Rod Franz, Dlrectm of Finance and Administration, explained the amendmenL Commissioner Blanchard aaJced for clari6cation on the percentage inc:reue in the project ,cope. Mr. Franz and Juon Gage, City Manager, responded. 14-0115 Moved by Commiuioner Blanchard, seconded by Commiaioner Homeholter, to adopt Resolution No. 14-7087. Aye: (5). Nay: (0). Motion carried. ADJOURNMIM" 14-0118 Moved by Commiuloner Blanchard, seconded by Commuaianer Shflley, that the regular meeting of the Board of City Commiaimen be adjourned. Aye: (5). Nay: (0). Motion carried. The meeting adjourned at 4:44 p.m. (SEAL] /J{AfY'rlntK, f(""""9flll, Aaron K. Househoher, Mayor A"ITEST: A(.fluuv/1,ltlldr Shandi Wkb, CMC, Oty Oezk I herel,/ certify that the forqoln1 is I true correct excerpt of the adlon bken by the GovernJn1 Body at its rqular meetq on April 21, 2014 reprdlng Re$olutlon No.14-7087. i I I I I RISOUJTJON HUMID 14-7117 A UIOUJTION AMENDJNC IEC'l10N 2 OF ltDOWtlON JMNI, AV'IIIOIIZDfG AND PROVIDJNG FOR THE CONIDVCTION OF IMPllOVIMENTI TO CERTAIN EXISTING PUIUC IIVILDDfGI JN THE CITY OP MLlllfA, KANSAI; AND PRO\IIDJHG FOa 1111 PAYM!N'I' OFTRE COSTITHEIIEO.F. WREUAI, IC. I.A. 12· l7J6 ...... M p111, 11111 Ill)' city In lhc Slate er 1Cams 1D11 fflCI Of CGllllnlet. lC4Uft I public lluildJaa Of lluildlllp Nd ,,.. II)' ......,. sile lllcrdcft and IIIIJ allere l'qllir, ltCOIISlnlel. tlfflOdd, Npface o, 1911cc additrOIII IO, flnlsJi u4 quip a public 1Mfda1orlllrillitip,.,... WDR£AS. IC.S.A. 12•17J7 prcwlda, m flll1, lhat the ptmittJ body ol 111)' dry NY, ror Ille,.,_. er rlflltlCIIIJ Ille cests auocllrlcl widl lhc torqolfta. '"-pnenl •Updon boa DldaeCity.and WBERUI. Ille IOfflll"'8 Nd1 ol tbe City or Salina, ICllllas (the "Cily"), llcNby fiad& 111d dclcftlllllll 1110 be W1S11Y IO IUlhoriac Ind Pf"ldc for 1hr COllllnlClion of,..,.... ... IO calla pllblic bildlnp In 1M City, II -,, t.lly dacnbe4 llerefll, tad IO previcle for the pl)fflllll of'dicccmlhamrwillloul lhu•caslryof• dcclion,atl as prtvldcd by AW K.S.A. 12.1mu ... • IIJlladed ancl IIIPfk....i 6ain tlml IOdffle(llae"'~ WHEREAS, oa Mardi 4, 2013, .._ pa,dna Wy or die City ,,.._., adopted llctoltilioii Ho. aunt ..,._mna end dirccdaa lhc ~•1ow1• .,,....... • tht Bicenleaaill Caler (die "Pftjeca"): Ylrioll ca,llal illlplMfflCIU Ill 1M 8~ C.. ~ llul INll lhnilell to: roof .. ,.,..,.. 111d Npllr, ... ~ elecubl 111d ....... l)'ltCIII ancl HVAC _,.........,. ..,1.1e11J1lftl or illllflor 111d ....,_ doors; rmKNlel or COlll:lllloe Slads, lollb)t, CllltWt 111d NffllllillrlllYI -.; exllrtot ~-............ QlrN .......... famllhltlp.,.... ..i ......,, for 111111. -.11111 on1ct .,_.. .. IMlnt ..,._ '° a.e 1oc11a1 OIi OIIIO StrlCI • TIie Mldwl)' 11111 Oakdale II The Midway; Ind all lldacr IICCIUII)' ... nlllcd bp'owemaits, II I toell admlld cml of Sl,750,000 plus C01U ol iuuaKc aid intmll OIi Ill)' llelllpDQJ)' "-c:IISJ;Nd WJ11UAs. dtc IOCII coaa eldic ,._ han incnaled, ud the pwniJnt llody had,y fM llld ddenailcs fr ....wy to amClld Stclioft Z olRflOhilloll No. IJ-6911 ID llfO¥idl for Ille lfflNllin1IIDMClf lalalC0111ollhc,,... .... , ........ diaeol. 111EREFORI, 1£ IT llESOLVED BY 11fE COVEINIHC BODY or THE CIJ'Y OFIAUNA,KANIAI: lealoli ,. AIM ....... ID llclln l ol llaohillh ,wna. Sactlan 2 or· Resolal• IUNl h .,...,, ...... ,s followa: lmloa2. lead A........._ 11atatillllted c..aa forlllt l'llljeclart la lhe tlllOINII el SID,200,000 pllls costs or IIINIICC ._ lillCrla oa all)' lnlpOrllY flnnc-,. TIie COIIS hll 6c Pn,jecl 111d essocialed filltllcltl& costs sJiall Ill payallle fi'onl Ille proccdl DI a-1 llblipllon .. lllcUor llfflpOll,y llOIIS ., ... Cily Issued ...., aldlloriry ., die Act (lllt.,,...,. lectlN J, lltlalieneant. The pvcmlna bod1 llerclly llllfl hs el1icill lllCClll lhll llolldl tnl)' lie faued ID rcimburae u,e,idilllm fflldc OIi or after the dale wtdch ii '° dayl lleloft die atrof•• Raol•lon. punulll lO TIIIIIIIJ ltcplllloo f I IJ0.2 lcictlM ... Effccthos Dak. Tliis AetolaitlOII ...... ,rr.a ... be la r..11 r... hnt 111d wr Ill adopliDe by llac IMfflinl liod>' ol'tbe CII)', ADOPTED AND APPROVED by die scwanhti bod)' or the City or S.liaa, Kaau. Olt April %1, 2014 i I I I I (Sal) I hereby certify that the above and f<>Rgoing is a true and correct copy ofResolution No. 14-7087 that wu adopted by the Governing Body of the City oCSalina a bciri lar meeting on April 21. 2014 I I RESOLUTION NUMBER 14-7152 A RESOLUTION AMENDING SECTION l OF RESOLUTION 13-6988, AUTHORIZING AND PROVIDING FOR TIIE CONSTRUCTION OF IMPROVEMENTS TO CERTAIN EXISTING PUBLIC BUILDINGS IN THE CITY OF SALINA, KANSAS; AND PROVIDING FOR THE PAYMENT OF THE COSTS THEREOF. WHEREAS, K.S.A. 12-1736 provides, in part, that any city in the State of Kansas may erect or construct, acquire a public building or buildings and procure any necessary site therefore and may alter, repair, reconstruct, remodel, replace or make additions to, furnish and equip a public building or buildings; and WHEREAS, K.S.A. 12-173 7 provides, in part, that the governing body of any city may, for the purposes of financing the costs associated with the foregoing, issue general obligation bonds of the City; and WHEREAS, the governing body of the City of Salina, Kansas (the "City''), hereby finds and determines it to be necessary to authorize and provide for the construction of improvements to certain public buildings in the City, as more fully described herein, and to provide for the payment of the costs thereof without the necessity of an election, all as provided by said K.S.A. 12-1736 et seq., as amended and supplemented from time to time (the "Act"); WHEREAS, on March 4, 2013, the governing body of the City previously adopted Resolution No. 13-698.8 authorizing and directing the following improvements to the Bicentennial Center (the "Project''): Various capital improvements to the Bicentennial Center including, but not limited to: roof reinforcement and repair; arena renovation; electrical and mechanical system and HV AC improvements; replacement of interior and exterior doors; remodel of concession stands, lobby, entrance and administrative areas; exterior improvements including sidewalks, curbs and landscaping; furnishings, fixtures and equipment for arena, stage and office spaces; building marquees to be located on Ohio Street at The Midway and Oakdale at The Midway; and all other necessary and related improvements, at a total estimated cost of $8,750,000 plus costs of issuance and interest on any temporary financing; and WHEREAS, on March 24, 2014, the governing body of the City adopted Resolution No. 14-7087, amending Section 2 of Resolution No. 13-6988 and increasing the estimated cost of the Project and the financing thereof to $10,200,000 plus costs of issuance and interest on any temporary financing. WHEREAS, the total costs of the Project have increased, and the governing body hereby finds and detennines it necessary to again amend Section 2 of Resolution No. 13-6988 to provide for the revised estimated total costs of the Project and the financing thereof. THEREFORE, BE IT RESOLVED BY THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS: Section 1. Amendments to Section 2 of Resolution 13-6988. Section 2 of Resolution 13-6988 is hereby amended as follows: Section 2. Bond Authorization. The estimated costs for the Project are in the amount of· $12.901,308 plus costs of issuance and interest on any temporary financing. The costs from the Project · and associated financing costs shall be payable from the proceeds of general obligation bonds and/or temporary notes of the City issued under authority of the Act (the "Bonds"). I I Section 3. Reimbunement. The governing body hereby states its official intent that Bonds may be issued to reimburse expenditures made on or after the date which is 60 days before the date of this Resolution, pursuant to Treasury Regulation § 1.150-2. Section 4. Effect. Resolution No. 13-6988, as amended by this Resolution, is hereby ratified and confirmed and shall remain in full force and effect. This Resolution shall supersede Resolution No. 14- 7087. Section S. Effective Date. This Resolution shall take effect and be in full force from and after its adoption by the governing body of the City. ,.. ADOPTED AND APPROVED by the governing body of the City of S day of November, 2014. {Seal) K. Householter, Mayor ATTEST: . ~{()UNI Shandi Wicks, CMC, City Clerk I I CITY OF~SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS 1'love111ber17,2014 4:00p.m. The City Commission convened at 2:45 for Iron Avenue Gateway Design and 3:45 p.m. for Qtizens Forum. The Regular Meeting of the Board of Commissioners was called to order at 4:03 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 Shandi Wicks, City Clerk. AWARDS AND PROCLAMATIONS None. CJnzENFORUM Brandy Carry, Leadership Salina, (works at Kennedy & Coe), provided information regarding the need for recycling in Salina and the current city curbside recycling program. . Lee Legleiter, Leadership Salina, provided information on his past experiences with recycling and information regarding the recycling programs in various cities in Kansas. John Walter, Leadership Salina, 2038 Stone Creek Court, provided information on his experiences with recycling and expressed his concerns regarding the c:u,rrent recycling program. Mardo Barreto, 2208 Brookfield Drive, Salina, .provided information regarding the need for a better recycling program in Salina. Commissioner Blanchard thanked the individuals for speaking today and provided his thoughts on recycling. Commissioner Hardy provided information regarding the recycling program in Seattle, Washington. PuBuc HEARINGS AND ITEMS SCHEDULED FOR A CERTAIN nME (5.1) Continuation of public hearing on an Appeal (filed by Jim Ravenkamp) of the Heritage Commission's approval of Certificate of Appropriateness Application No. CA13-2, (filed by Salina Regional Health Center), requesting approval of a Certificate of Appropriateness to allow the demolition of the vacant St. John's Hospital building located at 139 N. Penn Avenue. Commissioner Davis recused himself due to a conflict of interest. Dean Andrew, Director of Planning, explained the nature of the request, Heritage Commission.action, review and appeal procedure, previous City Commission actionJ status update on the request and commission action alternatives. Page 1 I I Commissioner Hardy asked a question pertaining to the December 4, 2013 minutes of the Heritage Commission and asked about the findings in the blue sheet from the January 13, 2014 City Commission meeting, regarding the willful neglect of the building. Mr. Andrew responded. Commissioner Blanchard asked if the hospital's contract with Comprise Community Development Company was still active and the basis of the past City Commission actions. Mr. Andrew responded. Commissioner Blanchard asked if any of the buildings were added or removed since the property became part of the Heritage Conservation Disbict in 1997. Mr. Andrew responded. Commissioner Blanchard provided his thoughts on the cultural significance of the building to the community and the areas of neglect in the building. · · Commissioner Blanchard asked for information regarding the Heritage Commission's finding that the denial of the Certificate of Appropriateness for demolition would cause an economic hardship. Mr. Andrew and Todd Luckman, Stumbo Hanson, LLP, responded. Jason Gage, City Manager, asked for clarification on the Heritage Commission's finding that the denial of the Certificate of Appropriateness for demolition would cause an economic hardship pertaining to the provisions of the Salina Code Section 42-465, Certificate of Economic Hardship. Mr. Luckman responded. Jack Hinnenkamp, Salina Regional Health Center, provided an update on the status of the · · · contract with Comprise Community Development Company and to request concurrence with the Heritage Commission's determination. Commissioner Hardy asked what year the building was fully vacated and how much of the deterioration of the building happened after the building was fully vacated. Mr. Hinnenkamp responded. Commissioner Crawford asked if the hospital tried to market the building in 2014. Mr. Hinnenkamp responded. Jim Ravenkamp, 652 S. Santa Fe, provided his thoughts on the need to keep the historical por.tions of the building, the conservation ordinance and property maintenance code in relation to this item and the best suitable option for the City Commission to act on for this property. Mike Forristal, owner of the Lee Building, provided his thoughts on the demolition of the St. John's Hospital building. Commissioner Blanchard asked if a vote does not pass, will the permit be granted as a default. Mr. Luckman and Mr. Gage responded. Commissioner Blanchard asked if staff could attend the quasi-judicial closed door session. Mr. Luckman responded. 14-0334 Moved by Commissioner Blanchard, seconded by Commissioner Hardy, to recess into a quasi- judicial closed se~sion for 15 minutes to discuss with legal counsel matters subject to the attorney- client privilege for the reason that public discussion of those matters would waive the privilege and adversely affect the City's interest in the matters and reconvene at 5:55 p.m. Page2 14-0335 I The City Commission recessed into a 5 minute break at 5:35 p.m., then recessed into quasi- judicial closed session at 5:40 p.m. and reconvened at 5:57 p.m. No action was taken. Moved by Commissioner Blanchard, seconded by Commissioner Hardy, to overturn the decision of the Heritage Commission and deny the demolition permit with the following findings: 1. That St. John's Hospital building is architecturally and/ or historically significant and that its demolition will have a negative impact on the Conservation District, surrounding neighborhood an~ community; 2. That it has not been sufficiently demonstrated by the owner/applicant that rehabilitation and reuse of the hospital building at 139 N. Penn Avenue is not structurally or economically practical and feasible, and 3. That it has not been demonstrated that partial demolition of the newer additions would be at such a cost to make it an undue hardship by the applicant. This ruling is without prejudice to resubmit an application that ·provides full information as to the cost for partial demolition. Commissioner Blanchard provided his thoughts on the demolition of the :t,uilding. Commissioner Hardy provided his thoughts on the demolition of the building. Commissioner Crawford provided her thoughts on protecting the historical preservation of the buildings in Salina. Mayor Householter provided his thoughts on the demoli~on of the building. Mayor Householter called the question to overturn the decision of the Heritage Commission and deny the demolition permit with the following findings: 1. That St. John's Hospital building is architecturally and/ or historically significant and that its demolition will have a negative impact on the Conservation District, surrounding neighborhood and community; 2. That it has not been sufficiently demonstrated by the owner/applicant that r~bilitation and reuse of the hospital building at 139 N. Penn Avenue is not structurally or economically practical and feasible, and 3. That it has not been demonstrated that partial demolition of the newer additions would be at such a cost to make it an undue hardship by the applicant. This ruling is without prejudice to resubmit an application that provides full information as to the cost for partial demolition. Aye: (3). Nay: (1) Householter. Motion carried. I Commissioner Davis returned. (5.2) Public hearing and report on Petition No. 4368 (filed by Guy Walker on behalf of CWW Enterprises, LP, owner of the former East Iron Dillons Store property), requesting the vacation of a 10 foot east-west alley abutting Lot 51 on Front Street and Lot 103 on Second Street in the Original Town of Salina, Saline County, Kansas. (5.2a) First reading Ordinance No. 14-10757. Mayor Householter opened the public hearing. Dean Andrew, Director of Planning, explained the nature of the current request and affected public and franchise utilities. There being no further comments the public hearing was closed. Mayor Householter asked if holding second reading approval next week would hold up the opening of the store. Mr. Andrew responded. Page3 14-0337 I 14-0338 Commissioner Davis asked if approval of use of the grocery store parking lo·t for vehicle access to the alley was also required today. Mr. Andrew responded. Guy Walker, 500 Graves Blvd., thanked the City Commission for considering the item today. Commissioner Blanchard asked for the anticipated opening date of the store. Mr. Walker responded. Moved by Commissioner Davis, seconded by Commissioner Blanchard, to pass Ordinance No. 14- 10757 on first reading. Aye: (5) Nay: (0). Motion carried. CONSENT AGENDA (6.1) (6.2) Approve minutes of November 10, 2014. Authorize the Mayor to approve Change Order No. 1 for the following Specialty Contractor Agreements: Laboratory Support -Site Wide Remedial Investigation-Chemical Testing of Soil, Sediment and Water to Continental Analytical Services, Inc, in the amount of $4,205.00 (Revised Agreement Amount $82,530.50); Surveying Support -Site Wide Remedial Investigation to Wilson & Company, Inc. Engineers & Architects, in the amount of $1,410.00 (Revised Agreement Amount $32,476.00); Drilling Support-Site Wide Remedial Investigation (Lines 01-07 and 10) to Enviro~tal Priority Services, Inc., in the amount of $8,975.00 (Revised Agreement Amount $155,605.00); and Drilling Support-Site Wide Remedial Investigation (Line Items: 08-11) to GeoCore, Inc., in the amount of $47,409.40 (Revised Agreement Amount $104,827.40). Commissioner Blanchard requested that Item 6.1 be removed from the consent agenda Moved by Commissioner Cra~ford, seconded by Commissioner Hardy, to approve the item 6.2 on the consent agenda. Aye: (5). Nay: (0). Motion carried. (6.1) Approve minutes of November 10, 2014. Commissioner Blanchard noted changes to the minutes and asked for clarification on motions 14- 0325 and 14-0326. Mr. Bengtson asked for time to look at the items and get back with the Commission later in the meeting. Moved by Commissioner Blanchard, seconded by Commissioner Hardy to table the approval until later in the meeting. ADMINISTRATION (7.1) Second reading Ordinance No. 14-10755 levying Salina Business Improvement District No. 1 service fees for 2015, in accordance with KS.A. 12-1791. Mayor l:louseholter noted that Ordinance No. 14-10755 was passed on first reading on November 10, 2014, and since that time no comments have been received. Ray Hruska, 235 N. Santa Fe, asked if the ordinance was referring to tax levies, for clarification of the word levy, if the correct ordinance number was referenced in the ordinance regarding the original ordinance establishing the business improvement district and asked for clarification on civil judgments and criminal prosecutions listed in the Page4 I I ordinance. Jason Gage, City Manager, and Greg Bengtson, City Attorney, responded. Mr. Bengtson provided additional information regarding the civil judgments and criminal prosecutions listed in Sections 10 and 11 in the ordinance. Moved by Commissioner Blanchard, seconded by Commissioner Davis, to adopt Ordinance No. 14-10755 on second reading modifying Ordinance No. 83-8979 with 83-8971 and removing Section 10 e and adding to Section 11. No civil judgement shall bar or prevent a criminal prosecution for each and every violation of this ordinance. A roll call vote was taken. Aye: (5) Blanchard, Crawford, Davis, Hardy, Householter. Nay: (0). Motion carried. (7.2) Second reading Charter Ordinance No. 38 a charter ordinance exempting the City of Salina, Kansas, from the provisions of KS.A. 13-1024a and providing substitute and additional provisions on the same subject relating to general improvements and the issuance of bonds for the purpose of paying for said improvemen~; and repealing Charter Ordinance Number 34. Mayor Householter noted that Ordinance No. 14-10755 was passed.on first reading on November 10, 2014, and since that time no comments have been received. 14-0340 Moved by Commissioner Hardy, seconded by Commissioner Davis, to adopt Charter Ordinance No. 38 on second reading. A roll call vote was taken. Aye: (5) Blanchard, Crawford, Davis, Hardy, Householter. Nay: (0). Motion carried. 14-0341 (7.3) Resolution No. 14-7152 amending Section 2 of Resolution No. 13-6988, 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 cost thereof. Rod Franz, Director of Finance, explained the amendment. Moved by Commissioner Davis, seconded by Commissioner Blanchard, to adopt Resolution No. 14-7152 amending Section 2 of Resolution No. 13-6988, 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 cost thereof. Commissioner Crawford provided her thoughts regarding the project. Mayor Householter called the question to adopt Resolution No. 14-7152 amending Section 2 of Resolution No. 13-6988, 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 cost thereof. Aye: (5). Nay: (0). Motion carried. (7.4) Authorize the ~yor to sign the engineering services agreement for Centennial Road Improvements, Jumper Road to South City Limits, Qty Project No. 14-3055. Dan Staci<, City Engineer, explained the agreement and project improvements. Commissioner Blanchard asked what portion of Centennial Road had been developed so far and if there was adequate space for bicycle traffic. Mr. Stack and Jason Gage, City Manager, responded. Commissioner Blanchard asked if Centennial Road had been a discussion in the Bicycle Master Plan. Dean Andrew, Director of Planning, and Mr. Gage responded. PageS I 14-0342 Moved by Com.missioner Hardy, seconded by Commissioner Davis, to authorize the Mayor to sign the engineering services agreement for Centennial Road Improvements, Jumper Road to South City Limits, City Project No. 14-3055 in the amount of $56,911.28. Aye: (5). Nay: (0). Motion carried. DEVELOPMENT BUSINESS (8.1} Resolution No. 14-7153 authorizing the Mayor to execute a license agreement with CWW Enterprises, LP, authorizing a portion of the former East Iron Dillons grocery store to encroach in!o the North Second Street and East Iron Avenue right-of-way. Dean Andrew, Director of Planning, explained the agreement. Commissioner Hardy asked if building encroachments in the right-of-way occur often. Mr. Andrew responded. 14-0343 Moved by Commissioner Blanchard, seconded by Commissioner Crawford, to adopt Resolution No. 14-7153 authorizing the Mayor to execute a license agreement with CWW Enterprises, LP, authorizing a portion of the former East Iron Dillons grocery store to encroach into the North ond Street and East Iron Avenue right-of-way. Aye: (5). Nay: (O}. Motion carried. 14-0344 Moved by Com.missioner Blanchard, seconded by Commissioner Hardy, to bring item 6.1 back to the table. Aye: (5). Nay: (0). Motion carried (6.1) · Approve the minutes of November 10, 2014. Greg Bengtson, City Attorney, provided clarification on the motions for item 7.3. Commissioner Blanchard requested the following changes be made to the minutes: downtown businesses changed to Business Improvement District Board on page 2; and to delete motion 14-0326 and modify 14-0325 to include an indefinite extension of the current Transient Guest Tax rate. 114-0345 Commissioner Hardy asked that trusty be modified to trustee and tresses be modified to trusses. Moved by Commissioner Blanchard, seconded by Commissioner Hardy to approve the minutes by amending downtown businesses changed to Business Improvement District Board on page 2; and to delete motion 14-0326 and modify 14-0325 to include an indefinite extension of the current Transient Guest Tax rate and change the spelling of trusty to bustee and tresses to trusses. Aye: (5). Nay: (0). Motion carried. OTHER BUSINESS (9.1) Request for executive session (legal/trade secrets). 14-0346 Moved by Commissioner Crawford, seconded by Commissioner Hardy, to recess into executive session for 30 minutes to discuss with legal counsel matters subject to the attorney-client privilege for the reason that public discussion of those matters would waive the privilege and adversely affect the City's interest in the matters and to discuss confidential data relating to the financial affairs and trade secrets of a corporation for the reason that public discussion of the information would competitively disadvantage the corporation and reconvene at 7:35 p.m. The City Commission recessed into executive session at 7:05 p.m. and reconvened at 7:35 p.m. No Page6 14-0347 14-0349 14-0350 14-0351 I action was taken. Moved by Commissioner Blanchard, seconded by Commissioner Hardy, to extend the current executive session for an additional 15 minutes. Aye: (5). Nay: (0). Motion carried. The City Commission recessed into ~xecutive session at 7:35 p.m. and reconvened at 7:50 p.m. No action was taken. Moved by Commissioner Blanchard, seconded by Commissioner Hardy, to extend the current executive session for an additional 10 minutes. Aye: (5). Nay: (0). Motion carried. The City Commission recessed into executive session at 7:50 p.m. and reconvened at 8:00 p.m. No action was taken. Moved by Commissioner Blanchard, seconded by Commissioner Hardy, to extend the current executive session for an additional 10 minutes. Aye: (5). Nay: (0). Motion carried. The City Commission recessed into executive session at 8:00 p.m. and reconvened at 8:10 p.m. No action was taken. Moved by Commissioner Blanchard, seconded by Commissioner Hardy, to extend the current executive session for an additional 10 minutes. Aye: (5). Nay: (0). Motion carried. The City Commission recessed into executive session at 8:10 p.m. and reconvened at 8:20 p.m. No action was taken. · ADJOURNMENT Moved by Commissioner Blanchard, seconded by Commissioner Hardy, that the regular meeting of the Board of City Commissioners be adjourned. Aye: (5). N 0). Motion carried. The meeting adjourned at 8:20 p.m. [SEAL] ATI'EST: ~llUIJ Shandi Wicks, CMC, City Clerk Page7 CITY OP SALl~XANSAS UGtJLAllMEEI'JNQ OJl'TIIJt BOARD OF COMMISSIONERS .. Februry 11, 20D2 4:00p.m. flltc.ityCommlulonconven!dst3:30p.m.faraCidzcno,tAFonm. Tht.ReplatMeetin;oflht BoardofOunml11fonen:wuca1Jedtocmler1t.C:OOp.m.ialooml07,~8allcling.An>IJ an wu tebll follawcd by the P1cdJe af AJJegiaaoc ada mrment of m:aoo. Absent: NDDO. . ADMINISTRAnON . . (1.2.) PilltrcadfnsOrdmweNo.02-J0071 deelpat1Dace110ume11umalnlraff'ICWl)'Sancl delignallng ccnaln addJllonlJ ltmD U ntftcway CODllccdom. 02-3114 Moved by Commiaicmer Slwfwid;. leCOllded by Commissioner Divine. '8 pass On!inance No. 01-10071 on ftm adqr. A,ye: (5). Nay: (0). Mo1kmcuried. ADIOURNMENT 02·3191 Novedb)'CommulkmcrSbadwict,secmufedbyCommbrionerHath,diatthoRepllr Medina of the Boanl af Commia1onen be adjomned. Aye: (5). Nay: (0). Motion cmried. The mecdng lltfoumcd at 5:47 p.m. (SF.AL) ATJ'IST: hf Ucu Ann Nioc>le Lieu Alm NicoJa, City Clede Commission Action# CITY OF SALINA, KANSAS 0 REGVLARMEETING OF THE BOARD OF COMMISSIONERS February 25, 2002 4:00p.m. Tho City Commission convened at 3:30 p.m. fora Citizen Open Formn. Tho City Commission also ~in a Study Session afterthcrcgularmeetingfor a City/USO 305 Progimus Briefing. The Regular Meeting af 1bc Board of Commiaioncn was ca1Jcd to Older aU:00 p.m. in Room 107, aty-County BuUding. A roll call was cakcn followed by the Pledge of Allegiance and a mommt of m1ence. Thete were pfflCDt: Mayor Kristin M. Sealon, Cmnnan presiding. CmmmsioncrDebomh P, Divi~ Commissiontt Don ~th, Commusioner Alan B. Jilb, Commi£sioner Monte D. Shadwick Absent None. ADMINISTRATION (8.1) Second rcadingOrdioancoNo. 02-10071 designating certain streets as main tramcways 8Dd designating certain. sclditional streets as trafficway conncetiom. 02-3193 Moved by Commissioner Shadwick, rcccmdcdbyCommis.sioncr Jilb, to adoptOrdiancc No. 01-10071 on second reading. A roll call vote was taken. Aye: (S) Divine, Heath, Jitb. Shadwick. Seaton. Nay: (0). Motion carried. • AD.JOUBNMENT . 02-3198 Moved by ConuniJsiollCI' Jilka, seconded by Commiuioncr Divine, that the hgular Mcctmg of the Board of Commissioners be adjourned. Aye: (S). Nay: (0). Motion carried. The • meeting adjourned at 4:32 p.m. · [SEAL] A'ITEST: Ljeu Ann Nicola Lieu Ann Nicola, City Cleric . Isl Kristin M, Sqtoo I hereby certify that the forcgoi11g is a true com:ct exccs:pt of the action taken by the Govcming Body at its regular meeting on Fcbmary 25, 2002 regarding Ontinaoce No. 02-10071. ~etk. 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No. ll'l-100'1'1 llu i>Mn comctly put,tllhwd tn Hid nawap&Pfl _1 __ ""'"·------lhellm publlcallon1>111111 g...., EXCERPT OF MINUTES OF A MEETING OF THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS HELD ON JUNE S, 2017 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 (presiding), Commissioners Jon Blanchard, Trent Davis. Melissa Rose Hodges, and Karl Ryan. Absent: The Mayor declared that a quorum was present and called the meeting to order. ************** (Other Proceedings) Thereupon, there was presented a Resolution entitled: A RESOLUTION AUTHORIZING THE IMPROVEMENT OR REIMPROVEMENT OF CERTAIN MAIN TRAFFICWAYS WITHIN IBE CITY OF SALINA, KANSAS; AND PROVIDING FOR THE PAYMENT OF THE COSTS THEREOF. Thereupon, Commissioner Hodges 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: Mayor Kaye J. Crawford, Commissioners Jon Blanchard, Trent Davis. Melissa Rose Hodges, and Karl Ryan. Nay:-------------------------- Thereupon, the Mayor declared said Resolution duly adopted and the Resolution was then duly numbered Resolution No. 17-7459 and was signed by the Mayor and attested by the Clerk. ************** (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 su~h proceedings are on file in my office. . . . (Signature page to Resolution) I "' ~ i D.. Ill ! ~ ] I I RESOLUTION NO. 17-7459 A RESOLUTION AUTHORIZING THE IMPROVEMENT OR REIMPROVEMENT OF CERTAL"' MAL~ TRAFFICWAYS WITHIN THE CITY OF SALINA, KANSAS; Al\1J PROVIDING FOR THE PAYMENT OF THE COSTS THEREOF. WHEREAS, K.S.A. 12-687 provides that the governing body of any city shall have the power to improve or reimprove or cause to be improved or reimproved, any main trafficway or trafficway connection designated and established under the provisions of K.S.A. 12-685 et seq. (the ;:Act"), and such improvement or reimprovement may include grading, regrading, curbing, recurbing, guttering, regunering, paving, repaving, macadamizing, remacadamizing, constructing, reconstructing, opening, widening, extending, rounding comers, straightening, relocating, building any necessal)' bridges and approaches thereto, viaducts, overpasses, underpasses, culverts and drainage, trafficway illumination, traffic control devices, pedestrian ways, or other improvements or any two or more of such improvements or reimprovements and the acquisition of right-of-way by purchase or condemnation when necessal)' for any of such purposes; and WHEREAS, the Act provides that all costs of improvements or reimprovements authorized thereunder, including acquisition of right-of-way, engineering costs, and all other costs properly attributable to such projects, shall be paid by the city at large and may be funded, among others, by the issuance of general obligation bonds; and · WHEREAS, the governing body of the City of Salina, Kansas (the ::City"), has previously designated certain streets within the City as main trafficways, as provided by and under the authority of the Act; and WHEREAS, said governing body hereby finds and detem1ines that it is necessal)' to improve or reimprove said main trafficways: and to provide for the payment of the costs thereof, all as provided by and under the authority of the Act. THEREFORE, BE IT RESOLVED BY THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS: Section 1. Project Authorization. It is hereby deemed and declared to be necessal)' to improve or reimprove the main trafficways hereinafter set forth under the authority of the Act: Country Club Road/Marymount Road Project. The improvement of Count!)' Club Road from approximately 100 feet east of Eastborough Road to Marymount Road, and the improvement of Marymount Road from Count')' Club Road to Iron A venuet including all costs related to milling, pavement replacement, overlay, curb and gutter, bicycle lanes, sidewalk, retaining wall, storm sewer, pedestrian crossing signalization, and all other related and necessary improvements (the :;Project"). Section 2. Financing Authority. The estimated costs of the Project, including construction, engineering fees, acquisition of right-of-way and easements, contingencies and administrative expenses are $ I ,200,000. The costs of the Project shall be payable from the proceeds of general obligation bonds of the City issued under authority of the Act in an amount not to exceed $ I ,200,000, plus interest on any temporary financing and costs of issuance. Section 3. Reimbursement. The bonds described above may be issued to reimburse expenditures made on or after the date which is 60 days before the date of this Resolution, pursuant to Treasury Regulation § 1.150-2. I I I z C. UJ Section 4. Effecth·e Date. This Resolution shall take effect and be in full force from and after its adoption by the governing body of the City. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 2 I "' "' z IL UJ I Ul i J I I ADOPTED At"\'D APPROVED by the governing body of the City of Salina, Kansas, on June 5, 2017. (Seal) ATTEST: (Signature page to Resolution) CITY OF SALINA REQUEST FOR CITY COMMISSION ACTION DATE 3/20/2017 TIME 4:00 P.M. AGENDA SECTION NO: ORIGINATING DEPARTMENT: FISCAL APPROVAL: PUBLIC WORKS BY:~ 7 ITEM NO: 3 FINAL APPROVAL: BY: 14/?JA-Page 1 BY: Daniel R. Stack, P.E. V ITEM: Award construction contract for Project 63143, Country Club Road Improvements. BACKGROUND: On March 7, 2016, the City Commission authorized a reconstruction project consistent with the City's adopted Comprehensive Plan. The roadway has been identified as a complete street and planned bike route and as such was designed to promote multi-modal travel to include auto, transit, bicycles and pedestrians. The project will have sidewalk on the west side of Marymount and sidewalk connections on the south side of Country Club Road to provide a continuous route from Country Club Road and Eastborough Road to Marymount Road and Iron Avenue; the addition of a retaining wall on the west side of Marymount Road adjacent to the Marymount College property; four foot wide bicycle lanes in each direction throughout the length of the project; reconfiguration of the entrance into the Salina Country ·ctub to improve vehicle and pedestrian safety. A solar powered Rectagular Rapid Flashing Beacon (RRFB) to facilitate a safer pedestrian crossing will be installed near West Park Lane due the curve at Marymount and Country Club intersection. p The construction phases are as follows. • 500 feet of variable depth milling/pavement replacement with curb and gutter and sidewalk (with retaining wall) on Marymount Road from Iron Avenue to the east radius return around comer (phase 1) • New curb and gutter, sidewalk and mill and inlay for 1800' to Overhill Road (Phase 2A) • New curb and gutter, sidewalk and overlay for 800' from Overhill Road to Eastborough Road intersection (phase 28) • Eastborough and Country Club intersection concrete panel replacement and storm sewer work with transition to existing section (phase 3) 1 Bids were received for this project on Tuesday, March 14, 2017, and are as follows: APAC Kansas Salina, KS Pavers, Inc. Salina, KS Bidder Smoky Hill, LLC Salina, KS Engineer's Estimate Bid $959,213.05 $1,094,759.53 $1,326,045.65 $1,076,367.00 Schedule 120 calendar days from notice to proceed 120 calendar days from notice to proceed 120 calendar days from notice to proceed APAC has successfully performed work for the City in the past, including numerous residential subdivisions and the annual mill and inlay projects. FISCAL NOTE: The 2017 CIP budget shows an estimated $1.43 million project cost to be funded via general CITY OF SALINA REQUEST FOR CITY COMMISSION ACTION DATE 3/20/2017 TIME 4:00 P.M. AGENDA SECTION NO: ORIGINATING DEPARTMENT: FISCAL APPROVAL: ITEM NO: PUBLIC WORKS BY: FINAL APPROVAL: Page 2 BY: Daniel R. Stack, P.E. BY: obligation bonds for $400,000 and federal exchange funds of $800,000 for FY 2018/2019. This estimate included costs for full depth removal and replacement in certain sections of the corridor. However, pavement cores showed substantial pavement structure such that the project could be scaled back from a full removal to a major asphalt mill and inlay project. This design change has resulted in potential project cost savings of $250,000 and reduced the time that Marymount Road will be closed to the adjacent properties and travelling public. Expenditures on the project also include design fees of $84,596.00, supplemental agreement of $19,916, and a construction contingency of $48,000. Additional expenses include cost to cure items estimated at $20,000 bringing this total to $172,512. The total project cost is estimated at $1,131,725.05. COMFORMANCE WITH STRATEGIC PLAN: GOAL #3: The City will provide the highest quality of services, consistent with governing body direction, available resources and staff commitment to quality. Action Item: The City Commission will maintain its commitment to the municipal organization by providing direction and resources that will allow them to meet established expectations. RECOMMENDED ACTION: Staff offers the following options for the City Commission's consideration and recommends option 1. 1. Award the contract for Project 63143, Country Club Road Improvements in the amount of $959,213.05 with a 5% contingency ($48,000). 2. Reject all bids and provide further direction to city staff. Cc: APAC Shears, Inc. Attachments: Location map EXCERPT OF MINUTES OF A MEETING OF THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS HELD ON JUNE 5, 2017 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 (presiding), Commissioners Jon Blanchard, Trent Davis, Melissa Rose Hodges, and Karl Ryan. Absent: ------------------------------ 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 OF THE CITY OF SALINA, KANSAS, AUTHORIZING AND PROVIDING FOR THE CONSTRUCTION OF CERTAIN IMPROVEMENTS RELATING TO THE SMOKY IDLL RIVER RENEWAL PROJECT IN THE CITY; AND AUTHORIZING THE ISSUANCE OF GENERAL OBLIGATION BONDS OF IBE CITY TO PAY THE COSTS THEREOF. Thereupon, Commissioner Ryan 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 (presiding), Commissioners Jon Blanchard, Trent Davis, Melissa Rose Hodges, and Karl Ryan. Nay: --------------------------- ************** (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 proceedin ~{!ling body of the City of Salina, Kansas held on the date stated therein, and that the offi ~~-~';'~~ proceedings are on file in my office. ~ ... . ... , .. \ ,...:. /0'r--GANIZ£o·· •• :-! · '. IJ.. • • --0: : '-._ ' (SE ~ \ 1!!! //~: , : \X ••••• • •• •· '"\ / ol ••••••••" • I *~// )5'/ .J- (Signature page to Excerpt of Minutes) I I I "' "' Summary published in The Salina Journal on June J..2_, 2017 Posred oo rbe City of SaJioa website from June ·1 ?:>-11 , 2017 ORDINANCE NO. 17-10885 AN ORDINANCE OF THE CITY OF SALINA, KANSAS, AUTHORIZING AND PROVIDING FOR THE CONSTRUCTION OF CERTAIN IMPROVEMENTS RELATING TO THE SMOKY HILL RIVER RENEWAL PROJECT IN THE CITY; AND AUTHORIZING THE ISSUANCE OF GENERAL OBLIGATION BONDS OF THE CITY TO PAY THE COSTS THEREOF. WHEREAS, K.S.A. 12-631 r(a) et seq. (the "Act") provides, in part, that whenever the governing body of any city determines it is necessary to construct stonn sewers, channels, retention basins or drains for the purpose of managing the storm drainage areas of all or any portion of such city and in the unincorporated areas outside of but within three miles of the corporate limits of such city, the governing body may authorize the construction of such storm sewers, channels, retention basins or drains, such construction shall be authorized by ordinance; such ordinance shall designate where such storm sewers, channels, retention basins or drains shall be located; and WHEREAS, Article 12, § 5 of the Constitution of the State of Kansas (the "Home Rule Amendment") and K.S.A. 12-10 l empowers cities to determine their local affairs and government and provides that such power and authority granted thereby to cities shall be liberally construed for the purpose of giving to cities the largest measure of self-government; and WHEREAS, the City of Salina, Kansas (the "City") is a city within the meaning of the Home Rule Amendment; and WHEREAS, the Project (as defined below) is located within the boundaries of the City, and there is no enactment of the Kansas legislature which authorizes the City to issue general obligation bonds to provide funds to finance the portion of the Project unrelated to storm sewer and drainage improvements, or which prohibits the City from issuing general obligation bonds to provide funds to finance such portions of the Project; and WHEREAS, in order to provide for the general health, safety and welfare of the City and its citizens, the governing body of the City has considered the need to construct certain storm sewer, river, trail, street and related improvements within the City described as follows (the "Project''): ; and The design, construction, improvement, and restoration of approximately 6.8 miles of the Original Smoky Hill River alignment within the City and adjacent property (beginning at the flood control levee-inlet structure and ending at the flood control levee-outlet structure), including any land acquisition necessary therefor, all pursuant to the Smoky Hill River Renewal Master Plan, including, but not limited to: removal of sediment, dredging, filtration, channel cleaning, restoration of stream flow, installation of a concrete channel and other various in-channel river improvements, the construction of a multi-use hiking and biking trail, sidewalk construction and improvements, replacement of drainage pipes and other storm sewer and drainage improvements, construction of bridges, various landscaping and aesthetic improvements, and all things necessary and appurtenant thereto WHEREAS, the governing body of the City hereby further finds and determines that it is necessary and advisable and in the interest of the public health, safety and welfare of the City to authorize the issuance of general obligation bonds of the City to provide funds to finance the Project. I :a z Q. w 1 ~ ! i 0 0 I I NOW, THEREFORE, BE IT ORDAINED BY THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS: Section 1. Public Benefit. The governing body of the City hereby finds and detennines that construction of the Project is in the interest of the public health, safety and welfare of the City and its citizens. Section 2. Financing Authorization; Reimbursement. The costs of the Project, interest on interim financing and associated financing costs are hereby authorized to be paid, in whole or in part, from the proceeds of general obligation bonds of the City (the "Bonds"), which are hereby authorized to be issued for such purposes pursuant to the collective authority of the Home Rule Amendment, K.S.A. 12-101 and the Act. The total estimated costs of the Project are $27,000,000, plus interest on any temporary financing and costs of issuance. The City expects to make expenditures related to the Project prior to the date of issuance of the Bonds, and hereby dedares its intent to use proceeds of such Bonds to reimburse expenditures made on or after the date which is 60 days before the date of this Resolution, pursuant to Treasury Regulation§ 1.150-2. Section 3. Further Authority. The officials of the City, the City's attorney, Gilmore & Bell, P.C., as bond counsel, and other consultants are authorized to proceed with such planning and document preparation as necessary in order to comply with the intent of this ordinance, subject to final approval of such documents by the governing body. Section 4. Effectin Date. This Ordinance shall be effective from and after final passage by the governing body, approval and signature by the Mayor and publication once in the official City newspaper by the following summary: Ordinance No. 17-10885 Summary On June 12, 2017, the Governing Body of the City of Salina, Kansas, adopted Ordinance No. 17-10885, authorizing and providing for certain improvements related to the Smoky Hill River Renewal Project and authorizing the issuance of general obligation bonds to pay the costs thereof. 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. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 2 I I I "' "' PASSED by the go\'eming body of the City of Salina, Kansas, on June 12, 2017 and APPROVED Ai'\'D IGNED by the Mayor. SEAL) [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] (Signature Page to Ordinance) I I I 2 0.. \!I PUBLICATION SUMMARY OF ORDINANCE NO. 17-10885, PASSED BY THE GOVERNING BODY OF THE CITY OF SALIN A, KANSAS ON THE 12 rn DAY OF JUNE, 2017 SUMMARY On June 12, 2017, the Governing Body of the City of Salina, Kansas, adopted Ordinance No. 17-10885, authorizing and providing for the construction of certain improvements relating the Smoky Hill River Renewal Project in the City. 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. ified this 12th day of June, 2017. Publish one time and return one Proof of Publication to the City Clerk and one to the City Attorney Publisher's Affidavit 1, __ .,.Ch_n ... ·s...,.t)'.,_f ... in,..k ____ , being duly sworn declare that I am a I.qal Omrdinatnr of THE SAUNA 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 continuous!)' and uninterruptedly published ior five consecutive years prior to first publication of attached notice, and that the Ordinance 17-10885 Notice has been correctly published in the entire issue of said newspaper one time, publication being given in the issue of June 15, ( Subscribed and sworn to before me, this / I, day of 9.(,(1 i' A.0.20 .L2 Printer's Fee ~ '" EXCERPT OF MINUTES OF A MEETING OF THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS HELD ON JUNE 5, 2017 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 (presiding}, Commissioners Jon Blanchard, Trent Davis, Melissa Rose Hodges, and Karl Ryan. Absent: 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 2017-A, and General Obligation Temporary Notes, Series 2017-1, 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 2017-A, AND GENERAL OBLIGATION TEMPORARY NOTES, SERIES 2017-1, OF THE CITY OF SALINA, KANSAS. Commissioner Hodges 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: Mayor Kaye J. Crawford, Commissioners Jon Blanchard, Trent Davis, Melissa Rose Hodges, and Karl Ryan. Nay: The Mayor declared the Resolution duly adopted; the Clerk designating the same Resolution No. 17-7457. ************** (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. ~~ ... ':-.'-'{ OF s(1·\;..~ 'A. T ~ ••••••••••••• : r(h'\ ~-·· '•.'p J..:. :' of1-GANIZ£o \?' LL.. • • '3.l 1870 Ji ~\ ··.. -·-i;ffi ~n "•... • •• • r..:: U'" "••••••• -;;i Shanai Wicks, CMC, City Clerk I I I RESOLUTION NO. 17-7457 RESOLUTION AUTHORIZING THE OFFERING FOR SALE OF GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS, SERIES 2017-A, AND GENERAL OBLIGATION TEMPORARY NOTES, SERIES 2017-1, OF THE CITY OF SALINA, KANSAS. - WHEREAS: the City of Salina, Kansas (the "Issuer") has previously authorized certain internal improvements described as follows (collectively, the "Note Improvements"): Proiect Descriotion Downt0\\11 Streetscaoe Grand Prairie Benefit District Police Training Facilitv Country Club Road Authoritv K.S.A. 12-631 r, 12-685 et sea. K.S.A. 12-6a01 et seQ. K.S.A. 12-1736 et seq. K.S.A. 12-685 et seq. Estimated Improvement Fund Deoosit $1,200,000 441,605 500,000 1,200,000 Smoky Hill River Renewal (Desii!Il Phase) Article 12, Section 5 of the Constitution of the State of Kansas 3,295,700 Tot"/: 56,637,305 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 Bicentennial Center Resolution No. Authorio· 13-6988 & 14-7152 K.S.A. 12-1736 et seq. Estimated Improvement Fund Deposit· $6:890,000 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 2016-1 Dated Date February 10, 2016 i\faturity Date August 1, 2017 Original Amount $6,890,000 WHEREAS: the Issuer has selected the finn 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 and retire the Refunded • Represents est!mated amount of Bond or Note proceeds to be deposited into the Improvem~nt Fund; excludes costs of issuance and interest on any temporary financing. I I I "' . ., z D. w i i ."2 ~ ~ u Notes, and a series of general obligation temporary notes of the Issuer to be issued in order to provide funds to temporarily finance the Note Improvements; and WHEREAS, the Issuer desires to authorize the Financial Advisor to proceed with the offering for 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, i\·tissouri, 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 2017-A (the "Bonds"), and General Obligation Temporary Notes, Series 2017-1 (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 the Issuer. Section 2. The l\.fayor 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 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-I 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 Preliminaf)' Official Statement and to execute the "Certificate Deeming Preliminaf)' 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. I :ll z Cl. UJ 2 cl i I 8 I I 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; and (b) make provision for payment and/or redemption of the Refunded Notes from proceeds of the Bonds. Section 7. This Resolution shall be in full force and effect from and after its adoption. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] I "' ~ z 11. w .i! iii (/) i i I I ADOPTED by the governing body on June 5, 2017. (SEAL) ATIEST: Shan~, CMC, City Clerk (Signature Page to Sale Resolution) I I I . ., L') z 0. w To: EXHIBIT A CERTJFICA TE DEEMING PRELIMINARY OFFICIAL ST A TEMENT FINAL June S, 2017 Re: General Obligation Internal Improvement Bonds, Series 2017-A; General Obligation Temporary Notes, Series 2017-1 The undersigned are the duly acting Mayor and Clerk of the City of Salina, Kansas (the "Issuer"), and are authorized to deliver this Certificate to the addressee(s) (the "Purchaser(s)") on behalf of the Issuer. The Issuer has 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-J 2(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 undernTiters and other terms of the Obligations depending on such matters. CITY OF SALI.t'JA, KANSAS By: ---------------- Title: Kaye J. Crawford, Mayor By: ----------------Title: Shandi Wicks, Ci\·1C, City Clerk NOTICE OF SALE CITY OF SALINA, KANSAS $2,180,000* GENERAL OBLIGATION TEMPORARY NOTES SERIES 2017-1 $9,390,000. GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2017-A (GENERAL OBLIGATION BONDS PAYABLE FROM UNLIMITED AD VALOREM TAXES) Bids. Written and electronic (as explained below) bids for the purchase of the above-referenced notes (the "Notes") and bonds (the "Bonds," and collectively with the Notes, the "Obligations") of the City of Salina, Kansas (the "Issuer") herein described will be received on behalf of the undersigned Clerk of the Issuer at the address hereinafter set forth in the case of written bids, and via PARITY® in the case of electronic bids, on July 10, 2017 (the "Sale Date") until the following times (the "Submittal Hour"): SERIES Series 2017-1 Notes Series 2017-A Bonds SUBMITTAL HOUR (Central Time) 12:00 p.m. 1:00 p.m. All bids will be publicly evaluated at said time and place and the award of the Obligations to the successful bidders (the "Successful Bidders") will be acted upon by the City Commission of the Issuer (the "Governing Body") at its meeting to be held at 4:00 p.m. on the Sale Date. No oral or auction bids will be considered. Capitalized terms not otherwise defined herein shall have the meanings set forth in the hereinafter referenced Preliminary Official Statement relating to the Obligations. THE NOTES Terms of the Notes. The Notes will consist of fully registered notes in the denomination of $5,000 or any integral multiple thereof (the "Authorized Denomination"). The Notes will be dated July 27, 2017 (the "Dated Date"), and will become due on August 1, 2018. The Notes will bear interest from the Dated Date at rates to be determined when the Notes are sold as hereinafter provided, which interest will be payable at maturity. Place of Payment. The principal of and interest on the Notes will be payable in lawful money of the United States of America by check or draft of the Treasurer of the State of Kansas, Topeka, Kansas (the "Paying Agent" and "Note Registrar"). The principal of each Note and the interest thereon will be payable at maturity to the owners thereof whose names are on the registration books (the "Note Register") of the Note Registrar (the "Registered Owner") upon presentation and surrender at the principal office of the Paying Agent. 'Preliminary; subject to change as provided in "Acijustment of Issue Size," herein. Note Registration. The Notes will be registered pursuant to a plan of registration approved by the Issuer and the Attorney General of the State of Kansas. The Issuer will pay for the fees of the Note Registrar for registration and transfer of the Notes and will also pay for printing a reasonable supply of registered note blanks. Any additional costs or fees that might be incurred in the secondary market, other than fees of the Note Registrar, will be the responsibility of the Registered Owners. Book-Entry-Only System. The Notes shall be initially registered in the name of Cede & Co., as the nominee of OTC and no beneficial owner will receive certificates representing their interests in the Notes. During the term of the Notes, so long as the book-entry-only system is continued, the Issuer will make payments of principal of, premium, if any, and interest on the Notes to OTC or its nominee as the Registered Owner of the Notes, OTC will make book-entry-only transfers among its participants and receive and transmit payment of principal of, premium, if any, and interest on the Notes to is participants who shall be responsible for transmitting payments to beneficial owners of the Notes in accordance with agreements between such participants and the beneficial owners. The Issuer will not be responsible for maintaining, supervising or reviewing the records maintained by OTC, its participants or persons acting through such participants. In the event that: (a) OTC determines not to continue to act as securities depository for the Notes, or (b) the Issuer determines that continuation of the book-entry-only form of evidence and transfer of ownership of the Notes would adversely affect the interests of the beneficial owners of the Notes, the Issuer will discontinue the book-entry-only form of registration with OTC. If the Issuer fails to identify another qualified securities depository to replace OTC, the Issuer will cause to be authenticated and delivered to the beneficial owners replacement Notes in the form of fully registered certificates. Reference is made to the Preliminary Official Statement for further information regarding the book-entry-only system ofregistration of the Notes and OTC. Redemption of Notes Prior to Maturity. The Notes are not subject to redemption prior to maturity. Authority, Purpose and Security. The Notes are being issued pursuant to K.S.A. 10-101 et seq. (specifically including K.S.A. 10-123), K.S.A. 10-620 et seq., K.S.A. 12-6a01 et seq., K.S.A. 12-63lr, K.S.A. 12-685 et seq., K.S.A. 12-1736 et seq., and K.S.A. 65-l 63u, all as amended, and a resolution adopted by the Governing Body (the "Note Resolution") for the purpose of paying a portion of the cost of certain public improvements (the "Improvements"). The Notes shall be general obligations of the Issuer payable as to both principal and interest in part from special assessments levied upon the property benefited by the construction of said Improvements or from the proceeds of general obligation bonds of the Issuer, and if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the Issuer. The full faith, credit and resources of the Issuer are irrevocably pledged for the prompt payment of the principal and interest on the Notes as the same become due. THE BONDS Terms of the Bonds. The Bonds will consist of fully registered bonds in the denomination of $5,000 or any integral multiple thereof (the "Authorized Denomination"). The Bonds will be dated July 27, 2017 (the "Dated Date"), and will become due in principal installments on October 1 in the years as follows: 2 Principal Principal October 1 Amount* October 1 Amount' 2018 $60,000 2028 $505,000 2019 360,000 2029 525,000 2020 380,000 2030 545,000 2021 400,000 2031 570,000 2022 410,000 2032 590,000 2023 425,000 2033 505,000 2024 440,000 2034 530,000 2025 455,000 2035 555,000 2026 465 ,000 2036 575,000 2027 490,000 2037 605,000 The Bonds will bear interest from the Dated Date at rates to be determined when the Bonds are sold as hereinafter provided, which interest will be payable semiannually on April 1 and October 1 in each year, beginning on April 1, 2018 (the "Interest Payment Dates"). Place of Payment. The principal of and interest on the Bonds will be payable in lawful money of the United States of America by check or draft of the Treasurer of the State of Kansas, Topeka, Kansas (the "Paying Agent" and "Bond Registrar"). The principal of each Bond will be payable at maturity or earlier redemption to the owner thereof whose name is on the registration books (the "Bond Register") of the Bond Registrar (the "Registered Owner") upon presentation and surrender at the principal office of the Paying Agent. Interest on each Bond will be payable to the Registered Owner of such Bond as of the fifteenth day (whether or not a business day) of the calendar month next preceding each Interest Payment Date (the "Record Date") (a) mailed by the Paying Agent to the address of such Registered Owner as shown on the Bond Register or at such other address as is furnished to the Paying Agent in writing by such Registered Owner; or (b) in the case of an interest payment to Cede & Co. or any Owner of $500,000 or more in aggregate principal amount of Bonds, by wire transfer to such Registered Owner upon written notice given to the Paying Agent by such Registered Owner, not less than 15 days prior to the Record Date for such interest, containing the wire transfer address to which such Registered Owner wishes to have such wire directed. Bond Registration. The Bonds will be registered pursuant to a plan of registration approved by the Issuer and the Attorney General of the State of Kansas (the "State"). The Issuer will pay for the fees of the Bond Registrar for registration and transfer of the Bonds and will also pay for printing a reasonable supply of registered bond blanks. Any additional costs or fees that might be incurred in the secondary market, other than fees of the Bond Registrar, will be the responsibility of the Owners. Book-Entry-Only System. The Bonds will initially be issued exclusively in "book entry" form and shall be initially registered in the name of Cede & Co., as the nominee ofDTC 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 • Preliminary; subject to change as provided in "Adjustment of Issue Size, " herein. 3 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 ofregistration of the Bonds and DTC. Redemption of Bonds Prior to Maturity. General. Whenever the Issuer is to select Bonds for the purpose of redemption, it will, in the case of Bonds in denominations greater than the minimum Authorized Denomination, ifless than all of the Bonds then outstanding are to be called for redemption, treat each minimum Authorized Denomination of face value of each such fully registered Bond as though it were a separate Bond in the minimum Authorized Denomination. Optional Redemption. At the option of the Issuer, Bonds maturing on October 1 in the years 2025, and thereafter, will be subject to redemption and payment prior to maturity on October 1, 2024, 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 ofredemption. Mandatory Redemption. A bidder may elect to have all or a portion of the Bonds scheduled to mature in consecutive years issued as tem1 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 and any provider of municipal bond insurance. 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 Redemption Date. All notices of redemption shall state the Redemption Date, 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 Redemption Date, provided funds are available for its payment at the price hereinbefore specified. Authority, Purpose and Security. The Bonds are being issued pursuant to K.S.A. 10-101 et seq. K.S.A. 10-427 et seq., K.S .A. 10-620 et seq., K.S.A. 12-63lr, K.S.A. 12-685 et seq., K.S.A. 12-1736 et seq., and Article 12, Section 5 of the Constitution of the State of Kansas, all as amended, and an ordinance and a resolution adopted by the Governing Body (collectively, the "Bond Resolution") for the purpose of permanently financing the cost of certain public improvements (the "Improvements") and refunding a portion of the interest on certain outstanding 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 4 Issuer. The full faith, credit and resources of the Issuer are irrevocably pledged for the prompt payment of the principal and interest on the Bonds as the same become due. THE NOTES AND THE BONDS Adjustment of Issue Size. The Issuer reserves the right to increase or decrease the total principal amount of the Obligations and the principal amount of any maturity in order to properly size the Obligations based on the required funding needs and offering prices and interest rates bid on the Obligations. Notwithstanding the requirements of the section herein entitled "Establishment of Issue Price," if requested by the Financial Advisor, the Success/ ul Bidder(s) shall within 20 minutes of such request provide the Financial Advisor with the initial offering prices of the Obligations to the public so as to allow for proper resizing of the Obligations. The Successful Bidder may not withdraw its bid or change the interest rates bid as a result of any changes made to the principal amount of the Obligations or principal of any maturity as described herein, provided, however, that the total principal amount of the Notes or the Bonds will not be changed by more than 15% without the consent of the Successful Bidder(s). If there is an increase or decrease in the final aggregate principal amount of the Obligations or the schedule of principal payments as described above, the Issuer will notify the Successful Bidder by means of telephone or facsimile transmission, subsequently confirmed in writing, no later than 4:00 p.m ., Central Time, on the Sale Date. The net production as a percentage of the principal amount of the Obligations generated from the bid(s) of the Successful Bidder(s) will not be decreased as a result of any change in the total principal amount of the Obligations. Submission of Bids. Written bids must be made on forms which may be procured from the Clerk or the Financial Advisor and shall be addressed to the undersigned, and marked "Proposal for General Obligation Temporary Notes, Series 2017-1 " or "Proposal for General Obligation Internal Improvement Bonds, Series 2017-A," as applicable. Written bids submitted by facsimile should not be preceded by a cover sheet and should be sent only once to (785) 309-5738. Confirmation of receipt of facsimile bids may be made by contacting the Financial Advisor at the number listed below. Electronic bids via PARITY® must be submitted in accordance with its Rules of Participation, as well as the provisions of this Notice of Sale. If provisions of this Notice of Sale conflict with those of PARITY®, this Notice of Sale shall control. Bids must be received prior to the Submittal Hour on the Sale Date accompanied by the Deposit (as hereinafter defined), which may be submitted separately as described below. The Issuer and Financial Advisor shall not be responsible for failure of transmission of facsimile or delivery by mail or in person of any bid. PARITY®. Information about the electronic bidding services of PARITY® may be obtained from i-Deal LLC at 1359 Broadway, 2nd Floor, New York, New York 10018, Phone No. (212) 849-5023. Conditions of Bids. Bids shall be submitted separately for each series of the Obligations. The Notes: Proposals will be received on the Notes bearing such rate of interest as may be specified by the bidders, subject to the following conditions: (a) the same rate shall apply to all Notes; (b) no interest rate may exceed 5.00%; and (c) no supplemental interest payments will be considered. No bid for less than 99.50% of the principal amount of the Notes and accrued interest thereon to the date of delivery will be considered. Each bid shall specify the total interest cost (expressed in dollars) during the term of the Notes on the basis of such bid, the discount, if any, the premium, if any, offered by the bidder, the net interest cost ( expressed in dollars) on the basis of such bid. 5 The Bonds: Proposals will be received on the Bonds bearing such rate or rates of interest as may be specified by the bidders, subject to the following conditions: (a) the same rate shall apply to all Bonds of the same maturity year; (b) no interest rate may exceed 5 .00%; ( c) no supplemental interest pay ments will be considered; ( d) each interest rate specified shall be a multiple of 1 /8 or 1 /20 of I%; and ( e) no interest rates of zero percent are permitted. The difference between the highest rate specified and the lowest rate specified cannot exceed 4.00%. No bid for Jess than 100% of the principal amount of the Bonds and accrued interest thereon to the date of delivery will be considered. Each bid shall specify the total interest cost (expressed in dollars) during the term of the Bonds on the basis of such bid the premium, if any, offered by the bidder, the net interest cost (expressed in dollars) on the basis of such bid, and an estimate of the TIC (as hereinafter defined) on the basis of such bid. All Obligations: Each bidder shall certify to the Issuer the correctness of the information contained on the Official Bid Form; the Issuer will be entitled to rely on such certification. Each bidder agrees that, if it is awarded the Notes or the Bonds, it will provide the certification as to initial offering prices described under the caption "Establishment oflssue Price" in this Notice. Good Faith Deposit. For the Notes: A good faith deposit will not be required for the Notes. For the Bonds: Each bid for the Bonds shall be accompanied by a good faith deposit (the "Deposit") payable to the order of the Issuer to secure the Issuer from any loss resulting from the failure of the bidder to comply with the terms of its bid. The amount of the Deposit shall be 2.00% of the principal amount of the Bonds. The Deposit may be submitted in either of the following forms: (a) Certified or Cashier's Check. Certified or cashier's check drawn on a bank located in the United States of America received by the Issuer or the Financial Advisor prior to the Submittal Hour; or (b) Wire Transfer. Wire transfer submitted by the Successful Bidder in Federal Reserve funds, immediately available for use by the Issuer not later than 4:00 p.m. applicable Central Time on the Sale Date (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. Checks submitted for Deposits 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. 6 Basis of Award. The Notes: The award of the Notes will be made on the basis of the lowest net interest cost ("NIC") (expressed in dollars), which will be determined by subtracting the amount of the premium bid, if any, from or adding the amount of the discount bid, if any, to the total interest cost to the Issuer. If there is any discrepancy between the net interest cost specified and the interest rate and premium/discount specified, the interest rate and premium/discount specified shall govern and the NIC specified in the bid shall be adjusted accordingly. If two or more proper bids providing for identical amounts for the lowest NIC are received, the Governing Body will determine which bid, if any, will be accepted, and its determination is final. The Bonds: Subject to the timely receipt of the Deposit as set forth above, the award of the Bonds will be made on the basis of the lowest true interest cost ("TIC"), which will be determined as follows: the TIC is the discount rate (expressed as a per annum percentage rate) which, when used in computing the present value of all payments of principal and interest to be paid on the Bonds, from the payment dates to the Dated Date, produces an amount equal to the price bid, including any adjustments for premium, 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 will detem1ine which bid, if any, will be accepted, and its determination is final. For All Obligations: The Issuer reserves the right to reject any and/or all bids and to waive any irregularities in a submitted bid. Any bid received after the Submittal Hour on the Sale Date will be destroyed. Any disputes arising hereunder shall be governed by the laws of the State, and any party submitting a bid agrees to be subject to jurisdiction and venue of the federal and state courts within Kansas with regard to such dispute. The Issuer's acceptance, including electronic acceptance through PARITY®, of the Successful Bidder's proposal for the purchase of the Obligations in accordance with this Notice of Sale shall constitute a bond purchase agreement between the Issuer and the Successful Bidder for purposes of the laws of the State and 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"). The method of acceptance shall be determined solely by the Governing Body. Bond Ratings. The outstanding general obligation temporary notes of the Issuer are rated "MIG 1" by Moody's Investors Service and 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 Obligations herein offered for sale. Optional Bond Insurance. The Issuer has not applied for any policy of municipal bond insurance with respect to the Obligations. If the Obligations qualify for municipal bond insurance, and any bidder desires to purchase such policy, such indication and the name of the desired insurer must be set forth on the bidder's Official Bid Form. The Issuer specifically reserves the right to reject any bid specifying municipal bond insurance, even though such bid may result in the lowest bid to the Issuer. 7 If the Successful Bidder elects to purchase the Bonds or Notes with municipal bond insurance, certain rating agencies will assign their ratings to the Bonds or Notes with the understanding that upon delivery of the Bonds or Notes, a policy insuring the payment when due of the principal of and interest on such Obligation 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 or Notes shall not constitute cause for failure or refusal by the Successful Bidder to accept delivery of the Bonds or Notes. CUSIP Numbers. CUSIP identification numbers will be assigned and printed on the Obligations, but neither the failure to print such number on any Obligation nor any error with respect thereto shall constitute cause for failure or refusal by the purchaser thereof to accept delivery of and pay for the Obligations in accordance with the terms of this Notice. All expenses in relation to the assignment and printing of CU SIP numbers on the Obligations will be paid by the Issuer. Delivery and Payment. The Issuer will pay for preparation of the Obligations and will deliver the Obligations properly prepared, executed and registered without cost on or about JULY 27, 2017 (the "Closing Date"), to OTC for the account of the Successful Bidder. The Successful Bidder will be furnished with a certified transcript of the proceedings evidencing the authorization and issuance of the Obligations and the usual closing documents, including a certificate that there is no litigation pending or threatened at the time of delivery of the Obligations affecting their validity and a certificate regarding the completeness and accuracy of the Official Statement. Payment for the Obligations shall be made in federal reserve funds, immediately available for use by the Issuer. The Issuer will deliver one Obligation of each maturity registered in the nominee name of OTC. Establishment of Issue Price. In order to provide the Issuer with infonnation necessary for compliance with Section 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder (collectively, the "Code"), the Successful Bidder(s) will be required to assist the Issuer in establishing the "issue price" of the Notes or Bonds and complete, execute and deliver to the Issuer prior to the Closing Date, a written certification in a form acceptable to the Successful Bidder(s), the Issuer and Bond Counsel ( each, an "Issue Price Certificate") containing the following for each maturity of the Notes or Bonds: (1) the interest rate; (2) the reasonably expected initial offering price to the "public" (as said term is used in Treasury Regulation Section 1.148-l(t) (the "Regulation")) or the sale price; and (3) pricing wires or equivalent communications supporting such offering or sale price. However, such Issue Price Certificate may indicate that the Successful Bidder has purchased the Notes or Bonds for its own account in a capacity other than as an underwriter or wholesaler, and currently has no intent to reoffer the Notes or Bonds for sale to the public. Any action to be taken or documentation to be received by the Issuer pursuant hereto may be taken or received by the Financial Advisor or Bond Counsel on behalf of the Issuer. The Issuer intends that the sale of the Notes and bonds pursuant to this Notice shall each constitute a "competitive sale" as defined in the Regulation. In support thereof: (1) the Issuer shall cause this Notice to be disseminated to potential bidders in a manner reasonably designed to reach potential bidders; (2) all bidders shall have an equal opportunity to submit a bid; (3) the Issuer reasonably expects that it will receive bids for each series of the Notes or Bonds from at least three bidders that have established industry reputations for underwriting municipal bonds such as the Obligations; and ( 4) the Issuer anticipates awarding the sale of the Bonds and/or Notes, as applicable, to the bidder that provides a bid with the lowest NIC or TIC, as applicable, in accordance with the section hereof entitled "Basis of Award." 8 Any bid submitted pursuant to this Notice shall be considered a firm offer for the purchase of the Notes or Bonds as specified therein. The Successful Bidder(s) shall constitute an "underwriter" as said term is defined in the Regulation. By submitting its bid, the Successful Bidder confirms that it shall require any agreement among underwriters, a selling group agreement or other agreement to which it is a party relating to the initial sale of the Notes or Bonds, to include provisions requiring compliance with provisions of the Code and the Regulation regarding the initial sale of the Notes or Bonds. If all of the requirements of a "competitive sale" are not satisfied for a series of the Obligations, the Issuer shall advise the applicable Successful Bidder of such fact at the time of award of such Obligation to the Successful Bidder and the following provisions shall apply to such Obligation. In such event, any bid submitted will not be subject to cancellation or withdrawal. Within twenty-four (24) hours of the notice of award of the sale of the Obligation, the Successful Bidder shall advise the Issuer if a "substantial amount" (as defined in the Regulation) of any maturity of the Obligation has been sold to the public and the price at which such substantial amount was sold. The Issuer will treat such sale price as the "issue price" for such maturity, applied on a maturity-by-maturity basis. The Issuer will not require the Successful Bidder to comply with that portion of the Regulation commonly described as the "hold-the-offering-price" requirement for the remaining maturities, but the Successful Bidder may elect such option. If the Successful Bidder exercises such option, the Issuer will apply the initial offering price to the public provided in the bid as the issue price for such maturities. If the Successful Bidder does not exercise that option, it shall thereafter promptly provide the Issuer the prices at which a substantial amount of such maturities are sold to the public. Any change in the issue price of any of the Obligations after the Submittal Hour will not affect the purchase price for the Obligations submitted in the bid of the Successful Bidder. 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 Notes, 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 and Notes, at the request of the Issuer, the Successful Bidder(s) will provide information explaining the factual basis for the Successful Bidder's representations in the Successful Bidder's Receipt relating to the pricing of the Bonds or Notes, other than information that would identify customers ( e.g., name or account number). This agreement by the Successful Bidder(s) 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 Successful Bidder(s). Preliminary Official Statement and Official Statement. The Issuer has prepared a Preliminary Official Statement dated June 30, 2017, "deemed final" by the Issuer except for the omission of certain information as provided in the Rule, copies of which may be obtained from the Clerk or from the Financial Advisor. Upon the sale of the Obligations, the Issuer will adopt the final Official Statement and will furnish the Successful Bidder, without cost, within seven business days of the acceptance of the Successful Bidder's proposal, with a sufficient number of copies thereof, which may be in electronic format, in order for the Successful Bidder to comply with the requirements of the Rule and Rule G-32. Additional copies may be ordered by the Successful Bidder at its expense. Continuing Disclosure. In the Note Resolution and the Bond Resolution, the Issuer has covenanted to provide annually certain financial information and operating data and other information necessary to comply with the Rule, and to transmit the same to the Municipal Securities Rulemaking Board. This covenant is for the benefit of and is enforceable by any Registered Owner of the Obligations. For further information, reference is made to the caption "CONTINUING DISCLOSURE" in the Preliminary Official Statement. 9 Assessed Valuation and Indebtedness. The total assessed valuation of the taxable tangible property within the Issuer for the year 2016 was $472,68 3,104. The total general obligation indebtedness of the Issuer as of the Dated Date, including the Obligations being sold but excluding temporary notes to be redeemed with proceeds from the sale of the Bonds, is $72,880,000. Legal Opinion. The Obligations 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 Obligations, if the Obligations are printed, and will be delivered to the Successful Bidder when the Obligations are delivered. Said opinion will also include the opinion of Bond Counsel relating to the interest on the Obligations being 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 Kansas income tax matters relating to the interest on the Obligations. Additional Information. Additional information regarding the Obligations may be obtained from the undersigned, or from the Financial Advisor, at the addresses set forth below: DATED: June 30, 2017. CITY OF SALINA, KANSAS By Shandi Wicks, Clerk Written and Facsimile Bid and Good Faith Deposit Delivery Address: Mike Schrage, Deputy City Manager City of Salina, Kansas 300 West Ash Salina, Kansas 67402 Phone No.: (785) 309-5700 Fax No.: (785) 309-5711 Email: mike.schrage@salina.org Financial Advisor: George K. Baum & Company 4801 Main Street, Suite 500 Kansas City, Missouri 64112 Attn: David Arteberry Phone No.: (816) 283-5137 Fax No.: (816) 283-5326 Email: arteberry@gkbaum.com 10 TO: OFFICIAL BID FORM PROPOSAL FOR THE PURCHASE OF CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES Shandi Wicks, Clerk City of Salina, Kansas July 10, 2017 For $2,180,000' principal amount of General Obligation Temporary Notes, Series 2017-1, of the City of Salina, Kansas, to be dated July 27, 2017, as described in your Notice of Sale dated June 30, 2017 (the "Notice"), said Notes to bear interest as follows: Maturity August 1 2018 Principal Amount* $2,180,000 Interest Rate ____ % * Subject to change; see the Notice. the undersigned will pay the purchase price for the Notes set forth below, plus accrued interest to the date of delivery. Principal Amount .................................................................................................................................... $2,180,000.00' Less Discount (not to exceed $10,900 or 0.50%) ............................................................... ~--------~ Plus Premium (if any) ......................................................................................................... _________ _ Total Purchase Price ....................................................................................................... $ __________ _ Total interest cost to maturity at the rate(s) specified ..................................................... $ __________ _ Net interest cost ............................................................................................................... $ __________ _ Average Annual Net Interest Cost ....................................................................................................... ______ % This proposal is subject to all tem1s and conditions contained in the Notice, and if the undersigned is the Successful Bidder, the undersigned will comply with all of the provisions contained in said Notice. The acceptance of this proposal by the Issuer shall constitute a contract between the Issuer and the Successful Bidder for purposes of complying with Rule l 5c2-12 of the Securities and Exchange Commission and a note purchase agreement for purposes of the laws of the State of Kansas. (LIST ACCOUNT MEMBERS ON REVERSE) ACCEPTANCE Submitted by: -------------- By: ------------ Telephone No. <---L...---------- Pursuant to action duly taken by the Governing Body of the City of Salina, Kansas, the above proposal is hereby accepted on July 10, 2017. Attest: Clerk Mayor NOTE: No additions or alterations in the above proposal fom1 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) 309-57 I l or electronic bids may be submitted via PAR1T~, at or prior to 12:00 p.m., Central Time, on July IO, 2017. Any bid received after such time will not be accepted or shall be returned to the bidder. TO: Shandi Wicks, Clerk City of Salina, Kansas OFFICIAL BID FORM PROPOSAL FOR THE PURCHASE OF CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS July 10, 2017 For $9,390,000* principal amount of General Obligation Internal Improvement Bonds, Series 2017-A, of the City of Salina. Kansas, to be dated July 27, 2017, as described in the Notice of Sale dated June 30, 2017 (the "Notice"), said Bonds to bear interest as follows: Stated Annual Stated Annual Maturity Principal Rate of Maturity Principal Rate of October 1 Amount* Interest October 1 Amount* Interest 2018 $60,000 % 2028 $505,000 % 2019 360,000 % 2029 525,000 % 2020 380,000 % 2030 545,000 % 2021 400,000 % 2031 570,000 % 2022 410,000 % 2032 590,000 % 2023 425,000 % 2033 505,000 % 2024 440,000 % 2034 530,000 % 2025 455,000 % 2035 555,000 % 2026 465,000 % 2036 575,000 % 2027 490,000 % 2037 605,000 % *Subject to change; see the Notice. the undersigned will pay the purchase price for the Bonds set forth below, plus accrued interest to the date of delivery. Principal Amount ......................................................................................................................................................... $9,390,000.00' Plus Premium (if any) ............................................................................................................................... _________ _ 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 purchase Municipal Bond Insurance from: [Assured] [AGM] [BAM] . Circle one or complete blank. 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 Successful Bidder, the undersigned will comply with all of the provisions contained in said Notice. A cashier's or certified check or a wire transfer in the amount of2.00% of the principal amount of the 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 shall constitute a contract between the Issuer and the Successful Bidder for purposes of complying with Rule l 5c2-12 of the Securities and Exchange Commission and 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 Pursuant to action duly taken by the Governing Body of the City of Salina, Kansas, the above proposal is hereby accepted on July IO, 2017. 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) 309-5711 or electronic bids may be submitted via PARITY®, at or prior to I :00 p.m., Central Time, on July I 0, 2017. Any bid received after such time will not be accepted or shall be returned to the bidder. PRELIMINARY OFFICIAL STATEMENT DATED JULY 5, 2017 In the opinion of Gilmore & Bell, P.C., 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 Notes and Bonds [(including any original issue discount properly allocable to an owner thereof) J is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, (2) the interest on the Notes and Bonds is exempt from income taxation by the State of Kansas, and (3) the Notes and Bonds have not been designated as "qualified wx-exempt obligations" within the meaning of Code Section 265(b)(3). See TAX MATTERS -"Opinion of Bond Counsel" herein. New Issues Book-Entry Only Moody's Ratings: Bonds-"Aa3" Notes-"MIG 1" Cityof !'-i CITY OF SALINA, KANSAS $2,180,000* GENERAL OBLIGATION TEMPORARY NOTES SERIES 2017-1 Sallna $9,390,000* GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2017-A Dated: Date of Delivery Due: As Shown Herein The General Obligation Temporary Notes, Series 2017-1 Notes (the "Notes") will be issued by the City of Salina, Kansas (the "Issuer" or the "City") as fully registered notes, without coupons. Purchases of the Notes will be made in book-entry form, in the denominations of $5,000 or any integral multiple thereof (the "Authorized Denomination"). Principal and interest will be payable at maturity upon presentation and surrender of the Notes by the registered owners thereof at the office of the Treasurer of the State of Kansas (the "Note Paying Agent" and "Note Registrar."). The Notes are not subject to redemption prior to maturity. The General Obligation Internal Improvement Bonds, Series 2017-A Bonds (the "Bonds") will be issued by the Issuer, as fully registered bonds, without coupons. Purchases of the Bonds will be made in book-entry only form, in the denomination of $5,000 or any integral multiple thereof (the "Authorized Denomination"). 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, 2018. The Treasurer of the State of Kansas will be designated as paying agent and registrar or the Bonds (the "Bond Paying Agent" and "Bond Registrar"). The Bonds are subject to redemption at the option of the City as further described herein. See THE BONDS -"Redemption Provisions" herein. MATURITY SCHEDULES ( see inside front cover) The full faith, credit, and resources of the City are irrevocably pledged for the prompt payment of the principal and interest on the Notes and Bonds as the same becomes due. See THE NOTES -"Security" and THE BONDS - "Security" herein. The Notes and Bonds are offered when, as and if issued by the City and received by the Underwriters subject to the approval of Bond Counsel. It is expected that the Notes and Bonds will be available for delivery through the facilities of OTC on or about July 27, 2017. BIDS FOR THE PURCHASE OF THE NOTES AND BONDS WILL BE RECEIVED PURSUANT TO THE NOTICE OF SALE: The Series 2017-1 Notes: On or before 12:00 p.m., Central Daylight Time The Series 2017-A Bonds: On or before 1:00 p.m., Central Daylight Time On Monday, July 10, 2017 THIS COVER PAGE CONTAINS INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THE ISSUES. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION. * Subject to change Maturity 08-01-18 MATURITY SCHEDULES $2,180,000* GENERAL OBLIGATION TEMPORARY NOTES SERIES 2017-1 Amount $2,180,000 The Notes are not subject to redemption prior to maturity. $9,390,000* GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2017-A Maturitv 10-01-18 10-01-19 10-01-20 10-01-21 10-01-22 10-01-23 10-01-24 10-01-25* 10-01-26* 10-01-27* 10-01-28* 10-01-29* 10-01-30* 10-01-31 * 10-01-32* 10-01-33* 10-01-34* 10-01-35* 10-01-36* 10-01-37* Maturity 10-01-20_ 10-01-20_ Amount $60,000 360,000 380,000 400,000 410,000 425,000 440,000 455,000 465,000 490,000 505,000 525,000 545,000 570,000 590,000 505,000 530,000 555,000 575,000 605,000 Amount* $ SERIAL BONDS Rate [TERM BONDS Rate __ % __ % (All plus accrued interest, if any) Yield Yield __% __ % Base cus1p11> 794743 Base cus1p111 794743 CUSIP 1 Base 794743 *The Bonds maturing on or after October 1, 2025, are subject to redemption prior to maturity at the option of the City on October l, 2024, and thereafter, in whole or in part at any time at a price equal to 100% of the principal amount of Bonds to be redeemed plus accrued interest to the redemption date. [The Term Bonds are subject to mandatory redemption as further described herein.] See THE BONDS -"Redemption Provisions" herein. 111CUSIP numbers hove been assigned to this issue by Standard & Poor's CUSIP Service Bureau, a division of S&P Global Inc .. , and ore included solely for the convenience of the Owners of the Notes and Bonds. Neither the City nor the Underwriters shall be responsible for the selection or correctness of the CUSIP numbers set forth above. • Preliminary; Subject to change IN CONNECTION WITH THIS OFFERING, THE NOTE UNDERWRITER AND/OR THE BONDS UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE BONDS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE NOTES AND BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE NOTES AND BONDS ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE SECURITIES AND EXCHANGE COMMISSION. THE REGISTRATION, QUALIFICATION OR EXEMPTION OF THE NOTES AND BONDS IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAW PROVISIONS OF THE JURISDICTIONS IN WHICH THESE SECURITIES HAVE BEEN REGISTERED, QUALIFIED OR EXEMPTED SHOULD NOT BE REGARDED AS A RECOMMENDATION THEREOF. NEITHER THESE JURISDICTIONS NOR ANY OF THEIR AGENCIES HAVE GUARANTEED OR PASSED UPON THE SAFETY OF THE NOTES OR THE BONDS AS AN INVESTMENT, UPON THE PROBABILITY OF ANY EARNINGS THEREON OR UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. THIS OFFICIAL STATEMENT CONTAINS STATEMENTS THAT ARE "FORWARD-LOOKING STATEMENTS" AS DEFINED IN THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. WHEN USED IN THIS OFFICIAL STATEMENT, THE WORDS "ESTIMATE," "INTEND," "EXPECT" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED IN SUCH FORWARD-LOOKING STATEMENTS. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF. THIS PRELIMINARY OFFICIAL STATEMENT IS DEEMED TO BE FINAL (EXCEPT FOR PERMITTED OMISSIONS) BY THE ISSUER FOR PURPOSES OF COMPLYING WITH RULE 15c2-12 OF THE SECURITIES AND EXCHANGE COMMISSION. IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. CITY OF SALINA, KANSAS City/County Building -Room 206 300WestAsh P. 0. Box 736 Salina, Kansas 67402-0736 CITY COMMISSION Kaye Crawford, Mayor Karl Ryan, Vice Mayor Trent Davis, Commissioner John R. Blanchard, Commissioner Melissa Rose Hodges, Commissioner CITY STAFF Jason Gage, City Manager Mike Schrage, Deputy City Manager Shandi Wicks, City Clerk CITY AITORNEV Greg Bengtson Clark, Mize & Linville, Chartered Salina, Kansas BOND COUNSEL Gilmore & Bell, P.C. Kansas City, Missouri MUNICIPAL ADVISOR George K. Baum & Company Kansas City, Missouri No person has been authorized by the City or the Underwriters to give any information or to make any representations with respect to the Notes or the Bonds, other than those contained in this Official Statement, and if given or made, such other information or representations must not be relied upon as having been given or authorized by the City or the Underwriters. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy the Notes or Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein concerning the Issuer has been furnished by the Issuer and other sources which are believed to be reliable, but such information is not guaranteed as to accuracy or completeness. The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the Federal Securities Laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Issuer since the date hereof. This Official Statement does not constitute a contract between the Issuer or the Underwriter and any one or more of the purchasers, Owners or Beneficial Owners of the Notes or Bonds. 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. TABLE OF CONTENTS Page INTRODUCTORY STATEMENT............................................................................................................. 1 THE NOTES.......................................................................................................................................... 2 THE BONDS ......................................................................................................................................... 5 THE DEPOSITORY TRUST COMPANY ................................................................................................... 10 THE FINANCING PLAN......................................................................................................................... 12 SOURCES AND USES OF FUNDS .......................................................................................................... 12 RISK FACTORS AND INVESTMENT CONSIDERATIONS ......................................................................... 13 LEGAL MATIER$................................................................................................................................. 14 TAX MATIERS ..................................................................................................................................... 15 RATINGS.............................................................................................................................................. 17 MUNICIPAL ADVISOR.......................................................................................................................... 17 UNDERWRITING ................................................................................................................................. 17 ABSENCE OF MATERIAL LITIGATION................................................................................................... 17 CONTINUING DISCLOSURE ................................................................................................................. 17 CERTIFICATION OF OFFICIAL STATEMENT.......................................................................................... 18 APPENDIX A: INFORMATION CONCERNING THE CITY FINANCIAL OVERVIEW OF THE CITY .............................................................................................. A-1 GENERAL INFORMATION CONCERNING THE CITY........................................................................ A-2 ECONOMIC INFORMATION CONCERNING THE CITY ..................................................................... A-7 DEBT SUMMARY OF THE CITY....................................................................................................... A-10 FINANCIAL INFORMATION CONCERNING THE CITY...................................................................... A-14 APPENDIX B: OMNIBUS CONTINUING DISCLOSURE UNDERTAKING APPENDIX C: AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDING DECEMBER 31, 2015 APPENDIX D: UNAUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDING DECEMBER 31, 2016 General OFFICIAL STATEMENT CITY OF SALINA, KANSAS $2,180,000* GENERAL OBLIGATION TEMPORARY NOTES SERIES 2017-1 $9,390,000* GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2017-A INTRODUCTORY STATEMENT The purpose of this Official Statement is to present certain information concerning the City of Salina, Kansas (the "Issuer" or "City"}, and the offering of its $2,180,000* General Obligation Temporary Notes, Series 2017-1 (the "Notes"), and its $9,390,000* General Obligation Internal Improvement Bonds, Series 2017-A (the "Bonds", and together with the Notes, the "Securities"). The Notes and the Bonds are being issued to provide funds to finance certain public improvements within the City and to retire the City's General Obligation Temporary Notes, Series 2016-1. See THE FINANCING PLAN herein. The full faith, credit, and resources of the City are irrevocably pledged for the prompt payment of the principal and interest on the Notes and Bonds as the same becomes due. See THE NOTES-"Security" and THE BONDS -"Security'' herein. The Appendices are an integral part of this Official Statement and should be read in their entirety. All financial and other information presented herein has been compiled by the City's financial advisor, George K. Baum & Company, Kansas City, Missouri (the "Financial Advisor"). Such information has been provided by the City and other sources deemed to be reliable. The presentation of information herein is intended to show recent historic information and is not intended to indicate future or continuing trends in the financial position or other affairs of the City. Gilmore & Bell, P.C., Kansas City, Missouri, Bond Counsel, has not assisted in the preparation of nor reviewed this Official Statement, except to the extent described under the sections captioned INTRODUCTORY STATEMENT, THE NOTES, THE BONDS, LEGAL MATIERS, TAX MATIERS, and APPENDIX B -OMNIBUS CONTINUING DISCLOSURE UNDERTAKING and, accordingly, expresses no opinion as to the accuracy or sufficiency of any other information contained herein. Definitions Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the resolution of the governing body of the City authorizing the Notes (the "Note Resolution") and in the ordinance and resolution of the governing body of the City authorizing the Bonds (collectively, the "Bond Resolution"), as applicable. Copies of the Note Resolution and the Bond Resolution are available upon request to the City or the Financial Advisor. Additional Information Additional information regarding the City, the Notes, or the Bonds may be obtained from George K. Baum & Company, 4801 Main Street, Kansas City, Missouri 64112, telephone 816-474-1100. *Subject to change 1 THE NOTES Authority The Notes are issued pursuant to and in full compliance with the Constitution and statutes of the State of Kansas, including without limitation K.S.A. 10-101 et seq., inclusive (specifically including K.S.A. 10-123), K.S.A. 12- 631r, K.S.A. 12-685 et seq., K.S.A. 12-6a01 et seq., K.S.A. 12-1736 et seq., andK.S>A. 65-163u, all as amended and supplemented from time to time, and a resolution adopted by the governing body of the City authorizing the issuance of the Notes (the "Note Resolution"). Security The Notes shall be general obligations of the City, payable as to both principal and interest from in part from special assessments levied upon the property benefitted by the construction of certain public improvements (as hereinafter described in the section entitled "THE FINANCING PLAN -The Note Projects"), or from the proceeds of general obligation bonds of the Issuer, and if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the City. The full faith, credit and resources of the City are hereby irrevocably pledged for the prompt payment of the principal of and interest on the Notes as the same become due. Description The Notes shall consist of fully registered book-entry-only notes in an Authorized Denomination and shall be numbered in such manner as the Note Registrar shall determine. All of the Notes shall be dated July 27, 2017 (the "Dated Date"), shall become due in the amount on the Stated Maturity. The Notes shall bear interest at the rate per annum set forth on the inside cover page of this Official Statement, and shall bear interest (computed on the basis of twelve 30-day months) from the Dated Date, payable at the Stated Maturity. Redemption Provisions The Notes are not subject to redemption and payment prior to maturity. Designation of Note Paying Agent and Note Registrar The City will at all times maintain a paying agent and note registrar meeting the qualifications set forth in the Note Resolution. The City reserves the right to appoint a successor paying agent or note registrar. No resignation or removal of the paying agent or note registrar shall become effective until a successor has been appointed and has accepted the duties of paying agent or note registrar. Every paying agent or note registrar appointed by the City shall at all times meet the requirements of Kansas law. The Treasurer of the State of Kansas, Topeka, Kansas (the "Note Registrar" and "Note Paying Agent") has been designated by the City as paying agent for the payment of principal of and interest on the Notes and note registrar with respect to the registration, transfer and exchange of Notes. Registration. Transfer and Exchange of Notes As long as any of the Notes remain Outstanding, each Note when issued shall be registered in the name of the Owner thereof on the Note Register. Notes may be transferred and exchanged only on the Note Register as hereinafter provided. Upon surrender of any Note at the principal office of the Note Registrar, the Note Registrar shall transfer or exchange such Note for a new Note or Notes in any authorized denomination of the same Stated Maturity and in the same aggregate principal amount as the Note that was presented for transfer or exchange. Notes presented for 2 transfer or exchange shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in a form and with guarantee of signature satisfactory to the Note Registrar, duly executed by the Owner thereof or by the Owner's duly authorized agent. In all cases in which the privilege of transferring or exchanging Notes is exercised, the Note Registrar shall authenticate and deliver Notes in accordance with the provisions of the Note Resolution. The City shall pay the fees and expenses of the Note Registrar for the registration, transfer and exchange of Notes. Any additional costs or fees that might be incurred in the secondary market, other than fees of the Note Registrar, are the responsibility of the Owners of the Notes. In the event any Owner fails to provide a correct taxpayer identification number to the Note Paying Agent, the Note Paying Agent may make a charge against such Owner sufficient to pay any governmental charge required to be paid as a result of such failure. The City and the Note Registrar shall not be to register the transfer or exchange of any Note during a period beginning at the opening of business on the day after receiving written notice from the City of its intent to pay Defaulted Interest and ending at the close of business on the date fixed for the payment of Defaulted Interest. Mutilated. Lost. Stolen or Destroyed Notes If (a) any mutilated Note is surrendered to the Note Registrar or the Note Registrar receives evidence to its satisfaction of the destruction, loss or theft of any Note, and (b) there is delivered to the City and the Note Registrar such security or indemnity as may be required by each of them, then, in the absence of notice to the City or the Note Registrar that such Note has been acquired by a bona fide purchaser, the City shall execute and, upon the City's request, the Note Registrar shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a new Note of the same Stated Maturity and of like tenor and principal amount. If any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the City, in its discretion, may pay such Note instead of issuing a new Note. Upon the issuance of any new Note, the City may require the payment by the Owner of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Note Paying Agent) connected therewith. Nonpresentment of Notes If any Note is not presented for payment when the principal thereof becomes due at Maturity, if funds sufficient to pay such Note have been made available to the Note Paying Agent all liability of the City to the Owner thereof for the payment of such Note shall forthwith cease, determine and be completely discharged, and thereupon it shall be the duty of the Note Paying Agent to hold such funds, without liability for interest thereon, for the benefit of the Owner of such Note, who shall thereafter be restricted exclusively to such funds for any claim of whatever nature on his part under this Note Resolution or on, or with respect to, said Note. If any Note is not presented for payment within four (4) years following the date when such Note becomes due at Maturity, the Note Paying Agent shall repay to the City the funds theretofore held by it for payment of such Note, and such Note shall, subject to the defense of any applicable statute of limitation, thereafter be an unsecured obligation of the City, and the Owner thereof shall be entitled to look only to the City for payment, and then only to the extent of the amount so repaid to it by the Note Paying Agent, and the City shall not be liable for any interest thereon and shall not be regarded as a trustee of such money. Method and Place of Payment of the Notes The principal of, or Redemption Price, and interest on the Notes shall be payable in any coin or currency which, on the respective dates of payment thereof, is legal tender for the payment of public and private debts. The principal or Redemption Price of each Note and the interest thereon shall be paid at Maturity to the Person in whose name such Note is registered on the Note Register at the Maturity thereof, upon presentation and surrender of such Note at the principal office of the Note Paying Agent. 3 The interest payable on each Note on any Interest Payment Date shall be paid to the Owner of such Note as shown on the Note Register at the close of business on the Record Date for such interest (a) by check or draft mailed by the Note Paying Agent to the address of such Owner shown on the Note Register or at such other address as is furnished to the Note Paying Agent in writing by such Owner; or (b) in the case of an interest payment to Cede & Co. or any Owner of $500,000 or more in aggregate principal amount of Notes, by electronic transfer to such Owner upon written notice given to the Note Registrar by such Owner, not less than 15 days prior to the Record Date for such interest, containing the electronic transfer instructions including the bank, ABA routing number and account number to which such Owner wishes to have such transfer directed. "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 Note shall cease to be payable to the Owner of such Note on the relevant Record Date and shall be payable to the Owner in whose name such Note is registered at the close of business on the Special Record Date for the payment of such Defaulted Interest, which Special Record Date shall be fixed as hereinafter specified. The City shall notify the Note Paying Agent in writing of the amount of Defaulted Interest proposed to be paid on each Note and the date of the proposed payment (which date shall be at least 30 days after receipt of such notice by the Note Paying Agent) and shall deposit with the Note Paying Agent an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest. Following receipt of such funds the Note Paying Agent shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment. The Note Paying Agent shall notify the City of such Special Record Date and shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, by first class mail, postage prepaid, to each Owner of a Note entitled to such notice not less than 10 days prior to such Special Record Date. SO LONG AS CEDE & CO. REMAINS THE REGISTERED OWNER OF THE NOTES, THE NOTE PAYING AGENT SHALL TRANSMIT PAYMENTS TO THE SECURITIES DEPOSITORY, WHICH SHALL REMIT SUCH PAYMENTS IN ACCORDANCE WITH ITS NORMAL PROCEDURES. See "THE NOTES -Book-Entry Notes; Securities Depository." Payments Due on Saturdays, Sundays and Holidays In any case where a Note Payment Date is not a Business Day, then payment of principal, Redemption Price or interest need not be made on such Note Payment Date but may be made on the next succeeding Business Day with the same force and effect as if made on such Note Payment Date, and no interest shall accrue for the period after such Note Payment Date. Book-Entry Notes; Securities Depository The Notes shall initially be registered to Cede & Co., the nominee for the Securities Depository, and no Beneficial Owner will receive certificates representing their respective interests in the Notes, except in the event the Note Registrar issues Replacement Notes. It is anticipated that during the term of the Notes, the Securities Depository will make book-entry transfers among its Participants and receive and transmit payment of principal of, premium, if any, and interest on, the Notes to the Participants until and unless the Note Registrar authenticates and delivers Replacement Notes to the Beneficial Owners as described in the following paragraphs. The City may decide, subject to the requirements of the Operational Arrangements of DTC (or a successor Securities Depository), and the following provisions of this section to discontinue use of the system of book-entry transfers through DTC (or a successor Securities Depository): (a) If the City determines (1) that the Securities Depository is unable to properly discharge its responsibilities, or (2) that the Securities Depository is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, or (3) that the continuation of a book-entry system to the exclusion of any Notes being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Notes; or 4 (b) if the Note Registrar receives written notice from Participants having interest in not less than 50% of the Notes Outstanding, as shown on the records of the Securities Depository (and certified to such effect by the Securities Depository), that the continuation of a book-entry system to the exclusion of any Notes being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Notes, then the Note Registrar shall notify the Owners of such determination or such notice and of the availability of certificates to owners requesting the same, and the Note Registrar shall register in the name of and authenticate and deliver Replacement Notes to the Beneficial Owners or their nominees in principal amounts representing the interest of each, making such adjustments as it may find necessary or appropriate as to accrued interest and previous calls for redemption; provided, that in the case of a determination under (a)(l) or (a)(2) of this paragraph, the City, with the consent of the Note Registrar, may select a successor securities depository in accordance with the following paragraph to effect book-entry transfers. In such event, all references to the Securities Depository herein shall relate to the period of time when the Securities Depository has possession of at least one Note. Upon the issuance of Replacement Notes, all references herein to obligations imposed upon or to be performed by the Securities Depository shall be deemed to be imposed upon and performed by the Note Registrar, to the extent applicable with respect to such Replacement Notes. If the Securities Depository resigns and the City, the Note Registrar or Owners are unable to locate a qualified successor of the Securities Depository, then the Note Registrar shall authenticate and cause delivery of Replacement Notes to Owners, as provided herein. The Note Registrar may rely on information from the Securities Depository and its Participants as to the names of the Beneficial Owners of the Notes. The cost of printing, registration, authentication, and delivery of Replacement Notes shall be paid for by the City. In the event the Securities Depository resigns, is unable to properly discharge its responsibilities, or is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, the City may appoint a successor Securities Depository provided the Note Registrar receives written evidence satisfactory to the Note Registrar with respect to the ability of the successor Securities Depository to discharge its responsibilities. Any such successor Securities Depository shall be a securities depository which is a registered clearing agency under the Securities and Exchange Act of 1934, as amended, or other applicable statute or regulation that operates a securities depository upon reasonable and customary terms. The Note Registrar upon its receipt of a Note or Notes for cancellation shall cause the delivery of the Notes to the successor Securities Depository in appropriate denominations and form as provided in the Note Resolution. THE BONDS Authority The Bonds are issued pursuant to and in full compliance with the Constitution and statutes of the State of Kansas, including without limitation K.S.A. 10-101 et seq., K.S.A. 10-427 et seq., K.S.A. 10-620 et seq., K.S.A. 12-63lr, K.S.A. 12-685 et seq., K.S.A.12-1736 et seq., and Article 12, Section 5 of the Constitution of the State of Kansas, all as amended, and an ordinance and resolution adopted by the governing body of the City authorizing the issuance of the Bonds (collectively, the "Bond Resolution"). Security 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. 5 Levy and Collection of Annual Tax. Transfer to Debt Service Account The governing body of the Issuer shall annually make provision for the payment of principal of, premium, if any, and interest on the Bonds as the same become due by, to the extent necessary, levying and collecting the necessary taxes upon all of the taxable tangible property within the Issuer in the manner provided by law. Such taxes 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. Description The Bonds shall consist of fully registered book-entry-only bonds in an Authorized Denomination and shall be numbered in such manner as the Bond Registrar shall determine. All of the Bonds will be dated July 27, 2017 (the "Dated Date"), shall become due in the amounts, on the Stated Maturities, and subject to redemption and payment prior to their Stated Maturities, and shall bear interest at the rates per annum set forth on the inside cover page of this Official Statement. The Bonds shall bear interest (computed on the basis of twelve 30-day months) from the later of the Dated Date or the most recent Interest Payment Date to which interest has been paid on the Interest Payment Dates in the manner hereinafter set forth. Redemption Provisions Optional Redemption. At the option of the City, Bonds or portions thereof maturing on October 1, 2025 and thereafter may be called for redemption and payment prior to their Stated Maturity on October 1, 2024, and thereafter as a whole or in part (selection of maturities and the amount of Bonds of each maturity to be redeemed to be determined by the City in such equitable manner as it may determine) at any time, at the Redemption Price of 100% (expressed as a percentage of the principal amount), plus accrued interest thereon to the Redemption Date. [ Mandatory Redemption. The Term Bonds 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 Term Bonds: *Final Maturity] Principal Amount $ * 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, 6 the Owner or the Owner's duly authorized agent shall forthwith present and surrender such Bond to the Bond Registrar: (1) for payment of the Redemption Price and interest to the Redemption Date of such minimum Authorized Denomination value called for redemption, and (2) for exchange, without charge to the Owner thereof, for a new Bond or Bonds of the aggregate principal amount of the unredeemed portion of the principal amount of such Bond. If the Owner of any such Bond fails to present such Bond to the Bond Paying Agent for payment and exchange as aforesaid, such Bond shall, nevertheless, become due and payable on the redemption date to the extent of the minimum Authorized Denomination value called for redemption (and to that extent only). Notice and Effect of Call for Redemption. Unless waived by any Owner of Bonds to be redeemed, if the City shall call any Bonds for redemption and payment prior to the Stated Maturity thereof, the City shall give written notice of its intention to call and pay said Bonds to the 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 Bond Paying Agent. The failure of any Owner to receive notice given as heretofore provided or an immaterial defect therein shall not invalidate any redemption. Prior to any Redemption Date, the City shall deposit with the Bond Paying Agent an amount of money sufficient to pay the Redemption Price of all the Bonds or portions of Bonds that are to be redeemed on such Redemption Date. Official notice of redemption having been given as aforesaid, the Bonds or portions of Bonds to be redeemed shall become due and payable on the Redemption Date, at the Redemption Price therein specified, and from and after the Redemption Date (unless the City defaults in the payment of the Redemption Price) such Bonds or portion of Bonds shall cease to bear interest. For so long as the Securities Depository is effecting book-entry transfers of the Bonds, the Bond Registrar shall provide the notices specified to the Securities Depository. It is expected that the Securities Depository shall, in turn, notify its Participants and that the Participants, in turn, will notify or cause to be notified the Beneficial Owners. Any failure on the part of the Securities Depository or a Participant, or failure on the part of a nominee of a Beneficial Owner of a Bond (having been mailed notice from the Bond Registrar, the Securities Depository, a Participant or otherwise) to notify the Beneficial Owner of the Bond so affected, shall not affect the validity of the redemption of such Bond. In addition to the foregoing notice, the City shall provide such notices of redemption as are required by the Disclosure Undertaking. The Bond Paying Agent is also directed to comply with any mandatory or voluntary standards then in effect for processing redemptions of municipal securities established by the State or the Securities and Exchange Commission. Failure to comply with such standards shall not affect or invalidate the redemption of any Bond. Designation of Bond Paying Agent and Bond Registrar The City will at all times maintain a paying agent and bond registrar meeting the qualifications set forth in the Bond 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 "Bond Registrar'' and "Bond Paying Agent") has been designated by the City as paying agent for the payment of principal of and interest on the Bonds and bond registrar with respect to the registration, transfer and exchange of Bonds. 7 Registration, Transfer and Exchange of Bonds As long as any of the Bonds remain Outstanding, each Bond when issued shall be registered in the name of the Owner thereof on the Bond Register. Bonds may be transferred and exchanged only on the Bond Register as hereinafter provided. Upon surrender of any Bond at the principal office of the Bond Registrar, the Bond Registrar shall transfer or exchange such Bond for a new Bond or Bonds in any authorized denomination of the same Stated Maturity and in the same aggregate principal amount as the Bond that was presented for transfer or exchange. Bonds presented for transfer or exchange shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in a form and with guarantee of signature satisfactory to the Bond Registrar, duly executed by the Owner thereof or by the Owner's duly authorized agent. In all cases in which the privilege of transferring or exchanging Bonds is exercised, the Bond Registrar shall authenticate and deliver Bonds in accordance with the provisions of the Bond Resolution. The City shall pay the fees and expenses of the Bond Registrar for the registration, transfer and exchange of Bonds. Any additional costs or fees that might be incurred in the secondary market, other than fees of the Bond Registrar, are the responsibility of the Owners of the Bonds. In the event any Owner fails to provide a correct taxpayer identification number to the Bond Paying Agent, the Bond Paying Agent may make a charge against such Owner sufficient to pay any governmental charge required to be paid as a result of such failure. The City and the Bond Registrar shall not be required (a) to register the transfer or exchange of any Bond that has been called for redemption after notice of such redemption has been mailed by the Bond Paying Agent and during the period of 15 days next preceding the date of mailing of such notice of redemption; or (b) to register the transfer or exchange of any Bond during a period beginning at the opening of business on the day after receiving written notice from the City of its intent to pay Defaulted Interest and ending at the close of business on the date fixed for the payment of Defaulted Interest. Method and Place of Payment of the Bonds The principal of, or Redemption Price, and interest on the Bonds shall be payable in any coin or currency which, on the respective dates of payment thereof, is legal tender for the payment of public and private debts. The principal or Redemption Price of each Bond shall be paid at Maturity to the Person in whose name such Bond is registered on the Bond Register at the Maturity thereof, upon presentation and surrender of such Bond at the principal office of the Bond Paying Agent. The interest payable on each Bond on any Interest Payment Date shall be paid to the Owner of such Bond as shown on the Bond Register at the close of business on the Record Date for such interest (a) by check or draft mailed by the Bond Paying Agent to the address of such Owner shown on the Bond Register or at such other address as is furnished to the Bond Paying Agent in writing by such Owner; or (b) in the case of an interest payment to Cede & Co. or any Owner of $500,000 or more in aggregate principal amount of Bonds, by electronic transfer to such Owner upon written notice given to the Bond Registrar by such Owner, not less than 15 days prior to the Record Date for such interest, containing the electronic transfer instructions including the bank, ABA routing number and account number to which such Owner wishes to have such transfer directed. "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 Bond Paying Agent in writing of the amount of Defaulted Interest proposed to be paid on each Bond and the date of the proposed payment (which date shall be at least 30 days after receipt of such notice by the Bond Paying Agent) and shall deposit with the Bond Paying Agent an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest. Following receipt of such funds the Bond Paying Agent shall fix a Special Record Date for the payment of such Defaulted Interest 8 which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment. The Bond Paying Agent shall notify the City of such Special Record Date and shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, by first class mail, postage prepaid, to each Owner of a Bond entitled to such notice not less than 10 days prior to such Special Record Date. SO LONG AS CEDE & CO., REMAINS THE REGISTERED OWNER OF THE BONDS, THE BOND PAYING AGENT SHALL TRANSMIT PAYMENTS TO THE SECURITIES DEPOSITORY, WHICH SHALL REMIT SUCH PAYMENTS IN ACCORDANCE WITH ITS NORMAL PROCEDURES. See ''THE BONDS -Book-Entry Bonds; Securities Depository." Payments Due on Saturdays, Sundays and Holidays In any case where a Bond Payment Date is not a Business Day, then payment of principal, Redemption Price or interest need not be made on such Bond Payment Date but may be made on the next succeeding Business Day with the same force and effect as if made on such Bond Payment Date, and no interest shall accrue for the period after such Bond Payment Date. Book-Entry Bonds; Securities Depository The Bonds shall initially be registered to Cede & Co., the nominee for the Securities Depository, and no Beneficial Owner will receive certificates representing their respective interests in the Bonds, except in the event the Bond Registrar issues Replacement Bonds. It is anticipated that during the term of the Bonds, the Securities Depository will make book-entry transfers among its Participants and receive and transmit payment of principal of, premium, if any, and interest on, the Bonds to the Participants until and unless the Bond Registrar authenticates and delivers Replacement Bonds to the Beneficial Owners as described in the following paragraphs. The City may decide, subject to the requirements of the Operational Arrangements of DTC (or a successor Securities Depository), and the following provisions of this section to discontinue use of the system of book-entry transfers through DTC (or a successor Securities Depository): (a) If the City determines (1) that the Securities Depository is unable to properly discharge its responsibilities, or (2) that the Securities Depository is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, or (3) that the continuation of a book-entry system to the exclusion of any Bonds being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Bonds; or (b) if the Bond Registrar receives written notice from Participants having interest in not less than 50% of the Bonds Outstanding, as shown on the records of the Securities Depository (and certified to such effect by the Securities Depository), that the continuation of a book-entry system to the exclusion of any Bonds being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Bonds, then the Bond Registrar shall notify the Owners of such determination or such notice and of the availability of certificates to owners requesting the same, and the Bond Registrar shall register in the name of and authenticate and deliver Replacement Bonds to the Beneficial Owners or their nominees in principal amounts representing the interest of each, making such adjustments as it may find necessary or appropriate as to accrued interest and previous calls for redemption; provided, that in the case of a determination under (a)(l) or (a)(2) of this paragraph, the City, 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 City, the Bond Registrar or Owners are unable to locate a qualified successor 9 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 1. The Depository Trust Company ("DTC''), New York, New York, will act as securities depository for the Securities. The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully- registered bond certificate will be issued for each scheduled maturity of the Securities, and will be deposited with DTC. 2. DTC, the world's largest depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.6 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has a Standard & Poor's rating of "AA+". The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. 3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & 10 Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. 5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. 6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. 7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Securities unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt offunds and corresponding detail information from the Issuer or Paying Agent, on the payment date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC nor its nominee, the Paying Agent, or the Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Issuer or Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to the Paying Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to the Paying Agent. The requirement for physical delivery of the Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC's records and followed by a book-entry credit of tendered Securities to the Paying 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 the Issuer or Paying Agent. Under such circumstances, in the event that a successor securities depository is not obtained, certificates are required to be printed and delivered. 11. The Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC. 12. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the Issuer believes to be reliable, but the Issuer takes no responsibility for the accuracy thereof. 11 THE FINANCING PLAN The Note Projects Proceeds from the sale of the Notes will be used to provide interim construction financing for a portion of the cost of certain public improvements within the City and to pay costs associated with the issuance of the Notes. The projects to be financed with the Notes are as follows: Project Description Downtown Streetscape Grand Prairie Addition, Phase II Police Training Center The Bond Projects Ordinance/ Resolution No. Ord. 17-10888 Res. 16-7394 Res . 17-7458 Estimated Authority K.S.A. 12-631r; 12-685 et seq. Improvement Fund Deposit K.S.A. 12-6a01 et seq. K.S.A. 12-1736 et seq. Total $1,200,000 441,605 500,000 $2,141,605 Proceeds from the sale of the Bonds will be used to (1) provide long term financing for a portion of the cost of certain public improvements within the City, (2) pay interest on a portion of the City's General Obligation Internal Improvement Bonds, Series 2007-A coming due on October 1, 2017, and (3) pay the costs associated with the issuance of the Bonds. The projects to be financed with the Bonds are as follows: Project Description Bicentennial Center Country Club Road Smoky Hill River Renewal Ordinance/ Resolution No. Res. 13-6988/14-7087 Res. 17-7459 Ord. 17-10885 Authority K.S.A. 12-1736 et seq. K.S.A. 12-685 et seq. Article 12, Section 5 of the Constitution of the State of Kansas Total Estimated Improvement Fund Deposit $6,912,392 1,200,000 1,200,000 $9,312,392 A portion of the cost of the Bicentennial Center project was financed by the issuance of the City's General Obligation Temporary Notes, Series 2016-1 {the "Series 2016-1 Notes"), which will be retired at maturity with proceeds from the sale of the Bonds. SOURCES AND USES OF FUNDS Funds to be used in the Financing Plan will be provided and applied approximately as follows, exclusive of accrued interest. Sources of Funds: Sale Proceeds [Original Issue Premium/Discount] Total Sources of Funds Uses of Funds: Deposit to Improvement Fund Deposit to Redemption Fund Underwriter's Discount Costs of Issuance Total Application of Funds 12 RISK FACTORS AND INVESTMENT CONSIDERATIONS A PROSPECTIVE PURCHASER OF THE THE SECURITIES DESCRIBED HEREIN SHOULD BE AWARE THAT THERE ARE CERTAIN RISKS ASSOCIATED WITH THE SECURITIES WHICH MUST BE RECOGNIZED. THE FOLLOWING STATEMENTS REGARDING CERTAIN RISKS ASSOCIATED WITH THE OFFERING SHOULD NOT BE CONSIDERED AS A COMPLETE DESCRIPTION OF ALL RISKS TO BE CONSIDERED IN THE DECISION TO PURCHASE THE SECURITIES. PROSPECTIVE PURCHASERS OF THE SECURITIES SHOULD ANALYZE CAREFULLY THE INFORMATION CONTAINED IN THIS OFFICIAL STATEMENT AND ADDITIONAL INFORMATION IN THE FORM OF THE COMPLETE DOCUMENTS SUMMARIZED HEREIN, COPIES OF WHICH ARE AVAILABLE AND MAY BE OBTAINED FROM THE CITY OR THE UNDERWRITER. Legal Matters Various state and federal laws, regulations and constitutional provisions apply to the obligations created by the Securities. There is no assurance that there will not be any change in, interpretation of, or addition to such applicable laws, provisions and regulations which would have a material effect, either directly or indirectly, on the City or the taxing authority of the City. Limitations on Remedies Available to Owners of Securities The enforceability of the rights and remedies of the owners of Securities, and the obligations incurred by the City in issuing the Securities, are subject to the following: the federal Bankruptcy Code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect; usual equity principles which may limit the specific enforcement under state law of certain remedies; the exercise by the United States of America of the powers delegated to it by the United States Constitution; and the reasonable and necessary exercise, in certain unusual situations, of the police power inherent in the State of Kansas and its governmental subdivisions in the interest of serving a legitimate and significant public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or state government, if initiated, could subject the owners of the Securities to judicial discretion and interpretation of their rights in bankruptcy and otherwise, and consequently may involve risks of delay, limitation or modification of their rights. Kansas Public Employees Retirement System As described in "APPENDIX A-FINANCIAL INFORMATION -Pension and Employee Retirement Plans," the Issuer 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 Issuer 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 Issuer makes all employer contributions to the Plan; neither the employees nor the Issuer 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, 2015, the Local Group had an UAAL of $1.486 billion and KP&F had an UAAL of $772 million. 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." 13 No Additional Interest or Mandatory Redemption upon Event of Taxability Neither the Bond Resolution nor the Note Resolution provide for the payment of additional interest or penalty on the Securities or the mandatory redemption thereof if the interest thereon becomes includable in gross income for federal income tax purposes. Likewise, neither the Bond Resolution nor the Note Resolution provide for the payment of any additional interest or penalty on the Securities if the interest thereon becomes subject to income taxation by the State of Kansas. Suitability of Investment The tax exempt feature of the Securities is more valuable to high tax bracket investors than to investors who are in low tax brackets, and so the value of the interest compensation to any particular investor will vary with individual tax rates. Each prospective investor should carefully examine this Official Statement, including the Appendices hereto, and its own financial condition to make a judgment as to its ability to bear the economic risk of such an investment, and whether or not the Securities are an appropriate investment. Market for the Securities Ratings. The Securities have been assigned the financial ratings set forth in the section hereof titled RATINGS. There is no assurance that a particular rating will remain in effect for any given period of time or that it will not be revised, either downward or upward, or withdrawn entirely, if in the judgment of the agency originally establishing such rating, circumstances so warrant. Any downward revision or withdrawal of any rating may have an adverse affect on the market price of the Securities. Secondary Market. There is no assurance that a secondary market will develop for the purchase and sale of the Securities. Prices of securities traded in the secondary market, though, are subject to adjustment upward and downward in response to changes in the credit markets. From time to time it may be necessary to suspend indefinitely secondary market trading in the Securities as a result of financial condition or market position of broker- dealers, prevailing market conditions, lack of adequate current financial information about the City, or a material adverse change in the financial condition ofthe City, whether or not the Securities are in default as to principal and interest payments, and other factors which may give rise to uncertainty concerning prudent secondary market practices. Recent Legislative Proposals Congress and the President 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 Securities 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 NOTES, THE BONDS, LEGAL MATIERS, TAX MATIERS, and APPENDIX B -OMNIBUS CONTINUING DISCLOSURE UNDERTAKING. 14 TAXMATIERS General The following is a summary of the material federal and State of Kansas income tax consequences of holding and disposing of the Securities. This summary is based upon laws, regulations, rulings and judicial decisions now in effect, all of which are subject to change (possibly on a retroactive basis). This summary does not discuss all aspects of federal income taxation that may be relevant to investors in light of their personal investment circumstances or describe the tax consequences to certain types of holders subject to special treatment under the federal income tax laws (for example, dealers in securities or other persons who do not hold the Securities as a capital asset, tax-exempt organizations, individual retirement accounts and other tax deferred accounts, and foreign taxpayers), and, except for the income tax laws of the State of Kansas, does not discuss the consequences to an owner under state, local or foreign tax laws. The summary does not deal with the tax treatment of persons who purchase the Securities in the secondary market. Prospective investors are advised to consult their own tax advisors regarding federal, state, local and other tax considerations of holding and disposing of the Securities. Opinion of Bond Counsel In the opinion of Bond Counsel, under the law existing as of the issue date of the Securities: Federal Tax Exemption: The interest on the Securities (including any original issue discount properly allocable to an owner thereof) is excludable from gross income for federal income tax purposes. Alternative Minimum Tax. Interest on the Securities is not an item of tax preference for purposes of computing the federal alternative minimum tax imposed on individuals and corporations, but is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. Bank Qualification. The Securities have not been designated as "qualified tax-exempt obligations" for purposes of Code §265(b). Kansas Tax Exemption. The interest on the Securities is exempt from income taxation by the State of Kansas. No Other Opinions. Bond Counsel's opinions are provided as of the date of the original issue of the Securities, subject to the condition that the City comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Securities in order that interest thereon be, or continue to be, excludable from gross income for federal income tax purposes. The City has covenanted to comply with all of these requirements. Failure to comply with certain of such requirements may cause the inclusion of interest on the Securities in gross income for federal income tax purposes retroactive to the date of issuance of the Securities. Bond Counsel is expressing no opinion regarding other federal, state or local tax consequences arising with respect to the Securities. Other Tax Consequences Original Issue Discount. For federal income tax purposes, original issue discount ("OID") is the excess of the stated redemption price at maturity of a security over its issue price. The issue price of a security is the first price at which a substantial amount of the security of that maturity has been sold to the public. The Notes. For each security, the stated redemption price at maturity includes all payments on the security, except interest payable at least annually over the term of the security ("qualified stated interest"). Since the August 1, 2018, interest payment on the Notes will be paid more than one year after the Notes are issued, none of the interest payments on the Notes constitute qualified stated interest, and the stated redemption price of each Note includes all payments on the Notes. 15 Under Code § 1288, OID on tax-exempt obligations accrues on a compound basis. The amount of OID that accrues to an owner of a Note during any accrual period generally equals: (a) the issue price of such Note plus the amount of OID accrued in all prior accrual periods; multiplied by (b) the yield to maturity on such Note (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period); minus (c) any interest payable on such Note during such accrual period. The amount of OID so accrued in a particular accrual period will be considered to be received ratably on each day of the accrual period, will be excludable from gross income for federal income tax purposes, and will increase the owner's tax basis in such Note. Prospective investors should consult their own tax advisors concerning the calculation and accrual of OID. The Bonds. 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 OID. Original Issue Premium. For federal income tax purposes, premium is the excess of the issue price of a Security over its stated redemption price at maturity. The issue price of a Security is generally the first price at which a substantial amount of the Securities of that maturity have been sold to the public. Under Code §171, premium on tax-exempt obligations amortizes 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, which will result in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes on sale or disposition of the Security prior to its maturity. Even though the owner's basis is reduced, no federal income tax deduction is allowed. Prospective investors should consult their own tax advisors concerning the calculation and accrual of bond premium. Sale, Exchange or Retirement of Securities. Upon the sale, exchange or retirement (including redemption) of a Security, an owner of the Security generally will recognize gain or loss in an amount equal to the difference between the amount of cash and the fair market value of any property received on the sale, exchange or retirement of the Security (other than in respect of accrued and unpaid interest) and such owner's adjusted tax basis in the Security. To the extent the Securities are held as a capital asset, such gain or loss will be capital gain or loss and will be long-term capital gain or loss if the Security has been held for more than 12 months at the time of sale, exchange or retirement. Reporting Requirements. In general, information reporting requirements will apply to certain payments of principal, interest and premium paid on Securities, and to the proceeds paid on the sale of Securities, other than certain exempt recipients (such as corporations and foreign entities). A backup withholding tax will apply to such payments if the owner fails to provide a taxpayer identification number or certification of foreign or other exempt status or fails to report in full dividend and interest income. The amount of any backup withholding from a payment to an owner will be allowed as a credit against the owner's federal income tax liability. Collateral Federal Income Tax Consequences. Prospective purchasers of the Securities should be aware that ownership of the Securities may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, individual recipients of Social Security or Railroad Retirement benefits, certain S corporations with "excess net passive income," foreign corporations subject to the branch profits tax, life insurance companies, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry or have paid or incurred certain expenses allocable to the Securities. Bond Counsel expresses no opinion regarding these tax consequences. Purchasers of Securities should consult their tax advisors as to the applicability of these tax consequences and other federal income tax consequences of the purchase, ownership and disposition of the Securities, including the possible application of state, local, foreign and other tax laws. 16 RATINGS The City has applied to Moody's Investors Service for a rating on the Notes and Bonds. Any explanation of the significance of such ratings may be obtained only from said rating agency. There is no assurance that the ratings will remain for any given period of time or that they may not be lowered or withdrawn entirely by the rating service if, in their judgment, circumstances so warrant. Any such downward change in or withdrawal of the ratings may have an adverse effect on the market price of the Notes and Bonds. Moody's has assigned ratings of "MIG 1" to the Notes and "Aa3" to the Bonds. MUNICIPAL ADVISOR George K. Baum & Company, Kansas City, Missouri, has acted as Municipal Advisor to the City in connection with the sale of the Securities. The Municipal Advisor has assisted the City in the preparation of this Official Statement and in other matters relating to the issuance of the Securities. The fees of the Municipal Advisor are contingent upon the issuance of the Securities. UNDERWRITING The Notes are being purchased by .._[ ___ _,] (the "Notes Underwriter") at a price equal to the principal amount of the Notes[, plus a premium of$[ ,] [less an underwriting discount of$ ]]. The Bonds are being purchased by .__ ____ ] (the "Bonds Underwriter'') at a price equal to the par amount of the Bonds[, plus a premium of$[ ,] [less an underwriting discount of$[ ]]. The Notes Underwriter and the Bonds Underwriter are collectively referred to herein as (the "Underwriters"). ABSENCE OF MATERIAL LITIGATION The Transcript of Proceedings will contain a certificate of non-litigation dated as of the closing date and executed by the City to the effect that, except as disclosed in the Official, there is no controversy, suit, or proceeding of any kind pending or, to the knowledge of the City, threatened wherein or whereby any question is raised, or may be raised, questioning, disputing, or affecting in any way the legal organization of the City or its boundaries or the legality of any official act shown to have been done regarding the issuance of the Notes and Bonds or the constitutionality or validity of the obligation represented by the Bonds or the means provided for the payment of the Notes and Bonds. CONTINUING DISCLOSURE The Securities and Exchange Commission (the "SEC") has promulgated amendments to Rule 15c2-12 (the "Rule"), requiring continuous secondary market disclosure. In 2013, the Issuer adopted an Omnibus Continuing Disclosure Undertaking (the "Disclosure Undertaking") wherein the Issuer covenanted to provide annually certain Financial Information and Operating Data and other information necessary to comply with the Rule, and to transmit the same to the Municipal Securities Rulemaking Board. 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 Resolution and Note Resolution, the Issuer covenants with the Underwriter and the Beneficial Owners to apply the provisions of the Disclosure Undertaking to the Securities. This covenant is for the benefit of and is enforceable by the Beneficial Owners of the Securities. For more information regarding the Disclosure Undertaking, see "APPENDIX B-OMNIBUS CONTINUING DISCLOSURE UNDERTAKING." 17 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. 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 By /s ________________ _ Director of Finance and Administration ATTEST: City Clerk 18 APPENDIX A FINANCIAL OVERVIEW OF THE CITY 2016 Estimated Actual Valuation (1) 2016 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 $ 3,046,949,034 $ 472,683,104 $ 66,085,000 $ $ $ $ $ $ $ $ 47,813 1,382 2.17% 13.98% 6,795,000 12,813,923 1,269,499 13,230,000 138,642,427 224,336,350 4,692 7.36% 47.46% (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; preliminary, subject to change. (3) Does not include notes to be retired with proceeds from the sale of the Series 2017-A Bonds. (4) The City intends to repay such loans from the net revenues of its municipal water and sewer 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 jorisdictions, 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 47,813. 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: Population Name Kaye Crawford Karl Ryan Jon R. Blanchard Melissa Rose Hodges Trent Davis Title Mayor Vice Mayor Commissioner Commissioner Commissioner Term Expires 2018 2020 2018 2020 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. Year 2015 2014 2013 2012 2011 A-2 U.S. Census Bureau Population 47,813 47,867 47,846 47,901 47,910 Police and Fire Protection 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 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 A-3 protection for the Airport. SBC provides telephone service. Multiple cellular phone companies provide service to the City. 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 $2.3 billion as of April 2016. 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 128 people. As of June 30, 2016 KPERS serves over 299,000 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; {bl 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 A-4 rate. State legislation enacted in 2003 made certain pre-1962 employees of the University of Kansas Hospital Authority (which are a part of a small group of pre-1962 Board and University of Kansas Hospital Authority employees known as the "TIAA Group"), special members of the Local Group. 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 IRS 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 8.46% of the employee's gross salary for calendar year 2017. In addition, the Issuer contributes 0% of the employee's gross salary for Death and Disability Insurance for covered employees for the period beginning April 1, 2016, through June 30, 2017, and 1% of the employee's gross salary for Death and Disability Insurance for covered employees for the period beginning July 1, 2017. According to the Valuation Report as of December 31, 2015 (the "2015 Valuation Report"), the KPERS Local Group, of which the Issuer is a member, carried an unfunded accrued actuarial liability ("UAAL") of $1.485 billion at the end of 2015. The 2015 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 2015 Valuation Report, which is the most recent financial and A-5 actuarial information available on the KPERS website relating to the funded status of the KPERS Local Group. The 2015 Valuation Report sets the employer contribution rate for the period beginning January 1, 2018, for the KPERS Local Group, and KPERS' actuaries identified that an employer contribution rate of 8.39% 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 2015 Valuation Report's actuarial rate. As a result, members of the Local Group are adequately funding their projected actuarial liabilities 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 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 2015 Valuation Report, KP&F carried an UAAL of $772 million at the end of 2015. For the year beginning January 1, 2017, employees contributed 7.15% of gross compensation and the Issuer contributed 19.03% of employees' 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. KPERS produces a Schedule of Employer and Nonemployer Allocations and Schedules of Pension Amounts by Employer and Nonemployer (the "GASB 68 Report") which provides the net pension liability allocated to each KPERS participant, including the Issuer. 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. A-6 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. 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. According to a 2016 Fort Hays State University Docking Institute of Public Affairs report, at December 31, 2014, over 100 businesses and organizations at the Salina Regional Airport and Airport Industrial Center employed 3,555 employees with a combined payroll in excess of $141.5 million. The report also cited that the Airport/Airport Industrial Center accounted for 17.3 percent of the employment in Saline County and 25 percent of the total economic activity in a seven-county area. The Kansas Department of Labor estimated the civilian labor force in the City of Salina for the year 2016 to be 34,010 persons. The estimated median household income for the City in 2015 was $46,167 and owner-occupied housing rates in the City were 63.8% 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. In April 2014, Unified School District No. 305 received voter approval for and subsequently issued $110,700,000 of general obligation bonds to fund a wide variety of improvements. The Salina Airport Authority The Salina Airport Authority (the "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. A-7 The Salina Regional Airport (the "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 Polytechnic ("KSUP"). The campus of KSUP is located adjacent to the Airport. KSUP offers degrees in professional flight training, airframe and power plant maintenance, UAS, airport management and avionics technology. During 2016, the Airport's commercial air service was improved by the commencement of scheduled flights provided by Great Lakes Airlines. The airline offers daily scheduled passenger air service to Denver International Airport with a 30-passenger Embraer EMB-120 regional aircraft. Great Lakes Airlines is a United Airlines code share partner. With the enhanced air service, the airport was also federalized with the Transportation Security Administration (TSA) providing federal screening resources. With the Great Lakes' service, the Airport anticipates having over 10,000 passenger enplanements during 2017 elevating the Airport's classification to that of a "Primary" airport by the Federal Aviation Administration. Also adding to the increased enplanement count is the Airport's status as an Airport of Embarkation/Debarkation by the Fort Riley, Kansas Army Installation located just 60 miles to the east of Salina on 1-17. The Airport also accommodates a wide variety of aircraft including business jets, military, flight training and general aviation aircraft. During 2016, the Salina Air Traffic Control Tower logged over 77,000 aircraft operations serving the needs of over 7,000 business jets, the professional flight training department of Kansas State University, general aviation and military aircraft. The Airport's fixed base operator, Avflight Salina, delivered over 1.8 million gallons of fuel to the wide variety of aircraft utilizing the Airport during 2016. The Airport and Airport Industrial Center is home for over 100 businesses and organizations. Fifty-eight of the businesses and organizations are tenants of the Authority. One of the primary functions of the Authority is to facilitate the continued growth of jobs and payroll at the Airport and Airport Industrial Center. The Authority works in partnership with the City of Salina, Saline County, and the Salina Area Chamber of Commerce, and the Kansas Department of Commerce for the retention of existing business and industry and the recruitment of new business and industry. A 2016 report prepared by the Docking Institute at Fort Hays State University cited the business and organizations located at the Salina Regional Airport and Airport Industrial Center contributed approximately 60 percent of the total economic activity in Saline County during 2014. Major Employers Industrial development during the past ten years has established a broad, industrial base in and around the City. A list of the major employers is as follows. All figures represent total full-time employment excluding seasonal and part-time employees. Name Schwan's Global Supply Chain, Inc. Unified School District No. 305 Salina Regional Health Center Exide Technologies Blue Philips Lighting Company City of Salina Walmart Dillon Stores Solomon Corporation Great Plains Manufacturing EIDorado National Crestwood, Inc. Advance Auto Parts Source: Salina Chamber of Commerce 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 Susses Wooden Cabinets Distribution Center A-8 Estimated Employment 1,800 1,659 1,300 750 490 465 421 343 324 258 221 219 195 Income The following table shows the per capita personal income for residents of Saline County and the State during the years indicated: Saline State of Year County Kansas 2015 $42,824 $47,161 2014 41,447 46,393 2013 41,096 45,838 2012 40,235 44,795 2011 39,240 42,515 2010 37,034 39,206 2009 38,752 38,301 2008 40,675 40,466 2007 36,781 37,663 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: Total Unemployment Year Labor Force EmQloyed UnemQIOlfed Rate 2017 {Mar) 26,295 25,401 894 3.4% 2016 26,194 25,170 1,024 3.9 2015 26,353 25,313 1,040 3.9 2014 26,303 25,159 1,144 4.4 2013 25,458 24,515 1,459 5.1 2012 25,808 24,241 1,567 6.3 2011 26,004 24,349 1,655 6.4 2010 26,156 24,434 1,722 6.6 State of Kansas: Total Unemployment Year Labor Force EmQloyed UnemQIOlfed Rate 2017 {Mar) 1,480,135 1,425,325 54,810 3.7% 2016 1,484,001 1,422,122 61,879 4.2 2015 1,499,009 1,435,884 63,125 4.2 2014 1,500,353 1,432,359 67,994 4.6 2013 1,491,745 1,405,036 86,709 5.3 2012 1,489,320 1,403,866 85,454 5.7 2011 1,498,872 1,401,055 97,817 6.5 2010 1,506,229 1,399,805 106,424 7.1 Source: Kansas Department of Labor A-9 DEBT SUMMARY OF THE CITY Current Indebtedness The following is an overview of the City's outstanding indebtedness by classification as of the dated date of the Bonds. Figures do not include bonds for which payment has been provided through the creation of designated escrow accounts. General Obligation Bonds: Date Issued 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 07-27-16 07-27-16 07-27-16 Total Series 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 2016-A 2016-B 2017-A 11l1ncludes the Bonds. 12lPreliminary; subject to change. Purpose Internal Improvements Internal Improvements Internal Improvements Internal Improvements Refunding & Improvement Refunding Internal Improvements Internal Improvements Refunding Taxable Improvements Improvements Improvements Revenue and Internal Imp. Internal Improvements Refunding Improvements Amount of Issue $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 6,570,000 13,750,000 9,390,00012) Final Maturity 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 10-01-36 10-01-31 10-01-37 Amount Outstandingl1l $ 360,000 250,000 1,845,000 7,090,000 1,260,000 2,810,000 1,780,000 1,800,000 1,375,000 1,160,000 3,655,000 6,460,000 6,530,000 6,570,000 13,750,000 9,390,000(2) $66,085,000 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 Series Issued Date Amount Outstanding 2016-1 02-10-16 08-01-17 $6,890,000 $ Oil) 2016-2 07-20-16 09-01-19 4,615,000 4,615,000 2017-1 07-27-16 08-01-18 2,180,000 2,180,000(2) $6,795,000 l1lTo be paid at maturity with proceeds from the sale of the Series 2017-A Bonds. See THE FINANCING PLAN herein. 121 Preliminary; subject to change. A-10 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, 2016): Year Original Item Issued Amount ERP System 2014 $ 456,370 Defibrillators 2014 146,235 HVAC System 2012 1,100,000 State Loans Final Maturity 10-01-31 Final Amount Outstanding $13,230,000 Amount Year Outstanding 2018 $ 235,348 2018 75,476 2027 958,675 $1,269,499 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. Project Year Final Original Amount Number Purpose Originated Payment Date Amount Outstanding KDHE 2629 Water 2014 08-01-34 $9,330,000 $ 8,563,923 KDHE 2841 * Water 2015 08-01-35 4,250,000 4,250,000 $12,813,923 * 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 Saline County Unified School District No. 305 *As of July 1, 2017. Amount Outstanding* $ 23,055,000 145,000 123,335,000 A-11 Estimated Share of the City Amount $ 23,055,000 108,866 115.478561 $138,642,427 Percentage 100.00% 75.08 93.63 Annual Debt Payments The following is a list of annual debt service requirements for the City's currently outstanding general obligation bonded indebtedness. All amounts are rounded to the nearest whole dollar. Existing Bonds Series 2017-A Bonds Year Principal Interest Princi~al Interest Total 2017 $6,020,000 $843,176 2018 6,395,000 1,562,669 2019 6,300,000 1,347,356 2020 4,150,000 1,162,726 2021 3,930,000 1,041,706 2022 4,000,000 905,516 2023 3,825,000 747,561 2024 3,585,000 594,491 2025 3,235,000 506,266 2026 2,850,000 422,454 2027 2,345,000 345,304 2028 1,990,000 284,859 2029 1,665,000 231,701 2030 1,150,000 189,439 2031 1,125,000 157,576 2032 995,000 125,244 2033 1,030,000 94,056 2034 975,000 61,825 2035 725,000 31,550 2036 405,000 10,125 *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 Debt to U.S. Debt Outstanding Assessed Estimated Actual Census Per Year December 31 Valuation Valuation Population Capita 2016 $56,875,000 12.07% 1.92% 47,813 $1,189.53 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 A-12 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 2017-1 Temporary Note as well as providing general obligation note and/or bond funding for approximately $25 million of improvements including construction of a riverfront renewal project and police training facility. A portion of the debt service payments on bonds issued for the riverfront project are anticipated to be paid from local sales tax. 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. Debt Payment Record The City has always met principal and interest payments on all outstanding bonds and temporary notes when due and payable. Legal Debt Limits Cities within Kansas are permitted to issue bonds in an aggregate amount not to exceed 30% of the total assessed valuation of the city. Bonds issued for the purpose of improving, acquiring, enlarging, or extending municipal utilities, including storm and sanitary sewer systems; bonds issued to pay the cost of improvements to intersections and streets in front of city or school district property; bonds for bridges as authorized by a vote of the electors of a city; bonds issued to refund outstanding bonds; and bonds payable from revenue sources other than the general taxing authority of the city are not included in total aggregate debt for purposes of computing a city's debt limitation. A-13 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: 2012 2013 2014 2015 Property Taxes $ 9,125,179 $ 8,959,066 $ 9,278,832 $9,244,160 Sales Tax 12,165,281 12,259,556 12,688,980 12,930,811 Other Taxes 5,057,100 5,264,277 5,636,239 5,663,843 Intergovernmental 1,080,291 1,255,203 1,162,384 975,720 Charges for Services 7,678,288 7,981,078 7,826,289 6,046,903 Investment Revenue 9,000 0 11,536 0 Miscellaneous 425,970 525,923 629,259 498,557 Total Revenues $35,541,109 $36,245,103 $37,233,769 $35,359,034 Expenditures: General Government $ 3,574,626 $ 4,268,824 $ 3,986,212 $5,342,433 Public Safety 18,564,988 19,155,034 19,558,487 21,267,630 Public Works 6,541,848 6,826,214 6,949,477 4,875,641 Public Health and Sanitation 1,188,836 1,183,970 146,178 754,347 Culture and Recreation 2,157,195 2,277,146 2,697,564 4,039,856 Planning and Development 2,267,262 2,335,233 2,209,836 586,358 Capital Outlay 721,079 694,750 843,975 1,041,690 Total Expenditures $35,015,834 $36,741,161 $36,391,729 $37,907,955 Revenues Over (Under) $ 525,275 $(496,058) $842,040 $(2,548,921) Other Sources (Uses) {534,403} 93,313 {137,351} 2,962,350 Net Change in Fund Balance $ (9,128) $(402,745) $704,689 $413,429 Fund Balance January 1 $3,836,238 $3,827,110 $3,549,740 $4,254,432 Restatement of Prior Year Balance 3,836,238 3,952,485 0 172,325 Fund Balance December 31 $3,827,110 $3,549,740 $4,254,429 $4,840,186 A-14 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 Year Estate Prope!jyt1> Utilities Vehicle Valuation 2017'2) $400,127,434 $10,739,414 $19,671,705 $51,833,505(3) $482,372,058 2016 389,872,825 11,653,719 19,323,055 51,833,505 472,683,104 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 !1lPersonal property valuations began to decline in 2006 as a result of legislative action that started the process of removing significant portions of industrial machinery and equipment from the property tax rolls. !2lPreliminary numbers provided by the County for estimating purposes. Final numbers will be available November 2017. !3l20l6 motor vehicle figure used. 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. Year 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Special Assessments Residential Real Estate Equalization Ratio 11.36% 11.28 11.65 11.55 11.95 12.04 11.89 11.67 11.66 11.68 Estimated Actual Value $3,046,949,034 2,968,008,193 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 A-15 improvements, the City requires that they pay 20% of the estimated cost of the project in cash, or file a letter of credit equivalent to 35% of the estimated cost of the project. The letter of credit is released when Certificates of Occupancy have been issued for 35% of the lots in the development. Special benefit districts have also been created to pay for the cost of improvements to streets and sidewalks in the City's downtown area. The creation of special benefit districts, the determination of property benefited, and the method of allocating the cost of the improvement is at the discretion of the City. Property owners have the ability to suggest improvements through a petition process and to comment on the final amount of their assessment. The City may or may not be included as part of the special benefit district. All property owners have the option to pay their portion of the improvement cost with a one-time payment during a 30-day assessment prepayment period or pay in annual installments with interest over a certain number of years. Upon completion of the special benefit district improvement projects and a 30-day prepayment period, the City issues general obligation bonds to provide for permanent project financing. The payment of the principal of and interest on such bonds is paid from the special assessments levied annually on the benefited property. Special assessments are paid at the same time and in the same manner as ad valorem property taxes. If at any time the special assessments received from the property owners are insufficient to provide for the payment of the principal of and interest on the bonds, the City is obligated to provide for the balance of such payments through its ability to levy unlimited ad valorem property taxes . Tax Collections Tax statements are mailed November 1 each year and may be paid in full or one-half on or before December 20 with the remaining one-half due on or before May 10 of the following year. Taxes that are unpaid on the due dates are penalized at a statutorily prescribed rate until paid or until the property is sold for taxes. Real estate bearing unpaid taxes is advertised for sale in July of each year and is sold by the County for taxes and all legal charges on the first Tuesday in September. Properties that are sold and not redeemed within two years after the tax sale are subject to foreclosure sale, except homestead properties which are subject to foreclosure sale after three years. 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 Year Rate Levied Amount ~ Amount ~ 2016 27.603 $11,651,479 $6,655,824 57.1% $6,688,199 57.4% 2015 27.311 11,316,065 10,460,246 92.4 11,077,742 97.9 2014 27.080 10,991,959 9,312,515 84.7 10,832,972 98.6 2013 26.927 10,868,225 8,101,775 74.5 10,839,120 99 .7 2012 26.190 10,550,730 6,597,038 62.5 10,500,249 99.5 2011 26.272 10,506,181 9,157,407 91.4 10,501,377 100.0 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 *Represents collections through May, 2017. A-16 Tax Levies Nov Nov Nov Nov Nov 2012 2013 2014 2015 2016 ~ ~ ~ ~ ~ City of Salina 26.190 26.927 27.080 27.311 27.603 Salina Library 5.452 5.761 6.034 5.895 5.893 State Education & Other 1.500 1.500 1.500 1.500 1.500 Unified School District No. 305 58.649 58.116 55.605 56.120 55.743 Airport Authority 4.007 4.504 4.486 4.396 4.396 Central Kansas Extension District 1.176 1.176 1.285 1.502 1.510 Saline County 34.823 37.895 38.047 38.275 37.508 Total 131.797 135.879 134.037 134.999 134.153 Largest Taxpayers According to the Saline County Clerk's Office, the following table lists the largest taxpayers in the City, their November 2016 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 $11,465,864 2.43% SFC Global Supply Chain Inc Manufacturing 7,189,283 1.52% Central Mall Realty Holding LLC Retail Shopping Center 6,311,063 1.34% RAF Salina LLC Regional Shopping Center 5,106,493 1.08% Sams Real Estate Business Trust/Walmart Discount Store 4,805,059 1.02% Salina Regional Health Centers Hospital and Medical Offices 4,318,078 0.91% Kansas Gas Service Utility 3,644,537 0.77% Menard Inc Home Improvement Store 2,506,064 0.53% Great Plains Manufacturing Manufacturing 2,327,353 0.49% Union Pacific Railroad 2,288,512 0.48% Total $49,962,306 10.57% 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: Sales Tax Year 2016 2015 2014 2013 2012 2011 2010 2009 Value $97,910,328 56,989,007 24,214,432 29,285,213 54,863,040 19,752,335 52,358,547 12,192,481 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 A-17 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. 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 8.75%, which consists of 6.5% imposed by the State, 1% countywide local option sales tax, and 1.25% citywide local option sales tax. The following table lists the local- option sales tax receipts of the City of Salina in the years indicated. 2016 1992 City's Portion of .75% Citywide .50% Citywide 1% Countywide Local Option Local Option Local Option Year Sales Tax Recei~ts Sales Tax Recei~ts Sales Tax Recei~ts 2017(l) $2,123,177 $2,653,971 $2,457,183 2016 4 I 648 I 28012) 5,810,350 7,312,618 2015 4,610,032 5,762,541 7,376,708 2014 4,488,672 5,610,840 7,188,934 2013 4,313,345 5,391,681 6,998,806 2012 4,244,974 5,306,218 6,992,853 2011 4,111,910 5,139,888 6,755,629 2010 3,886,733 4,858,416 6,394,838 11lAs of April, 2017 12icollections prior to October 1, 2016 represent taxes attributable to a .40% sales tax that was originally imposed November 2008. Source: City Clerk Budgeting Procedures Applicable Kansas statutes require that budgets be legally adopted for all funds (including debt service and enterprise funds} unless exempted by a specific statute. All budgets are prepared utilizing the modified accrual basis further modified by the encumbrance method of accounting. For example, commitments such as purchase orders and contracts, in addition to disbursements and accounts payable, are recorded as expenditures. The statutes provide that the budget for the succeeding calendar year must be prepared on or before August 1 and published on or before August 5 of each year. A public hearing is required to be held on or before August 15, with the final budget being adopted on or before August 25 of each year. Original appropriations may be modified by supplemental appropriations and transfers among budget categories. The City Commission must approve all significant changes. 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 A-18 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 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." A-19 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. 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 11.5% 25.0 30.0 25.0 12.0 12.0 30.0 A-20 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% 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 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 2016 Preliminary Kansas Appraisal/Sales Ratio Study, the equalization ratio for residential real property in Saline County was 11.36%, and commercial and industrial property was 23.85%. REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY A-21 APPENDIX B Omnibus Continuing Disclosure Undertaking CITY OF SALINA, KANSAS OMNIBUS CONTINUING DISCLOSURE UNDERTAKING DATED AS OF JULY 15, 2013 OMNIBUS CONTINUING DISCLOSURE UNDERTAKING TIDS OMNIBUS CONTINUING DISCLOSURE UNDERTAKING (the "Disclosure Undertaking"), dated as of July 15, 2013, is executed and delivered by the City of Salina, Kansas (the "Issuer"). RECITALS 1. This Disclosure Undertaking is executed and delivered by the Issuer, pursuant to a resolution adopted by the governing body of the Issuer to consolidate the continuing disclosure obligations of the Issuer with respect to the Bonds and the Prior Undertakings, both as defined below, to enhance efficiency of the administration of Prior Undertakings and promote timely disclosure by the Issuer. 2. The Issuer is executing this Disclosure Undertaking for the benefit of the Beneficial Owners of the Bonds and in order to assist each Participating Underwriter in complying with the SEC Rule, as defined below. The Issuer is the only "obligated person," as defined in the SEC Rule, with responsibility for continuing disclosure hereunder. 3. This Disclosure Undertaking shall apply with respect to any series of Bonds issued prior to the effective date hereof and subject to the SEC Rule. In consideration of the foregoing, the Issuer covenants and agrees as follows: Section 1. Definitions. In addition to the definitions set forth in the Bond Resolution, which apply to any capitalized term used in this Disclosure Undertaking, unless otherwise defined herein, the following capitalized terms shall have the following meanings: "Annual Report" means any Annual Report filed by the Issuer pursuant to, and as described in, Section 2 of this Disclosure Undertaking, which may include the Issuer's CAFR, so long as the CAFR contains the Financial Information and Operating Data. "Beneficial Owner" means, with respect to a series of Bonds, any registered owner of any Bonds of such series and any person which: (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds of such series (including persons holding Bonds through nominees, depositories or other intermediaries); or (b) is treated as the owner of any Bonds of such series for federal income tax purposes. "Bond Insurer" means the provider of the bond insurance policy, if any, for any series of Bonds. "Bond Resolution" means collectively the ordinance(s) and/or resolution(s) of the governing body of the Issuer authorizing the issuance of each series of the Bonds. "Bonds" means all bonds, notes, installment sale agreements, leases or certificates intended to be a debt obligation of the Issuer identified on Schedule 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. "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 B-1 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. "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. B-2 "System" means the entire combined waterworks plant and system and sewerage plant and system owned and operated by the Issuer for the production, storage, treatment and distribution of water, and for the collection, treatment and disposal of sewage, to serve the needs of the Issuer and its inhabitants and others, including all appurtenances and facilities connected therewith or relating thereto, together with all extensions, improvements, additions and enlargements thereto hereafter made or acquired by the Issuer. Section 2. Provision of Annual Reports. (a) The Issuer shall, or shall cause the Dissemination Agent to, not later than 180 days after the end of the Issuer's Fiscal Year, commencing with the Fiscal Year ended in 2013, file with the Repository the Issuer's Annual Report, consisting of the Financial Information and Operating Data described as follows: (1) Financial Information . The financial statements of the Issuer and the System for such prior Fiscal Year, accompanied by an audit report resulting from an audit conducted by an Independent Accountant in conformity with generally accepted auditing standards. Such financial statements will be prepared on a modified accrual basis of accounting other than GAAP for all governmental funds, expendable trust and agency funds. The accrual basis of accounting is used for proprietary and nonexpendable trust funds. A more detailed explanation of the accounting basis is contained in Appendix A of the Official Statement. If such audit report is not available by the time the Annual Report is required to be filed pursuant to this Section, the Annual Report shall contain summary unaudited financial information and the audit report and accompanying financial statements shall be filed in the same manner as the Annual Report promptly after they become available. The method of preparation and basis of accounting of the Financial Information may not be changed to a basis less comprehensive than contained in the Official Statement, unless the Issuer provides notice of such change in the same manner as for a Material Event under Section 3(b) hereof. (2) Operating Data. Updates as of the end of the Fiscal Year of certain financial information and operating data described in Exhibit A, with such modifications to the formatting and general presentation thereof as deemed appropriate by the Issuer; provided, any substantive change to information provided shall be effected only in accordance with Section 6 hereof. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues with respect to which the Issuer is an "obligated person" (as defined by the SEC Rule), which have been filed with the Repository, the MSRB or the SEC. If the document included by reference is a final official statement, it must be available from the Repository. The Issuer shall clearly identify each such other document so included by reference. In each case, the Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in this Section; provided that the audit report and accompanying financial statements may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the Issuer's Fiscal Year changes, it shall give notice of such change in the same manner as for a Material Event under Section 3(b). (b) From and after such time that Section (b)(S) of the SEC Rule applies to any series of Bonds, if the Annual Report is not filed within the time period specified in subsection (a) hereof, the Issuer shall send a notice to the Repository in a timely manner, in substantially the form attached as Exhibit B. B-3 (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. (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. B-4 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 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 B-5 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 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. B-6 ( e) If a provision of this Disclosure Undertaking is amended or waived with respect to a series of Bonds pursuant to subsection (d), the Issuer shall describe such amendment or waiver in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Issuer. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements: (1) notice of such change shall be given in the same manner as for a Material Event under Section 3(b); and (2) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Section 7. Additional Information. Nothing in this Disclosure Undertaking shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Undertaking or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is required by this Disclosure Undertaking. If the Issuer chooses to include any information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is specifically required by this Disclosure Undertaking, the Issuer shall have no obligation under this Disclosure Undertaking to update such information or include it in any future Annual Report or notice of occurrence of a Material Event. Section 8. Noncompliance. In the event of a failure of the Issuer or the Dissemination Agent, if any, to comply with any provision of this Disclosure Undertaking with respect to a series of Bonds, any Participating Underwriter or any Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order, to cause the Issuer or the Dissemination Agent, if any, as the case may be, to comply with its obligations under this Disclosure Undertaking. Noncompliance with the provisions of this Disclosure Undertaking shall not be deemed an Event of Default under the Bond Resolution or the Bonds, and the sole remedy under this Disclosure Undertaking in the event of any failure of the Issuer or the Dissemination Agent, if any, to comply with this Disclosure Undertaking shall be an action to compel performance. Section 9. Notices. Any notices or communications to or among the parties referenced in this Disclosure Undertaking shall be given the Notice Representatives at the Notice Addresses set forth in the Bond Resolution for each series of Bonds; provided notice to the Dissemination Agent shall be given at the Notice Address set forth on Exhibit C hereto. Section 10. Electronic Transactions. Actions taken hereunder and the arrangement described herein may be conducted and related documents may be stored by electronic means. Copies, telecopies, facsimiles, electronic files and other reproductions of original documents shall be deemed to be authentic and valid counterparts of such original documents for all purposes, including the filing of any claim, action or suit in the appropriate court of law. Section 11. Beneficiaries. This Disclosure Undertaking shall inure solely to the benefit of the Issuer, the Dissemination Agent, if any, each Participating Underwriter and Beneficial Owners from time to time with respect to a series of Bonds, and shall create no rights in any other person or entity. Section 12. Severability. If any provision in this Disclosure Undertaking, the Bond Resolution or the Bonds relating hereto, shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions of this Disclosure Undertaking shall not in any way be affected or impaired thereby. B-7 Section 13. Governing Law. This Disclosure Undertaking shall be governed by and construed in accordance with the Jaws of the State of Kansas. [BALANCE OF TIIlS PAGE INTENTIONALLY LEFT BLANK] B-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 B-9 (Signature Page to Continuing Disclosure Undertaking) SCHEDULE] DESCRIPTION OF BONDS SUBJECT TO DISCLOSURE UNDERTAKING General Obligation Bonds (Base CUSIP No.: 794743) Description of Indebtedness 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 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 General Obligation Internal Improvement Bonds, Series 2017-A Dated Date 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 07-27-17 Temporary Notes (Base CUSIP No.: 794743) Description of Indebtedness General Obligation Temporary Notes, Series 2016-1 General Obligation Temporary Notes, Series 2017-1 Dated Date 02-10-16 07-27-17 Revenue Bonds {Base CUSIP No.: 794811) Description of Indebtedness Water and Sewage System Revenue Bonds, Series 2011 B-10 Dated Date 04-15-11 Final Maturitv 10-01-17 10-01-17 07-01-28 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 10-01-36 10-01-31 10-01-37 Final Maturity 08-01-17 08-01-18 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. B-11 EXHIBITB NOTICE TO REPOSITORY OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Name of Bond Issue: Name of Obligated Person: Date of Issuance: City of Salina, Kansas [Description of Bonds], Series L_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 ____________ _ By _____________ , as Dissemination Agent cc: City of Salina, Kansas B-12 EXHIBITC ACCEPTANCE OF DISSEMINATION AGENT Name of Issuer: City of Salina, Kansas Name of Bond Issue: [Description of Bonds], Series L_], dated as of [Bonds Dated Date] Dissemination Agent: Notice Address of Dissemination Agent: __________ _, having been duly appointed by the City of Salina, Kansas to act in the capacity of Dissemination Agent pursuant to the Disclosure Undertaking, to which this acceptance is attached, accepts such duties and responsibilities set forth therein. Dated: B-13 APPENDIX C December 31, 2015 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, 2015, including financial statements as audited by the firm of Mize Houser & Company, P.A., Certified Public Accountants, Topeka, Kansas. CITY OF SALINA, KANSAS Financial Statements and Schedule of Expenditures of Federal Awards For the Fiscal Year Ended December 31, 2015 Independent Auditor's Report Basic Financial Statements: CITY OF SALINA, KANSAS Financial Statements and Schedule Of Expenditures of Federal Awards For the year ended December 31, 2015 TABLE OF CONTENTS 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 Net Position -Proprietary Funds Statement of Cash Flows -Proprietary Funds Statement of Assets and Liabilities -Agency Funds Notes to the Basic Financial Statements Required Supplementary Information Schedule of Funding Progress and Schedule of Employer Contributions KPERS Pension Plan Schedule of City's Proportionate Share of the Net Pension Liability Schedule of City Contributions 1 - 3 4 5 6 7 8 9 10 11 12 13 14 15 16 -17 18 19-49 50 51 51 CITY OF SALINA, KANSAS Financial Statements and Schedule Of Expenditures of Federal Awards For the year ended December 31, 2015 TABLE OF CONTENTS -CONTINUED 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 -Non major 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 Arts & Humanities Fund Debt Service Fund Solid Waste Disposal Fund Water and Sewer Fund Sanitation Fund Golf Course Fund Workers' Compensation Reserve Fund Health Insurance Fund Central Garage 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 52-53 54 55 56-57 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 Financial Statements and Schedule Of Expenditures of Federal Awards For the year ended December 31, 2015 TABLE OF CONTENTS-CONTINUED 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 the Uniform Guidance 85 86 87-90 91 -92 93-94 Mayor and City Commissioners City of Salina, Kansas Report on the Financial Statements INDEPENDENT AUDITOR'S REPORT • MIZE~JiOUSER '-..,Y.,..OMPANYP.A. We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Salina, Kansas, as of and for the year ended December 31, 2015, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on the financial statement based on our audit. 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 Kansas Municipal Audit and Accounting Guide. Those standards require we plan and perform 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 and deferred outflows of resources of $46,404,451 as of December 31, 2015 and total revenues of $4,170,264 for the year then ended, and the Housing Authority of the City of Salina which statements reflect total assets and deferred outflows of resources of $7,561,852 as of June 30, 2015 and total revenues of $2,364,932 for the year then ended, which are discretely presented component units in the accompanying financial statements. Those financial statements were audited by other auditors whose reports thereon have been furnished to us, and our opinion, insofar as it relates to the amounts included for the Salina Airport Authority and the Housing Authority of the City of Salina is based solely on the reports of the other auditors. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. www.mlzehouser.com • mhco@mlzehouser.com 534 S Kansas Ave, Suite 700 • Topeka, KS 66603-3465 • 785.233.0536 p • 785.233.1078 I 534 S Kansas Ave, Suite 400 • Topeka, KS 66603-3454 • 785.234.5573 p • 785.234.1037 I 7101 College Blvd, Suite 900 • Overland Park, KS 66210-1984 • 913.451 .1882 p • 913.451.2211 I 211 E Eighth Suite A• Lawrence, KS 66044-2771 • 785.842.8844 p • 785.842.9049 I 1 Opinions In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Salina, Kansas, as of December 31 , 2015, and the respective changes in financial position and cash flows, where applicable, thereof 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. Emphasis of Matter Change in Accounting Principle As described in Note 3 to the financial statements, the City implemented GASS 68 during the current year. As a result of the implementation, a restatement was made to the net position for the proportionate share of the City's net pension liability at December 31 , 2014. Our opinion is not modified with respect to this matter. Prior Period Restatement As discussed in Note 3 to the financial statements, certain errors resulting in amounts previously reported as expenses, capital assets, deferred charges on bond issuances and capital leases as of December 31 , 2014, were discovered by management of the City during the current year. Accordingly, these amounts have been restated in the December 31 , 2015, 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 The City has not presented management discussion and analysis that accounting principles generally accepted in the United States of America has determined is necessary to supplement, although not required to be a part of, the basic financial statements. Accounting principles generally accepted in the United States of America require that the schedules of funding progress on page 50, the schedule of the City's proportionate share of the net pension liability on page 51, and the schedule of City contributions on page 51 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 combining and individual nonmajor fund financial statements and schedules 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 Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 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 directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying account and other records used to prepare the 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. 2 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated June 26, 2017, 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 June 26, 2017 P4 3 CITY OF SALINA, KANSAS STATEMENT OF NET POSITION December 31, 2015 Prima~ Government Com~nent Units Total Total Total Salina Salina Governmental Business-type Primary Housing Airport Activities Activities Government Aulhori)X Aulhori)X ASSETS AND DEFERRED OUTLFOWS OF RESOURCES Current assets: Cash and investments $ 14,508,203 $ 28,415,391 $ 42,923,594 $ 1,631,114 $ 719,084 Receivables (net of allowance for uncollectibles) Accounts 1,840,153 1,515,432 3,355,585 29,813 127,534 Taxes 11,809,338 11,809,338 Interest 10,735 16 10,751 Inventory 305,703 488,578 794,281 26,112 Restricted cash and investments 153,627 Prepaid expenses 36 982 157,892 Total current assets 28,474,132 30,419,417 58,893,549 1877648 1004510 Noncurrent assets: Capital assets, nondepreciable Construction in progress 19,019,623 13,579,083 32,598,706 144,403 906,356 Land 23,263,030 1,546,806 24,809,836 1,456,891 9,843,426 Capital assets, depreciable 245,001 ,219 131,357,885 376,359,104 8,122,489 71,332,228 Less: Accumulated depreciation 106,042,539 55,887,493 161,930,032 4,060,239 36,688,486 Total noncurrent assets 181,241,333 90,596,281 271,837,614 5,663,544 45,393,524 Total assets 209,715,465 121,015,698 330,731,163 7,541,192 46,398,034 Deferred outflows of resources: Pension -difference between expected and actual experience 149,622 149,622 Pension -contributions subsequent to the measurement date 1,784,758 185,364 1,970,122 20,660 6,417 Pension -changes in proportion 345 136 481 Deferred charge on bond issuance 336,828 274,528 611,356 Total deferred outflows of resources 2,271 ,553 460,028 2,731 ,581 20,660 6,417 Total assets and deferred outflows of resources $ 211 ,987,018 $ 121 ,475,726 $ 333,462,744 $ 7,561,852 $ 46,404,451 Liab,nies: Current liabilities: Accounts payable $ 2,203,492 $ 1,019,095 $ 3,222,587 $ 36,555 $ 91 ,126 Retainage payable 503,396 387,051 890,447 Accrued liabilities 456,533 456,533 37,718 139,332 Matured bond principal and interest 145 145 Accrued interest payable 410,475 280,121 690,596 319,615 Deposits payable 178,910 178,910 94,979 Current portion of compensated absences 1,482,001 321,439 1,803,440 2,307 Current portion of temporary notes payable 5,995,000 5,995,000 Current portion of loans payable 387,077 387,077 Current portion of revenue bonds payable 663,696 663,696 Current portion of financing leases payable 158,192 158,192 55,696 Current portion of special assessment debt payable 19,197 Current portion of general obligation bonds payable 5,216,252 1,073 573 6,289,825 1,035,000 Total current liabilities 16,425,486 4,310,962 20,736,448 171,559 1,659,966 Noncurrent liabilities: Accrued liabilities 100,508 100,508 325,559 Compensated absences 1,396,289 305,153 1,701 ,442 20,764 Security deposits returnable 37,702 Net OPEB obligation 4,267,321 416,684 4,684,005 Net pension liability 23,598,676 2,824,797 26,423,473 545,977 Loans payable 5,366,543 5,366,543 Revenue bonds payable 13,285,443 13,285,443 Financing leases payable 321,174 321 ,174 Special assessment debt payable 11,268 General obligation bonds payable 45,624,380 7,466,199 53,090,579 21,756,330 Lanctfill post-closure care liabilities 1,902,252 1,902,252 Total noncurrent liabilities 75,308,348 31,567,071 106,875,419 346,323 22,351 ,277 Total liabilnies 91 ,733,834 35,878,033 127,611,867 517,882 24,011,243 Deferred inflows of resources: Unavailable revenue -property taxes 11,270,014 11,270,014 10,265 44,212 Pension -difference between expected and actual experience 478,347 79,965 558,312 113,729 Pension -net difference between projected and actual earnings on pension plan investments 801,065 109,959 911,024 Pension -changes of assumptions 264,622 39,479 304,101 Pension -change in proportion 735,733 139,038 874,771 Total deferred inflows of resources 13,549,781 368,441 13,918,222 10,265 157,941 Total liabilities and deferred inflows of resources $ 105,283,615 $ 36,246,474 $ 141,530,089 $ 528,147 $ 24,169,184 Net Position Net investment in capital assets $ 130,400,701 $ 68,107,370 $ 198,508,071 $ 5,663,544 $ 22,516,034 Restricted for: Permanent funds: Expendable 478,999 478,999 28,140 Debt service 745,339 1,512,125 2,257,464 Unrestricted [24,921,636) 15,609,757 [9,311 ,879) 1,342,021 [280,767) Total net position $ 106,703,403 $ 85,229,252 $ 191,932,655 $ 7,033,705 $ 22,235,267 The notes to the basic financial statements are an integral part of this statement. 4 Governmental activities: General government Public safety Public wori<s Public health and sanitation Culture and recreation Planning and development Interest on long-term debt Total governmental activities Business-type activities: Solid Waste Disposal Water and Sewer Sanitation Golf Course Total business-type activities Total primary government Component units: Salina Housing Authority Salina Airport Authority Total component units CITY OF SALINA, KANSAS STATEMENT OF ACTIVITIES For the Year Ended December 31, 2015 Net [Expenses] Revenue and Chanaes in Net Position Program Revenues Prima!}'. Government Operating Capital Total Total Total Charges for Grants and Grants and Governmental Business-type Primary Exe!!nses Services Contributions Contributions Activities Activities Government $ 10,742,987 $ 3,151,436 $ 754,016 $ $ [6,837,535] $ $ [6,837,535] 21,083,431 4,600,375 682,827 [15,800,229] [15,800,229] 9,049,101 192,553 1,431 ,755 (7,424,793] [7,424,793] 994,680 45,566 184,555 [764,559] [764,559] 6,516,702 1,500,871 195,097 [4,820,734] [4,820,734] 1,915,399 73,254 145,970 [1,696,175] [1,696,175] 1,774,410 [1,774,410) [1,774,410) 52,076,710 9,564,055 3,394,220 [39,118,435) [39,118,435) 1,766,480 2,518,532 752,052 752,052 11 ,711 ,823 19,058,855 7,347,032 7,347,032 1,909,251 2,528,829 619,578 619,578 820,539 819,945 (594) [594) 16,208,093 24,926,161 8,718,068 8,718,068 $ 68,284,803 $34,490,216 $ 3,394,220 $ [39,118,435) 8,718,068 [30,400,36ZJ $ 2,328,836 $ 369,355 $ 1,773,035 $ 97,525 5,644,898 1,787,840 217,112 $ 7,973,734 $ 2,157,195 $ 1,773,035 $ 314,637 General Revenues: Property taxes levied for General purposes 8,242,146 8,242,146 Debt service 2,765,813 2,765,813 Motor vehicle tax General purposes 1,312,358 1,312,358 Sales tax General purposes 12,930,811 12,930,811 Selective purposes 4,558,035 4,558,035 Other taxes General purposes 7,362,412 7,362,412 Investment revenues 86,123 56,031 142,154 Reimbursements 100 100 Miscellaneous 2,371,060 132,402 2,503,462 Transfers, net 3,819,309 [3,781,685) 37,624 Subtotal general revenues 43,448,067 [3,593,152) 39,854,915 Change in net position 4,329,632 5,124,916 9,454,548 Net position -beginning 127,878,328 82,778,234 210,656,562 Prior period adjustment [25,504,55ZJ [2,673,898) [28,178,455) Net position -beginning, restated 102,373,771 80,104,336 182,478,107 Net position -ending $ 106,703,403 $ 85,229,252 $ 191,932,655 The notes to the basic financial statements are an integral part of this statement. 5 Component Units Salina Salina Housing Airport Authori!)'. Authori!)'. $ $ [88,921] [3,639,946) [88,921) [3,639,946) 2,028,074 7,242 286 117,775 136,952 125,017 2,165,312 36,096 [1,474,634) 7,373,068 24,247,520 [375,459) [537,619) 6,997,609 23,709,901 $7,033,705 $22,235,267 ASSETS Cash and investments Receivables (net) Accounts Taxes Interest Inventory Due from other funds Cash with fiscal agent Total assets LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable Retainage payable Due to other funds Matured principal and interest Temporary notes payable Total liabilities Deferred inflows of resources Unavailable revenue -property taxes Total deferred inflows of resources Fund balance: Nonspendable Restricted Committed Assigned Unassigned Total fund balances Total liabilities, deferred inflows of resources and fund balances CITY OF SALINA, KANSAS BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2015 Tourism and General Convention $ 3,958,353 $ 216,807 $ 1,015,867 366,306 8,403,904 10,735 111,614 20,861 $ 13,521,334 $ 583,113 $ $ 448,541 $ 418,824 $ 448,541 8,232,607 8,232,607 111,614 198,717 4,529,855 4,840,186 418,824 164,289 164,289 Special Gas 402,415 314,751 717,166 77,524 1,495 79,019 532,678 105,469 638,147 $13,521,334 $ 583,113 $ 717,166 Schilling Other Total Sales Tax Capital Debt Capital Governmental Governmental Capital Improvement Service Projects Funds Funds $ 1,622,631 $ 5,554,768 $ 692,063 $ [3,499,129) $ 3,603,387 $ 12,551,295 454,369 3,611 1,840,153 3,090,683 11,809,338 10,735 111,614 20,861 145 145 $ 1,622,631 $ 5,554,768 $ 3,782,891 $ [3,044,760] $ 3,606,998 $ 26,344,141 $ 2,314 $ 19,317 $ -$ 995,819 $ 182,814 $ 2,145,153 501,901 503,396 20,861 20,861 145 145 5,995,000 5,995,000 2,314 19,317 145 7,492,720 203,675 8,664,555 3,037,407 11,270,014 3,037,407 11,270,014 111,614 745,339 1,350,260 2,792,566 1,495,985 5,304,667 1,894,788 8,695,440 124,332 230,784 158,275 817,577 [10,537,480] [6,007,625] 1,620,317 5,535,451 745,339 [10,537,480] 3,403,323 6,409,572 $ 1,622,631 $ 5,554,768 $ 3,782,891 $ [3,044,760] $ 3,606,998 $ 26,344,141 The notes to the basic financial statements are an integral part of this statement. 6 CITY OF SALINA, KANSAS RECONCILIATION OF THE TOTAL GOVERNMENTAL FUND BALANCE TO NET POSITION OF GOVERNMENTAL ACTIVITIES December 31, 2015 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 Pension contributions are reported an expense in the funds and as a deferred outflow of resources in the governmental activities in the statement of net position. Pension fundings are reported an a revenue in the funds and as a deferred inflow of resources in the governmental activities in the statement of net position. 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 Net pension liability Bonds payable Financing leases payable Accrued interest on the bonds Net Position of Governmental Activities 287,060,630 105,861,177 2,841,581 4,267,321 23,457,286 50,840,632 479,366 410,475 The notes to the basic financial statements are an integral part of this statement. 7 $ 6,409,572 336,828 181,199,453 1,925,440 [2,261,325] 1,390,096 [82,296,661] $ 106,703,403 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS For the Year Ended December 31 , 2015 Tourism and Special General Convention Gas REVENUES: Taxes Real estate taxes $ 8,028,863 $ -$ Delinquent taxes 213,283 Motor vehicle taxes 1,001,054 General sales taxes 12,930,811 Selective sales taxes Other taxes 5,663,843 1,698,569 Intergovernmental 975,720 1,422,255 Special assessments Licenses and permits Charges for services 6,046,903 Investment revenue 368 1,655 Reimbursements Donations Miscellaneous 498,557 Total revenues 35,359,034 1,698,937 1,423,910 EXPENDITURES: Current General government 5,342,433 Public safety 21 ,267,630 Public works 4,875,641 453,740 Public health and sanitation 754,347 Culture and recreation 4,039,856 Planning and development 586,358 1,202,932 Miscellaneous Capital outlay 1,041,690 1,256,839 Debt service Principal retirement Interest and other charges Total expenditures 37,907,955 1,202,932 1,710,579 Excess (deficiency] of revenue and other sources over (under] expenditures and other (uses] [2,548,921) 496,005 [286,669) OTHER FINANCING SOURCES [USES] Issuance of bonds Bond premium Transfers in 3,644,350 170,000 Transfers [out] [682,000] [882,839] [174,913] Total other financing sources [uses] 2,962,350 [882,839) [4,913] Net change in fund balance 413,429 [386,834] [291,582] Fund balance -Beginning of year 4,254,432 551,123 929,729 Restatement of prior year fund balance 172,325 Fund balance -Beginning of year, as restated 4,426,757 551,123 929,729 Fund balance -End of year $ 4,840,186 $ 164,289 $ 638,147 Schilling Other Total Sales Tax Capital Debt Capital Governmental Governmental Capital Improvement Service Projects Funds Funds $ -$ -$ 2,700,326 $ -$ -$ 10,729,189 65,487 278,770 311 ,304 1,312,358 12,930,811 4,204,376 353,659 4,558,035 7,362,412 986,746 3,384,721 1,679,019 1,679,019 9,500 9,500 368,999 6,415,902 4,610 14,302 4,134 16,393 5,076 46,538 491 ,274 491,274 83,391 83,391 11,925 1,226,650 115,845 1,852,977 4,208,986 14,302 4,772,195 1,734,317 1,923,216 51 ,134,897 5,342,433 21 ,267,630 3,281 5,332,662 227,249 981 ,596 1,619,484 5,659,340 120,915 1,910,205 35 35 2,686,381 2,074,552 17,965,828 502,090 25,527,380 6,095,285 155,000 6,250,285 1,602,053 94,483 136,030 1,832,566 2,686,381 2,074,552 7,697,338 18,060,311 2,764,084 74,104,132 1,522,605 [2,060,250] [2,925,143] [16,325,994] [840,868] [22,969,235] 1,210,000 5,615,000 6,825,000 368,598 368,598 2,052,618 412,248 1,363,306 7,642,522 [1 ,816,750] [326,711] [30,000] [3,913,213] [1,816,750] 3,262,618 6,069,135 1,333,306 10,922,907 [294,145] [2,060,250] 337,475 [10,256,859] 492,438 [12,046,328] 1,914,462 7,595,701 407,864 [280,621] 2,957,479 18,330,169 [46,594] 125,731 1,914,462 7,595,701 407,864 [280,621] 2,910,885 18,455,900 $ 1,620,317 $ 5,535,451 $ 745,339 $ [10,537,480] $ 3,403,323 $ 6,409,572 The notes to the basic financial statements are an integral part of this statement. 