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Transcript of ProceedingsLegal Opinion Gilmore & Bell, P.C. Kansas City, Missouri TRANSCRIPT OF PROCEEDINGS AUTHORIZING THE ISSUANCE OF $7,050,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES SERIES 2020-1 DATED APRIL 29, 2020 CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES SERIES 2020-1 DATED APRIL 29, 2020 CLOSING LIST Copies of the transcript of proceedings for the above referenced issue (the "Notes"), will be prepared and distributed as follows: 1. City of Salina, Kansas (the "Issuer") 2. Attorney General of the State of Kansas 3. UMB Bank, N.A., Kansas City, Missouri (the "Original Purchaser") 4. Stifel, Nicolaus & Company, Incorporated, Kansas City, Missouri (the "Municipal Advisor") 5. Gilmore & Bell, P.C., Kansas City, Missouri ("Bond Counsel") Document Number PROCEEDINGS AUTHORIZING THE IMPROVEMENTS 1. Pheasant Ridge Addition No. 3 2. Police Training Facility 3. Stone Lake 2 PROCEEDINGS AUTHORIZING THE SALE AND ISSUANCE OF THE NOTES 4. Excerpt of Minutes of the March 25, 2020 governing body meeting evidencing adoption of Resolution No. 20-7814 5. Resolution No. 20-7814 authorizing the offering for sale of the Notes 6. Notice of Sale, Preliminary Official Statement and Certificate Deeming Preliminary Official Statement Final 7. Official Statement 8. Continuing Disclosure Undertaking 9. Excerpt of Minutes of the April 13, 2020 governing body meeting evidencing adoption of Resolution No. 20-7817; Bid Tabulation; Winning Bid 10. Resolution No. 20-7817 authorizing the issuance of the Notes and prescribing the form and details of the Notes 11. Refunded Notes Redemption Documents · Conditional Call for Redemption ·Notice of Conditional Call for Redemption CLOSING DOCUMENTS 12. Transcript Certificate Exhibit A -Schedule of Outstanding General Obligation Indebtedness 13. Specimen Note 14. Agreement Between Issuer and Agent 15. DTC Documents Blanket Letter of Representations Underwriting Safekeeping Agreement 16. Rating Letter Moody's Investors Service 1 7. Closing Certificate 18. Federal Tax Certificate with attachments as follows: Exhibit A Debt Service Schedule and Proof of Note Yield Exhibit B IRS Form 8038-G Exhibit C-1 Purchaser's Receipt for Notes and Issue Price Certificate Exhibit C-2 Municipal Advisor's Certificate Regarding the Competitive Sale Exhibit D Description of Property Comprising the Financed Facility and List of Reimbursement Expenditures Exhibit E Sample Annual Compliance Checklist LEGAL OPINIONS 19. Approving legal opinion of Gilmore & Bell, P.C. 20. Approval letter of Attorney General MISCELLANEOUS DOCUMENTS 21. Closing Letter 22. Letter from State Treasurer Confirming Registration Number 23. Authorization of State Treasurer to use facsimile signature and seal 2 REVISED PETITION 4395 TO THE GOVERNING BODY OF THE CITY OF SAUNA, KANSAS: City Clerk's Office Filed We, the undenigned, owners of record of property located within the City of Salina, Kansas (the "City") and being the ownen of 100% of the area liable for assessment set forth below, do hereby respectively request that the Governing Body of the City create and designate an improvement district for the purpose of making certain improvements lo tbe manner provided by K.S.A. 1Ua01, et seq. l. The general nature of the proposed improvements are as follows: The curb, gutter, pavement, and grading for approximately 485 lineal feet of Covey Lane and 383 lineal feet of Covey Court (the "Street Improvements''). The installation of approximately 342 lineal feet of stonn sewer pipe, inlets, pump station, force main and all appurtenances thereto (the ''Drainage Improvements"). The installation of approximately 1,328 lineal feet of six-inch water main, fire hydrants, valves, fittings, service connections for water lines and all appurtenances thereto (the "Water System Improvements"). The installation of approximately 894 lineal feet of eight-inch sanitary sewer main, service connections for sewer lines, manholes, and all appurtc:nances thcn:to (the "Sanitary Sewer Improvements"). (coUectively, the "Improvements"). 2. The estimated or probable ~It of the Improvements Is: Five Hundred Seventy-Nine Thousand Sixty-Five Dollars and Forty Cents ($579,065.40) 3. The extent of the proposed improvement district to be assessed is: Lots 1 through 6, Block 2 and Lots 8 through 19, Block l, all in Pheasant Ridge Addition No. 3, City of Salina, Saline County, Kansas. (the "Improvement District"). 