8 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 , 2015 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/[Loss] on sale of assets Proceeds from sale of assets Capital outlays (4,155] [74,685] 21 ,172,676 $ [12,046,328] Depreciation expense [5,496,914] 15,596,922 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. Pension payments are reported as expenditures in the governmental funds and do not affect the statement of net activities. 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 The notes to the basic financial statements are an integral part of this statement. 9 58,156 585,779 [295,790] 1,129,005 [6,948,397] 6,250,285 $ 4,329,632 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 , 2015 Variance with Final Budget Budgeted Amounts Positive Actual Original Final [Negative] Revenues Taxes Real estate taxes $ 8,028,863 $ 8,122,487 $ 8,122,487 $ [93,624] Delinquent taxes 213,283 177,337 177,337 35,946 Motor vehicle taxes 1,002,014 898,404 898,404 103,610 General sales tax 12,930,811 13,150,000 13,150,000 [219,189] Other taxes 5,663,843 6,387,350 6,387,350 [723,507] Intergovernmental 975,720 1,014,759 1,014,759 [39,039] Charges for services 5,602,453 6,046,842 6,046,842 [444,389] Investment revenue 3,883 21,668 21,668 [17,785] Miscellaneous 502,403 514,117 514,117 [11,714) Total revenues 34,923,273 36,332,964 36,332,964 [1,409,691) Expenditures General government 5,019,120 4,110,237 4,110,237 [908,883] Public safety 21 ,262,910 17,131,981 17,131,981 [4,130,929] Public works 4,857,772 3,485,760 3,485,760 [1 ,372,012] Public health and sanitation 754,347 [754,347] Culture and recreation 4,035,739 4,273,595 4,273,595 237,856 Planning and development 586,358 2,782,434 2,782,434 2,196,076 Capital outlay 1,030,631 5,000,971 5,000,971 3,970,340 Total expenditures 37,546,877 36,784,978 36,784,978 [761,899) Excess [deficiency] of revenues over [under] expenditures [2,623,604) [452,014) [452,014) [2,171 ,590) Other financing sources [uses] Transfers in 3,644,350 4,114,855 4,114,855 [470,505] Transfers [out] [682,000) [6,522,093) [6,522,093) 5,840,093 Total other financing sources [uses] 2,962,350 [2,407,238) [2,407,238) 5,369,588 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 338,746 [2,859,252) [2,859,252) 3,197,998 Unreserved fund balance, January 1 2,811,061 3,095,087 3,095,087 [284,026] Restatement of prior year fund balance 172,580 172,580 Unreserved fund balance, January 1, as restated 2,983,641 3,095,087 3,095,087 [111,446] Prior year cancelled encumbrances 9,569 9,569 Unreserved fund balance, December 31 3,331 ,956 $ 235,835 $ 235,835 $ 3,096,121 Reconciliation to GAAP Interest receivable 10,735 Accounts receivable 1,015,867 Taxes receivable 8,403,904 Inventory 111,614 Deferred revenue [8,232,607] Current year encumbrances 198,717 GAAP Fund Balance, December 31 $ 4,840,186 See independent auditor's report on the financial statements. 10 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) TOURISM AND CONVENTION FUND For the Year Ended December 31 , 2015 Budgeted Amounts Actual Original Final Revenues Other taxes $ 1,858,992 $ 1,420,000 $ 1,858,992 Investment revenue 368 Total revenues 1,859,360 1,420,000 1,858,992 Expenditures Planning and development 1,202,932 745,000 1,000,549 Total expenditures 1,202,932 745,000 1,000,549 Excess [deficiency] of revenues over [under] expenditures 656,428 675,000 858,443 Other financing sources [uses] Transfers [out] [882,839] [675,000] [882,838] Total other financing sources [uses] [882,839] [675,000] [882,838] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [226,411] [24,395] Unreserved fund balance, January 1 24,394 24,395 Unreserved fund balance, December 31 [202,017] $ -$ - Reconciliation to GAAP Accounts receivable 366,306 GAAP Fund Balance, December 31 $ 164,289 See independent auditor's report on the financial statements. 11 Variance with Final Budget Positive [Negative] $ 368 368 [202,383] [202,383] [202,015] [1] [1] [202,016] [1] $ [202,017] 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, 2015 Budgeted Amounts Actual Original Final Revenues Intergovernmental $ 1,418,249 $ 1,432,730 $ 1,432,730 Investment revenue 1,655 6,000 6,000 Total revenues 1,419,904 1,438,730 1,438,730 Expenditures Public works 453,740 520,040 520,040 Capital outlay 1,398,409 1,610,749 1,610,749 Total expenditures 1,852,149 2,130,789 2,130,789 Excess [deficiency] of revenues over [under] expenditures [432,245] [692,059] [692,059] Other financing sources [uses] Transfers in 170,000 170,000 170,000 Total other financing sources [uses] 170,000 170,000 170,000 Excess [deficiency] of revenues and other sources over [under] [262,245] [522,059] [522,059] expenditures and other [uses] Unreserved fund balance, January 1 376,059 522,059 522,059 Prior year cancelled encumbrances 104,113 Unreserved fund balance, December 31 217,927 $ -$ - Reconciliation to GAAP Taxes receivable 314,751 Current year encumbrances 105,469 GAAP Fund Balance, December 31 $ 638,147 See independent auditor's report on the financial statements. 12 Variance with Final Budget Positive [Negative] $ [14,481] [4,345] [18,826] 66,300 212,340 278,640 259,814 259,814 [146,000] 104,113 $ 217,927 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, 2015 Budgeted Amounts Actual Original Final Revenues Taxes Selective sales taxes $ 4,204,376 $ 4,250,000 $ 4,250,000 Investment revenue 4,610 5,000 5,000 Total revenues 4,208,986 4,255,000 4,255,000 Expenditures Capital outlay 1,919,720 3,034,588 3,034,588 Total expenditures 1,919,720 3,034,588 3,034,588 Excess [deficiency] of revenues over [under] expenditures 2,289,266 1,220,412 1,220,412 Other financing sources [uses] Transfers [out] [1,816,750] [1,816,750] [1,816,750] Total other financing sources [uses] [1,816,750] [1,816,750] [1,816,750] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 472,516 [596,338] [596,338] Unreserved fund balance, January 1 1,023,469 596,338 596,338 Unreserved fund balance, December 31 1,495,985 $ -$ - Reconciliation to GAAP Current year encumbrances 124,332 GAAP Fund Balance, December 31 $ 1,620,317 See independent auditor's report on the financial statements. 13 Variance with Final Budget Positive [Negative] $ [45,624] [390] [46,014] 1,114,868 1,114,868 1,068,854 1,068,854 427,131 $ 1,495,985 CITY OF SALINA, KANSAS STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31 , 2015 Business-Type Activities: Entererise Funds Total Internal Solid Waste Water and Enterprise Service Assets and deferred outflows of resources: Diseosal Sewer Sanitation Golf Course Funds Funds Current assets: Cash and investments $ 5,580,448 $ 21,603,888 $1,050,369 $ 180,686 $ 28,415,391 $1,956,763 Receivables (net of allowance for uncollectibles) Accounts 172,151 1,179,968 163,313 1,515.432 Interest 16 16 Inventory and prepaid supplies 462,329 26,249 488,578 194,089 Total current assets 5,752,615 23,246.185 1,213,682 206,935 30,419,417 2,150,852 Capital assets: Nondepreciable capital assets: Construction in progress 13,579,083 13,579,083 Land 682,000 844,806 5,000 15,000 1,546,806 Depreciable capital assets: Capital assets 11,268,787 116,965,237 2,067.804 1,056,057 131,357,885 223,242 Less: accumulated depreciation 7,249,313 46,495,243 1,362,220 780,717 55,887,493 181,362 Total capital assets 4,701,474 84,893,883 710,584 290,340 90,596,281 41,880 Total assets 10,454,089 108,140,068 1,924,266 497,275 121,015,698 2,192,732 Deferred outflows of resources: Pension -contributions subsequent to the measurement date 22,635 121,800 31,322 9,607 185,364 9,278 Pension -changes in proportion 17 89 23 7 136 7 Deferred charge on bond issuance 274,528 274,528 Total deferred outflows of resources 22,652 396,417 31,345 9,614 460,028 9,285 Total assets and deferred outflows of resources $10,476,741 $108,536,485 $1,955,611 $ 506,889 $121,475,726 $2,202,017 Liabilities and deferred inflows of resources: Current liabilities Accounts payable $ 62,073 $ 928,222 $ 10,767 $ 18,033 $ 1,019,095 $ 58,339 Retainage payable 387,051 387,051 Interest payable 14,286 265,835 280,121 Meter deposits payable 178,910 178,910 Current portion of compensated absences payable 41,152 191,306 56,215 32,766 321,439 18,832 Current portion of accrued claims payable 456,533 Current portion of loans payable 387,077 387,077 Current portion of general obligation bonds payable 355,000 718,573 1,073,573 Current portion of revenue bonds payable 663,696 663,696 Total current liabilities 472,511 3,720,670 66,982 50,799 4,310,962 533,704 Noncurrent liabilities: Compensated absences payable 39,066 181 ,614 53,368 31,105 305,153 17,877 Accrued claims payable 100,508 Net OPEB Obligation 85,620 288,894 42,170 416,684 Net pension liability 344,952 1,856,123 477,318 146,404 2,824,797 141,390 Payable from restricted assets Loans payable 5,366,543 5,366,543 General obligation bonds payable 1,520,000 5,946,199 7,466,199 Revenue bonds payable 13,285,443 13,285,443 Landfill post-closure care liabilities 1,902,252 1,902,252 Total noncurrent liabilities 3,891,890 26,924,816 530.686 219,679 31 ,567,071 259,775 Total liabilities 4,364,401 30,645,486 597,668 270,478 35,878,033 793,479 Deferred inflows of resources Pension -difference between expected and actual experience 9,764 52,544 13,512 4,145 79,965 4,003 Pension -net difference between projected and actual earnings on pension plan investments 13,428 72,252 18,580 5,699 109,959 5,504 Pension -changes of assumptions 4,821 25,941 6,671 2,046 39,479 1,976 Pension -change in proportion 16,979 91,359 23,494 7,206 139,038 6,959 Total deferred inflows of resources 44,992 242,096 62,257 19,096 368,441 18,442 Total liabilities and deferred inflows of resources $ 4,409,393 $ 30,887,582 $ 659,925 $ 2ag,574 $ 36,246.474 $ 811,921 Net position Net investment in capital assets $ 2,826,474 $ 64,279,972 $ 710,584 $ 290,340 $ 68,107,370 $ 41,880 Restricted Restricted for bond retirement 1,512,125 1,512,125 Unrestricted 3,240,874 11 ,856,806 585,102 [73,025) 15,609,757 1,348,216 Total net position $ 6,067,348 $ 77,648,903 $1,295,686 $ 217,315 $ 85,229,252 $1,390,096 The notes to the basic financial statements are an integral part of this statement. 14 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the Year Ended December 31, 2015 Business-Type Activities: Entererise Funds Solid Waste Water and Diseosal Sewer Sanitation Golf Course Operating revenues Charges for services $2,518,532 $19,058,855 $2,528,829 $ 819,945 Reimbursements 100 Miscellaneous 45,820 40,201 46,381 Total operating revenues 2,564,352 19,099,156 2,528,829 866,326 Operating expenses General government Public works 1,542,920 8,939,974 1,800,108 Recreation 791,454 Depreciation 147,010 1,877,979 150,143 29,085 Total operating expenses 1,689,930 10,817,953 1,950,251 820,539 Operating income [loss] 874,422 8,281 ,203 578,578 45,787 Nonoperating revenues [expenses] Investment revenue 12,854 40,456 2,482 239 Interest expense [76,636] [888,509] Gain/[loss] on disposal of fixed assets 86 1,551 41,000 Accretion of bond premium 11,560 Amortization of bond issuance costs (18,472] Total nonoperating revenues [expenses] [63,696) [853,414] 43,482 239 Income [loss] before transfers 810,726 7,427,789 622,060 46,026 Transfers from [to] other funds Transfers in Transfers [out] [626,000] [2,707,335] [448,350] Total transfers [626,000] [2,707,335] [448,350] Change in net position 184,726 4,720,454 173,710 46,026 Net position, January 1 5,793,843 75,000,010 1,649,695 334,686 Restatement 88,779 [2,071 ,561] [527,719] [163,397) Net position, January 1, restated 5,882,622 72,928,449 1,121,976 171,289 Net position, December 31 $6,067,348 $77,648,903 $1,295,686 $ 217,315 The notes to the basic financial statements are an integral part of this statement. 15 Total Internal Enterprise Service Funds Funds $24,926,161 $7,927,385 100 132,402 18,103 25,058,663 7,945,488 7,444,125 12,283,002 791,454 2,204,217 9,259 15,278,673 7,453,384 9,779,990 492,104 56,031 3,675 [965,145] 42,637 830 11 ,560 (18,472) [873,389) 4,505 8,906,601 496,609 100,000 [3,781,685] (10,000] [3,781 ,685] 90,000 5,124,916 586,609 82,778,234 1,030,288 [2,673,898) [226,801) 80,104,336 803,487 $ 85,229,252 $1,390,096 CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31 , 2015 Business-Type Activities: Entererise Funds Solid Waste Water and Diseosal Sewer Sanitation Golf Course Cash flows from operating activities Cash received from customers and users $2,596,537 $19,002,846 $2,519,816 $ 819,945 Cash paid to suppliers of goods or services [1 ,325,067] [5,513,851] [1 ,012,038] [464,504] Cash paid to employees [612,709] [3,238,860] [828,132] [347,246] Other operating receipts 45,820 40,201 46,381 Net cash provided by [used in] operating activities 704,581 10,290,336 679,646 54,576 Cash flows from capital and related financing activities Purchase and construction of capital assets [145,288] [6,121 ,603] [153,369] Proceeds from sale of capital assets 86 1,551 41 ,000 Principal payments -loans [454,482] Principal payments -general obligation bonds [330,000] [709,715] Principal payments -revenue bonds [640,000] Interest paid [76,795) [895,153) Net cash provided by [used in] capital and related financing activities (551,997) [8,819,402) [112,369) Cash flows from investing activities Interest received 12,854 40,456 2,482 239 Cash flows from noncapital financing activities Transfers in Transfers [out] [626,000) (2,707,335) [448,350) Net cash provided by (used in] noncapital financing activities [626,000) [2,707,335) [448,350) Net increase [decrease] in cash and cash equivalents [460,562) [1,195,945) 121,409 54,815 Cash and cash equivalents, January 1 6,041 ,010 22,799,833 928,960 125,871 Restatement Cash and cash equivalents, January 1, restated 6,041 ,010 22,799,833 928,960 125,871 Cash and cash equivalents, December 31 $5,580,448 $21,603,888 $1,050,369 $ 180,686 The notes to the basic financial statements are an integral part of this statement. 16 Total Internal Enterprise Service Funds Funds $24,939,144 $7,612,850 [8,315,460] [7,179,570] [5,026,947] [261,984] 132,402 18,103 11,729,139 189,399 [6,420,260] [36,685] 42,637 830 [454,482] [1,039,715] [640,000] [971,948) (9,483,768) [35,855) 56,031 3,674 100,000 [3,781,685) [10,000) [3,781 ,685) 90,000 [1,480,283) 247,218 29,895,674 1,898,749 (189,204) 29,895,674 1,709,545 $28,415,391 $1,956,763 CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (Continued) For the Year Ended December 31 , 2015 Business-Type Activities: Enterprise Funds Total Internal Reconciliation of operating [loss] 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] $ 874,422 $ 8,281 ,203 $578,578 $ 45,787 $ 9,779,990 $ 492,104 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 deferred outflows Increase [decrease] in accounts payable Increase [decrease] in retainage payable Increase [decrease] in accrued compensated absences Increase [decrease] in claims payable Increase [decrease] in landfill postclosure liabilities Increase [decrease] in net pension liability Increase [decrease] in net OBEB obligation Increase [decrease] in meter deposits payable Increase [decrease] in deferred inflows Net cash provided by [used in] operating activities $ 147,010 78,005 [77] [503,374] [15,000] 5,640 129,225 4,570 6,350 [22,190] 704,581 1,877,979 [63,903] 20,631 [421] 215,863 7,454 17,121 24,588 21,426 7,794 [119,399] $10,290,336 150,143 29,085 [9,013] [6,116] [108] [33] [15,654] 12,474 80 [22,271) 6,324 1,939 3,128 [30,704] [9,417] $679,646 $ 54,576 The notes to the basic financial statements are an integral part of this statement. 17 2,204,217 9,259 5,089 14,515 [5,729] [639] [32] [290,691] 12,723 [7,546] 570 2,832 [314,536] 129,225 37,421 1,873 30,904 7,794 [181,710] [9,095] $ 11 , 729, 139 $ 189,399 ASSETS CITY OF SALINA, KANSAS STATEMENT OF ASSETS AND LIABILITIES AGENCY FUNDS December 31 , 2015 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. 18 $ 127,441 $ 127,441 $ 127,441 $ 127,441 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 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 as part of 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, 2015. 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, 2015 Total change in unencumbered cash, year ended December 31, 2015 Total cash receipts, year ended December 31, 2015 Total cash receipts from City of Salina 19 (Kansas Regulatory Basis) Building $ Authority (Audited) 907,742 313,228 1,229,442 464,637 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 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. 20 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) Property taxes and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. 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 93% of the .40 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. 21 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 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 2016. 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. 22 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 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 23 Years 50 5 -15 6 -10 30-50 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 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, 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. 24 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, Fund Balance, and Net Position (Continued} 8. Fund Balances In the fund financial statements, governmental funds report fund balance in the following classifications: nonspendable, restricted, committed, assigned and unassigned. Nonspendable fund balance includes amounts that cannot be spent because they are either not in spendable form or legally or contractually required to be maintained intact. Restricted fund balance indicates that constraints have been placed on the use of resources either by being externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or imposed by law through constitutional provisions 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: Tourism Schilling Other Total and Special Sales Tax Capijal Debt Capital Governmental Governmental General ~onvention Gas Capital Improvement Service Projects Funds Funds Fund Balances: Nonspendable for: Inventory $ 111,614 $ -$ $ -$ $ -$ $ $ 111 ,614 Restricted for: Public works 532,678 532,678 Public health and sanitation 134 134 Culture and recreation 83,300 83,300 Planning and development 164,289 180,939 345,228 Debt payments 745,339 1,085,887 1,831,226 Committed for: Public safety [34,706) [34,706) Culture and recreation 591 ,926 591 ,926 Planning and development 6,196 6,196 Cemetery 473,236 473,236 Capital improvements 1,495,985 5,304,667 858,136 7,658,788 Assigned for: General government 42,643 42,643 Public safety 64,867 9,283 74,150 Public works 44,532 44,532 Culture and recreation 7,970 22,577 30,547 Capital improvements 38,705 105,469 124,332 230,784 126,415 625,705 Unassigned: 4,529,855 - - -[10,537,480] (6,007,625) --------- Total Fund Balances $4,840,186 $ 164,289 $638,147 $1,620,317 $ 5,535,451 $745,339 $ 110,537,480] $ 3,403,323 $ 6,409,572 25 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 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 outflows 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 City reports a 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. Additionally, the City reports changes in the pension liability proportion and contributions made to the pension plan after the measurement date of the net pension liability as deferred outflows of resources in the government activities. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. Unavailable revenue -property taxes, is reported in the governmental funds balance sheet and the governmental activities in the government-wide statement of net position. Additionally, the City reports differences between expected and actual experience, differences between projected and actual investment earnings, changes in assumptions, and changes in the pension liability proportion as deferred inflows for governmental activities. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. 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. 26 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (Continued) A. Budgetary Information (Continued} 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 2015 budget was amended for the Tourism and Convention Fund, the Bicentennial Center Fund, the Special Parks and Recreation Fund and the Special Alcohol Fund. The statutes permit management to transfer budgeted amounts between line items within an individual fund. However, such statutes prohibit expenditures in excess of the total amount of the adopted budget of expenditures of individual funds. Budget comparison statements are presented for each fund showing actual receipts and expenditures compared to legally budgeted receipts and expenditures. All legal annual operating budgets are prepared using the statutory basis of accounting, in which, revenues are recognized when cash is received, and expenditures include disbursements, accounts payable, and encumbrances. Encumbrances are commitments by the municipality for future payments and are supported by a document evidencing the commitment, such as a purchase order or contract. All unencumbered appropriations (legal budget expenditure authority) lapse at year end. A legal operating budget is not required for capital projects funds, non-major debt service funds, trust funds, and the following special revenue funds: Community Development Revolving, HOME 2012, 911 Communications, Fair Housing, Kenwood Cove Capital, Special Law Enforcement, Police Grants, Federal 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, 2015 in the Tourism and Convention Fund, and Special Alcohol 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, 2015, the statutory limit for the City was $137,096,966, providing a debt margin of $83,895,593. 27 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31 , 2015 Note 3. RESTATEMENT OF EQUITY On January 1, 2015, the City changed its method of accounting to adopt Government Accounting Standards Board Statement No. 68, Accounting and Financial Reporting for Pensions and the City decided to consolidate several funds. Additionally, following the close of the previous fiscal year, it was discovered that a capital lease had not been properly recorded, that several capital assets were misclassified or recorded incorrectly and that the deferred charge on bond issuance had been recorded incorrectly. Accordingly, the beginning net position/fund balances were restated, the effects of which are as follows: Bicentennial HUD Community Bicentennial Center Community Development Heritage Fair Governmental General Center Event Development Revolving Commission Housing Activities Fund Fund Fund Fund Fund Fund Fund Net Position/Fund Balance, December 31 , 2014 $ 127,878,328 $ 4,254,432 $ -$ 500 $ 74,578 $ 109,254 $ 4 $46,590 Capital Asset Adjustment [5,000] Deferred Charge on Bond Issuance Adjustment 36,791 Capital Lease Adjustment [456,370] Pension Liability [25,148,978] Fund Consolidation 69 000 172,325 500 [500) [74,578) 74 578 [4) [46,590) Net Position/Fund Balance, December 31 , 2014, Restated $ 102,373.771 $ 4,426.757 $ 500 $ $ -$ 183,832 $ -_$ __ - Solid Waste Water and Risk Central Information Disposal Sewer Sanitation Golf Course Management Garage Services Fund Fund Fund Fund Fund Fund Fund Net Position, December 31 , 2014 $ 5,793,843 $ 75,000,010 $1,649,695 $ 334,686 $ 25,593 $ 185,379 $ 43,407 Capttal Asset Adjustment 473,769 5,000 Pension Liability [384,990) [2,071,561) [532,719) [163,397) [157,801) Fund Consolidation [25,593) [43,407) Net Position, December 31, 2014, Restated $ 5,882,622 $ 72,928,449 $1,121,976 $ 171 ,289 $ -$ 27,578 $ 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. 28 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) A Deposits and Investments (Continued) At December 31, 2015, the City has the following investments: Investment Type Kansas Municipal Investment Pool U.S. Government Securities Total fair value Fair Value $ 305,350 S&P AAAf/S1 + 4,000,000 N/A $ 4,305,350 The municipal investment pool is under the oversight of the Pooled Money Investment Board. The board is comprised of the State Treasurer and four additional members appointed by the State Governor. The board reports annually to the Kansas legislature. State pooled monies may be invested in direct obligations of, or obligations that are insured as to principal and interest by the U.S. government or any agency thereof, with maturities up to four years . No more than 10 percent of those funds may be invested in mortgage-backed securities. In addition, the State pool may invest in repurchase agreements with Kansas banks or with primary government securities dealers. The City's investment policy provides direction on concentration risk. The City policy states that funds shall be diversified to reduce the extent of losses due to having an unbalanced portfolio in terms of maturities, instrument type, and issuers. Therefore, portfolio maturities shall be staggered to avoid undue concentration of assets in a specific maturity sector. Liquidity, free of market risk, shall be assured through practices insuring that the next disbursement date and payroll date are covered through maturing investments, marketable U.S. Treasury Bills, the Municipal Investment Pool, or money market accounts. Default risk shall be minimized by requiring that all security purchases occur on a delivery vs. payment basis, and that all securities are adequately collateralized. Risk of market price volatility shall be controlled through the adoption of a "buy and hold" strategy whereby the City holds each investment to maturity, coupled with maintenance of an adequate liquidity position to insure the ability to meet normal anticipated cash flow needs. 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. 29 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) B. Receivables C. Receivables as of year-end, including the applicable allowances for doubtful accounts, are as follows: General Primary Government Receivables: Accounts $ 4,955,200 Taxes 8,403,904 Interest 10,735 Gross receivables 13,369,839 Less: allowance for uncollectibles [3,939,333) Total $ 9,430,506 Primary Government Receivables: Accounts Taxes Interest Gross receivables Less: allowance for uncollectibles Total 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 $ $ Tourism and Convention 366,306 366,306 366,306 $ $ Special Gas -314,751 314,751 314,751 $ $ $ $ Debt Service -3,090,683 3,090,683 3,090,683 Solid Waste Diseosal 172,151 16 172,167 172,167 Capital Other __ P_ro~je_c_ts_ Governmental $ 454,369 $ 6,700 6,700 [3,089) $ -$ 3,611 Water and Sewer Sanitation $ 2,125,813 $ 294,223 2,125,813 294,223 [945,845) 1130,910) $ 1,179,968 $ 163,313 The composition of interfund balances as of December 31, 2015, is as follows: Fund Types General Fund Other Government Funds Due From $ 20,861 Due To $ 20,861 $ 20,861 $ 20,861 Subtotal $ 5,782,575 11,809,338 10 735 17,602,648 [3,942,422) $ 13,660,226 Total $ 8,374,762 11,809,338 10,751 20,194,851 l5,o19, 177) $ 15,175,674 $ 129,034 [1,500) 127,534 30,548 [1 ,100] 365 29,813 $ 157,347 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. 30 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) D. Capital Assets Capital asset activity for the year ended December 31, 2015, was as follows: Balance Adj. Bal. Balance 12/31/2014 Adjustments 12/31/2014 Additions Retirements 12/31/2015 City governmental activities: Governmental activities: Capital assets, not being depreciated Construction in progress $ 9,994,512 $ -$ 9,994,512 $ 19,503,590 $ 10,478,479 $ 19,019,623 Land 22,639,800 [5,000] 22,634,800 628,230 23,263,030 Capital assets, being depreciated Infrastructure 179,876,532 179,876,532 7,817,689 187,694,221 Buildings and improvements 39,351,042 39,351,042 2,588,1 05 41 ,939,147 Vehicles 9,031,615 9,031,615 909,379 401,974 9,539,020 Equipment, furniture and fixtures 5,698,144 [76,809] 5,621,335 240,847 33,351 5,828,831 Total capital assets 266,591,645 [81,809] 266,509,836 31,687,840 10,913,804 287,283,872 Less accumulated depreciation for: Infrastructure 73,828,690 73,828,690 3,543,536 77,372,226 Buildings and improvements 16,842,231 16,842,231 987,693 17,829,924 Vehicles 5,723,011 5,723,011 752,118 322,304 6,152,825 Equipment, furniture and fixtures 4 574 898 [76,809] 4,498,089 222,826 33,351 4,687 564 Total accumulated depreciation 100,968,830 [76,809] 100,892,021 5,506,173 355,655 106,042,539 Governmental activities capital assets, net $ 165,622,815 $ [5,000] $ 165,617,815 $ 26,181,667 $ 10,558,149 $ 181 ,241,333 Business-type activities: Capital assets, not being depreciated Construction in progress $ 27,865,017 $ 473,769 $ 28,338,786 $ 6,102,103 $ 20,861,806 $ 13,579,083 Land 1,541,806 5,000 1,546,806 1,546,806 Capital assets, being depreciated Infrastructure 79,261,098 79,261,098 20,729,261 99,990,359 Buildings and improvements 22,579,933 22,579,933 22,579,933 Vehicles 3,432,604 [13,469] 3,419,135 172,867 127,036 3,464,966 Equipment, furniture and fixtures 5,062,328 5,062,328 277,832 17 533 5,322,627 Total capital assets 139,742,786 465,300 140,208,086 27,282,063 21,006,375 146,483,774 Less accumulated depreciation for: Infrastructure 35,759,711 35,759,711 1,377,230 37,136,941 Buildings and improvements 11,951,354 11 ,951,354 422,642 12,373,996 Vehicles 2,652,477 [13,469] 2,639,008 186,822 127,036 2,698,794 Equipment, furniture and fixtures 3 477,772 3,477 772 217,523 17,533 3,677,762 Total accumulated depreciation 53 841 314 [13,469] 53,827,845 2,204,217 144,569 55,887,493 Business-type activities capital assets, net $ 85,901,472 $ 478,769 $ 86,380,241 $ 25,077,846 $ 20,861,806 $ 90,596,281 31 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) D. Capital Assets (Continued) The City's depreciation expense was charged to governmental functions as follows: E. Long-Term Debt Governmental Activities: General government $ Public safety Public works Public health 11,499 717,330 3,865,994 25,620 Culture and recreation 880,536 Planning and development 5,194 Total depreciation _$ __ 5_,5_0_6_, 1_7_3 Business-type Activities: Solid Waste Disposal $ 147,010 Water and Sewer 1,877,979 Sanitation 150,143 Golf Course Division 29,085 Total depreciation __ $ __ 2_,2_0_4 __ ,2_17_ Following is a summary of changes in long-term debt for fiscal year 2015: Restated Balance Balance January 1, December 31, 2015 Additions Deletions 2015 Governmental activities: General obligation bonds $ 50,033,555 $ 7,157,688 $ 6,350,611 $ 50,840,632 Financing lease 632,605 153,239 479,366 Accrued compensation 2,896,150 1,483,287 1,501,147 2,878,290 Temporary notes 5,000,000 5,995,000 5,000,000 5,995,000 Total $ 58,562,310 $ 14,635,975 $ 13,004,997 $ 60,193,288 Business-type activities: General obligation bonds $ 9,587,351 $ -$ 1,047,579 $ 8,539,772 Revenue bonds 14,592,836 643,697 13,949,139 Loans payable 6,208,102 454,482 5,753,620 Accrued compensation 626,022 327,364 326,794 626,592 Total $ 31,014,311 $ 327,364 $ 2,472,552 $ 28,869,123 Component Units: General obligation bonds $ 23,260,000 $ 705,000 $ 955,000 $ 23,010,000 Less unamortized discount [285,445] [66,775] [218,670] Financing lease 107,966 52,270 55,696 Special assessment debt 48,949 18,484 30,465 Total component units $ 23,131,470 $ 705,000 $ 958,979 $ 22,877,491 32 Amounts Due Within One Year $ 5,216,252 158,192 1,482,001 5,995,000 $ 12,851,445 $ 1,073,573 663,696 387,077 321,439 $ 2,445,785 $ 1,035,000 55,696 19,197 $ 1,109,893 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) The following is a detailed listing of the city's long-term debt including general obligation bonds, revenue bonds, temporary notes and loans payable: Primary Government Original Interest Bonds General Obligation Bonds Issue Rates Outstanding Internal Improvements 20068, due 10/1/2021 $ 885,000 4.00% to 4.50% $ 255,000 Internal Improvements 2007A, due 10/1/2027 6,545,000 4.25% to 4.625% 3,645,000 Internal Improvements 2008A, due 10/1/2023 3,720,000 3.25% to 4.00% 2,000,000 Internal Improvements 20088, due 7/1/2028 3,525,000 3.65% to 5.00% 2,870,000 Internal Improvements 2009A, due 10/1/2029 23,695,000 2.00% to 5.00% 14,443,552 Internal Improvements 2010A, due 10/1/2025 6,916,592 2.00% to 3.875% 3,402,727 Internal Improvements 20108, due 10/1/2023 7,973,044 0.50% to 3.00% 3,804,565 Internal Improvements 2011A, due 10/1/2031 6,587,985 2.00% to 5.00% 5,403,389 Internal Improvements 2012A, due 10/1/2027 2,383,903 1.00% to 2.45% 1,965,123 Refunding 20128, due 10/1/2020 3,817,108 1.00% to 1.40% 1,855,066 Internal Improvements 2013A, due 10/1 /28 1,369,380 3.00% to 4.00% 1,248,130 Internal Improvements 20138, due 10/1/33 4,485,073 0.60% to 3.65% 4,029,565 Internal Improvements 2014A, due 10/1/34 7,839,050 2.50% to 3.75% 7,300,599 Improvement and Refunding 2015A, due 10/1/35 7,157,688 2.00% to 4.00% 7,157,688 Total general obligation bonds $ 59,380,404 Revenue Bonds Revenue 2011, due 10/1/31 $ 16,193,925 2.00% to 4.60% $ 13,949,139 Total revenue bonds $ 13,949,139 Temporary Notes Series 2015-1, due 8/1/2016 $ 5,000,000 1.25% $ 5,995,000 Total temporary notes $ 5,995,000 Loans Payable Kansas Public Water Supply, due 8/1/2034 $ 9,330,000 2.12% $ 5,753,620 Total loans payable $ 5,753,620 Financing Lease, due 2/10/2017 Equipment, due 2/10/17 $ 30,000 3.54% $ 20,346 Equipment, due 5/8/18 146,235 3.28% 111,426 Software, due 10/10/18 456,370 3.19% 347,594 $ 479,366 33 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Component Unit Salina Airport Authority General Obligation Bonds Original Issue Interest Rates Bonds Outstanding General Obligation 2009A, due 2029 2,025,000 4.31% $ 2,025,000 General Obligation 2009B, due 2026 6,080,000 3.00% to 5.50% 4,365,000 General Obligation 2011A, due 2030 11,820,000 4.64% 11,040,000 General Obligation 2011 B, due 2031 2,505,000 4.28% 2,505,000 General Obligation 2015A, due 2025 3,075,000 2.14% 3,075,000 Less unamortized bond premium 47,883 Less unamortized bond discount [266,553) Total general obligation bonds 22,791,330 Special Assessment Debt Airport Industrial Center, due 2016 565,235 3.79% 17,225 Hangar 600 Sanitary Sewer, due 2021 27,599 4.47% 13,240 Total special assessment debt 30,465 Financing Lease, due 2016 425,000 6.609% 55,696 Total $ 22,877,491 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 2016 $ 6,289,825 $ 2,011,716 $ 8,301,541 2017 6,124,824 1,788,691 7,913,515 2018 6,229,824 1,579,823 7,809,647 2019 6,144,824 1,355,936 7,500,760 2020 3,994,823 1,169,155 5,163,978 2021-2025 17,601,659 17,601,659 35,203,318 2026-2030 9,768,212 1,411,882 11,180,094 2031-2035 3,226,413 287,933 3,514,346 Total $ 59,380,404 $ 27,206,795 $ 86,587,199 34 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) General Obligation -Component Units Bonds Interest Year Outstanding Due Total 2016 $ 1,035,000 $ 954,582 $ 1,989,582 2017 1,065,000 928,373 1,993,373 2018 1,090,000 898,938 1,988,938 2019 1,215,000 866,425 2,081,425 2020 1,255,000 827,990 2,082,990 2021-2025 6,570,000 3,346,207 9,916,207 2026-2030 8,865,000 1,609,729 10,474,729 2031 1,915,000 78,994 1,993,994 Total $ 23,010,000 $ 9,511,238 $ 32,521,238 Annual debt service requirements to maturity for revenue bonds to be paid with utility revenues: Revenue Bonds -Primary Government Bonds Interest Year Outstanding Due Total 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 748,696 466,242 1,214,938 2021-2025 4,163,480 1,901,889 6,065,369 2026-2030 5,098,480 968,219 6,066,699 2031 1,158,699 53,130 1,211,829 Total $ 13,949,139 $ 5,465,194 $ 19,414,333 Annual debt service requirements to maturity for temporary notes -to be paid through the issuance of general obligation bonds: Year 2016 $ Temporary Notes -Primary Government Bonds Interest Outstanding 5,995,000 $ 35 Due Total 74,354 $ 6,069,354 ------------ CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 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: Caeital Lease -Prima!l'. Government Lease Interest Year Outstanding Due Total 2016 $ 158,192 $ 15,463 $ 173,655 2017 163,306 10,350 173,656 2018 157,868 5,071 162,939 Total $ 479,366 $ 30,884 $ 510,250 Financing Lease -Component Units Lease Interest Year Outstanding Due Total 2016 $ 55,696 $ 2,776 58,472 Total $ 55,696 $ 2,776 $ 58,472 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 -Prima!l'. Government Loans Interest Year Outstanding Due Total 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 421,145 153,652 626,245 2021-2025 2,244,248 629,737 3,149,263 2026-2030 2,493,811 380,174 3,149,263 2031-2034 2,193,284 105,916 1,415,883 Total $ 8,951,000 $ 1,970,155 $ 10,830,264 36 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 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 2016 $ 19,198 $ 1,245 $ 20,443 2017 2,061 504 2,565 2018 2,153 412 2,565 2019 2,249 315 2,564 2020 2,350 215 2,565 2021 2,454 110 2,564 Total $ 30,465 $ 2,801 $ 33,266 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, 2015, total outstanding conduit debt was $51,265,000. Defeased debt. On July 29, 2015, the City issued $6,825,000 in general obligation refunding and internal improvement bonds with interest ranging from 2.00 to 4.00% to current refund all $1,320,000 of the outstanding Series 2006A general obligation improvement bonds with interest rates ranging from 3.80 to 4.35% and to refund all $5,000,000 of the outstanding Series 2014-1 temporary notes with an interest rate of 1.00%. The remaining proceeds will be used for capital improvements. The transaction resulted in an economic gain of $126,075 and a reduction of $146,642 in future debt payments. 37 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 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-cancelable 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. The total cost for this lease was $93,926 for the year ended December 31, 2015. The future minimum lease payments for the lease are as follows: Year Amount 2016 $ 93,926 2017 93,926 2018 93,926 2019 93,926 2020 93,926 2021-2025 469,633 2026-2027 187,854 Total $ 1,127,117 G. Reconciliation of Transfers A reconciliation of interfund transfers follows: Transfer In Transfer Out Major Funds: General fund $3,644,350 $ 682,000 Tourism and convention fund 882,839 Special gas fund 170,000 174,913 Sales tax capital fund 1,816,750 Debt service 2,052,618 Capital projects fund 412,248 326,711 Other governmental funds 1,363,306 30,000 Agency funds 37,624 Solid waste disposal fund 626,000 Water and sewer fund 2,707,335 Sanitation fund 448,350 Central garage fund 100,000 10,000 Total Transfers $7,742,522 $ 7,742,522 The City uses interfund transfers to share administrative costs between funds. 38 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 5. OTHER INFORMATION A. Defined Benefit Pension Plan Description of Pension Plan. The City participates in a cost-sharing multiple-employer pension plan (Pension Plan), as defined in Governmental Accounting Standards Board Statement No. 67, Financial Reporting for Pension Plans. The Pension Plan is administered by the Kansas Public Employees Retirement System (KPERS), a body corporate and an instrumentality of the State of Kansas. KPERS provides benefit provisions to the following statewide pension groups under one plan, as provided by K.S.A. 74, article 49: • Public employees, which includes: • State/School employees • Local employees • Police and Firemen • Judges Substantially all public employees in Kansas are covered by the Pension Plan. Participation by local political subdivisions is optional, but irrevocable once elected. Those employees participating in the Pension Plan for the City are included in the Local employees group and the Kansas Police and Firemen group. KPERS issues a stand-alone comprehensive annual financial report, which is available on the KPERS website at www.kpers.org. Benefits. Benefits are established by statute and may only be changed by the State Legislature. Members (except Police and Firemen) with ten or more years of credited service, may retire as early as age 55 (Police and Firemen may be age 50 with 20 years of credited service), with an actuarially reduced monthly benefit. Normal retirement is at age 65, age 62 with ten years of credited service, or whenever a member's combined age and years of service equal 85. Police and Firemen normal retirement ages are age 60 with 15 years of credited service, age 55 with 20 years, age 50 with 25 years, or any age with 36 years of service. Monthly retirement benefits are based on a statutory formula that includes final average salary and years of service. When ending employment, members may withdraw their contributions from their individual accounts, including interest. Members who withdraw their accumulated contributions lose all rights and privileges of membership. For all pension coverage groups, the accumulated contributions and interest are deposited into and disbursed from the membership accumulated reserve fund as established by K.S.A. 7 4- 4922. Members choose one of seven payment options for their monthly retirement benefits. At retirement a member may receive a lump-sum payment of up to 50% of the actuarial present value of the member's lifetime benefit. His or her monthly retirement benefit is then permanently reduced based on the amount of the lump sum. Benefit increases, including ad hoc post-retirement benefit increases, must be passed into law by the Kansas Legislature. Benefit increases are under the authority of the Legislature and the Governor of the State of Kansas. The 2012 Legislature made changes affecting new hires, current members and employers. A new KPERS 3 cash balance retirement plan for new hires starting January 1, 2015, was created. Normal retirement age for KPERS 3 is 65 with five years of service or 60 with 30 years of service. Early retirement is available at age 55 with ten years of service, with a reduced benefit. Monthly benefit options are an annuity benefit based on the account balance at retirement. 39 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 5. OTHER INFORMATION (Continued) A. Defined Benefit Pension Plan (Continued) For all pension coverage groups, the retirement benefits are disbursed from the retirement benefit payment reserve fund as established by K.S.A. 74-4922. Contributions. Member contributions are established by state law, and are paid by the employee according to the provisions of Section 414(h) of the Internal Revenue Code. State law provides that the employer contribution rates are determined based on the results of an annual actuarial valuation. The contributions and assets of all groups are deposited in the Kansas Public Employees Retirement Fund established by K.S.A. 7 4-4921. All of the retirement systems are funded on an actuarial reserve basis. For fiscal years beginning in 1995, Kansas legislation established statutory limits on increases in contribution rates for KPERS employers. Annual increases in the employer contribution rates related to subsequent benefit enhancements are not subject to these limitations. The statutory cap increase over the prior year contribution rate is 1.0% of total payroll for the fiscal year ended June 30, 2015. The actuarially determined employer contribution rates (not including the 0.85% contribution rate for the Death and Disability Program) and the statutory contribution rates are as follows: Local employees Police and Firemen Actuarial Employer Rate 9.48% 21 .36% Statutory Employer Capped Rate 9.48% 21.36% Member contribution rates as a percentage of eligible compensation for the fiscal year 2015 are 5.00% or 6.00% for Local employees and 7.15% for Police and Firemen. Employer Allocations. Although KPERS administers one cost-sharing multiple-employer defined benefit pension plan, separate (sub) actuarial valuations are prepared to determine the actuarial determined contribution rate by group. Following this method, the measurement of the collective net pension liability, deferred outflows of resources, deferred inflows of resources, and pension expense are determined separately for each of the following groups of the plan: • State/School • Local • Police and Firemen • Judges To facilitate the separate (sub) actuarial valuations, KPERS maintains separate accounts to identify additions, deductions, and fiduciary net position applicable to each group. The allocation percentages presented for each group in the schedule of employer and nonemployer allocations are applied to amounts presented in the schedules of pension amounts by employer and nonemployer. The allocation percentages for the City's share of the collective pension amounts as of December 31 , 2015, are based on the ratio of its contributions to the total of the employer and nonemployer contributions of the group for the fiscal years ended December 31, 2015. The contributions used exclude contributions made for prior service, excess benefits and irregular payments. At June 30, 2015, the City's proportion for the Local employees group was 0.764%, which was a decrease of .040% from its proportion measured at June 30, 2014. At June 30, 2015, the City's proportion for the Police and Firemen group was 2.258%, which was an decrease of .037% from its proportion measured at June 30, 2014. 40 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 5. OTHER INFORMATION (Continued) A. Defined Benefit Pension Plan (Continued) Net Pension Liability. At December 31, 2015 and 2014, the City reported a liability of $26,423,473 and $24,948,243, respectively, for its total proportionate share of the net pension liability for the Local and Police and Firemen groups. Actuarial Assumptions. The total pension liability was determined by an actuarial valuation as of December 31, 2014, which was rolled forward to June 30, 2015, using the following actuarial assumptions: Price inflation Wage inflation Assumptions Salary increases, including wage increases Long-term rate of return, net of investment expense, and including price inflation 3.00% 4.00% 4% to 16.00%, including inflation 8.00% Mortality rates were based on the RP-2000 Healthy Annuitant Mortality Table for Males and Females, with adjustments to better match actual experience. Separate tables apply for males and females as well as each group (State, School, Local, KP&F and Judges). The actuarial assumptions used in the December 31, 2014 valuation were based on the results of an actuarial experience study conducted for three years ending December 31, 2012. The long-term expected rate of return of pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class . These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of June 30, 2015 are summarized in the following table: Asset Global Equity Fixed Income Yield driven Real Return Real estate Alternatives Short-term investments Long-Term Allocation 47.00% 13.00% 8.00% 11.00% 11.00% 8.00% 2.00% 100.00% Long-Term Expected Real Rate of Return 6.30% 0.80% 4.20% 1.70% 5.40% 9.40% -0.50% Discount Rate. The discount rate used to measure the total pension liability was 8.00%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the contractually required rate. The State, School and Local employers do not necessarily contribute the full actuarial determined rate. Based on legislation passed in 1993, the employer contribution rates certified by the System's Board of Trustees for these groups may not increase by more than the statutory cap. The expected KPERS employer statutory contribution was modeled for future years, assuming all actuarial assumptions are met in future years. Employers contribute the full actuarial determined rate for Police & Firemen, and Judges. Future employer contribution rates were also modeled for Police & Firemen and Judges, assuming all actuarial assumptions are met in future years. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 41 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 5. OTHER INFORMATION (Continued) A. Defined Benefit Pension Plan (Continued} Sensitivity of the City's proportionate share of the net pension liability to changes in the discount rate. The following presents the City's proportionate share of the net pension liability calculated using the discount rate of 8.00%, as well as what the City's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower (7.00%) or 1-percentage point higher (9.00%) than the current rate: Local Police & Firemen Total 1% Decrease {7.00%) $ 14,234,822 23,809,559 $ 38,044,381 Discount Rate {8.00%) 1% Increase {9.00%) $ 10,027,679 $ 6,460,848 16,395,794 10,133,696 $ 26,423,473 $ 16,594,544 ------------ Pension Expense. For the year ended December 31, 2015, the City recognized Local pension expense of $602,891 and Police and Firemen pension expense of $1,433,594, which includes the changes in the collective net pension liability, projected earnings on pension plan investments, and the amortization of deferred outflows of resources and deferred inflows of resources for the current period. Deferred Outflows of Resources and Deferred Inflows of Resources. At December 31 , 2015, the City reported deferred outflows of resources and deferred inflows of resources related to pensions for Local and Police and Firemen groups from the following sources: Deferred outflows Deferred inflows of resources of resources Differences between actual and expected experience $ -$ 283,864 Contributions subsequent to the measurement date Net differences between projected and actual earnings on investments Changes in assumptions Changes in proportion 658,021 390,342 140,147 481 493,566 To~I $ ------658,502 $ 1,3071919 Police & Firemen Differences between actual and expected experience Contributions subsequent to the measurement date Net differences between projected and actual earnings on investments Changes in assumptions Changes in proportion Total 42 Deferred outflows Deferred inflows of resources of resources $ 149,622 $ 274,448 $ 1,312,101 520,682 163,954 381,205 1,461,723 $ 1,340,289 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 5. OTHER INFORMATION (Continued) A. Defined Benefit Pension Plan (Continued) $1,970,122 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2016. Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Local Police & Firemen Deferred Deferred Year ended [Inflows] Outflows [Inflows] Outflows December 31 , Amount Amount Total 2016 $ [407,367] $ [472,478] $ [879,845] 2017 [407,367] [472,478] [879,845] 2018 [407,367] [472,478] [879,845] 2019 23,770 331,942 355,712 2020 [109,107] [105,175] [214,282] Total $ [1,307,438] $ [1, 190,667] $ [2,498,105] B. Deferred Compensation Plan The City offers its employees a deferred compensation plan ("Plan") created in accordance with Internal Revenue Code Section 457. The Plan, available to all City employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. Plan assets are transferred to a plan agent in a custodial trust and are not available to the claims of the City's general creditors. C. Flexible Benefit Plan (I.R.C. Section 125) The City Commission has adopted by resolution a salary reduction flexible benefit plan ("Plan") under Section 125 of the Internal Revenue Code. All City employees working more than 20 hours per week are eligible to participate in the Plan beginning after two full months of employment. Each participant may elect to reduce his or her salary to purchase benefits offered through the Plan. Benefits offered through the Plan include various insurance and disability benefits. D. Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; natural disasters and other events for which the City carries commercial insurance. No significant reductions in insurance coverage from that of the prior year have occurred. Settlements have not exceeded insurance coverage for each of the past three years. 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, $181,093 is considered to be due within one year. 43 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 5. OTHER INFORMATION (Continued) D. Risk Management (Continued) Changes in the balances of claims liabilities during the past two years are as follows: 2015 2014 Unpaid claims, January 1 $ 342,362 $ 569,755 Incurred claims (including IBNRs) 844,704 660,413 Claim payments [905,465) [887,806) Unpaid claims, December 31 $ 281,601 $ 342,362 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: E. Capital Projects Unpaid claims, January 1 Incurred claims (including IBNRs) Claim payments Unpaid claims, December 31 2015 2014 $ 529,215 $ 372,147 3,826,243 [4,080,018) $ 275,440 5,447,940 [5,290,872) $ 529,215 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, 2015. Project Markley, Magnolia, Valley View Sanitary Sewer Improvements Downtown Wellfield Improvements Cloud & Ohio Street to Levee Pavement-Design Ninth and Cloud Intersection Realignment Bicentennial Center Improvements Fire Department Apparatus Bay Addition Ohio Street Improvements Iron Avenue Reconstruction Chiller for Police Department Greeley Ave Bridge Community Fieldhouse Centennial Road Improvements -Design 2015 Traffic Control Maintenance Wayfinding Phase II 44 Authorization $ 5,150,000 9,330,000 155,014 1,100,000 10,200,000 2,096,654 1,700,000 2,250,000 93,400 305,000 7,651,685 56,911 265,250 350,000 Expenditures $ 141,933 4,799,023 163,354 1,053,887 9,894,365 162,506 2,156,130 3,331,542 97,905 169,867 2,059,740 56,911 16,898 239,452 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 5. OTHER INFORMATION (Continued) F. Contingent Liabilities The City receives significant financial assistance from numerous federal and state governmental agencies in the form of grants and state pass-through aid. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and is subject to audit. Any disallowed claims resulting from such audits could become a liability of the General Fund or other applicable funds. However, in the opinion of management, any such disallowed claims would not have a material effect on any of the financial statements of the City at December 31, 2015. 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 $1,902,252 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. The City's solid waste fund will recognize the remaining estimate cost of closure and postclosure care of $4,697,309 as the remaining estimated capacity is filled over the remaining life expectancy of 142 years. These amounts are based on what it would cost to perform all closure and postclosure care in 2015. 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. 45 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 5. OTHER INFORMATION (Continued) H. Environmental Matters (Continued) 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. 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). 46 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 5. OTHER INFORMATION (Continued) H. Environmental Matters (Continued) 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 ). 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. 47 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 5. OTHER INFORMATION (Continued) I. Postemployment Health Care Plan (Continued) Funding Policy. The contribution requirements of plan participants and the City are established and amended by the City. The required contribution is based on projected pay-as-you-go financing requirements. Plan participants contributed approximately $209,000 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 OPES Obligation. The City's annual other postemployment benefit (OPES) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASS Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the City's annual OPES cost for the Plan for the year, the amount actually contributed to the plan, and the changes in the City's net OPES obligation to the Plan: Annual required contribution Interest on Net OPES Obligation Adjustment to Annual Required Contribution Annual OPES cost (expense) Benefit payments Change in net OPES obligation Net OPES obligation -beginning of year Net OPES obligation -end of year $ 570,840 130,099 [144,554] 556,385 [209,000] 347,385 4,336,620 $4,684,005 The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPES obligation for the year ended December 31, 2015 was as follows: Annual Fiscal Annual OPES Net Year OPES Cost OPES Ended Cost Contributed Obligation December 31, 2013 570,434 148,000 3,986,743 December 31, 2014 534,877 185,000 4,336,620 December 31, 2015 556,385 209,000 4,684,005 Funding Status and Funding Progress. As of the year ended December 31, 2015, 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 (UML) of $5,538,770. The covered payroll (annual payroll of active employees covered by the plan) was $22,958,300, and the ratio of the UML to the covered payroll was 24.13%. 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. 48 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 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, 2015, 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. I. Deficit Fund Balance The Capital Projects Fund maintained a deficit fund balance of $[10,537,480] at December 31, 2015, as did the following nonmajor funds: 911 Communications Fund -$[3,281], Police Grants Fund -$[25, 139], Federal CARE Grant Fund -$(10,785]. J. Statutory Violations -Deficit Cash Balance The Capital Projects Fund had a deficit cash balance of $[3,499, 129] at December 31, 2015, which is a violation of K.S.A. 10-1113. 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 2016. The loan proceeds will be used to fund various capital projects related to achieving and maintaining compliance with the Safe Drinking Water Act. 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 26, 2016, the City issued Series 2016-A general obligation internal improvement bonds in the amounts of $6,570,000. The bonds will be used to finance various capital projects. The City will make the first payment on the bonds on April 1, 2017 and the last payment on October 1, 2036. The interest rate on the bonds ranges from 2.00% to 2.50%. On July 26, 2016, the City issued Series 2016-B general obligation refunding bonds in the amounts of $13,750,000. The bonds will be used to refund certain maturities of the Series 2006-B, 2007-A, 2008-A, 2009- A, 2010-A and 2011-A general obligation bonds. The City will make the first payment on the bonds on April 1, 2017 and the last payment on October 1, 2036. The interest rate on the bonds ranges from 2.00% to 2.50%. On February 2, 2016, the City issued Series 2016-1 temporary notes in the amounts of $6,890,000. The temporary notes will be used to finance improvements to the Bicentennial Center. The maturity date of the temporary notes is August 1, 2017 and the interest rate on the notes is 0.65%. On July 20, 2016, the City issued Series 2016-2 temporary notes in the amounts of $4,615,000. The temporary notes will be used to finance improvements to the Salina Fieldhouse. The maturity date of the temporary notes is September 1, 2019 and the interest rate on the notes is 1.00%. 49 CITY OF SALINA, KANSAS OTHER POST-EMPLOYMENT BENEFITS REQUIRED SUPPLEMENT ARY INFORMATION December 31, 2015 Schedule of Employer Contributions: Annual Fiscal Annual OPEB Net Year OPEB Cost OPEB Ended Cost Contributed Obligation December 31, 2013 570,434 148,000 3,986,743 December 31, 2014 534,877 185,000 4,336,620 December 31, 2015 556,385 209,000 4,684,005 Schedule of Funding Progress: Actuarial Actuarial Actuarial Unfunded Funded Covered Valuation Value of Accrued AAL Ratio Payroll Date Assets (a) Liabilit~ (b) (b) -(a) (a/b) M 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 12/31/2015 5,538,770 5,538,770 0.0% 22,958,300 50 UAAL as Percent of Payroll (b-a)/(c) 25.04% 25.00% 24.13% CITY OF SALINA, KANSAS KPERS PENSION PLAN REQUIRED SUPPLEMENTARY INFORMATION (CONTINUED) December 31, 2015 Schedule of the City's Proportionate Share of the Net Pension Liability Last Ten Fiscal Years* Police and City's proportion of the net pension liability City's proportionate share of the net pension liability City's covered-employee payroll City's proportionate share of the net pension liability as a percentage of its covered-employee payroll Local 12/31/15 0.764% $10,027,679 $12,931,197 77.55% Firemen 12/31/15 2.258% $16,395,794 $10,161,866 161.35% Plan fiduciary net position as a percentage of the total pension liability 71.98% 74.60% * -The amounts presented for each fiscal year were determined as of 12/31. Data became available with the inception of GASS 68 during fiscal year 2015, therefore 10 years of data is unavailable. Schedule of the City's Contributions Last Ten Fiscal Years* Contractually required contribution Contributions in relation to the contractually required contribution Contribution deficiency [excess] City's covered-employee payroll Contributions as a percentage of covered employee payroll * -Data became available with the inception of GASS 68 during fiscal year 2015, therefore 10 years of data is unavailable. 51 Police and Local Firemen 12/31/15 12/31/15 $ 1,256,217 $ 2,527,995 1,256,217 2,527,995 $ - $ ---------- $13,251,236 $10,730,033 9.48% 23.56% CITY OF SALINA, KANSAS COMBINING STATEMENTS-NONMAJOR FUNDS NONMAJOR 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. 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. Sales tax economic development fund -To account for 12.5% of the 1/4 cent sales tax designated for economic Development purposes. HOME 2012 fund -To account for grants received from the federal government to be used for housing rehabilitation. 911 communications -To account for transitioning the receipt and administration of 911 fees to the City from the Kansas Department of Revenue and Saline County, as the City is now the public answering point. Monies will be used to pay for 911 related services. Kenwood cove 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 Federal grants fund -To account for grants received from the federal government to be used to monitor and mediate fair housing complaints. 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 fund -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. 52 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. 53 CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2015 Total Total Nonmajor Nonmajor Nonmajor Debt Special Revenue Permanent Service Funds Funds Fund ASSETS Cash and investments $ 2,038,501 $ 478,999 $ 1,085,887 Receivables Accounts 3,611 Total assets $ 2,042,112 $ 478,999 $ 1,085,887 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 182,814 $ -$ - Due to other funds 20,861 Total liabilities 203,675 Fund balances: Restricted 264,373 1,085,887 Committed 1,415,789 478,999 Assigned 158,275 Total fund balances 1,838,437 478,999 1,085,887 Total liabilities and fund balances $ 2,042,112 $ 478,999 $ 1,085,887 See independent auditor's report on the financial statements. 54 Total Nonmajor Governmental Funds $ 3,603,387 3,611 $ 3,606,998 $ 182,814 20,861 203,675 1,350,260 1,894,788 158,275 3,403,323 $ 3,606,998 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended December 31, 2015 Total Total Nonmajor Total REVENUES Taxes Intergovernmental Charges for services Licenses and permits Investment revenue Donations Miscellaneous Total revenues EXPENDITURES Current Culture and recreation Public safety 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 Fund balance -Beginning of year, as restated Fund balance -End of year Non major Non major Debt Nonmajor Special Revenue Permanent Service Governmental Funds Funds Fund Funds $ 353,659 $ - $ - $ 417,283 569,463 358,619 10,380 9,500 3,938 1,057 81 83,391 115,845 1,342,235 1,619,484 3,281 227,249 120,915 502,090 2,473,019 [1,130,784] 1,363,306 11,437 35 35 11,402 569,544 155,000 136,030 291,030 278,514 __ __._[3_0 ...... ,0_0__,0] ---- 1,333,306 202,522 11,402 1,682,509 467,597 [46,594] 1,635,915 467,597 278,514 807,373 807,373 353,659 986,746 368,999 9,500 5,076 83,391 115,845 1,923,216 1,619,484 3,281 227,249 120,915 35 155,000 136,030 502,090 2,764,084 [840,868] 1,363,306 [30,000] 1,333,306 492,438 2,957,479 [46,594] 2,910,885 $ 1,838,437 $478,999 $1,085,887 $ 3,403,323 See independent auditor's report on the financial statements. 55 CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS December 31, 2015 Business Bicentennial Improvement Neighborhood Center District Park ASSETS Cash and investments $ 92,584 $ 3,952 $ 124,178 Receivables Accounts 3,611 Total assets $ 92,584 $ 7,563 $ 124,178 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 59,297 $ 81 $ 1,469 Due to other funds Total liabilities 59,297 81 1,469 Fund balance: Restricted 7,482 Committed 33,287 100,132 Assigned 22,577 Total fund balance [deficit] 33,287 7,482 122,709 Total liabilities and fund balances $ 92,584 $ 7,563 $ 124,178 Special Parks & Recreation $ 87,640 $ 87,640 $ 4,340 4,340 83,300 83,300 $ 87,640 $ $ $ $ Community Special Development Alcohol Revolving 95,759 $ 184,242 $ 95,759 $ 184,242 $ 95,625 $ -$ 95,625 134 184,242 134 184,242 95,759 $ 184,242 $ Sales Tax Economic Development 897,215 $ 897,215 $ -$ 897,215 897,215 HOME 911 2012 Communications -$ -$ - $ 3,281 [126,415] 126,415 3,281 [3,281] [3,281] 897,215 $ -$ ---------------- See independent auditor's report on the financial statements. 56 ASSETS Cash and investments Receivables Accounts Total assets CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS (Continued) December 31, 2015 Kenwood Special Cove Law Police Cagital Enforcement Grants $ 81,730 $ 2,880 $ $ 81,730 $ 2,880 $ - - LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ -$ -$ 15,063 Due to other funds 10,076 Total liabilities 25,139 Fund balance: Restricted Committed 81,730 2,880 (25,139] Assigned Total fund balance [deficit] 81,730 2,880 [25,139] Total liabilities and fund balances $ 81,730 $ 2,880 $ - Federal Grants $ 19 $ 19 $ 19 19 $ 19 Police War Federal Department Animal DARE Memorial Arts & CARE Federal Homeowners' Shelter Donations Maintenance Humanities Grant Forfeiture Funds Assistance Donations Totals $ 6,234 $ 32,813 $ 141,870 $ -$ 98 $ 5,606 $ 281,681 $ 2,038,501 3,611 $ 6,234 $ 32,813 $ 141,870 $ -$ 98 $ 5,606 $ 281,681 $ 2,042,112 $ 38 $ -$ 3,620 $ -$ -$ -$ -$ 182,814 38 6,196 32,813 6,196 32,813 $ 6,234 $ 32,813 10,785 3,620 10,785 -[10,785] 138,250 [9,185] 5,606 281,681 9,283 138,250 [10,785] 98 5,606 281,681 $ 141,870 $ -$ 98 $ 5,606 $ 281,681 See independent auditor's report on the financial statements. 57 20,861 203,675 264,373 1,415,789 158,275 1,838,437 $ 2,042,112 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS For the Year Ended December 31, 2015 Business Bicentennial Improvement Neighborhood Center District Park Revenues Taxes $ -$ -$ - Intergovernmental Charges for services 31,993 Licenses and permits 9,500 Investment revenue 83 17 274 Donations Miscellaneous Total Revenues 83 32,010 9,774 Expenditures Current Culture and recreation 722,704 Public safety Public health and sanitation Planning and development 78,837 Capital outlay 1,148 5,024 Total Expenditures 723,852 78,837 5,024 Excess [deficiency] of revenues over [under] expenditures [723,769) [46,827] 4,750 Other financing sources [uses] Transfers in 756,556 Transfers [out] Total other financing sources [uses] 756,556 Net change in fund balance 32,787 [46,827] 4,750 Fund balance, beginning of year 54,309 117,959 Restatement of prior year fund balance 500 Fund balance, beginning of year, as restated 500 54,309 117,959 Fund balance, end of year $ 33,287 $ 7,482 $ 122,709 Special Parks & Special Recreation Alcohol $ -$ 184,555 184,555 274 138 184,829 184,693 227,015 254,129 254,129 227,015 [69,300] [42,322] [30,000] [30,000) [99,300] [42,322) 182,600 42,456 182,600 42,456 $ 83,300 $ 134 Bicentennial Center Event HUD Community Development Community Development Revolving Heritage Commission Sales Tax Economic Development HOME 2012 911 Communications $ - $ - $ - $ - $ 353,659 $ - $ 10,850 500 [500) $ -$ 410 1,793 410 355,452 10,850 133,391 133,391 410 222,061 10,850 410 222,061 10,850 74,578 109,254 4 675,154 [10,850) [74,578] 74,578 [4] 183,832 675,154 [10,850] -$ 184,242 $ -$ 897,215 $ - See independent auditor's report on the financial statements. 58 3,281 3,281 [3,281] [3,281] $ [3,281) 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, 2015 Kenwood Special Fair Cove Law Police Housing Capital Enforcement Grants Revenues Taxes $ -$ -$ -$ - Intergovernmental Charges for services Licenses and permits Investment revenue 100 3 Donations Miscellaneous 2,680 Total Revenues 100 3 2,680 Expenditures Current Culture and recreation Public safety Public health and sanitation Planning and development Capital outlay 52,688 Total Expenditures 52,688 Excess [deficiency] of revenues over [under] expenditures [52,588] 3 2,680 Other financing sources [uses] Transfers in 106,750 Transfers [out] Total other financing sources [uses] 106,750 Net change in fund balance 54,162 3 2,680 Fund balance, beginning of year 46,590 27,568 2,877 [27,819] Restatement of prior year fund balance [46,590] Fund balance, beginning of year, as restated 27,568 2,877 [27,819] Fund balance, end of year $ -$81,730 $ 2,880 $ (25,139J Federal Grants $ 19 19 19 19 $ 19 DARE Donations $ - 9 2,642 2,651 52 52 2,599 2,599 3,597 3,597 $ 6,196 Police War Federal Department Animal Memorial Arts & CARE Federal Homeowners' Shelter Maintenance Humanities Grant Forfeiture Funds Assistance Donations $ $ -$ -$ -$ -$ -$ - 37,323 326,626 75 132 42 9 560 83,391 106,981 3,542 75 433,739 37,323 42 3,551 83,951 1,270 895,510 234 42,026 55,710 1,270 895,510 42,026 55,710 234 [1,195) [461,771] [4,703) [55,668) 3,551 83,717 500,000 500,000 [1,195) 38,229 [4,703] [55,668] 3,551 83,717 34,008 100,021 [6,082] 55,766 2,055 197,964 34,008 100,021 [6,082] 55,766 2,055 197,964 32,813 $ 138,250 $ [10,785) $ 98 $ 5,606 $281,681 See independent auditor's report on the financial statements. 59 Totals $ 353,659 417,283 358,619 9,500 3,938 83,391 115,845 1,342,235 1,619,484 3,281 227,249 120,915 502,090 2,473,019 [1,130,784] 1,363,306 [30,000) 1,333,306 202,522 1,682,509 [46,594] 1,635,915 $1,838,437 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 , 2015 Cemetery Mausoleum Tricentennial Endowment Endowment Commission Total $ 471,219 $ 2,017 ..:...$ __ 5....,_,7_6_3 $ 478,999 $ 471,219 $ 2,017 _$ __ 5_,7_6_3 $ 478,999 ..:;,_$ ____ -..:;,_$ ____ -..:;,_$ ____ -~$ ___ _ 471,219 2,017 5,763 478,999 $ 471,219 $ 2,017 .;..$ __ 5;..:.,7 ..... 6.;.3 $ 478,999 See independent auditor's report on the financial statements. 60 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR PERMANENT FUNDS For the Year Ended December 31, 2015 Cemetery Mausoleum Tricentennial Endowment Endowment Commission Revenues Charges for services $ 10,380 $ -$ Investment revenue 1,041 4 Total revenues 11,421 4 Expenditures Miscellaneous 35 Total expenditures 35 Net change in fund balance 11,386 4 Fund balances -beginning of year 459,833 2,013 Fund balances -end of year $ 471,219 $ 2,017 $ See independent auditor's report on the financial statements. 61 - 12 12 12 5,751 5,763 Total $ 10,380 1,057 11,437 35 35 11,402 467,597 $ 478,999 ! ! 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, 2015 Budgeted Amounts Actual Original Revenues Investment revenue $ 83 $ -$ Total revenues 83 Expenditures Culture and recreation 722,704 480,000 Capital outlay 1,148 Total expenditures 723,852 480,000 Excess [deficiency] of revenues over [under] expenditures [723,769] [480,000] Other financing sources [uses] Transfers in 756,556 492,000 Total other financing sources [uses] 756,556 492,000 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 32,787 12,000 Unreserved fund balance, January 1 500 71 ,574 Unreserved fund balance/GAAP fund balance December 31 $ 33,287 $ 83,574 $ See independent auditor's report on the financial statements. 62 Final - 725,000 725,000 [725,000] 708,558 708,558 [16,442] 25,666 9,224 Variance with Final Budget Positive [Negative] $ 83 2,296 [1,148] 1,148 1,231 47,998 47,998 49,229 [25,166] $ 24,063 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) BUSINESS IMPROVEMENT DISTRICT FUND For the Year Ended December 31, 2015 Budgeted Amounts Actual Original Revenues Charges for services $ 83,128 $ 90,000 $ Investment revenue 17 500 Total revenues 83,145 90,500 Expenditures Planning and development 78,837 90,500 Total expenditures 78,837 90,500 Excess [deficiency] of revenues over [under] expenditures 4,308 Unreserved fund balance, January 1 [437] Unreserved fund balance, December 31 3,871 $ -$ Reconciliation to GAAP Accounts receivable 3,611 GAAP Fund Balance, December 31 $ 7,482 See independent auditor's report on the financial statements. 63 Final 90,000 500 90,500 90,500 90,500 - Variance with Final Budget Positive [Negative] $ [6,872] [483] [7,355] 11,663 11,663 4,308 [437] $ 3,871 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) NEIGHBORHOOD PARK FUND Revenues Licenses and permits Investment revenue Total revenues Expenditures Capital outlay Total expenditures Excess [deficiency) of revenues over [under] expenditures For the Year Ended December 31, 2015 Budgeted Amounts Actual Original Final $ 9,500 $ 20,000 $ 20,000 274 4,000 4,000 9,774 24,000 24,000 5,024 134,260 134,260 5,024 134,260 134,260 4,750 [110,260] [110,260] 95,382 110,260 110,260 Variance with Final Budget $ Positive [Negative] [10,500] [3,726] [14,226] 129,236 129,236 115,010 [14,878] Unreserved fund balance, January 1 Unreserved fund balance, December 31 Reconciliation to GAAP 100,132 $ - $ - $ 100,132 ----- Current year encumbrances 22,577 GAAP Fund Balance, December 31 $ 122,709 See independent auditor's report on the financial statements. 64 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 , 2015 Budgeted Amounts Actual Original Final Revenues Intergovernmental $ 184,555 $ 160,000 $ Investment revenue 274 4,000 Total revenues 184,829 164,000 Expenditures Capital outlay 254,129 225,668 Total expenditures 254,129 225,668 Excess [deficiency] of revenues over [under] expenditures [69,300] [61,668] Other financing sources [uses] Transfers [out] [30,000] [30,000] Total other financing sources [uses] [30,000] [30,000] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [99,300] [91,668] Unreserved fund balance, January 1 182,600 91,668 Unreserved fund balance/GAAP fund balance December 31 $ 83,300 $ -$ See independent auditor's report on the financial statements. 65 179,120 200 179,320 332,154 332,154 [152,834] [30,000) [30,000) [182,834] 182,834 - Variance with Final Budget Positive [Negative] $ 5,435 74 5,509 78,025 78,025 83,534 83,534 (234) $ 83,300 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, 2015 Budgeted Amounts Actual Original Revenues Intergovernmental $ 184,555 $ 160,000 $ Investment revenue 138 Total revenues 184,693 160,000 Expenditures Public health and sanitation 227,015 165,204 Total expenditures 227,015 165,204 Excess [deficiency] of revenues over [under] expenditures [42,322] [5,204] Unreserved fund balance, January 1 42,456 5,205 Unreserved fund balance/GAAP fund balance December 31 $ 134 $ 1 $ See independent auditor's report on the financial statements. 66 Final 179,120 179,120 221,585 221,585 [42,465] 42,465 - Variance with Final Budget Positive [Negative] $ 5,435 138 5,573 [5,430] [5,430] 143 [9] $ 134 Revenues Taxes Investment revenue Total revenues Expenditures Capital outlay Total expenditures 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, 2015 Budgeted Amounts Actual Original Final $ 353,659 $ 317,744 $ 317,744 1,793 5,000 5,000 355,452 322,744 322,744 133,391 1,025,294 1,025,294 133,391 1,025,294 1,025,294 Excess [deficiency] of revenues over [under] expenditures 222,061 [702,550] Unreserved fund balance, January 1 675,154 702,550 Unreserved fund balance/GAAP fund balance December 31 $ 897,215 $ -$ See independent auditor's report on the financial statements. 67 [702,550] 702,550 - Variance with Final Budget Positive [Negative] $ 35,915 [3,207] [3,207] 891,903 891 ,903 924,611 [27,396] $ 897,215 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, 2015 Budgeted Amounts Actual Original Revenues Charges for services $ 326,626 $ 480,350 $ Investment revenue 132 2,000 Miscellaneous 106,981 500 Total revenues 433,739 482,850 Expenditures Culture and recreation 895,510 1,083,860 Total expenditures 895,510 1,083,860 Excess [deficiency] of revenues over [under] expenditures [461,771] [601,010] Other financing sources [uses] Transfers in 500,000 607,034 Transfers [out] [67,343] Total other financing sources [uses] 500,000 539,691 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 38,229 [61,319] Unreserved fund balance, January 1 100,021 61,319 Unreserved fund balance/GAAP fund balance December 31 $ 138,250 $ -$ See independent auditor's report on the financial statements. 68 Final 480,350 2,000 500 482,850 1,083,860 1,083,860 [601,01 OJ 607,034 [67,343] 539,691 [61,319] 61,319 - Variance with Final Budget Positive [Negative] $ [153,724] [1,868] 106,481 104,613 188,350 188,350 139,239 [107,034] 67,343 [39,691] 99,548 38,702 $ 138,250 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GMP BASIS} DEBT SERVICE FUND For the Year Ended December 31, 2015 Budgeted Amounts Actual Original Revenues Taxes Real estate taxes $ 2,700,326 $ 2,726,505 Delinquent taxes 65,487 55,000 Motor vehicle taxes 311,602 279,408 Special assessments 1,716,643 1,655,000 Investment revenue 4,134 5,000 Miscellaneous 95,808 96,800 Total revenues 4,894,000 4,817,713 Expenditures Debt Service Principal retirement 4,885,284 5,120,042 Interest and other charges 1,602,053 1,602,053 Total expenditures 6,487,337 6,722,095 Excess [deficiency] of revenues over [under] expenditures [1,593,337] [1,904,382] Other financing sources [uses] Issuance of bonds 224,400 Transfers in 1,706,711 1,605,000 Total other financing sources [uses] 1,931,111 1,605,000 Excess [deficiency] of revenues and other sources over (under] expenditures and other [uses] 337,774 [299,382] Unreserved fund balance, January 1 354,289 299,382 Unreserved fund balance December 31 692,063 $ - Reconciliation to GAAP Taxes receivable 3,090,683 Deferred revenue [3,037,407] GAAP Fund Balance, December 31 $ 745,339 See independent auditor's report on the financial statements. 69 Final $ 2,726,505 55,000 279,408 1,655,000 5,000 96,800 4,817,713 5,120,042 1,602,053 6,722,095 [1,904,382] 1,605,000 1,605,000 [299,382] 299,382 $ - Variance with Final Budget Positive [Negative] $ [26,179] 10,487 32,194 61,643 (866] [992) 76,287 234,758 234,758 311,045 224,400 101,711 326,111 637,156 54,907 $ 692,063 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS -BUDGET AND ACTUAL (NON -GMP BASIS) SOLID WASTE DISPOSAL FUND For the Year Ended December 31, 2015 Budgeted Amounts Actual Original Revenues Charges for services $ 2,656,686 $ 2,562,850 $ Investment revenue 6,114 7,000 Miscellaneous 70,707 Total revenues 2,733,507 2,569,850 Expenditures Public works 1,893,406 2,936,659 Total expenditures 1,893,406 2,936,659 Excess [deficiency] of revenues over [under] expenditures 840,101 [366,809) Other financing sources [uses] Transfers [out] [600,000) [975,375] Total other financing sources [uses] [600,000] [975,375] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 240,101 [1,342, 184] Unreserved fund balances, January 1 2,085,518 1,342,184 Unreserved fund balances, December 31 $ 2,325,619 $ -$ See independent auditor's report on the financial statements. 70 Final 2,562,850 7,000 2,569,850 2,936,659 2,936,659 [366,809] [975,375] [975,375) [1,342,184] 1,342,184 - Variance with Final Budget Positive [Negative] $ 93,836 [886] 70,707 163,657 1,043,253 1,043,253 1,206,910 375,375 375,375 1,582,285 743,334 $ 2,325,619 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, 2015 Budgeted Amounts Revenues Charges for services Investment revenue Miscellaneous Total revenues Expenditures Public works Total expenditures Excess [deficiency] of revenues over [under] expenditures Other financing sources [uses] Transfers in Transfers [out] Total other financing sources [uses] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] Unreserved fund balances, January 1 Prior year cancelled encumbrances Actual $ 19,012,854 28,053 40,201 19,081,108 13,380,232 13,380,232 5,700,876 60,302 [5,646,302] [5,586,000] 114,876 9,306,498 20,867 Original $ 19,658,700 25,000 560,000 20,243,700 16,451,428 16,451,428 3,792,272 35,950 [8,724,444] [8,688,494] [4,896,222] 4,896,222 Final $ 19,658,700 25,000 560,000 20,243,700 16,451,428 16,451,428 3,792,272 35,950 [8,724,444] [8,688,494) [4,896,222] 4,896,222 Variance with Final Budget $ Positive (Negative] [645,846] 3,053 [519,799) [1,162,592) 3,071,196 3,071,196 1,908,604 24,352 3,078,142 3,102,494 5,011,098 4,410,276 20,867 Unreserved fund balances, December 31 $ 9,442,241 ,;:;,.$ ______ $ ____ - $ 9,442,241 See independent auditor's report on the financial statements. 71 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS -BUDGET AND ACTUAL (NON -GAAP BASIS) SANITATION FUND For the Year Ended December 31, 2015 Budgeted Amounts Actual Original Final Revenues Charges for services $ 2,543,119 $ 2,577,830 $ 2,577,830 Investment revenue 2,482 3,500 3,500 Total revenues 2,545,601 2,581,330 2,581,330 Expenditures Public works 1,960,188 1,868,215 1,868,215 Total expenditures 1,960,188 1,868,215 1,868,215 Excess [deficiency] of revenues over [under] expenditures 585,413 713,115 713,115 Other financing sources [uses] Transfers [out] [448,350] [965,459] [965,459] Total other financing sources [uses] [448,350] [965,459] [965,459] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 137,063 [252,344] [252,344] Unreserved fund balance, January 1 897,013 785,062 785,062 Unreserved fund balances, December 31 $ 1,034,076 $ 532,718 $ 532,718 See independent auditor's report on the financial statements. 72 Variance with Final Budget Positive [Negative] $ [34,711] [1,018] [35,729] [91,973] [91,973] [127,702] 517,109 517,109 389,407 111,951 $ 501,358 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS -BUDGET AND ACTUAL (NON -GAAP BASIS) GOLF COURSE FUND For the Year Ended December 31, 2015 Budgeted Amounts Actual Original Revenues Charges for services $ 819,945 $ 834,500 $ Investment revenue 221 Miscellaneous 42,416 Total revenues 862,582 834,500 Expenditures Recreation 815,382 904,877 Total expenditures 815,382 904,877 Excess [deficiency] of revenues over [under] expenditures 47,200 [70,377] Other financing sources [uses] Transfers [out] [48,217] Total other financing sources [uses] [48,217] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 47,200 [118,594] Unreserved fund balance, January 1 117,158 118,594 Unreserved fund balances, December 31 $ 164,358 $ -$ See independent auditor's report on the financial statements. 73 Final 834,500 834,500 904,877 904,877 [70,377] [48,217] [48,217] [118,594] 118,594 - Variance with Final Budget Positive [Negative) $ [14,555] 221 42,416 28,082 89,495 89,495 117,577 48,217 48,217 165,794 [1,436] $ 164,358 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GMP BASIS} WORKERS' COMPENSATION RESERVE FUND For the Year Ended December 31, 2015 Budgeted Amounts Actual Original Revenues Charges for services $ 301,579 $ 456,490 $ Investment revenue 1,491 2,500 Miscellaneous 1,883 Total revenues 304,953 458,990 Expenditures General government 304,889 441,030 Total expenditures 304,889 441,030 Excess [deficiency) of revenues over [under] expenditures 64 17,960 Unreserved fund balance, January 1 621,645 685,100 Unreserved fund balances, December 31 $ 621,709 $ 703,060 $ See independent auditor's report on the financial statements. 74 Final 456,490 2,500 458,990 441,030 441,030 17,960 685,100 703,060 Variance with Final Budget Positive [Negative] $ [154,911] [1,009] 1,883 [154,037] 136,141 136,141 [17,896] [63,455] $ [81,351) CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) HEALTH INSURANCE FUND For the Year Ended December 31, 2015 Budgeted Amounts Actual Original Final Revenues Charges for services $ 6,368,477 $ 7,084,350 $ 7,084,350 Investment revenue 2,118 5,000 5,000 Miscellaneous 16,122 Total revenues 6,386,717 7,089,350 7,089,350 Expenditures General government 6,121,023 8,048,360 8,048,360 Total expenditures 6,121,023 8,048,360 8,048,360 Excess [deficiency] of revenues over [under] expenditures 265,694 [959,010] [959,010] Unreserved fund balance, January 1 896,856 1,307,041 1,307,041 Unreserved fund balances, December 31 $ 1,162,550 $ 348,031 $ See independent auditor's report on the financial statements. 75 348,031 Variance with Final Budget Positive [Negative] $ [715,873] [2,882] 16,122 [702,633] 1,927,337 1,927,337 1,224,704 [410,185] $ 814,519 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 , 2015 Budgeted Amounts Actual Original Revenues Charges for services $ 1,257,329 $ 1,811,570 $ Investment revenue 66 40 Miscellaneous 928 Total revenues 1,258,323 1,811,610 Expenditures General government 1,379,585 1,806,158 Total expenditures 1,379,585 1,806,158 Excess [deficiency] of revenues over [under] expenditures [121,262] 5,452 Other financing sources [uses] Transfers in 100,000 Transfers [out] [10,000] [66,150] Total other financing sources [uses] 90,000 [66,150) Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [31,262] [60,698] Unreserved fund balance, January 1 16,441 376,490 Unreserved fund balance, December 31 $ p4,821J $ 315,792 $ See independent auditor's report on the financial statements. 76 Final 1,811,570 40 1,811,610 1,806,158 1,806,158 5,452 [66,150] [66,150] [60,698] 376,490 315,792 Variance with Final Budget Positive [Negative] $ [554,241] 26 928 [553,287] 426,573 426,573 [126,714] 100,000 56,150 156,150 29,436 [360,049] $ [330,613] 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. 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. 77 CITY OF SALINA, KANSAS COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS December 31, 2015 Workers' Compensation Health ASSETS Reserve Insurance Current assets: Cash and investments $ 750,898 $1 ,162,720 Inventory and prepaid supplies Total current assets 750,898 1,162,720 Capital assets: Capital assets Less: accumulated depreciation Total capital assets Total assets 750,898 1,162,720 Deferred outflows of resources: Pension -contributions subsequent to the measurement date Pension -changes in proportion Total deferred outflows of resources Total assets and deferred outflows of resources $ 750,898 $1,162,720 Liabilities: Current liabilities (payable from current assets): Accounts payable $ 204 $ 170 Current portion of compensated absences payable Current portion of accrued claims payable 181,093 275,440 Total current liabilities (payable from current assets) 181,297 275,610 Noncurrent liabilities: Compensated absences payable Accrued claims payable 100,508 Net pension liability Total noncurrent liabilities 100,508 Total liabilities 281,805 275,610 Deferred inflows of resources Pension -difference between expected and actual experience Pension -net difference between projected and actual earnings on pension plan investments Pension -changes of assumptions Pension - c h a n g e in proportion Total deferred inflows of resources Total liabilities and deferred inflows of resources $ 281,805 $ 275,610 Net Position Invested in capital assets, net of related debt $ -$ - Unrestricted 469,093 887,110 Total net position $ 469,093 $ 887,110 See independent auditor's report on the financial statements. 78 Total Internal Central Service Garage Funds $ 43,145 $1,956,763 194,089 194,089 237,234 2,150,852 223,242 223,242 181,362 181 ,362 41,880 41,880 279,114 2,192,732 9,278 9,278 7 7 9,285 9,285 $288,399 $2,202,017 $ 57,965 $ 58,339 18,832 18,832 456,533 76,797 533,704 17,877 17,877 100,508 141,390 141,390 159,267 259,775 236,064 793,479 4,003 4,003 5,504 5,504 1,976 1,976 6,959 6,959 18,442 18,442 $254,506 $ 811 ,921 $ 41 ,880 $ 41,880 [7,987] 1,348,216 $ 33,893 $1 ,390,096 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION INTERNAL SERVICE FUND For the Year Ended December 31, 2015 Workers' Risk Compensation Health Central Management Reserve Insurance Garage Operating revenues Charges for services $ -$ 301,579 $ 6,368,477 $ 1,257,329 Miscellaneous 1,883 16,122 98 Total operating revenues 303,462 6,384,599 1,257,427 Operating expenses General government 244,128 5,867,248 1,332,749 Depreciation 9,259 Total operating expenses 244,128 5,867,248 1,342,008 Operating income [loss] 59,334 517,351 [84,581] Nonoperating revenues [expenses] Investment revenue 1,491 2,118 66 Gain/[loss) on disposal of fixed assets 830 Total other operating revenues [expenses] 1,491 2,118 896 Income [loss) before transfers Transfers from [to] other funds Transfers in Transfers [out] Total transfers Change in net position Net position, January 1 Restatement Net position, January 1, restated Net position, December 31 60,825 519,469 [83,685] 100,000 [10,000] 90,000 60,825 519,469 6,315 25,593 408,268 367,641 185,379 [25,593] [157,801] 408,268 367,641 27,578 $ -$ 469,093 $ 887,110 $ 33,893 See independent auditor's report on the financial statements. 79 Total Internal Information Service Systems Funds $ -$ 7,927,385 18,103 7,945,488 7,444,125 9,259 7,453,384 492,104 3,675 830 4,505 496,609 100,000 [10,000] 90,000 586,609 43,407 1,030,288 [43,407] [226,801] 803,487 $ -$ 1,390,096 CITY OF SALINA, KANSAS COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the Year Ended December 31, 2015 Workers' Risk Compensation Health Management Reserve Insurance Cash flows from operating activities Cash received from customers and users $ $ 240,818 $6,114,702 Cash paid to suppliers of goods or services [244,490] [5,867,248] Cash paid to employees Other operating receipts 1,883 16,122 Net cash provided by [used in) operating activities [1,789] 263,576 Cash flows from investing activities Interest received 1 491 2 118 Cash flows from capital and related financing activities Purchase and construction of capital assets Proceeds from sale of capital assets Net cash provided by [used in] capital Cash flows from noncapital financing activities Transfers in Transfers [out) Net cash provided by [used in] noncapital financing activities Net increase [decrease] in cash and cash equivalents [298] 265,694 Cash and cash equivalents, January 1 62,853 751,196 897,026 Restatement [62,853] Cash and cash equivalents, January 1, restated 751,196 897,026 Cash and cash equivalents, December 31 $ -$ 750,898 $1,162,720 See independent auditor's report on the financial statements. 80 Total Internal Central Information Service Garage Services Funds $1,257,330 $ -$7,612,850 [1 ,067,832] (7,179,570) [261,984] [261,984) 98 18103 [72,388] 189,399 65 3 674 [36,685] [36,685] 830 830 [35,855) [35,855) 100,000 100,000 [10,000) [10,000) 90,000 90,000 [18,178] 247,218 61,323 126,351 1,898,749 [126,351) (189,204) 61 ,323 1,709,545 $ 43,145 $ $1,956,763 CITY OF SALINA, KANSAS COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS (Continued) For the Year Ended December 31, 2015 Reconciliation of operating [loss] income to net cash provided by [used in] operating activities Workers' Compensation Health Central Reserve Insurance Garage Total Internal Service Funds Operating income [loss] $ 59,334 $517,351 $[84,581] $492,104 Adjustments to reconcile operating income [loss] to net cash provided by [used in] operating activities Depreciation expense [Increase] decrease in inventory [Increase] decrease in deferred outflows Increase [decrease] in accounts payable Increase [decrease] in accrued compensated absences Increase [decrease] in net pension liability Increase [decrease] in claims payable Increase [decrease] in deferred inflows Net cash provided by [used in] operating activities [362] [60,761] [253,775] $ [1,789) $263,576 See independent auditor's report on the financial statements. 81 9,259 9,259 [5,729] [5,729] [32] [32] 13,085 12,723 2,832 2,832 1,873 1,873 [314,536] [9,095] [9,095] $ [72,388) $189,399 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. 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. 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. 82 ASSETS: Cash and investments Total assets LIABILITIES: Accounts payable Total liabilities CITY OF SALINA, KANSAS COMBINING BALANCE SHEET AGENCY FUNDS December 31, 2015 Special Fire Court Police Assessment Insurance Payroll Bond and Investigation Escrow Proceeds Clearing Restitution Account CitizenshiQ $ $ $ $ 84,647 $ 63 $ [303,463] $ 31,696 $ 3,376 $ 84,647 $ 63 $ [303,463] $ 31,696 $ 3,376 $ 84,647 $ 63 $ [303,463] $ 31,696 $ 3,376 $ 84,647 $ 63 $ [303,463) $ 31 ,696 $ 3,376 $ See independent auditor's report on the financial statements. 83 172 172 172 172 Section 125 Plan Totals $310,950 $127,441 $310,950 $127,441 $310,950 $127,441 $310,950 $127,441 CITY OF SALINA, KANSAS COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS For the Year Ended December 31, 2015 Balance December 31, 2014 Additions Deductions Cash and investments Special Assessment Escrow $ 121,157 $ 1,113 $ Fire Insurance Proceeds 53 58,234 PEGS Access 1 Payroll Clearing [273,632] Court Bond and Restitution 35,899 Police Investigation Account 4,014 Citizenship Trust 3,729 4 Section 125 Plan Fund 316,863 310,062 Total Assets $ 208,084 $ 369,413 $ Accounts Payable Special Assessment Escrow $ 121,157 $ 1,113 $ Fire Insurance Proceeds 53 58,234 PEGS Access 1 Payroll Clearing [273,632] Court Bond and Restitution 35,899 Police Investigation Account 4,014 Citizenship Trust 3,729 4 Section 125 Plan Fund 316,863 310,062 Total liabilities $ 208,084 $ 369,413 $ See independent auditor's report on the financial statements. 84 37,623 58,224 1 29,831 4,203 638 3,561 315,975 450,056 37,623 58,224 1 29,831 4,203 638 3,561 315,975 450,056 Balance December 31, 2015 $ 84,647 63 [303,463] 31,696 3,376 172 310,950 $ 127,441 $ 84,647 63 [303,463] 31,696 3,376 172 310,950 $ 127,441 CITY OF SALINA, KANSAS SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended December 31, 2015 Federal Federal Granter/Pass-Through CFDA Granter/Program Title Number Revenues Department of Housing and Urban Develo12ment Fair Housing Assistance Program 14.401 $ 30,300 Passed through Kansas Housing Resources Corporation Emergency Solutions Grant 14.231 97,796 Total Department of Housing and Urban Development 128,096 Department of Transportation Passed Through the Kansas Department of Transportation: State and Community Highway Safety 20.600 11,495 National Priority Safety Programs 20.616 7,502 Total Department of Transportation 18,997 Environmental Protection Agency Community Action for a Renewed Environment (CARE) Program 66.035 37,323 Passed Through the Kansas Department of Health and Environment Capitalization Grants for Drinking Water State Revolving Funds 66.468 Total Environmental Protection Agency 37,323 Total Expenditures of Federal Awards $ 184,416 Exeenditures $ 97,796 97,796 11,495 7,502 18,997 42,026 1,673,971 1,715,997 $ 1,832,790 See independent auditor's report on the financial statements and notes to the schedule of expenditures of federal awards. 85 CITY OF SALINA, KANSAS NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended December 31, 2015 1. Organization The City of Salina, Kansas (the City), is the recipient of several federal awards. All federal awards received directly from federal agencies as well as those awards that are passed through other government agencies, are included on the schedule of Expenditures of Federal Awards. 2. Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the City, and is presented on the Kansas regulatory basis of accounting which includes cash disbursements, accounts payable and encumbrances. The information presented in this schedule is in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of the basic financial statements. The City elected not to use the 10% de minimis indirect cost rate. 3. Local Government Contributions Local cost sharing is required by certain federal grants. The amount of cost sharing varies with each program. Only the federal share of expenditures is presented in the Schedule of Expenditures of Federal Awards. 4. Additional Audits Grantor agencies reserve the right to conduct additional audits of the City's grant programs for economy and efficiency and program results that may result in disallowed costs to the City. However, management does not believe such audits would result in any disallowed costs that would be material to the City's financial position at December 31, 2015. 5. Outstanding Loans The City did not have any outstanding loans under any federal grants at December 31, 2015. 86 CITY OF SALINA, KANSAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2015 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 the Uniform Guidance? 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? 87 Unmodified X Yes No --- X Yes None reported --- Yes X No ------ Yes X No ------ Yes ---X None reported --- Unmodified Yes X No ------ Name of Federal Program or Cluster Capitalization Grants for Drinking Water State Revolving Funds $750,000 X Yes No --- CITY OF SALINA, KANSAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) For the Year Ended December 31, 2015 Section II -Financial Statement Findings Current Year Findings Material Weaknesses: Finding 2015-1 -Cash and Bank Reconciliations Conditions and Criteria: During our audit of cash balances we noted the following: a. The City did not prepare individual bank reconciliations for the months of August, 2015 through November, 2015. b. The City did not complete the bank reconciliation for the month ended December 31, 2015 until May, 2016. c. The City did not have formal bank reconciliation procedures in place from August, 2015 through the completion of audit fieldwork in May, 2017. Context: The City underwent an accounting sotty,,are conversion in August, 2015 and also experienced significant turnover in key finance department staff positions during 2015, 2016 and 2017. After the conversion process, the City was unable to property reconcile cash balances due to problems encountered with the new software and due to inexperienced personnel attempting to perform the reconciliations. Effect: The cash balances for the months of August, 2015 through November, 2015 were inadequately documented and analyzed and the cash balances at December 31 , 2016 were unable to be effectively audited until May, 2017. Cause: No procedures were in place to properly reconcile cash balances after the software conversion in August, 2015. Auditor's Recommendation: We recommend that the City establish written procedures to document the bank reconciliation process and ensure that bank reconciliations are prepared timely after each month-end. Additionally, we recommend that the City ensure that there is proper separation of duties with regards to individuals responsible for handling cash, recording accounting transactions, receiving and opening bank statements, preparing bank reconciliations and reviewing bank reconciliations. Views of Responsible Officials and Planned Corrective Actions: The City agrees with the recommendation and will work to implement the proposed steps. Finding 2015-2 -Capital Assets and Construction In Progress Conditions and Criteria: During our audit of capital assets and construction in progress we noted the following: a. During 2015, the City did not properly update their capital asset software for capital assets acquired and disposed of throughout the year. b. During 2015, the City did not consistently track the status of the various capital projects in progress and did not keep an accurate accounting of expenditures and open payables related to these projects. c. At the beginning of audit fieldwork, City staff did not possess appropriate knowledge of the City's asset capitalization policies or asset management systems. Context: The City underwent an accounting software conversion in August, 2015 and also experienced significant turnover in key finance department staff positions during 2015, 2016 and 2017. During much of this time, the City was unable to keep up with the management of capital asset and construction in progre·ss reporting. Effect: The capital asset and construction in progress balances for 2015 were inadequately documented during much of audit fieldwork. It was not until June, 2017 that the City as able to complete the accounting for capital assets and construction in progress as of December 31, 2015. Cause: No procedures were in place to properly maintain capital asset and construction in progress balances during 2015. Auditor's Recommendation: We recommend that the City establish written procedures to document the recording of capital assets in their software and that all capital projects be continuously tracked and monitored to ensure accurate construction in progress balances. Additionally, we recommend that the City ensure that there is proper separation of duties with regard to individuals responsible for purchasing, recording and reconciling capital assets and construction in progress. Views of Responsible Officials and Planned Corrective Actions: The City agrees with the recommendation and will work to implement the proposed steps. 