4. The proposed method of assessment shall be: Each Jot in the Improvement District shall be assessed equally per lot for costs of the various Improvements. S. The proposed apportionment of cost between the Improvement District and the City at Large is: One hundred percent (100%) of the total cost of the Improvements shall be assessed to the Improvement District and no portion of costs shall be paid by the City at Large. 6. Ponuant to K.S.A. 12-6aCM(c), the Petitionen further acknowledge the following: This Petition is submitted pursuant to subsection (c) ofK.S.A. J2-6a04. The Improvement District docs not include all properties which may be deemed to benefit from the Improvements. The signen of this Petition hereby request that the Improvements be made without notJce and bearing as required by K.S.A. 12-6a04(a). NAMES MAY NOT BE WITBDRA WN FROM THE PETITION BY THE SIGNERS THEREOF AFfER THE GOVERNING BODY COMMENCES CONSIDERATION OF THE PETITION OR LATER THAN SEVEN (7) DAYS AFI'ER FILING OF THE PETITION WITH THE CITY CLERK, WHICHEVER OCCURS FIRST. Each signer of this Petition certifies1, under oath, that: (a) The petitioner and its principals do not have a financial interest in any real estate located in the city which is subject to delinquent special assessments or ad valorem taxes as of the date of the petition; (b) The petitioner and its principals do not have a financial interest in any real estate located in the State of Kansas on which special assessments or ad valorem taxes were delinquent for a period of more than one year during the five-year period immediately preceding the date of the petition; (c) The petitioner and its principals are not in breach of any outstanding contractual obligations owed to the city as of the date of the petition; and ( d) The petitioner and its principals have not been convicted of a felony financial crime, including but not limited to ftaud or embezzlement, during the five-year period immediately pieccding the date of the petition. 1 These certifications ue only required to be made by petitioners for special assessment f"UW1Cing in new developments. 2 LEGAL DESCRIPTION OF PROPERTI' OWNED WITHIN IBE PROPOSED IMPROVEMENT DISTRICT: Lots J through 6, Block 2 and Lots 8 through 19, Block I, all in Pheasant Ridge Addition No. 3, City of Salina, Saline County, Kansas. ST ATE OF KANSAS ) ) SALINE COUNTY ) I, the uodenigned Notary Publi~ hereby certify that the ~ipature appearing above is genuine and that this document was signed before me on this ~ day of bbvemt:rr . 20.Jl3__ • .t .. SHANDI L. WICKS -Nollry Nilic • Stlle of l<anm MyAppt. Expires My appointment expires: 4/~fd40'0 ~·.Lu"J.(l/:() Notary Public 3 CITY OF SALINA, KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS ecember 3, 2018 :00 p.m. e City Commission convened at 2:30 p.m. for Downtown Enhancement & Entertainment Ordinance Discussion and at 3:45 p.m. for Citizens Forum at City-County Building, Room 107. e Regular Meeting of the Board of Commissioners was called to order at 4:00 p.m. in Room 107, City-Count}' Building. Roll call was taken followed by the Pledge of Allegiance and a moment of silence. Those present and comprising a quorum: Mayor Karl F. Ryan (presiding), Commissioners Trent Da\•is, Joe Hay, Jr., Melissa Rose Hodges, and Mike Hoppock. Also present: Michael Schrage, Interim City Manager; Greg Bengtson, City Attorney; and Shandi Wicks, Oty Oerk. AWARDS AND PROCLAMATIONS None. CmZENS FORUM Rachel Dix, 129 S. Tenth Street:. provided ~ormation on a business she operated at 701 Bishop. She continued to provide information regarding the hurdles she had on obtaining an occupancy permit and building permit for the property. Michael Schrage, Interim City Manager, provided information on the building codes, spoke to the specific request and provided information about the need for available parking. A conversation ensued between Mr. Schrage and Ms. Dix regarding the deed resb'iction requirement on the shared parking agreement. Lauren Driscoll, Director of Community & Development, stated she would be willing to work with Ms. Dix regarding the shared parking issue and get something resolved. Joan Ratzlaff, Salina, provided information on citizen advisory boards and stated there were some holes in the process of allowing the citizen board members to participate in the discussions. She continued to provide information on the need for a staff person that coordinated training for boards, obtaining feedback from the boards or creating a counsel of boards. Michael Schrage, Interim Oty Manager, provided information on the citizen board orientation provided by the city manager and city attorney and individualized board training by the board liaison. • PUBUC HEARINGS AND ITEMS SCHEDULED FOR A CERTAIN nME None. CONSENT AGENDA (6.1) Approve the