88 CITY OF SALINA, KANSAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) For the Year Ended December 31, 2015 Section II -Financial Statement Findings (Continued) Current Year Findings (Continued) Finding 2015-3 -General Accounting Policies & Procedures Conditions and Criteria: During our audit, many of the reports requested by the auditors had to be re-run multiple times over the course of the approximately one year time period it took to complete audit fieldwork. It was necessary to re-run the reports after it was determined that the previous versions contained inaccurate or incomplete data. Each time a report was re-run, the audit process for that report had to be started over again, which significantly increased audit time. Reports that were re-run on multiple occasions included detail and summary trial balances, year-end accounts payable balances, year-end encumbrances balances, capital asset summaries, construction in progress reconciliations and other reports containing supplemental data. Context: The City underwent an accounting software conversion in August, 2015 and also experienced significant turnover in key finance department staff positions during 2015, 2016 and 2017. During much of this time, the City was attempting to identify errors created in the software conversion and post journal entries to correct the errors. Effect: Accounting reports necessary for the audit were incorrect or incomplete. Cause: The City lacked appropriate knowledge of the new accounting system to be able to correctly record transactions and generate reports. Auditor's Recommendation: We recommend that the City continue to provide appropriate levels of training for staff using the new accounting software and that the City work to develop appropriate written accounting policies and procedures that include adequate internal controls. Views of Responsible Officials and Planned Corrective Actions: The City agrees with the recommendation and will work to implement the proposed steps. Significant Deficiencies: Finding 2015-4 -Municipal Court Accounts Receivable Conditions and Criteria: During our audit of municipal courts accounts receivable balances we noted the following: a. The City was unable to produce an accounts receivable aging report or accounts receivable subledger that agreed to the municipal courts accounts receivable balance as of December 31 , 2015 Municipal Court Monthly Report. b. Per a comparison of the 2015 and 2014 Municipal Court Monthly Reports, the number of municipal court cases filed decreased by approximately 1 % and the amount of cost and fine revenues collected decreased by approximately 7% during 2015. c. Per a comparison of the 2015 and 2014 Municipal Court Monthly Reports, the number of cases closed decreased by 1% during 2015 and the number of pending cases at December 31, 2015 was 22% higher than at December 31 , 2014. Context: The City collects municipal court revenues and tracks municipal court accounts receivable balances. In the year under audit, the City was unable to provide appropriate documentation and explanations to the auditor to support the case numbers, revenues recorded, accounts receivable balances. Effect: The municipal court revenue and accounts receivable balances were inadequately documented and analyzed. Cause: No procedures were in place to produce the appropriate accounts receivable reports or analyze the differences between years of various municipal court revenue data. Auditor's Recommendation: We recommend that the City process and save a detailed accounts receivable aging report at the end of each month that agrees to the Municipal Court Monthly Report. Additionally, we recommend that the City designate an appropriate individual to review and approve these reports each month and to closely monitor the number of cases closed and cases pending in order to determine if sufficient progress is being made to close 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 these tickets are in line with the City's projections and budget. Views of Responsible Officials and Planned Corrective Actions: The City agrees with the recommendation and will work to implement the proposed steps. 89 CITY OF SALINA, KANSAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) For the Year Ended December 31, 2015 Section II • Financial Statement Findings (Continued) Prior Year Findings Significant Deficiencies: Finding 2014·1 • Municipal Court Accounts Receivable Conditions and Criteria: During our audit of municipal courts accounts receivable balances we noted the following: a. The City was unable to produce an accounts receivable aging report or accounts receivable subiedger that agreed to the municipal courts accounts receivable balance as of December 31, 2014 Municipal Court Monthly 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% during 2014. c. Per a comparison of the 2014 and 2013 Municipal Court Monthly Reports, the number of case closed decreased by 23% during 2014 and the number of pending cases at December 31 , 2014 was 68% higher than at December 31, 2013. Context: The City collects municipal court revenues and tracks municipal court accounts receivable balances. In the year under audit, the City was unable to provide appropriate documentation and explanations to the auditor to support the case numbers, revenues recorded, accounts receivable balances. Effect: The municipal court revenue and accounts receivable balances were inadequately documented and analyzed. Cause: No procedures were in place to produce the appropriate accounts receivable reports or analyze the differences between years of various municipal court revenue data. Auditor's Recommendation: We recommend that the City process and save a detailed accounts receivable aging report at the end of each month that agrees to the Municipal Court Monthly Report. Additionally, we recommend that the City designate an appropriate individual to review and approve these reports each month and to closely monitor the number of cases closed and cases pending in order to determine if sufficient progress is being made to close 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 these tickets are in line with the City's projections and budget. Status: Repeated at Finding 2015-4 Section Ill • Federal Award Findings and Questioned Costs None Noted 90 • MIZE~J-IOUSER '-"'-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 Guide, the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Salina, Kansas, (the City) as of and for the year ended December 31, 2015, and the related notes to the financial statements, which collectively comprise the City's financial statements, and have issued our report thereon dated June 26, 2017. 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 other auditors' testing of internal control over financial reporting or compliance and other 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. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph 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. However, as described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies. 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 entity's financial statements will not be prevented or detected and corrected on a timely basis. We consider the deficiencies described in the accompanying schedule of findings and questioned costs to be material weaknesses: Finding 2015-1, Finding 2015-2, Finding 2015-3. 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. We consider the deficiencies described in the accompanying schedule of findings and questioned costs to be significant deficiencies: Finding 2015-4. www.mizehouser.com • mhco@mlzehouser.com 534 S Kansas Ave, Suite 700 • Topeka, KS 66603-3465 • 785.233.0536 p • 785.233.1078 f 534 S Kansas Ave, Suite 400 • Topeka, KS 66603-3454 • 785.234.5573 p • 785.234.1037 f 7101 College Blvd, Suite 900 • Overland Park, KS 66210-1984 • 913.451.1882 p • 913.451 .2211 f 211 E Eighth Suite A• Lawrence, KS 66044-2771 • 785.842.8844 p • 785.842.9049 f 91 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 June 26, 2017. 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 June 26, 2017 /JI+ 92 Ill MIZE.,e.flOUSER ~OMPANYP.A. INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE Mayor and City Commissioners City of Salina, Kansas Report on Compliance for Each Major Federal Program We have audited the compliance of the City of Salina, Kansas, (the City) with the types of compliance requirements described in the 0MB 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 , 2015. 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 compliance 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 audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion 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, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2015. www.mlzehouser.com • mhco@mlzehouser.com 534 S Kansas Ave, Suite 700 • Topeka, KS 66603-3465 • 785.233.0536 p • 785.233.1078 f 534 S Kansas Ave, Suite 400 • Topeka, KS 66603-3454 • 785.234.5573 p • 785.234.1037 f 7101 College Blvd, Suite 900 • Overland Park. KS 66210-1984 • 913.451.1882 p • 913.451.2211 f 211 E Eighth Suite A• Lawrence, KS 66044-2771 • 785.842.8844 p • 785.842.9049 f 93 Report on Internal 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 the Uniform Guidance, 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 and therefore, material weaknesses or significant deficiencies may exists that were not identified. 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 the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Certified Public Accountants Lawrence, Kansas June 26, 2017 /J4 94 APPENDIX D Unaudited Financial Statements for the Fiscal Year ended December 31, 2016 2015 Revised 2016 Revised 2017 Original Budget 2015 Actual Budget 2016 Actual Budget 100 -General Fund Revenue 40,511,616.00 38,567,874.65 41,035,321.00 39,612,327.70 43,235,527.00 Expense (39,907,141.00) (38,214,301.41} (40,855,630.00) (39,186,606.43) (43,875,813.00) 100 -General Fund Total 604,475.00 353,573.24 179,691.00 425,721.27 (640,286.00) Beginning Fund Balance 2,988,547.00 3,342,120.24 Ending Fund Balance 3,342,120.24 3,767,841.51 200 -Arts and Humanities Revenue 982,850.00 933,739.98 1,007,850.00 960,787.99 982,850.00 Expense (990,320.00} (895,510.39} (1,007,604.00} (944,905.68} (1,016,988.00) 200 -Arts and Humanities Total (7,470.00) 38,229.59 246.00 15,882.31 (34,138.00) Beginning Fund Balance 100,021.00 138,250.59 Ending Fund Balance 138,250.59 154,132.90 210 -Sales Tax Capital Revenue 4,255,000.00 4,208,985.84 4,294,950.00 4,439,517.4.3 8,0A8,656.00 Expense (4,576,750.00) (3,736,469.30) (3,485,805.00) (4,390,740.03) (8,64.5,088.00) 210 -Sales Tax Capital Total (321,750.00) 472,516.54 809,145.00 48,777.40 (596,432.00) Beginning Fund Balance 1,023,469.00 1,495,985.54 Ending Fund Balance 1,495,985.54 1,544,762.94 220 -Sales Tax Economic Dev Revenue 322,744.00 355,451.66 351,586.00 349,032.03 ~54,849.00 Expense (901,470.00) (133,391.12) (750,000.00) (449,844.70) (1,474,000.00) 220 -Sales Tax Economic Dev Total (578,726.00) 222,060.54 (398,414.00) (100,812.67) (819,151.00) Beginning Fund Balance 675,154.00 897,214.54 Ending Fund Balance 897,214.54 796,401.87 230 -Business lmprov District #1 Revenue 90,500.00 83,144.72 87,013.00 81,511.68 89,190.00 Expense (90,500.00) (78,836.87) (87,000.00) (77,421.46) (89,175.00) 230 -Business lmprov District #1 Total 0.00 4,307.85 13.00 4,090.22 15.00 Beginning Fund Balance (436.85) 3,871.00 ' Ending Fund Balance 3,871.00 , 7,961.22 * . . 240 -Tourism and Convention Revenue 1,420,000.00 1,859,359.70 1,500,171.00 1,600,511.95 1,608,000.00 Expense (1,420,000.00) (1,801,790.45) (1,600,513.00) (1,600,511.55) (2,207,990.00) 240 -Tourism and Convention Total 0.00 57,569.25 (100,342.00) 0.40 (599,990.00) Beginning Fund Balance 24,394.70 81,963.95 Ending Fund Balance 81,963.95 : 81,964.35 250 -Special Parks and Recreation Revenue 164,000.00 184,828.57 184,749.00 178,086.44 194,092.00 Expense (152,432.00) (284,129.13} (208,000.00) (146,341.96) (194,000.00) 250 -Special Parks and Recreation Total 11,568.00 (99,300.56) (23,251.00) 31,744.48 92.00 Beginning Fund Balance 182,600.36 83,299.80 Ending Fund Balance 83,299.80 115,044.28 D-1 260 -Special Alcohol Revenue 160,000.00 184,691.93 211,776.00 177,818.63 216,086.00 Expense (165,204.00) (227,014.61) (217,252.00) (177,818.51) (216,086.00) 260 -Special Alcohol Total (5,204.00) {42,322.68) (5,476.00) 0.12 0.00 Beginning Fund Balance 42,456.23 133.55 Ending Fund Balance 133.55 133.67 270 -Special Gas Tax Revenue l,608, 730.00 1,589,904.27 1,543,929.00 1,562,036.00 1,536,400.00 Expense {l,642, 700.00) {1,852,147.80) {1,341,158.00) {1,398,498.37) {1,516,158.00) 270 -Special Gas Tax Total (33,970.00) {262,243.53) 202,771.00 163,537.63 20,242.00 Beginning Fund Balance 376,058.20 113,814.67 Ending Fund Balance 113,814.67 277,352.30 280 -Neighborhood Park Development Revenue 24,000.00 9,773.88 10,161.00 6,713.10 10,500.00 Expense {134,260.00) (5,024.00) (100,000.00) (79,471.39) (95,073.00) 280 -Neighborhood Park Development Total (110,260.00) 4,749.88 (89,839.00) {72,758.29) {84,573.00) Beginning Fund Balance 95,382.33 100,132.21 Ending Fund Balance 100,132.21 27,373.92 t 290 -Bicentennial Center Revenue 480,000.00 756,639.48 700,000.00 733,211.91 720,000.00 Expense (450,000.00) (723,851.72) (900,000.00) (725,159.01) (850,000.00) 290 -Bicentennial Center Total 30,000.00 32,787.76 (200,000;00) 8,052.90 {130,000.00) Beginning Fund Balance 500.00 33,287.76 Ending Fund Balance 33,287.76 41,340.66 300 -Sanitation Revenue 2,503,500.00 2,545,600.50 2,873,705.00 2,697,124.36 2,934,679.00 Expense (2,452,560.00) {2,408,537.59) (2,865,267.00) (2,689,821.70) (2,930,516.00) 300 -Sanitation Total 50,940.00 137,062.91 8,438.00 7,302.66 4,163.00 Beginning Fund Balance 897,013.02 1,034,075.93 Ending Fund Balance 1,034,075.93 , 1,041,378.59 320 -Solid Waste Revenue 2,489,810.00 2,673,444.30 2,465,040.00 2,826,041.59 2,568,789.00 Expense (2,567,641.00) (2,493,406.17) (2,610,530.00) (2,034,634.38) (2,985,410.00) 320-Solid Waste Total (77,831.00) 180,038.13 (145,490.00) 791,407.21 (416,621.00) Beginning Fund Balance 2,085,518.82 2,265,556.95 Ending Fund Balance 2,265,556.95 3,056,964.16 340 -Golf Course Revenue 834,500.00 862,582.33 867,215.00 837,422.29 873,850.00 Expense (788,187.00) (815,382.40) (790,914.00) {899,761.51) (901,353.00) 340-Golf Course Total 46,313.00 47,199.93 76,301.00 (62,339.22) (27,503.00) Beginning Fund Balance 117,157.65 164,357.58 Ending Fund Balance 164,357.58 102,018.36 370 -Water and Wastewater Revenue 20,279,650.00 19,141,409.66 19,057,200.00 19,096,358.22 19,782,200.00 D-2 Expense (19,808,782.00) (18,932,573.46) (21,548,754.00) (15,021,248.00) (21,691,722.00) 370 -Water and Wastewater Total 470,868.00 208,836.20 (2,491,554.00) 4,075,110.22 (1,909,522.00) Beginning Fund Balance 9,306,498.22 9,515,334.42 Ending Fund Balance 9,515,334.42 13,590,444.64 410 -Workers Comp Reserve Revenue 459,990.00 304,952.37 496,981.00 516,848.91 313,837.00 Expense (401,030.00) (304,888.67) (401,030.00) (262,660.80) (409,667.00) 410 -Workers Comp Reserve Total 58,960.00 63.70 95,951.00 254,188.11 (95,830.00) Beginning Fund Balance 621,644.47 621,708.17 Ending Fund Balance 621,708.17 875,896.28 420 -Health Insurance Revenue 6,416,680.00 6,386,717.15 6,720,000.00 6,754,119.83 7,054,200.00 Expense (6,182,628.00) (6,121,023.45) (6,587,999.00) (5,776,461.92) (6,960,644.00) 420 -Health Insurance Total 234,052.00 265,693.70 132,001.00 977,657.91 93,556.00 Beginning Fund Balance 896,856.04 1,162,549.74 Ending Fund Balance 1,162,549.74 2,140,207.65 450 -Central Garage Revenue 1,492,822.00 1,358,322.88 1,531,540.00 1,328,254.12 1,747,540.00 Expense (1,469,503.00) (1,389,584.90) (1,396,483.00) (1,33i,012.06) (1,767,484.00) 450-Central Garage Total 23,319.00 (31,262.02) 135,057.00 (3,757.94) (19,944.00) Beginning Fund Balance 16,441.92 (14,820.10) Ending Fund Balance (14,820.10) (18,578.04) 500 -Bond and Interest Revenue 6,422,714.00 6,825,111.23 6,900,252.00 7,561,484.30 6,866,452.00 Expense (6,522,095.00) (6,628,921.93) (7,035,500.00) (7,027,834.04) (7,244,607.00) 500 -Bond and Interest Total (99,381.00} 196,189.30 (135,248.00} 533,650.26 (378,155.00) Beginning Fund Balance 344,671.85 540,861.15 Ending Fund Balance 540,861.15 1,074,511.41 D-3 Cityof Salina A Mixed Sources \.1 -----fONStl. Qlllnled IOWUS and N<Jded wood • ibft. Printed by: lmageMaster, LLC www.Jm,gtmaster.com • t s CERTIFICATE DEEMING PRELIMINARY OFFICIAL STATEMENT FINAL July 10, 2017 To: Robert W •. Baird, Inc. Red Bank, New Jersey Commerce Bank Kansas City, Missour~ Re: City of Salina, Kansas, General Obligation Internal Improvement Bonds, Series 2017-A City of Salina, Kansas, General Obligation Temporary Notes, Series 2017-1 The undersigned are the duly acting Finance Director of the City of Salina, Kansas (the "Issuer"), and are authorized to deliver this Certificate to the addressee (the "Purchaser") on behalf of the Issuer. The Issuer has previously caused to be delivered to the Purchaser copies of the Preliminary Official Statement (the "Preliminary Official Statement") relating to the above-referenced notes and bonds (the "Securities"). For the purpose of enabling the Purchaser to comply with the requirements of Rule 15c2-12(b )(1) of the Securities and Exchange Commission (the "Rule"), the Issuer hereby deems the information regarding the Issuer contained in the Preliminary Official Statement to be final as of its date, except for the omission of such information as is permitted by the Rule, such as offering prices, interest rates, selling compensation, aggregate principal amount, principal per maturity, delivery dates, ratings, identity of the underwriters and other terms of the Securities depending on such matters. CITY OF SALINA, KANSAS By:~~ Title: Financerector In the opinion of Gilmore & Bell, P.C., 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 Notes and Bonds (including any original issue discount properly allocable to an owner thereof) is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, {2) the interest on the Notes and Bonds is exempt from income taxation by the State of Kansas, and {3} the Notes and Bonds have not been designated as "qualified tax-exempt obligations" within the meaning of Code Section 265{b}{3}. See TAX MATTERS -"Opinion of Bond Counsel" herein. New Issues Book-Entry Only Dated: Date of Delivery Moody's Ratings: Bonds-"Aa3" Notes-"MIG 1" CITY OF SALINA, KANSAS $2,180,000 GENERAL OBLIGATION TEMPORARY NOTES SERIES 2017-1 $9,310,000 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2017-A Due: As Shown Herein The General Obligation Temporary Notes, Series 2017-1 Notes {the "Notes") will be issued by the City of Salina, Kansas (the "Issuer" or the "City") as fully registered notes, without coupons. Purchases of the Notes will be made in book-entry form, in the denominations of $5,000 or any integral multiple thereof {the "Authorized Denomination"). Principal and interest will be payable at maturity upon presentation and surrender of the Notes by the registered owners thereof at the office of the Treasurer of the State of Kansas {the "Note Paying Agent" and "Note Registrar."). The Notes are not subject to redemption prior to maturity. The General Obligation Internal Improvement Bonds, Series 2017-A Bonds (the "Bonds") will be issued by the Issuer, as fully registered bonds, without coupons. Purchases of the Bonds will be made in book-entry only form, in the denomination of $5,000 or any integral multiple thereof (the "Authorized Denomination"). 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, 2018. The Treasurer of the State of Kansas will be designated as paying agent and registrar or the Bonds (the "Bond Paying Agent" and "Bond Registrar"). The Bonds are subject to redemption at the option of the City as further described herein. See THE BONDS -"Redemption Provisions" herein. MATURITY SCHEDULES (see inside front cover) The full faith, credit, and resources of the City are irrevocably pledged for the prompt payment of the principal and interest on the Notes and Bonds as the same becomes due. See THE NOTES -"Security" and THE BONDS -"Security" herein. The Notes and Bonds are offered when, as and if issued by the City and received by the Underwriters subject to the approval of Bond Counsel. It is expected that the Notes and Bonds will be available for delivery through the facilities of DTC on or about July 27, 2017. This date of this Official Statement is July 10, 2017. THIS COVER PAGE CONTAINS INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THE ISSUES. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OFAN INFORMED INVESTMENT DECISION. Maturity 08-01-18 MATURITY SCHEDULES $2,180,000 GENERAL OBLIGATION TEMPORARY NOTES SERIES 2017-1 Amount $2,180,000 Rate 2.000% Yield 1.050% The Notes are not subject to redemption prior to maturity. $9,310,000 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2017-A Maturity 10-01-18 10-01-19 10-01-20 10-01-21 10-01-22 10-01-23 10-01-24 10-01-25* 10-01-26* 10-01-27* 10-01-28* 10-01-31 * 10-01-32* 10-01-33* 10-01-34* 10-01-35* 10-01-36* 10-01-37* Maturity 10-01-2030* Amount $175,000 390,000 395,000 410,000 420,000 435,000 445,000 455,000 475,000 490,000 505,000 555,000 565,000 480,000 495,000 505,000 525,000 540,000 Amount* $1,050,000 SERIAL BONDS Rate 3.000% 3.000 3.000 3.000 3.000 3.000 3.000 3.000 3.000 3.000 3.000 3.000 3.000 3.125 3.250 3.250 3.250 3.375 TERM BONDS Rate 3.000% (All plus accrued interest, if any) Yield 1.100% 1.250 1.350 1.500 1.650 1.840 1.960 2.100 2.300 2.500 2.750 3.100 3.200 3.250 3.290 3.330 3.375 3.400 Yield 3.000% Base cus1p111 794744 AAO Base cus1p111 794744 AB8 AC6 AD4 AE2 AF9 AG7 AH5 AJl AK8 AL6 AM4 AQ5 AR3 ASl AT9 AUG AV4 AW2 CUSIP Ill Base 794744 AP7 *The Bonds maturing on or after October 1, 2025, are subject to redemption prior to maturity at the option of the City on October 1, 2024, and thereafter, in whole or in part at any time at a price equal to 100% of the principal amount of Bonds to be redeemed plus accrued interest to the redemption date. The Term Bonds are subject to mandatory redemption as further described herein. See THE BONDS -"Redemption Provisions" herein. /liCLJSIP numbers have been assigned to this issue by Standard & Poor's CUSIP Service Bureau, a division of S&P Global Inc .. , and are included solely for the convenience of the Owners of the Notes and Bonds. Neither the City nor the Underwriters sho/1 be responsible for the selection or correctness of the CUSIP numbers set forth obove. IN CONNECTION WITH THIS OFFERING, THE NOTE UNDERWRITER AND/OR THE BONDS UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE BONDS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE NOTES AND BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE NOTES AND BONDS ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE SECURITIES AND EXCHANGE COMMISSION. THE REGISTRATION, QUALIFICATION OR EXEMPTION OF THE NOTES AND BONDS IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAW PROVISIONS OF THE JURISDICTIONS IN WHICH THESE SECURITIES HAVE BEEN REGISTERED, QUALIFIED OR EXEMPTED SHOULD NOT BE REGARDED AS A RECOMMENDATION THEREOF. NEITHER THESE JURISDICTIONS NOR ANY OF THEIR AGENCIES HAVE GUARANTEED OR PASSED UPON THE SAFETY OF THE NOTES OR THE BONDS AS AN INVESTMENT, UPON THE PROBABILITY OF ANY EARNINGS THEREON OR UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. THIS OFFICIAL STATEMENT CONTAINS STATEMENTS THAT ARE "FORWARD-LOOKING STATEMENTS" AS DEFINED IN THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. WHEN USED IN THIS OFFICIAL STATEMENT, THE WORDS "ESTIMATE," "INTEND," "EXPECT" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED IN SUCH FORWARD-LOOKING STATEMENTS. READERS ARE CAUTIONED NOTTO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF. IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. CITY OF SALINA, KANSAS City/County Building -Room 206 300West Ash P.O. Box736 Salina, Kansas 67402-0736 CITY COMMISSION Kaye Crawford, Mayor Karl Ryan, Vice Mayor Trent Davis, Commissioner John R. Blanchard, Commissioner Melissa Rose Hodges, Commissioner CITY STAFF Jason Gage, City Manager Mike Schrage, Deputy City Manager Shandi Wicks, City Clerk CITY ATTORNEY Greg Bengtson Clark, Mize & Linville, Chartered Salina, Kansas BOND COUNSEL Gilmore & Bell, P.C. Kansas City, Missouri MUNICIPAL ADVISOR George K. Baum & Company Kansas City, Missouri No person has been authorized by the City or the Underwriters to give any information or to make any representations with respect to the Notes or the Bonds, other than those contained in this Official Statement, and if given or made, such other information or representations must not be relied upon as having been given or authorized by the City or the Underwriters. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy the Notes or Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein concerning the Issuer has been furnished by the Issuer and other sources which are believed to be reliable, but such information is not guaranteed as to accuracy or completeness. The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the Federal Securities Laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Issuer since the date hereof. This Official Statement does not constitute a contract between the Issuer or the Underwriter and any one or more of the purchasers, Owners or Beneficial Owners of the Notes or Bonds. 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. TABLE OF CONTENTS Page INTRODUCTORY STATEMENT............................................................................................................. 1 THE NOTES.......................................................................................................................................... 2 THE BONDS......................................................................................................................................... 5 THE DEPOSITORY TRUST COMPANY................................................................................................... 10 THE FINANCING PLAN......................................................................................................................... 12 SOURCES AND USES OF FUNDS.......................................................................................................... 12 RISK FACTORS AND INVESTMENT CONSIDERATIONS......................................................................... 13 LEGAL MATIERS ................................................................................................................................. 14 TAX MATIERS..................................................................................................................................... 15 RATINGS.............................................................................................................................................. 17 MUNICIPAL ADVISOR.......................................................................................................................... 17 UNDERWRITING ................................................................................................................................. 17 ABSENCE OF MATERIAL LITIGATION................................................................................................... 17 CONTINUING DISCLOSURE................................................................................................................. 17 CERTIFICATION OF OFFICIAL STATEMENT.......................................................................................... 18 APPENDIX A: INFORMATION CONCERNING THE CITY FINANCIAL OVERVIEW OF THE CITY.............................................................................................. A-1 GENERAL INFORMATION CONCERNING THE CITY........................................................................ A-2 ECONOMIC INFORMATION CONCERNING THE CITY..................................................................... A-7 DEBT SUMMARY OF THE CITY....................................................................................................... A-10 FINANCIAL INFORMATION CONCERNING THE CITY...................................................................... A-14 APPENDIX B: OMNIBUS CONTINUING DISCLOSURE UNDERTAKING APPENDIX C: AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDING DECEMBER 31, 2015 APPENDIX D: UNAUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDING DECEMBER 31, 2016 General OFFICIAL STATEMENT CITY OF SALINA, KANSAS $2,180,000 GENERAL OBLIGATION TEMPORARY NOTES SERIES 2017-1 $9,310,000 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2017-A INTRODUCTORY STATEMENT The purpose of this Official Statement is to present certain information concerning the City of Salina, Kansas (the "Issuer" or "City"), and the offering of its $2,180,000 General Obligation Temporary Notes, Series 2017-1 (the "Notes"), and its $9,310,000 General Obligation Internal Improvement Bonds, Series 2017-A (the "Bonds", and together with the Notes, the "Securities"). The Notes and the Bonds are being issued to provide funds to finance certain public improvements within the City and to retire the City's General Obligation Temporary Notes, Series 2016-1. See THE FINANCING PLAN herein. The full faith, credit, and resources of the City are irrevocably pledged for the prompt payment of the principal and interest on the Notes and Bonds as the same becomes due. See THE NOTES-"Security" and THE BONDS -"Security" herein. The Appendices are an integral part of this Official Statement and should be read in their entirety. All financial and other information presented herein has been compiled by the City's financial advisor, George K. Baum & Company, Kansas City, Missouri (the "Financial Advisor"). Such information has been provided by the City and other sources deemed to be reliable. The presentation of information herein is intended to show recent historic information and is not intended to indicate future or continuing trends in the financial position or other affairs of the City. Gilmore & Bell, P.C., Kansas City, Missouri, Bond Counsel, has not assisted in the preparation of nor reviewed this Official Statement, except to the extent described under the sections captioned INTRODUCTORY STATEMENT, THE NOTES, THE BONDS, LEGAL MATIERS, TAX MATIERS, and APPENDIX B -OMNIBUS CONTINUING DISCLOSURE UNDERTAKING and, accordingly, expresses no opinion as to the accuracy or sufficiency of any other information contained herein. Definitions Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the resolution of the governing body of the City authorizing the Notes (the "Note Resolution") and in the ordinance and resolution of the governing body of the City authorizing the Bonds (collectively, the "Bond Resolution"), as applicable. Copies of the Note Resolution and the Bond Resolution are available upon request to the City or the Financial Advisor. Additional Information Additional information regarding the City, the Notes, or the Bonds may be obtained from George K. Baum & Company, 4801 Main Street, Kansas City, Missouri 64112, telephone 816-474-1100. 1 THE NOTES Authority The Notes are issued pursuant to and in full compliance with the Constitution and statutes of the State of , Kansas, including without limitation K.S.A. 10-101 et seq., inclusive (specifically including K.S.A. 10-123), K.S.A. 12- 631r, K.S.A. 12-685 et seq., K.S.A. 12-6a01 et seq., K.S.A. 10-620 et seq., K.S.A. 12-1736 et seq., and K.S.A. 65-163u, all as amended and supplemented from time to time, and a resolution adopted by the governing body of the City authorizing the issuance of the Notes (the "Note Resolution"). Security The Notes shall be general obligations of the City, payable as to both principal and interest from in part from special assessments levied upon the property benefitted by the construction of certain public improvements (as hereinafter described in the section entitled "THE FINANCING PLAN -The Note Projects"), or from the proceeds of general obligation bonds of the Issuer, and if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the City. The full faith, credit and resources of the City are hereby irrevocably pledged for the prompt payment of the principal of and interest on the Notes as the same become due. Description The Notes shall consist offully registered book-entry-only notes in an Authorized Denomination and shall be numbered in such manner as the Note Registrar shall determine. All of the Notes shall be dated July 27, 2017 (the "Dated Date"), shall become due in the amount on the Stated Maturity. The Notes shall bear interest at the rate per annum set forth on the inside cover page of this Official Statement, and shall bear interest (computed on the basis of twelve 30-day months) from the Dated Date, payable at the Stated Maturity. Redemption Provisions The Notes are not subject to redemption and payment prior to maturity. Designation of Note Paying Agent and Note Registrar The City will at all times maintain a paying agent and note registrar meeting the qualifications set forth in the Note Resolution. The City reserves the right to appoint a successor paying agent or note registrar. No resignation or removal of the paying agent or note registrar shall become effective until a successor has been appointed and has accepted the duties of paying agent or note registrar. Every paying agent or note registrar appointed by the City shall at all times meet the requirements of Kansas law. The Treasurer of the State of Kansas, Topeka, Kansas (the "Note Registrar'' and "Note Paying Agent") has been designated by the City as paying agent for the payment of principal of and interest on the Notes and note registrar with respect to the registration, transfer and exchange of Notes. Registration, Transfer and Exchange of Notes As long as any of the Notes remain Outstanding, each Note when issued shall be registered in the name of the Owner thereof on the Note Register. Notes may be transferred and exchanged only on the Note Register as hereinafter provided. Upon surrender of any Note at the principal office of the Note Registrar, the Note Registrar shall transfer or exchange such Note for a new Note or Notes in any authorized denomination of the same Stated Maturity and in the same aggregate principal amount as the Note that was presented for transfer or exchange. Notes presented for 2 transfer or exchange shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in a form and with guarantee of signature satisfactory to the Note Registrar, duly executed by the Owner thereof or by the Owner's duly authorized agent. In all cases in which the privilege of transferring or exchanging Notes is exercised, the Note Registrar shall authenticate and deliver Notes in accordance with the provisions of the Note Resolution. The City shall pay the fees and expenses of the Note Registrar for the registration, transfer and exchange of Notes. Any additional costs or fees that might be incurred in the secondary market, other than fees of the Note Registrar, are the responsibility of the Owners of the Notes. In the event any Owner fails to provide a correct taxpayer identification number to the Note Paying Agent, the Note Paying Agent may make a charge against such Owner sufficient to pay any governmental charge required to be paid as a result of such failure. The City and the Note Registrar shall not be required to register the transfer or exchange of any Note during a period beginning at the opening of business on the day after receiving written notice from the City of its intent to pay Defaulted Interest and ending at the close of business on the date fixed for the payment of Defaulted Interest. Mutilated, Lost, Stolen or Destroyed Notes If (a) any mutilated Note is surrendered to the Note Registrar or the Note Registrar receives evidence to its satisfaction of the destruction, loss or theft of any Note, and (b) there is delivered to the City and the Note Registrar such security or indemnity as may be required by each of them, then, in the absence of notice to the City or the Note Registrar that such Note has been acquired by a bona fide purchaser, the City shall execute and, upon the City's request, the Note Registrar shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a new Note of the same Stated Maturity and of like tenor and principal amount. If any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the City, in its discretion, may pay such Note instead of issuing a new Note. Upon the issuance of any new Note, the City may require the payment by the Owner of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Note Paying Agent) connected therewith. Nonpresentment of Notes If any Note is not presented for payment when the principal thereof becomes due at Maturity, if funds sufficient to pay such Note have been made available to the Note Paying Agent all liability of the City to the Owner thereof for the payment of such Note shall forthwith cease, determine and be completely discharged, and thereupon it shall be the duty of the Note Paying Agent to hold such funds, without liability for interest thereon, for the benefit of the Owner of such Note, who shall thereafter be restricted exclusively to such funds for any claim of whatever nature on his part under this Note Resolution or on, or with respect to, said Note. If any Note is not presented for payment within four (4) years following the date when such Note becomes due at Maturity, the Note Paying Agent shall repay to the City the funds theretofore held by it for payment of such Note, and such Note shall, subject to the defense of any applicable statute of limitation, thereafter be an unsecured obligation of the City, and the Owner thereof shall be entitled to look only to the City for payment, and then only to the extent of the amount so repaid to it by the Note Paying Agent, and the City shall not be liable for any interest thereon and shall not be regarded as a trustee of such money. Method and Place of Payment of the Notes The principal of, or Redemption Price, and interest on the Notes shall be payable in any coin or currency which, on the respective dates of payment thereof, is legal tender for the payment of public and private debts. The prindpal or Redemption Price of each Note and the interest thereon shall be paid at Maturity to the Person in whose name such Note is registered on the Note Register at the Maturity thereof, upon presentation and surrender of such Note at the principal office of the Note Paying Agent. 3 The interest payable on each Note on any Interest Payment Date shall be paid to the Owner of such Note as shown on the Note Register at the close of business on the Record Date for such interest (a) by check or draft mailed by the Note Paying Agent to the address of such Owner shown on the Note Register or at such other address as is furnished to the Note Paying Agent in writing by such Owner; or {b) in the case of an interest payment to Cede & Co. or any Owner of $500,000 or more in aggregate principal amount of Notes, by electronic transfer to such Owner upon written notice given to the Note Registrar by such Owner, not less than 15 days prior to the Record Date for such interest, containing the electronic transfer instructions including the bank, ABA routing number and account number to which such Owner wishes to have such transfer directed. "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 Note shall cease to be payable to the Owner of such Note on the relevant Record Date and shall be payable to the Owner in whose name such Note is registered at the close of business on the Special Record Date for the payment of such Defaulted Interest, which Special Record Date shall be fixed as hereinafter specified. The City shall notify the Note Paying Agent in writing of the amount of Defaulted Interest proposed to be paid on each Note and the date of the proposed payment (which date shall be at least 30 days after receipt of such notice by the Note Paying Agent) and shall deposit with the Note Paying Agent an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest. Following receipt of such funds the Note Paying Agent shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment. The Note Paying Agent shall notify the City of such Special Record Date and shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, by first class mail, postage prepaid, to each Owner of a Note entitled to such notice not less than 10 days prior to such Special Record Date. SO LONG AS CEDE & CO. REMAINS THE REGISTERED OWNER OF THE NOTES, THE NOTE PAYING AGENT SHALL TRANSMIT PAYMENTS TO THE SECURITIES DEPOSITORY, WHICH SHALL REMIT SUCH PAYMENTS IN ACCORDANCE WITH ITS NORMAL PROCEDURES. See "THE NOTES -Book-Entry Notes; Securities Depository." Payments Due on Saturdays. Sundays and Holidays In any case where a Note Payment Date is not a Business Day, then payment of principal, Redemption Price or interest need not be made on such Note Payment Date but may be made on the next succeeding Business Day with the same force and effect as if made on such Note Payment Date, and no interest shall accrue for the period after such Note Payment Date. Book-Entry Notes; Securities Depository The Notes shall initially be registered to Cede & Co., the nominee for the Securities Depository, and no Beneficial Owner will receive certificates representing their respective interests in the Notes, except in the event the Note Registrar issues Replacement Notes. It is anticipated that during the term of the Notes, the Securities Depository will make book-entry transfers among its Participants and receive and transmit payment of principal of, premium, if any, and interest on, the Notes to the Participants until and unless the Note Registrar authenticates and delivers Replacement Notes to the Beneficial Owners as described in the following paragraphs. The City may decide, subject to the requirements of the Operational Arrangements of DTC (or a successor Securities Depository), and the following provisions of this section to discontinue use of the system of book-entry transfers through DTC (or a successor Securities Depository): (a) If the City determines (1) that the Securities Depository is unable to properly discharge its responsibilities, or (2) that the Securities Depository is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, or (3) that the continuation of a book-entry system to the exclusion of any Notes being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Notes; or 4 (b) if the Note Registrar receives written notice from Participants having interest in not less than 50% of the Notes Outstanding, as shown on the records of the Securities Depository (and certified to such effect by the Securities Depository), that the continuation of a book-entry system to the exclusion of any Notes being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Notes, then the Note Registrar shall notify the Owners of such determination or such notice and of the availability of certificates to owners requesting the same, and the Note Registrar shall register in the name of and authenticate and deliver Replacement Notes to the Beneficial Owners or their nominees in principal amounts representing the interest of each, making such adjustments as it may find necessary or appropriate as to accrued interest and previous calls for redemption; provided, that in the case of a determination under (a)(l) or (a)(2) of this paragraph, the City, with the consent of the Note Registrar, may select a successor securities depository in accordance with the following paragraph to effect book-entry transfers. In such event, all references to the Securities Depository herein shall relate to the period of time when the Securities Depository has possession of at least one Note. Upon the issuance of Replacement Notes, all references herein to obligations imposed upon or to be performed by the Securities Depository shall be deemed to be imposed upon and performed by the Note Registrar, to the extent applicable with respect to such Replacement Notes. If the Securities Depository resigns and the City, the Note Registrar or Owners are unable to locate a qualified successor of the Securities Depository, then the Note Registrar shall authenticate and cause delivery of Replacement Notes to Owners, as provided herein. The Note Registrar may rely on information from the Securities Depository and its Participants as to the names of the Beneficial Owners of the Notes. The cost of printing, registration, authentication, and delivery of Replacement Notes shall be paid for by the City. In the event the Securities Depository resigns, is unable to properly discharge its responsibilities, or is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, the City may appoint a successor Securities Depository provided the Note Registrar receives written evidence satisfactory to the Note Registrar with respect to the ability of the successor Securities Depository to discharge its responsibilities. Any such successor Securities Depository shall be a securities depository which is a registered clearing agency under the Securities and Exchange Act of 1934, as amended, or other applicable statute or regulation that operates a securities depository upon reasonable and customary terms. The Note Registrar upon its receipt of a Note or Notes for cancellation shall cause the delivery of the Notes to the successor Securities Depository in appropriate denominations and form as provided in the Note Resolution. THE BONDS Authority The Bonds are issued pursuant to and in full compliance with the Constitution and statutes of the State of Kansas, including without limitation K.S.A. 10-101 et seq., K.S.A. 10-427 et seq., K.S.A. 10-620 et seq., K.S.A. 12-631r, K.S.A. 12-685 et seq., K.S.A. 12-1736 et seq., and Article 12, Section 5 of the Constitution of the State of Kansas, all as amended, and an ordinance and resolution adopted by the governing body of the City authorizing the issuance of the Bonds (collectively, the "Bond Resolution"). Security 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. 5 Levy and Collection of Annual Tax. Transfer to Debt Service Account The governing body of the Issuer shall annually make provision for the payment of principal of, premium, if any, and interest on the Bonds as the same become due by, to the extent necessary, levying and collecting the necessary taxes upon all of the taxable tangible property within the Issuer in the manner provided by law. Such taxes 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. Description The Bonds shall consist of fully registered book-entry-only bonds in an Authorized Denomination and shall be numbered in such manner as the Bond Registrar shall determine. All of the Bonds will be dated July 27, 2017 (the "Dated Date"), shall become due in the amounts, on the Stated Maturities, and subject to redemption and payment prior to their Stated Maturities, and shall bear interest at the rates per annum set forth on the inside cover page of this Official Statement. The Bonds shall bear interest (computed on the basis of twelve 30-day months) from the later of the Dated Date or the most recent Interest Payment Date to which interest has been paid on the Interest Payment Dates in the manner hereinafter set forth. Redemption Provisions Optional Redemption. At the option of the City, Bonds or portions thereof maturing on October 1, 2025 and thereafter may be called for redemption and payment prior to their Stated Maturity on October 1, 2024, and thereafter as a whole or in part (selection of maturities and the amount of Bonds of each maturity to be redeemed to be determined by the City in such equitable manner as it may determine) at any time, at the Redemption Price of 100% (expressed as a percentage of the principal amount), plus accrued interest thereon to the Redemption Date. Mandatory Redemption. The Term Bonds 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 Term Bonds: *Final Maturity Principal Amount $520,000 530,000 Year 2029 2030* 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: 6 (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 Bo~ds of the aggregate principal amount of the unredeemed portion of the principal amount of such Bond. If the Owner of any such Bond fails to present such Bond to the Bond Paying Agent for payment and exchange as aforesaid, such Bond shall, nevertheless, become due and payable on the redemption date to the extent of the minimum Authorized Denomination value called for redemption (and to that extent only). Notice and Effect of Call for Redemption. Unless waived by any Owner of Bonds to be redeemed, if the City shall call any Bonds for redemption and payment prior to the Stated Maturity thereof, the City shall give written notice of its intention to call and pay said Bonds to the 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 Bond Paying Agent. The failure of any Owner to receive notice given as heretofore provided or an immaterial defect therein shall not invalidate any redemption. Prior to any Redemption Date, the City shall deposit with the Bond Paying Agent an amount of money sufficient to pay the Redemption Price of all the Bonds or portions of Bonds that are to be redeemed on such Redemption Date. Official notice of redemption having been given as aforesaid, the Bonds or portions of Bonds to be redeemed shall become due and payable on the Redemption Date, at the Redemption Price therein specified, and from and after the Redemption Date (unless the City defaults in the payment of the Redemption Price) such Bonds or portion of Bonds shall cease to bear interest. For so long as the Securities Depository is effecting book-entry transfers of the Bonds, the Bond Registrar shall provide the notices specified to the Securities Depository. It is expected that the Securities Depository shall, in turn, notify its Participants and that the Participants, in turn, will notify or cause to be notified the Beneficial Owners. Any failure on the part of the Securities Depository or a Participant, or failure on the part of a nominee of a Beneficial Owner of a Bond (having been mailed notice from the Bond Registrar, the Securities Depository, a Participant or otherwise) to notify the Beneficial Owner of the Bond so affected, shall not affect the validity of the redemption of such Bond. In addition to the foregoing notice, the City shall provide such notices of redemption as are required by the Disclosure Undertaking. The Bond Paying Agent is also directed to comply with any mandatory or voluntary standards then in effect for processing redemptions of municipal securities established by the State or the Securities and Exchange Commission. Failure to comply with such standards shall not affect or invalidate the redemption of any Bond. Designation of Bond Paying Agent and Bond Registrar The City will at all times maintain a paying agent and bond registrar meeting the qualifications set forth in the Bond 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 "Bond Registrar'' and "Bond Paying Agent") has been designated by the City as paying agent for the payment of principal of and interest on the Bonds and bond registrar with respect to the registration, transfer and exchange of Bonds. 7 Registration, Transfer and Exchange of Bonds As long as any of the Bonds remain Outstanding, each Bond when issued shall be registered in the name of the Owner thereof on the Bond Register. Bonds may be transferred and exchanged only on the Bond Register as hereinafter provided. Upon surrender of any Bond at the principal office of the Bond Registrar, the Bond Registrar shall transfer or exchange such Bond for a new Bond or Bonds in any authorized denomination of the same Stated Maturity and in the same aggregate principal amount as the Bond that was presented for transfer or exchange. Bonds presented for transfer or exchange shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in a form and with guarantee of signature satisfactory to the Bond Registrar, duly executed by the Owner thereof or by the Owner's duly authorized agent. In all cases in which the privilege of transferring or exchanging Bonds is exercised, the Bond Registrar shall authenticate and deliver Bonds in accordance with the provisions of the Bond Resolution. The City shall pay the fees and expenses of the Bond Registrar for the registration, transfer and exchange of Bonds. Any additional costs or fees that might be incurred in the secondary market, other than fees of the Bond Registrar, are the responsibility of the Owners of the Bonds. In the event any Owner fails to provide a correct taxpayer identification number to the Bond Paying Agent, the Bond Paying Agent may make a charge against such Owner sufficient to pay any governmental charge required to be paid as a result of such failure. The City and the Bond Registrar shall not be required (a) to register the transfer or exchange of any Bond that has been called for redemption after notice of such redemption has been mailed by the Bond Paying Agent and during the period of 15 days next preceding the date of mailing of such notice of redemption; or (b) to register the transfer or exchange of any Bond during a period beginning at the opening of business on the day after receiving written notice from the City of its intent to pay Defaulted Interest and ending at the close of business on the date fixed for the payment of Defaulted Interest. Method and Place of Payment of the Bonds The principal of, or Redemption Price, and interest on the Bonds shall be payable in any coin or currency which, on the respective dates of payment thereof, is legal tender for the payment of public and private debts. The principal or Redemption Price of each Bond shall be paid at Maturity to the Person in whose name such Bond is registered on the Bond Register at the Maturity thereof, upon presentation and surrender of such Bond at the principal office of the Bond Paying Agent. The interest payable on each Bond on any Interest Payment Date shall be paid to the Owner of such Bond as shown on the Bond Register at the close of business on the Record Date for such interest (a) by check or draft mailed by the Bond Paying Agent to the address of such Owner shown on the Bond Register or at such other address as is furnished to the Bond Paying Agent in writing by such Owner; or (b) in the case of an interest payment to Cede & Co. or any Owner of $500,000 or more in aggregate principal amount of Bonds, by electronic transfer to such Owner upon written notice given to the Bond Registrar by such Owner, not less than 15 days prior to the Record Date for such interest, containing the electronic transfer instructions including the bank, ABA routing number and account number to which such Owner wishes to have such transfer directed. "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 Bond Paying Agent in writing of the amount of Defaulted Interest proposed to be paid on each Bond and the date of the proposed payment (which date shall be at least 30 days after receipt of such notice by the Bond Paying Agent) and shall deposit with the Bond Paying Agent an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest. Following receipt of such funds the Bond Paying Agent shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment. The Bond Paying 8 Agent shall notify the City of such Special Record Date and shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, by first class mail, postage prepaid, to each Owner of a Bond entitled to such notice not less than 10 days prior to such Special Record Date. SO LONG AS CEDE & CO., REMAINS THE REGISTERED OWNER OF THE BONDS, THE BOND PAYING AGENT SHALL TRANSMIT PAYMENTS TO THE SECURITIES DEPOSITORY, WHICH SHALL REMIT SUCH PAYMENTS IN ACCORDANCE WITH ITS NORMAL PROCEDURES. See ''THE BONDS -Book-Entry Bonds; Securities Depository." Payments Due on Saturdays, Sundays and Holidays In any case where a Bond Payment Date is not a Business Day, then payment of principal, Redemption Price or interest need not be made on such Bond Payment Date but may be made on the next succeeding Business Day with the same force and effect as if made on such Bond Payment Date, and no interest shall accrue for the period after such Bond Payment Date. Book-Entry Bonds; Securities Depository The Bonds shall initially be registered to Cede & Co., the nominee for the Securities Depository, and no Beneficial Owner will receive certificates representing their respective interests in the Bonds, except in the event the Bond Registrar issues Replacement Bonds. It is anticipated that during the term of the Bonds, the Securities Depository will make book-entry transfers among its Participants and receive and transmit payment of principal of, premium, if any, and interest on, the Bonds to the Participants until and unless the Bond Registrar authenticates and delivers Replacement Bonds to the Beneficial Owners as described in the following paragraphs. The City may decide, subject to the requirements of the Operational Arrangements of DTC (or a successor Securities Depository), and the following provisions of this section to discontinue use of the system of book-entry transfers through DTC (or a successor Securities Depository): (a) If the City determines (1) that the Securities Depository is unable to properly discharge its responsibilities, or (2) that the Securities Depository is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, or (3) that the continuation of a book-entry system to the exclusion of any Bonds being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Bonds; or (b) if the Bond Registrar receives written notice from Participants having interest in not less than 50% of the Bonds Outstanding, as shown on the records of the Securities Depository (and certified to such effect by the Securities Depository), that the continuation of a book-entry system to the exclusion of any Bonds being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Bonds, then the Bond Registrar shall notify the Owners of such determination or such notice and of the availability of certificates to owners requesting the same, and the Bond Registrar shall register in the name of and authenticate and deliver Replacement Bonds to the Beneficial Owners or their nominees in principal amounts representing the interest of each, making such adjustments as it may find necessary or appropriate as to accrued interest and previous calls for redemption; provided, that in the case of a determination under (a)(l) or (a)(2) of this paragraph, the City, 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 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 9 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 1. The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the Securities. The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully- registered bond certificate will be issued for each scheduled maturity of the Securities, and will be deposited with DTC. 2. 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 17 A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.6 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has a Standard & Poor's rating of "AA+". The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. 3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the 10 actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. 5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. 6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. 7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Securities unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the Issuer or Paying Agent, on the payment date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC nor its nominee, the Paying Agent, or the Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Issuer or Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to the Paying Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to the Paying Agent. The requirement for physical delivery of the Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC's records and followed by a book-entry credit of tendered Securities to the Paying 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 the Issuer or Paying Agent. Under such circumstances, in the event that a successor securities depository is not obtained, certificates are required to be printed and delivered. 11. The Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC. 12. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the Issuer believes to be reliable, but the Issuer takes no responsibility for the accuracy thereof. 11 THE FINANCING PLAN The Note Projects Proceeds from the sale of the Notes will be used to provide interim construction financing for a portion of the cost of certain public improvements within the City and to pay costs associated with the issuance of the Notes. The projects to be financed with the Notes are as follows: Project Description Downtown Streetscape Grand Prairie Addition, Phase II Police Training Center The Bond Projects Ordinance/ Resolution No. Ord. 17-10888 Res. 16-7394 Res. 17-7458 Authority K.S.A. 12-631r; Improvement Fund Deposit $1,200,000 12-685 et seq; 65-163u K.S.A. 12-6a01 et seq. K.S.A. 12-1736 et seq. Total 441,605 500,000 $2,141,605 Proceeds from the sale of the Bonds will be used to (1) provide long term financing for a portion of the cost of certain public improvements within the City, (2) pay interest on a portion of the City's General Obligation Internal Improvement Bonds, Series 2007-A coming due on October 1, 2017, and (3) pay the costs associated with the issuance of the Bonds. The projects to be financed with the Bonds are as follows: Project Description Tony's Pizza Events Center Country Club Road Smoky Hill River Renewal Ordinance/ Resolution No. Res. 13-6988/14-7087 Res. 17-7459 Ord. 17-10885 Improvement Fund Deposit $6,912,392 1,200,000 1,200,000 Authority K.S.A. 12-1736 et seq. K.S.A. 12-685 et seq. Article 12, Section 5 of the Constitution of the State of Kansas Total $9,312,392 A portion of the cost of the Tony's Pizza Events Center project was financed by the issuance of the City's General Obligation Temporary Notes, Series 2016-1 (the "Series 2016-1 Notes"), which will be retired at maturity with proceeds from the sale of the Bonds. SOURCES AND USES OF FUNDS Funds to be used in the Financing Plan will be provided and applied approximately as follows, exclusive of accrued interest. Sources of Funds: Principal Amount Original Issue Premium Total Sources of Funds Uses of Funds: Deposit to Improvement Fund -Project Costs Deposit to Improvement Fund -Retire Series 2016-1 Notes Deposit to Redemption Fund -Series 2007-A Bonds Interest Underwriter's Discount Costs of Issuance Total Application of Funds 12 $2,180,00.00 20,753.60 $2,200,753.60 $2,179,392.40 0.00 0.00 4,011.20 17,350.00 $2,200,753.60 $9,310,000.00 178,173.00 $9,488,173.00 $2,400,000.00 6,912,392.50 1,000.00 99,803.20 74,977.30 $9,488,173.00 RISK FACTORS AND INVESTMENT CONSIDERATIONS A PROSPECTIVE PURCHASER OF THE THE SECURITIES DESCRIBED HEREIN SHOULD BE AWARE THAT THERE ARE CERTAIN RISKS ASSOCIATED WITH THE SECURITIES WHICH MUST BE RECOGNIZED. THE FOLLOWING STATEMENTS REGARDING CERTAIN RISKS ASSOCIATED WITH THE OFFERING SHOULD NOT BE CONSIDERED AS A COMPLETE DESCRIPTION OF ALL RISKS TO BE CONSIDERED IN THE DECISION TO PURCHASE THE SECURITIES. PROSPECT/VE PURCHASERS OF THE SECURITIES SHOULD ANALYZE CAREFULLY THE INFORMATION CONTAINED IN THIS OFFICIAL STATEMENT AND ADDITIONAL INFORMATION IN THE FORM OF THE COMPLETE DOCUMENTS SUMMARIZED HEREIN, COPIES OF WHICH ARE AVAILABLE AND MAY BE OBTAINED FROM THE CITY OR THE UNDERWRITER. Legal Matters Various state and federal laws, regulations and constitutional provisions apply to the obligations created by the Securities. There is no assurance that there will not be any change in, interpretation of, or addition to such applicable laws, provisions and regulations which would have a material effect, either directly or indirectly, on the City or the taxing authority of the City. Limitations on Remedies Available to Owners of Securities The enforceability of the rights and remedies of the owners of Securities, and the obligations incurred by the City in issuing the Securities, are subject to the following: the federal Bankruptcy Code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect; usual equity principles which may limit the specific enforcement under state law of certain remedies; the exercise by the United States of America of the powers delegated to it by the United States Constitution; and the reasonable and necessary exercise, in certain unusual situations, of the police power inherent in the State of Kansas and its governmental subdivisions in the interest of serving a legitimate and significant public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or state government, if initiated, could subject the owners of the Securities to judicial discretion and interpretation of their rights in bankruptcy and otherwise, and consequently may involve risks of delay, limitation or modification of their rights. Kansas Public Employees Retirement System As described in "APPENDIX A-FINANCIAL INFORMATION -Pension and Employee Retirement Plans," the Issuer 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 Issuer 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 Issuer makes all employer contributions to the Plan; neither the employees nor the Issuer 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, 2015, the Local Group had an UAAL of $1.486 billion and KP&F had an UAAL of $772 million. 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." 13 No Additional Interest or Mandatory Redemption upon Event of Taxability Neither the Bond Resolution nor the Note Resolution provide for the payment of additional interest or penalty on the Securities or the mandatory redemption thereof if the interest thereon becomes includable in gross income for federal income tax purposes. Likewise, neither the Bond Resolution nor the Note Resolution provide for the payment of any additional interest or penalty on the Securities if the interest thereon becomes subject to income taxation by the State of Kansas. Suitability of Investment The tax exempt feature of the Securities is more valuable to high tax bracket investors than to investors who are in low tax brackets, and so the value of the interest compensation to any particular investor will vary with individual tax rates. Each prospective investor should carefully examine this Official Statement, including the Appendices hereto, and its own financial condition to make a judgment as to its ability to bear the economic risk of such an investment, and whether or not the Securities are an appropriate investment. Market for the Securities Ratings. The Securities have been assigned the financial ratings set forth in the section hereof titled RATINGS. There is no assurance that a particular rating will remain in effect for any given period of time or that it will not be revised, either downward or upward, or withdrawn entirely, if in the judgment of the agency originally establishing such rating, circumstances so warrant. Any downward revision or withdrawal of any rating may have an adverse affect on the market price of the Securities. Secondary Market. There is no assurance that a secondary market will develop for the purchase and sale of the Securities. Prices of securities traded in the secondary market, though, are subject to adjustment upward and downward in response to changes in the credit markets. From time to time it may be necessary to suspend indefinitely secondary market trading in the Securities as a result of financial condition or market position of broker- dealers, prevailing market conditions, lack of adequate current financial information about the City, or a material adverse change in the financial condition of the City, whether or not the Securities are in default as to principal and interest payments, and other factors which may give rise to uncertainty concerning prudent secondary market practices. Recent Legislative Proposals Congress and the President 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 Securities being subjected to Federal income taxes, such legislation or proposals could affect the value or marketability of the Securities. Prospective purchasers of the Securities should consult their own tax advisers regarding the impact of any change in law on the Securities. LEGAL MATTERS All matters incident to the authorization and issuance of the Securities by the City are subject to the approval of Gilmore & Bell, P.C., Kansas City, Missouri, Bond Counsel 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 NOTES, THE BONDS, LEGAL MATTERS, TAX MATTERS, and APPENDIX B -OMNIBUS CONTINUING DISCLOSURE UNDERTAKING. 14 TAX MATTERS General The following is a summary of the material federal and State of Kansas income tax consequences of holding and disposing of the Securities. This summary is based upon laws, regulations, rulings and judicial decisions now in effect, all of which are subject to change (possibly on a retroactive basis). This summary does not discuss all aspects of federal income taxation that may be relevant to investors in light of their personal investment circumstances or describe the tax consequences to certain types of holders subject to special treatment under the federal income tax laws (for example, dealers in securities or other persons who do not hold the Securities as a capital asset, tax-exempt organizations, individual retirement accounts and other tax deferred accounts, and foreign taxpayers), and, except for the income tax laws of the State of Kansas, does not discuss the consequences to an owner under state, local or foreign tax laws. The summary does not deal with the tax treatment of persons who purchase the Securities in the secondary market. Prospective investors are advised to consult their own tax advisors regarding federal, state, local and other tax considerations of holding and disposing of the Securities. Opinion of Bond Counsel In the opinion of Bond Counsel, under the law existing as of the issue date of the Securities: Federal Tax Exemption: The interest on the Securities (including any original issue discount properly allocable to an owner thereof) is excludable from gross income for federal income tax purposes. Alternative Minimum Tax. Interest on the Securities is not an item of tax preference for purposes of computing the federal alternative minimum tax imposed on individuals and corporations, but is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. Bank Qualification. The Securities have not been designated as "qualified tax-exempt obligations" for purposes of Code §265(b). Kansas Tax Exemption. The interest on the Securities is exempt from income taxation by the State of Kansas. No Other Opinions. Bond Counsel's opinions are provided as of the date of the original issue of the Securities, subject to the condition that the City comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Securities in order that interest thereon be, or continue to be, excludable from gross income for federal income tax purposes. The City has covenanted to comply with all of these requirements. Failure to comply with certain of such requirements may cause the inclusion of interest on the Securities in gross income for federal income tax purposes retroactive to the date of issuance of the Securities. Bond Counsel is expressing no opinion regarding other federal, state or local tax consequences arising with respect to the Securities. Other Tax Consequences Original Issue Discount. For federal income tax purposes, original issue discount ("OID") is the excess of the stated redemption price at maturity of a security over its issue price. The issue price of a security is the first price at which a substantial amount of the security of that maturity has been sold to the public. The Notes. For each security, the stated redemption price at maturity includes all payments on the security, except interest payable at least annually over the term of the security ("qualified stated interest"). Since the August 1, 2018, interest payment on the Notes will be paid more than one year after the Notes are issued, none of the interest payments on the Notes constitute qualified stated interest, and the stated redemption price of each Note includes all payments on the Notes. 15 Under Code § 1288, OID on tax-exempt obligations accrues on a compound basis. The amount of OID that accrues to an owner of a Note during any accrual period generally equals: (a) the issue price of such Note plus the amount of OID accrued in all prior accrual periods; multiplied by (bl the yield to maturity on such Note (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period); minus (c) any interest payable on such Note during such accrual period. The amount of OID so accrued in a particular accrual period will be considered to be received ratably on each day of the accrual period, wil I be excludable from gross income for federal income tax purposes, and will increase the owner's tax basis in such Note. Prospective investors should consult their own tax advisors concerning the calculation and accrual of OID. The Bonds. 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 (bl 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 OID. Original Issue Premium. For federal income tax purposes, premium is the excess of the issue price of a Security over its stated redemption price at maturity. The issue price of a Security is generally the first price at which a substantial amount of the Securities of that maturity have been sold to the public. Under Code §171, premium on tax-exempt obligations amortizes 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, which will result in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes on sale or disposition of the Security prior to its maturity. Even though the owner's basis is reduced, no federal income tax deduction is allowed. Prospective investors should consult their own tax advisors concerning the calculation and accrual of bond premium. Sale, Exchange or Retirement of Securities. Upon the sale, exchange or retirement (including redemption) of a Security, an owner of the Security generally will recognize gain or loss in an amount equal to the difference between the amount of cash and the fair market value of any property received on the sale, exchange or retirement of the Security (other than in respect of accrued and unpaid interest) and such owner's adjusted tax basis in the Security. To the extent the Securities are held as a capital asset, such gain or loss will be capital gain or loss and will be long-term capital gain or loss if the Security has been held for more than 12 months at the time of sale, exchange or retirement. Reporting Requirements. In general, information reporting requirements will apply to certain payments of principal, interest and premium paid on Securities, and to the proceeds paid on the sale of Securities, other than certain exempt recipients (such as corporations and foreign entities). A backup withholding tax will apply to such payments if the owner fails to provide a taxpayer identification number or certification of foreign or other exempt status or fails to report in full dividend and interest income. The amount of any backup withholding from a payment to an owner will be allowed as a credit against the owner's federal income tax liability. Collateral Federal Income Tax Consequences. Prospective purchasers of the Securities should be aware that ownership of the Securities may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, individual recipients of Social Security or Railroad Retirement benefits, certain S corporations with "excess net passive income," foreign corporations subject to the branch profits tax, life insurance companies, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry or have paid or incurred certain expenses allocable to the Securities. Bond Counsel expresses no opinion regarding these tax consequences. Purchasers of Securities should consult their tax advisors as to the applicability of these tax consequences and other federal income tax consequences of the purchase, ownership and disposition of the Securities, including the possible application of state, local, foreign and other tax laws. 16 RATINGS The City has applied to Moody's Investors Service for a rating on the Notes and Bonds. Any explanation of the significance of such ratings may be obtained only from said rating agency. There is no assurance that the ratings will remain for any given period of time or that they may not be lowered or withdrawn entirely by the rating service if, in their judgment, circumstances so warrant. Any such downward change in or withdrawal of the ratings may have an adverse effect on the market price of the Notes and Bonds. Moody's has assigned ratings of "MIG 1" to the Notes and "Aa3" to the Bonds. MUNICIPAL ADVISOR George K. Baum & Company, Kansas City, Missouri, has acted as Municipal Advisor to the City in connection with the sale of the Securities. The Municipal Advisor has assisted the City in the preparation of this Official Statement and in other matters relating to the issuance of the Securities. The fees of the Municipal Advisor are contingent upon the issuance of the Securities. UNDERWRITING The Notes are being purchased by Commerce Bank (the "Notes Underwriter'') at a price equal to the principal amount of the Notes, plus an original issue premium of $20,753.60, less an underwriting discount of $4,011.20. The Bonds are being purchased by Robert W. Baird & Co. Incorporated (the "Bonds Underwriter") at a price equal to the par amount of the Bonds, plus an original issue premium of $178,173.00, less an underwriting discount of $99,803.20. The Notes Underwriter and the Bonds Underwriter are collectively referred to herein as (the "Underwriters"). ABSENCE OF MATERIAL LITIGATION The Transcript of Proceedings will contain a certificate of non-litigation dated as of the closing date and executed by the City to the effect that, except as disclosed in the Official Statement, there is no controversy, suit, or proceeding of any kind pending or, to the knowledge of the City, threatened wherein or whereby any question is raised, or may be raised, questioning, disputing, or affecting in any way the legal organization of the City or its boundaries or the legality of any official act shown to have been done regarding the issuance of the Notes and Bonds or the constitutionality or validity of the obligation represented by the Bonds or the means provided for the payment of the Notes and Bonds. CONTINUING DISCLOSURE The Securities and Exchange Commission (the "SEC") has promulgated amendments to Rule 15c2-12 (the "Rule"), requiring continuous secondary market disclosure. In 2013, the Issuer adopted an Omnibus Continuing Disclosure Undertaking (the "Disclosure Undertaking") wherein the Issuer covenanted to provide annually certain Financial Information and Operating Data and other information necessary to comply with the Rule, and to transmit the same to the Municipal Securities Rulemaking Board. 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 Resolution and Note Resolution, the Issuer covenants with the Underwriter and the Beneficial Owners to apply the provisions of the Disclosure Undertaking to the Securities. This covenant is for the benefit of and is enforceable by the Beneficial Owners of the Securities. For more information regarding the Disclosure 17 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. 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 By /s ______ C=i"'-'n=d.,_y.,_.M=c=Sw=a·""'m'-------- Director of Finance and Administration ATTEST: /s/ _____ ~Sh~a~n~d~i Vl/~ic~k~s-----~ City Clerk 18 APPENDIX A INFORMATION CONCERNING THE CITY APPENDIX A FINANCIAL OVERVIEW OF THE CITY 2016 Estimated Actual Valuation (1) 2016 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 $ 3,046,949,034 $ 472,683,104 $ 66,005,000 $ $ $ $ $ $ $ $ 47,813 1,380 2.17% 13.96% 6,795,000 12,813,923 1,269,499 13,230,000 138,642,427 224,256,350 4,690 7.36% 47.44% (1) For a further description of how Estimated Actual Valuation is calculated and additional historical figures see the section titled FINANCIAL INFORMATION CONCERNING THE CITY-"Estimated Actual Valuation". (2) Includes the Bonds. (3) Does not include notes to be retired with proceeds from the sale of the Series 2017-A Bonds. (4) The City intends to repay such loans from the net revenues of its municipal water and sewer 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 47,813. The City is the county seat for Saline County which had an estimated 2016 U.S. Census Bureau population of 55,142. 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: Population Name Kaye Crawford Karl Ryan Jon R. Blanchard Melissa Rose Hodges Trent Davis Title Mayor Vice Mayor Commissioner Commissioner Commissioner Term Expires 2018 2020 2018 2020 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. Year 2015 2014 2013 2012 2011 A-2 U.S. Census Bureau Population 47,813 47,867 47,846 47,901 47,910 Police and Fire Protection 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 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. The District also operates alternative education, vocational-technical, and special education schools. Current enrollment is over 7,000. Additionally, there are a number of parochial institutions that operate two grade schools, two junior high schools, and one senior high school. A military school is located in the City and operates both a grade school and high school. The City is home to five regional or private upper-level specialty schools. The Kansas Highway Patrol has a training academy located in Salina. Kansas State University Polytechnic Campus 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 682 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 750 students, the majority from Kansas and surrounding states. The school, based on a liberal arts foundation, offers more than 50 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 Great Lakes Airlines. The airline offers daily scheduled passenger air service to Denver International Airport with a 30-passenger Embraer EMB-120 regional aircraft. Great Lakes Airlines is a United Airlines code share partner. Utilities and Infrastructure Westar Energy supplies electricity and Kansas Gas Service provides natural gas to the City. The City owns A-3 its own water and sewage system. Additionally, the City is responsible for street maintenanc~ and police and fire protection for the Airport. SBC provides telephone service. Two cellular phone companies provide service to the City. 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 $2.3 billion as of April 2016. 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 128 people. As of June 30, 2016 KPERS serves over 299,000 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 "TIM Group"), special members of the State/School Group. (b) Local Group -all participating cities, counties, library boards, water districts and political A-4 subdivisions are included in this group. Local employers contribute at a different rate than the State/School Group rate. State legislation enacted in 2003 made certain pre-1962 employees of the University of Kansas Hospital Authority (which are a part of a small group of pre-1962 Board and University of Kansas Hospital Authority employees known as the "TIAA Group"), special members of the Local Group. 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 IRS 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 8.46% of the employee's gross salary for calendar year 2017. In addition, the Issuer contributes 0% of the employee's gross salary for Death and Disability Insurance for covered employees for the period beginning April l, 2016, through June 30, 2017, and 1% of the employee's gross salary for Death and Disability Insurance for covered employees for the period beginning July 1, 2017. According to the Valuation Report as of December 31, 2015 (the "2015 Valuation Report"), the KPERS Local Group, of which the Issuer is a member, carried an unfunded accrued actuarial liability {"UAAL") of $1.485 billion at the end of 2015. The 2015 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 A-5 information set forth on the KPERS website or in the 2015 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 2015 Valuation Report sets the employer contribution rate for the period beginning January 1, 2018, for the KPERS Local Group, and KPERS' actuaries identified that an employer contribution rate of 8.39% 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 2015 Valuation Report's actuarial rate. As a result, members of the Local Group are adequately funding their projected actuarial liabilities 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 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 2015 Valuation Report, KP&F carried an UAAL of $772 million at the end of 2015. For the year beginning January 1, 2017, employees contributed 7.15% of gross compensation and the Issuer contributed 19.03% of employees' 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% offinal 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. KPERS produces a Schedule of Employer and Nonemployer Allocations and Schedules of Pension Amounts by Employer and Nonemployer (the "GASB 68 Report") which provides the net pension liability allocated to each KPERS participant, including the Issuer. 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 Tony's Pizza Events Center (formerly 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. A-6 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. 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. According to a 2016 Fort Hays State University Docking Institute of Public Affairs report, at December 31, 2014, over 100 businesses and organizations at the Salina Regional Airport and Airport Industrial Center employed 3,555 employees with a combined payroll in excess of $141.5 million. The report also cited that the Airport/Airport Industrial Center accounted for 17.3 percent of the employment in Saline County and 25 percent of the total economic activity in a seven-county area. The Kansas Department of Labor estimated the civilian labor force in the City of Salina for the year 2016 to be 34,010 persons. The estimated median household income for the City in 2015 was $46,167 and owner-occupied housing rates in the City were 63.8% 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. In April 2014, Unified School District No. 305 received voter approval for and subsequently issued $110,700,000 of general obligation bonds to fund a wide variety of improvements. The Salina Airport Authority The Salina Airport Authority (the "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. A-7 The Salina Regional Airport (the "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 Polytechnic ("KSUP"). The campus of KSUP is located adjacent to the Airport. KSUP offers degrees in professional flight training, airframe and power plant maintenance, UAS, airport management and avionics technology. During 2016, the Airport's commercial air service was improved by the commencement of scheduled flights provided by Great Lakes Airlines. The airline offers daily scheduled passenger air service to Denver International Airport with a 30-passenger Embraer EMB-120 regional aircraft. Great Lakes Airlines is a United Airlines code share partner. With the enhanced air service, the airport was also federalized with the Transportation Security Administration (TSA) providing federal screening resources. With the Great Lakes' service, the Airport anticipates having over 10,000 passenger enplanements during 2017 elevating the Airport's classification to that of a "Primary" airport by the Federal Aviation Administration. Also adding to the increased enplanement count is the Airport's status as an Airport of Embarkation/Debarkation by the Fort Riley, Kansas Army Installation located just 60 miles to the east of Salina on 1-17. The Airport also accommodates a wide variety of aircraft including business jets, military, flight training and general aviation aircraft. During 2016, the Salina Air Traffic Control Tower logged over 77,000 aircraft operations serving the needs of over 7,000 business jets, the professional flight training department of Kansas State University, general aviation and military aircraft. The Airport's fixed base operator, Avflight Salina, delivered over 1.8 million gallons of fuel to the wide variety of aircraft utilizing the Airport during 2016. The Airport and Airport Industrial Center is home for over 100 businesses and organizations. Fifty-eight of the businesses and organizations are tenants of the Authority. One of the primary functions of the Authority is to facilitate the continued growth of jobs and payroll at the Airport and Airport Industrial Center. The Authority works in partnership with the City of Salina, Saline County, and the Salina Area Chamber of Commerce, and the Kansas Department of Commerce for the retention of existing business and industry and the recruitment of new business and industry. A 2016 report prepared by the Docking Institute at Fort Hays State University cited the business and organizations located at the Salina Regional Airport and Airport Industrial Center contributed approximately 60 percent of the total economic activity in Saline County during 2014. Major Employers Industrial development during the past ten years has established a broad, industrial base in and around the City. A list of the major employers is as follows. All figures represent total full-time employment excluding seasonal and part-time employees. Name Schwan's Global Supply Chain, Inc. Unified School District No. 305 Salina Regional Health Center Exide Technologies Blue Philips Lighting Company City of Salina Walmart Dillon Stores Solomon Corporation Great Plains Manufacturing EIDorado National Crestwood, Inc. Advance Auto Parts Source: Salina Chamber of Commerce 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 Susses Wooden Cabinets Distribution Center A-8 Estimated Employment 1,800 1,659 1,300 750 490 465 421 343 324 258 221 219 195 Income The following table shows the per capita personal income for residents of Saline County and the State during the years indicated: Saline State of Year County Kansas 2015 $42,824 $47,161 2014 41,447 46,393 2013 41,096 45,838 2012 40,235 44,795 2011 39,240 42,515 2010 37,034 39,206 2009 38,752 38,301 2008 40,675 40,466 2007 36,781 37,663 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: Total Unemployment Year Labor Force Em~loyed Unem~loyed Rate 2017 (Mar) 26,295 25,401 894 3.4% 2016 26,194 25,170 1,024 3.9 2015 26,353 25,313 1,040 3.9 2014 26,303 25,159 1,144 4.4 2013 25,458 24,515 1,459 5.1 2012 25,808 24,241 1,567 6.3 2011 26,004 24,349 1,655 6.4 2010 26,156 24,434 1,722 6.6 State of Kansas: Total Unemployment Year Labor Force Em~loyed Unem~loyed Rate 2017 (Mar) 1,480,135 1,425,325 54,810 3.7% 2016 1,484,001 1,422,122 61,879 4.2 2015 1,499,009 1,435,884 63,125 4.2 2014 1,500,353 1,432,359 67,994 4.6 2013 1,491,745 1,405,036 86,709 5.3 2012 1,489,320 1,403,866 85,454 5.7 2011 1,498,872 1,401,055 97,817 6.5 2010 1,506,229 1,399,805 106,424 7.1 Source: Kansas Department of Labor A-9 DEBT SUMMARY OF THE CITY Current Indebtedness The following is an overview of the City's outstanding indebtedness by classification as of the dated date of the Bonds. Figures do not include bonds for which payment has been provided through the creation of designated escrow accounts. General Obligation Bonds: Date Amount Final Amount Issued Series Purpose of Issue Maturit~ Outstanding • 06-15-07 2007-A Internal Improvements $6,545,000 10-01-17 $ 360,000 07-15-08 2008-A Internal Improvements 3,720,000 10-01-17 250,000 12-15-08 2008-B Internal Improvements 3,525,000 07-01-26 1,845,000 07-15-09 2009-A Internal Improvements 23,695,000 10-01-20 7,090,000 05-01-10 2010-A Refunding & Improvement 6,875,000 10-01-20 1,260,000 10-15-10 2010-B Refunding 7,860,000 10-01-23 2,810,000 07-15-11 2011-A Internal Improvements 6,565,000 10-01-21 1,780,000 07-15-12 2012-A Internal Improvements 2,365,000 10-01-27 1,800,000 07-15-12 2012-B Refunding 3,785,000 10-01-20 1,375,000 02-15-13 2013-A Taxable Improvements 1,360,000 10-01-28 1,160,000 07-15-13 2013-B Improvements 4,330,000 10-01-33 3,655,000 07-30-14 2014-A Improvements 7,570,000 10-01-34 6,460,000 07-29-15 2015-A Revenue and Internal Imp. 6,825,000 10-01-35 6,530,000 07-27-16 2016-A Internal Improvements 6,570,000 10-01-36 6,570,000 07-27-16 2016-B Refunding 13,750,000 10-01-31 13,750,000 07-27-17 2017-A Improvements 9,310,000 10-01-37 9,310,000 Total $66,005,000 ·includes the Bonds. 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 Series Issued Date Amount Outstanding 2016-1 02-10-16 08-01-17 $6,890,000 $ o· 2016-2 07-20-16 09-01-19 4,615,000 4,615,000 2017-1 07-27-17 08-01-18 2,180,000 2,180,000 $6,795,000 ·robe paid at maturity with proceeds from the sale of the Series 2017-A Bonds. See THE FINANCING PLAN herein. A-10 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, 2016): Year Original Item Issued Amount ERP System 2014 $ 456,370 Defibrillators 2014 146,235 HVACSystem 2012 1,100,000 State Loans Final Maturity 10-01-31 Final Amount Outstanding $13,230,000 Amount Year Outstanding 2018 $ 235,348 2018 75,476 2027 958,675 $1,269,499 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. Project Year Final Original Amount Number Purpose Originated Payment Date Amount Outstanding KDHE 2629 Water 2014 08-01-34 $9,330,000 $ 8,563,923 KDHE 2841 * Water 2015 08-01-35 4,250,000 4,250,000 $12,813,923 * 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 Saline County Unified School District No. 305 *As of July 1, 2017. Amount Outstanding* $ 23,055,000 145,000 123,335,000 A-11 Estimated Share of the City Amount $ 23,055,000 108,866 115,478,561 $138,642,427 Percentage 100.00% 75.08 93.63 Annual Debt Payments The following is a list of annual debt service requirements for the City's currently outstanding general obligation bonded indebtedness. All amounts are rounded to the nearest whole dollar. Existing Bonds Series 2017-A Bonds Year Principal Interest Principal Interest Total 2017 $6,020,000 $843,176 0 0 $6,863,176 2018 6,395,000 1,562,669 $175,000 $336,535 7,374,711 2019 6,300,000 1,347,356 390,000 280,488 8,628,157 2020 4,150,000 1,162,726 395,000 268,787 8,311,143 2021 3,930,000 1,041,706 410,000 256,938 5,979,664 2022 4,000,000 905,516 420,000 244,637 5,636,343 2023 3,825,000 747,561 435,000 232,038 5,572,554 2024 3,585,000 594,491 445,000 218,987 5,236,548 2025 3,235,000 506,266 455,000 205,638 4,840,129 2026 2,850,000 422,454 475,000 191,987 4,408,253 2027 2,345,000 345,304 490,000 177,738 3,940,192 2028 1,990,000 284,859 505,000 163,037 3,358,341 2029 1,665,000 231,701 520,000 147,888 2,942,747 2030 1,150,000 189,439 530,000 132,287 2,558,988 2031 1,125,000 157,576 555,000 116,388 2,010,827 2032 995,000 125,244 565,000 99,737 1,947,313 2033 1,030,000 94,056 480,000 82,788 1,683,032 2034 975,000 61,825 495,000 67,787 1,686,843 2035 725,000 31,550 505,000 51,700 1,593,525 2036 405,000 10,125. 525,000 35,288 1,316,838 2037 0 0 540,000 18,225 973,350 $56,695,000 $10,665,600 $9,310,000 $3,328,898 $79,999,498 *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 Debt to U.S. Debt Outstanding Assessed Estimated Actual Census Per Year December 31 Valuation Valuation Population Capita 2016 $56,875,000 12.07% 1.92% 47,813 $1,189.53 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 A-12 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 2017-1 Temporary Note as well as providing general obligation note and/or bond funding for approximately $25 million of improvements including construction of a riverfront renewal project and police training facility. A portion of the debt service payments on bonds issued for the riverfront project are anticipated to be paid from local sales tax. 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 foF 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. Debt Payment Record The City has always met principal and interest payments on all outstanding bonds and temporary notes when due and payable. Legal Debt Limits Cities within Kansas are permitted to issue bonds in an aggregate amount not to exceed 30% of the total assessed valuation of the city. Bonds issued for the purpose of improving, acquiring, enlarging, or extending municipal utilities, including storm and sanitary sewer systems; bonds issued to pay the cost of improvements to intersections and streets in front of city or school district property; bonds for bridges as authorized by a vote of the electors of a city; bonds issued to refund outstanding bonds; and bonds payable from revenue sources other than the general taxing authority of the city are not included in total aggregate debt for purposes of computing a city's debt limitation. A-13 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: 2012 2013 2014 2015 Property Taxes $ 9,125,179 $ 8,959,066 $ 9,278,832 $9,244,160 Sales Tax 12,165,281 12,259,556 12,688,980 12,930,811 Other Taxes 5,057,100 5,264,277 5,636,239 5,663,843 Intergovernmental 1,080,291 1,255,203 1,162,384 975,720 Charges for Services 7,678,288 7,981,078 7,826,289 6,046,903 Investment Revenue 9,000 0 11,536 0 Miscellaneous 425,970 525,923 629,259 498,557 Total Revenues $35,541,109 $36,245,103 $37,233,769 $35,359,034 Expenditures: General Government $ 3,574,626 $ 4,268,824 $ 3,986,212 $5,342,433 Public Safety 18,564,988 19,155,034 19,558,487 21,267,630 Public Works 6,541,848 6,826,214 6,949,477 4,875,641 Public Health and Sanitation 1,188,836 1,183,970 146,178 754,347 Culture and Recreation 2,157,195 2,277,146 2,697,564 4,039,856 Planning and Development 2,267,262 2,335,233 2,209,836 586,358 Capital Outlay 721,079 694,750 843,975 1,041,690 Total Expenditures $35,015,834 $36,741,161 $36,391,729 $37,907,955 Revenues Over (Under) $ 525,275 $(496,058) $842,040 $(2,548,921) Other Sources (Uses) {534,403} 93,313 {137,351} 2,962,350 Net Change in Fund Balance $ (9,128) $(402,745) $704,689 $413,429 Fund Balance January 1 $3,836,238 $3,827,110 $3,549,740 $4,254,432 Restatement of Prior Year Balance 3,836,238 3,952,485 0 172,325 Fund Balance December 31 $3,827,110 $3,549,740 $4,254,429 $4,840,186 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 Year Estate Progertvl11 Utilities Vehicle Valuation 2017(21 $400,127,434 $10,739,414 $19,671,705 $51,833,505(3) $482,372,058 2016 389,872,825 11,653,719 19,323,055 51,833,505 472,683,104 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 A-14 !llPersonal property valuations began to decline in 2006 as a result of legislative action that started the process of removing significant portions of industrial machinery and equipment from the property tax rolls. !2lPreliminary numbers provided by the County for estimating purposes. Final numbers will be available November 2017. !3l2016 motor vehicle figure used. 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. Year 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Special Assessments Residential Real Estate Equalization Ratio 11.36% 11.28 11.65 11.55 11.95 12.04 11.89 11.67 11.66 11.68 Estimated Actual Value $3,046,949,034 2,968,008,193 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. 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. A-15 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 ~O 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 Year Rate Levied Amount ~ Amount ~ 2016 27.603 $11,651,479 $6,655,824 57.1% $6,688,199 57.4% 2015 27.311 11,316,065 10,460,246 92.4 11,077,742 97.9 2014 27.080 10,991,959 9,312,515 84.7 10,832,972 98.6 2013 26.927 10,868,225 8,101,775 74.5 10,839,120 99.7 2012 26.190 10,550,730 6,597,038 62.5 10,500,249 99.5 2011 26.272 10,506,181 9,157,407 91.4 10,501,377 100.0 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 *Represents collections through May, 2017. Tax Levies Nov Nov Nov Nov Nov 2012 2013 2014 2015 2016 ~ ~ ~ ~ ~ City of Salina 26.190 26.927 27.080 27.311 27.603 Salina Library 5.452 5.761 6.034 5.895 5.893 State Education & Other 1.500 1.500 1.500 1.500 1.500 Unified School District No. 305 58.649 58.116 55.605 56.120 55.743 Airport Authority 4.007 4.504 4.486 4.396 4.396 Central Kansas Extension District 1.176 1.176 1.285 1.502 1.510 Saline County 34.823 37.895 38.047 38.275 37.508 Total 131.797 135.879 134.037 134.999 134.153 A-16 Largest Taxpayers According to the Saline County Clerk's Office, the following table lists the largest taxpayers in the City, their November 2016 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 $11,465,864 2.43% SFC Global Supply Chain Inc Manufacturing 7,189,283 1.52% Central Mall Realty Holding LLC Retail Shopping Center 6,311,063 1.34% RAF Salina LLC Regional Shopping Center 5,106,493 1.08% Sams Real Estate Business Trust/Walmart Discount Store 4,805,059 1.02% Salina Regional Health Centers Hospital and Medical Offices 4,318,078 0.91% Kansas Gas Service Utility 3,644,537 0.77% Menard Inc Home Improvement Store 2,506,064 0.53% Great Plains Manufacturing Manufacturing 2,327,353 0.49% Union Pacific Railroad 2,288,512 0.48% Total $49,962,306 10.57% 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: Sales Tax Year 2016 2015 2014 2013 2012 2011 2010 2009 Value $97,910,328 56,989,007 24,214,432 29,285,213 54,863,040 19,752,335 52,358,547 12,192,481 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. 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. A-17 The total sales tax for goods and services in the City is 8. 75%, which consists of 6.5% imposed by the State, 1% countywide local option sales tax, and 1.25% citywide local option sales tax. The following table lists the local- option sales tax receipts of the City of Salina in the years indicated. 2016 1992 City's Portion of .75% Citywide .50% Citywide 1% Countywide Local Option Local Option Local Option Vear Sales Tax Recei~ts Sales Tax Recei~ts Sales Tax Recei~ts 2017(1) $2,123,177 $2,653,971 $2,457,183 2016 4,648,280(2) 5,810,350 7,312,618 2015 4,610,032 5,762,541 7,376,708 2014 4,488,672 5,610,840 7,188,934 2013 4,313,345 5,391,681 6,998,806 2012 4,244,974 5,306,218 6,992,853 2011 4,111,910 5,139,888 6,755,629 2010 3,886,733 4,858,416 6,394,838 UlAs of April, 2017 !2lCollections prior to October 1, 2016 represent taxes attributable to a .40% sales tax that was originally imposed November 2008. Source: City Clerk Budgeting Procedures Applicable Kansas statutes require that budgets be legally adopted for all funds (including debt service and enterprise funds) unless exempted by a specific statute. All budgets are prepared utilizing the modified accrual basis further modified by the encumbrance method of accounting. For example, commitments such as purchase orders and contracts, in addition to disbursements and accounts payable, are recorded as expenditures. The statutes provide that the budget for the succeeding calendar year must be prepared on or before August 1 and published on or before August 5 of each year. A public hearing is required to be held on or before August 15, with the final budget being adopted on or before August 25 of each year. Original appropriations may be modified by supplemental appropriations and transfers among budget categories. The City Commission must approve all significant changes. 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 repair of any existing structures or improvements on the property; (B) increased personal property valuation; A-18 (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 offunds 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 Securities, as required by the Bond Resolution and the Note Resolution. The City cannot predict the impact of the Tax Lid on the ratings on the Securities, or the general rating of the City. A change in the rating on the Securities or a change in the general rating of the City may adversely impact the market price of the Securities in the secondary market. Kansas law prohibits cities and other governmental units from creating indebtedness unless there is money A-19 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 provided certain statutory requirements are met: religious, educational, literary, scientific, A-20 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 2016 Preliminary Kansas Appraisal/Sales Ratio Study, the equalization ratio for residential real property in Saline County was 11.36%, and commercial and industrial property was 23.85%. REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY A-21 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 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 I. The Issuer may make future series of Bonds subject to this Disclosure Undertaking by incorporating by reference in a Bond Resolution or executing a certificate to such effect in conjunction with the issuance of such series of Bonds. "Business Day" means a day other than: (a) a Saturday, Sunday or legal holiday; (b) a day on which banks located in any city in which the principal corporate trust office or designated payment office 1 of the trustee, any paying agent or a Dissemination Agent, as applicable, is located are required or authorized by law to remain closed; or (c) a day on which the Securities Depository or the New York Stock Exchange is closed. "CAFR" means the Issuer's Comprehensive Annual Financial Report, if any. "Designated Agent" means Gilmore & Bell, P.C. or one or more other entities designated in writing by the Issuer to serve as a designated agent of the Issuer for purposes of this Disclosure Undertaking. "Dissemination Agent" means any entity designated in writing by the Issuer to serve as dissemination agent pursuant to this Disclosure Undertaking and which has filed with the Issuer a written acceptance of such designation substantially in the form attached hereto as Exhibit C. "EMMA" means the Electronic Municipal Market Access system for municipal securities disclosures established and maintained by the MSRB, which can be accessed at www.emma.msrb.org. "Financial Information" means the financial information of the Issuer described in Section 2(a)(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. "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. 2 "System" means the entire combined waterworks plant and system and sewerage plant and system owned and operated by the Issuer for the production, storage, treatment and distribution of water, and for the collection, treatment and disposal of sewage, to serve the needs of the Issuer and its inhabitants and others, including all appurtenances and facilities connected therewith or relating thereto, together with all extensions, improvements, additions and enlargements thereto hereafter made or acquired by the Issuer. Section 2. Provision of Annual Reports. (a) The Issuer shall, or shall cause the Dissemination Agent to, not later than 180 days after the end of the Issuer's Fiscal Year, commencing with the Fiscal Year ended in 2013, file with the Repository the Issuer's Annual Report, consisting of the Financial Information and Operating Data described as follows: (1) Financial Information. The financial statements of the Issuer and the System for such prior Fiscal Year, accompanied by an audit report resulting from an audit conducted by an Independent Accountant in conformity with generally accepted auditing standards. Such financial statements will be prepared on a modified accrual basis of accounting other than GAAP for all governmental funds, expendable trust and agency funds. The accrual basis of accounting is used for proprietary and nonexpendable trust funds. A more detailed explanation of the accounting basis is contained in Appendix A of the Official Statement. If such audit report is not available by the time the Annual Report is required to be filed pursuant to this Section, the Annual Report shall contain summary unaudited financial information and the audit report and accompanying financial statements shall be filed in the same manner as the Annual Report promptly after they become available. The method of preparation and basis of accounting of the Financial Information may not be changed to a basis less comprehensive than contained in the Official Statement, unless the Issuer provides notice of such change in the same manner as for a Material Event under Section 3(h) hereof. (2) Operating Data. Updates as of the end of the Fiscal Year of certain financial information and operating data described in Exhibit A, with such modifications to the formatting and general presentation thereof as deemed appropriate by the Issuer; provided, any substantive change to information provided shall be effected only in accordance with Section 6 hereof. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues with respect to which the Issuer is an "obligated person" (as defined by the SEC Rule), which have been filed with the Repository, the MSRB or the SEC. If the document included by reference is a final official statement, it must be available from the Repository. The Issuer shall clearly identify each such other document so included by reference. In each case, the Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in this Section; provided that the audit report and accompanying financial statements may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the Issuer's Fiscal Year changes, it shall give notice of such change in the same manner as for a Material Event under Section 3(b). (b) From and after such time that Section (b )( 5) of the SEC Rule applies to any series of Bonds, if the Annual Report is not filed within the time period specified in subsection (a) hereof, the Issuer shall send a notice to the Repository in a timely manner, in substantially the form attached as Exhibit B. 3 (c) Pursuant to Section (d)(3) of the SEC Rule, the provisions of Section 2(a)(I) hereof shall not apply to any Bonds with a stated maturity of 18 months or less. Section 3. Reporting of Material Events. (a) No later than 10 Business Days after the occurrence of any of the following Material Events, the Issuer shall give, or cause to be given, to the Repository notice of the occurrence of any of the following Material Events with respect to the Bonds, with copies to the Bond Insurer, if any: (1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; ( 4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; ( 6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; (7) modifications to rights of bondholders, if material; (8) bond calls, if material, and tender offers; (9) defeasances; (10) release, substitution or sale of property securing repayment of the Bonds, if material; (11 ) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the Issuer or System (which shall be deemed to occur as provided in the SEC Rule); ( 13) the consummation of a merger, consolidation, or acquisition involving the Issuer or System or the sale of all or substantially all of the assets of the Issuer or System, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (14) appointment of a successor or additional paying agent or trustee or the change of name of the paying agent or trustee, if material. (b) Notwithstanding the foregoing, notice of Material Events described in subsections (a)(8) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to the Owners of affected Bonds pursuant to the Bond Resolution. 4 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 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 5 the Dissemination Agent and payment of the Bonds. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Issuer pursuant to this Disclosure Undertaking. · (e) Other Designated Agents. The Issuer may, from time to time, appoint or designate a Designated Agent to submit Annual Reports, Material Event notices, and other notices or reports pursuant to this Disclosure Undertaking. The Issuer hereby appoints the Dissemination Agent and the Designated Agent( s) solely for the purpose of submitting Issuer-approved Annual Reports, Material Event notices, and other notices or reports pursuant to this Disclosure Undertaking. The Issuer may revoke this designation at any time upon written notice to the Designated Agent. Section 5. Termination of Reporting Obligation. The Issuer's obligations under this Disclosure Undertaking for a particular series of Bonds shall terminate upon the legal defeasance, prior redemption or payment in full of that series of Bonds. If the Issuer's obligations hereunder are assumed in full by some other entity as permitted in the Bond Resolution, such person shall be responsible for compliance with under this Disclosure Undertaking in the same manner as if it were the Issuer, and the Issuer shall have no further responsibility hereunder. If such termination or assumption occurs prior to the final maturity of such Bonds, the Issuer shall give notice of such termination or assumption in the same manner as for a Material Event under Section 3(b). Section 6. Bonds Subject to this Disclosure Undertaking; Amendment; Waiver. (a) All outstanding Bonds as of the date of this Disclosure Undertaking shown on Schedule 1 are hereby made subject to this Disclosure Undertaking. The Issuer may make any future series of Bonds subject to this Disclosure Undertaking by incorporating by reference in a Bond Resolution or executing a certificate to such effect in conjunction with the issuance of such series of Bonds. (b) All references to the "Bonds" in this Disclosure Undertaking shall apply separately to each series of Bonds that are or become subject to this Disclosure Undertaking, without further amendment hereto. (c) Notwithstanding the provisions of subsection (d) or anything else contained in this Disclosure Undertaking to the contrary, in conjunction with the public offering of any series of Bonds, the Issuer and the Dissemination Agent may amend the categories of Operating Data to be updated as set forth in Section 2(a)(2) and Exhibit A to conform to the operating data included in the final Official Statement for such series of Bonds, in conformance with the requirements and interpretations of the SEC Rule as of the date of such final Official Statement, without further amendment to this Disclosure Undertaking. Thereafter, the Operating Data to be filed by the Issuer with the Repository with respect to the Bonds (and all other series of Bonds then subject to this Disclosure Undertaking) shall be deemed to be amended to reflect the requirements of the revised Exhibit 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 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. 6 (e) If a provision of this Disclosure Undertaking is amended or waived with respect to a series of Bonds pursuant to subsection (d), the Issuer shall describe such amendment or waiver in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type ( or, in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Issuer. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements: (1) notice of such change shall be given in the same manner as for a Material Event under Section 3(b); and (2) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Section 7. Additional Information. Nothing in this Disclosure Undertaking shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Undertaking or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is required by this Disclosure Undertaking. If the Issuer chooses to include any information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is specifically required by this Disclosure Undertaking, the Issuer shall have no obligation under this Disclosure Undertaking to update such information or include it in any future Annual Report or notice of occurrence of a Material Event. Section 8. Noncompliance. In the event of a failure of the Issuer or the Dissemination Agent, if any, to comply with any provision of this Disclosure Undertaking with respect to a series of Bonds, any Participating Underwriter or any Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order, to cause the Issuer or the Dissemination Agent, if any, as the case may be, to comply with its obligations under this Disclosure Undertaking. Noncompliance with the provisions of this Disclosure Undertaking shall not be deemed an Event of Default under the Bond Resolution or the Bonds, and the sole remedy under this Disclosure Undertaking in the event of any failure of the Issuer or the Dissemination Agent, if any, to comply with this Disclosure Undertaking shall be an action to compel performance. Section 9. Notices. Any notices or communications to or among the parties referenced in this Disclosure Undertaking shall be given the Notice Representatives at the Notice Addresses set forth in the Bond Resolution for each series of Bonds; provided notice to the Dissemination Agent shall be given at the Notice Address set forth on Exhibit C hereto. Section 10. Electronic Transactions. Actions taken hereunder and the arrangement described herein may be conducted and related documents may be stored by electronic means. Copies, telecopies, facsimiles, electronic files and other reproductions of original documents shall be deemed to be authentic and valid counterparts of such original documents for all purposes, including the filing of any claim, action or suit in the appropriate court of law. Section 11. Beneficiaries. This Disclosure Undertaking shall inure solely to the benefit of the Issuer, the Dissemination Agent, if any, each Participating Underwriter and Beneficial Owners from time to time with respect to a series of Bonds, and shall create no rights in any other person or entity. Section 12. Severability. If any provision in this Disclosure Undertaking, the Bond Resolution or the Bonds relating hereto, shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions of this Disclosure Undertaking shall not in any way be affected or impaired thereby. 7 Section 13. Governing Law. This Disclosure Undertaking shall be governed by and construed in accordance with the laws of the State of Kansas. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 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 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 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 General Obligation Internal Improvement Bonds, Series 2017-A Dated Date 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 07-27-17 Temporary Notes (Base CUSIP No.: 794743) Description of Indebtedness General Obligation Temporary Notes, Series 2016-1 General Obligation Temporary Notes, Series 2017-1 Dated Date 02-10-16 07-27-17 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 Maturi!l'. 10-01-17 10-01-17 07-01-28 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 10-01-36 10-01-31 10-01-37 Final Maturi!l'. 08-01-17 08-01-18 Final Maturi!l'. 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 oflssuer: Name of Bond Issue: Name of Obligated Person: Date of Issuance: City of Salina, Kansas [Description of Bonds], Series L__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 ____________ _ By _____________ , as Dissemination Agent cc: City of Salina, Kansas B-1 EXHIBITC ACCEPTANCE OF DISSEMINATION AGENT Name of Issuer: City of Salina, Kansas Name of Bond Issue: [Description of Bonds], Series L_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, 2015 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, 2015, including financial statements as audited by the firm of Mize Houser & Company, P.A., Certified Public Accountants, Topeka, Kansas. CITY OF SALINA, KANSAS Financial Statements and Schedule of Expenditures of Federal Awards For the Fiscal Year Ended December 31, 2015 Independent Auditor's Report Basic Financial Statements: CITY OF SALINA, KANSAS Financial Statements and Schedule Of Expenditures of Federal Awards For the year ended December 31, 2015 TABLE OF CONTENTS 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 Net Position -Proprietary Funds Statement of Cash Flows -Proprietary Funds Statement of Assets and Liabilities -Agency Funds Notes to the Basic Financial Statements Required Supplementary Information Schedule of Funding Progress and Schedule of Employer Contributions KPERS Pension Plan Schedule of City's Proportionate Share of the Net Pension Liability Schedule of City Contributions 1-3 4 5 6 7 8 9 10 11 12 13 14 15 16-17 18 19-49 50 51 51 CITY OF SALINA, KANSAS Financial Statements and Schedule Of Expenditures of Federal Awards For the year ended December 31, 2015 TABLE OF CONTENTS -CONTINUED 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 Arts & Humanities Fund Debt Service Fund Solid Waste Disposal Fund Water and Sewer Fund Sanitation Fund Golf Course Fund Workers' Compensation Reserve Fund Health Insurance Fund Central Garage 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 52-53 54 55 56-57 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 Financial Statements and Schedule Of Expenditures of Federal Awards For the year ended December 31, 2015 TABLE OF CONTENTS -CONTINUED 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 the Uniform Guidance 85 86 87-90 91 -92 93-94 Mayor and City Commissioners City of Salina, Kansas Report on the Financial Statements INDEPENDENT AUDITOR'S REPORT ~ MIZE HOUSER OoMPANYr.A. We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Salina, Kansas, as of and for the year ended December 31 , 2015, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on the financial statement based on our audit. 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 Kansas Municipal Audit and Accounting Guide . Those standards require we plan and perform 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 and deferred outflows of resources of $46,404,451 as of December 31, 2015 and total revenues of $4,170,264 for the year then ended, and the Housing Authority of the City of Salina which statements reflect total assets and deferred outflows of resources of $7 ,561 ,852 as of June 30, 2015 and total revenues of $2,364,932 for the year then ended, which are discretely presented component units in the accompanying financial statements. Those financial statements were audited by other auditors whose reports thereon have been furnished to us, and our opinion, insofar as it relates to the amounts included for the Salina Airport Authority and the Housing Authority of the City of Salina is based solely on the reports of the other auditors. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. www.mizehouser.com • mhco@mizehouser.com 534 S Kansas Ave, Suite 700 • Topeka, KS 66603-3465 • 785.233.0536 p • 785.233.1078 I 534 S Kansas Ave, Suite 400 • Topeka, KS 66603-3454 • 785.234.5573 p • 785.234.1037 I 7101 College Blvd, Suite 900 • Overland Park, KS 66210-1984 • 913.451 .1882 p • 913.451.2211 f 211 E Eighth Suite A• Lawrence, KS 66044-2771 • 785.842.8844 p • 785.842.9049 f 1 Opinions In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Salina, Kansas, as of December 31, 2015, and the respective changes in financial position and cash flows, where applicable, thereof 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. Emphasis of Matter Change in Accounting Principle As described in Note 3 to the financial statements, the City implemented GASB 68 during the current year. As a result of the implementation, a restatement was made to the net position for the proportionate share of the City's net pension liability at December 31, 2014. Our opinion is not modified with respect to this matter. Prior Period Restatement As discussed in Note 3 to the financial statements, certain errors resulting in amounts previously reported as expenses, capital assets, deferred charges on bond issuances and capital leases as of December 31, 2014, were discovered by management of the City during the current year. Accordingly, these amounts have been restated in the December 31, 2015, 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 The City has not presented management discussion and analysis that accounting principles generally accepted in the United States of America has determined is necessary to supplement, although not required to be a part of, the basic financial statements. Accounting principles generally accepted in the United States of America require that the schedules of funding progress on page 50, the schedule of the City's proportionate share of the net pension liability on page 51, and the schedule of City contributions on page 51 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 combining and individual nonmajor fund financial statements and schedules 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 Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 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 directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying account and other records used to prepare the 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. 2 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated June 26, 2017, 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 June 26, 2017 3 CITY OF SALINA, KANSAS STATEMENT OF NET POSITION December 31, 2015 Pnma'i'. Government Com~nent Units Total Total Total Salina Sahna Governmental Business-type Pnmary Housing Airport Act1v1bes Act1v1bes Government Authon!}'. Authon!}'. ASSETS AND DEFERRED OUTLFOWS OF RESOURCES Current assets· Cash and investments $ 14,508,203 $ 28,415,391 $ 42,923,594 $ 1,631,114 $ 719,084 Receivables (net of allowance for uncollect1bles) Accounts 1,840,153 1,515,432 3,355,585 29,813 127,534 Taxes 11,809,338 11,809,338 Interest 10,735 16 10,751 Inventory 305,703 488,578 794,281 26,112 Restricted cash and investments 153,627 Prepaid expenses 36982 157 892 Total current assets 28,474,132 30 419,417 58,893,549 1 877,648 1,004,510 Noncurrent assets Capital assets, nondepreciable ConstructJon in progress 19,019,623 13,579,083 32,598,706 144,403 906,356 Land 23,263,030 1,546,806 24,809,836 1,456,891 9,843,426 Capital assets, depreciable 245,001,219 131,357,885 376,359,104 8,122,489 71,332,228 Less Accumulated depreciation 106,042,539 55,887,493 161,930,032 4 060,239 36 688 486 Total noncurrent assets 181,241,333 90,596,281 271,837,614 5,663,544 45,393,524 Total assets 209,715,465 121,015,698 330,731,163 7,541,192 46,398,034 Deferred outflows of resources: Pension -difference between expected and actual expenence 149,622 149,622 Pension -contnbutoons subsequent to the measurement date 1,784,758 185,364 1,970,122 20,660 6,417 Pension -changes in proportion 345 136 481 Deferred charge on bond issuance 336 828 274 528 611356 Total deferred outflows of resources 2,271,553 460 028 2,731,581 20660 6417 Total assets and deferred outflows of resources $ 211,987,018 $ 121,475,726 S 333,462,744 $ 7,561,852 $ 46,404,451 Liabllrt1es· Current habol1bes· Accounts payable $ 2,203,492 s 1,019,095 $ 3,222,587 $ 36,555 $ 91,126 Retainage payable 503,396 387,051 890,447 Acaued hab1hbes 456,533 456,533 37,718 139,332 Matured bond pnnapal and interest 145 145 Acaued interest payable 410,475 280,121 690,596 319,615 Dep0S1ts payable 178,910 178,910 94,979 Current portion of compensated absences 1,482,001 321,439 1,803,440 2,307 Current portion of temporary notes payable 5,995,000 5,995,000 Current portion of loans payable 387,077 387,077 Current portion of revenue bonds payable 663,696 663,696 Current portion of financing leases payable 158,192 158,192 55,696 Current portion of speaal assessment debt payable 19,197 Current portion of general obhgabon bonds payable 5,216,252 1,073 573 6289 825 1,035,000 Total current habol1bes 16 425,486 4 310,962 20,736,448 171 559 1,659,966 Noncurrent hab1hbes Acaued hab1hbes 100,508 100,508 325,559 Compensated absences 1,396,289 305,153 1,701,442 20,764 Secunty deposits returnable 37,702 Net OPEB obligation 4,267,321 416,684 4,684,005 Net pension hab1hty 23,598,676 2,824,797 . 26,423,473 545,977 Loans payable 5,366,543 5,366,543 Revenue bonds payable 13,285,443 13,285,443 Financing leases payable 321,174 321,174 Special assessment debt payable 11,268 General obhgabon bonds payable 45,624,380 7,466,199 53,090,579 21,756,330 Lanclfin post-closure care hab1hbes 1,902,252 1,902,252 Total noncurrent hab1hbes 75 308 348 31 567,071 106,875,419 346 323 22 351.277 Total hab1hties 91 733,834 35,878,033 127,611,867 517 882 24,011,243 Deferred inflows of resources: Unavailable revenue -property taxes 11,270,014 11,270,014 10,265 44,212 Pension -difference between expected and actual expenence 478,347 79,965 558,312 113,729 Pension -net difference between projected and actual earnings on pension plan investments 801,065 109,959 911,024 Pension -changes of assumptions 264,622 39,479 304,101 Pension -change in proportion 735 733 139 038 874 771 Total deferred inflows of resources 13 549,781 368 441 13,918,222 10265 157941 Total habolrt1es and deferred inflows of resources $ 105,283,615 $ 36 246,474 $ 141,530,089 $ 528147 $ 24,169,184 Net P0S1bon Net investment 1n capital assets $ 130,400,701 $ 68,107,370 $ 198,508,071 $ 5,663,544 $ 22,516,034 Restncted for. Permanent funds Expendable 478,999 478,999 28,140 Debt service 745,339 1,512,125 2,257,464 Unrestncted [24,921,636) 15,609,757 [9,311,879) 1342021 [280,767) Total net position $ 106,703,403 $ 85,229,252 $ 191,932,655 $ 7,033,705 $ 22,235.267 The notes to the basic financial statements are an Integral part of this statement 4 Governmental actlvltles: General government Public safety Publicwor1<s Public health and sanitation Culture and recreation Planning and development Interest on long-term debt Total governmental activities Business-type activities: Solid Waste Disposal Water and Sewer Sanitation Golf Course Total business-type acllvities Total primary government Component units: Salina Housing Authority Salina Airport Authonty Total component units CITY OF SALINA, KANSAS STATEMENT OF ACTIVITIES For the Year Ended December 31, 2015 Net [Expenses) Revenue and Chan11es in Net Position Pro11ram Revenues Prima!1 Government Operating Capital Total Total Total Charges for Grants and Grants and Governmental Business-type Primary E~nses Services Contributions Contributions Acllvibes Activities Government $ 10,742,987 $ 3,151,436 $ 754,016 $ $ [6,837,535) $ $ [6,837,535) 21,083,431 4,600,375 682,827 [15,800,229) [15,800,229) 9,049,101 192,553 1,431,755 [7,424,793) [7,424,793) 994,680 45,566 184,555 [764,559] [764,559) 6,516,702 1,500,871 195,097 [4,820,734) [4,820,734) 1,915,399 73,254 145,970 [1,696,175) [1,696,175) 1 774 410 [1,774,410) [1,774,410) 52,076,710 9,564,055 3,394,220 [39,118,435) [39,118,435) 1,766,480 . 2,518,532 752,052 752,052 11,711,823 19,058,855 7,347,032 7,347,032 1,909,251 2,528,829 619,578 619,578 820,539 819,945 [594) [594) 16,208,093 24,926,161 8,718,068 8,718,068 $ 68,284,803 $34.490,216 $ 3,394,220 $ [39,118,435) 8,718,068 [30,400,367) $ 2,328,836 $ 369,355 $ 1,773,035 $ 97,525 5,644,898 1,787,840 217,112 $ 7,973,734 $ 2,157,195 $ 1,773,035 $ 314,637 General Revenues: Property taxes levied for General purposes 8,242,146 8,242,146 Debt service 2,765,813 2,765,813 Motor vehicle tax General purposes 1,312,358 1,312,358 Sales tax General purposes 12,930,811 12,930,811 Selective purposes 4,558,035 4,558,035 Other taxes General purposes 7,362,412 7,362,412 Investment revenues 86,123 56,031 142,154 Reimbursements 100 100 Miscelaneous 2,371,060 132,402 2,503,462 Transfers, net 3,819,309 [3,781,685) 37 624 Subtotal general revenues 43,448,067 [3,593,152) 39,854,915 Change In net position 4,329,632 5,124,916 9,454,548 Net position -beginning 127,878,328 82,778,234 210,656,562 Prior period adjustment [25,504,557) [2,673,898) [28,178,455) Net position -beginning, restated 102,373,771 80,104,336 182,478,107 Net position -ending $106,703,403 $ 85,229,252 $ 191.932,655 The notes to the basic financial statements are an integral part of this statement. 5 Com~nent Units Salina Salina Housing Airport Authori!}'. Authori!}'. $ $ [88,921) [3,639,946) [88,921) [3,639,946) 2,028,074 7,242 286 117,775 136,952 125,017 2,165,312 36,096 [1,474,634) 7,373,068 24,247,520 [375,459) [537,619) 6,997,609 23,709,901 $7,033,705 $22,235,267 ASSETS Cash and investments Receivables (net) Accounts Taxes Interest Inventory Due from other funds Cash with fiscal agent Total assets LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable Retainage payable Due to other funds Matured principal and interest Temporary notes payable Total liabilities Deferred inflows of resources Unavailable revenue -property taxes Total deferred inflows of resources Fund balance: Nonspendable Restricted Committed Assigned Unassigned Total fund balances Total liabilities, deferred inflows of resources and fund balances CITY OF SALINA, KANSAS BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2015 Tourism and General Convention $ 3,958,353 $ 216,807 $ 1,015,867 366,306 8,403,904 • 10,735 111,614 20,861 $ 13,521,334 $ 583,113 $ $ 448,541 $ 418,824 $ 448,541 8,232,607 8,232,607 111,614 198,717 4,529,855 4,840,186 418,824 164,289 164,289 Special Gas 402,415 314,751 717,166 77,524 1,495 79,019 532,678 105,469 638,147 $13,521,334 $ 583,113 $ 717,166 Schilling Other Total Sales Tax Capital Debt Capital Governmental Governmental Capital Improvement Service Projects Funds Funds $ 1,622,631 $ 5,554,768 $ 692,063 $ [3,499,129] $ 3,603,387 $ 12,551,295 454,369 3,611 1,840,153 3,090,683 11,809,338 10,735 111,614 20,861 145 145 $ 1,622,631 $ 5,554,768 $ 3,782,891 $ [3,044,760) $ 3,606,998 $ 26,344,141 $ 2,314 $ 19,317 $ -$ 995,819 $ 182,814 $ 2,145,153 501,901 503,396 20,861 20,861 145 145 5,995,000 5,995,000 2,314 19,317 145 7,492,720 203,675 8,664,555 3,037,407 11,270,014 3,037,407 11,270,014 111,614 745,339 1,350,260 2,792,566 1,495,985 5,304,667 1,894,788 8,695,440 124,332 230,784 158,275 817,577 [10,537,480] [6,007,625] 1,620,317 5,535,451 745,339 [10,537,480] 3,403,323 6,409,572 $ 1,622,631 $ 5,554,768 $ 3,782,891 $ [3,044,760) $ 3,606,998 $ 26,344,141 The notes to the basic financial statements are an integral part of this statement. 6 CITY OF SALINA, KANSAS RECONCILIATION OF THE TOTAL GOVERNMENTAL FUND BALANCE TO NET POSITION OF GOVERNMENTAL ACTIVITIES December 31, 2015 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 Pension contributions are reported an expense in the funds and as a deferred outflow of resources in the governmental activities in the statement of net position. Pension fundings are reported an a revenue in the funds and as a deferred inflow of resources in the governmental activities in the statement of net position. 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 Net pension liability Bonds payable Financing leases payable Accrued interest on the bonds Net Position of Governmental Activities 287,060,630 105,861,177 2,841,581 4,267,321 23,457,286 50,840,632 479,366 410,475 The notes to the basic financial statements are an integral part of this statement. 7 $ 6,409,572 336,828 181,199,453 1,925,440 [2,261,325] 1,390,096 [82,296,661] $ 106,703,403 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS For the Year Ended December 31, 2015 Tourism and Special General Convention Gas REVENUES: Taxes Real estate taxes $ 8,028,863 $ -$ Delinquent taxes 213,283 Motor vehicle taxes 1,001,054 General sales taxes 12,930,811 Selective sales taxes Other taxes 5,663,843 1,698,569 Intergovernmental 975,720 1,422,255 Special assessments Licenses and permits Charges for services 6,046,903 Investment revenue 368 1,655 Reimbursements Donations Miscellaneous 498,557 Total revenues 35,359,034 1,698,937 1,423,910 EXPENDITURES: Current General government 5,342,433 Public safety 21,267,630 Public works 4,875,641 453,740 Public health and sanitation 754,347 Culture and recreation 4,039,856 Planning and development 586,358 1,202,932 Miscellaneous Capital outlay 1,041,690 1,256,839 Debt service Principal retirement Interest and other charges Total expenditures 37,907,955 1,202,932 1,710,579 Excess [deficiency] of revenue and other sources over [under] expenditures and other [uses] [2,548,921] 496,005 [286,669] OTHER FINANCING SOURCES [USES] Issuance of bonds Bond premium Transfers in 3,644,350 170,000 Transfers [out] [682,000] [882,839] [174,913] Total other financing sources [uses] 2,962,350 [882,839] [4,913] Net change in fund balance 413,429 [386,834] [291,582] Fund balance -Beginning of year 4,254,432 551,123 929,729 Restatement of prior year fund balance 172,325 Fund balance -Beginning of year, as restated 4,426,757 551,123 929,729 Fund balance -End of year $ 4,840,186 $ 164,289 $ 638,147 Schilling Other Total Sales Tax Capital Debt Capital Governmental Governmental Capital Improvement Service Projects Funds Funds $ -$ -$ 2,700,326 $ -$ -$ 10,729,189 65,487 278,770 311,304 1,312,358 12,930,811 4,204,376 353,659 4,558,035 7,362,412 986,746 3,384,721 1,679,019 1,679,019 9,500 9,500 368,999 6,415,902 4,610 14,302 4,134 16,393 5,076 46,538 491,274 491,274 83,391 83,391 11,925 1,226,650 115,845 1,852,977 4,208,986 14,302 4,772,195 1,734,317 1,923,216 51,134,897 5,342,433 21,267,630 3,281 5,332,662 227,249 981,596 1,619,484 5,659,340 120,915 1,910,205 35 35 2,686,381 2,074,552 17,965,828 502,090 25,527,380 6,095,285 155,000 6,250,285 1,602,053 94,483 136,030 1,832,566 2,686,381 2,074,552 7,697,338 18,060,311 2,764,084 74,104,132 1,522,605 [2,060,250] [2,925.143] [16,325,994] [840,868] [22,969,235] 1,210,000 5,615,000 6,825,000 368,598 368,598 2,052,618 412,248 1,363,306 7,642,522 [1,816,750] [326,711] [30,000] [3,913,213] [1,816,750] 3,262,618 6,069,135 1,333,306 10,922,907 [294,145] [2,060,250] 337,475 [10,256,859] 492,438 [12,046,328] 1,914,462 7,595,701 407,864 [280,621] 2,957,479 18,330,169 [46,594] 125,731 1,914,462 7,595,701 407,864 [280,621] 2,910,885 18,455,900 $ 1,620,317 $ 5,535,451 $ 745,339 $ [10,537,480] $ 3,403,323 $ 6,409,572 The notes to the basic financial statements are an integral part of this statement. 8 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, 2015 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/[Loss] on sale of assets Proceeds from sale of assets Capital outlays [4,155] [74,685] 21,172,676 $ [12,046,328] Depreciation expense [5,496,914] 15,596,922 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. Pension payments are reported as expenditures in the governmental funds and do not affect the statement of net activities. 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 The notes to the basic financial statements are an integral part of this statement. 9 58,156 585,779 [295,790] 1,129,005 [6,948,397] 6,250,285 $ 4,329,632 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, 2015 Variance with Final Budget Budgeted Amounts Positive Actual Original Final [Negative] Revenues Taxes Real estate taxes $ 8,028,863 $ 8,122,487 $ 8,122,487 $ [93,624] Delinquent taxes 213,283 177,337 177,337 35,946 Motor vehicle taxes 1,002,014 898,404 898,404 103,610 General sales tax 12,930,811 13,150,000 13,150,000 [219,189] Other taxes 5,663,843 6,387,350 6,387,350 [723,507] Intergovernmental 975,720 1,014,759 1,014,759 [39,039] Charges for services 5,602,453 6,046,842 6,046,842 [444,389] Investment revenue 3,883 21,668 21,668 [17,785] Miscellaneous 502,403 514,117 514,117 [11,714] Total revenues 34,923,273 36,332,964 36,332,964 [1,409,691] Expenditures General government 5,019,120 4,110,237 4,110,237 [908,883] Public safety 21,262,910 17,131,981 17,131,981 [4,130,929] Public works 4,857,772 3,485,760 3,485,760 [1,372,012] Public health and sanitation 754,347 [754,347] Culture and recreation 4,035,739 4,273,595 4,273,595 237,856 Planning and development 586,358 2,782,434 2,782,434 2,196,076 Capital outlay 1,030,631 5,000,971 5,000,971 3,970,340 Total expenditures 37,546,877 36,784,978 36,784,978 [761,899) Excess [deficiency] of revenues over [under] expenditures [2,623,604) [452,014] [452,014) [2,171,590) Other financing sources [uses] Transfers in 3,644,350 4,114,855 4,114,855 [470,505] Transfers [out] [682,000] [6,522,093] [6,522,093] 5,840,093 Total other financing sources [uses] 2,962,350 [2,407,238) [2,407,238) 5,369,588 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 338,746 [2,859,252) [2,859,252) 3,197,998 Unreserved fund balance, January 1 2,811,061 3,095,087 3,095,087 [284,026] Restatement of prior year fund balance 172,580 172,580 Unreserved fund balance, January 1, as restated 2,983,641 3,095,087 3,095,087 [111,446] Prior year cancelled encumbrances 9,569 9,569 Unreserved fund balance, December 31 3,331,956 $ 235,835 $ 235,835 $ 3,096,121 Reconciliation to GAAP Interest receivable 10,735 Accounts receivable 1,015,867 Taxes receivable 8,403,904 Inventory 111,614 Deferred revenue [8,232,607] Current year encumbrances 198,717 GAAP Fund Balance, December 31 $ 4,840,186 See independent auditor's report on the financial statements. 10 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) TOURISM AND CONVENTION FUND For the Year Ended December 31, 2015 Budgeted Amounts Actual Original Final Revenues Other taxes $ 1,858,992 $ 1,420,000 $ 1,858,992 Investment revenue 368 Total revenues 1,859,360 1,420,000 1,858,992 Expenditures Planning and development 1,202,932 745,000 1,000,549 Total expenditures 1,202,932 745,000 1,000,549 Excess [deficiency] of revenues over [under] expenditures 656,428 675,000 858,443 Other financing sources [uses] Transfers [out] [882,839] [675,000] [882,838] Total other financing sources [uses] [882,839] [675,000] [882,838] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [226,411] [24,395] Unreserved fund balance, January 1 24,394 24,395 Unreserved fund balance, December 31 [202,017] $ -$ - Reconciliation to GAAP Accounts receivable 366,306 GAAP Fund Balance, December 31 $ 164,289 See independent auditor's report on the financial statements. 11 Variance with Final Budget Positive [Negative] $ 368 368 [202,383] [202,383] [202,015] [1 j [1 j [202,016] [1] $ [202,017] 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, 2015 Budgeted Amounts Actual Original Final Revenues Intergovernmental $ 1,418,249 $ 1,432,730 $ 1,432,730 Investment revenue 1,655 6,000 6,000 Total revenues 1,419,904 1,438,730 1,438,730 Expenditures Public works 453,740 520,040 520,040 Capital outlay 1,398,409 1,610,749 1,610,749 Total expenditures 1,852,149 2,130,789 2,130,789 Excess [deficiency] of revenues over [under] expenditures [432,245] [692,059] [692,059] Other financing sources [uses] Transfers in 170,000 170,000 170,000 Total other financing sources [uses] 170,000 170,000 170,000 Excess [deficiency] of revenues and other sources over [under] [262,245] [522,059] [522,059] expenditures and other [uses] Unreserved fund balance, January 1 376,059 522,059 522,059 Prior year cancelled encumbrances 104,113 Unreserved fund balance, December 31 217,927 $ -$ - Reconciliation to GAAP Taxes receivable 314,751 Current year encumbrances 105,469 GAAP Fund Balance, December 31 $ 638,147 See independent auditor's report on the financial statements. 12 Variance with Final Budget Positive [Negative] $ [14,481] [4,345] [18,826] 66,300 212,340 278,640 259,814 259,814 [146,000] 104,113 $ 217,927 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, 2015 Budgeted Amounts Actual Original Final Revenues Taxes Selective sales taxes $ 4,204,376 $ 4,250,000 $ 4,250,000 Investment revenue 4,610 5,000 5,000 Total revenues 4,208,986 4,255,000 4,255,000 Expenditures Capital outlay 1,919,720 3,034,588 3,034,588 Total expenditures 1,919,720 3,034,588 3,034,588 Excess [deficiency] of revenues over [under] expenditures 2,289,266 1,220,412 1,220,412 Other financing sources [uses] Transfers [out] [1,816,750] [1,816,750] [1,816,750] Total other financing sources [uses] [1,816,750] [1,816,750] [1,816,750] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 472,516 [596,338] [596,338] Unreserved fund balance, January 1 1,023,469 596,338 596,338 Unreserved fund balance, December 31 1,495,985 $ -$ - Reconciliation to GAAP Current year encumbrances 124,332 GAAP Fund Balance, December 31 $ 1,620,317 See independent auditor's report on the financial statements. 13 Variance with Final Budget Positive [Negative] $ [45,624] [390] [46,014] 1,114,868 1,114,868 1,068,854 1,068,854 427,131 $ 1,495,985 CITY OF SALINA, KANSAS STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31, 2015 Business-Type Activities: Ente!Erise Funds Total Internal Solid Waste Water and Enterprise Service Assets and deferred outflows of resources: Diseosal Sewer Sanitation Golf Course Funds Funds Current assets: Cash and investments $ 5,580,448 $ 21,603,888 $1,050,369 $ 180,686 $ 28,415,391 $1,956,763 Receivables (net of allowance for uncollectibles) Accounts 172,151 1,179,968 163,313 1,515,432 Interest 16 16 Inventory and prepaid supplies 462,329 26,249 488 578 194,089 Total current assets 5,752,615 23,246,185 1,213,682 206,935 30,419,417 2,150,852 Caprtal assets: Nondepreciable caprtal assets: Construction in progress 13,579,083 13,579,083 Land 682,000 844,806 5,000 15,000 1,546,806 Depreciable caprtal assets: Capital assets 11,268,787 116,965,237 2,067,804 1,056,057 131,357,885 223,242 Less: accumulated depreciation 7,249,313 46,495,243 1,362,220 780,717 55,887,493 181,362 Total caprtal assets 4 701 474 84,893,883 710 584 290,340 90,596,281 41 880 Total assets 10,454,089 108,140,068 1,924,266 497,275 121,015,698 2,192,732 Deferred outflows of resources: Pension -contributions subsequent to the measurement date 22,635 121,800 31,322 9,607 185,364 9,278 Pension -changes in proportion 17 89 23 7 136 7 Deferred charge on bond issuance 274 528 274,528 Total deferred outflows of resources 22,652 396417 31,345 9614 460,028 9,285 Total assets and deferred outflows of resources $ 10,476,741 $ 10815361485 $1,955,611 $ 506,889 $ 121,475,726 $2,202,017 Liabilrties and deferred inflows of resources: Current liabilrties Accounts payable $ 62,073 $ 928,222 $ 10,767 $ 18,033 $ 1,019,095 $ 58,339 Retainage payable 387,051 387,051 Interest payable 14,286 265,835 280,121 Meter deposits payable 178,910 178,910 Current portion of compensated absences payable 41,152 191,306 56,215 32,766 321.439 18,832 Current portion of accrued claims payable 456,533 Current portion of loans payable 387,077 387,077 Current portion of general obligation bonds payable 355,000 718,573 1,073,573 Current portion of revenue bonds payable 663,696 663,696 Total current liabilities 472 511 3,720,670 66,982 50,799 4,310,962 533,704 Noncurrent liabilities: Compensated absences payable 39,066 181,614 53,368 31,105 305,153 17,877 Accrued claims payable 100,508 Net OPEB Obligation 85,620 288,894 42,170 416,684 Net pension liabilrty 344,952 1,856,123 477,318 146,404 2,824,797 141,390 Payable from restricted assets Loans payable 5,366,543 5,366,543 General obligation bonds payable 1,520,000 5,946,199 7,466,199 Revenue bonds payable 13,285,443 13,285,443 Landfill post-closure care liabilrties 1,902,252 1,902,252 Total noncurrent habilrties 3,891,890 26,924,816 530,686 219,679 31,567,071 259,775 Total habilrties 4,364,401 30,645,486 597,668 270,478 35,878,033 793,479 Deferred inflows of resources Pension -difference between expected and actual experience 9,764 52,544 13,512 4,145 79,965 4,003 Pension -net difference between projected and actual earnings on pension plan investments 13,428 72,252 18,580 5,699 109,959 5,504 Pension -changes of assumptions 4,821 25,941 6,671 2,046 39,479 1,976 Pension -change in proportion 16,979 91,359 23,494 7,206 139 038 6 959 Total deferred inflows of resources 44,992 242,096 62,257 19,096 368 441 18,442 Total liabilrties and deferred inflows of resources $ 4,409,393 $ 30,887,582 $ 659,925 $ 289,574 $ 36,246,474 $ 811,921 Net position Net investment in capital assets $ 2,826,474 $ 64,279,972 $ 710,584 $ 290,340 $ 68,107,370 $ 41,880 Restricted Restricted for bond retirement 1,512,125 1,512,125 Unrestricted 3,240,874 11,856,806 585,102 [73,025) 15,609,757 1,348,216 Total net position $ 6,067,348 $ 77,648,903 $1,295,686 $ 217,315 $ 85,229,252 $1,390,096 The notes to the basic financial statements are an integral part of this statement. 14 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the Year Ended December 31, 2015 Business-Type Activities: Entererise Funds Solid Waste Water and Dis12osal Sewer Sanitation Golf Course Operating revenues Charges for services $2,518,532 $ 19,058,855 $2,528,829 $ 819,945 Reimbursements 100 Miscellaneous 45,820 40,201 46,381 Total operating revenues 2,564,352 19,099,156 2,528,829 866,326 Operating expenses General government Public works 1,542,920 8,939,974 1,800,108 Recreation 791,454 Depreciation 147,010 1,877,979 150,143 29,085 Total operating expenses 1,689,930 10,817,953 1,950,251 820,539 Operating income [loss] 874,422 8,281,203 578,578 45,787 Nonoperating revenues [expenses] Investment revenue 12,854 40,456 2,482 239 Interest expense [76,636] [888,509] Gain/[loss] on disposal of fixed assets 86 1,551 41,000 Accretion of bond premium 11,560 Amortization of bond issuance costs [18,472] Total nonoperating revenues [expenses] [63,696] [853,414] 43,482 239 Income [loss] before transfers 810,726 7,427,789 622,060 46,026 Transfers from [to] other funds Transfers in Transfers [out] [626,000) [2,707,335) [448,350] Total transfers [626,000) [2,707,335] [448,350] Change in net position 184,726 4,720,454 173,710 46,026 Net position, January 1 5,793,843 75,000,010 1,649,695 334,686 Restatement 88,779 [2,071,561) [527,719) [163,397) Net position, January 1, restated 5,882,622 72,928,449 1,121,976 171,289 Net position, December 31 $61067,348 $ 771648,903 $1,295,686 $ 2171315 The notes to the basic financial statements are an integral part of this statement. 15 Total Internal Enterprise Service Funds Funds $24,926,161 $7,927,385 100 132,402 18,103 25,058,663 7,945,488 7,444,125 12,283,002 791,454 2,204,217 9,259 15,278,673 7,453,384 9,779,990 492,104 56,031 3,675 [965,145] 42,637 830 11,560 [18,472] [873,389] 4,505 8,906,601 496,609 100,000 [3,781,685] [10,000) [3,781,685] 90,000 5,124,916 586,609 82,778,234 1,030,288 [2,673,898) [226,801) 80,104,336 803,487 $ 8512291252 $1,390,096 CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2015 Business-Type Activities: Entererise Funds Solid Waste Water and Diseosal Sewer Sanitation Golf Course Cash flows from operating activities Cash received from customers and users $2,596,537 $ 19,002,846 $2,519,816 $ 819,945 Cash paid to suppliers of goods or services [1,325,067] [5,513,851] [1,012,038] [464,504] Cash paid to employees [612,709] [3,238,860] [828,132] [347,246] Other operating receipts 45,820 40,201 46,381 Net cash provided by [used in] operating activities 704,581 10,290,336 679,646 54,576 Cash flows from capital and related financing activities Purchase and construction of capital assets [145,288] [6,121,603] [153,369] Proceeds from sale of capital assets 86 1,551 41,000 Principal payments -loans [454,482] Principal payments -general obligation bonds [330,000] [709,715] Principal payments -revenue bonds [640,000] Interest paid [76,795] [895,153) Net cash provided by [used in] capital and related financing activities [551,997] [8,819,402) [112,369) Cash flows from investing activities Interest received 12,854 40,456 2,482 239 Cash flows from noncapital financing activities Transfers in Transfers [out] [626,000) [2,707,335] [448,350) Net cash provided by [used in] noncapital financing activities [626,000) [2,707,335) [448,350) Net increase [decrease] in cash and cash equivalents [460,562) [1,195,945] 121,409 54,815 Cash and cash equivalents, January 1 6,041,010 22,799,833 928,960 125,871 Restatement Cash and cash equivalents, January 1, restated 6,041,010 22,799,833 928,960 125,871 Cash and cash equivalents, December 31 $5,580,448 $21,603,888 $1,050,369 $ 180,686 The notes to the basic financial statements are an integral part of this statement. 16 Total Internal Enterprise Service Funds Funds $24,939,144 $7,612,850 [8,315,460] [7,179,570] [5,026,947] [261,984] 132,402 18,103 11,729,139 189,399 [6,420,260] [36,685] 42,637 830 [454,482] [1,039,715] [640,000] [971,948) [9,483,768) [35,855) 56,031 3,674 100,000 [3,781,685] [10,000) [3,781,685] 90,000 [1,480,283) 247,218 29,895,674 1,898,749 [189,204) 29,895,674 1,709,545 $28,415,391 $1,956,763 CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (Continued) For the Year Ended December 31, 2015 Business-Type Activities: Enterprise Funds Total Internal Solid Waste Water and Enterprise Disposal Sewer Sanitation Golf Course Funds Reconciliation of operating Poss] income to net cash provided by [used in] operating activities Operating income [loss] $ 874,422 $ 8,281,203 $578,578 $ 45,787 $ 9,779,990 Adjustments to reconcile operating income [loss] to net cash provided by [used in] operating activities Depreciation expense 147,010 1,877,979 150,143 29,085 2,204,217 [Increase] decrease in accounts receivable 78,005 [63,903] [9,013] 5,089 [Increase] decrease in inventory 20,631 [6,116) 14,515 [Increase] decrease in deferred outflows [77) [421) [108] [33) [639] Increase [decrease] in accounts payable [503,374] 215,863 [15,654) 12,474 [290,691] Increase [decrease] in retainage payable [15,000] 7,454 [7,546] Increase [decrease] in accrued compensated absences 5,640 17,121 80 [22,271] 570 Increase [decrease) in claims payable Increase [decrease] in landfill postclosure liabilities 129,225 129,225 Increase [decrease] in net pension liability 4,570 24,588 6,324 1,939 37,421 Increase [decrease] in net OBEB obligation 6,350 21,426 3,128 30,904 Increase [decrease] in meter deposits payable 7,794 7,794 Increase [decrease] in deferred inflows [22,190] [119,399] [30,704] [9,417] [181,710] Net cash provided by [used in] operating activities The notes to the basic financial statements are an integral part of this statement. 17 Service Funds $ 492,104 9,259 [5,729] [32] 12,723 2,832 [314,536] 1,873 [9,095] ASSETS CITY OF SALINA, KANSAS STATEMENT OF ASSETS AND LIABILITIES AGENCY FUNDS December 31, 2015 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. 18 $ 127,441 $ 127,441 $ 127,441 $ 127,441 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 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 as part of 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, 2015. 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, 2015 Total change in unencumbered cash, year ended December 31, 2015 Total cash receipts, year ended December 31, 2015 Total cash receipts from City of Salina 19 (Kansas Regulatory Basis) Building Authority (Audited) $ 907,742 313,228 1,229,442 464,637 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 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. 20 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) Property taxes and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. 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 93% of the .40 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. 21 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 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 2016. 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. 22 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 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 23 Years 50 5-15 6-10 30-50 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 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, 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. 24 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 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: Tourism Sch1lhng Other Total and Special Sales Tax Capttal Debt Caprtal Governmental Governmental General Q2nvention GM ~ lm!!rovement Sel'Vlce Projects Funds Funds Fund Balances: Nonspendable for: Inventory $ 111,614 $ -$ -$ -$ -$ -$ -$ -$ 111,614 Restricted for: Public works 532,678 532,678 Public health and sanitation 134 134 Culture and recreation 83,300 83,300 Planning and development 164,289 180,939 345,228 Debt payments 745,339 1,085,887 1,831,226 Committed for: Public safety [34,706) [34,706) Culture and recreation 591,926 591,926 Planning and development 6,196 6,196 Cemetery 473,236 473,236 Capttal improvements 1,495,985 5,304,667 858,136 7,658,788 Assigned for: General government 42,643 42,643 Public safety 64,867 9,283 74,150 Public works 44,532 44,532 Culture and recreation 7,970 22,577 30,547 Caprtal improvements 38,705 105,469 124,332 230,784 126,415 625,705 Unassigned: 4,529,855 --[10,537,480) (6,007,625) ------ Total Fund Balances $4,840,186 $ 164,289 $638,147 $1,620,317 s s,535,451 $745,339 s [101537,480) s 3,403,323 $ 6,409,572 25 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 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 outflows 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 City reports a 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. Additionally, the City reports changes in the pension liability proportion and contributions made to the pension plan after the measurement date of the net pension liability as deferred outflows of resources in the government activities. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. Unavailable revenue -property taxes, is reported in the governmental funds balance sheet and the governmental activities in the government-wide statement of net position. Additionally, the City reports differences between expected and actual experience, differences between projected and actual investment earnings, changes in assumptions, and changes in the pension liability proportion as deferred inflows for governmental activities. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. 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. 26 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (Continued) A. Budgetary Information (Continued) 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 2015 budget was amended for the Tourism and Convention Fund, the Bicentennial Center Fund, the Special Parks and Recreation Fund and the Special Alcohol Fund. The statutes permit management to transfer budgeted amounts between line items within an individual fund. However, such statutes prohibit expenditures in excess of the total amount of the adopted budget of expenditures of individual funds. Budget comparison statements are presented for each fund showing actual receipts and expenditures compared to legally budgeted receipts and expenditures. All legal annual operating budgets are prepared using the statutory basis of accounting, in which, revenues are recognized when cash is received, and expenditures include disbursements, accounts payable, and encumbrances. Encumbrances are commitments by the municipality for future payments and are supported by a document evidencing the commitment, such as a purchase order or contract. All unencumbered appropriations (legal budget expenditure authority) lapse at year end. A legal operating budget is not required for capital projects funds, non-major debt service funds, trust funds, and the following special revenue funds: Community Development Revolving, HOME 2012, 911 Communications, Fair Housing, Kenwood Cove Capital, Special Law Enforcement, Police Grants, Federal 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, 2015 in the Tourism and Convention Fund, and Special Alcohol 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, 2015, the statutory limit for the City was $137,096,966, providing a debt margin of $83,895,593. 27 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 3. RESTATEMENT OF EQUITY On January 1, 2015, the City changed its method of accounting to adopt Government Accounting Standards Board Statement No. 68, Accounting and Financial Reporting for Pensions and the City decided to consolidate several funds. Additionally, following the close of the previous fiscal year, it was discovered that a capital lease had not been properly recorded, that several capital assets were misclassified or recorded incorrectly and that the deferred charge on bond issuance had been recorded incorrectly. Accordingly, the beginning net position/fund balances were restated, the effects of which are as follows: Bicentennial HUD Community Bicentennial Center Community Development Hentage Fair Governmental General Center Event Development Revolving Commission Housing Activities E.!.!lli! .El.!lli!. E.!.!lli! E.!.!lli! .EYlli!. E.!.!lli! E.!.!lli! Net Position/Fund Balance, December 31, 2014 $ 127,878,328 $ 4,254,432 $ -$ 500 $ 74,578 $ 109,254 $ 4 $46,590 Caprtal Asset Adjustment [5,000] Deferred Charge on Bond Issuance Adjustment 36,791 Capital Lease Adjustment [456,370] Pension L1ab1lrty [25,148,978] Fund Consolidation 69,000 172,325 500 [500) [I4,578J 74578 [4) [46,590) Net Position/Fund Balance, December 31, 2014, Restated $ 10213n1n1 $ 4,426,757 $ 500 $ -$ -$ 183,832 $ -_$ __ - Solid Waste Water and Risk Central Information Disposal Sewer Sanitation Golf Course Management Garage Services E.!.!lli! E.!.!lli! Fund E.!.!lli! E.!.!lli! .EYlli!. E.!.!lli! Net Position, December 31, 2014 $ 5,793,843 $ 75,000,010 $1,649,695 $ 334,686 $ 25,593 $ 185,379 $ 43,407 Capital Asset Adjustment 473,769 5,000 Pension Liability [384,990] [2,071,561] [532,719] [163,397] [157,801] Fund Consolidation [25,593) [43,407) Net Position, December 31, 2014, Restated $ 5,882,622 $ 72,928,449 $ 111211976 $ 1711289 $ -$ 27,578 $ 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. 28 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) A Deposits and Investments (Continued) At December 31, 2015, the City has the following investments: Investment Type Kansas Municipal Investment Pool U.S. Government Securities Total fair value Fair Value $ 305,350 S&P AAAf/S1+ 4,000,000 N/A $ 4,305,350 The municipal investment pool is under the oversight of the Pooled Money Investment Board. The board is comprised of the State Treasurer and four additional members appointed by the State Governor. The board reports annually to the Kansas legislature. State pooled monies may be invested in direct obligations of, or obligations that are insured as to principal and interest by the U.S. government or any agency thereof, with maturities up to four years. No more than 10 percent of those funds may be invested in mortgage-backed securities. In addition, the State pool may invest in repurchase agreements with Kansas banks or with primary government securities dealers. The City's investment policy provides direction on concentration risk. The City policy states that funds shall be diversified to reduce the extent of losses due to having an unbalanced portfolio in terms of maturities, instrument type, and issuers. Therefore, portfolio maturities shall be staggered to avoid undue concentration of assets in a specific maturity sector. Liquidity, free of market risk, shall be assured through practices insuring that the next disbursement date and payroll date are covered through maturing investments, marketable U.S. Treasury Bills, the Municipal Investment Pool, or money market accounts. Default risk shall be minimized by requiring that all security purchases occur on a delivery vs. payment basis, and that all securities are adequately collateralized. Risk of market price volatility shall be controlled through the adoption of a "buy and hold" strategy whereby the City holds each investment to maturity, coupled with maintenance of an adequate liquidity position to insure the ability to meet normal anticipated cash flow needs. 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. 29 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) B. Receivables C. Receivables as of year-end, including the applicable allowances for doubtful accounts, are as follows: General Primary Government Receivables: Accounts $ 4,955,200 Taxes 8,403,904 Interest 10,735 Gross receivables 13,369,839 Less: allowance for uncollectibles [3,939,333] Total $ 9,430,506 Primary Government Receivables: Accounts Taxes Interest Gross receivables Less· allowance for uncollect1bles Total Component Unrts Salina Airport Authority Accounts Less: allowance for uncollect1bles Total Salina Airport Authority Salina Housing Authority Accounts Less: allowance for uncollecbbles Interest Total Salina Housing Authority Total lnterfund Receivables and Payables $ $ Tourism and Convention 366,306 366,306 366,306 $ $ Special Gas - 314,751 314,751 314 751 $ $ $ $ Debt Service - 3,090,683 3,090,683 3,090,683 Solid Waste Dise2sal 172,151 16 172,167 172,167 Capital Other Projects Governmental __ s_u_bt_ota_l_ $ 454,369 $ 6,700 $ 5,782,575 11,809,338 10,735 6,700 17,602,648 [3,089] [3,942,422] $ -$ 3,611 $ 13,660,226 Water and Sewer Sanitabon Total $ 2,125,813 $ 294,223 $ 8,374,762 11,809,338 10,751 2,125,813 294,223 20,194,851 [945,845] [130,910] [5,019,177] $ 1,179,968 $ 163,313 $ 15,175,674 $ 129,034 [1,500] 127,534 30,548 [1,100] 365 29,813 $ 157 347 The composition of interfund balances as of December 31, 2015, is as follows: Fund Types General Fund Other Government Funds Due From Due To $ 20,861 $ 20,861 $ 20,861 $ 20,861 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. 30 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) D. Capital Assets Capital asset activity for the year ended December 31, 2015, was as follows: Balance Adj. Bal. Balance 12/31/2014 Adiu!itment!i 12/31/2014 Add1t1ons Retiremen!ii 12/31/2015 City governmental activities: Governmental activities: Capital assets, not being depreciated Construction in progress $ 9,994,512 $ -$ 9,994,512 $ 19,503,590 $ 10,478,479 $ 19,019,623 Land 22,639,800 (5,000] 22,634,800 628,230 23,263,030 Capital assets, being depreciated Infrastructure 179,876,532 179,876,532 7,817,689 187,694,221 Buildings and improvements 39,351,042 39,351,042 2,588,105 41,939,147 Vehicles 9,031,615 9,031,615 909,379 401,974 9,539,020 Equipment, furniture and fixtures 5,698,144 [76,809] 5,621,335 240 847 33,351 5,828,831 Total capital assets 266,591,645 [81,809] 266,509,836 31,687,840 10,913,804 287,283,872 Less accumulated depreciation for: Infrastructure 73,828,690 73,828,690 3,543,536 77,372,226 Buildings and improvements 16,842,231 16,842,231 987,693 17,829,924 Vehicles 5,723,011 5,723,011 752,118 322,304 6,152,825 Equipment, furniture and fixtures 4 574 898 [76,809] 4,498,089 222,826 33 351 4,687,564 Total accumulated depreciation 100,968,830 [76,809] 100,892,021 5,506,173 355,655 106,042,539 Governmental activities capital assets, net $ 165,6221815 $ [5,000] $ 165,617,815 $ 26,181,667 $ 101558,149 $ 181,241,333 Business-type activities: Capital assets, not being depreciated Construction in progress $ 27,865,017 $ 473,769 $ 28,338,786 $ 6,102,103 $ 20,861,806 $ 13,579,083 Land 1,541,806 5,000 1,546,806 1,546,806 Capital assets, being depreciated Infrastructure 79,261,098 79,261,098 20,729,261 99,990,359 Buildings and improvements 22,579,933 22,579,933 22,579,933 Vehicles 3,432,604 (13,469] 3,419,135 172,867 127,036 3,464,966 Equipment, furniture and fixtures 5,062,328 5,062,328 277,832 17 533 5,322,627 Total capital assets 139,742,786 465,300 140,208,086 27,282,063 21,006,375 146,483,774 Less accumulated depreciation for: Infrastructure 35,759,711 35,759,711 1,377,230 37,136,941 Buildings and improvements 11,951,354 11,951,354 422,642 12,373,996 Vehicles 2,652,477 [13,469] 2,639,008 186,822 127,036 2,698,794 Equipment, furniture and fixtures 3 477 772 3477 772 217,523 17 533 3,677,762 Total accumulated depreciation 53,841,314 [13,469] 53,827,845 2,204,217 144 569 55,887,493 Business-type activities capital assets, net $ 85,901,472 $ 478,769 $ 86,380,241 $ 25,077,846 $ 20,861,806 $ 901596,281 31 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 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 $ 11,499 Public safety 717,330 Public works 3,865,994 Public health 25,620 Culture and recreation 880,536 Planning and development 5,194 Total depreciation $ 5,506,173 Business-type Activities: Solid Waste Disposal $ 147,010 Water and Sewer 1,877,979 Sanitation 150,143 Golf Course Division 29,085 Total depreciation $ 2,204,217 E. Long-Term Debt Following is a summary of changes in long-term debt for fiscal year 2015: Restated Balance Balance January 1, · December 31, 2015 Additions Deletions 2015 Governmental activities: General obligation bonds $ 50,033,555 $ 7,157,688 $ 6,350,611 $ 50,840,632 Financing lease 632,605 153,239 479,366 Accrued compensation 2,896,150 1,483,287 1,501,147 2,878,290 Temporary notes 5,000,000 5,995,000 5,000,000 5,995,000 Total $ 58,562,310 $ 14,635,975 $ 13,004,997 $ 60,193,288 Business-type activities: General obligation bonds $ 9,587,351 $ -$ 1,047,579 $ 8,539,772 Revenue bonds 14,592,836 643,697 13,949,139 Loans payable 6,208,102 454,482 5,753,620 Accrued compensation 626,022 327,364 326,794 626,592 Total $ 31,014,311 $ 327,364 $ 2,472,552 $ 28,869,123 Component Units: General obligation bonds $ 23,260,000 $ 705,000 $ 955,000 $ 23,010,000 Less unamortized discount [285,445] [66,775] [218,670] Financing lease 107,966 52,270 55,696 Special assessment debt 48,949 18,484 30,465 Total component units $ 23,131,470 $ 705,000 $ 958,979 $ 22,877,491 32 Amounts Due Within One Year $ 5,216,252 158,192 1,482,001 5,995,000 $ 12,851,445 $ 1,073,573 663,696 387,077 321,439 $ 2,445,785 $ 1,035,000 55,696 19,197 $ 1,109,893 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) The following is a detailed listing of the city's long-term debt including general obligation bonds, revenue bonds, temporary notes and loans payable: Primary Government Original Interest Bonds General Obligation Bonds Issue Rates Outstanding Internal Improvements 2006B, due 10/1/2021 $ 885,000 4.00% to 4.50% $ 255,000 Internal Improvements 2007A, due 10/1/2027 6,545,000 4.25% to 4.625% 3,645,000 Internal Improvements 2008A, due 10/1/2023 3,720,000 3.25% to 4.00% 2,000,000 Internal Improvements 2008B, due 7/1/2028 3,525,000 3.65% to 5.00% 2,870,000 Internal Improvements 2009A, due 10/1/2029 23,695,000 2.00% to 5.00% 14,443,552 Internal Improvements 2010A, due 10/1/2025 6,916,592 2.00% to 3.875% 3,402,727 Internal Improvements 2010B, due 10/1/2023 7,973,044 0.50% to 3.00% 3,804,565 Internal Improvements 2011A, due 10/1/2031 6,587,985 2.00% to 5.00% 5,403,389 Internal Improvements 2012A, due 10/1/2027 2,383,903 1.00% to 2.45% 1,965,123 Refunding 2012B, due 10/1/2020 3,817,108 1.00% to 1.40% 1,855,066 Internal Improvements 2013A, due 10/1/28 1,369,380 3.00% to 4.00% 1,248,130 Internal Improvements 2013B, due 10/1/33 4,485,073 0.60% to 3.65% 4,029,565 Internal Improvements 2014A, due 10/1/34 7,839,050 2.50% to 3.75% 7,300,599 Improvement and Refunding 2015A, due 10/1/35 7,157,688 2.00% to 4.00% 7,1571688 Total general obligation bonds $ 59,380,404 Revenue Bonds Revenue 2011, due 10/1/31 $ 16,193,925 2.00% to 4.60% $ 13,949,139 Total revenue bonds $ 13,949,139 Temporary Notes Series 2015-1, due 8/1/2016 $ 5,000,000 1.25% $ 5,995,000 Total temporary notes $ 5,995,000 Loans Payable Kansas Public Water Supply, due 8/1/2034 $ 9,330,000 2.12% $ 5,753,620 Total loans payable $ 5,753,620 Financing Lease, due 2/10/2017 Equipment, due 2/10/17 $ 30,000 3.54% $ 20,346 Equipment, due 5/8/18 146,235 3.28% 111,426 Software, due 10/10/18 456,370 3.19% 347,594 $ 479,366 33 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Component Unit Salina Airport Authority General Obligation Bonds General Obligation 2009A, due 2029 Original Issue 2,025,000 Interest Rates 4.31% General Obligation 20098, due 2026 6,080,000 3.00% to 5.50% General Obligation 2011A, due 2030 11,820,000 4.64% General Obligation 2011 B, due 2031 2,505,000 4.28% General Obligation 201 SA, due 2025 3,075,000 2.14% Less unamortized bond premium Less unamortized bond discount Total general obligation bonds Special Assessment Debt Airport Industrial Center, due 2016 565,235 3.79% Hangar 600 Sanitary Sewer, due 2021 27,599 4.47% Total special assessment debt Financing Lease, due 2016 425,000 6.609% Total Bonds Outstanding $ 2,025,000 4,365,000 11,040,000 2,505,000 3,075,000 47,883 [266,553] 22,791,330 17,225 13,240 30,465 55,696 $ 22,877,491 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 2016 $ 6,289,825 $ 2,011,716 $ 8,301,541 2017 6,124,824 1,788,691 7,913,515 2018 6,229,824 1,579,823 7,809,647 2019 6,144,824 1,355,936 7,500,760 2020 3,994,823 1,169,155 5,163,978 2021-2025 17,601,659 17,601,659 35,203,318 2026-2030 9,768,212 1,411,882 11,180,094 2031-2035 3,226,413 287,933 3,514,346 Total $ 59,380,404 $ 27,2061795 $ 86,587,199 34 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) General Obligation -Component Units Bonds Interest Year Outstanding Due Total 2016 $ 1,035,000 $ 954,582 $ 1,989,582 2017 1,065,000 928,373 1,993,373 2018 1,090,000 898,938 1,988,938 2019 1,215,000 866,425 2,081,425 2020 1,255,000 827,990 2,082,990 2021-2025 6,570,000 3,346,207 9,916,207 2026-2030 8,865,000 1,609,729 10,474,729 2031 1,915,000 78,994 1,993,994 Total $ 23,0101000 $ 9,511,238 $ 32,5211238 Annual debt service requirements to maturity for revenue bonds to be paid with utility revenues: Revenue Bonds -Primary Government Bonds Interest Year Outstanding Due Total 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 748,696 466,242 1,214,938 2021-2025 4,163,480 1,901,889 6,065,369 2026-2030 5,098,480 968,219 6,066,699 2031 1,1581699 53,130 1,211,829 Total $ 13,949,139 $ 5,465,194 $ 19,414,333 Annual debt service requirements to maturity for temporary notes -to be paid through the issuance of general obligation bonds: Year 2016 $ Temporary Notes -Primary Government Bonds Interest Outstanding 5,995,000 $ 35 Due Total 74,354 __ $ __ 6 __ ._06_9 __ ,3_5_4 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 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: Caeital Lease -Prima!}:'. Government Lease Interest Year Outstanding Due Total 2016 $ 158,192 $ 15,463 $ 173,655 2017 163,306 10,350 173,656 2018 157,868 5,071 162,939 Total $ 479,366 $ 30,884 $ 510,250 Financing Lease -Component Units Lease Interest Year Outstanding Due Total 2016 $ 55,696 $ 2,776 58,472 Total $ 55,696 $ 2,776 $ 58,472 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 -Prima!}:'. Government Loans Interest Year Outstanding Due Total 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 421,145 153,652 626,245 2021-2025 2,244,248 629,737 3,149,263 2026-2030 2,493,811 380,174 3,149,263 2031-2034 2,193,284 105,916 1,415,883 Total $ 81951,000 $ 1,970,155 $ 10,830,264 36 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 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 2016 $ 19,198 $ 1,245 $ 20,443 2017 2,061 504 2,565 2018 2,153 412 2,565 2019 2,249 315 2,564 2020 2,350 215 2,565 2021 2,454 110 2,564 Total $ 30,465 $ 2,801 $ 33,266 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, 2015, total outstanding conduit debt was $51,265,000. Defeased debt. On July 29, 2015, the City issued $6,825,000 in general obligation refunding and internal improvement bonds with interest ranging from 2.00 to 4.00% to current refund all $1,320,000 of the outstanding Series 2006A general obligation improvement bonds with interest rates ranging from 3.80 to 4.35% and to refund all $5,000,000 of the outstanding Series 2014-1 temporary notes with an interest rate of 1.00%. The remaining proceeds will be used for capital improvements. The transaction resulted in an economic gain of $126,075 and a reduction of $146,642 in future debt payments. 37 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 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-cancelable 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. The total cost for this lease was $93,926 for the year ended December 31, 2015. The future minimum lease payments for the lease are as follows: Year Amount 2016 $ 93,926 2017 93,926 2018 93,926 2019 93,926 2020 93,926 2021-2025 469,633 2026-2027 187,854 Total $ 1,127,117 G. Reconciliation of Transfers A reconciliation of interfund transfers follows: Transfer In Transfer Out Major Funds: General fund $3,644,350 $ 682,000 Tourism and convention fund 882,839 Special gas fund 170,000 174,913 Sales tax capital fund 1,816,750 Debt service 2,052,618 Capital projects fund 412,248 326,711 Other governmental funds 1,363,306 30,000 Agency funds 37,624 Solid waste disposal fund 626,000 Water and sewer fund 2,707,335 Sanitation fund 448,350 Central garage fund 100,000 10,000 Total Transfers $7,742,522 $ 7,742,522 The City uses interfund transfers to share administrative costs between funds. 38 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31 , 2015 Note 5. OTHER INFORMATION A Defined Benefit Pension Plan Description of Pension Plan. The City participates in a cost-sharing multiple-employer pension plan (Pension Plan), as defined in Governmental Accounting Standards Board Statement No. 67, Financial Reporting for Pension Plans. The Pension Plan is administered by the Kansas Public Employees Retirement System (KPERS), a body corporate and an instrumentality of the State of Kansas. KPERS provides benefit provisions to the following statewide pension groups under one plan, as provided by K.S.A. 74, article 49: • Public employees, which includes: • State/School employees • Local employees • Police and Firemen • Judges Substantially all public employees in Kansas are covered by the Pension Plan. Participation by local political subdivisions is optional , but irrevocable once elected. Those employees participating in the Pension Plan for the City are included in the Local employees group and the Kansas Police and Firemen group. KPERS issues a stand-alone comprehensive annual financial report, which is available on the KPERS website at www.kpers.org. Benefits. Benefits are established by statute and may only be changed by the State Legislature. Members (except Police and Firemen) with ten or more years of credited service, may retire as early as age 55 (Police and Firemen may be age 50 with 20 years of credited service), with an actuarially reduced monthly benefit. Normal retirement is at age 65, age 62 with ten years of credited service, or whenever a member's combined age and years of service equal 85. Police and Firemen normal retirement ages are age 60 with 15 years of credited service, age 55 with 20 years, age 50 with 25 years, or any age with 36 years of service. Monthly retirement benefits are based on a statutory formula that includes final average salary and years of service. When ending employment, members may withdraw their contributions from their individual accounts, including interest. Members who withdraw their accumulated contributions lose all rights and privileges of membership. For all pension coverage groups, the accumulated contributions and interest are deposited into and disbursed from the membership accumulated reserve fund as established by K.S.A. 74- 4922. Members choose one of seven payment options for their monthly retirement benefits. At retirement a member may receive a lump-sum payment of up to 50% of the actuarial present value of the member's lifetime benefit. His or her monthly retirement benefit is then permanently reduced based on the amount of the lump sum. Benefit increases, including ad hoc post-retirement benefit increases, must be passed into law by the Kansas Legislature. Benefit increases are under the authority of the Legislature and the Governor of the State of Kansas. The 2012 Legislature made changes affecting new hires, current members and employers. A new KPERS 3 cash balance retirement plan for new hires starting January 1, 2015 , was created. Normal retirement age for KPERS 3 is 65 with five years of service or 60 with 30 years of service. Early retirement is available at age 55 with ten years of service, with a reduced benefit. Monthly benefit options are an annuity benefit based on the account balance at retirement. 39 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 5. OTHER INFORMATION (Continued) A. Defined Benefit Pension Plan (Continued) For all pension coverage groups, the retirement benefits are disbursed from the retirement benefit payment reserve fund as established by K.S.A. 74-4922. Contributions. Member contributions are established by state law, and are paid by the employee according to the provisions of Section 414(h) of the Internal Revenue Code. State law provides that the employer contribution rates are determined based on the results of an annual actuarial valuation. The contributions and assets of all groups are deposited in the Kansas Public Employees Retirement Fund established by K.S.A. 74-4921. All of the retirement systems are funded on an actuarial reserve basis. For fiscal years beginning in 1995, Kansas legislation established statutory limits on increases in contribution rates for KPERS employers. Annual increases in the employer contribution rates related to subsequent benefit enhancements are not subject to these limitations. The statutory cap increase over the prior year contribution rate is 1.0% of total payroll for the fiscal year ended June 30, 2015. The actuarially determined employer contribution rates (not including the 0.85% contribution rate for the Death and Disability Program) and the statutory contribution rates are as follows: Local employees Police and Firemen Actuarial Employer Rate 9.48% 21.36% Statutory Employer Capped Rate 9.48% 21.36% Member contribution rates as a percentage of eligible compensation for the fiscal year 2015 are 5.00% or 6.00% for Local employees and 7.15% for Police and Firemen. Employer Allocations. Although KPERS administers one cost-sharing multiple-employer defined benefit pension plan, separate (sub) actuarial valuations are prepared to determine the actuarial determined contribution rate by group. Following this method, the measurement of the collective net pension liability, deferred outflows of resources, deferred inflows of resources, and pension expense are determined separately for each of the following groups of the plan: • State/School • Local • Police and Firemen • Judges To facilitate the separate (sub) actuarial valuations, KPERS maintains separate accounts to identify additions, deductions, and fiduciary net position applicable to each group. The allocation percentages presented for each group in the schedule of employer and nonemployer allocations are applied to amounts presented in the schedules of pension amounts by employer and nonemployer. The allocation percentages for the City's share of the collective pension amounts as of December 31, 2015, are based on the ratio of its contributions to the total of the employer and nonemployer contributions of the group for the fiscal years ended December 31, 2015. The contributions used exclude contributions made for prior service, excess benefits and irregular payments. At June 30, 2015, the City's proportion for the Local employees group was 0.764%, which was a decrease of .040% from its proportion measured at June 30, 2014. At June 30, 2015, the City's proportion for the Police and Firemen group was 2.258%, which was an decrease of .037% from its proportion measured at June 30, 2014. 40 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 5. OTHER INFORMATION (Continued) A. Defined Benefit Pension Plan (Continued) Net Pension Liability. At December 31, 2015 and 2014, the City reported a liability of $26,423,473 and $24,948,243, respectively, for its total proportionate share of the net pension liability for the Local and Police and Firemen groups. Actuarial Assumptions. The total pension liability was determined by an actuarial valuation as of December 31, 2014, which was rolled forward to June 30, 2015, using the following actuarial assumptions: Assumptions Rate Price inflation Wage inflation Salary increases, including wage increases Long-term rate of return, net of investment expense, and 3.00% 4.00% 4% to 16.00%, including inflation including price inflation 8.00% Mortality rates were based on the RP-2000 Healthy Annuitant Mortality Table for Males and Females, with adjustments to better match actual experience. Separate tables apply for males and females as well as each group (State, School, Local, KP&F and Judges). The actuarial assumptions used in the December 31, 2014 valuation were based on the results of an actuarial experience study conducted for three years ending December 31, 2012. The long-term expected rate of return of pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of June 30, 2015 are summarized in the following table: Asset Global Equity Fixed Income Yield driven Real Return Real estate Alternatives Short-term investments Long-Term Allocation 47.00% 13.00% 8.00% 11.00% 11.00% 8.00% 2.00% 100 00% Long-Term Expected Real Rate of Return 6.30% 0.80% 4.20% 1.70% 5.40% 9.40% -0.50% Discount Rate. The discount rate used to measure the total pension liability was 8.00%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the contractually required rate. The State, School and Local employers do not necessarily contribute the full actuarial determined rate. Based on legislation passed in 1993, the employer contribution rates certified by the System's Board of Trustees for these groups may not increase by more than the statutory cap. The expected KPERS employer statutory contribution was modeled for future years, assuming all actuarial assumptions are met in future years. Employers contribute the full actuarial determined rate for Police & Firemen, and Judges. Future employer contribution rates were also modeled for Police & Firemen and Judges, assuming all actuarial assumptions are met in future years. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 41 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 5. OTHER INFORMATION (Continued) A. Defined Benefit Pension Plan (Continued) Sensitivity of the City's proportionate share of the net pension liability to changes in the discount rate. The following presents the City's proportionate share of the net pension liability calculated using the discount rate of 8.00%, as well as what the City's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower (7.00%) or 1-percentage point higher (9.00%) than the current rate: 1% Decrease {7.00%) $ 14,234,822 23,809,559 Discount Rate (8.00%) 1% Increase (9.00%) Local $ 10,027,679 $ 6,460,848 Police & Firemen Total 16,395,794 10.133,696 $ 38,044,381 $ 26,423,473 $ 16,594,544 ________ ...... _ Pension Expense. For the year ended December 31, 2015, the City recognized Local pension expense of $602,891 and Police and Firemen pension expense of $1,433,594, which includes the changes in the collective net pension liability, projected earnings on pension plan investments, and the amortization of deferred outflows of resources and deferred inflows of resources for the current period. Deferred Outflows of Resources and Deferred Inflows of Resources. At December 31, 2015, the City reported deferred outflows of resources and deferred inflows of resources related to pensions for Local and Police and Firemen groups from the following sources: Local Differences between actual and expected experience Contributions subsequent to the measurement date Net differences between projected and actual earnings on investments Changes in assumptions Changes in proportion Total Police & Firemen Differences between actual and expected experience Contributions subsequent to the measurement date Net differences between projected and actual earnings on investments Changes in assumptions Changes in proportion Total 42 Deferred outflows Deferred inflows of resources of resources $ -$ 283,864 658,021 390,342 140,147 481 493,566 $ 658,502 $ 1,307,919 Deferred outflows Deferred inflows of resources of resources $ 149,622 $ 274,448 $ 1,312,101 520,682 163,954 381,205 1,461,723 $ 1,340,289 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 5. OTHER INFORMATION (Continued) A. Defined Benefit Pension Plan (Continued) $1,970,122 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2016. Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Local Police & Firemen Deferred Deferred Year ended [Inflows] Outflows [Inflows] Outflows December 31, Amount Amount Total 2016 $ [407,367] $ [472,478] $ [879,845] 2017 [407,367] [472,478] [879,845] 2018 [407,367] [472,478] [879,845] 2019 23,770 331,942 355,712 2020 [109,107] [105,175] [214,282] Total $ [1,307,438] $ [1, 190,667] $ [2,498,105] 8. Deferred Compensation Plan The City offers its employees a deferred compensation plan ("Plan") created in accordance with Internal Revenue Code Section 457. The Plan, available to all City employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. Plan assets are transferred to a plan agent in a custodial trust and are not available to the claims of the City's general creditors. C. Flexible Benefit Plan (I.R.C. Section 125) The City Commission has adopted by resolution a salary reduction flexible benefit plan ("Plan") under Section 125 of the Internal Revenue Code. All City employees working more than 20 hours per week are eligible to participate in the Plan beginning after two full months of employment. Each participant may elect to reduce his or her salary to purchase benefits offered through the Plan. Benefits offered through the Plan include various insurance and disability benefits. D. Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; natural disasters and other events for which the City carries commercial insurance. No significant reductions in insurance coverage from that of the prior year have occurred. Settlements have not exceeded insurance coverage for each of the past three years. 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, $181,093 is considered to be due within one year. 43 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 5. OTHER INFORMATION (Continued) D. Risk Management (Continued) Changes in the balances of claims liabilities during the past two years are as follows: 2015 2014 Unpaid claims, January 1 $ 342,362 $ 569,755 Incurred claims (including IBNRs) 844,704 660,413 Claim payments [905,465] [887,806] Unpaid claims, December 31 $ 281,601 $ 342,362 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: E. Capital Projects Unpaid claims, January 1 Incurred claims (including IBNRs) Claim payments Unpaid claims, December 31 2015 2014 $ 529,215 $ 372,147 3,826,243 5,447,940 [4,080,018] [5,290,872] $ 275,440 $ 529,215 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, 2015. Project Markley, Magnolia, Valley View Sanitary Sewer Improvements Downtown Wellfield Improvements Cloud & Ohio Street to Levee Pavement-Design Ninth and Cloud Intersection Realignment Bicentennial Center Improvements Fire Department Apparatus Bay Addition Ohio Street Improvements Iron Avenue Reconstruction Chiller for Police Department Greeley Ave Bridge Community Fieldhouse Centennial Road Improvements -Design 2015 Traffic Control Maintenance Wayfinding Phase II 44 Authorization $ 5,150,000 9,330,000 155,014 1,100,000 10,200,000 2,096,654 1,700,000 2,250,000 93,400 305,000 7,651,685 56,911 265,250 350,000 Expenditures $ 141,933 4,799,023 163,354 1,053,887 9,894,365 162,506 2,156,130 3,331,542 97,905 169,867 2,059,740 56,911 16,898 239,452 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 5. OTHER INFORMATION (Continued) F. Contingent Liabilities The City receives significant financial assistance from numerous federal and state governmental agencies in the form of grants and state pass-through aid. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and is subject to audit. Any disallowed claims resulting from such audits could become a liability of the General Fund or other applicable funds. However, in the opinion of management, any such disallowed claims would not have a material effect on any of the financial statements of the City at December 31, 2015. 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 $1,902,252 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. The City's solid waste fund will recognize the remaining estimate cost of closure and postclosure care of $4,697,309 as the remaining estimated capacity is filled over the remaining life expectancy of 142 years. These amounts are based on what it would cost to perform all closure and postclosure care in 2015. 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. 45 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 5. OTHER INFORMATION (Continued) H. Environmental Matters (Continued) 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. · 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). 46 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 5. OTHER INFORMATION (Continued) H. Environmental Matters (Continued) 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). 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. 47 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 Note 5. OTHER INFORMATION (Continued) I. Postemployment Health Care Plan (Continued) Funding Policy. The contribution requirements of plan participants and the City are established and amended by the City. The required contribution is based on projected pay-as-you-go financing requirements. Plan participants contributed approximately $209,000 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. 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 $ 570,840 130,099 [144,554] 556,385 [209,000] 347,385 4,336,620 $4,684,005 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, 2015 was as follows: Annual Fiscal Annual OPEB Net Year OPEB Cost OPEB Ended Cost Contributed Obligation December 31, 2013 570,434 148,000 3,986,743 December 31, 2014 534,877 185,000 4,336,620 December 31, 2015 556,385 209,000 4,684,005 Funding Status and Funding Progress. As of the year ended December 31, 2015, 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 $22,958,300, and the ratio of the UAAL to the covered payroll was 24.13%. 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. 48 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2015 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, 2015, 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. I. Deficit Fund Balance The Capital Projects Fund maintained a deficit fund balance of $[10,537,480) at December 31, 2015, as did the following nonmajor funds: 911 Communications Fund -$[3,281), Police Grants Fund -$[25,139), Federal CARE Grant Fund -$[10,785). J. Statutory Violations -Deficit Cash Balance The Capital Projects Fund had a deficit cash balance of $[3,499,129) at December 31, 2015, which is a violation of K.S.A. 10-1113. 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 2016. The loan proceeds will be used to fund various capital projects related to achieving and maintaining compliance with the Safe Drinking Water Act. 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 26, 2016, the City issued Series 2016-A general obligation internal improvement bonds in the amounts of $6,570,000. The bonds will be used to finance various capital projects. The City will make the first payment on the bonds on April 1, 2017 and the last payment on October 1, 2036. The interest rate on the bonds ranges from 2.00% to 2.50%. On July 26, 2016, the City issued Series 2016-B general obligation refunding bonds in the amounts of $13,750,000. The bonds will be used to refund certain maturities of the Series 2006-B, 2007-A, 2008-A, 2009- A, 2010-A and 2011-A general obligation bonds. The City will make the first payment on the bonds on April 1, 2017 and the last payment on October 1, 2036. The interest rate on the bonds ranges from 2.00% to 2.50%. On February 2, 2016, the City issued Series 2016-1 temporary notes in the amounts of $6,890,000. The temporary notes will be used to finance improvements to the Bicentennial Center. The maturity date of the temporary notes is August 1, 2017 and the interest rate on the notes is 0.65%. On July 20, 2016, the City issued Series 2016-2 temporary notes in the amounts of $4,615,000. The temporary notes will be used to finance improvements to the Salina Fieldhouse. The maturity date of the temporary notes is September 1, 2019 and the interest rate on the notes is 1.00%. 49 CITY OF SALINA, KANSAS OTHER POST-EMPLOYMENT BENEFITS REQUIRED SUPPLEMENTARY INFORMATION December 31, 2015 Schedule of Employer Contributions: Annual Fiscal Annual OPEB Net Year OPEB Cost OPEB Ended Cost Contributed Obligation December 31, 2013 570,434 148,000 3,986,743 December 31, 2014 534,877 185,000 4,336,620 December 31, 2015 556,385 209,000 4,684,005 Schedule of Funding Progress: Actuarial Actuarial Actuarial Unfunded Funded Covered Valuation Value of Accrued AAL Ratio Payroll Date Assets (a} Liabili~ (b} (b} -(a} (a/b} .{£1 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 12/31/2015 5,538,770 5,538,770 0.0% 22,958,300 50 UAALas Percent of Payroll (b-a}/(c} 25.04% 25.00% 24.13% CITY OF SALINA, KANSAS KPERS PENSION PLAN REQUIRED SUPPLEMENTARY INFORMATION (CONTINUED) December 31, 2015 Schedule of the City's Proportionate Share of the Net Pension Liability Last Ten Fiscal Years* City's proportion of the net pension liability City's proportionate share of the net pension liability City's covered-employee payroll City's proportionate share of the net pension liability as a percentage of its covered-employee payroll Plan fiduciary net position as a percentage of the total pension liability Local 12/31/15 0.764% $10,027,679 $12,931,197 77.55% 71.98% * -The amounts presented for each fiscal year were determined as of 12/31. Data became available with the inception of GASB 68 during fiscal year 2015, therefore 10 years of data is unavailable. Schedule of the City's Contributions Last Ten Fiscal Years* Police and Firemen 12/31/15 2.258% $16,395,794 $10,161,866 161.35% 74.60% Police and Contractually required contribution Contributions in relation to the contractually required contribution Contribution deficiency [excess] City's covered-employee payroll Contributions as a percentage of covered employee payroll * -Data became available with the inception of GASB 68 during fiscal year 2015, therefore 10 years of data is unavailable. 51 Local Firemen 12/31/15 12/31/15 $ 1,256,217 $ 2,527,995 1,256,217 2,527,995 _$ ____ -.;:.$ ___ _ $13,251,236 $10,730,033 9.48% 23.56% CITY OF SALINA, KANSAS COMBINING STATEMENTS-NONMAJOR FUNDS NONMAJOR 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. 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. Sales tax economic development fund -To account for 12.5% of the 1/4 cent sales tax designated for economic Development purposes. HOME 2012 fund -To account for grants received from the federal government to be used for housing rehabilitation. 911 communications -To account for transitioning the receipt and administration of 911 fees to the City from the Kansas Department of Revenue and Saline County, as the City is now the public answering point. Monies will be used to pay for 911 related services. Kenwood cove 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 Federal grants fund -To account for grants received from the federal government to be used to monitor and mediate fair housing complaints. 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 fund -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. 52 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. 53 CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2015 Total Total Nonmajor Nonmajor Nonmajor Debt Special Revenue Permanent Service Funds Funds Fund ASSETS Cash and investments $ 2,038,501 $ 478,999 $ 1,085,887 Receivables Accounts 3,611 Total assets $ 2,042,112 $ 478,999 $ 1,085,887 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 182,814 $ -$ - Due to other funds 20,861 Total liabilities 203,675 Fund balances: Restricted 264,373 1,085,887 Committed 1,415,789 478,999 Assigned 158,275 Total fund balances 1,838,437 478,999 1,085,887 Total liabilities and fund balances $ 2,042,112 $ 478,999 $ 1,085,887 See independent auditor's report on the financial statements. 54 Total Nonmajor Governmental Funds $ 3,603,387 3,611 $ 3,606,998 $ 182,814 20,861 203,675 1,350,260 1,894,788 158,275 3,403,323 $ 3,606,998 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended December 31, 2015 Total Total Non major Total REVENUES Taxes Intergovernmental Charges for services Licenses and permits Investment revenue Donations Miscellaneous Total revenues EXPENDITURES Current Culture and recreation Public safety 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 Fund balance -Beginning of year, as restated Fund balance -End of year Nonmajor Nonmajor Debt Non major Special Revenue Permanent Service Governmental Funds Funds Fund Funds $ 353,659 $ - $ - $ 353,659 986,746 368,999 417,283 569,463 358,619 10,380 9,500 3,938 1,057 81 83,391 115,845 1,342,235 1,619,484 3,281 227,249 120,915 502,090 2,473,019 [1,130,784] 1,363,306 11,437 35 35 11,402 __ __._[3_0.,_,0_0_,0] --- 1,333,306 202,522 11,402 1,682,509 467,597 __ __._[4;..;:.6.i...;;,5....;.94.,J] --- 1,635,915 467,597 569,544 155,000 136,030 291,030 278,514 278,514 807,373 807,373 9,500 5,076 83,391 115,845 1,923,216 1,619,484 3,281 227,249 120,915 35 155,000 136,030 502,090 2,764,084 [840,868] 1,363,306 [30,000] 1,333,306 492,438 2,957,479 [46,594] 2,910,885 $ 1,838,437 $ 478,999 $ 1,085,887 $ 3,403,323 See independent auditor's report on the financial statements. 55 CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS December 31, 2015 Business Bicentennial Improvement Neighborhood Center District Park ASSETS Cash and investments $ 92,584 $ 3,952 $ 124,178 Receivables Accounts 3,611 Total assets $ 92,584 $ 7,563 $ 124,178 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 59,297 $ 81 $ 1,469 Due to other funds Total liabilities 59,297 81 1,469 Fund balance: Restricted 7,482 Committed 33,287 100,132 Assigned 22,577 Total fund balance [deficit] 33,287 7,482 122,709 Total liabilities and fund balances $ 92,584 $ 7,563 $ 124,178 Special Parks & Recreation $ 87,640 $ 87,640 $ 4,340 4,340 83,300 83,300 $ 87,640 $ $ $ $ Community Special Development Alcohol Revolving 95,759 $ 184,242 $ 95,759 $ 184,242 $ 95,625 $ - $ 95,625 134 184,242 134 184,242 95,759 $ 184,242 $ Sales Tax Economic Development 897,215 $ 897,215 $ - $ 897,215 897,215 HOME 911 2012 Communications -$ -$ - $ 3,281 [126,415] 126,415 3,281 [3,281] [3,281] 897,215 _$ _____ -_$ ____ _ See independent auditor's report on the financial statements. 56 ASSETS Cash and investments Receivables Accounts Total assets CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS (Continued) December 31, 2015 Kenwood Special Cove Law Police Capital Enforcement Grants $ 81,730 $ 2,880 $ $ 81,730 $ 2,880 $ - - LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ -$ -$ 15,063 Due to other funds 10,076 Total liabilities 25,139 Fund balance: Restricted Committed 81,730 2,880 [25,139] Assigned Total fund balance [deficit] 81,730 2,880 [25,139] Total liabilities and fund balances $ 81,730 $ 2,880 $ - Federal Grants $ 19 $ 19 $ 19 19 $ 19 Police War Federal Department Animal DARE Memorial Arts & CARE Federal Homeowners' Shelter Donations Maintenance Humanities Grant Forfeiture Funds Assistance Donations Totals $ 6,234 $ 32,813 $ 141,870 $ -$ 98 $ 5,606 $ 281,681 $ 2,038,501 3,611 $ 6,234 $ 32,813 $ 141,870 $ -$ 98 $ 5,606 $ 281,681 $ 2,042,112 $ 38 $ - $ 3,620 $ - $ - $ - $ - $ 182,814 20,861 38 6,196 32,813 6,196 32,813 $ 6,234 $ 32,813 10,785 3,620 10,785 -[10,785] 138,250 [9,185] 5,606 281,681 9,283 138,250 [10,785] 98 5,606 281,681 $ 141,870 $ -$ 98 $ 5,606 $ 281,681 See independent auditor's report on the financial statements. 57 203,675 264,373 1,415,789 158,275 1,838,437 $ 2,042,112 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS For the Year Ended December 31, 2015 Business Bicentennial Improvement Neighborhood Center District Park Revenues Taxes $ -$ -$ - Intergovernmental Charges for services 31,993 Licenses and permits 9,500 Investment revenue 83 17 274 Donations Miscellaneous Total Revenues 83 32,010 9,774 Expenditures Current Culture and recreation 722,704 Public safety Public health and sanitation Planning and development 78,837 Capital outlay 1,148 5,024 Total Expenditures 723,852 78,837 5,024 Excess [deficiency] of revenues over [under] expenditu~es [723,769] [46,827] 4,750 Other financing sources [uses] Transfers in 756,556 Transfers [out] Total other financing sources [uses] 756,556 Net change in fund balance 32,787 [46,827] 4,750 Fund balance, beginning of year 54,309 117,959 Restatement of prior year fund balance 500 Fund balance, beginning of year, as restated 500 54,309 117,959 Fund balance, end of year $ 33,287 $ 7,482 $ 122,709 Special Parks & Special Recreation Alcohol $ -$ 184,555 184,555 274 138 184,829 184,693 227,015 254,129 254,129 227,015 [69,300] [42,322] [30,000] [30,000] [99,300] [42,322] 182,600 42,456 182,600 42,456 $ 83,300 $ 134 Bicentennial Center Event HUD Community Development Community Development Revolving Heritage Commission Sales Tax Economic Development HOME 2012 911 Communications $ - $ - $ - $ - $ 353,659 $ - $ 10,850 500 [500] $ -$ 410 410 410 410 74,578 109,254 4 [74,578] 74,578 [4] 183,832 -$ 184,242 $ -$ 1,793 355,452 133,391 133,391 222,061 222,061 675,154 675,154 897,215 10,850 10,850 10,850 [10,850] [10,850] $ - See independent auditor's report on the financial statements. 58 3,281 3,281 [3,281] [3,281] $ [3,281J 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, 2015 Kenwood Special Fair Cove Law Police Housing Capital Enforcement Grants Revenues Taxes $ -$ -$ -$ - Intergovernmental Charges for services Licenses and permits Investment revenue 100 3 Donations Miscellaneous 2,680 Total Revenues 100 3 2,680 Expenditures Current Culture and recreation Public safety Public health and sanitation Planning and development Capital outlay 52,688 Total Expenditures 52,688 Excess [deficiency] of revenues over [under] expenditures [52,588] 3 2,680 Other financing sources [uses] Transfers in -106,750 Transfers [out] Total other financing sources [uses] -106,750 Net change in fund balance 54,162 3 2,680 Fund balance, beginning of year 46,590 27,568 2,877 [27,819] Restatement of prior year fund balance [46,590] Fund balance, beginning of year, as restated 27,568 2,877 [27,819] Fund balance, end of year $ -$81,730 $ 2,880 $ [25,139) Federal Grants $ 19 19 19 19 $ 19 DARE Donations $ - 9 2,642 2,651 52 52 2,599 2,599 3,597 3,597 $ 6,196 Police War Federal Department Animal Memorial Arts & CARE Federal Homeowners' Shelter Maintenance Humanities Grant Forfeiture Funds Assistance Donations $ $ -$ -$ -$ -$ -$ - 37,323 326,626 75 132 42 9 560 83,391 106,981 3,542 75 433,739 37,323 42 3,551 83,951 1,270 895,510 234 42,026 55,710 1,270 895,510 42,026 55,710 234 [1,195] [461,771] [4,703] [55,668] 3,551 83,717 500,000 500,000 [1,195] 38,229 [4,703] [55,668] 3,551 83,717 34,008 100,021 [6,082] 55,766 2,055 197,964 34,008 100,021 [6,082] 55,766 2,055 197,964 32,813 $ 138,250 $ [10,785) $ 98 $ 5,606 $281,681 See independent auditor's report on the financial statements. 59 Totals $ 353,659 417,283 358,619 9,500 3,938 83,391 115,845 1,342,235 1,619,484 3,281 227,249 120,915 502,090 2,473,019 [1,130,784] 1,363,306 [30,000] 1,333,306 202,522 1,682,509 [46,594] 1,635,915 $1,838,437 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, 2015 Cemetery Mausoleum Tricentennial Endowment Endowment Commission Total $ 471,219 $ 2,017 .:,;..$ _ ____;5:.i.;,7;..::6...::..3 $ 478,999 $ 471,219 $ 2,017 _$ __ 5 __ ,7_6_3 $ 478,999 ...:..$ ____ -...:..$ ____ -.e._$ ____ -_$ ___ _ 471,219 2,017 5,763 478,999 $ 471,219 $ 2,017 .;..$ _ ___;5 •• 7..;;6.;.3 $ 478,999 See independent auditor's report on the financial statements. 60 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJORPERMANENTFUNDS For the Year Ended December 31, 2015 Cemetery Mausoleum Tricentennial Endowment Endowment Commission Revenues Charges for services $ 10,380 $ -$ Investment revenue 1,041 4 Total revenues 11,421 4 Expenditures Miscellaneous 35 Total expenditures 35 Net change in fund balance 11,386 4 Fund balances -beginning of year 459,833 2,013 Fund balances -end of year $ 471,219 $ 2,017 $ See independent auditor's report on the financial statements. 61 - 12 12 12 5,751 5,763 Total $ 10,380 1,057 11,437 35 35 11,402 467,597 $ 478,999 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, 2015 Budgeted Amounts Actual Original Revenues Investment revenue $ 83 $ -$ Total revenues 83 Expenditures Culture and recreation 722,704 480,000 Capital outlay 1,148 Total expenditures 723,852 480,000 Excess [deficiency] of revenues over [under] expenditures [723,769] [480,000] Other financing sources [uses] Transfers in 756,556 492,000 Total other financing sources [uses] 756,556 492,000 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 32,787 12,000 Unreserved fund balance, January 1 500 71,574 Unreserved fund balance/GAAP fund balance December 31 $ 33,287 $ 83,574 $ See independent auditor's report on the financial statements. 62 Final - 725,000 725,000 [725,000] 708,558 708,558 [16,442] 25,666 9,224 Variance with Final Budget Positive [Negative] $ 83 2,296 [1,148] 1,148 1,231 47,998 47,998 49,229 [25,166] $ 24,063 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) BUSINESS IMPROVEMENT DISTRICT FUND For the Year Ended December 31, 2015 Budgeted Amounts Actual Original Revenues Charges for services $ 83,128 $ 90,000 $ Investment revenue 17 500 Total revenues 83,145 90,500 Expenditures Planning and development 78,837 90,500 Total expenditures 78,837 90,500 Excess [deficiency] of revenues over [under] expenditures 4,308 Unreserved fund balance, January 1 [437] Unreserved fund balance, December 31 3,871 $ -$ Reconciliation to GAAP Accounts receivable 3,611 GAAP Fund Balance, December 31 $ 7,482 See independent auditor's report on the financial statements. 63 Final 90,000 500 90,500 90,500 90,500 - Variance with Final Budget Positive [Negative] $ [6,872] [483] [7,355] 11,663 11,663 4,308 [437] $ 3,871 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) NEIGHBORHOOD PARK FUND Revenues Licenses and permits Investment revenue Total revenues Expenditures Capital outlay Total expenditures Excess [deficiency] of revenues For the Year Ended December 31, 2015 Budgeted Amounts Actual Original Final $ 9,500 $ 20,000 $ 20,000 274 4,000 4,000 9,774 24,000 24,000 5,024 134,260 134,260 5,024 134,260 134,260 Variance with Final Budget Positive [Negative] $ [10,500] [3,726] [14,226] 129,236 129,236 over [under] expenditures 4,750 [110,260] [110,260] 115,010 Unreserved fund balance, January 1 Unreserved fund balance, December 31 Reconciliation to GAAP Current year encumbrances GAAP Fund Balance, December 31 95,382 110,260 110,260 [14,878] 100,132 $ - $ - $ 100,132 22,577 $ 122,709 See independent auditor's report on the financial statements. 64 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, 2015 Budgeted Amounts Actual Original Revenues Intergovernmental $ 184,555 $ 160,000 $ Investment revenue 274 4,000 Total revenues 184,829 164,000 Expenditures Capital outlay 254,129 225,668 Total expenditures 254,129 225,668 Excess [deficiency] of revenues over [under] expenditures [69,300] [61,668] Other financing sources [uses] Transfers [out] [30,000] [30,000] Total other financing sources [uses] [30,000] [30,000] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [99,300] [91,668] Unreserved fund balance, January 1 182,600 91,668 Unreserved fund balance/GAAP fund balance December 31 $ 83,300 $ -$ See independent auditor's report on the financial statements. 65 Final 179,120 200 179,320 332,154 332,154 [152,834] [30,000] [30,000] [182,834] 182,834 - Variance with Final Budget Positive [Negative] $ 5,435 74 5,509 78,025 78,025 83,534 83,534 [234] $ 83,300 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, 2015 Budgeted Amounts Actual Original Revenues Intergovernmental $ 184,555 $ 160,000 $ Investment revenue 138 Total revenues 184,693 160,000 Expenditures Public health and sanitation 227,015 165,204 Total expenditures 227,015 165,204 Excess [deficiency] of revenues over [under] expenditures [42,322] [5,204] Unreserved fund balance, January 1 42,456 5,205 Unreserved fund balance/GMP fund balance December 31 $ 134 $ 1 $ See independent auditor's report on the financial statements. 66 Final 179,120 179,120 221,585 221,585 [42,465] 42,465 - Variance with Final Budget Positive [Negative] $ 5,435 138 5,573 [5,430] [5,430] 143 [9] $ 134 Revenues Taxes Investment revenue Total revenues Expenditures Capital outlay Total expenditures 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, 2015 Budgeted Amounts Actual Original Final $ 353,659 $ 317,744 $ 317,744 1,793 5,000 5,000 355,452 322,744 322,744 133,391 1,025,294 1,025,294 133,391 1,025,294 1,025,294 Excess [deficiency] of revenues over [under] expenditures 222,061 [702,550] Unreserved fund balance, January 1 675,154 702,550 Unreserved fund balance/GAAP fund balance December 31 $ 897,215 $ -$ See independent auditor's report on the financial statements. 67 [702,550] 702,550 - Variance with Final Budget Positive [Negative] $ 35,915 [3,207] [3,207] 891,903 891,903 924,611 [27,396] $ 897,215 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, 2015 Budgeted Amounts Actual Original Revenues Charges for services $ 326,626 $ 480,350 $ Investment revenue 132 2,000 Miscellaneous 106,981 500 Total revenues 433,739 482,850 Expenditures Culture and recreation 895,510 1,083,860 Total expenditures 895,510 1,083,860 Excess [ deficiency] of revenues over [under] expenditures [461,771J [601,01 OJ Other financing sources [uses] Transfers in 500,000 607,034 Transfers [out) [67,343J Total other financing sources [uses] 500,000 539,691 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 38,229 [61,319] Unreserved fund balance, January 1 100,021 61,319 Unreserved fund balance/GAAP fund balance December 31 $ 138,250 $ -$ See independent auditor's report on the financial statements. 68 Final 480,350 2,000 500 482,850 1,083,860 1,083,860 [601,01 OJ 607,034 [67,343J 539,691 [61,319] 61,319 - Variance with Final Budget Positive [Negative] $ [153,724] [1,868] 106,481 104,613 188,350 188,350 139,239 [107,034] 67,343 [39,691J 99,548 38,702 $ 138,250 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, 2015 Budgeted Amounts Actual Original Revenues Taxes Real estate taxes $ 2,700,326 $ 2,726,505 Delinquent taxes 65,487 55,000 Motor vehicle taxes 311,602 279,408 Special assessments 1,716,643 1,655,000 Investment revenue 4,134 5,000 Miscellaneous 95,808 96,800 Total revenues 4,894,000 4,817,713 Expenditures Debt Service Principal retirement 4,885,284 5,120,042 Interest and other charges 1,602,053 1,602,053 Total expenditures 6,487,337 6,722,095 Excess [deficiency] of revenues over [under] expenditures [1,593,337) [1,904,382) Other financing sources [uses] Issuance of bonds 224,400 Transfers in 1,706,711 1,605,000 Total other financing sources [uses] 1,931,111 1,605,000 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 337,774 [299,382] Unreserved fund balance, January 1 354,289 299,382 Unreserved fund balance December 31 692,063 $ - Reconciliation to GAAP Taxes receivable 3,090,683 Deferred revenue [3,037,407] GAAP Fund Balance, December 31 $ 745,339 See independent auditor's report on the financial statements. 69 Final $ 2,726,505 55,000 279,408 1,655,000 5,000 96,800 4,817,713 5,120,042 1,602,053 6,722,095 [1,904,382] 1,605,000 1,605,000 [299,382] 299,382 $ - Variance with Final Budget Positive [Negative] $ [26,179] 10,487 32,194 61,643 [866] [992] 76,287 234,758 234,758 311,045 224,400 101,711 326,111 637,156 54,907 $ 692,063 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, 2015 Budgeted Amounts Actual Original Revenues Charges for services $ 2,656,686 $ 2,562,850 $ Investment revenue 6,114 7,000 Miscellaneous 70,707 Total revenues 2,733,507 2,569,850 Expenditures Public works 1,893,406 2,936,659 Total expenditures 1,893,406 2,936,659 Excess [deficiency] of revenues over [under] expenditures 840,101 [366,809] Other financing sources [uses] Transfers [out] [600,000] [975,375] Total other financing sources [uses] [600,000] [975,375] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 240,101 [1,342.184] Unreserved fund balances, January 1 2,085,518 1,342,184 Unreserved fund balances, December 31 $ 2,325,619 $ -$ See independent auditor's report on the financial statements. 70 Final 2,562,850 7,000 2,569,850 2,936,659 2,936,659 [366,809] [975,375] [975,375] [1,342, 184] 1,342,184 - Variance with Final Budget Positive [Negative] $ 93,836 [886] 70,707 163,657 1,043,253 1,043,253 1,206,910 375,375 375,375 1,582,285 743,334 $ 2,325,619 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, 2015 Budgeted Amounts Revenues Charges for services Investment revenue Miscellaneous Total revenues Expenditures Public works Total expenditures Excess [deficiency) of revenues over [under] expenditures Other financing sources [uses] Transfers in Transfers [out] Total other financing sources [uses] Excess [deficiency) of revenues and other sources over [under) expenditures and other ruses] Unreserved fund balances, January 1 Actual $ 19,012,854 28,053 40,201 19,081,108 13,380,232 13,380,232 5,700,876 60,302 [5,646,302] [5,586,000] 114,876 9,306,498 20,867 Original $ 19,658,700 25,000 560,000 20,243,700 16,451,428 16,451,428 3,792,272 35,950 [8,724,444] [8,688,494] [4,896,222) 4,896,222 Final $ 19,658,700 25,000 560,000 20,243,700 16,451,428 16,451,428 3,792,272 35,950 [8,724,444] [8,688,494] [4,896,222) 4,896,222 Variance with Final Budget $ Positive [Negative] [645,846) 3,053 [519,799] [1,162,592] 3,071,196 3,071,196 1,908,604 24,352 3,078,142 3,102,494 5,011,098 4,410,276 20,867 Prior year cancelled encumbrances Unreserved fund balances, December 31 $ 9,442,241 __ $ ____ -_$ ____ -$ 9,442,241 See independent auditor's report on the financial statements. 71 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS -BUDGET AND ACTUAL (NON -GAAP BASIS) SANITATION FUND For the Year Ended December 31, 2015 Budgeted Amounts Actual Original Final Revenues Charges for services $ 2,543,119 $ 2,577,830 $ 2,577,830 Investment revenue 2,482 3,500 3,500 Total revenues 2,545,601 2,581,330 2,581,330 Expenditures Public works 1,960,188 1,868,215 1,868,215 Total expenditures 1,960,188 1,868,215 1,868,215 Excess [ deficiency] of revenues over [under] expenditures 585,413 713,115 713,115 Other financing sources [uses] Transfers [out] [448,350] [965,459] [965,459] Total other financing sources [uses] [448,350] [965,459] [965,459] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 137,063 [252,344] [252,344] Unreserved fund balance, January 1 897,013 785,062 785,062 Unreserved fund balances, December 31 $ 1,034,076 $ 532,718 $ 532,718 See independent auditor's report on the financial statements. 72 Variance with Final Budget Positive [Negative] $ [34,711] [1,018] [35,729] [91,973] [91,973] [127,702] 517,109 517,109 389,407 111,951 $ 501,358 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS -BUDGET AND ACTUAL (NON -GAAP BASIS) GOLF COURSE FUND For the Year Ended December 31, 2015 Budgeted Amounts Actual Original Revenues Charges for services $ 819,945 $ 834,500 $ Investment revenue 221 Miscellaneous 42,416 Total revenues 862,582 834,500 Expenditures Recreation 815,382 904,877 Total expenditures 815,382 904,877 Excess [deficiency] of revenues over [under] expenditures 47,200 [70,377] Other financing sources [uses] Transfers [out] [48,217] Total other financing sources [uses] [48,217] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 47,200 [118,594] Unreserved fund balance, January 1 117,158 118,594 Unreserved fund balances, December 31 $ 164,358 $ -$ See independent auditor's report on the financial statements. 73 Final 834,500 834,500 904,877 904,877 [70,377] [48,217] [48,217] [118,594] 118,594 - Variance with Final Budget Positive [Negative] $ [14,555] 221 42,416 28,082 89,495 89,495 117,577 48,217 48,217 165,794 [1,436] $ 164,358 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, 2015 Budgeted Amounts Actual Original Revenues Charges for services $ 301,579 $ 456,490 $ Investment revenue 1,491 2,500 Miscellaneous 1,883 Total revenues 304,953 458,990 Expenditures General government 304,889 441,030 Total expenditures 304,889 441,030 Excess [deficiency] of revenues over [under] expenditures 64 17,960 Unreserved fund balance, January 1 621,645 685,100 Unreserved fund balances, December 31 $ 621,709 $ 703,060 $ See independent auditor's report on the financial statements. 74 Final 456,490 2,500 458,990 441,030 441,030 17,960 685,100 703,060 Variance with Final Budget Positive [Negative] $ [154,911] [1,009] 1,883 [154,037] 136,141 136,141 [17,896] [63,455] $ [81,351) 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, 2015 Budgeted Amounts Actual Original Final Revenues Charges for services $ 6,368,477 $ 7,084,350 $ 7,084,350 Investment revenue 2,118 5,000 5,000 Miscellaneous 16,122 Total revenues 6,386,717 7,089,350 7,089,350 Expenditures General government 6,121,023 8,048,360 8,048,360 Total expenditures 6,121,023 8,048,360 8,048,360 Excess [deficiency] of revenues over [under] expenditures 265,694 [959,010] [959,010] Unreserved fund balance, January 1 896,856 1,307,041 1,307,041 Unreserved fund balances, December 31 $ 1,162,550 $ 348,031 $ See independent auditor's report on the financial statements. 75 348,031 Variance with Final Budget Positive [Negative] $ [715,873] [2,882] 16,122 [702,633] 1,927,337 1,927,337 1,224,704 [410,185] $ 814,519 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, 2015 Budgeted Amounts Actual Original Final Revenues Charges for services $ 1,257,329 $ 1,811,570 $ 1,811,570 Investment revenue 66 40 40 Miscellaneous 928 Total revenues 1,258,323 1,811,610 1,811,610 Expenditures General government 1,379,585 1,806,158 1,806,158 Total expenditures 1,379,585 1,806,158 1,806,158 Excess [deficiency] of revenues over [under] expenditures [121,262] 5,452 5,452 Other financing sources [uses] Transfers in 100,000 Transfers [out] [10,000] [66,150] [66,150] Total other financing sources [uses] 90,000 [66,150] [66,150] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [31,262] [60,698] [60,698] Unreserved fund balance, January 1 16,441 376,490 376,490 Unreserved fund balance, December 31 $ [14,821l $ 315,792 $ 315,792 See independent auditor's report on the financial statements. 76 Variance with Final Budget Positive [Negative] $ [554,241] 26 928 [553,287] 426,573 426,573 [126,714] 100,000 56,150 156,150 29,436 [360,049] $ [330,613l 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. 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. 77 CITY OF SALINA, KANSAS COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS December 31, 2015 Workers' Compensation Health ASSETS Reserve Insurance Current assets: Cash and investments $ 750,898 $1,162,720 Inventory and prepaid supplies Total current assets 7501898 1,162,720 Capital assets: Capital assets Less: accumulated depreciation Total capital assets Total assets 7501898 1,162,720 Deferred outflows of resources: Pension -contributions subsequent to the measurement date Pension -changes in proportion Total deferred outflows of resources Total assets and deferred outflows of resources $ 750.898 $1,162,720 Liabilities: Current liabilities (payable from current assets): Accounts payable $ 204 $ 170 Current portion of compensated absences payable Current portion of accrued claims payable 181,093 275,440 Total current liabilities (payable from current assets) 1811297 275,610 Noncurrent liabilities: Compensated absences payable Accrued claims payable 100,508 Net pension liability Total noncurrent liabilities 1001508 Total liabilities 281,805 275,610 Deferred inflows of resources Pension -difference between expected and actual experience Pension -net difference between projected and actual earnings on pension plan investments Pension -changes of assumptions Pension -change in proportion Total deferred inflows of resources Total liabilities and deferred inflows of resources $ 281,805 $ 275,610 Net Position Invested in capital assets, net of related debt $ -$ - Unrestricted 4691093 887,110 Total net position $ 469.093 $ 887,110 See independent auditor's report on the financial statements. 78 Total Internal Central Service Garage Funds $ 43,145 $1,956,763 194,089 194,089 237,234 2,150,852 223,242 223,242 181,362 181,362 41,880 41,880 279,114 2,192?32 9,278 9,278 7 7 9,285 9,285 $288,399 $2,202,017 $ 57,965 $ 58,339 18,832 18,832 456,533 76,797 533,704 17,877 17,877 100,508 141,390 141,390 159,267 259,775 236,064 793,479 4,003 4,003 5,504 5,504 1,976 1,976 6,959 6,959 18,442 18,442 $254,506 $ 811,921 $ 41,880 $ 41,880 [7,987) 1,348,216 $ 33,893 $1,390,096 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION INTERNAL SERVICE FUND For the Year Ended December 31, 2015 Workers' Risk Compensation Health Central Management Reserve Insurance Garage Operating revenues Charges for services $ -$ 301,579 $ 6,368,477 $ 1,257,329 Miscellaneous 1,883 16,122 98 Total operating revenues 303,462 6,384,599 1,257,427 Operating expenses General government 244,128 5,867,248 1,332,749 Depreciation 9,259 Total operating expenses 244,128 5,867,248 1,342,008 Operating income [loss] 59,334 517,351 [84,581] Nonoperating revenues [expenses] Investment revenue 1,491 2,118 66 Gain/[loss] on disposal of fixed assets 830 Total other operating revenues [expenses] 1,491 2,118 896 Income [loss] before transfers Transfers from [to] other funds Transfers in Transfers [out] Total transfers Change in net position Net position, January 1 Restatement Net position, January 1, restated Net position, December 31 60,825 519,469 [83,685] 100,000 [10,000] 90,000 60,825 519,469 6,315 25,593 408,268 367,641 185,379 [25,593] [157,801] 408,268 367,641 27,578 $ -$ 469,093 $ 887,110 $ 33,893 See independent auditor's report on the financial statements. 79 Total Internal Information Service S~stems Funds $ -$ 7,927,385 18,103 7,945,488 7,444,125 9,259 7,453,384 492,104 3,675 830 4,505 496,609 100,000 [10,000] 90,000 586,609 43,407 1,030,288 [43,407] [226,801] 803,487 $ -$ 1,390,096 CITY OF SALINA, KANSAS COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the Year Ended December 31, 2015 Workers' Risk Compensation Health Management Reserve Insurance Cash flows from operating activities Cash received from customers and users $ -$ 240,818 $6,114,702 Cash paid to suppliers of goods or services [244,490) [5,867,248) Cash paid to employees Other operating receipts 1 883 16,122 Net cash provided by [used in] operating activities [1,789) 263,576 Cash flows from investing activities Interest received 1 491 2118 Cash flows from capital and related financing activities Purchase and construction of capital assets Proceeds from sale of capital assets Net cash provided by [used in] capital Cash flows from noncapital financing activities Transfers in Transfers [out] Net cash provided by [used in] noncapital financing activities Net increase [decrease] in cash and cash equivalents [298) 265,694 Cash and cash equivalents, January 1 62,853 751,196 897,026 Restatement [62,853) Cash and cash equivalents, January 1, restated 751 196 897,026 Cash and cash equivalents, December 31 $ -$ 7501898 $11162:720 See independent auditor's report on the financial statements. 80 Total Internal Central Information Service Garage Services Funds $1,257,330 $ -$7,612,850 [1,067,832) [7,179,570) [261,984) [261,984) 98 18,103 [72,388) 189,399 65 3674 [36,685) [36,685) 830 830 [35,855) [35,855) 100,000 100,000 [10,000) [10,000) 90,000 90,000 [18,178) 247,218 61,323 126,351 1,898,749 [126,351) [189,204) 61,323 1,709,545 $ 431145 $ -$1,956:763 CITY OF SALINA, KANSAS COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS (Continued) For the Year Ended December 31, 2015 Total Workers' Internal Reconciliation of operating [loss] income to net cash provided by [used in] operating activities Operating income [loss] Adjustments to reconcile operating income [loss] to net cash provided by [used in] operating activities Depreciation expense [Increase] decrease in inventory [Increase] decrease in deferred outflows Increase [decrease] in accounts payable Increase [decrease] in accrued compensated absences Increase [decrease] in net pension liability Increase [decrease] in claims payable Increase [decrease] in deferred inflows Net cash provided by [used in] operating activities Compensation Health Central Service Reserve Insurance Garage Funds $ 59,334 $517,351 $ [84,581] $492,104 9,259 9,259 [5,729] [5,729] [32] [32] [362] 13,085 12,723 2,832 2,832 1,873 1,873 [60,761] [253,775] [314,536] [9,095] [9,095] $ [1,789) $263,576 $ [72,388) $189,399 See independent auditor's report on the financial statements. 81 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. 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. 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. 82 ASSETS: Cash and investments Total assets LIABILITIES: Accounts payable Total liabilities CITY OF SALINA, KANSAS COMBINING BALANCE SHEET AGENCY FUNDS December 31, 2015 Special Fire Court Police Assessment Insurance Payroll Bond and Investigation Escrow Proceeds Clearing Restitution Account Citizenshig $ $ $ $ 84,647 $ 63 $ [303,463] $ 31,696 $ 3,376 $ 84,647 $ 63 $ [303,463] $ 31,696 $ 3,376 $ 84,647 $ 63 $ [303,463] $ 31,696 $ 3,376 $ 84,647 $ 63 $ [303,463] $ 31,696 $ 3,376 $ See independent auditor's report on the financial statements. 83 172 172 172 172 Section 125 Plan Totals $310,950 $127,441 $310,950 $127,441 $310,950 $127,441 $310,950 $127,441 CITY OF SALINA, KANSAS COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS For the Year Ended December 31, 2015 Balance December 31, 2014 Additions Deductions Cash and investments Special Assessment Escrow $ 121,157 $ 1,113 $ Fire Insurance Proceeds 53 58,234 PEGS Access 1 Payroll Clearing [273,632] Court Bond and Restitution 35,899 Police Investigation Account 4,014 Citizenship Trust 3,729 4 Section 125 Plan Fund 316,863 310,062 Total Assets $ 208,084 $ 369,413 $ Accounts Payable Special Assessment Escrow $ 121,157 $ 1,113 $ Fire Insurance Proceeds 53 58,234 PEGS Access 1 Payroll Clearing [273,632] Court Bond and Restitution 35,899 Police Investigation Account 4,014 Citizenship Trust 3,729 4 Section 125 Plan Fund 316,863 310,062 Total liabilities $ 208,084 $ 369,413 $ See independent auditor's report on the financial statements. 84 37,623 58,224 1 29,831 4,203 638 3,561 315,975 450,056 37,623 58,224 1 29,831 4,203 638 3,561 315,975 450,056 Balance December 31, 2015 $ 84,647 63 [303,463] 31,696 3,376 172 310,950 $ 127,441 $ 84,647 63 [303,463] 31,696 3,376 172 310,950 $ 127,441 CITY OF SALINA, KANSAS SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended December 31, 2015 Federal Federal Grantor/Pass-Through CFDA Grantor/Program Title Number Revenues Department of Housing and Urban Development Fair Housing Assistance Program 14.401 $ 30,300 Passed through Kansas Housing Resources Corporation Emergency Solutions Grant 14.231 97,796 Total Department of Housing and Urban Development 128,096 Department of Transportation Passed Through the Kansas Department of Transportation: State and Community Highway Safety 20.600 11,495 National Priority Safety Programs 20.616 7,502 Total Department of Transportation 18,997 Environmental Protection Agency Community Action for a Renewed Environment (CARE) Program 66.035 37,323 Passed Through the Kansas Department of Health and Environment Capitalization Grants for Drinking Water State Revolving Funds 66.468 Total Environmental Protection Agency 37,323 Total Expenditures of Federal Awards $ 184,416 Exeenditures $ 97,796 97,796 11,495 7,502 18,997 42,026 1,673,971 1,715,997 $ 1,832,790 See indep~ndent auditor's report on the financial statements and notes to the schedule of expenditures of federal awards. 85 CITY OF SALINA, KANSAS NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended December 31, 2015 1. Organization The City of Salina, Kansas (the City), is the recipient of several federal awards. All federal awards received directly from federal agencies as well as those awards that are passed through other government agencies, are included on the schedule of Expenditures of Federal Awards. 2. Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the City, and is presented on the Kansas regulatory basis of accounting which includes cash disbursements, accounts payable and encumbrances. The information presented in this schedule is in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of the basic financial statements. The City elected not to use the 10% de minimis indirect cost rate. 3. Local Government Contributions Local cost sharing is required by certain federal grants. The amount of cost sharing varies with each program. Only the federal share of expenditures is presented in the Schedule of Expenditures of Federal Awards. 4. Additional Audits Granter agencies reserve the right to conduct additional audits of the City's grant programs for economy and efficiency and program results that may result in disallowed costs to the City. However, management does not believe such audits would result in any disallowed costs that would be material to the City's financial position at December 31, 2015. 5. Outstanding Loans The City did not have any outstanding loans under any federal grants at December 31, 2015. 86 CITY OF SALINA, KANSAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2015 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 the Uniform Guidance? 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? 87 Unmodified X Yes No --- X Yes None reported --- Yes X No --- Yes X No Yes ---X None reported Unmodified Yes X No Name of Federal Program or Cluster Capitalization Grants for Drinking Water State Revolving Funds $750,000 X Yes No CITY OF SALINA, KANSAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued} For the Year Ended December 31, 2015 Section II -Financial Statement Findings Current Year Findings Material Weaknesses: Finding 2015-1 -Cash and Bank Reconciliations Conditions and Criteria: During our audit of cash balances we noted the following: a. The City did not prepare individual bank reconciliations for the months of August, 2015 through November, 2015. b. The City did not complete the bank reconciliation for the month ended December 31, 2015 until May, 2016. c. The City did not have formal bank reconciliation procedures in place from August, 2015 through the completion of audit fieldwork in May, 2017. Context: The City underwent an accounting software conversion in August, 2015 and also experienced significant turnover in key finance department staff positions during 2015, 2016 and 2017. After the conversion process, the City was unable to properly reconcile cash balances due to problems encountered with the new software and due to inexperienced personnel attempting to perform the reconciliations. Effect: The cash balances for the months of August, 2015 through November, 2015 were inadequately documented and analyzed and the cash balances at December 31, 2016 were unable to be effectively audited until May, 2017. Cause: No procedures were in place to properly reconcile cash balances after the software conversion in August, 2015. Auditor's Recommendation: We recommend that the City establish written procedures to document the bank reconciliation process and ensure that bank reconciliations are prepared timely after each month-end. Additionally, we recommend that the City ensure that there is proper separation of duties with regards to individuals responsible for handling cash, recording accounting transactions, receiving and opening bank statements, preparing bank reconciliations and reviewing bank reconciliations. Views of Responsible Officials and Planned Corrective Actions: The City agrees with the recommendation and will work to implement the proposed steps. Finding 2015-2 -Capital Assets and Construction In Progress Conditions and Criteria: During our audit of capital assets and construction in progress we noted the following: a. During 2015, the City did not properly update their capital asset software for capital assets acquired and disposed of throughout the year. b. During 2015, the City did not consistently track the status of the various capital projects in progress and did not keep an accurate accounting of expenditures and open payables related to these projects. c. At the beginning of audit fieldwork, City staff did not possess appropriate knowledge of the City's asset capitalization policies or asset management systems. Context: The City underwent an accounting software conversion in August, 2015 and also experienced significant turnover in key finance department staff positions during 2015, 2016 and 2017. During much of this time, the City was unable to keep up with the management of capital asset and construction in progress reporting. Effect: The capital asset and construction in progress balances for 2015 were inadequately documented during much of audit fieldwork. It was not until June, 2017 that the City as able to complete the accounting for capital assets and construction in progress as of December 31, 2015. Cause: No procedures were in place to properly maintain capital asset and construction in progress balances during 2015. Auditor's Recommendation: We recommend that the City establish written procedures to document the recording of capital assets in their software and that all capital projects be continuously tracked and monitored to ensure accurate construction in progress balances. Additionally, we recommend that the City ensure that there is proper separation of duties with regard to individuals responsible for purchasing, recording and reconciling capital assets and construction in progress. Views of Responsible Officials and Planned Corrective Actions: The City agrees with the recommendation and will work to implement the proposed steps. 88 CITY OF SALINA, KANSAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) For the Year Ended December 31 , 2015 Section II -Financial Statement Findings (Continued) Current Year Findings {Continued) Finding 2015-3 -General Accounting Policies & Procedures Conditions and Criteria: During our audit, many of the reports requested by the auditors had to be re-run multiple times over the course of the approximately one year time period it took to complete audit fieldwork. It was necessary to re-run the reports after it was determined that the previous versions contained inaccurate or incomplete data. Each time a report was re-run, the audit process for that report had to be started over again, which significantly increased audit time. Reports that were re-run on multiple occasions included detail and summary trial balances, year-end accounts payable balances, year-end encumbrances balances, capital asset summaries, construction in progress reconciliations and other reports containing supplemental data. Context: The City underwent an accounting software conversion in August, 2015 and also experienced significant turnover in key finance department staff positions during 2015, 2016 and 2017. During much of this time, the City was attempting to identify errors created in the software conversion and post journal entries to correct the errors. Effect: Accounting reports necessary for the audit were incorrect or incomplete. Cause: The City lacked appropriate knowledge of the new accounting system to be able to correctly record transactions and generate reports. Auditor's Recommendation: We recommend that the City continue to provide appropriate levels of training for staff using the new accounting software and that the City work to develop appropriate written accounting policies and procedures that include adequate internal controls. Views of Responsible Officials and Planned Corrective Actions: The City agrees with the recommendation and will work to implement the proposed steps. Significant Deficiencies: Finding 2015-4 -Municipal Court Accounts Receivable Conditions and Criteria: During our audit of municipal courts accounts receivable balances we noted the following: a. The City was unable to produce an accounts receivable aging report or accounts receivable subledger that agreed to the municipal courts accounts receivable balance as of December 31 , 2015 Municipal Court Monthly Report. b. Per a comparison of the 2015 and 2014 Municipal Court Monthly Reports, the number of municipal court cases filed decreased by approximately 1 % and the amount of cost and fine revenues collected decreased by approximately 7% during 2015. c. Per a comparison of the 2015 and 2014 Municipal Court Monthly Reports, the number of cases closed decreased by 1 % during 2015 and the number of pending cases at December 31 , 2015 was 22% higher than at December 31 , 2014. Context: The City collects municipal court revenues and tracks municipal court accounts receivable balances. In the year under audit, the City was unable to provide appropriate documentation and explanations to the auditor to support the case numbers, revenues recorded, accounts receivable balances. Effect: The municipal court revenue and accounts receivable balances were inadequately documented and analyzed. Cause: No procedures were in place to produce the appropriate accounts receivable reports or analyze the differences between years of various municipal court revenue data. Auditor's Recommendation: We recommend that the City process and save a detailed accounts receivable aging report at the end of each month that agrees to the Municipal Court Monthly Report. Additionally, we recommend that the City designate an appropriate individual to review and approve these reports each month and to closely monitor the number of cases closed and cases pending in order to determine if sufficient progress is being made to close 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 these tickets are in line with the City's projections and budget. Views of Responsible Officials and Planned Corrective Actions: The City agrees with the recommendation and will work to implement the proposed steps. 89 CITY OF SALINA, KANSAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) For the Year Ended December 31 , 2015 Section II -Financial Statement Findings (Continued) Prior Year Findings Significant Deficiencies: Finding 2014-1 -Municipal Court Accounts Receivable Conditions and Criteria: During our audit of municipal courts accounts receivable balances we noted the following: a. The City was unable to produce an accounts receivable aging report or accounts receivable subledger that agreed to the municipal courts accounts receivable balance as of December 31 , 2014 Municipal Court Monthly 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% during 2014. c. Per a comparison of the 2014 and 2013 Municipal Court Monthly Reports, the number of case closed decreased by 23% during 2014 and the number of pending cases at December 31, 2014 was 68% higher than at December 31 , 2013. Context: The City collects municipal court revenues and tracks municipal court accounts receivable balances. In the year under audit, the City was unable to provide appropriate documentation and explanations to the auditor to support the case numbers, revenues recorded, accounts receivable balances. Effect: The municipal court revenue and accounts receivable balances were inadequately documented and analyzed. Cause: No procedures were in place to produce the appropriate accounts receivable reports or analyze the differences between years of various municipal court revenue data. Auditor's Recommendation: We recommend that the City process and save a detailed accounts receivable aging report at the end of each month that agrees to the Municipal Court Monthly Report. Additionally, we recommend that the City designate an appropriate individual to review and approve these reports each month and to closely monitor the number of cases closed and cases pending in order to determine if sufficient progress is being made to close 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 these tickets are in line with the City's projections and budget. Status: Repeated at Finding 2015-4 Section Ill -Federal Award Findings and Questioned Costs None Noted 90 MIZE0 HOUSER OMPANYr.A. INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL ST A TEMENTS 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 Guide, the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Salina, Kansas, (the City) as of and for the year ended December 31 , 2015, and the related notes to the financial statements, which collectively comprise the City's financial statements, and have issued our report thereon dated June 26, 2017. 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 other auditors' testing of internal control over financial reporting or compliance and other 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. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph 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. However, as described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies. 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 entity's financial statements will not be prevented or detected and corrected on a timely basis. We consider the deficiencies described in the accompanying schedule of findings and questioned costs to be material weaknesses: Finding 2015-1 , Finding 2015- 2, Finding 2015-3. 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. We consider the deficiencies described in the accompanying schedule of findings and questioned costs to be significant deficiencies: Finding 2015-4. www.mizehouser.com • mhco@mizehouser.com 534 S Kansas Ave, Suite 700 • Topeka, KS 66603-3465 • 785.233.0536 p • 785.233.1078 f 534 S Kansas Ave, Suite 400 • Topeka, KS 66603-3454 • 785.234.5573 p • 785.234.1037 f 7101 College Blvd, Suite 900 • Overland Park, KS 66210-1984 • 913.451.1882 p • 913.451 .2211 f 211 E Eighth Suite A• Lawrence, KS 66044-2771 • 785.842.8844 p • 785.842.9049 f 91 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 June 26, 2017. 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 June 26, 2017 92 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE Mayor and City Commissioners City of Salina, Kansas Report on Compliance for Each Major Federal Program We have audited the compliance of the City of Salina, Kansas, (the City) with the types of compliance requirements described in the 0MB 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 , 2015. 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 compliance 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 audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion 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, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31 , 2015. www.mizehouser.com • mhco@mlzehouser.com 534 S Kansas Ave, Suite 700 • Topeka, KS 66603-3465 • 785.233.0536 p • 785.233.1078 f 534 S Kansas Ave, Suite 400 • Topeka, KS 66603-3454 • 785.234.5573 p • 785.234.1037 f 7101 College Blvd, Suite 900 • Overland Park, KS 66210-1984 • 913.451 .1882 p • 913.451 .2211 t 211 E Eighth Suite A• Lawrence, KS 66044-2771 • 785.842.8844 p • 785.842. 9049 f 93 Report on Internal 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 the Uniform Guidance, 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 and therefore, material weaknesses or significant deficiencies may exists that were not identified. 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 the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Certified Public Accountants Lawrence, Kansas June 26, 2017 /J4 94 APPENDIX D Unaudited Financial Statements for the Fiscal Year ended December 31, 2016 2015 Revised 2016 Revised 2017 Original Budget 2015 Actual Budget 2016 Actual Budget 100 -General Fund Revenue 40,511,616.00 38,567,874.65 41,035,321.00 39,612,327.70 43,235,527.00 Expense (39,907,141.00) (38,214,301.41) (40,855,630.00) (39,186,606.43) (43,875,813.00) 100 -General Fund Total 604,475.00 353,573.24 179,691.00 425,721.27 (640,286.00) Beginning Fund Balance 2,988,547.00 3,342,120.24 Ending Fund Balance 3,342,120.24 3,767,841.51 200 -Arts and Humanities Revenue 982,850.00 933,739.98 1,007,850.00 960,787.99 982,850.00 Expense (990,320.00) (895,510.39) (1,007,604.00) (944,905.68) (1,016,988.00) 200 -Arts and Humanities Total (7,470.00) 38,229.59 246.00 15,882.31 (34,138.00) Beginning Fund Balance 100,021.00 138,250.59 Ending Fund Balance 138,250.59 154,132.90 210 -Sales Tax Capital Revenue 4,255,000.00 4,208,985.84 4,294,950.00 4,439,517.43 8,048,656.00 Expense (4,576,750.00) (3,736,469.30) (3,485,805.00) (4,390,740.03) (8,645,088.00) 210 -Sales Tax Capital Total (321,750.00) 472,516.54 809,145.00 48,777.40 (596,432.00) Beginning Fund Balance 1,023,469.00 1,495,985.54 Ending Fund Balance 1,495,985.54 1,544,762.94 220 -Sales Tax Economic Dev Revenue 322,744.00 355,451.66 351,586.00 349,032.03 654,849.00 Expense (901,470.00) (133,391.12) (750,000.00) (449,844.70) (1,474,000.00) 220 -Sales Tax Economic Dev Total (578,726.00) 222,060.54 (398,414.00) (100,812.67) (819,151.00) Beginning Fund Balance 675,154.00 897,214.54 Ending Fund Balance 897,214.54 796,401.87 230 -Business lmprov District #1 Revenue 90,500.00 83,144.72 87,013.00 81,511.68 89,190.00 Expense (90,500.00) (78,836.87) (87,000.00) (77,421.46) (89,175.00) 230 -Business lmprov District #1 Total 0.00 4,307.85 13.00 4,090.22 15.00 Beginning Fund Balance (436.85) 3,871.00 Ending Fund Balance 3,871.00 7,961.22 240 -Tourism and Convention Revenue 1,420,000.00 1,859,359.70 1,500,171.00 1,600,511.95 1,608,000.00 Expense (1,420,000.00) (1,801,790.45) (1,600,513.00) (1,600,511.55) (2,207,990.00) 240 -Tourism and Convention Total 0.00 57,569.25 (100,342.00) 0.40 (599,990.00) Beginning Fund Balance 24,394.70 81,963.95 Ending Fund Balance 81,963.95 81,964.35 250 -Special Parks and Recreation Revenue 164,000.00 184,828.57 184,749.00 178,086.44 194,092.00 Expense (152,432.00) (284,129.13) (208,000.00) (146,341.96) (194,000.00) 250 -Special Parks and Recreation Total 11,568.00 (99,300.56) (23,251.00) 31,744.48 92 .00 Beginning Fund Balance 182,600.36 83,299.80 Ending Fund Balance 83,299.80 115,044.28 260 -Special Alcohol Revenue 160,000.00 184,691.93 211,776.00 177,818.63 216,086.00 Expense (165,204.00) (227,014.61) (217,252.00) (177,818.51) (216,086.00) 260 -Special Alcohol Total (5,204.00) (42,322.68) (5,476.00) 0.12 0.00 Beginning Fund Balance 42,456.23 133.55 Ending Fund Balance 133.55 133.67 270 -Special Gas Tax Revenue 1,608,730.00 1,589,904.27 1,543,929.00 1,562,036.00 1,536,400.00 Expense (1,642,700.00) (1,852,147.80) (1,341,158.00) (1,398,498.37) (1,516,158.00) 270 -Special Gas Tax Total (33,970.00) (262,243.53) 202,771.00 163,537.63 20,242.00 Beginning Fund Balance 376,058.20 113,814.67 Ending Fund Balance 113,814.67 277,352.30 280 -Neighborhood Park Development Revenue 24,000.00 9,773.88 10,161.00 6,713.10 10,500.00 Expense (134,260.00) (5,024.00) (100,000.00) (79,471.39) (95,073.00) 280 -Neighborhood Park Development Total (110,260.00) 4,749.88 (89,839.00) (72,758.29) (84,573 .00) Beginning Fund Balance 95,382.33 100,132.21 Ending Fund Balance 100,132.21 27,373.92 290 -Bicentennial Center Revenue 480,000.00 756,639.48 700,000.00 733,211.91 720,000.00 Expense (450,000.00) (723,851.72) (900,000.00) (725,159.01) (850,000.00) 290 -Bicentennial Center Total 30,000.00 32,787.76 (200,000.00) 8,052.90 (130,000.00) Beginning Fund Balance 500.00 33,287.76 Ending Fund Balance 33,287.76 41,340.66 300 -Sanitation Revenue 2,503,500.00 2,545,600.50 2,873,705.00 2,697,124.36 2,934,679.00 Expense (2,452,560.00) (2,408,537.59) (2,865,267.00) (2,689,821.70) (2,930,516.00) 300 -Sanitation Total 50,940.00 137,062.91 8,438.00 7,302.66 4,163.00 Beginning Fund Balance 897,013.02 1,034,075.93 Ending Fund Balance 1,034,075.93 1,041,378.59 320 -Solid Waste Revenue 2,489,810.00 2,673,444.30 2,465,040.00 2,826,041.59 2,568,789.00 Expense (2,567,641.00) (2,493,406.17) (2,610,530.00) (2,034,634.38) (2,985,410.00) 320 -Solid Waste Total (77,831.00) 180,038.13 (145,490.00) 791,407.21 (416,621.00) Beginning Fund Balance 2,085,518.82 2,265,556.95 Ending Fund Balance 2,265,556.95 3,056,964.16 340 -Golf Course Revenue 834,500.00 862,582.33 867,215.00 837,422.29 873,850.00 Expense (788,187.00) (815,382.40) (790,914.00) (899,761.51) (901,353.00) 340 -Golf Course Total 46,313.00 47,199.93 76,301.00 (62,339.22) (27,503.00) Beginning Fund Balance 117,157.65 164,357.58 Ending Fund Balance 164,357.58 102,018.36 370 -Water and Wastewater ------Revenue 20,279,650.00 19,141,409.66 19,057,200.00 19,096,358.22 19,782,200.00 Expense (19,808,782.00) (18,932,573.46) (21,548,754.00) (15,021,248.00) (21,691,722.00) 370 -Water and Wastewater Total 470,868.00 208,836.20 (2,491,554.00) 4,075,110.22 (1,909,522.00) Beginning Fund Balance 9,306,498.22 9,515,334.42 Ending Fund Balance 9,515,334.42 13,590,444.64 410 -Workers Comp Reserve Revenue 459,990.00 304,952.37 496,981.00 516,848.91 313,837.00 Expense (401,030.00) (304,888.67) (401,030.00) (262,660.80) (409,667.00) 410 -Workers Comp Reserve Total 58,960.00 63.70 95,951.00 254,188.11 (95,830.00) Beginning Fund Balance 621,644.47 621,708.17 Ending Fund Balance 621,708.17 875,896.28 420 -Health Insurance Revenue 6,416,680.00 6,386,717.15 6,720,000.00 6,754,119.83 7,054,200.00 Expense (6,182,628.00) (6,121,023.45) (6,587,999.00) (5,776,461.92) (6,960,644.00) 420 -Health Insurance Total 234,052.00 265,693.70 132,001.00 977,657.91 93,556.00 Beginning Fund Balance 896,856.04 1,162,549.74 Ending Fund Balance 1,162,549.74 2,140,207.65 450 -Central Garage Revenue 1,492,822.00 1,358,322.88 1,531,540.00 1,328,254.12 1,747,540.00 Expense (1,469,503.00) (1,389,584.90) (1,396,483.00) (1,332,012.06) (1,767,484.00) 450 -Central Garage Total 23,319.00 (31,262.02) 135,057.00 (3,757.94) (19,944.00) Beginning Fund Balance 16,441.92 (14,820.10) Ending Fund Balance (14,820.10) (18,578.04) 500 -Bond and Interest ------- Revenue 6,422,714.00 6,825,111.23 6,900,252.00 7,561,484.30 6,866,452.00 Expense (6,522,095.00) (6,628,921.93) (7,035,500.00) (7,027,834.04) (7,244,607.00) 500 -Bond and Interest Total (99,381.00) 196,189.30 (135,248.00) 533,650.26 (378,155.00) Beginning Fund Balance 344,671.85 540,861.15 Ending Fund Balance 540,861.15 1,074,511.41 Cityof Salina ft Mixed Sources ... -.................. J,,i; forerts,~IOl.l'uslnd ,.. ,eqdetlwoodwt\bet. Printed by: lmageMaster, LLC www.lmagemaster.com .! CITY OF SALINA, KANSAS OMNIBUS CONTINUING DISCLOSURE UNDERTAKING DATED AS OF JULY 15, 2013 OMNIBUS CONTINUING DISCLOSURE UNDERTAKING THIS OMNIBUS CONTINUING DISCLOSURE UNDERTAKING (the "Disclosure Undertaking"), dated as of July 15, 2013, is executed and delivered by the City of Salina, Kansas (the "Issuer"). RECITALS 1. This Disclosure Undertaking is executed and delivered by the Issuer, pursuant to a resolution adopted by the governing body of the Issuer to consolidate the continuing disclosure obligations of the Issuer with respect to the Bonds and the Prior Undertakings, both as defined below, to enhance efficiency of the administration of Prior Undertakings and promote timely disclosure by the Issuer. 2. The Issuer is executing this Disclosure Undertaking for the benefit of the Beneficial Owners of the Bonds and in order to assist each Participating Underwriter in complying with the SEC Rule, as defined below. The Issuer is the only "obligated person," as defined in the SEC Rule, with responsibility for continuing disclosure hereunder. 3. This Disclosure Undertaking shall apply with respect to any series of Bonds issued prior to the effective date hereof and subject to the SEC Rule. In consideration of the foregoing, the Issuer covenants and agrees as follows: Section 1. Definitions. In addition to the definitions set forth in the Bond Resolution, which apply to any capitalized term used in this Disclosure Undertaking, unless otherwise defined herein, the following capitalized terms shall have the following meanings: "Annual Report" means any Annual Report filed by the Issuer pursuant to, and as described in, Section 2 of this Disclosure Undertaking, which may include the Issuer's CAFR, so long as the CAFR contains the Financial Information and Operating Data. "Beneficial Owner" means, with respect to a series of Bonds, any registered owner of any Bonds of such series and any person which: (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds of such series (including persons holding Bonds through nominees, depositories or other intermediaries); or (b) is treated as the owner of any Bonds of such series for federal income tax purposes. "Bond Insurer" means the provider of the bond insurance policy, if any, for any series of Bonds. "Bond Resolution" means collectively the ordinance(s) and/or resolution( s) of the governing body of the Issuer authorizing the issuance of each series of the Bonds. "Bonds" means all bonds, notes, installment sale agreements, leases or certificates intended to be a debt obligation of the Issuer identified on Schedule 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. "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 1 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 secunt1es 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 continhing 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. "SEC Rule" means Rule l 5c2-12 adopted by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time. 2 "System" means the entire combined waterworks plant and system and sewerage plant and system owned and operated by the Issuer for the production, storage, treatment and distribution of water, and for the collection, treatment and disposal of sewage, to serve the needs of the Issuer and its inhabitants and others, including all appurtenances and facilities connected therewith or relating thereto, together with all extensions, improvements, additions and enlargements thereto hereafter made or acquired by the Issuer. Section 2. Provision of Annual Reports. (a) The Issuer shall, or shall cause the Dissemination Agent to, not later than 180 days after the end of the Issuer's Fiscal Year, commencing with the Fiscal Year ended in 2013, file with the Repository the Issuer's Annual Report, consisting of the Financial Information and Operating Data described as follows: (1) Financial Information. The financial statements of the Issuer and the System for such prior Fiscal Year, accompanied by an audit report resulting from an audit conducted by an Independent Accountant in conformity with generally accepted auditing standards. Such financial statements will be prepared on a modified accrual basis of accounting other than GAAP for all governmental funds, expendable trust and agency funds. The accrual basis of accounting is used for proprietary and nonexpendable trust funds. A more detailed explanation of the accounting basis is contained in Appendix A of the Official Statement. If such audit report is not available by the time the Annual Report is required to be filed pursuant to this Section, the Annual Report shall contain summary unaudited financial information and the audit report and accompanying financial statements shall be filed in the same manner as the Annual Report promptly after they become available. The method of preparation and basis of accounting of the Financial Information may not be changed to a basis less comprehensive than contained in the Official Statement, unless the Issuer provides notice of such change in the same manner as for a Material Event under Section 3 (b) hereof. (2) Operating Data. Updates as of the end of the Fiscal Year of certain financial information and operating data described in Exhibit A, with such modifications to the formatting and general presentation thereof as deemed appropriate by the Issuer; provided, any substantive change to information provided shall be effected only in accordance with Section 6 hereof. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues with respect to which the Issuer is an "obligated person" (as defined by the SEC Rule), which have been filed with the Repository, the MSRB or the SEC. If the document included by reference is a final official statement, it must be available from the Repository. The Issuer shall clearly identify each such other document so included by reference. In each case, the Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in this Section; provided that the audit report and accompanying financial statements may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the Issuer's Fiscal Year changes, it shall give notice of such change in the same manner as for a Material Event under Section 3(b). (b) From and after such time that Section (b )( 5) of the SEC Rule applies to any series of Bonds, if the Annual Report is not filed within the time period specified in subsection (a) hereof, the Issuer shall send a notice to the Repository in a timely manner, in substantially the form attached as Exhibit B. 3 (c) Pursuant to Section (d)(3) of the SEC Rule, the provisions of Sectioll 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. (b) Notwithstanding the foregoing, notice of Material Events described in subsectiolls (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. 4 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)(I) or otherwise, the Issuer shall promptly determine if such event constitutes a Material Event and shall promptly notify the Dissemination Agent of such determination. If appropriate, such writing shall instruct the Dissemination Agent to report the occurrence pursuant to Section 4(c)(3). (3) If the Dissemination Agent has been given written instructions by the Issuer to report the occurrence of a Material Event pursuant to Section 4(c)(2), the Dissemination Agent shall promptly file a notice of such Material Event with the Repository and provide a copy thereof to the Issuer and the Bond Insurer. Notwithstanding the foregoing, notice of Material Events described in Sections 3(a)(8) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to the Owners of affected Bonds pursuant to the Bond Resolution. ( d) Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Undertaking, and the Issuer agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the Issuer under this Section shall survive resignation or removal of 5 the Dissemination Agent and payment of the Bonds. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Issuer pursuant to this Disclosure Undertaking. (e) Other Designated Agents. The Issuer may, from time to time, appoint or designate a Designated Agent to submit Annual Reports, Material Event notices, and other notices or reports pursuant to this Disclosure Undertaking. The Issuer hereby appoints the Dissemination Agent and the Designated Agent(s) solely for the purpose of submitting Issuer-approved Annual Reports, Material Event notices, and other notices or reports pursuant to this Disclosure Undertaking. The Issuer may revoke this designation at any time upon written notice to the Designated Agent. Section 5. Termination of Reporting Obligation. The Issuer's obligations under this Disclosure Undertaking for a particular series of Bonds shall terminate upon the legal defeasance, prior redemption or payment in full of that series of Bonds. If the Issuer's obligations hereunder are assumed in full by some other entity as permitted in the Bond Resolution, such person shall be responsible for compliance with under this Disclosure Undertaking in the same manner as if it were the Issuer, and the Issuer shall have no further responsibility hereunder. If such termination or assumption occurs prior to the final maturity of such Bonds, the Issuer shall give notice of such termination or assumption in the same manner as for a Material Event under Section 3(b). Section 6. Bonds Subject to this Disclosure Undertaking; Amendment; Waiver. (a) All outstanding Bonds as of the date of this Disclosure Undertaking shown on Schedule I are hereby made subject to this Disclosure Undertaking. The Issuer may make any future series of Bonds subject to this Disclosure Undertaking by incorporating by reference in a Bond Resolution or executing a certificate to such effect in conjunction with the issuance of such series of Bonds. (b) All references to the "Bonds" in this Disclosure Undertaking shall apply separately to each series of Bonds that are or become subject to this Disclosure Undertaking, without further amendment hereto. (c) Notwithstanding the provisions of subsection (d) or anything else contained in this Disclosure Undertaking to the contrary, in conjunction with the public offering of any series of Bonds, the Issuer and the Dissemination Agent may amend the categories of Operating Data to be updated as set forth in Section 2(a)(2) and Exhibit A to conform to the operating data included in the final Official Statement for such series of Bonds, in conformance with the requirements and interpretations of the SEC Rule as of the date of such final Official Statement, without further amendment to this Disclosure Undertaking. Thereafter, the Operating Data to be filed by the Issuer with the Repository with respect to the Bonds (and all other series of Bonds then subject to this Disclosure Undertaking) shall be deemed to be amended to reflect the requirements of the revised Exhibit A for the new series of Bonds. (d) Except as otherwise provided in subsection (c), the Issuer may amend this Disclosure Undertaking and any provision of this Disclosure Undertaking may be waived, provided that Bond Counsel or other counsel experienced in federal securities law matters provides the Issuer with its written opinion that the undertaking of the Issuer contained herein, as so amended or after giving effect to such waiver, is in compliance with the SEC Rule and all current amendments thereto and interpretations thereof that are applicable to this Disclosure Undertaking; provided, however, that this Disclosure Undertaking, including Schedule I hereto, may be amended for the purpose of (1) extending the coverage of this Disclosure Undertaking to any additional series of Bonds or (2) removing reference to any series of Bonds for which the Issuer's reporting obligations have terminated in accordance with Section 5 hereof, each without the provision of a written opinion as otherwise required by this paragraph. 6 ( e) If a provision of this Disclosure Undertaking is amended or waived with respect to a series of Bonds pursuant to subsectioll (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 Sectioll 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, iffeasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Section 7. Additional Information. Nothing in this Disclosure Undertaking shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Undertaking or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is required by this Disclosure Undertaking. If the Issuer chooses to include any information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is specifically required by this Disclosure Undertaking, the Issuer shall have no obligation under this Disclosure Undertaking to update such information or include it in any future Annual Report or notice of occurrence of a Material Event. Section 8. Noncompliance. In the event of a failure of the Issuer or the Dissemination Agent, if any, to comply with any provision of this Disclosure Undertaking with respect to a series of Bonds, any Participating Underwriter or any Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order, to cause the Issuer or the Dissemination Agent, if any, as the case may be, to comply with its obligations under this Disclosure Undertaking. Noncompliance with the provisions of this Disclosure Undertaking shall not be deemed an Event of Default under the Bond Resolution or the Bonds, and the sole remedy under this Disclosure Undertaking in the event of any failure of the Issuer or the Dissemination Agent, if any, to comply with this Disclosure Undertaking shall be an action to compel performance. Section 9. Notices. Any notices or communications to or among the parties referenced in this Disclosure Undertaking shall be given the Notice Representatives at the Notice Addresses set forth in the Bond Resolution for each series of Bonds; provided notice to the Dissemination Agent shall be given at the Notice Address set forth on Exhibit C hereto. Section 10. Electronic Transactions. Actions taken hereunder and the arrangement described herein may be conducted and related documents may be stored by electronic means. Copies, telecopies, facsimiles, electronic files and other reproductions of original documents shall be deemed to be authentic and valid counterparts of such original documents for all purposes, including the filing of any claim, action or suit in the appropriate court of law. Section 11. Beneficiaries. This Disclosure Undertaking shall inure solely to the benefit of the Issuer, the Dissemination Agent, if any, each Participating Underwriter and Beneficial Owners from time to time with respect to a series of Bonds, and shall create no rights in any other person or entity. Section 12. Severability. If any provision in this Disclosure Undertaking, the Bond Resolution or the Bonds relating hereto, shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions of this Disclosure Undertaking shall not in any way be affected or impaired thereby. 7 Section 13. Governing Law. This Disclosure Undertaking shall be governed by and construed in accordance with the laws of the State of Kansas. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 8 S WHEREOF, lhc Issuer ha. cau eel this Di.clo urc Undi:rtaking to be exccut d a ' CITY OF SALINA, KANSAS Mayor Shandi Wicks, CMC, Deputy City CJerl( (Signature Page to Continuing Di. clos ure ndcrtaking) SCHEDULE I DESCRIPTION OF BONDS SUBJECT TO DISCLOSURE UNDERTAKING General Obligation Bonds (Base CUSIP No.: 794743) Description of Indebtedness 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 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 General Obligation Internal Improvement Bonds, Series 2017-A Dated Date 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 07-27-17 Temporary Notes (Base CUSIP No.: 794743) Description of Indebtedness General Obligation Temporary Notes, Series 2016-1 General Obligation Temporary Notes, Series 2017-1 Dated Date 02-10-16 07-27-17 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 Maturitv 10-01-17 10-01-17 07-01-28 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 10-01-36 10-01-31 10-01-37 Final Maturity 08-01-17 08-01-18 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: Date of Issuance: City of Salina, Kansas [Description of Bonds], Series L_], 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 ____________ _ By _____________ , as Dissemination Agent cc: City of Salina, Kansas B-1 EXHIBJTC ACCEPTANCE OF DISSEMINATION AGENT Name of Issuer: City of Salina, Kansas Name of Bond Issue: [Description of Bonds], Series L_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 EXCERPT OF MINUTES OF A MEETING OF THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS HELD ON JUNE 5, 2017 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, Melissa Rose Hodges 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 2017- 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 Ryan 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: Aye: Mayor Kaye J. Crawford, Commissioners Jon Blanchard, Trent Davis, Melissa Rose Hodges 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. City Clerk (Signature Page to Excerpt of Minutes) EXCERPT OF MINUTES OF A MEETING OF THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS HELD ON JULY 10, 2017 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, Melissa Rose Hodges and Karl Ryan Absent: None The Mayor declared that a quorum was present and called the meeting to order. ************** ( Other Proceedings) The Finance Director reported that pursuant to the Notice of Sale duly given, bids for the purchase of General Obligation Internal Improvement Bonds, Series 2017-A, dated July 27, 2017, 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., Incorporated, Red Bank, New Jersey 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 2017- 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 Blanchard moved that said Ordinance be passed. The motion was seconded by Commissioner Hodges. Said Ordinance, having been approved by a first reading on June 5, 2017, 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: Aye: Mayor Kaye J. Crawford, Commissioners Jon Blanchard, Trent Davis, Melissa Rose Hodges and Karl Ryan Nay: None Thereupon, the Mayor declared said Ordinance duly passed and the Ordinance was then duly numbered Ordinance No. 17-10886 was signed and approved by the Mayor and attested by the Clerk and the Ordinance or a summary thereof was directed to be published one time in the official newspaper of the City. Thereupon, there was presented a Resolution entitled: A RESOLUTION PRESCRIBING THE FORM AND DETAILS OF AND AUTHORIZING AND DIRECTING THE SALE AND DELIVERY OF GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS, SERIES 2017-A, OF THE CITY OF SALINA, KANSAS, PREVIOUSLY AUTHORIZED BY ORDINANCE NO. 17-10886 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 Blanchard moved that said Resolution be adopted. The motion was seconded by Commissioner Hodges. 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: Aye: Mayor Kaye J. Crawford, Commissioners Jon Blanchard, Trent Davis, Melissa Rose Hodges and Karl Ryan Nay: None Thereupon, the Mayor declared said Resolution duly adopted and the Resolution was then duly numbered Resolution No. 17-7466 and was signed by the Mayor and attested by the Clerk. ************** ( Other Proceedings) [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 2 On motion duly made, seconded and carried, the meeting thereupon adjourned. CERTIFICATE 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. ~ ~Mai U)IW Clerk (Signature Page to Excerpt of Minutes) EXHIBIT A BID TABULATION CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2017-A A-1 Salina $9,390,000 General Obligation Internal Improvement Bonds, Series 2017-A The following bids were submitted using PARlrv® and displayed ranked by lowest TIC. Click on the name of each bidder to see the respective bids. Bid Award* Bidder Name TIC 0 Rgb~rt W. 6air!;! ~ Co., lni;;. 3.035479 0 Hut~hin~Qn ShQ!;;k~!,!. !;rl~ ~ Qo. 3.043049 *Awarding the Bonds to a specific bidder will provide you with the Reoffering Prices and Yields. © 1981-2002 i-Oeal LLC. Al rights res.erved. Trndema~ s EXHIBITB BID OF PURCHASER B-1 (!.taear Wlrelnbox Parity Calendar Oeal List J~~R1·ry.··I Salina I Upcoming Calendar I Overview j Result I Excel Robert W. Baird & Co., Inc. • Red Bank, NJ's Bid $9,390,000 General Obligation Internal Improvement Bonds, ~ Series 2017-A ~. For the aggregate principal amount of $9,390,000.00, we will pay you $9,457,279.15, plus accrued interest from the date of j issue to the date of delivery. The Bo ii ~ nds are to bear Interest at the follow!no rate(s): Maturity Date Amount$ Coupon% Bond Insurance 10/01/2018 60M 3.0000 10/01/2019 360M 3.0000 10/01/2020 380M 3.0000 10/01/2021 400M 3.0000 10/01/2022 410M 3.0000 10/01/2023 425M 3.0000 10/01/2024 440M 3.0000 10/01/2025 455M 3.0000 10/01/2026 465M 3.0000 10/01/2027 490M 3.0000 10/01/2028 505M 3.0000 10/01/2029 10/01/2030 1,070M 3.0000 10/01/2031 570M 3.0000 10/01/2032 590M 3.0000 10/01/2033 505M 3.1250 10/01/2034 530M 3.2500 10/01/2035 555M 3.2500 10/01/2036 575M 3.2500 10/01/2037 605M 3.3750 Total Interest Cost: $3,475,620.83 Premium: $67,279.15 Net Interest Cost: $3,408,341 .68 TIC: 3.035479 Total Insurance Premium: $0.00 Time Last Bid Received On:07/10/2017 12:55:18 COST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder: Robert W. Baird & Co .. Inc., Red Bank , NJ Contact: Charles 1M&&aF9 'eJ a 1A / 1A Tille: .difeel~ 1/t Telephone: 732-576-4410 Fax: 732-576-4420 ompany Name: \?vwt \V · ~ lrJ_ ~ 0J.)) N . ,pl~~ 7 ,tJ~\) A Date: Date: ~ I I • V City of Salia, Kansas General Obligation Internal Improvement Bonds Series 2017-A Pricing Summary Maturity Maturity Type of Bond Coupon Yield Value Price YTM Call Date Call Price Dollar Price 10/01/2018 Serial Coupon 3.000% 1.100% 175,000.00 102.216% - - -178,878.00 10/01/2019 Serial Coupon 3.000% 1.250% 390,000.00 103.747% - - -404,613.30 10/01/2020 Serial Coupon 3.000% 1.350% 395,000.00 105.114% - - -415,200.30 10/01/2021 Serial Coupon 3.000% 1.500% 410,000.00 106.051% - - -434,809.10 10/01/2022 Serial Coupon 3.000% 1.650% 420,000.00 106.671% - - -448,018.20 10/01/2023 Serial Coupon 3.000% 1.840% 435,000.00 106.743% - - -464,332.05 10/01/2024 Serial Coupon 3.000% 1.960% 445,000.00 106.930% - - -475,838.50 10/01/2025 Serial Coupon 3.000% 2.100% 455,000.00 105.965% C 2.199% 10/01/2024 100.000% 482,140.75 10/01/2026 Serial Coupon 3.000% 2.300% 475,000.00 104.605% C 2.437% 10/01/2024 100.000% 496,873.75 10/01/2027 Serial Coupon 3.000% 2.500% 490,000.00 103.264% C 2.632% 10/01/2024 100.000% 505,993.60 10/01/2028 Serial Coupon 3.000% 2.750% 505,000.00 101.616% C 2.830% 10/01/2024 100.000% 513,160.80 10/01/2030 Tenn I Coupon 3.000% 3.000% 1,050,000.00 100.000% - - -1,050,000.00 I 0/01/2031 Serial Coupon 3.000% 3.100% 555,000.00 98.857% - - -548,656.35 I 0/01/2032 Serial Coupon 3.000% 3.200% 565,000.00 97.607% - - -551,479.55 10/01/2033 Serial Coupon 3.125% 3.250% 480,000.00 98.434% - - -472,483.20 10/01/2034 Serial Coupon 3.250% 3.290% 495,000.00 99.475% - - -492,401.25 10/01/2035 Serial Coupon 3.250% 3.330% 505,000.00 98.912% - - -499,505.60 10/01/2036 Serial Coupon 3.250% 3.375% 525,000.00 98.242% - - -515,770.50 10/01/2037 Serial Coupon 3.375% 3.400% 540,000.00 99.633% - - -· 538,018.20 Total ---$9,310,000.00 - - - - - $9,488,173.00 Bid Information Par Amount of Bonds $9,310,000.00 Reoffering Premiwn or (Discount) 178,173.00 Gross Production $9,488,173.00 Total Underwriter's Discount (1.072%) $(99,803.20) Bid (100.842%) 9,388,369.80 Total Purchase Price $9,388,369.80 Bond Year Dollars $106,965.11 Average Life I 1.489 Years Average Coupon 3.1121345% Net Interest Cost (NIC) 3.0388678% True Interest Cost (TIC} 3.0141480% Senes 2017-A I Issue Summary I 7/10/2017 I 2 09 PM ' George K. Baum & Co. Public Finance (JTH) ORDINANCE N0.17-10886 OF THE CITY OF SALINA, KANSAS PASSED JULY 10, 2017 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2017-A ORDINANCE N0.17-10886 AN ORDINANCE AUTHORIZING AND PROVIDING FOR THE ISSUANCE OF GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS, SERIES 2017- 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 laws of the State; and WHEREAS, pursuant to K.S.A. 12-1736 et seq., K.S.A. 12-685 et seq., K.S.A. 12-631r et seq., Article 12, Section 5 of the Constitution of the State of Kansas, 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: Project Description Bicentennial Center Country Club Road Smoky Hill River Renewal Ord./Res. No. Res. Nos. 13-6988 & 14-7152 Res. 17-7459 Ord. 17-10885 Authority K.S.A. 12-1736 et seq. K.S.A. 12-685 et seq. K.S.A. 12-631r et seq., Article 12, Section 5 of the Constitution of the State of Kansas Improvement Fund Deposit $6,912,392 1,200,000 1,200,000 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 City previously issued and has outstanding the Series 2007-A Bonds and is authorized by K.S.A. 10-427 et seq. to issue general obligation refunding a portion of the October 1, 2017 interest due on the Series 2007-ABonds (the "Refunded Interest"); and WHEREAS, in order to provide an orderly plan of finance for the City, it has become desirable and in the best interest of the City and its inhabitants to refund the Refunded Interest; 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 L public bodies, as well as natural persons. 1 L "Act" means the Constitution and statutes of the State including K.S.A. 10-101 to 10-125, inclusive, K.S.A. 10-427 et seq., K.S.A. 10-620 et seq., K.S.A. 12-631r et seq., K.S.A. 12-685 et seq., K.S.A. 12-1736 et seq., and Article 12, Section 5 of the Constitution of the State of Kansas, 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 2017-A, dated July 27, 2017, 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. "Finance Director" means the duly appointed and/or elected Finance Director or, in the Finance Director's absence, the duly appointed Deputy Finance Director or Acting Finance Director of the Issuer. "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 Interest" means a portion of the interest due on the Series 2007-A Bonds scheduled to be paid on October 1, 2017. "Refunded Notes" means the Series 2016-1 Notes maturing on August 1, 2017 in the aggregate principal amount of $6,890,000. "Series 2007-A Bonds" means the City's General Obligation Internal Improvement Bonds, Series 2007-A, dated June 15, 2007. "Series 2016-1 Notes" means the City's General Obligation Temporary Notes, Series 2016-1, dated February 10, 2016. "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 2017-A, of the City in the principal amount of $9,310,000, for the purpose of providing funds to: (a) pay a portion of the costs of 2 the Improvements; (b) retire the Refunded Notes; (c) refund the Refunded Interest; and (d) pay Costs of Issuance. 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. 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 ( or a summary thereof) in the official City newspaper. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 3 (SEAL) (Signature Page to Bond Ordinance) Publisher's Affidavit I, ----'C .... b ...... r ..... is ... ty+-'F__.i..,.n,..k ____ , being duly sworn declare that I am a T,egaJ Coordinator of THE SALINA JOURNAL, a daily newspaper published at Salina, Saline County, Kansas, and of general circulation in said county, which newspaper has been admitted to the mails as second class matter in said county, and continuously and uninterruptedly published for five consecutive years prior to first publication of attached notice, and that the Ordinance 17-10886 Notice has been correctly published in the entire issue of said newspaper one time, publication being given in the issue of July 26, 2017 \ Subscribed and sworn to before me, this J., (p ~ day of A.D. 20 LZ Printer's Fee $90.00 Toa--, II Ollllld 111110lh *JGl-21117. ltlGllgA.lllllglNI. ca,,.., (1t) I PUBLICATION SUMMARY OF ORDINANCE NO. 17-10886, PASSED BY THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS ON THE l O TH DAY OF JULY, 2017 SUMMARY On July 10, 2017, the Governing Body of the City of Salina, Kansas, adopted Ordinance No. 17-10886, authorizing and providing for the issuance of $9 ,310,000 principal amount of General Obi igation Internal Improvement Bonds, Series 2017-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 and refund a portion of the interest due on certain outstanding general obligation bonds. In addition, the Ordinance provides for security of the bonds, terms, and details and conditions for the issuance of 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. 'tied this t Olh day of July, 2017. Publish one time and return one Proof of Publication to the City Clerk and one to the City Attorney. RESOLUTION N0.17-7466 OF THE CITY OF SALINA, KANSAS ADOPTED JULY 10, 2017 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2017-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 508. Section 601. 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 ............................................................................................... 9 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 ........................................................... 11 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 .................................................................. 13 Nonpresentment of Bonds ........................................................................................... 14 Preliminary and Final Official Statement. ................................................................... 14 Sale of the Bonds ......................................................................................................... 14 ARTICLE III 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 the Redemption Fund ........................................................ 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 Section 602. Section 603. Section 701. Section 801. Section 802. Section 901. Section 902. Section 1001. Section 1002. Section 1003. Section 1004. Section 1005. Section 1006. Section 1007. Section 1008. Section 1009. Limitation on Rights of Owners .................................................................................. 21 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 EXHIBIT A -FORM OF BONDS ............................................................................................................. A-1 [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 11 L RESOLUTION NO. 17-7466 A RESOLUTION PRESCRIBING THE FORM AND DETAILS OF AND AUTHORIZING AND DIRECTING THE SALE AND DELIVERY OF GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS, SERIES 2017-A, OF THE CITY OF SALINA, KANSAS, PREVIOUSLY AUTHORIZED BY ORDINANCE NO. 17-10886 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 City Commission of the Issuer (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; and WHEREAS, the Governing Body hereby finds and determines that it is necessary for the Issuer to authorize the issuance and delivery of the Bonds in the principal amount of $9,310,000 to pay a portion of the costs of the Improvements and refund the Refunded Interest. 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 coiporations, 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. 10-427 et seq., K.S.A. 10-620 et seq., K.S.A. 12-631r et seq., K.S.A. 12-685 et seq., K.S.A. 12-1736 et seq., and Article 12, Section 5 of the Constitution of the State of Kansas, 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. 1 "Bond Counsel" means the firm of Gilmore & Bell, P.C., or any other attorney or firm of attorneys whose expertise in matters relating to the issuance of obligations by states and their political subdivisions is nationally recognized and acceptable to the Issuer. "Bond Payment Date" means any date on which principal of or interest on any Bond is payable. "Bond Register" means the books for the registration, transfer and exchange of Bonds kept at the office of the Bond Registrar. "Bond Registrar" means the State Treasurer, and any successors and assigns. "Bond Resolution" means this resolution relating to the Bonds. "Bonds" means the General Obligation Internal Improvement Bonds, Series 2017-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 co'nnection 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 27, 2017. "Debt Service Account" means the Debt Service Account for General Obligation Internal Improvement Bonds, Series 2017-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. 2 "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 (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: 3 (a) Payment of the principal and of the redemption premium, if any, of any of the Bonds shall not be made when the same shall become due and payable, either at Stated Maturity or by proceedings for redemption or otherwise; (b) Payment of any installment of interest on any of the Bonds shall not be made when the same shall become due; or ( c) The Issuer shall default in the due and punctual performance of any other of the covenants, conditions, agreements and provisions contained in the Bonds or in this Bond Resolution ( other than the covenants relating to continuing disclosure requirements contained herein and in the Disclosure 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. "Finance Director" means the duly appointed and/or elected Finance Director or, in the Finance · Director's absence, the duly appointed Deputy Finance Director or Acting Finance Director of the Issuer. "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 Sectioll 501 hereof. "Governing Body" means the City Commission of the Issuer. "Improvement Fund" means the Improvement Fund for General Obligation Internal Improvement Bonds, Series 2017-A created pursuant to Sectioll 501 hereof. "Improvements" means the improvements referred to in tl.le 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, 2018. "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. 4 "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 liquidated or shall no longer perform the functions of a securities rating agency, "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency designated by the Issuer. "Notice Address" means with respect to the following entities: (a) To the Issuer at: City of Salina, Kansas Attn: City Clerk 300 West Ash Salina, Kansas 67402 Fax: (785) 309-5738 (b) To the Paying Agent at: State Treasurer of the State of Kansas Landon Office Building 900 Southwest Jackson, Suite 201 Topeka,Kansas 66612-1235 Fax: (785) 296-6976 ( c) To the Purchaser: Robert W. Baird & Co., Incorporated One Harding Road, Suite 207 Red Bank, New Jersey 07701 (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. 5 (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. 17-10886 of the Issuer authorizing the issuance of the Bonds, as amended from time to time. "Outstanding" means, when used with reference to the Bonds, as of a particular date of determination, all Bonds theretofore authenticated and delivered, except the following Bonds: (a) Bonds theretofore canceled by the Paying Agent or delivered to the Paying Agent for cancellation; (b) Bonds deemed to be paid in accordance with the provisions of 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); G) 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 (l) bonds of any municipality of the State as defined in K.S.A. 10-1101 which have been refunded in advance of their maturity and are fully secured as to payment of principal and interest thereon by deposit in trust, under escrow agreement with a bank, of securities described in (c) or (f), all as may be further restricted or modified by amendments to applicable State law. 6 "Person" means any natural person, corporation, partnership, joint venture, association, firm, joint-stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof or other public body. "Purchase Price" means the principal amount of the Bonds plus accrued interest to the date of delivery, plus a bid premium of $78,369.80. "Purchaser" means Robert W. Baird & Co., Incorporated, Red Bank, New Jersey, 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 2017-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 such 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 Interest 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 Interest" means a portion of the interest due on the Series 2007-A Bonds scheduled to be paid on October 1, 2017. "Refunded Notes" means the Series 2016-1 Notes maturing on August 1, 2017, in the aggregate principal amount of $6,890,000. "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 Article II 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. 7 "Series 2007-A Bonds" means the Issuer's General Obligation Internal Improvement Bonds, Series 2007-A, dated June 15, 2007. "Series 2007-A Bonds Paying Agent" means the paying agent for the Series 2007-A Bonds, and any successor or successors at the time acting as paying agent for the Series 2007-A Bonds. "Series 2016-1 Notes" means the Issuer's General Obligation Temporary Notes, Series 2016-1, dated February 10, 2016. "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. "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 Bonds scheduled to mature in the year 2030. "Treasurer" means the duly appointed and/or elected Treasurer of the Issuer or, in the Treasurer's absence, the duly appointed Deputy Treasurer or acting Treasurer of the Issuer. "United States Government Obligations" means bonds, notes, certificates of indebtedness, treasury bills or other securities constituting direct obligations of, or obligations the principal of and interest on which are fully and unconditionally guaranteed as to full and timely payment by, the United States of America, including evidences of a direct ownership interest in future interest or principal payment on obligations issued by the United States of America (including the interest component of obligations of the Resolution Funding Corporation), or securities which represent an undivided interest in such obligations, which obligations are rated in the highest rating category by a nationally recognized rating service and such obligations are held in a custodial account for the benefit of the Issuer. ARTICLE II AUTHORIZATION AND DETAILS OF THE BONDS Section 201. Authorization of the Bonds. The Bonds have been previously authorized and directed to be issued pursuant to the Ordinance in the principal amount of $9,310,000, for the purpose of 8 providing funds to: (a) pay a portion of the costs of the Improvements; (b) retire the Refunded Notes; (c) refund the Refunded Interest; and ( d) 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: Stated Maturity October 1 2018 2019 2020 2021 2022 2023 2024 2025 2026 SERIAL BONDS Principal Annual Rate Stated Maturity Principal Amount of Interest October 1 Amount $175,000 3.000% 2027 $490,000 390,000 3.000 2028 505,000 395,000 3.000 2031 555,000 410,000 3.000 2032 565,000 420,000 3.000 2033 480,000 435,000 3.000 2034 495,000 445,000 3.000 2035 505,000 455,000 3.000 2036 525,000 475,000 3.000 2037 540,000 TERM BONDS Stated Maturity October 1 2030 Principal Amount $1,050,000 Annual Rate of Interest 3.00% Annual Rate of Interest 3.000% 3.000 3.000 3.000 3.125 3.250 3.250 3.250 3.375 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 9 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. 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 depos.it 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. 10 Section 206. Registration, Tran sf er and Exchange of Bonds. The Issuer covenants that, as long as any of the Bonds remain Outstanding, it will cause the Bond Register to be kept at the office of the Bond Registrar as herein provided. Each Bond when issued shall be registered in the name of the Owner thereof on the Bond Register. Bonds may be transferred and exchanged only on the Bond Register as provided in this Section. Upon surrender of any Bond at the principal office of the Bond Registrar, the Bond Registrar shall transfer or exchange such Bond for a new Bond or Bonds in any Authorized Denomination of the same 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 11 the manual or facsimile signature of the Clerk, and the seal of the Issuer shall be affixed thereto or imprinted thereon. The Mayor and Clerk are hereby authorized and directed to prepare and execute the Bonds in the manner herein specified, and to cause the Bonds to be registered in the office of the Clerk, which registration shall be evidenced by the manual or facsimile signature of the Clerk with the seal of the Issuer affixed thereto or imprinted thereon. The Bonds shall also be registered in the office of the State Treasurer, which registration shall be evidenced by the manual or facsimile signature of the State Treasurer with the seal of the State Treasurer affixed thereto or imprinted thereon. In case any officer whose signature appears on any Bonds ceases to be such officer before the delivery of such Bonds, such 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 12 practices of the Paying Agent. The Paying Agent shall execute a certificate in duplicate describing the Bonds so cancelled and destroyed and shall file an executed counterpart of such certificate with the Issuer. Section 210. Book-Entry Bonds; Securities Depository. The Issuer and Paying Agent have entered into a DTC Representation Letter with DTC. The Bonds shall initially be registered to Cede & Co., the nominee for the Securities Depository, and no Beneficial Owner will receive certificates representing their respective interests in the Bonds, except in the event the Bond Registrar issues Replacement Bonds as provided in this Section. It is anticipated that during the term of the Bonds, the Securities Depository will make book-entry transfers among its Participants and receive and transmit payment of principal of, premium, if any, and interest on, the Bonds to the Participants until and unless the Bond Registrar authenticates and delivers Replacement Bonds to the Beneficial Owners as described in the following paragraph. The Issuer may decide, subject to the requirements of the Operational Arrangements of DTC ( or a successor Securities Depository), and the following provisions of this section to discontinue use of the system of book-entry transfers through DTC (or a successor Securities Depository): (a) If the Issuer determines (1) that the Securities Depository is unable to properly discharge its responsibilities, or (2) that the Securities Depository is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, or (3) that the continuation of a book-entry system to the exclusion of any Bonds being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owner.s 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 13 Depository provided the Bond Registrar receives written evidence satisfactory to the Bond Registrar with respect to the ability of the successor Securities Depository to discharge its responsibilities. Any such successor Securities Depository shall be a securities depository which is a registered clearing agency under the Securities and Exchange Act of 1934, as amended, or other applicable statute or regulation that operates a securities depository upon reasonable and customary terms. The Bond Registrar upon its receipt of a Bond or Bonds for cancellation shall cause the delivery of Bonds to the successor Securities Depository in an Authorized Denominations and form as provided herein. 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, 2017, 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, ~ated 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 I in the years 2025, and thereafter, will be subject to redemption and payment prior to their Stated Maturity on 14 October 1, 2024, 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. Mandatory Redemption. The Term Bonds shall be subject to mandatory redemption and payment prior to Stated Maturity pursuant to the mandatory redemption requirements of this Section at a Redemption Price equal to 100% of the principal amount thereof plus accrued interest to the Redemption Date. The taxes levied in Article 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 Term Bonds: *Final Maturity Principal Amount $520,000 530,000 Year 2029 2030* 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 I 15 selected for redemption, then upon notice of intention to redeem a minimum Authorized Denomination, the Owner or the Owner's duly authorized agent shall forthwith present and surrender such Bond to the Bond Registrar: (1) for payment of the Redemption Price and interest to the Redemption Date of a minimum Authorized Denomination of face value called for redemption, and (2) for exchange, without charge to the Owner thereof, for a new Bond or Bonds of the aggregate principal amount of the unredeemed portion of the principal amount of such Bond. If the Owner of any such Bond fails to present such Bond to the Paying Agent for payment and exchange as aforesaid, such Bond shall, nevertheless, become due and payable on the redemption date to the extent of a minimum Authorized Denomination of face value called for redemption (and to that extent only). 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 Qwners of said Bonds. Each of said written notices shall be deposited in the United States first class mail not less than 30 days prior to the Redemption Date. All official notices of redemption shall be dated and shall contain the following information: (a) the Redemption Date; (b) the Redemption Price; (c) if less than all Outstanding Bonds are to be redeemed, the identification (and, in the case of partial redemption of any Bonds, the respective principal amounts) of the Bonds to be redeemed; ( d) a statement that on the Redemption Date the Redemption Price will become due and payable upon each such Bond or portion thereof called for redemption and that interest thereon shall cease to accrue from and after the Redemption Date; and (e) the place where such Bonds are to be surrendered for payment of the Redemption Price, which shall be the principal office of the Paying Agent. The failure of any Owner to receive notice given as heretofore provided or an immaterial defect therein shall not invalidate any redemption. Prior to any Redemption Date, the Issuer shall deposit with the Paying Agent an amount of money sufficient to pay the Redemption Price of all the Bonds or portions of Bonds that are to be redeemed on such Redemption Date. 16 For so long as the Securities Depository is effecting book-entry transfers of the Bonds, the Bond Registrar shall provide the notices specified in this Section to the Securities Depository. It is expected that the Securities Depository shall, in turn, notify its Participants and that the Participants, in turn, will notify or cause to be notified the Beneficial Owners. Any failure on the part of the Securities Depository or a Participant, or failure on the part of a nominee of a Beneficial Owner of a Bond (having been mailed notice from the Bond Registrar, the Securities Depository, a Participant or otherwise) to notify the Beneficial Owner of the Bond so affected, shall not affect the validity of the redemption of such Bond. Official notice of redemption having been given as aforesaid, the Bonds or portions of Bonds to be redeemed shall become due and payable on the Redemption Date, at the Redemption Price therein specified, and from and after the Redemption Date (unless the Issuer defaults in the payment of the Redemption Price) such Bonds or portion of Bonds shall cease to bear interest. Upon surrender of such Bonds for redemption in accordance with such notice, the Redemption Price of such Bonds shall be paid by the Paying Agent. Installments of interest due on or prior to the Redemption Date shall be payable as herein provided for payment of interest. Upon surrender for any partial redemption of any Bond, there shall be prepared for the Owner a new Bond or Bonds of the same Stated Maturity in the amount of the unpaid principal as provided herein. All Bonds that have been surrendered for redemption shall be cancelled and destroyed by the Paying Agent as provided herein and shall not be reissued. In addition to the foregoing notice, the Issuer shall provide such notices of redemption as are required by the Disclosure Undertaking. Further notice may be given by the Issuer or the Bond Registrar on behalf of the Issuer as set out below, but no defect in said further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption if official notice thereof is given as above prescribed: (a) Each further notice of redemption given hereunder shall contain the information required above for an official notice of redemption plus ( 1) the CU SIP 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; Transfer 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 referred to above shall be extended upon the tax rolls in each of the several years, respectively, and shall be levied and collected at the same time and in the same manner as the other ad valorem taxes of the Issuer are levied and collected. The proceeds derived from said taxes shall be deposited in the Bond and Interest Fund, shall be kept separate and apart from all other funds of the Issuer shall thereafter be transferred to the Debt Service Account and shall be used solely for the payment of the principal of and interest on the Bonds as and when the same become due, taking into account any scheduled mandatory redemptions, and the fees and expenses of the Paying Agent. If at any time said taxes 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 2017-A. (b) Debt Service Account for General Obligation Internal Improvement Bonds, Series 2017- A (within the Bond and Interest Fund). (c) Rebate Fund for General Obligation Internal Improvement Bonds, Series 2017-A. ( d) Redemption Fund for the Refunded Interest. The Funds and Accounts established herein shall be administered m 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$1,000 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 Improvement Fund shall be used for the sole purpose of: (a) paying the costs of the Improvements, in accordance with the plans and specifications therefor approved by the Governing Body 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; (d) retiring the Refunded Notes; and ( e) 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 Improvement 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 or ordinance 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 or ordinance 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 Series 2007-A Paying Agent, with irrevocable instructions to apply such amount to the payment of the Refunded Interest. Any moneys remaining in the Redemption Fund not needed to retire the Refunded Interest 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 19 or Redemption Price of and interest on the Bonds and the fees and expenses of the Bond Registrar and Paying Agent as and when the same become due, and to forward such sums to the Paying Agent in a manner which ensures that the Paying Agent will receive immediately available funds in such amounts on or before the Business Day immediately preceding the dates when such principal, interest and fees of the Bond Registrar and Paying Agent will become due. If, through the lapse of time or otherwise, the Owners of Bonds are no longer entitled to enforce payment of the Bonds or the interest thereon, the Paying Agent shall return said funds to the Issuer. All moneys deposited with the Paying Agent shall be deemed to be deposited in accordance with and subject to all of the provisions contained in this Bond Resolution and shall be held in trust by the Paying Agent for the benefit of the Owners of the Bonds entitled to payment from such moneys. Any moneys or investments remaining in the Debt Service Account after the retirement of the 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(t) 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 other than the Redemption Fund may be invested in accordance with this Bond Resolution and the Federal Tax Certificate in Permitted Investments; provided, however, that no such investment shall be made for a period extending longer than to the date when the moneys invested may be needed for the purpose for which such fund was created. All ea!Ilings on any investments held in any Fund or Account shall accrue to and become a part of such Fund or Account; 20 provided that, during the period of construction of the Improvements, earnings on the investment of such funds may, at the discretion of the Issuer, be credited to the Debt Service Account. 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 shall at all times during the usual business hours be open to the examination and inspection by any taxpayer, any Owner of any of the Bonds, or by anyone acting for or on behalf of such taxpayer or Owner. Upon payment of the reasonable cost of preparing and mailing the same, a copy of any annual audit will, upon request, be sent to any Owner or prospective Owner. As soon as possible after the completion of the annual audit, the Governing Body 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 ordinance or 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 23 deed to be recorded, and such instrument or instruments shall be filed with the Clerk, but no such modification or alteration shall: (a) extend the maturity of any payment of principal or interest due upon any Bond; (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 ordinance or 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 or ordinance 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 ordinance or 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 ordinance or 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 confirmation of receipt. Copies of such notices shall also be given to the Paying Agent. The Issuer, the Paying Agent and the Purchaser may from time to time designate, by notice given hereunder to the others of such parties, such other address to which subsequent notices, certificates or other communications shall be sent. All notices given by: (a) certified or registered mail as aforesaid shall be deemed duly given as of the date they are so mailed; (b) fax as aforesaid shall be deemed duly given as of the date of confirmation of receipt. If, because of the temporary or permanent suspension of regular mail service or for any other reason, it is impossible or impractical to mail any notice in the manner herein provided, then such other form of notice as shall be made with the approval of the Paying Agent shall constitute a sufficient notice. Section 1005. Electronic Transactions. The issuance of the Bonds and the transactions related thereto and described herein may be conducted and documents may be stored by electronic means. Section 1006. Further Authority. The officers and officials of the Issuer, including the Mayor and Clerk, are hereby authorized and directed to execute all documents and take such actions as they may deem necessary or advisable in order to carry out and perform the purposes of this Bond Resolution and to make ministerial alterations, changes or additions in the foregoing agreements, statements, instruments and other documents herein approved, authorized and confirmed which they may approve, and the execution or taking of such action shall be conclusive evidence of such necessity or advisability. Section 1007. Severability. If any section or other part of this Bond Resolution, whether large or small, is for any reason held invalid, the invalidity thereof shall not affect the validity of the other provisions of this Bond Resolution. 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. [BALANCE OF PAGE INTENTIONALLY LEFT BLANK] 26 ADOPTED by the governing body of the Issuer on July 10, 2017. (Signature Page to Bond Resolution) 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 2017-A Interest Rate: Maturity Date: REGISTERED OWNER: PRINCIPAL AMOUNT: Dated CUSIP: Date: July 27, 2017 KNOW ALL PERSONS BY THESE PRESENTS: That the City of Salina, in the County of Saline, State of Kansas (the "Issuer"), for value received, hereby acknowledges itself to be indebted and promises to pay to the Registered Owner shown above, or registered assigns, but solely from the source and in the manner herein specified, the Principal Amount shown above on the Maturity Date shown above, unless called for redemption prior to said Maturity Date, and to pay interest thereon at the Interest Rate per annum shown above ( computed on the basis of a 360-day year of twelve 30-day months), from the Dated Date shown above, or from the most recent date to which interest has been paid or duly provided for, payable semiannually on April 1 and October 1 of each year, commencing April 1, 2018 (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 2017-A," aggregating the principal amount of $9,310,000 (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. 10-101 et seq., K.S.A. 10-427 et seq., K.S.A. 10-620 et seq., K.S.A. 12-631r et seq., K.S.A. 12-685 et seq., K.S.A. 12-1736 et seq., and Article 12, Section 5 of the Constitution of the State of Kansas, 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 set forth 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, THIS GLOBAL BOND MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF THE SECURITIES DEPOSITORY OR TO A SUCCESSOR SECURITIES DEPOSITORY OR TO A NOMINEE OF A SUCCESSOR SECURITIES DEPOSITORY. This Bond may be transferred or exchanged, as provided in the Bond Resolution, only on the Bond Register kept for that purpose at the principal office of the Bond Registrar, upon surrender of this Bond, together with a written instrument of transfer or authorization for exchange satisfactory to the Bond Registrar duly executed by the Registered Owner or the Registered Owner's duly authorized agent, and thereupon a new Bond or Bonds in any Authorized Denomination of the same maturity and in the same aggregate principal amount shall be issued to the transferee in exchange therefor as provided in the Bond Resolution and upon payment of the charges therein prescribed. The Issuer shall pay all costs incurred in connection with the issuance, payment and initial registration of the Bonds and 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: ____ ..._{f:=a~cs=i=m=il~e..,_) _______ _ 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 2017-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 27, 2017. WITNESS my hand and official seal. (Facsimile Seal) By: ____ (=f:=ac~s=im=1=·1e_) _______ _ Clerk CERTIFICATE OF STATE TREASURER OFFICE OF THE TREASURER, STATE OF KANSAS JACOB LATURNER, 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) L TRANSCRIPT CERTIFICATE $9,310,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL Th1PROVEMENT BONDS SERIES 2017-A DATED JULY 27, 2017 The undersigned Mayor and Clerk of the City of Salina, Kansas (the "Issuer"), do hereby make this certificate for inclusion in the transcript of and as a part of the proceedings authorizing and providing for the issuance of the above described bonds (the "Bonds"); and do hereby certify as of July 10, 2017, as follows: 1. Meaning of Words and Terms. Capitalized words and terms used herein, unless otherwise defined herein or the context requires otherwise, shall have the same meanings ascribed to such words and terms in the hereinafter defined Bond Resolution authorizing the Bonds. 2. Organization. The Issuer is a legally constituted city of the first class organized and existing under the laws of the State of Kansas. 3. Transcript of Proceedings. The transcript of proceedings (the "Transcript") relating to the authorization and issuance of the Bonds is to the best of our knowledge, information and belief full and complete; none of such proceedings have been modified, amended or repealed, except as might be shown in the Transcript, and the facts stated in the Transcript still exist. In each and every instance where copies appear in the Transcript, such copies are true and correct duplicates of the original instruments now on file with the Clerk. 4. Newspaper. The Salina Journal was the official newspaper of the Issuer at all times during these proceedings. 5. Meetings. All of the meetings of the governing body of the Issuer at which action was taken as shown in the Transcript were either regular meetings or duly adjourned regular meetings or special meetings duly called and held in accordance with law and the ordinances and rules of the Issuer. 6. Incumbency of Officers. The following named persons were and are the duly qualified and acting officers of the Issuer at and during all the times when action was taken as indicated in the Transcript as follows: Name Title Term of Office Kaye Crawford Mayor April 18, 2016 to Present Jon Blanchard Mayor April 20, 2015 to April 18, 2016 Aaron Householter Mayor April 21, 2014 to April 20, 2015 Barbara Shirley Mayor April 15, 2013 to April 21, 2014 Norman M. Jennings Mayor April 19, 2012 to April 15, 2013 Karl Ryan Vice-Mayor April 18, 2016 to Present Kaye Crawford Vice-Mayor April 20, 2015 to April 18, 2016 Jon R. Blanchard Vice-Mayor April 21, 2014 to April 20, 2015 Kaye Crawford Commissioner April 18, 2011 to Present Jon Blanchard Commissioner April 15, 2013 to Present Trent Davis Commissioner September 8, 2014 to Present Karl Ryan Commissioner April 20, 2015 to Present Melissa Rose Hodges Commissioner January 9, 2017 to Present Randall Hardy Commissioner April 15, 2013 to January 8, 2017 Barbara Shirley Commissioner April 18, 2011 to April 20, 2015 Aaron Householter Commissioner April 18, 2011 to April 21, 2014 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 Mayor and Clerk of the Issuer. 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 Bonds 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 the 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. 10-101 to 10-125, inclusive, K.S.A. 10-427 et seq., K.S.A. 10-620 et seq., K.S.A. 12-631r et seq., K.S.A. 12-685 et seq., K.S.A. 12-1736 et seq., and Article 12, Section 5 of the Constitution of the State of Kansas, as amended, Ordinance No. 17-10886 and Resolution No. 17-7 466 of the Issuer duly adopted by the governing body of the Issuer on July 10, 2017 ( 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, 2017 the following temporary notes of the Issuer, issued to temporarily finance the Improvements (the "Refunded Notes"): Description General Obligation Temporary Notes Series 2016-1 Dated Date February 10, 2016 Maturity Date August 1, 2017 Amount $6,890,000 The total principal amount of the Bonds does not exceed the cost of the Improvements for which the Bonds are issued. The interest rates on the Bonds on the date of the sale of the Bonds were within the maximum legal limit for interest rates under K.S.A. 10-1009, as amended. 9. Bonded Indebtedness. The currently outstanding applicable indebtedness of the Issuer, including the Bonds, does not exceed any applicable constitutional or statutory limitations. A schedule of general obligation indebtedness 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 2016 is $472,683,104. 2 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 (t) the levy and collection of a tax to pay the principal of and interest on the Bonds. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 3 WITNESS our true and genuine manual signatures and the seal of the Issuer. (Signature page to Transcript Certificate -Bonds) Date Issued 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 07-27-16 07-27-16 07-27-17 Total EXHIBIT A SCHEDULE OF OUTSTANDING GENERAL OBLIGATION INDEBTEDNESS (as of July 27, 2017) General Obligation Bonds: Amount Final Amount Series Purpose of Issue Maturitl'. Outstandin11; 2007-A Internal Improvements $6,545,000 10-01-17 $ 360,000 2008-A Internal Improvements 3,720,000 10-01-17 250,000 2008-B Internal Improvements 3,525,000 07-01-26 1,845,000 2009-A Internal Improvements 23,695,000 10-01-20 7,090,000 2010-A Refunding & Improvement 6,875,000 10-01-20 1,260,000 2010-B Refunding 7,860,000 10-01-23 2,810,000 2011-A Internal Improvements 6,565,000 10-01-21 1,780,000 2012-A Internal Improvements 2,365,000 10-01-27 1,800,000 2012-B Refunding 3,785,000 10-01-20 1,375,000 2013-A Taxable Improvements 1,360,000 10-01-28 1,160,000 2013-B Improvements 4,330,000 10-01-33 3,655,000 2014-A Improvements 7,570,000 10-01-34 6,460,000 2015-A Revenue and Internal Imp. 6,825,000 10-01-35 6,530,000 2016-A Internal Improvements 6,570,000 10-01-36 6,570,000 2016-B Refunding 13,750,000 10-01-31 13,750,000 2017-A Improvements 9,310,000 10-01-37 9,310,000 $66,005,000 Temporary Notes: Final Original Date Maturity Note Amount Series Issued Date Amount Outstandin2 2016-1 02-10-16 08-01-17 $6,890,000 $ o· 2016-2 07-20-16 09-01-19 4,615,000 4,615,000 2017-1 07-27-17 08-01-18 2,180,000 2,180,000 $6,795,000 •To be paid at maturity with proceeds from the sale of the Series 2017-A Bonds. CERTIFICATE OF MANUAL SIGNATURE OF THE MAYOR OF THE CITY OF SALINA, KANS STATE OF KANSAS ) ) ss. COUNTY OF SALINE ) I, the undersigned, Kaye Crawford, being duly sworn on oath certify that I am the duly qualified Mayor of the City of Salina, Kansas, and that the signature appearing below is my signature and I file herewith this certificate pursuant to K.S.A. 75-4001 to 75-4007, inclusive. Subscribed and sworn to before me as of July (Q_, 2017. fl, .. ALLISON STRAIT ~ Notary Public • State of Kansas My Appt Expires IO -2. S • 2. 0 ... (SEAL) My commission expires: I 0-25-2 0 CERTIFICATE OF MANUAL S1GNA'l1JRE OF THE CLERK OF THE CITY OF SALINA, KANSAS IN THE OFFICE OF THE SECRETARY OF STATE OFTBE STATE OF KANSAS STATE OF KANSAS COUNTY OF SALINE ) ) ss. ) I, the undersign~ Shandi Wicks. being duly sworn OD 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: 'J,14::::f1 1-1 Shandi Wicks RECEIVED JUL 2 2 2011 KRIS W. KOBACH SECRETARY OF STATE REGISTERED NUMBERR-1 REGISTERED $175,000.00 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., bas an interest herein. UNITED STATES OF AMERICA / STATE OF KANSAS ,.,.,., COUNTY OF SALINE .,t'~~,.i'.'~·. GENERAL OBLIGATION INTERNAL ' P O~NT BOND CITY OF SAL~IN., "'\ ~- SERIES 201?-A ') y"' Interest Rate: 3.000% ti,,. \~~ , \ ~~t,.. I' Maturity ,.~~,~~d ',j,..-· Date: October 1, 2Q.~ "~,. 1'~ July 27, 2017 .A,,\., .. REGISTERED OWNER: CEDE & 4. \');;;· , CUSIP: 794744AB8 PRINCIPAL AMOUNT: O~~NTY-FIVE THOUSAND DOLLARS ~ / . . KNOW ALL PE , ~;,,T~E PRE~ENTS: That the City of ~alina, in ~e County of Sahne, State of Kansas "Is er"),")t value received, hereby acknowledges itself to be mdebted and promises to pay to thpR<egist Owner shown above, or registered assigns, but solely from the source and in the manner herei\)J,.g~~~: P~cipal ~ount shown abov~ on the Maturity Date shown above, unless called for red~fonJ:t.o to said Matunty Date, and to pay mterest thereon at the Interest Rate per annum shown above (co~y~d 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, 2018 (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 def med· 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 2017-A," aggregating the principal amo~t .of $9,3.10,000 (the "Bonds") issued for the purposes set forth./.,in ~~ Ordinance of the ~suer authonzmg the issuance of the Bonds and the Resolution of the Issuer pr~nbmg the form and details of the B~nds (co?ectively, ~e. "Bond R~s~lution") .. ~e ~ands are j§~~~-b_~he authority of and in full compliance with the provisions, restrictions and hfilltahons of t t'~~nd laws of the State of Kansas, including K.S.A. 10-101 et seq., K.S.A. 10-427 et se ; ::-S.A:ij)-620 et seq., K.S.A. 12-631r et seq., K.S.A. 12-685 et seq., K.S.A. 12-1736 et seq., and . e 1 ec~'5 of the Constitution of the State of Kansas, as amended, and all other provisions of~ law the S ie of Kansas applicable thereto. 't"'?;A, General Obligations. The Bonds consti~,~ gen~~g, . ons of the Issuer payable as to both principal and interest fro?1 ad valorem taxes wp~~t; .. ~vi~wi~out_ ~ita~ion as to rate or amount upon all the taxable tangible property, real an . ;son~_\V~ the temtonal limits of the Issuer. The full faith, credit and resources of the Issuer ~re '· 1, irre~bly pledged for the prompt payment of the principal of and interest on the Bonds asf e same bt ., · _ 'due. . Redemption Pri?r to ~11~~ds are subject to red~mption prior to maturity, as set forth m the Bond Resolution. ,<_~./"''· \. . . -~·. k Book-Entry Sy e ~,9'~e being issued by means of a book-entry system with no physical distribution of boo ificateffo be made except as provided in the Bond Resolution. One Bond certificate with resceac . te on which the Bonds are stated to mature or with respect to each form of Bonds, registere '· · ~· e 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 ll't~~ 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 AgefttJllay deem and treat the person in who~e. name this Bond is registered on the B~nd. Register as the_~ ~§~~J= her~of for the purpose of rece1vmg payment of, or on account of, ~e p~c1pal or r~em__ ion~ · · . ~d mterest ~ue_ hereon and for all other purposes. The Bonds are issued m fully reg1s . e form~ Authonzed Denonunations. Auth~ntication. This Bond shall not.be valid ortcom . liga{ )ior any ~urpose or ~e entitled to any secunty or benefit under the heremafter de~!3on oluhon until the Certificate of Authentication and Registration hereon shall have~e.n la~,~xy ted by the Bond Registrar. IT IS HEREBY DECLARED AND ~~~~~at~: acts, conditions, and things required to be done and to exist precedent to and in ~t.U ~Bond have been properly done and performed and do exist in due and regular form an . mann ired by the Constitution and laws of the State of Kans~s, ?°d that the total ~d~bt~dn..J(~S . the Issuqr, including this series of bonds, does not exceed any constitutional or statutory hmitatl~. . ,/ Ai, }· . . ~( .. ')·.:, 1~,' . r'.Ji ,. ; ~ ., ~~.-,:,~~ -·~:,,~)· J -:... 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. AlTE~T: ~·itl:lfr By: ---------- Clerk CITY OF SALINA, KANSAS CERTIFICATE OF AUTHENTICATION AND REGISTRATION This Bond is one of a series of General Obligation Internal Improvement Bonds, Series 201 7-A, of the City of Salina, Kansas, described in the within-mentioned Bond Resolution. Registration Date _______ _ Registration Number: 0322-085-072717-156 STATE OF KANSAS /'\' Office of the State Treasurer, Topeka, Kansas, as Bond Registrar and Paying Agent By: ____________ _ ~·liUJr By:------------- Clerk ' rf' ~:·'CERTIFICATE OF STATE TREASURER OFFICE OF Tiffi TREASURER, STATE OF KANSAS JACOB LATURNER, 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. A, ~ Name ,,1:1~·.:1::.s,;_,;;} .. 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 July 27, 2017 Red Bank, New Jersey 4:,1", \ "~.,, / " t·ftc;,,,. . ,, \. ) ' ·~ .S, • .., <i.ii)l\\ $9,310,000 General Obligatjofr·~~mM~~provement Bonds, Series 2017-A, of the City of Salina, Kansa~~d ~ 27 ,j2017 Re: We have acted as Bond Cou~el . connectipn't·;th the issuance by the City of Salina, Kansas (the "Issuer"), of the above-captione~,lmnd\ ( ':o "). In this capacity, we have examined the law and the certified proceedings, certifica~-~"'Otbf.r ocuments that we deem necessary to render this opinion. Capitalized terms not othe · ~e~~ h~in shall have the meanings ascribed thereto in the resolution adopted by the governin y the ~r authorizing the issuance of the Bonds. Rega~ding .~:it~~ o_, · ~S ~aterial to our op~on, we hav~ relied on the ~fled ~roceedings and other cert1ficati&as~c cials and others furnished to us without undertaking to venfy them by independent investigatio~. } ~:,;"'' 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 e~ent, if any, stated in the Official Statement). Further, we express no opinion regarding tax consequences ~ing with respect to the Bonds other than as expressly set forth in this opinion. ~~~!~~~. The rights of the owners of the Bonds and the enfor~,the;~ may be limited by bankruptcy, ins~lvency, ~eo~ganization, morat~rium and other ~imila~ l~.~,. e g £r¥hors' rights generally and by equitable pnnciples, whether considered at law or m eqm,~'::·t. ..,,./ . . This opinion is given ~s of its date, and £6.~,ssufll~~-;-i.? g~tion to revise or s~pplement this opimon to reflect any facts or circumstances tha~ay~....t~>ouf.'attention or any changes m law that may occur after the date of this opinion. c~~~: BELL, PC /'''• } / ' ·. ,"'~-s ),... \ . . '<I;,;<·-'; .; \..,! . i' AGREEMENT BETWEEN ISSUER AND AGENT $9,310,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2017-A DATED JULY 27, 2017 THIS AGREEMENT, dated as of July 27, 2017, 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. Agent shall notify the owners of the Securities upon default in payment of principal or interest on the Securities and the Agent shall have no duties or responsibilities thereafter. III. COMPENSATION Issuer covenants and agrees to pay to Agent, as reasonable compensation for the services provided as Agent, an initial setup fee of $300, a registration fee of $30, plus a fee of $5,000. This amount will be due at the time of registration unless such fee is to be paid from the proceeds of the bond issue in which case Issuer agrees to pay such fee within two (2) business days of the closing of the bond issue. In addition to the aforementioned fee, Issuer covenants and agrees to pay to Agent the fee as stated and required by K.S.A. I 0-505 for performing the duties of paying the principal of the Securities. IV. STANDARD OF PERFORMANCE Issuer shall provide, or shall cause to be provided to Agent, a designation of whether its Securities are to be issued in certificated or uncertificated form, or both. A. STATEMENTS OF OWNERSHIP Agent agrees to provide Statements of Ownership to the owner ofuncertificated 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 decimal place is equal to or greater than five the sixth decimal place is increased by one. The final 2 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 loss must be sufficient in the judgment of Issuer and Agent to protect Issuer and Agent from any loss which any of them may suffer if the Security is replaced. Issuer may charge the Security owner for its expenses in the replacement of a Security. H. REDEMPTIONS Optional Redemption. If any Securities are to be redeemed pursuant to an optional 3 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 Redemption. Agent shall then notify, by ordinary mail, the owner of such Securities to be so redeemed. Agent shall select the Securities to be so redeemed. Agent shall not be required to exchange or register a transfer of any Security for a period of fifteen (15) days preceding the date notice is to be provided to the Security owners for the purpose of selecting Securities on a partial redemption. Further, in the event notice is given to Agent for a complete redemption of the Issue according to the terms of the Bond Resolution, Agent shall not be required to transfer or exchange any Security beginning on the day following the 15th day preceding the date set for redemption. I. MISCELLANEOUS Agent hereby acknowledges receipt of numbered Securities of Issuer (in a number equal to one Security for each maturity) for registration and exchange, and shall safeguard any "blank" Securities held for purpose of exchange or transfer. J. REPORTS Agent shall provide Issuer an annual report of the activity with respect to the issuance of Securities upon written request of Issuer. K. CONSTRUCTION This Agreement shall be construed in accordance with the laws of the State of Kansas and also the Bond Resolution authorizing the issuance of the Securities. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 4 ATTEST: CITY OF SALINA, KANSAS OFFICE OF THE TREASURER OF THE STATE OF KANSAS By ~~ ----Director of Bond Services (Signature page to Agreement Between Issuer and Agent -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 $9,310,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2017-A DATED JULY 27, 2017 Notice is hereby given that pursuant to the provisions of Article III of Resolution No. 17-7466 (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, 2030 (the "Called Bonds"), have been called for mandatory redemption and payment on October 1, [ ] (the "Redemption Date"), at the principal office of the Treasurer of the State of Kansas (the "Bond Registrar and Paying Agent"). Maturity Date (October 1) 20 20 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. SALINA, KANSAS Treasurer of the State of Kansas, Topeka, Kansas • ... .. ..... ,. . . . . : ,.• ·r .... . . Blanket Issuer Letter of Representations cro.be Oon1*ted 17/..., IAaies and Gentlemen: ••• i •• f •• This Jetter sets forth our undemmding with tapect to aD issues (the -secwitics1 that ~ shall n=quest be made eligible foz:depositbyTbe I>epositol)'Tnzst Company ("'OTC') • . • To induce PTC to accept the Securities as ~le for deposit at OTC, and tD act in acco:rda. ce \\ith D?c-s Rules with mpcc:t to the Secwnies. hsuer represents to DTC that Issuer will comply with the reqo1remeots stated in DTCs Operational AJrangements. as they may be amended fuJm time to time. •• •• • . • 'VtJry trulyyoms. C1.t.y of Salina, 'l:ansa• csa.AiliiiarS S-Ji,m D 67402-G736 cci,J a-, i¥ 913-826-7240 .. . ... 1 ! SAMPLE OFF'ERING DOCUMENT LANGUAGE DESCRIBING BQOK-ENTRX:QNLYISSUANCE (Prcplre4 lly ~ 111111:rial ra,llc appiculc ely IDcalUI Ima) 1, The Depositmy Tmst Company ("DTC"), New York. NY, will act as cewriCies depository for the securities (the "'Socmf tios"). The Securities will be frmed" a fully-registerecl lec:mides ~ .in the name of Cede 8' Co. (DTC's pm1Dcnbjp nominee) or audJ other DIIJD8 u may be requestecJ by~ authorized represe:ntalive or DTC. One 1wly-regillmDd Bccmity c:ertificatc will be iaaod for (each iuae ofJ the , Secmities, [each] in the aggrcptc principal 11DODDt of such issue, and wJ1I be deposited with DTC. m howevm, the qgrepie prindpll llDOIIDt of (ID)'] issue c:xcceds SSOO million. one ccrti&:ate wi11 bo issued with zespect to each S500 million of ptjncipal amc,unt. llDd an additicnal cez1ilicatc will be issaed with respect to 1DY remalnmg pliDcipal lmDVDt of IDCh issue.] . . 2. DTC, the womt•s 1arJest securities depolitozy, is a limited-pmpose trust company orpnized under the New Ycdc BakiDg Law, a "ban\ina OIJ•uizatiQn• wi1mzl tho m.eerring of tho New York Banking Law, a member of the Fedml Reserve System, a •clming COEJ)Olation"' within the memin1 oftbe New York Uniform CommcrciaJ Code, and a •cJeam,g as=c)'" registered pummit ID 1he provisfom of Sc:ction 17A of the Securities Exchange· Act of !934. DTC holds and proridcs asset scrvicfng mr ow:r 3.S million issues of U.S. and uon-U.S. equity issues, corporate and mmicipa1 debt irma, and 1Dllllley maket fusbmneutl (hm over 100 COWllries) that DTC's participants ('"Direct Partic1pan11i deposit wi1h DTC. DTC also facilitates 1he post-trade settlement among Direct Plltidpams of ales and othm-secmides trlDUCtioDS. in dcponll=d securities, through electrollic c:omputerized book-catty trmsfers 111d pledges between Direct Participam' accounts. This elirniutes the need far physical JDO'vemcot of securities c:crtific:aScs. Direct Pamcipama iuclude both U.S. and DOD-U.S. sccmmcs bmtcrs and deal=, banks, mist companies. clming empomdons. and certain other c,rganiDtioas. DTC is a whoDy-owned subsidiary of The Depositmy Tnllt & Cimini Corporadou ("DTCC'"). DTCC ic the holding compmy for I>TC. Natioml Securi1ies Oeadug Colpcntion • and Fixed lucome Clearing Colpontion, all of which are regiffliecl clea.ting agem:iea. DTCC is owned by the users of its replatecl mbsidiaries. Accen to the DTC l)'5tem is also available 11D othczs such as both U.S. and uon-U.S, securities lnokers 1Dd deaJcJs. bauJcs, D'IISt c:ompanics, and clearing cmpo.raliom that clear tmt,ugb or maintain a custodial relationship with a Direct Participant, either directly or mdircctly ("Indirect Pamc:ipants"). DTC has Standard & Poor'• bigbcst rating: AAA. The DTC Rnles applicable to its Participants are on file with the Securities and Bxcbange Commisshm. Mom mfmmatiim aboat DTC can be 1b1md atwww.dt;c.com amd www.dtc.org. · 3. Pmc:hase, of Securitie, 1111der the DTC l)'ltem muct be made by or fmo1lgh I>hect Participads, which will re.ceive a credit for 1he Secmifies on DTC'a records. The ownership interest of each actual pmchuet of each Sccuri1y {"'Bmtficia1 Owner, is in tum to be recorded OD the Direct and Indirect Participems" m:ords. Beneficial Ownm will not receive written canffrmation from OTC of their pmdmc. BcDcfic1al Owners are, however, expected to m:cive written confi@•riom prcrriding ddaik. of tho transaction, u wen as periodic mt,,.ments of their hoidings, from the Direct or Indirect Participant duough which the Bcne6cial Owner e:ntelecl into the trauaction. Tramf.en of ownmbip inleaests fD 1he Secmides are to be ICCOCJJJ)lisbcc by cmtries made cm the boob of Direct and Iadim:t PmidpaDts acting cm behalf of Beneficial 0wnezs. Bendiclal 01Vnln wn, not =ei..e certificates reprea:nting 1hdi' owmahip m.u:rests m Securities, except in tbc m:m 1hat use of the book,amy system for 1ho Sccmities Is dJ10001i1111ed. 4. To ncilita1o mbacqumt 1rmsfm. all Sccmities deposited by Direct hl1icipanis with DTC arc registered in lbc name ofDTC's partnersmp nommee, Cede & eo .. or l11Ch Dth=' mmc·u mq bc fflll1CStcd by an authamed rq,ie:sentldve ofDTC. The deposit of Securities wHb DTC IDd their ~adon in the name of Cede & Co. or such o1het DTC nominee do not dcct c, chmp in bcaefici.al ownenbip. DTC bu no knowledge oftbe ~ Beneficial Ownen of the Securitic:s; DTC'1 mconlucdlcct 0Dly1be ickmtity of the Direct Panidpants to whose accmm11 111ch Securities n. credited, -wldcb may or may not be 1he Beneficfal Owners. The Duect ud Indi!ect Pll'ticipams will tcmain respomiblc for bcping accouut of their holdiDp on • behalf of thcircustomm. • • BLOR 03l'15I08 . SalEDULEA (ro B1an1rct lsncr Lenerofltepraadlltioas) s. Conveyance or notices and other ~eatious by DTC to Direct Pl11idpmts, by Direct Participants to Indirect Pu1icipants, and by Direct Particjpmts and mdireet Participants to Ben~ Owners will be govcmcd by mangemems 11mm1g them. subject to any stamtozy or regulatory requirements u may be in effect Dom timo to time. [Beoeficia1 Owners of Secmities may wish to !Ike ce.ttlin steps to amgment the tnmsmisskll to them of notioes of significant evr:nts wfSb. respect to the Securities, such u tedemptions, tenders. dt&uJts. and proposed m=ndmcnts to the SCICllrlly docnmea11 For e:nmpla, Bmefidll Owners of Securities may wish to ucatain 1h11 the nominee holding the Securities fer their benefit has aped to obtain and transmit notices to B=eficiaJ Owners. In the a11mativc. Beneficial OWDea may wish to pmvide 1bcir names and addrmcs to the registrar and request that copies ofnoticcsbc"provfclcd dmctJy to them.) "[6. Redemption notices shall be sent to DTC. If leu 1bn Ill of the Secaritis wi1biD an issue are being fflClecmtld, DTC"s practice is to ddamine by lot the amount oflhe inta'est or each Direct Participant in such issue to be redeemed,] • 7. Nci1ber DTC nor Code & Co. (Dor 1111 olhat DTC ~) will ce;,mea.t or vole with respect to Securities unless allthodzed by a Direct Participant in accordaDcc with DTC's MMI Ptocedures. Under its usual pocedmcs. DTC mails an Omnibus Proxy to Isner u aoon as possible aftm the rcc:o:d dasc. The Omnibus Pmxy assigns c.ede & Co.'s coascnting or votina rights 10 thbse Direct Participants to whose accoonts s~ are credited on the record date (idlztificd m a listinJ attacbed to the Omnibus Pioxy). B. Redemption proceeds, distrlbutions, and dividend paymmts OD the Securities wm ·1,e made to Cede & Co., or such oth~ nominee u may be ~ by an autbodzed representltive of DTC. J>TC's practice is to credit Dircet Participallts' accounts upon DTC's receipt of funds awl coacspcmd:ing detail intonnasion fiom Issuer or A.gem. on payable date in accordance with their ~ holdings lbowD on DTC's iecords. Payment1 by Puticipants to Bcm:fic:ill Ownem will be governed by ~ iDstruc:tions end customuy pncticcs, as js 1hc c:ase with securities held for 1hc a=mits of customcn iii beam Conn or registered in "street name," and will be the responsibility of such Participant and not of DTC, A.goat. or Issuer, subject to any statutmy or regulatory rcquiremen1I u may be in deet from mnc to time. hymc:nt of redemption "pmceeck. distributions, and dividend paymems to Cede & Co. tor SDCh oflier nmrinee as may be requested by an au1horized represmtative of DTC) is the !eSpOnSib1lity of Issuer er Asem. disbmsemellt of such paymmts to Dim:t Participants will be the~ ofDTC, and disbmlcment of such paymen1S to the Bcmdicia1 Owners will be tbe JeSpODll"'bili~ of Direct IDd Jndmc:t PmdcipaD1s. . . (9. A Beneficial Owner lball give notice to elect to have itr Scc:uritics pmcbued or tendered, through its PmticJpant, to [Tender/Jlematketm&) Aacnt, ad sball e&ct ddivay of such Securities.by causmg the l)jxect P,rticipant to tnmsf'er 1he Partieipmt's interest fn tho Securities. on DTC's recordl. to [TeudcrfRemutctiDg) A8=t. The req\lii:em,::nt for physical delivay 'of Secmities in connectioa with ID optioml tender or a mandatary pmdme will be dcc:mcd 11tisfied wbm tbe ownership rigbls in tbe Securities me tnmsferred by Direc:t Participants mi I>TC's n:cords ad folkmd by a book-entry mc!it of umdacd Seauittes to trenderlRemadceti Agent's DTC aCCOllllt.] 10. DTC may discoDtinue providing its serrices u depository with respect to tho Secudties It any time by givins roasonablc notice to Issac:r or Agent. Under IIICh circmmtlnce5. in 1hc m:at 1bat a succcaor depositoty ic DOt obtained. Seemity certificates are reqvhed 10 be printed 1111d delivered. 11. Issuer may decide U> discontinue use of the system of book-entry-only tnmsfm tbroup DTC (or a successor scc:mitics clcpositmy). In that eNem. Security ccrtffic:ates wi'U be printed ad dclivcrc:4 to OTC. 12. The mf'ormation in this section concerning DTC and DTC't book-entry systtm has been obtained &om sources that Juaer believes to be reliable, bat Issuer 1lba 1IO relJ)ODll'bility for the 1CC1JDCY thereof. 8LOR 03l2S'08 UNDERWRITING SAFEKEEPING AGREEMENT BY AND BETWEEN DEPOSITORY TRUST COMPANY AND THE CITY OF SALINA, KANSAS AND THE OFFICE OF THE KANSAS STATE TREASURER $9,310,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2017-A DATED JULY 27, 2017 In order to induce the Depository Trust Company (the "DTC") to accept delivery of the above captioned bonds (the "Bonds") for safekeeping prior to the delivery of the Bonds on July 27, 2017 (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 underwriter of the 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 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 10, 2017 By: ~i Ll.)OU Cl rk (Signature page to Underwriting Safekeeping Agreement -Bonds) CREDIT OPINION 29 June 2017 New Issue Rate this Research m Contacts Kenneth R Surgenor 214-979-6848 Associate Analyst kenneth surgenor@moodys com Denise Rappmund 214-979-6865 VP-Senior Analyst denise rappmund@moodys com U.S. PUBLIC FINANCE City of Salina, KS New Issue: Moody's Assigns Aa3 to Salina, KS's Series 2017 A GO's & MIG 1 to Series 2017-1 GO Temporary Notes Summary Rating Rationale Moody's Investors Service has assigned a Aa3 rating to the City of Salina, KS's $6 9 million General Obligation Bonds, Series 2017-A and a MIG 1 rating to the city's $4.6 million General Obligation Temporary Notes, Series 2017-1. Concurrently, we have affirmed the Aa3 rating on the city's outstanding general obligation debt and a MIG 1 rating on the city's outstanding temporary note financing. Post sale, the city will have $94 million in total debt outstanding. The Aa3 rating reflects the moderate 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. The MIG 1 rating on the notes reflects the city's underlying credit characteristics inherent in the long-term Aa3 general obligation rating, as well as expected favorable market access for the takeout bonds and strong takeout management including a history of issuing takeout bonds in advance of maturity. Credit Strengths » Regional commercial and retail center » History of takeout financing in advance of maturity Credit Challenges » Dependence on economically sensitive sales tax revenues » Below average liquidity position; reliance on market access to take out temporary notes » Above average debt burden » Below average resident wealth indices 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 . .. . . . . . . . . . . . . . . ...... . . .. . . . .. . ... . . . . . . . .. . .. . . . .. . . . . . . . . . . . . . .. . .. . . . . . . ............................ . '. .. . . . . . . . . . . . .. .. . . . . .. . . . . .. . . . . . . . ... . .. . .. . . . .. ... . . . . . . . .. . . . . .. . . . . . . . . .. . . . ............. . MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE Factors that Could Lead to a Downgrade » Increased debt without growth in tax base » Erosion of reserves below current levels Key Indicators Exhibit 1 Salina (City of), KS 2011 2012 2013 2014 2015 Eix>nomy/Tax Base Total Full Value ($000) $ 2,891,461 $ 2,884,189 $ 2,889,386 $ 2,917,268 $ 2,968,008 Full Value R3t' Capita $ 61,018 $ 60,586 $ 60,541 $ 60,911 $ 62,040 Median Family Income(% of US Median) 84.8% 84.3% 82.5% 84.6% 86.2% Rnances Operating RNenue ($000) $ 41,297 $ 41 ,403 $ 43,251 $ 43,600 $ 45,716 Fund Balance as a % of Rlvenues 13.5% 9.0% 11.6% 12.0% 11.7% O:s1 Balance as a % of Rlvenues 12.0% 10.7% 9.6% 10.8% 12.5% Debt/Alnsions Net Direct Debt ($000) $ 42,432 $ 51,410 $ 53,844 $ 57,415 $ 59,190 Net Direct Debt / Operating RNenues(x) 1.0x 1.2x 1.2x 1.3x 1.3x Net Direct Debt / Full Value (%) 1.5% 1.8% 1.9% 2.0% 2.0% Moody's-a:Jjustoo Net Fllnsion Liibility (3-yr avErnge) to Felenues(x) 1.5x 1.7x 2.lx 2.2x 2.0x Moody's-a:Jjustoo Net Fllnsion Liibility (3-yr average) to Full Value(%) 2.1% 2.5% 3.1% 3.3% 3.0% Source: Moody's Investors Service; Salina audited financial reports fiscal years (2017-2015) Detailed Rating Considerations Economy and Tax Base: Moderately-Sized Tax Base Serves as Regional Economic Center As a regional retail hub, Salina's economy will remain stable over the near term. The city is located in Saline County approximately 95 miles north of Wichita (Aa1 stable), at the intersection of 1-70 and 1-135, and serves as a regional retail, commercial, industrial, and medical hub for the largely agricultural communities of north central Kansa s (Aa2 stable). The city's $3 billion tax base has been stable over the last five years with valuations averaging a modest 0.9% annual increase, including a 2.4% increase in 2016. Based on preliminary indications from the county, the city expects its tax base to increase by approximately 2% for fiscal 2018, largely based on ongoing modest residential and commercial development. The city's tax base exhibits a mild degree of concentration, with the ten largest taxpayers accounting for 12.1% of the 2016 assessed valuation. The top taxpayer, Westar Energy. lnc.(Baa1 stable), accounts for 2.8% of AV. Residential income indices are below national benchmarks, with 2015 median family income at 86.2% of national levels. At 3.1% as of April 2017, the city's unemployment rate was below both state (3 .5%) and national (4.1%) levels during the same period. Financial Operations and Reserves: Growth in Reserves Projected The city's financial position is projected to 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. Following a downward trend from fiscal 2010-2013, expenditure reductions and sales tax revenue growth pushed the General Fund to surplus operations in fiscal 2014 and 2015. The fiscal 2015 surplus of $413,000 improved the city's General Fund reserve position to $4.8 million, representing 12.4% of revenues. Inclusive of debt service funds, the city's operating reserves totaled $6.7 million in fiscal 2015, or 14.6% of total operating revenues. Management reports additional sales tax growth in fiscal 2016 and a $425,000 General Fund surplus. In fiscal 2017, Tony's Pizza (a subsidiary of The Schwan Food Company) purchased the naming rights to the city's events center for $12 million. Funding from the This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys com for the most updated credit rating action information and rating history. 29 June 2017 City of Salina, KS: New Issue: Moody's Assigns Aa3 to Salina, KS's Series 2017A GO's & MIG 1 to Series 2017-1 GO Temporary Notes MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE agreement, along with another strong year of sales tax growth, will add approximately $1.7 million to the city's reserve position in fiscal 2017. The city's current General Fund reserve target is $5 million which will be achieved in 2017. Management will recommend the board set a new General Fund target in the $7-8 million range. Typical of Kansas cities, sales tax receipts represent the city's primary operating revenue source, comprising 33% of fiscal 2015 General Fund revenues, followed by property taxes at approximately 21% and charges for services at 16%. Positively, voters approved a 0.35% sales tax increase (from 0.40% to 0.75%) of the city's local option sales tax {LOST) with a 20 year sunset. The increased revenues will provide for capital improvements and economic development. Management's ability to maintain balanced operations and bolster the city's reserve position will be key considerations in future reviews. LIQUIDITY The General Fund closed fiscal 2015 with $4 million in cash and investments, representing a narrow 10.1% of revenues. Inclusive of debt service funds, the operating funds closed with $5.7 million, or 12.5% of operating revenues . The city's cash position will improve as management builds reserves. Debt and Pensions: Manageable, Though Elevated, Fixed Costs Mitigate by Strong Pension Contributions The city's debt burden, though above average, will remain manageable in the near term due to support from the city's utility enterprises. Post sale, the city will have $94 million in total debt outstanding comprised of $76.6 million in debt secured by the city's ad va lorem tax pledge, including $63.8 million in GO debt and $12.8 million in state loans paid by the self-supporting water and sewer enterprise, but ultimately secured by the city's ability to levy unlimited ad valorem property taxes. The total debt burden also includes $16.1 million in Temporary Notes, all of which are projected to be taken out by September 2019, and various capital leases. The city's direct debt burden of 3.1% of fiscal 2016's full value is slightly above average, but when accounting for the self-supporting nature of the enterprise debt, the burden falls to 2.7%. The city typically issues general obligation bonds and short-term notes each spring for general capital improvements although management expects this practice to diminish in the near term as the city has completed major projects. Management also reports the Temporary Notes (Series 2016-1, Series 2016-2, and Series 2017-1) could be taken out with STAR bonds and paid from sales tax revenues, although long-term GO financing is still a possibility. DEBT STRUCTURE All of the city's outstanding general obligation debt is fixed rate and matures over the long-term (final maturity fiscal 2037). Principal amortization is slightly below average with 75.7% of principal retired in 10 years. Inclusive of the current sale, the city will have $16 million of GO Temporary Notes outstanding, comprising approximately 21% of total GO debt outstanding. While operating liquidity represents just 48% of the city's outstanding temporary financing, we note the city issued Temporary Notes annually from 2000-2007 and again from 2012-2017. The city has ample experience accessing the market and a practice of issuing long term financing, or renewing notes, approximately one month prior to maturity DEBT-RELATED DERIVATIVES The city is not party to any interest rate swaps or other derivative agreements. PENSIONS AND OPEB The city participates the Kansas Public Employees Retirement System (KPERS), a cost-sharing multiple-employer pension plan. Although KPERS administers one cost-sharing multiple-employer defined benefit pension plan, separate actuarial valuations are prepared to determine the contribution rate by group, the Local group and the Kansas Police and Firemen group. The city has consistently made its required contributions to the plan in accordance with statutory requirements. Moody's three year average adjusted net pension liability {ANPL) for the city is $90.4 million, or 2.0 times fiscal 2015 operating revenues (General Fund+ Debt Service Fund) and 3 05% of full valuation. Contributions to the plan were approximately $3 .8 million, or a manageable 8.4% of operating revenues. Fiscal 2015 fixed costs were approximately $11.5 million ($7.7 million in debt service+ $3.8 million in pension contributions), representing a moderately-high 25% of operating revenues. However, the high fixed costs are partially mitigated by the city's pension contributions that were 125% of "tread water" in fiscal 2015. 3 29 June 2017 City of Salina, KS: New Issue: Moody's Assigns Aa3 to Salina, KS"s Series 2017A GO's & MIG 1 to Series 2017-1 GO Temporary Notes 4 MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE Moody's ANPL reflects certain adjustments we make to improve comparability of reported pension liabilities. The adjustments are not intended to replace Salina's reported pension information, but to improve comparability with other rated entities. We determined the city's share of liability for the cost-sharing plans administered under KPERS in proportion to its contributions to the plan. The "tread water" indicator measures the annual government contribution required to prevent the reported NPL from growing, under reported assumptions. Contributions above this level cover all NPL interest plus pay down some principal, making them stronger from a credit perspective than contributions below this level. We expect that the city will adequately incorporate rising pension costs into its budget while maintaining operational balance. Management and Governance Kansas cities have an Institutional Framework score of Aaa, which is high compared to the nation. Institutional Framework scores measure a sector's legal ability to increase revenues and decrease expenditures. The sector has one or more major revenue sources that are not subject to any caps . Specifically, large revenue sources for cities include property taxes and sales taxes. Sales taxes can be increased via voter referendum. Property taxes are now subject to an annual lid which limits the additional amount of taxes generated to the previous year plus the five year rolling average of the Consumer Price Index; however, numerous exemptions are stipulated in the legislation including expenses for debt service, public safety, and state and federal mandates among others. Unpredictable revenue fluctuations tend to be minor, or under 5% annually. Across the sector, fixed and mandated costs are generally greater than 25% of expenditures. Kansas is a Right to Work state, providing significant expenditure-cutting ability. Unpredictable expenditure fluctuations tend to be minor, under 5% annually. Legal Security The bonds and notes are secured by an unlimited ad valorem tax pledge. The full faith, credit and resources of the city are irrevocably pledged for the prompt payment of the bonds and notes. Use of Proceeds The Series 2017-A bond proceeds will fund certain public improvements within the city, specifically the city's events center. The Series 2017-1 note proceeds will fund preliminary design work for a riverfront renovation project, construction and upgrade of downtown streets, improvements to a main thoroughfare in the city, infrastructure in a developing residential subdivision, and construction of a police training faci lity. Obliger Profile 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 US Census Bureau estimated population of 47,840. Methodology The principal methodology used in the long-term rating was US Local Government General Obligation Debt published in December 2016. The principal methodology used in the short-term rating was US Bond Anticipation Notes published in April 2014. Please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies. Ratings Exhibit 2 Salina (City of} KS Issue General Obligation Bonds Series 2017-A Rating Type Sale Amount Expected Sale Date Rating Description General Obligation Temporary Notes Series 2017-1 Rating Type 29 June 2017 Rating Aa3 Underlying LT $6,900,000 07/10/2017 General Obligation MIG 1 Underlying ST City of Salina, KS: New Issue: Moody's Assigns Aa3 to Salina, KS's Series 2017A GO's & MIG 1 to Series 2017-1 GO Temporary Notes 5 MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE Sale Amount Expected Sale Date Rating Description Source: Moody's Investors Service 29 June 2017 $4,600,000 07/10/2017 Note: Bond Anticipation City of Salina, KS : New Issue: Moody's Assigns Aa3 to Salina, KS's Series 2017A GO's & MIG 1 to Series 2017-1 GO Temporary Notes 6 MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE © 2017 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"}. All rights reserved. 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REPORT NUMBER 1075457 29 June 2017 City of Salina, KS: New Issue: Moody's Assigns Aa3 to Salina, KS's Series 2017A GO's & MIG 1 to Series 2017-1 GO Temporary Notes MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE Contacts CLIENT SERVICES Denise Rappmund 214-979-6865 Americas Asia Pacific Japan EMEA 1-212-553-1653 852-3551-3077 81-3-5408-4100 44-20-7772-5454 VP-Senior Analyst denise rappmund@moodys com Moooy's INVESTORS SERVICE 7 29 June 2017 City of Salina, KS· New Issue: Moody's Assigns Aa3 to Salina, KS's Series 2017A GO's & MIG 1 to Series 2017-1 GO Temporary Notes ( CLOSING CERTIFICATE $9,310,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2017-A DATED JULY27, 2017 The undersigned Mayor and Clerk of the City of Salina, Kansas (the "Issuer"), make this Certificate for inclusion in the transcript of and as a part of the proceedings authorizing and providing for the issuance of the above described bonds (the "Bonds"); and certify as of July 27, 2017 (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 eachfostance 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 10, 2017 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. 10-101 to 10-125, inclusive, K.S.A. 10-427 et seq., K.S.A. 10-620 et seq., K.S.A. 12-631r et seq., K.S.A. 12-685 et seq., K.S.A. 12-1736 et seq., and Article 12, Section 5 of the Constitution of the State of Kansas, as amended, Ordinance No. 17-10886 and Resolution No. 17-7466 of the Issuer duly adopted by the governing body of the Issuer on July 10, 2017 ( 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, 2017 the following temporary notes of the Issuer, issued to temporarily finance the Improvements (the "Refunded Notes"): Description General Obligation Temporary Notes Series 2016-1 Dated Date February 10, 2016 Maturity Date August 1, 2017 Amount $6,890,000 4. 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 arid 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 June 30, 2017 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 "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 know ledge, any inquiry or investigation at law or in equity or before or by any public board or body pending or, to the best or our knowledge, threatened against or affecting the Issuer, its officers or its property, or, to the best of our knowledge, any basis therefor questioning, disputing or affecting in any way: (a) the legal organization of the Issuer or its boundaries; (b) the right or title of any of its officers to their respective offices; ( c) the legality of any official act shown to have been done in the Transcript; ( d) the constitutionality or validity of the indebtedness represented by the Bonds shown to be authorized in the Transcript; ( e) the validity of the Bonds, or any of the proceedings had in relation to the authorization, issuance or sale thereof; (f) the levy and collection of an ad valorem property tax to pay the principal of and interest on the Bonds; or (g) the federal or state tax-exempt status of the interest on the Bonds; wherein any unfavorable decision, ruling or finding would adversely affect the Issuer, the transactions contemplated by the Bond Resolution or the Official Statement, or the validity or enforceability of the Bonds, which are not disclosed in the final Official Statement. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 2 10. Receipt for Purchase Price. The Issuer has received from Robert W. Baird, Inc., Red Bank, New Jersey, the Underwriter of the Bonds, the full purchase price of the Bonds, said purchase price received by the Issuer being calculated as follows: Principal Amount .................................. . Less Underwriting Discount ................. . Plus Net Original Issue Premium Total Purchase Price ............................ . Less Good Faith Deposit received on Sale Date Net Amount Received at Closing $9,310,000.00 (99,803.20) 178,173.00 $9,388,369.80 $(187 ,800 .00) $9,200,569.80 [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 3 WITNESS our hands and the seal of the Issuer. Signature Official Title Mayor Clerk (Signature Page to Closing Certificate -Bonds) $9,310,000 City of Salina, Kansas General Obligation Internal Improvement Bonds Series 2017-A (the "Bonds") FEDERAL TAX CERTIFICATE This Federal Tax Certificate and all accompanying Exhibits (the "Tax Certificate") has been prepared and is being signed in conjunction with the closing and funding of the purchase price of the Bonds. The purchase and funding date for the Bonds is July 27, 2017 (the "Closing Date"). The City of Salina, Kansas (the "Issuer") and Robert W. Baird & Co., Incorporated, the purchaser of the Bonds (the "Purchaser"), intend that interest on the Bonds will be excludable from gross income for federal income tax purposes (the "Tax-Exempt Bonds"). One purpose of this Tax Certificate is to document the steps the Issuer agrees to take in the future so that the Bonds will continue to be Tax-Exempt Bonds. The Issuer acknowledges and agrees that its future compliance with this Tax Certificate is required to comply with the general covenant and agreement it has made in Ordinance No. 17-10886 and Resolution No. 17-7446, adopted by the Issuer on July 10, 2017 ( collectively, the "Resolution"), to take no action that would result in the Bonds ceasing to be Tax-Exempt Bonds. Gilmore & Bell, P.C. ("Bond Counsel") also will rely on the Issuer's representations in this Tax Certificate and assume continued compliance with the Tax Certificate as a basis for its opinion that the Bonds are Tax-Exempt Bonds. 1. Continuing Requirements; Bond Counsel Opinions. The Bonds are being issued to finance the cost of new assets and to refinance (refund) the Issuer's General Obligation Temporary Notes, Series 2016-1 (the "Refunded Notes" and refinance (refund) a portion of the interest due on the Issuer's General Obligation Internal Improvement Bonds, Series 2007-A (the "Refunded Interest") (collectively, the "Refunded Obligations"). The property to be financed or refinanced by the Bonds (including the property originally financed by the Refunded Obligations) is collectively referred to in this Tax Agreement as the "Financed Property." The Issuer acknowledges that the requirements related to the expenditure and investment of money and the uses of Financed Property will continue to apply until all principal of and interest on the Bonds have been paid. "Defeasing" the Bonds pursuant to the Resolution does not constitute "payment" of the Bonds for purposes of these requirements. This Tax Certificate requires the Issuer to keep records of expenditures, investment and use of proceeds of the Bonds and the Financed Property. The Issuer agrees to separately maintain these records as part of a "Bond Compliance File" in either paper or electronic format until three years following the date all of the Bonds have been repaid. Further, the Issuer acknowledges that it may need to obtain written legal advice from an attorney or firm of attorneys experienced in the rules related to Tax-Exempt Bonds before undertaking certain transactions as further described in this Tax Certificate. This written advice is referred to as "Bond Counsel Written Advice." The Issuer agrees to obtain Bond Counsel Written Advice at the times specified in this Tax Certificate. 2. Financed Assets: Use of Proceeds; Use of Financed Property. a. Purchaser's Certification of Issue Price. As set out in the Underwriter's Receipt for Bonds and Issue Price Certificate attached as Exhibit G, the Purchaser is acquiring the Bonds in a public sale and has offered the Bonds in a public offering. Based on these certifications, Bond Counsel has determined the "Issue Price" of the Bonds is $9,488,173.00. The Issue Price of the Bonds is the amount of sale proceeds of the Bonds for which the Issuer must account and is referred to throughout the rest of this Tax Certificate as the "Sale Proceeds." b. Records of Expenditures; Close Out. The Issuer has described its expected uses of Sale Proceeds and earnings from the investment of Sale Proceeds (referred to as "Investment Proceeds") to finance the Financed Property and to refund the Refunded Obligations on Exhibit A-1. The Issuer will keep records of expenditures of the portion of the Financed Property originally financed by the Refunded Notes in the Bond Compliance File. Additionally, the Issuer will keep contemporaneous records of expenditures of Sale Proceeds and Investment Proceeds of the Bonds to finance Financed Property as part of the Bond Compliance File. Expenditure records will include the following information: (1) the person or entity paid, (2) the amount paid, (3) a statement of the general purpose of the expenditure, and (4) the date the expenditure was paid. The Issuer will assemble the records of expenditures of the Refunded Notes and the Bonds and complete a written "Close Out" for the Bonds in substantially the form included on Exhibit A-2 not later than the due date for the "Annual Checklist" (described below in paragraph 2(f)) that immediately follows the date the Financed Property is placed in service (or the date all Sale Proceeds of the Bonds have been spent if earlier), but in all events not later than the 5th anniversary of the Closing Date. c. Financed Assets; Reimbursement of Costs Paid Before Closing Date. The Issuer represents that the identified assets have been or will be financed or refinanced with proceeds of the Bonds as shown on Exhibit E-1. Sale Proceeds expected to be allocated (spent) to reimburse costs paid by the Issuer prior to the Closing Date are identified on Exhibit E-2. For each separate project or improvement comprising the Financed Property, the Issuer evidenced in writing its intent to finance that portion of the Financed Property and to reimburse those expenditures from proceeds of the Bonds. A copy of each written evidence of intent to finance and reimburse is included in the Transcript of Proceedings for the Bonds as Items #2-3. d. Restrictions on Use of Financed Property. The Issuer understands that the use of Financed Property is generally limited to use by (1) a State or local government or an agency or instrumentality of the State or a local government (an "Eligible User") or (2) use by any individual or entity as a member of the general public. Except as described on Exhibit F-1, the Issuer has not entered into any of the following transactions related to the Financed Property, and will not enter into any of the following transactions in the future involving any of the Financed Property unless it obtains Bond Counsel Written Advice: (1) transferring ownership of any part of the Financed Property to a person other than an Eligible User (a "Private Person"); (2) leasing or otherwise entering into an agreement granting possession or a right to use any part of the Financed Property to a Private Person for a time period greater than 50 days; (3) entering into a management or service agreement with a Private Person related to the operation of any part of the Financed Property; or ( 4) any other agreement with a Private Person that provides special legal rights to the Financed Property. As shown on Exhibit F-1, the Issuer has provided Bond Counsel with copies of the contracts and agreements described in the preceding sentence that it currently has in place and that are expected to involve the Financed Property. The Issuer recognizes that a portion of the Financed Property may be treated as used by a Private Person in a manner that could potentially give rise to private business use as a result of such agreement(s), but any such private business use will not exceed 10% of the Bond proceeds or the use of the Financed Property, as shown on Exhibit F-1. e. No Loan of Proceeds. No proceeds of the Bonds will be loaned to a Private Person. f. Annual Checklist. An "Annual Checklist" is attached as Exhibit F-2. Until all of the Bonds have been paid, the Issuer will complete an Annual Checklist within sixty days following the date chosen by the Issuer as the end of the annual reporting period. The completed Annual Checklist will be retained as part of the Bond Compliance File. 2 3. Investment Rules. a. Restricted Money. All money subject to the investment rules described in this Tax Certificate is referred to as "Restricted Money." The investment rules apply to Sale Proceeds and Investment Proceeds of the Bonds, and to a pro-rata portion of Sale Proceeds or Investment Proceeds of the Refunded Obligations ( or earlier series of refundings) to the extent principal of or interest on the Refunded Obligations is paid by the Bonds (referred to as "Transferred Proceeds"). In addition, any money the Issuer either expects to use to repay the Bonds or which has been set aside in a manner that makes it reasonably likely the money will be available to repay the Bonds even if the Issuer were to encounter financial difficulty is subject to the investment rules (referred to as "Repla_cement Proceeds"). These investment rules apply to Restricted Money without regard to the account or fund in which the money is held or whether the money is commingled with other funds. Bond Counsel has listed the funds and accounts of the Resolution that are expected to contain Restricted Money on Exhibit C along with a description of those investment descriptions. Unless Bond Counsel Written Advice is obtained, the investment rules apply until the Restricted Money is spent or until all of the Bonds are repaid. Additionally, in order to be counted as an "expenditure" of Restricted Money, the amount paid generally must be ( 1) used to pay principal, premium or interest on the Refunded Obligations, or in the case of Transferred Proceeds, be a capital expenditure and not an operating cost of the Issuer, (2) transferred to an entity that is not related to the Issuer in order to satisfy a currently existing contract payment liability, (3) paid as interest on or principal of the Bonds, or (4) paid as a cost of issuing the Bonds or providing credit enhancement for the Bonds. b. Accounting/or the Investment of Restricted Money. The investment of Restricted Money will be accounted for by the Issuer on its books and records. These books and records may consist of statements provided to the Issuer by a third-party banking institution, a trust company or an investment provider. The Issuer will keep these records as part of the Bond Compliance File. The records must contain sufficient information to identify the type of investment acquired, the acquisition date and amount paid for the investment, all principal and interest payment dates and the amounts paid, and the date and amount received on the sale, disposition or retirement of the investment. c. Investments Requiring Opinion of Bond Counsel. In addition to the investment restrictions set out in the Resolution and on Exhibit C, the Issuer will obtain Bond Counsel Written Advice prior to (1) investing Restricted Money in any investment agreement that has specially negotiated rates and terms of investment and withdrawal or (2) investing Restricted Money in any escrow designed to defease the Bonds pursuant to the terms of the Resolution. The Issuer will always attempt to obtain a market yield on the investment of Restricted Money unless the investment acquired is a United States Treasury Obligation (State and Local Government Series) ("SLGS") or a tax-exempt bond. d. Yield on Bonds; Weighted Average Maturity. Bond Counsel has advised that the yield on the Bonds is 2.8984%, the remaining weighted average maturity of the Refunded Notes is 0.0111 years, and the weighted average maturity of the Bonds is 11.3421 years (as computed on Exhibit D). e. Yield Restriction; Rebate. The table on Exhibit C that contains a list of the funds and accounts established under the Resolution. The table identifies: (1) the funds and accounts that are expected to contain Restricted Money, (2) when the investment of Restricted Money is limited to a yield that is not materially higher than the yield on the Bonds and the materially higher yield limit (stated as a percentage), (3) the funds or accounts where the investment restrictions may be satisfied by making yield reduction payments to the IRS, and (4) the funds or accounts containing Restricted Money that must be included in a calculation of arbitrage rebate and any spending exception to arbitrage rebate that may apply. The Issuer will follow the investment yield restrictions and rebate compliance directions set out on Exhibit C and in the Annual Checklist. 3 f. Multipurpose Issue. Pursuant to Regulations § l.148-9(h), 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 of applying the arbitrage rules. Under Regulations § l .148-9(h), the Bonds will be treated as 2 separate issues (a "New Money Portion" and a "Refunding Portion") for purposes of applying certain of the arbitrage restrictions under Code § 148. g. Temporary Periods. The Issuer expects to spend at least 85% of the Sale Proceeds of the New Money Portion within 3 years following the Closing Date, the Issuer has entered into or will enter into a binding obligation to spend at least 5% of the Sale Proceeds of the New Money Portion within 6 months following the Closing Date for the Financed Property, and the Issuer will exercise due diligence to complete the project of which the Financed Property is a part. h. No Hedge Bonds. Not more than 50% of the proceeds of the Refunded Obligations were invested in Investments having a substantially guaranteed yield for 4 years or more. Additionally, not more than 50% of the proceeds of the New Money Portion will be in invested in Investments having a substantially guaranteed yield for 4 years or more. At least 85% of the proceeds of each of the Refunded Obligations were spent within 3 years after the respective closing date to carry out the purposes of those obligations, and at least 85% of the proceeds of the New Money Portion will be spent within 3 years after the Closing Date to carry out the purposes of the New Money Portion. 4. Miscellaneous. a. Bank Qualified Tax-Exempt Bonds. The Bonds are not "bank qualified" obligations. b. Status as "Small Issue" for Arbitrage Rebate Purposes. The Bonds are not exempt from arbitrage rebate. The Issuer will follow the instructions contained in the Annual Checklist to cause any arbitrage liability to be determined and paid to the United States at least once every five years and as of the date all of the Bonds are paid. c. No Advance Refunding. No proceeds of the Refunding Portion of the Bonds will be used more than 90 days following the Closing Date to pay principal or interest on any other debt obligation. d. No Federal Guaranty. The Issuer will not permit the payment of debt service on the Bonds to be guaranteed by the United States or any agency of the United States. e. Record Owner. The Issuer will maintain or cause to be maintained a record of the owners of the Bonds and the persons entitled to the receipt of interest. f. Written Compliance Procedures. On June 11, 2012, the Issuer adopted the Tax and Securities Compliance Procedure for all tax-exempt obligations it has issued. This Issuer intends to comply with those procedures as applicable to the Bonds, as supplemented and modified by this Tax Certificate. g. Form 8038-G. Attached as Exhibit B is a completed Form 8038-G signed by Bond Counsel as paid preparer. On or following the Closing Date, the Issuer will timely sign and cause to be filed the Form 8038-G with the Internal Revenue Service. h. 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's General Obligation Temporary Notes, 4 Series 2017-1 (the "Notes") were sold and are being issued under a different plan of finance than the Bonds, because the Notes are being issued as short-term obligations to finance certain facilities, whereas the Bonds are being issued as long-term financing or refinancing for unrelated facilities. Therefore, the Bonds constitute a separate "issue" from 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 Notes. i. Effective Date of Agreement. This Tax Certificate is effective on and after the Closing Date. If this Tax Certificate is actually executed prior to the Closing Date, it is subject to the express condition that the individual executing the Tax Certificate will immediately notify Bond Counsel and the Purchaser if any of the representations made in this Tax Certificate are not true and correct as of the Closing Date. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 5 Dated July 27, 2017. SALINA, KANSAS ~~ By: Name:~~ Title: Financ; irector (Signature Page to Tax Compliance Certificate and Agreement-Series 2017-A Bonds) Exhibit A-1 Expected Expenditure of Bond Proceeds & Investment Proceeds Sources: Bond Proceeds: Par Amount Original Issue Discount Premium Uses: Project Fund Deposits: Project Constmction Fund Reftmding Escrow Deposits: Cash Deposit Delive1y Date Expenses: Cost oflssuance U11derw1iter's Discom1t Other Uses ofFm1ds: h1terest Due on Series 2016-1 Note Refonding of Se1ies 2007A 10/1/17 Interest Payment Additional Proceeds 9,310,000.00 (46,685.35) 224,858.35 9,488,173.00 2.400,000.00 6,890.000.00 71,844.37 99.803.20 171.647.57 22.392.50 1,000.00 3.132.93 26,525.43 9,488,173.00 Investment Earnings: Unless otherwise indicated above, the Issuer intends to allocate all investment earnings allocable to the refunding of Refunded Obligations to the repayment of the Refunded Obligations. Investment earnings on the financing of the New Money Portion will be allocated to the payment of principal and interest on the Bonds. Exhibit A-2 Form of Close-Out -Complete as of the earliest of (1) the date the Financed Property is Placed in Service, (2) the date all Sale Proceeds of the Bonds have been spent, or (3) the 5th Anniversary of the Closing Date1 $9,310,000 City of Salina, Kansas General Obligation Internal Improvement Bonds Series 2017-A (the "Bonds") Bond Issue Close Out This Bond Issue Close Out confirms the allocation and expenditure of Sale Proceeds of the above- referenced portion of Bonds allocable to the Financed Property and to the extent noted other funds of the Issuer. New Money Portion New Money Portion Sources Expected Amount Actual Amount Issue Price (Sale Proceeds) $9,488,173.00 Other Issuer Funds 0.00 Total Sources $9,488.173.00 New Money Portion New Money Portion Uses of Sale Proceeds and Other Money Expected Amount Actual Amount Underwriter's Discount $99,803.20 Bond Insurance or Other Credit Enhancement 0.00 Other Issuance Cost 74,976.80 Debt Service Reserve Fund 0.00 Financed Assets2 2,400,000.00 Funded Interest on Bonds 0.00 Other Use [Retire Series 2016-1 Notes] 6,912,392.50 Other Use [Interest on 10/1/17 Payment Date for Series 2007 A Bonds l 1,000.00 Total Uses $9.488.172.50 Investment Earnings: All earnings from the investment of Sale Proceeds of the New Money Portion of the Bonds are allocated to the payment of interest on the Bonds. Placed In Service: The Financed Property [has not been placed in service as of this date] [was "placed in service" no earlier than [Month] [Year]. The Financed Property [has not been placed in service as of this date] [ was "placed in service" no earlier than [Month] [Year]. Assets are considered to be "placed in service" as of the date on which, based on all the facts and circumstances: (1) the constructing and equipping of the 1 If all Sale Proceeds have not been spent by the end of the 5th Anniversary of the Closing Date, contact Bond Counsel and obtain instructions regarding what to do with remaining money. 2 Provide narrative description and itemized amounts for individual projects asset has reached a degree of completion which would permit its operation at substantially its design level; and (2) the asset is, in fact, in operation at that level. Expenditure Records: Attached are written records of expenditures required to be maintained pursuant to Section 3(b) of the Tax Certificate for the Bonds as part of the Bond Compliance File. City of Salina, Kansas By: Title: Dated: Exhibit B Form 8038-G VIA FEDERAL EXPRESS Internal Revenue Service Center Ogden, Utah 84201 ;;; 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 September 14, 2017 Ref : 600596 60174 GMR Dale: 14Sep17 Wgl : 1.00 LBS Dep: OV : SHIPPING : SPECIAL : HANDLING : 0 . 00 TOTAL : Svcs: ** 2DAY ** TRCK : 4076 6911 4633 Re: $9,31 0,000 General Obligation Internal Improvement Bonds, Series 2017-A, of the City of Salina, Kansas, Dated July 27, 2017 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 60596.60174 Very truly yours, Gina M. Riekhof 12 .3& 0.62 0 .00 13 .00 September 21 ,2017 Dear Customer: The following is the proof-of-delivery for tracking number 407669114633. Delivery Information: Status: Signed for by: Service type: Special Handling: Shipping Information: Tracking number: Recipient: Delivered D.ELZZA FedEx 2Day Deliver Weekday No Signature Required 407669114633 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: SANDY CASHAW Gilmore & Bell , P.C. 2405 Grand Boulevard Suite 1100 Kansas City, MO 64108 US 600596.60174 GMR Shipping/Receiving 1973 RULON WHITE BLVD OGDEN , UT 84201 Sep 15, 2017 09:35 Sep 14, 2017 0.5 lbs/0.2 kg Form8038-G lnfonnatlon Retum for Tax-Exempt Govemmental Obligations (Rev. September 2011) II> Under Internal Revenue Code section 149(•) 0MB No. 1645-0720 Depamnerrt of the T~ .... See Npare1e nttNctlonl, lnt8mll Rewnue s.rvlce Caution: If the Issue pric:e II under $100,000, use Form 8038-GC. Reoorting Authoritv If Amended Return, check here IJI-D 1 llauar'• name 2 laeuer'• employer ldentlfloalion number (EIN) City of Salina, Kansas 48.S017Z88 Sa Name of l)el1IOl1 {other than Issue!) with whom the IRS may ~munlcate about this return (aee lnllr\lctlons) ab Telephone runber of other penon "-°" Sa Gina M. Rlekhof, Gilmore & Bell, P.C., Bond Counsel 816-221-1000 4 Number and street (or P.O. bolt If mall ls not delivered to .treat addrna) I Aoomllulte I Report number (For IRS Use C>n)tJ 2405 Grand Boulevard 1100 I :3 I·.; 1 ' • e City, IO'MI, or po9I offloe, ltllte, and ZIP code 7 Dateof lnue Kansas Cfty, MO 84108 07/27/2017 e Name of IAue G_,..I Obligation lntMnal in,pro-nent Bonda, Serles 2017-A ' CUSIP number 714744AW2 11111 Name and title of offloer or other employee of the IBauer whom the IRS may call fer more lnlonnation (IN 10b Telephone numberof oflloerorother Nlln.lOllons) employee lhown an 1oa Cindy Beneke, Deputy Finance Director 78~S09-S7!5 ••-11111:• 1• Type of l11ue (enter the issue price). See the instructions and attach schedule. 11 Education . . . 11 12 Health end hospital . 12 13 Transportation . 13 14 Public aafety • . 14 15 EnVironment Oncludlng aewage bonds) . 111 16 Housing . . . 18 17 Utilities . . 17 18 Other. Desa1be ... Publlc Improvements (environmental lmDrovamants, convention center, streets) 18 9,488,173 19 If obligations are TANs or RANs, check only box 19a ... 0 .... If obligations are BANs, check only box 19b IJll.0 , : . .. : . . . .. -20 If obligations ere In the form of a lease or insteUment sale, check box ... o ·• .. .. :·, ·-.. -.. . -. . . .. D11111 Description of Obligations. Comolete for the entire issue for which this form Is being filed. (a) Final mat\ll1ty elate lb) 19aueprice ,~1 6ltwcl Ndarnpllan (d)We~hted tel Yllld price at tnatu1ty __.. matullty 21 10/01/2037 s 9,488,173 t 9,310,000 11.142 """""" z.na.c ~ 11111 ~ u ... of Proceeds of Bond Issue ru,cludlna underwriters' discount) 22 Proceeds used for accrued Interest 22 0 23 Issue price of entire Issue (enter amount from llne 21, column (b)) . 23 9,488,173 24 Proceeds used for bond Issuance costs (Including undetwriters' discount). 24 171,648 ' 25 Proceeds used for credit enhancement 25 0 28 Proceeds allocated to reasonably JlKIUired reserve or replacement fund 26 0 .. 27 Proceeds used to currently refund prior Issue& 27 8,813,S92 .. :.. . .·· .. 28 Proceeds used to advance refund prior Issues 28 0 t',c·, .• . ·~, . 28 Total (add lines 24 through 28) . . , .. . 29 7,o86,040 30 Nonrefundlng proceeds of the Issue (subtract line 29 from line 23 and enter amount here) 30 Z,.OS,1U ••----.11-·-DescriDtlon of Refunded Bonds. Complete this oart onlV for refundina bonds. 31 Enter the remaining weighted average maturity of the bonds to be currently refunded . ... 0.0111 ye.-s 32 Enter the remaining weighted average maturity of the bonds to be advance refunded • ... NIA veers 33 Enter the last date on which the refunded bonds will be called (MM/00/YYVV) IJll,-08/01/2017 34 Enter the dete(s) the refunded bonds were Issued ... (MM,WIVYYV) 02/10/2018 For Paperwork Reduction Act Notice, ... Mparate ln8tnlction1. Cat. No. asnss Fonn 8038-G (Rev.11•2011) Form 8038-G (Rev. 9-2011) Page2 ••.-r-•-... II Miscellaneous 35 Enter the amount of the state volume cap allocated to the issue under section 141 (b)(5} 35 36a Enter the amount of gross proeeeds Invested or to be Invested In a guaranteed investment contract (GIC) (see Instructions) 36a b Enter the final maturity date of the GIC ..,_ C Enter the name of the GIC provider..,_ 37 Pooled financings: Enter the amount of the proceeds of this Issue that are to be used to make loans .... to other governmental units • . . 37 38a b If this Issue Is a loan made from the proceeds of another tax-exempt Issue, check box ..,_ 0 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 haa designated the isSue under section 265(b)(3)(B)(i)(III) (amall lGeuer 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 e hedge, check here ..,_ 0 and enter the following Information: 418 b Name of hedge provider..,. c Type of hedge ... ----------------d Term of hedge""---------------- .. 0 ..,_ D 42 If the IBSUer has auperintegrated the hedge, check box • • • • • . • . • • • • • • • • • • . • • "" D 43 If the Issuer has established written proceduJ'88 to ensure that all nonqualified bonds of this issue are remediated according to the requirements under the Code and Regulations (see Instructions), check box • . . . • • .,. @ If the Issuer has established written procedures to monitor the requirements of Motion 14'3, check box . . . .,. 121 If some portion of the proceeds was used to reimburse expenditures, check here .. @ and enter the amount of reimbursement • . • • • • • • • "" $420,803.13 b Enter the date the official Intent was adopted ..,. _v_a_rlous __ o_a_bl5_and_P_ro_.!Jects.._ ________ _ Signature and Consent Paid Preparer Use Only Under penaltlea ol pe,jury, I declarw 1hlt I haw exainkwd lhla relll'n ar,ct aocompanylng schedules and lllatamanla, and to the beat of my kncwlldge and belief, they -lnle, corr9Ct, end oomplete. I funh• declart 111&1 I corunl ID the IRS'• di9cbli.n of the ilauel'1 Rltil'n lnlomwllon, ea n-..ry to ~ ~· return, to the'*'°" that I have authar1zed al:loYa. f:,, ,11~ t..6ut:tM q~1 Cindy Beneke, Deputy Finance Director Signature of s authonied re~ 1' a print name and title Prim/Type prepare,'$ name Pnlpam'• tiglllhn,, A ·~ aMClk D If l'TIN James Dummitt ~----'f' -17 Mlf-4ffll)loY9d POU)IZl37 Firm'• name ~ GIimore I< Bell, P.C. Firm'• EIN ~ 43·1111738 'aaddrNs ~ 2405 Grand Boulevard, Suite 1100, Kansn Cl , MO 64108 Phone no. 115-ZZMOOO Form 8038-G ~. 9-2011) Exhibit C Table of Funds and Restricted Money Investment Restriction Materially Higher Yield Limit for Money Not Yield Subject to Temporary Qualifying Reduction Rebate4 Yes/No Restricted Period for for Payments -Eligible for Money Unrestricted Unrestricted Permitted Spending Fund/Account Yes/No1 Investment:2 Investment Yes/No3 Exception5 Y; 3 years from Closing Date: Minor Yes; 6 month; Improvement Fund (New Portion Bond Yield+ 18 month; [2 Money Portion) Yes thereafter 1/8% Yes vearl Yes -90 days Improvement Fund from Closing (Refunded Notes) Yes Date. NIA Yes Yes; 6 month Yes -90 days Redemption Fund from Closing (Refunded Interest) Yes Date. NIA Yes Yes· 6 month Yes; 13 months from receipt to extent part of bona fide debt service No -So long as fund6 Minor qualifying for Portion Bond Yield+ bona fide debt Debt Service Account Yes thereafter 1/1000 % No service fund 1 Assumes money in fund/account is held for purposes described in the Bond documents. Any money intended by the Issuer to be used to pay debt service on the Bonds must be invested at a yield not exceeding the Bond Yield unless a Bond Counsel Opinion is obtained. 2 Minor Portion -Money not qualifying for any other temporary period for unrestricted investment or as part of a bona fide debt service fund (see below) may be invested at an unrestricted yield so long as the amount of money invested for the Bond issue does not exceed $100,000 (or 5% of the issue price, ifless). 3 See Exhibit F-2 (Annual Checklist) regarding calculation and payment of Yield Reduction Amount. 4 See Exhibit F-2 (Annual Checklist) regarding calculation and payment of Arbitrage Rebate. 5 Spending Exceptions -For use by Rebate Analyst in connection with the Annual Checklist (See Exhibit F-2). 6 Bona Fide Debt Service Fund -Means a fund or account or a portion of the fund or account used by the issuer to match annual revenues and debt service on the Bonds so long as the fund or account is reduced each year to an amount not exceeding I/12th of the annual debt service on the Bonds. Exhibit D Computation of Debt Service Schedule, Proof of Bond Yield, Weighted Average Maturity of the Bonds, and Remaining Weighted Average Maturity of the Refunded Notes Debt Service Schedule Period Annual Bond Total Ending Principal Coupon Interest Debt Service Debt Service Balance Bond Value 07/27/2017 9,310,000 9,310,000 04/01/2018 193,666.53 193,666.53 9,310,000 9,310,000 10/01/2018 175,000 3.000% 142,868.75 317,868.75 511,535.28 9,135,000 9,135,000 04/01/2019 140,243.75 140,243.75 9,135,000 9,135,000 10/01/2019 390,000 3.000% 140,243.75 530,243.75 670,487.50 8,745,000 8,745,000 04/01/2020 134,393.75 134,393.75 8,745,000 8,745,000 10/01/2020 395,000 3.000% 134,393.75 529,393.75 663,787.50 8,350,000 8,350,000 04/01/2021 128,468.75 128,468.75 8,350,000 8,350,000 l 0/01/2021 410,000 3.000% 128,468.75 538,468.75 666,937.50 7,940,000 7,940,000 04/01/2022 122,318.75 122,318.75 7,940,000 7,940,000 10/01/2022 420,000 3.000% 122,318.75 542,318.75 664,637.50 7,520,000 7,520,000 04/01/2023 116,018.75 116,018.75 7,520,000 7,520,000 10/01/2023 435,000 3.000% 116,018.75 551,018.75 667,037.50 7,085,000 7,085,000 04/01/2024 109,493.75 109,493.75 7,085,000 7,085,000 10/01/2024 445,000 3.000% 109,493.75 554,493.75 663,987.50 6,640,000 6,640,000 04/01/2025 102,818.75 102,818.75 6,640,000 6,640,000 10/01/2025 455,000 3.000% 102,818.75 557,818.75 660,637.50 6,185,000 6,185,000 04/01/2026 95,993.75 95,993.75 6,185,000 6,185,000 10/01/2026 475,000 3.000% 95,993.75 570,993.75 666,987.50 5,710,000 5,710,000 04/01/2027 88,868.75 88,868.75 5,710,000 5,710,000 10/01/2027 490,000 3.000% 88,868.75 578,868.75 667,737.50 5,220,000 5,220,000 04/01/2028 81,518.75 81,518.75 5,220,000 5,220,000 10/01/2028 505,000 3.000% 81,518.75 586,518.75 668,037.50 4,715,000 4,715,000 04/01/2029 73,943.75 73,943.75 4,715,000 4,715,000 10/01/2029 520,000 3.000% 73,943.75 593,943.75 667,887.50 4,195,000 4,195,000 04/01/2030 66,143.75 66,143.75 4,195,000 4,195,000 10/01/2030 530,000 3.000% 66,143.75 596,143.75 662,287.50 3,665,000 3,665,000 04/01/2031 58,193.75 58,193.75 3,665,000 3,665,000 10/01/2031 555,000 3.000% 58,193.75 613,193.75 671,387.50 3,110,000 3,110,000 04/01/2032 49,868.75 49,868.75 3,110,000 3,110,000 10/01/2032 565,000 3.000% 49,868.75 614,868.75 664,737.50 2,545,000 2,545,000 04/01/2033 41,393.75 41,393.75 2,545,000 2,545,000 10/01/2033 480,000 3.125% 41,393.75 521,393.75 562,787.50 2,065,000 2,065,000 04/01/2034 33,893.75 33,893.75 2,065,000 2,065,000 10/01/2034 495,000 3.250% 33,893.75 528,893.75 562,787.50 1,570,000 1,570,000 04/01/2035 25,850.00 25,850.00 1,570,000 1,570,000 10/01/2035 505,000 3.250% 25,850.00 530,850.00 556,700.00 1,065,000 1,065,000 04/01/2036 17,643.75 17,643.75 1,065,000 1,065,000 10/01/2036 525,000 3.250% 17,643.75 542,643.75 560,287.50 540,000 540,000 04/01/2037 9,112.50 9,112.50 540,000 540,000 10/01/2037 540,000 3.375% 9,112.50 549,112.50 558,225.00 9,310,000 3,328,897.78 12,638,897.78 12,638,897.78 Proof of Bolld Yield alld WAM of the Bollds Present Value PV to 07/27/2017 Date Debt Service Factor @ 2.8984463390% 04/01/2018 193,666.53 0.980684938 189,925.85 10/01/2018 317,868.75 0.966675650 307,275.98 04/01/2019 140,243.75 0.952866488 133,633.57 10/01/2019 530,243.75 0.939254593 498,033.88 04/01/2020 134,393.75 0.925837146 124,426.73 10/01/2020 529,393.75 0.912611371 483,130.76 04/01/2021 128,468.75 0.899574529 115,567.22 10/01/2021 538,468.75 0.886723920 477,473.12 04/01/2022 122,318.75 0.874056885 106,913.55 10/01/2022 542,318.75 0.861570801 467,246.00 04/01/2023 116,018.75 0.849263084 98,530.44 10/01/2023 551,018.75 0.837131185 461,274.98 04/01/2024 109,493.75 0.825172593 90,351.24 I 0/01/2024 1,974,493.75 0.813384831 1,606,023.27 04/01/2025 81,518.75 0.801765460 65,358.92 10/01/2025 81,518.75 0. 790312075 64,425.25 04/01/2026 81,518.75 0.779022303 63,504.92 10/01/2026 81,518.75 0.767893808 62,597.74 04/01/2027 81,518.75 0.756924286 61,703.52 10/01/2027 81,518.75 0.746111466 60,822.07 04/01/2028 81,518.75 0. 735453109 59,953.22 10/01/2028 586,518.75 0.724947009 425,195.01 04/01/2029 73,943.75 0.714590991 52,839.54 10/01/2029 593,943.75 0. 704382910 418,363.83 04/01/2030 66,143.75 0.694320654 45,924.97 10/01/2030 596,143.75 0.684402140 408,002.06 04/01/2031 58,193.75 0.674625314 39,258.98 10/01/2031 613,193.75 0.664988151 407,766.58 04/01/2032 49,868.75 0.655488658 32,688.40 10/01/2032 614,868.75 0.646124867 397,281.99 04/01/2033 41,393.75 0.636894839 26,363.47 10/01/2033 521,393.75 0.627796664 327,329.26 04/01/2034 33,893.75 0.618828459 20,974.42 10/01/2034 528,893.75 0.609988366 322,619.03 04/01/2035 25,850.00 0.601274556 15,542.95 10/01/2035 530,850.00 0.592685224 314,626.95 04/01/2036 17,643.75 0.584218593 10,307.81 10/01/2036 542,643.75 0.575872910 312,493.84 04/01/2037 9,112.50 0.567646446 5,172.68 10/01/2037 549,112.50 0.559537499 307,249.03 12,552,647.78 9,488,173.00 Proceeds Summary Delivery date 07/27/2017 Par Value 9,310,000.00 Premium (Discount) 178,173.00 Target for yield calculation 9,488,173.00 2 Remaining Average Maturity of the Refunded Notes Bond Component Date Principal Coupon Price Issue Price General Obligation Temporary Notes, Series 2016-1: SRLCPN 08/01/2017 6,890,000.00 6,890,000.00 General Obligation Temporary Notes, Series 2016-1 All Refunded Issues 3 0.650% Last Call Date 100.000 Issue Date 02/10/2016 6,890,000.00 6,890,000.00 Remaining Weighted Average Maturity 0.0111 0.0111 Exhibit E-1 Description of Property Comprising the Financed Property Exhibit E-2 List of Costs Paid Prior to Closing to be Reimbursed from Bond Proceeds Allocable to the New Money Portion Basis for Reimbursement (See Payee Date Paid Amount Paid Key Below) Total to Be Shown on Line 45b Form 8038-G 0 Reimbursement Key: 1. Paid not earlier than sixty days prior to date of written evidence of intent to finance completed. See Project authorizing resolutions in the Bond Transcript. 2. Costs of issuance of the Bonds. 3. Preliminary cost for design or similar costs paid prior to commencement of acquisition of construction or acquisition of the Financed Property (note: in the aggregate, these cannot exceed 20% of the Issue Price of the New Money Portion of the Bonds). Exhibit F-1 List of Existing Contracts and Agreements with Parties other than Eligible Users • Naming, Advertising and Sponsorship Agreement, dated February 14, 2017, between Global Spectrum (as agent for the City of Salina, Kansas) and Schwan's Shared Services, LLC • Management Agreement, dated as of March 1, 2017, between Global Spectrum, L.P. and the City of Salina, Kansas, for the Bicentennial Center Exhibit F-2 FORM OF ANNUAL COMPLIANCE CHECKLIST $9,310,000 City of Salina, Kansas General Obligation Internal Improvement Bonds Series 2017-A (the "Bonds") ANNUAL COMPLIANCE CHECKLIST FORM (Prepare annually and retain in Bond Compliance File) Name of Issuer Bond Compliance Officer: Period covered "Annual Period" : Item 1 Question Placed in As of the date of the Checklist, has the Financed Property been placed Service in service (available for use and actually used for their intended purpose). If Yes, attach completed Close Out to Checklist. Item 2 Question Ownership Was the entire Financed Property owned by the Issuer during the entire Annual Period? If answer above was "No," was advice of legal counsel obtained prior to the transfer? If Yes, include a description of the conclusions in the Tax-Exempt Bond File. If No, contact legal counsel and include a description of the conclusions in the Tax-Exempt Bond File. Item3 Question Leases & During the Annual Period, was any part of the Financed Property leased Other Rights at any time pursuant to a lease or similar agreement for more than 50 to Possession days? If answer above was "Yes," was advice oflegal counsel obtained prior to entering into the lease or other arrangement? If Yes, include a description of the conclusions in the Tax-Exempt Bond File. If No, contact legal counsel and include a description of the conclusions in the Tax-Exempt Bond File. Response 0Yes 0No Response OYes 0No 0Yes 0No Response OYes 0No 0Yes 0No Item4 Question Response Management During the Annual Period, has the management of all or any part of the DYes or Service operations of the Financed Property been assumed by or transferred to DNo Agreements another entity, other than the Management Agreement with Global Spectrum? During the Annual Period, has the Management Agreement with Global Spectrum been materially modified? If answer to either above was "Yes," was advice of legal counsel DYes obtained prior to entering into the management agreement? DNo If Yes, include description of the conclusions in the Tax-Exempt Bond File. If No, contact legal counsel and include description of the conclusions in the Tax-Exempt Bond File. Item 5 Question Response Other Use Was any other agreement entered into with an individual or entity that DYes grants special legal rights to the Financed Facility, other than the 0No Naming, Advertising and Sponsorship Agreement with Schwan's? During the Annual Period, has the Naming, Advertising and Sponsorship Agreement with Schwan 's been materially modified? If answer to either above was "Yes," was advice of legal counsel DYes obtained prior to entering into the agreement? 0No If Yes, include description of the conclusions in the Tax-Exempt Bond File. If No, contact legal counsel and include a description of the conclusions in the Tax-Exempt Bond File. 2 ltem6 Question Response Arbitrage The Issuer should engage Bond Counsel or another person eligible to DYes & Rebate represent third parties before the Internal Revenue Service (an "Rebate 0No Compliance Analyst") to prepare an arbitrage rebate and yield reduction calculation prior to each 5th anniversary of the Closing Date on other dates determined by the Rebate Analyst thereafter. Has the Issuer engaged a Rebate Analyst? If Yes; include copy of latest computations in the Bond Compliance File. Also, if there was a rebate or yield reduction amount liability, include a copy of Form 8038-T, and evidence of filing and payment to the United States Treasury of any calculated arbitrage rebate or yield reduction amount in the Bond Compliance File. If No, and this checklist is being prepared as of July 1, 2022, contact Bond Counsel and obtain written confirmation that no computation or arbitrage analysis is required. Has the Issuer established any fund or account which it expects to be used to pay debt service on the Bonds other than those identified in the DYes Resolution for the Bonds or deposited to any fund or account established 0No under the Resolution amounts in excess of that needed to pay debt service on the Bonds coming due in a period more than 12 months in advance? Issuer Bond Compliance Officer: Date Completed: 3 Exhibit G Underwriter’s Receipt for Bonds and Issue Price Certificate UNDERWRITER'S RECEIPT FOR BONDS AND ISSUE PRICE CERTIFICATE $9,310,000 City of Salina, Kansas General Obligation Internal Improvement Bonds Series 2017-A Dated July 27, 2017 The undersigned, on behalf of Robert W. Baird & Co., Incorporated, (the "Original Purchaser"), as the Original Purchaser of the above-described bonds (the "Bonds"), being issued on the date of this Certificate by the City of Salina, Kansas (the "Issuer"), certifies and represents as follows: 1. Receipt for Bonds. The Original Purchaser acknowledges receipt by the Depository Trust Company on behalf of the Original Purchaser on the dated date of the Bonds consisting of fully registered "book-entry-only" bonds in authorized denominations in a form acceptable to the Original Purchaser. 2. Issue Price. (a) Public Offering. The Original Purchaser has offered all the Bonds to the Public in a bona fide initial offering to the Public at the offering prices listed on Schedule A (the "Initial Offering Prices"). Included in Schedule A is a copy of the pricing wire or similar communication used to document the initial offering of the Bonds to the Public at the Initial Offering Prices. (b) Sale Prices. As of the date of this Certificate, for each Maturity, the price or prices at which the first 10% of such Maturity was sold to the Public is the respective price or prices listed in Schedule A and all of the Bonds comprising the first I 0% of sales for each Maturity were sold at the same price. (c) Defined Terms. (i) The term "Maturity" means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate maturities. (ii) The term "Public" means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter. The term "related party" is defined in U.S. Treasury Regulation § 1.150-l(b) which generally provides that the term related party means any two or more persons who have a greater than 50 percent common ownership, directly or indirectly. (iii) The term "Underwriter" means (A) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public). 3. 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. Provided, however, that nothing herein represents our interpretation of any laws, and in particular, regulations under Section 148 of the Internal Revenue Code. Dated: July 27, 2017 ROBERT W. BAIRD & CO., INCORPORATED RED BANK, NEW JERSEY By:f&~ Title: f,A/.l SCHEDULE A $9,310,000 City of Salina, Kansas General Obligation Internal Improvement Bonds Series 2017-A Dated July 27, 2017 Initial Offering Price and Sale Price Documentation Wire Details . [View Deal Actwns: Inbox V] [Go] [Print] [Close] Rec'd Date/Time (EST) Sender Deal ST Wire Type/Title Master Message# T ype 07/10/17 04:02 PM Robert W. Baird NJ Confirmation Wire RE: $ 9,310,000 City of Salina, Kansas General Obligation Internal Improvement Bonds, Series 2017-A To the members addressed: Comp We are pleased that our account as set forth herein purchased the above mentioned bonds on 07/10/2017 at competitive bidding. Details of our bid follow: Production Spread Bid T. I.C. 101.9137809 10.720109 100.84177 3.014149 N. I.C. 3.038868 The bonds were purchased subject to approval of legality of GILMORE & BELL, P.C., Kansas City, MO. MOODY'S: Aa3 S&P: FITCH: DATED:07/27/2017 DUE: 10/01 FIRST COUPON:04/01/2018 INITIAL TRADE DATE: 07/11/2017 ADD'L TAKEDOWN MATURITY AMOUNT COUPON PRICE ( Pts ) 10/01/2018 175M 3.00% 1.10 1/2 (Approx. $ Price 102.216) 10/01/2019 390M 3.00% 1. 25 1/4 (Approx. $ Price 103.747) 10/01/2020 395M 3.00% 1. 35 1/4 (Approx. $ Price 105 .114) 10/01/2021 410M 3.00% 1. 50 1/4 (Approx. $ Price 106.051) 10/01/2022 420M 3.00% 1. 65 1/4 (Approx. $ Price 106.671) 10/01/2023 435M 3.00% 1. 84 3/8 (Approx. $ Price 106.743) 10/01/2024 445M 3.00% 1. 96 1/2 (Approx. $ Price 106.930) 10/01/2025 455M 3.00% 2.10 5/8 (Approx. $ Price PTC 10/01/2024 105.965 Approx. YTM 2.199) 10/01/2026 475M 3.00% 2.30 5/8 (Approx. $ Price PTC 10/01/2024 104.605 Approx. YTM 2.437) 10/01/2027 490M 3.00% 2.50 5/8 (Approx. $ Price PTC 10/01/2024 103.264 Approx. YTM 2.632) 10/01/2028 505M 3.00% 2.75 3/4 (Approx. $ Price PTC 10/01/2024 101.616 Approx. YTM 2.830) 10/01/2030 1,050M 3.00% 3.00 1. 00 10/01/2031 555M 3.00% 3.10 1 1/4 (Approx. $ Price 98.857) (Original Issue Discount) 10/01/2032 565M 3.00% 3.20 1 1/4 (Approx. $ Price 97.607) (Original Issue Discount) 10/01/2033 480M 3.125% 3.25 1 1/4 (Approx. $ Price 98.434) (Original Issue Discount) 10/01/2034 495M 3.25% 3.29 1 1/ 4 (Approx. $ Price 99.475) (Original Issue Discount) 10/01/2035 505M 3.25% 3.33 1 1/2 (Approx. $ Price 98.912) (Original Issue Discount) 10/01/2036 525M 3.25% 3.375 1 1/2 (Approx. $ Price 98.242) (Original Issue Discount) 10/01/2037 540M 3.375% 3. 40 1 1/2 (Approx. $ Price 99.633) (Original Issue Discount) CALL FEATURES: Optional call in 10/01/2024@ 100.00 Delivery is firm for Thursday, July 27, 2017. By: Robert W. Baird & Co., Inc. Red Bank, NJ 07/10/2017 03:18:25 PM EST Bond Report $9,310,000.00 (Revised) Salina, KS General Obligation Internal Improvement Bonds, Series 2017-A S&P: NR / Moody: Aa3 / Fitch: NR / Kroll: NR Description: SAL REV AMT Sale Date: 07/10/2017 13:00:00 PM COST Robert W. Baird Page 1 of 2 rwP flrJOL Delivery Date: 07/27/2017 Dated Date: 07/27/2017 First Int Date: 04/01/2018 Int Accrue Date: 07/27/2017 Submitted via Parity: No. Maturity Coupon Price Computed Cone. Takedown Price of Date or Price To Bonds Basis Yield Date 175 10/01/2018 3.0000 1.1000 102.2160 0.5000 .390 10/01/2019 3.0000 1.2500 103.7470 0.2500 _395 10/01/2020 3.0000 1.3500 105.1140 0.2500 .410 10/01/2021 3.0000 1.5000 106.0510 0.2500 .420 10/01/2022 3.0000 1.6500 106.6710 0.2500 435 10/01/2023 3.0000 1.8400 106.7430 0.3750 445 10/01/2024 3.0000 1.9600 106.9300 0.5000 455 10/01/2025 3.0000 2.1000 105.9650 0.6250 10/01/2024 475 10/01/2026 3.0000 2.3000 .104.6050 0.6250 10/01/2024 490 10/01/2027 3.0000 2.5000 103.2640 0.6250 10/01/2024 . 505 10/01/2028 3.0000 2.7500 . 101.6160 0.7500 10/01/2024 10/01/2029 1,050 10/01/2030 3.0000 3.0000 100.0000 1.0000 10/01/2030 555 10/01/2031 3.0000 3.1000 98.8570 1.2500 10/01/2031 ·565 10/01/2032 3.0000 3.2000 97.6070 1.2500 10/01/2032 480 10/01/2033 3.1250 3.2500 98.4340 1.2500 10/01/2033 495 10/01/2034 3.2500 3.2900 99.4750 1.2500 10/01/2034 505 10/01/2035 . 3.2500 3.3300 98.9120 1.5000 10/01/2035 525 10/01/2036 3.2500 3.3750 98.2420 1.5000 10/01/2036 540 10/01/2037 3.3750 3.4000 99.6330 1.5000 10/01/2037 07/10/2017 03:18:25 PM EST Bond Report $9,310,000.00 (Revised) Salina, KS General Obligation Internal Improvement Bonds, Serles 2017-A Delivery Date: 07/27/2017 First Int Date: 04/01/2018 Par Amount: Gross Prod: Spread: Bid: Accrued Int: Bond Yrs: Avg Life: Gross Int Cost: -Net Premium: Net Int Cost: NIC: TIC -NIC Date*: Avg Takedown: S&P: NR / Moody: Aa3 / Fitch: NR / Kroll: NR Description: SAL REV AMT Sale Date: 07/10/2017 13:00:00 PM COST Robert W. Baird Dated Date: 07/27/2017 Int Accrue Date: 07/27/2017 Submitted via Parity: Summary Total 9,310,000.00 9,488,173.00 99,804.21 9,388,368.79 0.00 106,965.11 11.4893 3,328,897.78 Per $100 100.000000 101.913781 1.072011 100.841770 0.000000 11 Years 5 Months 26 Days 78,368.79 (+Prod:178, 173.00 -Spread:99,804.21) 3,250,528.99 3.038868 3.014149 8.772154 Call Schedule Bonds due 10/01/2025 to 10/01/2037 callable 10/01/2024 at par. Page 2 of 2 CERTIFICATE OF MUNICIPAL ADVISOR $9,310,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2017-A DATED JULY 27, 2017 George K. Baum & Co., Kansas City, Missouri, is employed as municipal advisor to the City of Salina, Kansas (the "Issuer") with respect to the above captioned bonds (the "Bonds"). 1. Duties. The Municipal 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, 2017 and the Official Statement dated July 10, 2017, (both documents referred to collectively herein as the "Official Statement"). 2. Official Statement. The Municipal Advisor has read the Official Statement, but has not, however, independently verified the factual and financial information contained in the Official Statement, including the appendices attached thereto, nor have we participated in the drafting Appendices B and C to the Official Statement. 3. Certification. Based on the foregoing, the Municipal Advisor certifies, to the best of our lmowledge, information and belief, the information contained in the Official Statement (except for Appendices B and C 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 27, 2017. GEORGE K. BAUM & CO. ::s~~ Title: ---~----"'-"------------ ORDINANCE NO. 07-10390 AN ORDINANCE AUTHORIZING THE ISSUANCE AND DELNERY OF $6,545,000 PRINCIPAL AMOUNT OF GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS, SERIES 2007-A, OF THE CITY OF SALINA, KANSAS, FOR THE PURPOSE OF PAYING THE COST OR A PORTION OF THE COST OF CERTAIN IMPROVEMENTS; PROVIDING FOR THE LEVY AND COLLECTION OF AN ANNUAL TAX FOR THE PURPOSE OF PAYING THE PRINCIPAL OF AND INTEREST ON THE BONDS AS THEY BECOME DUE; AND MAKING CERTAIN COVENANTS WITH RESPECT THERETO. WHEREAS, the City of Salina, Kansas (the "City") is a City of the first class, created, organized and existing under the laws of the State; and WHEREAS, pursuant to K.S.A. 10-101 et seq., K.S.A. 12-685 et seq., and K.S.A. 12-6a01 et seq., as amended and supplemented, and all other applicable provisions of the laws of the state of Kansas, the governing body of the City has caused the following improvements to be undertaken in the City (such improvements to be referred to as the "Improvements"): Resolution Number Prolect Name Amount 02-5811; 06-6237 North Ohio Overpass $2,240,000 04-6086; 06-6235 North Broadway Blvd 2,257,939 06-6243 Mamolia Hills Subdivision 790,029 06-1588 Piercy Addition 147,901 06-6233 Golden Eagle 312,675 06-6252 Ea,:deMed 27,599 06-6264 Quail Meadows, Phase II 494,675 06-6280 West Grand Water extension 201,950 06-6282 Lakeside Addition 72,232 TOTAL= $6,545,000 WHEREAS, all legal requirements pertaining to the Improvements have been complied with, and the governing body of the City now finds and determines that the total cost of the Improvements is at least $6,545,000, to be paid by the issuance of general obligation bonds; and WHEREAS, the governing body of the City is authorized by law to issue general obligation bonds of the City to pay the costs of the Improvements; and WHEREAS, the governing body of the City hereby finds and determines it is necessary for the City to authorize the issuance and delivery of its general obligation bonds in the principal amount of $6,545,000 to pay the costs of the Improvements; NOW, THEREFORE, BE IT ORDAINED BY THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS, AS FOLLOWS: Section 1. Definitions of Words and Terms. "Act" means the Constitution and all applicable statutes of the State including but not limited to K.S.A. 10-101 et seq., K.S.A. 12-685 et seq., and K.S.A. 12-6a01 et seq., all as amended and supplemented. "Authorized Cost" means the amount of expenditure for an Improvement which has been authorized to be paid by the City by a resolution or ordinance of the City, less (1) the amount of any notes or bonds of the City which are currently outstanding and available to pay the Authorized Cost, and (2) any Authorized Costs which have been previously paid by the City or by any eligible source of funds unless such amounts are entitled to be reimbursed under State and federal law. "Bond and Interest Fund" means the Bond and Interest Fund of the City for its general obligation bonds. "Bonds" means the General Obligation Internal Improvement Bonds, Series 2007-A authorized by this Ordinance in the aggregate principal amount of$6,545,000 and dated June 15, 2007. "City" means the City of Salina, Kansas. "City Clerk" means the appointed and acting City Clerk or, in the City Clerk's absence, the appointed and/or elected Deputy or Acting City Clerk of the City. "Code" means the Internal Revenue Code of 1986, as amended, and the applicable regulations proposed or promulgated thereunder of the United States Department of the Treasury. "Improvements" means the improvements referred to in the preamble to this Ordinance. "Mayor" means the elected and acting Mayor of the City or, in the Mayor's absence, the appointed and/or elected Vice or Acting Mayor of the City. "Ordinance" means this Ordinance authorizing the issuance of the Bonds. "State" means the state of Kansas. "Treasurer" means the appointed and acting Treasurer of the City or, in the Treasurer's absence, the appointed and/or elected Deputy or Acting Treasurer of the City. Section 2. Authorization of and Security for the Bonds. These Bonds shall be issued for the purpose of providing funds to pay the Authorized Costs of the Improvements. The Bonds shall be general obligations of the City payable as to both principal and interest in part from special assessments levied upon the property benefited by the construction of certain improvements, and, if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable property, real and personal within the territorial limits of the City. The balance of the principal of and interest on the Bonds is payable from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the City. The full faith, credit and resources of the City are hereby -2- irrevocably pledged for the prompt payment of the principal of and interest on the Bonds as the same become due. Section 3. Tenns, Details and Conditions of the Bonds. The Bonds sha11 be dated and bear interest, shall mature and be payable at such times, shall be in such forms, shall be subject to redemption and payment prior to the maturity thereof, and shall be issued and delivered in the manner prescribed and subject to the provisions, covenants and agreements set forth in a resolution hereinafter adopted by the governing body of the City. Section 4. Levy and Co11ection of Annual Tax and Assessments. The governing body of the City sha11 annually make provision for the payment of principal of, premium, if any, and interest on the Bonds as the same become due, taking into account any scheduled mandatory redemptions, by levying and collecting the necessary taxes and/or assessments upon all of the taxable tangible property within the City in the manner provided by Jaw. The taxes and/or assessments referred to above sha11 be spread upon the tax rolls 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, and the proceeds derived from the taxes and/or assessments shall be deposited in the Bond and Interest Fund. If at any time the taxes and/or assessments are not co11ected in time to pay the principal of or interest on the Bonds when due, the City Treasurer is hereby authorized and directed to pay the principal or interest out of the general funds of the City and to reimburse the general funds for money so expended when the taxes and/or assessments are collected. Section 5. Tax Covenants. The City covenants and agrees that it will not take any action, or fail to take any action, if any such action or failure to take action would adversely affect the exclusion of the interest on the Bonds from gross income for federal income tax purposes. The City covenants and agrees that it will use the proceeds of the Bonds as soon as practicable and with all reasonable dispatch for the purpose for which the Bonds are issued as previously set forth, and that it will not directly or indirectly use or permit the use of any proceeds of the Bonds or any other funds of the City, or take or omit to take any action that would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148(a) of the Code. To that end, the City will comply with an requirements of Section 148 of the Code to the extent applicable to the Bonds. The City covenants and agrees that it will not use any portion of the proceeds of the Bonds, including any investment income earned on such proceeds, directly or indirectly, in a manner that would cause any Bond to be a "private activity bond" within the meaning of Section 141 (a) of the Code. Section 6. Further Authority. The Mayor, City Clerk and other City officials are authorized and directed to execute such documents and take such actions as they may deem necessary or advisable in order to carry out the purposes of this Ordinance. Section 7. Governing Law. The Ordinance and the Bonds shall be governed 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 and publication in the official City newspaper. -3- PASSED by the governing body of the City on June 11, 2007. City of Salina . Bond Ordinance Series 2007 -A S-1 Affidavit of Publication Following is a true and correct copy of ____ _.s,..u .. m,..m,.,,..yy,..,__._N::..:'o..,t"'ic:"'e"'of....,S.,a .. 1.,.e ____________ _ together with proof of publication of the same. AFFIDAVIT l,. ______ ...,Au.,.,nwo""'G...,.a.,rr ... js"'o"'n"-------, being duly sworn, declare that I am the Majors/Nationals Coordinator of THE SALINA JOURNAL, a daily news- paper published at Salina, Saline County, Kansas, and of general circulation in said county, which newspaper has been continuously and uninterruptedly published for five consecutive years prior to first publication of at- tached notice, and that the attachc..__ ______ _ Summary Notice of Sale has bcen correctly published in said newspaper _l_ times,. _______ _ the first publication given in the issue of. _____ ..:.M::.:.a,:;y,._3"'1&.-_____ 2007. Subscribed and sworn to before me, this day of 9UMD A.O. 2007 C~uu ~L ". CHRISTY FINK 11t:JfJ Na!11y Public· S111e or K1nus M1 Appl. E~l)lres ~ -I I:)• 1~ lnlhoSalna • .kunol MaV 31, 2007)-.. -,.~ NOTICE · :. Of'~ -., $5.125 000' ~ GENERAi. OIILJQATION f' ~=-'~;ES ,.. ,u .. s.ooo- • GEN!IIAI. OSUGATION , INTERNAL IMPROVEMENT • BONDS· SERIES 2007-.,. ;~OF THE liN~ SALINA, 1•(QENEIIAL OSLIGATIONS >v PAYAIILE "' FROM UNUMITED AO -VALOREM TAXES) • 11111:1. a.-. lacalmllo --1 .. ..,..1noc1 bolow)bldoJor ... .,..- ol ss.~.ooo· a.-11 Obi,. =~Ti~.=,; Ind $1,545,000' ol Oontral 'Ollllgltian -Jmpro,,e-.monl -. s .... 2007-A llho '8ancll"), ol lho Clly ol. $ah, Kll'IUI (Iha 'Clly") '.l!tlbo-(1)1nlll0 -caoo ol -led and facMnilo •bido by ... Cily Clotk at lho addroa Ind lox n.- 'nottlnof1or Ml -and (2) lnlhocaNol-..UC:bl<lo tnrough PNIITY olocllonlc, .bid .-ion iyslomJ I:.i~· lnil lll..RJD., tot 111o ,-, """ I ·until Z OQ A ffl k¥ill lrnft. to1 ' ll>O-; on Monday, Juno 1 , :11. 2007 at "'1lcll -,uch --wll bo publicly INCi and. ..... bo IIClod upon by 1ho ~bodyatlll--)i,g lo bo hold at .. 1)() p.m, • • 111a1 day. No 0181 O< ·-• blcl&Wll bo conoldond. • • lmlLDlllllL Each -• :o1 Ile,-, WI bo dato<l 0 Juno 15, 2007 and w11 be- -due an AUQUII. 1, ~-Each -ol lho ~Wll-ollulyrag-__ 111.,.-- · naoon o1 ss.ooo °' any Im· itll rnlli1Jple '*eol, l!ad1 'N<ioo ol lha N-Wll boar -lllnomllo-daio ..... _ ... __ _ .,. Nolff.,. IOld. Tho lnlllr• MlonlllO-Wllbopay- -a1 "*"Illy. Tho r ..... -o1 ... sw.111- ... bo Iha Payr,g Agonc and Rog-to, 1111 Holis • l<xO Pl$ :n.o 8Dnds ... -ol luly rwglllofod • C0111f'rcalod -. oacn.ln .llo --...cn ol $15,000 . or any 1n1ogr11 ~-. 11'· Tllo lloncll wll bo -j!1.r10 15, 2007, and wll i,,. acme u amuany on Odo- • 1 In .,_ )'Nl8 and ln•b fmoun!sutlotllbolow: .~.m~~1 1365,000 20011 ~385.000 2009 ,3115.000 2010 .385.000 2011' •360.000 2012 l360,000 2013 4380.000 201• • .380.ooo 201s 1 •:iao.000 2010 1380,000 2017 ' 380,000 2018 , 380.000 2019" , ,:JI0,000 2020 · 380,000 2021 ..;360.000 2022 • 225,000 • 2023 225.000 202,4 • 225,000 2025 • • 225,000 2020 l ,' 225,000 2027 ".t.:!;.""l>Ot'f. llqocl lo • Tho -wll bear -· ~ fronl ... -dalO at :" .,:,:.~-"": l -t ... bo payoblo -~ on Aorl 1 ana Oclo-, ',it< 1, bo;lrvilng on Aprl 1, 2008. Tllo TIUIUIW of lho Sloto of Kanou Will bo (ho I P.-,; AQoc,l Ind llagt&lror '. Jo•.,.Noloo. · . ' I State of Kansas Office of Secretary of State Ron Thornburgh Affidavit of Publication I, Ron Thornburgh, Secretary of State of the State of Kansas, do hereby certify that I am the publisher of the Kansas Register, a newspaper published pursuant to K.S.A. 75-430, and that the attached is a true copy of the notice which appeared therein on the date given below: May 31, 2007 In Testimony Whereof: I hereto set my hand and cause to be affixed my official seal. Done at the City of Topeka this 31st day of May A.D.2007 I Ron Thornburgh Secretary of State KI08302 RESOLUTION NO. 07-6403 OF CITY OF SALINA, KANSAS ADOPTED JUNE 11, 2007 $6,545,000 REGISTERED BONDS BOOK-ENTRY ONLY SERIES 2007-A GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2007-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 301. Section 302. Section 303. Section 304. Section 401. RESOLUTION TABLE OF CONTENTS Title..................................................................................................................... 1 Recitals................................................................................................................ 1 ARTICLE I DEFINITIONS Definitions of Words and Terms ........................................................................ . ARTICLE JI DETAILS OF THE BONDS Authorization of the Bonds ............................................................................... .. Description of the Bonds ................................................................................... . Designation of Paying Agent and Bond Registrar ............................................ .. Method and Place of Payment of the Bonds ...................................................... . Method of Execution and Authentication of the Bonds ..................................... . Registration, Transfer and Exchange of Bonds ................................................. .. Surrender and Cancellation of Bonds ................................................................ . Mutilated, Lost, Stolen or Destroyed Bonds ...................................................... . Temporary Bonds .............................................................................................. .. Delivery of the Bonds ........................................................................................ . Book-Entry Bonds; Securities Depository ........................................................ .. Payments Due on Saturdays, Sundays and Holidays .......................................... . ARTICLE III REDEMPTION OF THE BONDS Optional Redemption ......................................................................................... . Selection of Bonds to be Redeemed .................................................................. . Notice of Redemption ....................................................................................... .. Effect of Cal) for Redemption ............................................................................ . ARTICLE IV ESTABLISHMENT OF FUNDS AND ACCOUNTS Creation of Funds and Accounts ....................................................................... .. -i- 4 4 5 5 6 6 7 7 7 8 8 8 9 10 11 11 12 Section 402. Section 501. Section 502. Section 503. Section 504. Section 601. Section 602. Section 603. Section 701. Section 702. Section 703. Section 801. Section 802. Section 803. Section 901. Section 902. Administration of Funds and Accounts .............................................................. . ARTICLEV APPLICATION OF BOND PROCEEDS Disposition of Bond Proceeds ............................................................................ . Withdrawals from the Improvement Fund ........................................................ .. Surplus in the Improvement Fund ...................................................................... . Substitution of Improvements ............................................................................... . ARTICLE VI PAYMENT OF THE BONDS Application of Moneys in the Principal and Interest Account.. ........................ .. Transfer of Funds to Paying Agent .................................................................... . Surplus in Principal and Interest Account ......................................................... .. ARTICLE VII DEPOSITS AND INVESTMENT OF FUNDS Deposits ............................................................................................................. . Investments ........................................................................................................ . Deposits into and Application of Moneys in the Rebate Fund ........................... .. ARTICLE VIII DEFAULT AND REMEDIES Remedies ............................................................................................................ . Limitation on Rights ofBondowners ................................................................. . Remedies Cumulative ........................................................................................ . ARTICLE IX AMENDMENfS Amendments ...................................................................................................... . Written Evidence of Amendments ..................................................................... . -ii- 11 12 12 12 12 13 13 13 13 13 14 14 15 15 15 16 ARTICLEX DEFEASANCE Section 1001. Defeasance .............................. ..................... ........ ... ........... ............................... .. 16 ARTICLE XI CONTINUING DISCLOSURE REQUIREMENTS Section 110 I. Disclosure Requirements.................................................................................... 17 Section 1201. Section 1202. Section 1203. Section 1204. Section 1205. Section 1206. ARTICLE XII MISCELLANEOUS PROVISIONS Preliminary Official Statement and Official Statement .................................... .. Tax Covenants ................................................................................................... .. Severability ........................................................................................................ . Further Authority ............................................................................................... . Governing Law .................................................................................................. . Effective Date .................................................................................................... . EXHIBIT A-BOND FORM EXHIBIT B -CONTINUING DISCLOSURE INSTRUCTIONS -iii- 17 17 18 18 18 18 RESOLUTION NO. 07-6403 A RESOLUTION PRESCRIBING THE FORM AND DETAILS OF AND AUTHORIZING THE DELIVERY OF $6,545,000 PRINCIPAL AMOUNf OF GENERAL OBLIGATION INTERNAL Th1PROVEMENT BONDS, SERIES 2007-A, OF THE CITY OF SALINA, KANSAS, PREVIOUSLY AUTHORIZED BY ORDINANCE NO. 07-10390 OF THE CITY; AND MAKING CERTAIN COVENANTS WITH RESPECT THERETO. WHEREAS, the City has adopted the Ordinance authorizing the issuance of the Bonds; and WHEREAS, the Ordinance authorized the governing body of the City to adopt a resolution prescribing certain details and conditions and to make certain covenants with respect to the issuance of the Bonds; WHEREAS, pursuant to K.S.A. 10-101 et seq., K.S.A. 12-685 et seq., and K.S.A. 12-6a01 et seq., as amended and supplemented, and all other applicable provisions of the laws of the state of Kansas, the governing body of the City has caused the following improvements to be undertaken in the City (such improvements to be referred to as the "Improvements"): Resolution Number Proiect Name Amount 02-5811; 06-6237 North Ohio Overoass $2,240,000 04-6086; 06-6235 North Broadway Blvd 2,257,939 06-6243 Mag;nolia Hills Subdivision 790,029 06-1588 Piercy Addition 147,901 06-6233 Golden EaeJe 312,675 06-6252 EaJdeMed 27,599 06-6264 Quail Meadows, Phase II 494,675 06-6280 West Grand Water extension 201,950 06-6282 Lakeside Addition 72,232 TOTAL= $6,545,000 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 Tenns. "Act" means the Constitution and statutes of the State of Kansas including, but not limited to, K.S.A. 10-101 et seq., K.S.A. 12-685 et seq., K.S.A. 12-6a01 et seq., all as amended and supplemented. "Authorized Costs" means the amount of expenditure for an Improvement which has been duly authorized to be paid by the City by a resolution or ordinance of the City, less (1) the amount of any notes or bonds of the City which are currently outstanding and available to pay such Authorized Costs, and (2) any Authorized Costs which have been previously paid by the City or by any eligible source of funds unless such amounts are entitled to be reimbursed under State and federal law. "Authorized Investments" means investments authorized by K.S.A. 10-131, as amended from time to time, or as otherwise permitted under the laws of the State. "Bond and Interest Fund" means the Bond and Interest Fund of the City for its general obligation bonds. "Bond Counsel" means the firm of Gilmore & BelJ, 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 City. "Bondowner" shall have the same meaning as the term Owner. "Bond Registrar" means the Treasurer of the State, Topeka, Kansas, and its successors and assigns. "Bonds" means the City's General Obligation Internal Improvement Bonds, Series 2007-A Bonds in the aggregate principal amount of $6,545,000 and dated June 15, 2007. "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 name of The Depository Trust Company, New York, New York. "City" means the City of Salina, Kansas. "City Clerk" means the duly appointed and acting City Clerk of the City.or, in the City Clerk's absence, the duly appointed and/or elected Deputy or Acting City Clerk of the City. "Code" means the Internal Revenue Code of 1986, as amended, and the applicable regulations proposed or promulgated thereunder of the United States Department of the Treasury. "Continuing Disclosure Instructions" means the Continuing Disclosure Instructions dated May 6, 1996 and attached as an exhibit to Resolution No. 96-5007 of the City (pertaining to General Obligation Internal Improvement Bonds, Series 1996-A of the City), as from time to time amended and a copy of which is attached hereto as Exhibit B. "Costs of Issuance" shall mean all costs of issuing the Bonds, including all publication, printing, signing and mailing expenses but not limited to, registration fees, all fees and expenses of legal counsel, and any expenses incurred in connection with receiving ratings on the Bonds, any financial advisory fees and all other related expenses. "Federal Tax Certificate" means the Federal Tax Certificate executed by the City in connection with the issuance of the Bonds (dated the date of issuance of the Bonds) relating to certain matters within -2- the scope of Section 148 of the Code, as the same may be amended or supplemented in accordance with its terms. "Improvement Fund" means the Improvement Fund for Salina, Kansas, General Obligation Internal Improvement Bonds, Series 2007-A, created herein and any Substitute Improvements. "Improvements" means the improvements described in the recitals hereto, or any Substitute Improvements. "Interest Payment Dates" means April 1 and October 1 of each year, commencing April l, 2008, and ending on the maturity date of the Bonds, or such other time as the Bonds are paid. "Mayor" means the duly elected and acting Mayor of the City or, in the Mayor's absence, the duly appointed and/or elected Mayor or acting Mayor of the City. "Ordinance" means Ordinance No. 07-10390 of the City authorizing the issuance of the Bonds. "Original Purchaser" means George K. Baum & Co., Kansas City, Missouri. "Outstanding" means as of a particular date, all Bonds heretofore issued, authenticated and delivered under the provisions of this Resolution, except: (a) Bonds cancelled by the Paying Agent or delivered to the Paying Agent for cancellation pursuant to this Resolution; (b) Bonds for the payment or redemption of which monies or investments have been deposited in accordance with this Resolution; and (c) Bonds in exchange for or in lieu of which other Bonds have been authenticated and delivered pursuant to this Resolution. "Owner" or "Registered Owner" when used with respect to any Bond means the person in whose name such Bond is registered on the registration books of the City as maintained by the Bond Registrar. "Participants" means those financial institutions for whom the Securities Depository effects 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 of Kansas, Topeka, Kansas, and any successors and assigns. "Principal and Interest Account" means the Principal and Interest Account for Salina, Kansas, General -Obligation Internal Improvement Bonds, Series 2007-A, created in the City's Bond and Interest Fund. "Principal Payment Dates" means October 1 of the years as set forth in Section 202 of this Resolution, or until such time as the aggregate principal amount of the Bonds has been paid or provision is made for the payment of the Bonds. -3- "Purchase Price" means 100% of the principal amount of the Bonds plus a bid premium of $3,272.50 plus accrued interest to the date of delivery. "Rebate Fund" means the Rebate Fund for Salina, Kansas, General Obligation Internal Improvement Bonds, Series 2007-A, created herein. "Record Dates" means the fifteenth day of each month preceding the Interest Payment Dates of . each year the Bonds are Outstanding. "Replacement Bonds" means Bonds issued to the beneficial owners of the Bonds in accordance with Section 21 Hb) hereof. "Representation Letter" shall mean any Representation Letter from the City and the Paying Agent to the Securities Depository with respect to the Bonds. "Resolution" means this resolution relating to the Bonds. "Securities Depository" means, initially, The Depository Trust Company, New York, New York, and its successors and assigns. "State" means the state of Kansas. "Substitute Improvements" means the substitute or additional improvements of the City as authorized by Section 504 of this Resolution. "Treasurer" means the duly appointed and acting Treasurer of the City or, in the Treasurer's absence, the duly appointed Deputy or acting Treasurer of the City. ARTICLE II DETAILSOFTHEBONDS Section 201. Authorization of the Bonds. The Bonds have been issued pursuant to the Ordinance for the purpose of providing funds to pay the Authorized Costs of the Improvements. Section 202. Description of the Bonds. The Bonds shalJ consist of fulJy registered bonds in the denomination of $5,000 or any integral multiple thereof, shall be dated June 15, 2007, shall be numbered in such manner as the Bond Registrar shall determine, shall be in substantially the form set forth in Exhibit A to this Resolution. All of the Bonds shall become due on the Principal Payment Dates and shall bear interest from the date thereof as follows: -4- MATURITY OQTOBER 1 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2027 SERIAL BONDS PRINCIPAL AMOUNT $365,000 $365,000 $365,000 $365,000 $360,000 $360,000 $360,000 $360,000 $360,000 $360,000 $360,000 $360,000 $360,000 $360,000 $360,000 $225,000 TERM BOND $900,000 INTEREST RATE 4.500% 4.500% 4.500% 4.250% 4.250% 4.250% 4.250% 4.250% 4.500% 4.500% 4.500% 4.500% 4.500% 4.500% 4.500% 4.500% 4.625% Interest on the Bonds at the rates stated above ( computed on the basis of a 360·day year of twelve 30.day months) from the date thereof or from the most recent Interest Payment Date to which interest has been paid or duly provided for, sha11 be payable on the Interest Payment Dates to the Owners whose names appear on the books maintained by the Bond Registrar at the close of business on the Record Dates. Section 203. Designation of Paying Agent and Bond Registrar. The State Treasurer of Kansas, Topeka, Kansas, is hereby designated as the Paying Agent and Bond Registrar for the Bonds. The Mayor and the City Clerk are hereby authorized and empowered to execute on behalf of the City an agreement with the Bond Registrar and Payin~ Agent for the Bonds. Section 204. Method and Place of Payment of the Bonds. The principal of, premium, if any, and interest on the Bonds sha11 be payable in any coin or currency which, on the respective dates of payment, is legal tender for the payment of debts due the United States of America. The principal of and any premium on the Bonds sha11 be paid to the Registered Owner of each Bond upon presentation of the Bond at the maturity or redemption date to the Paying Agent for cance1lation. The interest payable on the Bonds on any Interest Payment Date shalJ be paid by check or draft mailed by the Paying Agent to the Registered Owner of each Bond at the Registered Owner's address as it appears on the registration books of the City maintained by the Bond Registrar or at such other address provided in writing to the Bond Registrar at the Record Dates. Payment of principal of, premium, if any, or interest on a Bond may be made by such other method of transferring funds as may be requested by the Owner of the Bond, provided that the Paying .5. Agent shall first receive a written request from such Owner (i) specifying the method and route for transferring funds and (ii) providing for the Paying Agent to be reimbursed by the Owner for all expenses incurred in such fund transfers. The Paying Agent shall keep in its offices a record of payment of principal of, premium, if any, and interest on all Bonds. Section 205. Method of Execution and Authentication of the Bonds. The Bonds shall be executed for and on behalf of the City by the manual or facsimile signature of the Mayor, attested by the manual or facsimile signature of the City Clerk and the seal of the City shall be affixed thereto or imprinted on the Bonds. The Bonds shall be registered in the office of the City Clerk, and evidenced by the manual or facsimile signature of the City Clerk with the seal of the City affixed to or imprinted on the Bonds. The Bonds shall also be registered in the office of the State Treasurer, evidenced by the manual or facsimile signature of the State Treasurer with the seal of the State Treasurer affixed to or imprinted on the Bonds. In the event that any of the officers shall cease to hold such offices before the Bonds are issued and delivered, the Bonds may be issued and transferred to other Owners as though the officers had not ceased to hold office, and such signatures appearing on the Bonds shall be valid and sufficient for all purposes as if they had remained in office until such issuance or transfer. The Bonds shalJ not be valid obligations under the provisions of this Resolution until the Certificate of Authentication appearing on each bond is executed by the Bond Registrar or a duly authorized representative of the Bond Registrar. It is not necessary that the same representative of the Bond Registrar execute the certificate of authentication on all of the Bonds. Section 206. Registration. Transfer and Exchange of Bonds. As long as the Bonds remain Outstanding, the City shall cause the Bond Registrar to keep the books for the registration and transfer of the Bonds. Upon presentation of the necessary documents the Bond Registrar shall transfer or exchange any Bond(s) for new Bond(s) in an authorized denomination of the same maturity and for the same aggregate principal amount as the Bond(s) which was presented for transfer or exchange. All Bonds presented for transfer or exchange shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in a form and with guarantee of signature satisfactory to the Bond Registrar, duly executed by the Registered Owner thereof or by the Registered Owner's duly authorized agent. In addition, all Bonds presented for transfer or exchange shall be surrendered to the Bond Registrar for cancellation. Prior to delivery of the new Bond(s) to the transferee, the Bond Registrar shaJl register the same in the registration books kept by the Bond Registrar for such purpose and shall authenticate each Bond. The City shal1 pay the fees of the Bond Registrar for registration and transfer of the Bonds and the cost of printing a reasonable supply of registered bond blanks. Any additional costs or fees that might be incurred in the secondary market, other than fees of the Bond Registrar, are the responsibility of the Owners. The City and the Bond Registrar shall not be required to issue, register, transfer or exchange any Bonds during a period beginning on the day following the Record Date preceding any Interest Payment -6- Date and ending at the close of business on the Interest Payment Date or any Bonds which have been called for redemption in accordance with Article III of this Resolution. New Bonds delivered upon any transfer or exchange shall be valid obligations of the City, evidencing the same debt as the Bonds surrendered, shall be secured by the Resolution and shall be entitled to all of the security and benefits hereof to the same extent as the Bonds surrendered. The City, Bond Registrar and Paying Agent may deem and treat the person in whose name any Bond is registered as the absolute Owner thereof, whether such Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of, redemption premium, if any, and interest on such Bond and for all other purposes, and neither the City, Bond Registrar and Paying Agent shall be affected by any notice to the contrary. Section 207. Surrender and Cancellation of Bonds. Whenever any Outstanding Bonds are delivered to the Bond Registrar for cancellation such Bond shall be canceled by the Bond Registrar upon payment of the principal amount of the Bond and interest thereon or replacement pursuant to the Resolution, and the canceled Bond shall be returned to the City. Section 208. Mutilated. Lost. Stolen or Destroyed Bonds. In the event Bond is mutilated, lost, stolen or destroyed, the City may execute and the Bond Registrar may authenticate a new Bond of the same date, maturity, denomination and interest rate, as the mutilated, lost, stolen or destroyed Bond; provided, that in the case of any mutilated Bond, such mutilated Bond shall first be surrendered to the City or the Bond Registrar, and, in the case of any lost, stolen or destroyed Bond there shall be first furnished to the Bond Registrar and the City evidence of such loss, theft or destruction satisfactory to them, together with an indenmity satisfactory to the City and the Bond Registrar. In the event any such Bond shall have matured, instead of issuing a duplicate Bond, the City and Bond Registrar may pay the same without surrender thereof. The City and Bond Registrar may charge to the Registered Owner of such Bond their reasonable fees and expenses in connection with replacing any Bond or Bonds mutilated, stolen, lost or destroyed. Section 209. Temporary Bonds. Until definitive Bonds are prepared, the City may execute, in the same manner as is provided in the Resolution and upon the request of the City, the Bond Registrar shall authenticate and deliver, in lieu of definitive Bonds but subject to the same provisions, limitations and conditions as the definitive Bonds, one or more temporary Bonds substantially of the tenor of the definitive Bonds in lieu of which such temporary Bond or Bonds are issued, in denominations authorized herein, authorized by the City and with such omissions, insertions and variations as may be appropriate to temporary Bonds. The City at its own expense shall prepare and execute and, upon the surrender of such temporary Bonds for exchange and upon the cancellation of such surrendered temporary Bonds, the Bond Registrar shall authenticate and, without charge to the Owner thereof, deliver in exchange therefor definitive Bonds of the same aggregate principal amount and maturity as the temporary Bonds surrendered. If the City shall authorize the issuance of temporary Bonds in -more than one denomination, the Registered Owner of any temporary Bond or Bonds may, at such Registered Owner's option, surrender the same to the Bond Registrar in exchange for another temporary Bond or Bonds of like aggregate principal amount and maturity of any other authorized denomination or denominations, and thereupon the City shall execute and the Bond Registrar shall authenticate and, upon payment of any applicable taxes, fees and charges, shall deliver a temporary Bond or Bonds of like aggregate principal amount and maturity in such other authorized denomination or denominations as shall be requested by such Owner. -7- All temporary Bonds surrendered in exchange either for another temporary Bond or Bonds or for a definitive Bond or Bonds shall be canceled by the Bond Registrar. Section 210. Delivery of the Bonds. The Mayor and City Clerk are hereby authorized and directed to cause the Bonds to be registered in the offices of the City Clerk and the State Treasurer as provided by law, and, when duly executed and registered, to cause the Bonds to be delivered to the Original Purchaser, upon receipt by the City of the Purchase Price. Section 211. Book-Entry Bonds; Securities Depository. (a) The Bonds shall initially be registered to Cede & Co., the nominee for the Securities Depository, and no beneficial owner will receive certificates representing their respective interests in the Bonds, except in the event the Bond Registrar issues Replacement Bonds as provided in subsection (b) hereof. It is anticipated that during the tenn 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 subsection (b). (b) (1) If the City detennines (A) that the Securities Depository is unable to properly discharge its responsibilities, or (B) that the Securities Depository is no longer qualified to act as a securities depository and registered clearing agency under the Securities Exchange Act of 1934, as amended, or (C) that the continuation of a book-entry system to the exclusion of any Bonds being issued to any Owner other than Cede & Co. is no longer in the best interests of the beneficial owners of the Bonds, or (2) if the Bond Registrar receives written notice from Participants 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 detennination or such notice and of the availability of certificates to Owners requesting the same, and the Bond Registrar shalJ register in the name of and authenticate and deliver Replacement Bonds to the beneficial owners or their nominees in principal amounts representing the interest of.each, making such adjustments as it may find necessary or appropriate as to accrued interest and previous calls for redemption; provided, that in the case of a determination under {l)(A) or (l)(B) of this subsection (b), the City, with the consent of the Bond Registrar, may select a successor securities depository in accordance with Section 21 Hc) hereof 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 in accordance with Section 21 l(c) hereof, then the Bond Registrar shall authenticate and cause delivery of •.. . Replacement Bonds to Owners, as provided herein. The Bond Registrar may rely on infonnation .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. (c) 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 -8- under the Securities Exchange Act of 1934, as amended, the City may appoint a successor Securities Depository provided the Bond Registrar receives written evidence satisfactory to the Bond Registrar with respect to the ability of the successor Securities Depository to discharge its responsibilities. Any such successor Securities Depository shall be a securities depository which is a registered clearing agency under the Securities Exchange Act of 1934, as amended, or other applicable statute or regulation that operates a securities depository upon reasonable and customary terms. The Bond Registrar upon its receipt of a Bond or Bonds for cancellation shall cause the delivery of Bonds to the successor Securities Depository in appropriate denominations and form as provided herein. (d) The execution and delivery of any required Representation Letter to the Securities Depository by an authorized officer of the City is hereby authorized. Section 212. Payments Due on Saturdays. Sundays and Holidays. In any case where the Principal Payment Date, the Interest Payment Date or the redemption date is not a Business Day, then payment of principal, interest or redemption price need not be made on such date(s) but may be made on the next succeeding Business Day with the same force and effect as if made on such date(s), and no interest shall accrue for the period after such date(s). ARTICLE III REDEMPTION OF THE BONDS Section 301. Optional and Mandatory Redemption of Bonds. (a) Optional Redemption. At the option of the City, Bonds maturing on or after October 1, 2018, will be subject to redemption prior to maturity at the option of the City on October 1, 2017, and thereafter, in whole or in part at any time, in such principal amounts for such maturities as shaU be determined by the City at the redemption price of 100% ( expressed as a percentage of the principal amount), plus accrued interest thereon to the date of redemption. (b) Mandatory Redemption. The Term Bonds maturing in the year 2027 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 Fund sha11 be sufficient to redeem, and the City shall redeem on October I in each year, the following principal amounts of such Term Bonds: *Final Maturity Year 2024 2025 2026 2027 Principal Amount $225,000 $225,000 $225,000 $2is:·ooo At its option, to be exercised on or before the 45th day next preceding any mandatory redemption date, the City may: (a) deliver to the Paying Agent for cancellation Tenn Bonds subject to mandatory -9- redemption on said mandatory redemption date, in any aggregate principal amount desired; or (b) 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 Registered Owner thereof whereupon the Paying Agent shall use its best efforts to expend such funds for such purpose to such extent as may be practical; or (c) receive a credit with respect to the mandatory redemption obligation of the City 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 requirements of this Section) and cancelled by the Paying Agent and not theretofore applied as a credit against any redemption obligation under this Section. 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 City to redeem Term Bonds of the same Stated Maturity on such redemption date, and any excess of such amount shall be credited on future mandatory redemption obligations for Term Bonds of the same Stated Maturity in chronological order, and the principal amount of Term Bonds of the same Stated Maturity to be redeemed by operation of the requirements of this Section shall be accordingly reduced. If the City intends to exercise any option granted by the provisions of clauses (a), (b) or (c) above, the City 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 (a), (b) and (c) are to be complied with with respect to such mandatory redemption payment, and in the event that the provisions of clause (a) are to be complied with, such certificate shall be accompanied by the Term Bond certificates to be cancelled. Section 302. Selection of Bonds to be Redeemed. The Bonds shall be redeemed only in the principal amount of $5,000 or any integral multiple thereof. Bonds of less than a full maturity to be redeemed and paid prior to maturity shall be selected in such manner as the Bond Registrar acting on behalf of the City shall determine. In the case of a partial redemption of Bonds when Bonds of denominations greater than $5,000 are then Outstanding, then for all purposes in connection with such redemption each $5,000 of face value shall be treated as though it were a separate Bond of the denomination of $5,000. If it is determined that one or more, but not all, of the $5,000 units of face value represented by any Bond is selected for redemption, then upon notice of intention to redeem such $5,000 unit or units, the Owner or the Owner's duly authorized agent shall forthwith present and surrender such Bond to the Bond Registrar: (i) for payment of the redemption price (including the redemption, if any, and interest to the date fixed for redemption) of the $5,000 unit or units of face value called for redemption; and (ii) for exchange, without charge to the Owner thereof, for a new Bond(s) of the aggregate principal amount of the unredeemed portion of the principal amount of such Bond. If the Owner of any Bond of a denomination greater than $5,000 shall fail to present such Bond as aforesaid, such Bond shall, nevertheless, become due and payable on the redemption date to the extent of the amount called for redemption. Section 303. Notice of Redemption. In the event the City desires to call the Bonds for optional redemption prior to maturity, written notice of such intent shall be provided in accordance with K.S.A. 10-129, as amended. Unless waived by any Owner of Bonds to be redeemed, if the City shall call any · Bonds for redemption and payment prior to the. maturity thereof, the City or the Bond Registrar and Paying Agent on behalf of the City shall give written notice of its intention to call and pay said Bonds on a specified date, the same being described by maturity, said notice to be mailed by United States first class mail addressed to the Owners of said Bonds, such notice to be mailed not less than 30 days prior to the date fixed for redemption. The City and Bond Registrar shall also give such additional notice as may be required by State law in effect as of the date of such notice. -10- All official notices of redemption shall be dated and shall state (1) the redemption date, (2) the redemption price, (3) ifless than all Outstanding Bonds are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the Bonds to be redeemed, (4) that on the redemption date the redemption price will become due and payable upon each such Bond or portion thereof called for redemption, and that interest thereon shall cease to accrue from and after said date, and (5) the place where such Bonds are to be surrendered for payment of the redemption price, which place of payment shall be the principal office of the Paying Agent. On or 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 which are to be redeemed on that date. Upon surrender of such Bonds for redemption in accordance with said notice, such Bonds shall be paid by the Paying Agent at the redemption price. Installments of interest due on or prior to the redemption date shall be payable as herein provided for payment of interest. Upon surrender for any partial redemption of any Bond, there shall be prepared for the Registered Owner a new Bond or Bonds of the same maturity in the amount of the unpaid principal. All Bonds which have been redeemed shall be cancelled and destroyed by the Paying Agent and shall not be reissued. For so long as the Securities Depository is effecting book-entry transfers of the Bonds, the Bond Registrar shall provide the notices specified in this Section to the Securities Depository. It is expected that the Securities Depository shall, in tum, notify its Participants and that the Participants, in turn, will notify or cause to be notified the beneficial owners. Any failure on the part of the Securities Depository or a Participant, or failure on the part of a nominee of a beneficial owner of a Bond (having been mailed notice from the Bond Registrar, the Securities Depository, a Participant or otherwise) to notify the beneficial owner of the Bond so affected, shall not affect the validity of the redemption of such Bond. Section 304. Effect of Call for Redemption. Whenever any Bond is called for redemption and payment as provided in this Article, 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 specified above. ARTICLE IV ESTABLISHMENT OF FUNDS AND ACCOUNTS Section 401. Creation of Funds and Accounts. Simultaneously with the issuance of the Bonds, there shall be created within the Treasury of the City the following funds and accounts: (a) Improvement Fund for Salina, Kansas, General Obligation Internal Improvement Bonds, Series 2007-A; and (b) Principal and Interest Account for Salina, Kansas, General Obligation Internal Improvement Bonds, Series 2007-A; and (c) Rebate Fund for Salina, Kansas, General Obligation Internal Improvement Bonds, Series 2007-A. Section 402. Administration of Funds and Accounts. The funds and accounts established herein shall be administered in accordance with the provisions of the Resolution so long as the Bonds are outstanding. -11- ARTICLEV APPLICATION OF BOND PROCEEDS Section 501. Disposition of Bond Proceeds. The proceeds of the Bonds, upon issuance and delivery thereof, shall be deposited as follows: (a) In the Principal and Interest Account, a sum equal to the accrued interest and any premium paid on the Bonds. (b) The balance of the proceeds of the Bonds shall be deposited into the Improvement Fund. If (a) any portion of the Bond proceeds will be used to pay principal of any temporary notes previously issued by the City to finance the Improvements or other City improvements (the "Refunded Notes"), and (b) any proceeds of such Refunded Notes (including sale proceeds and investment earnings on such proceeds) remain unspent, then there may be transferred to the Improvement Fund all such unspent proceeds. Section 502. Withdrawals from the Improvement Fund. The Treasurer shall make withdrawals from the Improvement Fund solely for the purpose of paying the Authorized Costs of the Improvements, including the retirement of any principal of, premium, if any, and interest on any previously issued temporary financing therefor and paying the Costs of Issuance for the Bonds. Section 503. Surplus in the Improvement Fund. All moneys remaining in the Improvement Fund after the completion of the Improvements, shall be transferred immediately to the Principal and Interest Account and applied to the next installment of principal and/or interest due on the Bonds. Section 504. Substitution of Improvements. If the City is prevented, hindered or delayed from proceeding with the acquisition or construction of the improvements listed on Exhibit B or if the City has moneys remaining in the Improvement Fund after the completion of such improvements, the City may elect to substitute or add other improvements pursuant to this Section (the "Substitute Improvement") provided the following conditions are met: (1) the Substitute Improvement and the issuance of general obligation bonds to pay the cost of the Substitute Improvement has been duly authorized by the governing body of the City in accordance with the laws of the State, (2) a resolution or ordinance authorizing the use of the proceeds of the Bonds to pay the Authorized Costs of the Substitute Improvement has been duly adopted by the governing body of the City, (3) the Attorney General of the State has approved the amendment to the transcript of proceedings for the Bonds to include the Substitute Improvements and (4) the City has received an opinion of Bond Counsel to the effect that the use of the proceeds of the Bonds to pay the Authorized Cost of the Substitute Improvement will not adversely affect the tax-exempt status of the Bonds under State or federal law and the Substitute Improvement has -been duly authorized pursuant to this Section and.the laws of the State. -12- ARTICLE VI PAYMENT OF THE BONDS Section 601. Application of Moneys in the Principal and Interest Account. All amounts paid and credited to the Principal and Interest Account shall be expended and used by the City for the sole purpose of paying the principal of, premium, if any, and interest on the Bonds as and when the same become due and paying the usual and customary fees and expenses of the Paying Agent. Section 602. Transfer of Funds to Paying Agent. The Treasurer is hereby authorized and directed to withdraw from the Principal and Interest Account and forward to the Paying Agent sums sufficient to pay both principal of and premium, if any, and interest on the Bonds as and when the same become due, and also to pay the charges made by the Paying Agent for acting in such capacity in the payment of principal and interest on the Bonds, and said charges shall be forwarded to the Paying Agent over and above the amount of the principal of, premium, if any, and interest on the Bonds. If, through the lapse of time, or otherwise, the Owners of Bonds shall no longer be entitled to enforce payment of their obligations, it shaJt be the duty of the Paying Agent forthwith to return said funds to the City to be used for any purpose not prohibited by law. All moneys deposited with the Paying Agent shall be deemed to be deposited in accordance with and subject to aJl of the provisions contained in the Resolution. Section 603. Surplus in Principal and Interest Account. Any moneys or investments remaining in the Principal and Interest Account after the retirement of the indebtedness for which the Bonds were issued shall be transferred and paid into the Bond and Interest Fund of the City. ARTICLE VII DEPOSITS AND INVESTMENT OF FUNDS Section 701. Deposits. Cash moneys in each of the funds and accounts created by this Resolution shall be deposited in a bank or banks or federal or state chartered savings and loan association(s), as permitted by Kansas law, and all such deposits shall be adequately secured by the bank or banks or savings and Joan associations holding such deposits in accordance with State law. Section 702. Investments. Moneys held in the funds and accounts herein created by this Resolution in conjunction with the issuance of the Bonds may be invested by the City in Authorized Investments, or in other investments allowed by State law in the amounts and maturing at such times as shall reasonably provide for moneys to be available when required in said accounts or funds; provided, however, that no such investment shall be made for a period extending longer than to the date when the moneys invested may be needed for the purpose for which the fund or account was created. All interest on any Authorized Investment held in any fund or account shall (except amounts required to be deposited into the Rebate Fund in accordance with the Arbitrage Instructions) accrue to and become a part of such fund or account. In determining the amount held in any fund or account under the provisions of the Resolution, Authorized Investments shall be valued at their principal par value or at their then market value, whichever is lower. -13- Section 703. Deposits into and 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. Subject to the payment provisions provided in subsection (b) below, all money in the Rebate Fund shall be held in trust, to the extent required to pay arbitrage rebate to the United States, and neither the City nor the Owner of any Bond shall have any rights in or claim to such money. All amounts in the Rebate Fund shall be governed by this Section and by the Federal Tax Certificate (the provisions of which are incorporated herein by reference). (b) Pursuant to the Federal Tax Certificate, the City shall pay rebate installments and the final rebate payments to the United States. Any moneys remaining in the Rebate Fund after redemption and payment of all of the Bonds and payment and satisfaction of any rebate amounts, or provision made therefor, shall be withdrawn and released to the City to be used for any purpose not prohibited by law. (c) Notwithstanding any other provision of the Resolution, including in particular this Article, the obligation to pay rebatable arbitrage to the United States and to comply with a11 other requirements of this Section, the preceding Section and the Federal Tax Certificate shall survive the defeasance or payment in full of the Bonds. ARTICLE VIII DEFAULT AND REMEDIES Section 801. Remedies. The provisions of the Resolution, including the covenants and agreements herein contained and the provisions of the Federal Tax Certificate incorporated herein by reference, shall constitute a contract between the City and the Owners of the Bonds. The Owner or Owners of any of the Bonds at the time Outstanding shall have the right for the equal benefit and protection of all Owners of Bonds similarly situated: (a) by mandamus or other suit, action or proceedings at law or in equity to enforce the rights of such Owner or Owners against the City and its officers, agents and employees, and to require and compel duties and obligations required by the provisions of the Resolution or by the Constitution and laws of the State; (b) by suit, action or other proceedings in equity or at law to require the City, its officers, agents and employees to account as if they were the trustees of an express trust; and ( 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 802. Limitation on Rights of Bondowners. The covenants and agreements of the City .... ,contained in this Resolution, the Federal Tax Certificate, 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 sha11 be of equal rank and without preference or priority of one Bond over any other Bond in the application of the funds herein pledged to the payment of the principal of and the interest on the Bonds, or otherwise, except as to rate of interest, date of maturity and right of prior redemption as provided in the Resolution. No one or more Bondowners secured hereby shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security granted and provided for herein, or to enforce any right hereunder, -14- except in the manner herein provided, and all proceedings at law or in equity shall be instituted, had and maintained for the equal benefit of all Owners of such Outstanding Bonds. Section 803. Remedies Cumu]ative. No remedy conferred herein upon the Bondowners is intended to be exclusive of any other remedy, but each such remedy sha11 be cumulative and in addition to every other remedy and may be exercised without exhausting and without regard to any other remedy conferred herein. No waiver of any default or breach of duty or contract by the Owner of any Bond shall extend to or affect any subsequent default or breach of duty or contract or shall impair any rights or remedies thereon. No delay or omission of any Bondowner to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or acquiescence therein. Every substantive right and every remedy conferred upon the Owners of the Bonds by the Resolution may be enforced and exercised from time to time and as often as may be deemed expedient. In case any suit, action or proceedings taken by any Bondowner on account of any default or to enforce any right or exercise any remedy shall have been discontinued or abandoned for any reason, or shall have been determined adversely to such Bondowner, then, and in every such case, the City and the Owners of the Bonds shall be restored to their former positions and rights hereunder, respective]y, and all rights, remedies, powers and duties of the Bondowners shall continue as if no such suit, action or other proceedings had been brought or taken. ARTICLE IX AMENDMENTS Section 901. Amendments. Except as set forth herein, the provisions of the Bonds and the provisions of the Resolution may be modified or amended at any time by the City with the written consent of the Owners of not less than seventy-five per cent (75%) in aggregate principal amount of the Bonds herein authorized at the time Outstanding; provided, however, that no such modification or amendment shall permit or be construed as permitting: (a) the extension of the maturity of the principal of any of the Bonds, or the extension of the maturity of any interest on any of the Bonds, or (b) a reduction in the principal amount of any of the Bonds or the rate of interest thereon, or ( c) a reduction in the aggregate principa] amount of the Bonds; the consent of 100% of the Owners of which is required for any such amendment or modification. The City may from time to time, without the consent of or notice to any of the Owners, provide for amendment to the Bonds or the Resolution, for any one or more of the fo])owing purposes: (a) To cure any ambiguity or formaJ defect or omission in the Resolution or to make any other change not prejudicial to the Owners; (b) To grant to or confer upon the Owners any additiona] rights,' remedies, powers or authority that may lawfully be granted to or conferred upon the Owners; (c) To more precisely identify the hnprovements or provide for Substitute Improvements; or (d) To conform the Resolution to the Code or future applicable federal law concerning tax-exempt obligations. -15- The Continuing Disclosure Instructions are exempt from the provisions of this Section and are subject to amendment and modification only as provided therein. The Federal Tax Ceretificate is exempt from the provisions of this Section and is subject to amendment and modification only as provided therein. Section 902. Written Evidence of Amendments. Every amendment or modification of a provision of the Bonds or of the Resolution to which the written consent of the Owners is given as above provided shall be expressed in a resolution of the City amending or supplementing the provisions of the Resolution and shall be deemed to be a part of the Resolution. It shall not be necessary to note on any of the Outstanding Bonds any reference to such amendment or modification, if any. A certified copy of every such amendatory or supplemental resolution, if any, and a certified copy of the Resolution shall always be kept on file in the Office of the City Clerk and shall be made available for inspection by the Owners of any Bond or prospective purchaser or Owners of any Bond authorized by the Resolution, and upon payment of the reasonable cost of preparing the same, a certified copy of any such amendatory or supplemental resolution or of the Resolution will be sent by the City Clerk to any such Owner or prospective Owner. ARTICLEX DEFEASANCE Section 100 l. Defeasance. When all or any part of the Bonds and interest thereon shall have been paid and discharged, then the requirements contained herein and the pledge of revenues made hereunder and all other rights granted hereby shaJI cease and determine. Bonds shaJI be deemed to have been paid and discharged within the meaning of the Resolution if there shall have been deposited with the Paying Agent or a bank located in the State and having full trust powers, at or prior to the maturity or redemption date of the Bonds, in trust for and irrevocably appropriated thereto, moneys and/or direct obligations of, or obligations the principal of and interest on which are guaranteed by, the United States of America, or other investments allowed by State law which, together with the interest to be earned on such investments, will be sufficient for the payment of the principal of the Bonds, the redemption premium thereon, if any there be, and interest accrued to the date of maturity or redemption, as the case may be, or if default in such payment shall have accrued on such date, then to the date of the tender of such payments, provided always that if any such Bonds shall be redeemed prior to the maturity thereof, the City shall have elected to redeem such Bonds and either notice of such redemption shall have been given or the City shall have given irrevocable instructions, or shall have provided for an escrow agent to give irrevocable instructions to the Bond Registrar to give such notice of redemption in compliance with this Resolution. Any moneys which at any time shall be deposited with the Paying Agent or said bank in the State by or on behalf of the City, for the purpose of paying and discharging any of the Bonds shall be and are hereby assigned, transferred and set over to the Paying Agent or such bank in the State in trust for the respective Owners of the Bonds, and such moneys shall be and are hereby irrevocably appropriated to the payment and discharge thereof. All moneys deposited with the Paying Agent or said bank in the State shall be deemed to be deposited in accordance with and subject to all of the provisions contained in the· Resolution. -16- ARTICLE XI CONTINUING DISCLOSURE REQUIREMENTS Section 110 I. Disclosure Requirements. The City hereby elects that the Continuing Disclosure Instructions shall apply to the Bonds. The City hereby covenants with the Original Purchaser and the Beneficial Owners (as defined in the Continuing Disclosure Instructions) to provide and disseminate such infonnation as is required by Rule 15c2-12 (as defined in the Continuing Disclosure Instructions) and as further set forth in the Continuing Disclosure Instructions. Such covenant shall be for the benefit of and enforceable by the Original Purchaser and such Beneficial Owners. In the event the City fails to comply in a timely manner with its covenants contained in the preceding sentences, the Original Purchaser and/or any such Beneficial Owner may make demand for such compliance by written notice to the City. In the event the City does not remedy such noncompliance within 10 days of receipt of such written notice, the Original Purchaser or any such Beneficial Owner may in its discretion, ·without notice or demand, proceed to enforce compliance by a suit or suits in equity for the specific performance of such covenant or agreement contained in the preceding section or for the enforcement of any other appropriate legal or equitable remedy as the Original Purchaser and/or any such Beneficial Owner sha11 deem effectual to protect and enforce any of the duties of the City under such preceding section, but such noncompliance shall not constitute a default or event of default under this Resolution. ARTICLE XII MISCELLANEOUS PROVISIONS Section 1201. Preliminary Official Statement and Official Statement. The City hereby approves the form and content of the Preliminary Official Statement prepared in the initial offering and sale of the Bonds. The Preliminary Official Statement is "deemed final" by the City except for the omission of certain information as provided in Securities and Exchange Commission Rule l 5c2-l 2. The City hereby approves the form and content of any addenda, supplement, or amendment thereto utilized to prepare a final Official Statement. The Official Statement is "deemed final" by the City in accordance with the provisions of Securities and Exchange Commission Rule 15c2-l 2. The use of such Official Statement in the reoffering of the Bonds by the Original Purchaser is hereby approved and authorized. The proper officials of the City are hereby authorized to execute and deliver a certificate pertaining to such Official · Statement as prescribed therein, dated as of the date of payment for and delivery of the Bonds. Section 1202. Tax Covenants. (a) The City covenants and agrees that (1) it will comply with an applicable provisions of the Internal Revenue Code of 1986, as amended (the "Code"), including Sections 103 and 141 through 150, necessary to maintain the exclusion from gross income for federal income tax purposes of the interest on the Bonds and (2) it will not take any action, or fail to take any action, if any such action or failure to take action would adversely affect the exclusion from gross income of the interest on the Bonds. The City 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 City. -17- (b) The City covenants and agrees that (1) it will comply with all requirements of Section 148 of the Code to the extent applicable to the Bonds, (2) it will use the proceeds of the Bonds as soon as practicable and with all reasonable dispatch for the purposes for which the Bonds are issued and (3) it will not invest or directly or indirectly use or pennit the use of any proceeds of the Bonds or any other funds of the City in any manner, or take or omit to take any action, that would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148(a) of the Code. ( c) The City covenants and agrees that it will pay or provide for the payment from time to time of all amounts required to be rebated to the United States pursuant to Section 148(f) of the Code and any Treasury Regulations applicable to the Bonds from time to time. This covenant shall survive payment in full or defeasance of the Bonds. The City specifically covenants to comply with the Federal Tax Certificate. Notwithstanding anything to the contrary contained herein, the Arbitrage Instructions may be amended or replaced if, in the opinion of counsel nationally recognized on the subject of municipal bonds, such amendment or replacement will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds. ( d) The foregoing covenants shall remain in full force and effect notwithstanding the defeasance of the Bonds pursuant to Section 17 of this Resolution until the final maturity date of all Bonds Outstanding. Section 1203. Severability. In case any one or more of the provisions of the Resolution or of the Bonds issued hereunder shall for any reason be held to be illegal or invalid, such illegality or invalidity shall not affect any other provision of the Resolution, or of the Bonds appertaining thereto, but the Resolution and the Bonds shall be construed and enforced as if such illegal or invalid provision had not been contained herein. In case any covenant, stipulation, obligation or agreement contained in the Bonds or in the Resolution shall for any reason be held to be in violation of law, then such covenant, stipulation, obligation or agreement shal1 be deemed to be the covenant, stipulation, obligation or agreement of the City to the full extent permitted by law. Section 1204. Further Authority. The Mayor, City Clerk and other officials of the City are authorized and directed to execute any and all documents and take such actions as they may deem necessary or advisable in order to. carry out and perform the purposes of the Resolution to make alterations, changes or additions in the foregoing agreements, statements, instruments and other documents herein approved, authorized and confirmed which they may approve and the execution or taking of such action shall be conclusive evidence of such necessity or advisability. Section 1205. Governing Law. The Resolution and the Bonds shall \>e governed exclusively by and construed in accordance with the applicable laws of the State. Section 1206. Effective Date. This Resolution shall take effect and be in full force from and after its adoption by the governing body of the City. -18- -~. I Bond Resolution S-1 EXHIBIT A (Fonn of Bond) EXCEPT AS OTHERWISE PROVIDED IN THE RESOLUTION (DESCRIBED HEREIN), TIDS GLOBAL BOND MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF THE SECURITIES DEPOSITORY (DESCRIBED HEREIN) OR TO A SUCCESSOR SECURITIES DEPOSITORY OR TO A NOMINEE OF A SUCCESSOR SECURITIES DEPOSITORY. REGISTERED NUMBER Interest Rate:_% UNITED STATES OF AMERICA STATE OF KANSAS COUNTY OF SALINE CITY OF SALINA GENERAL OBLIGATION INTERNAL IMPROVEMENT BOND SERIES 2007-A Maturity Dated Date: October 1, 20 _ Date: June 15, 2007 REGISTERED OWNER: PRINCIPAL AMOUNT: REGISTERED $ ___ _ CUSIP: KNOW ALL PERSONS BY THESE PRESENTS: That the City of Salina, in the County of Saline, State of Kansas (the "City"), for value received, hereby acknowledges itself to be indebted and promises to pay to the registered owner identified above, or registered assigns, as of the Record Dates as hereinafter provided on the Maturity Date identified above, the Principal Amount identified above, and in like manner to pay.interest on such Principal Amount from the Dated Date shown above or from the most recent interest payment date to which interest has been paid or duly provided for at the rate of interest per annum set forth above (computed on the basis of a 360-day year of twelve 30-day months), semiannually on April 1 and October 1 of each year, commencing April 1, 2008 (the "Interest Payment Dates"), until the Principal Amount is paid, unless this Bond shaJI have been previously called for redemption and payment as hereinafter set forth. The principal of, premium, if any, and interest on this Bond shall be payable by the State Treasurer of Kansas, Topeka, Kansas (the "Paying Agent" and "Bond Registrar"). The principal of and any premium on this Bond shall be payable to the registered owner hereof upon presentation of this Bond at the maturity or redemption date to the Paying Agent for payment and cancellation. The interest payable on this Bond shaU be paid by the Paying Agent to the Registered Owner hereof at the address appearing .... on the registration books of the City maintained by the Bond Registrar or at such other address provided in writing by the Registered Owner to the Bond Registrar at the close of business on the fifteenth day of the month preceding the interest payment date (the "Record Date"). The principal, premium, if any, and interest on the Bonds shall be payable in any coin or currency which, on the respective dates of payment thereof, is legal tender for the payment of debts due the United States of America. The Bonds constitute general obligations of the City payable as to both principal and interest in part from special assessments A-I levied upon the property benefited by the construction of certain improvements, and, if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal within the territorial limits of the City. The balance of the principal and interest on the Bonds is payable from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the City. The full faith, credit and resources of the City are irrevocably pledged for the payment of the principal of and interest on this Bond and the issue of which it is a part as the same respectively become due. This Bond is one of an authorized series of Bonds of the City designated "General Obligation Internal Improvement Bonds, Series 2007-A," in an aggregate principal amount of $6,545,000 (the "Bonds") issued for the purposes set forth in the Ordinance of the City authorizing the issuance of the Bonds and the Resolution of the City prescribing the form and details of the Bonds Gointly, the "Resolution"). The Bonds are issued by the authority of and in full compliance with the provisions, restrictions and limitations of the Constitution and laws of the state of Kansas, including, without limitation, K.S.A. 10-101 et seq., K.S.A. 12-685 et seq., and K.S.A. 12-6a01 et seq., all as amended and supplemented. At the option of the City, Bonds maturing on October 1, 2018, and thereafter may be called for redemption and payment prior to maturity on October l, 2017 and thereafter, in whole or in part at any time (the maturities and principal amounts of Bonds of each maturity to be redeemed will be determined by the City) at the redemption price of 100% (expressed as a percentage of the principal amount), plus accrued interest thereon to the date of redemption. Bonds maturing on October 1 in the year 2027 are subject to mandatory redemption and payment prior to maturity pursuant to the mandatory redemption requirements of the Bond Resolution on October 1, 2024 and on each October 1 thereafter prior to maturity, at a redemption price equal to 100% of the principal amount thereof, plus accrued interest thereon to the redemption date. Unless waived by any owner of the Bonds to be redeemed, if the City elects to call any Bonds for redemption and payment prior to maturity, the City or the Bond Registrar and Paying Agent on behalf of the City shall give written notice of its intention to call and pay such Bonds on a specified date, the same being described by maturity, such notice to be mailed by United States first class mail addressed to the Owners of the Bonds not less than 30 days prior to the date fixed for redemption. All Bonds so called for redemption and payment shall cease to bear interest from the date for which such call is made, provided funds are available for the payment of such Bonds at the price specified above. The Bonds are being issued by means of a book-entry system with no physical distribution of bond certificates to be made except as provided in the Resolution. One Bond certificate with respect to each date on which the Bonds are stated to mature, registered in the nominee name of the Securities Depository, is being issued and required to be deposited with the Securities Depository and immobilized in its custody. The book-entry system will evidence positions held in the Bonds by the Securities Depository's participants, beneficial ownership of the Bonds in authorized denominations being evidenced •in the records of such participants. 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 City, the Bond Registrar and the Paying Agent will recognize the Securities Depository nominee, while the registered owner of this Bond, as the owner of this Bond for all purposes, including (i) payments of principal of, and redemption premium, if any, and interest on, this Bond, (ii) notices and (iii) voting. Transfers of principal, interest and any redemption premium payments to participants of the Securities Depository, and transfers of principal, interest and any A-2 redemption premium payments to beneficial owners of the Bonds by participants of the Securities Depository will be the responsibility of such participants and other nominees of such beneficial owners. The City, the Bond Registrar and the Paying Agent will not be responsible or liable for such transfers of payments or for maintaining, supervising or reviewing the records maintained by the Securities Depository, the Securities Depository nominee, its participants or persons acting through such participants. While the Securities Depository nominee is the owner of this Bond, notwithstanding the provision hereinabove contained, payments of principal of and interest on this Bond shall be made in accordance with existing arrangements among the City, the Bond Registrar and the Securities Depository. EXCEPT AS OTHERWISE PROVIDED IN THE RESOLUTION, THIS GLOBAL BOND MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF THE SECURITIES DEPOSITORY OR TO A SUCCESSOR SECURITIES DEPOSITORY OR TO A NOMINEE OF A SUCCESSOR SECURITIES DEPOSITORY. The Bonds are issued in fully registered form in the denomination of $5,000 or any integral multiple thereof. This Bond may be exchanged at the office of the Bond Registrar for a like aggregate principal amount of Bonds of the same maturity of other authorized denominations upon the terms provided in the Resolution. The City and the Bond Registrar may deem and treat the registered owner hereof as the absolute owner hereof for purposes of receiving payment of or on account of principal hereof and interest due hereon and for all other purposes and neither the City nor the Bond Registrar shall be affected by any notice to the contrary. ' This Bond is transferable by the registered owner hereof in person or by the registered owner's agent duly authorized in writing, at the office of the Bond Registrar, but only in the manner, subject to the limitations and upon payment of the charges provided in the Resolution and upon surrender and cancellation of this Bond. The City shall pay all costs incurred in connection with the issuance, payment and initial registration of the Bonds and the cost of a reasonable supply of bond blanks. The City and the Bond Registrar shall not be required to issue, register, transfer or exchange any Bonds during a period beginning on the day following the Record Date preceding any Interest Payment Date and ending at the close of business on the Interest Payment Date or Bonds which have been called for redemption in accordance with Article III of the Resolution. IT IS HEREBY DECLARED AND CERTIFIED that all acts, conditions, and things required to be done and to exist precedent to and in the issuance of this Bond have been properly done and performed and do exist in due and regular form and manner as required by the Constitution and laws of the state of Kansas, and that the total indebtedness of the City, including this series of bonds, does not exceed any constitutional or statutory limitation. This Bond sha11 not be valid or become obligatory for any purpose until the Certificate of Authentication and Registration hereon shall have been lawfully executed by the Bond Registrar. A-3 ., ... .. IN WITNESS WHEREOF, the City has caused this Bond to be executed by the manual or facsimile signature of its Mayor and attested by the manual or facsimile signature of its City Clerk, and its corporate seal to be affixed hereto or imprinted hereon, and this Bond to be dated the Dated Date shown above. (Facsimile Seal) ATIEST: By _____ { __ fa=c=si=m .... i...,le ...... ) __ _ City Clerk CITY OF SALINA, KANSAS (facsimile) Mayor CERTIFICATE OF AUTHENTICATION AND REGISTRATION This Bond is one of a series of General Obligation Internal Improvement Bonds, Series 2007-A, of the City of Salina, Kansas, described in the within-mentioned Resolution. Registration Date: ____ _ Registration Number: 0322-085-061507-487 A-4 Office of the State Treasurer, Topeka, Kansas as Bond Registrar and Paying Agent By: ------'------------ BOND ASSIGNMENT FOR VALUE RECEIVED, the undersigne~ 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 ________________ _ [Name of Eligible Guarantor Institution as defined by SEC Rule 17ad-15 (12CFR240.17 Ad-15) or any simi1ar rule which the Note Registrar deems applicable] A-5 CERTIFICATE OF CITY CLERK STATE OF KANSAS ) ) ss. COUNTY OF SALINE ) I, the undersigned, City Clerk of Salina, Kansas, hereby certify that the within Bond has been duly registered in my office according to law as of June_, 2007. WI1NESS my hand and official seal. (Facsimile Seal) (facsimile) City Clerk CERTIFICATE OF STATE TREASURER OFFICE OF THE TREASURER, STATE OF KANSAS I, LYNN JENKINS, Treasurer of the State of Kansas, do hereby certify that a transcript of the proceedings leading up to the issuance of this Bond has been filed in my office, and that this Bond was registered in my office according to Jaw on _____ _ WI1NESS my hand and official seal. (Facsimile Seal) Treasurer of the State of Kansas A-6 LEGAL OPINION I, the undersigned, City Clerk of the City of Salina, Kansas, hereby certify that the following is a true and correct copy of the approving legal opinion of Gilmore & Bell, a Professional Corporation, Attorneys at Law, Kansas City, Missouri, on the within Bond and the series of which it is a part, except that it omits the date of such opinion; that the opinion was manually executed and was dated and issued as of the date of delivery of and payment for the Bonds and is on file in my office. By ____ _.._<fi __ ac .... s ....... im=il ..... e).__ ___ _ City Clerk (PRINTED LEGAL OPINION) A-7 EXHIBITB CONTINUING DISCLOSURE INSTRUCTIONS SECTION 1. Purpose of the Continuing Disclosure Instructions. These Continuing Disclosure Instructions (the "Instructions") are being executed and delivered by the City for the benefit of the beneficial owners of any series of the Bonds and in order to assist the Participating. Underwriters in complying with Rule I5c2-l2 (defined below). These Instructions are to govern the continuing disclosure obligations of the City with respect to the City's General Obligation Internal Improvement Bonds, Series 1996-A dated as of June 1, 1996 (the "1996 Bonds'') and any additional series of Bonds that the City hereafter elects to make subject to these Instructions. SECTION 2. Definitions. Unless otherwise defined in these Instructions, the following capitalized terms shall have the following meanings for purposes of these Instructions: "Beneficial Owner" means any registered owner of the Bonds and any other person who, directly or indirectly, has investment power with respect to any of the Bonds. "Bond Counsel" means the firm of Gilmore & Bell, P.C., or any other attorney or firm of attorneys with a nationally recognized standing in the field of municipal bond financing selected by the City. "Bonds" means the 1996 Bonds and any additional series of bonds, notes or other municipal obligations of the City that the City elects at the time of issuance to have subject to these Instructions for the purpose of constituting the undertaking of the City to provide continuing disclosure pursuant to Rule 15c2- 12. "City" means the City of Salina, Kansas. "MSRB" means the Municipal Securities Rulemaking Board. "NRMSIR" means any information repository recognized by the Securities and Exchange Commission as a nationally recognized municipal securities information repository under Rule 15c2-12. "Participating Underwriter" means any of the original underwriters of the 1996 Bonds and any future series of Bonds required to comply with Rule 15c2-12 in connection with the offering of any series of Bonds. "Rule 15c2-12" means Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "SID" means any public or private information depository, if any, designated by the State of Kansas and the Securities and Exchange Commission as such for purposes of Rule 15c2-12. SECTION 3. Provision of Annual Reports. (a) Within 180 days after the close of each fiscal year, the City shall furnish to each NRMSIR and to the SID, if any, (i) a copy of the financial statements of the City prepared in accordance with generally accepted accounting principles and audited by its independent auditors ( or if not available as of B-1 such date, the unaudited financial statements of the City and as soon thereafter as available such audited financial statements of the City), and (ii) the operating data of the City, updated for the fiscal year then ended, in substantially the scope and form contained in the Official Statement dated May 6, 1996, with respect to the 1996 Bonds in the tables under the fo11owing headings: 1. Debt Summary 2. Tax Levies 3. Assessed Valuation 4. Estimated Actual Valuation 5. Tax Collections 6. Largest Taxpayers (b) Any or all of the financial infonnation or operating data required by this Section 3 may be incorporated by reference from other documents, including official statements of debt issues with respect to the City that have been filed with each NRMSIR or the Securities and Exchange Commission, and in the case of a final official statement, that is available from the MSRB. The City shall clearly identify in each annual report filed under this Section 3 each document incorporated by reference and the source from which it is available. SECTION 4. Reporting of Material Events. (a) The City shall disseminate to the SID, if any, and to each NRMSIR or to the MSRB, promptly upon the occurrence thereof notice of any of the following events with respect to each series of the Bonds, if material: (i) Any principal or interest payment delinquencies; (ii) Any non-payment related defaults; (iii) Any unscheduled draws on debt service reserves reflecting financial difficulties; (iv) Any.unscheduled draws on credit enhancements reflecting financial difficulties; (v) Any substitution of credit or liquidity providers, or their failure to perform; (vi) Any adverse tax opinions or events affecting the tax-exempt status of any series of the Bonds; (vii) Any modifications to rights of security holders; (viii) Any calls (other than mandatory sinking fund redemptions or redemptions at maturity); (ix) Any defeasances; (x) Any release, substitution or sale of property securing repayment of any series of the Bonds; and (xi) Any rating changes. B-2 (b) The City shall also provide to the SID, if any, and to each NRMSIR or to the MSRB, as promptly as practicable notice of any failure of the City to provide the NRMSIR.s and the SID, if any, the annual financial infonnation or operating data required by Section 3 on or before the date specified. SECTION 5. Termination of Reporting Obligation. The City's obligations under these Instructions shall tenninate with respect to each series of Bonds upon the defeasance, prior redemption or payment in full of all of such series of Bonds. SECTION 6. Amendment: Waiver. (a) The provisions of these Instructions may be amended only by a written instrument executed by the Mayor of the City if the City receives an opinion from Bond Counsel to the effect that these Instructions, as so amended, are in compliance with Rule 1Sc2-12 and all current amendments thereto and interpretations thereof that are applicable to these Instructions. (b) If an amendment is made to these Instructions, the City shall describe in the next annual financial report submitted to the NRMSIR.s pursuant to Section 3 the substance of the amendment, the reasons for such amendment and the impact of such amendment on the type of operating data or financial information required to be provided under these Instructions. SECTION 7. Additional Information. Nothing in these Instructions shall be deemed to prevent the City from disseminating any other information, or including any other information in any report or notice made hereunder, in addition to that which is required by these Instructions. If the City chooses to include any information in any report or notice made hereunder in addition to that which is specifically required by these Instructions, the City shall have no obligation hereunder to update such infonnation or include it in any future report or notice. SECTION 8. Noncompliance. The provisions of these Instructions shall be subject to specific enforcement or action in mandamus in a court of equity by any beneficial owner of any series of the Bonds. A breach of the provisions of this Section sha11 not constitute a default or event of default under the resolution adopted by the City authorizing any series of the Bonds. SECTION 9. Beneficiaries. These Instructions are for the benefit of the City, the Participating Underwriters and the beneficial owners of any series of the Bonds, and shall create no rights in any other person. SECTION 10. Applicability to Future Series of Bonds. These Instructions shall apply to any future series of Bonds of the City that the City elects to have subject to these Instructions at the time of issuance thereof. These Instructions shall constitute the undertaking of the City with respect to any such future series of Bonds for the purpose of any Participating Underwriters detennining compliance with Rule 15c2-12. Nothing contained herein shall obligate the City to adopt these Instructions with respect to any future bonds or municipal obligations issued by the City. Dated: May 6, 1996. CITY OF SALINA, KANSAS B-3 & GILMOR._EBELL Governing Body City of Salina, Kansas Robert W. Baird & Co., Incorporated Red Bank, New Jersey GILMORE & BELL PC 2405 GRAND BOULEVARD, SUITE 1100 KANSAS CITY, MISSOURI 64108-2521 816-221-1000 I 816-221-1018 FAX GILMOREBELL.COM July 27, 2017 Re: $9,310,000 General Obligation Internal Improvement Bonds, Series 2017-A, of the City of Salina, Kansas, Dated July 27, 201 7 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 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 AnORNEY GENERAL The Honorable Jake LaTurner State Treasurer July 27, 2017 Landon State Office Building, Room 201 N Topeka, KS 66612 Dear Mr. LaTurner: MEMORIAL HALL 120 SW 10TH AVE., 2ND FLOOR TOPEKA, KS 66612-1597 (785) 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: 2017-A Dated: July 27, 2017 Aggregate Amount: $9,310,000.00 Date of First Payment: April 1, 2018 Fiscal Agent: Kansas State Treasurer NLU:sb cc: Shandi Wicks, Clerk Gilmore & Bell-Kansas City Numbered: Register~d Sincerely, OFFICE.OF THE ATTORNEY GENERAL DEREK SCHMIDT Nancy L. Ulric Special Assistant Attorney General TO : FROM : SEE DISTRIBUTION LIST DAVID ARTEBERRY ROGER EDGAR George K. Baum & Company I NVESTME/.T BA:-<KERS S11'CE l9t8 July 21, 2017 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 : $9,310,000 City of Salina, Kansas General Obligation Internal Improvement Bonds Series 2017-A Dated July 27, 2017 10:00 a.m. Thursday, July 27, 2017 Via telephone Par Amount of Bonds Plus Bid Premium Total Less Good Faith Deposit Net Amount Due at Closing Wire Transfer of Federal Funds $9,310,000.00 78,369.80 9,388,369.80 (187,800.00) $9,200,569.80 4801 Main Street • Suite 500 • Kansas City, Missouri 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 Thursday, July 27, 2017 R.W. Baird will wire transfer an amount of $2,288,177.30 to Sunflower Bank, ABA #1011-0062-1, AC #10218 7275 for credit to the City of Salina, Attn: Kayleen Chaput. On Thursday, July 27, 2017, R.W. Baird shall wire transfer an amount of $6,912,392.50 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: Shauna Wake. Upon receipt of $2,288,177.30 from R.W. Baird, plus the good faith deposit on hand in the amount of $187,800.00 ($2,475,977.30 total), the City will deposit the funds as follows: $ 1,000.00 2,474,977.30 $2,475,977.30 2017-A Redemption Fund 2017-A Improvement Fund Upon receipt of $6,912,392.50 from R.W. Baird, the State Treasurer shall use the funds to pay the principal and interest due as of August 1, 2017 on the City's Series 2016-1 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 2017-A Improvement Fund upon presentation of the proper invoices. Engelman, Heather (G&B) From: Sent: To: Cc: Subject: July 12, 2017, 14:22:54 webmaster@treasurer.ks.gov Wednesday, July 12, 2017 2:23 PM Engelman, Heather (G&B) bonds@treasurer.ks.gov Updated Bond Registration: SALINA This bond issue has been updated in the KST Bond Registration System. Below is the updated information: Registration#: 0322-085-072717-156 Municipality: SALINA Bond Counsel: GILMORE BELL: HEATHER ENGLEMAN Paying Agent: STATE Purpose & Series: GO INT IMP BDS SR 2017-A Principal: $9,390,000.00 Closing Date: July 27, 2017 The issue was updated by KIM BARRY. 1