minutes of November 26, 2018. (6.2) Approve Resolution No. 18-7633 providing for the advisability and authorization related to establishing special improvement district for water, sanitary sewer, street, Page 1 3 18-0496 i I and drainage improvements in Pheasant Ridge Addition No. 3, Phase II and repeal Resolution No. 18-7619. Commissioner Hodges requested that Item 6.2 be removed from the consent agenda. Moved by Commissioner Hodges, seconded by Commissioner Hay, to appro\'e the minutes of November 26, 2018 as presented. Aye: (5). Nay: (0). Motion carried. (6.2) Approve Resolution No. 18-7633 providing for the advisability and authorization related to establishing special improvement district for water, sanitary sewer, street, and drainage improvements in Pheasant Ridge Addition No. 3, Phase 11 and repeal Resolution No. 18-7619. Commissioner Hodges stated she was not present when the item was originally presented. on November 5, 2018, did not have any questions, but wanted to make sure her vote was counted. 18-0497 Mo\'ed by Commissioner Hoppock, seconded by Commissioner Hay, to adopt Resolution No. 18- 7633 providing for the advisability and authorization related to establishing special improvement district for water, sanitary sewer, street, and drainage improvements in Pheasant Ridge Addition No. 3, Phase 11 and repeal Resolution No. 18-7619. Aye: (4). Nay: (1) Hodges. Motion carried. ADMINISTRATION (7.1) Second reading Ordinance No. 18-10988 changing the zoning district classification from A-1 {Agricultural) district to 1-3 (Heavy industrial) district on a 1.8 aae unplatted tract of land located between North 9th Street and North 5th Street. Mayor Ryan noted that Ordinance No. 18-10988 was passed on first reading on November 26, 2018 and since that time no comments have been received. 18-0498 Moved by Com.missioner Hoppock, seconded by Commissioner Davis, to adopt Ordinance No. 18- 10988 changing the zoning district classification from A-1 (Agricultural) district to I-3 {Heavy Industrial) district on a 1.8 acre unplatted tract of land located between North 9th Street and North 5th Street on second reading. A roll call vote was taken. A)'e: (5) Davis, Ha)', Hodges, Hoppock, Ryan. Nay: (0). Motion carried. (7.2) Resolution No. 18-7639 authorizing City of Salina staff to commence with such actions to implement the features of the sanitation plan as described herein as supported by the City Commission at recent study sessions including development of fees based on the sanitation services and preferred plan, with additional fees, as specified, for additional services, and repealing Resolution No. 18-7540. Jim Kowach, Director of Public Works, explained the plan, fees, fiscal impact and action options. Commissioner Hay asked for the total number of curbside recycling participants and how many had canceled since the opening of the recycling center. Mr. J<owach stated there were currentl)• 849 participants in the program and about 100 participants have canceled their service since the opening of the recycling center. Commissioner Hay stated there was a private individual that would pick up the recycling and deliver it to the recycling facility for citizens and asked if the private individual would be interested in taking over the 849 customers. Mr. Kowach stated staff had not contacted Page2 the private party but would include information on alternate resources available in the letter mailed to the participating parties. Commissioner Hay provided his thoughts on canceling the curbside recycling program. Commissioner Davis provided his thoughts on the curbside recycling program. Commissioner Davis asked if there were any considerations.to sorting the recycling instead of having a single stream source. Jim Teutsch, Operations Manager, stated the market was trending toward single stream recycling versus sorting the materials. He continued to provide information on the contamination of materials at collection and the recycling industry. A conversation ensued between the Commission, Mr. Teutsch and Michael Schrage, Interim City Manager, regarding contamination of materials and the recycling industry. Commissioner Davis asked if staff was aware of the financial model of Abilene's recycling center. Mr. Teutsch stated the operators that are sorting the materials; they hold the product until they have a large enough quantity to be sold. He continued to provide information on the process of materials going to market. A conversation ensued between the Commission, l\'lr. Schrage and Mr. Teutsch regarding the collection and sorting of the recycling. Commissioner Hay asked if staff could reach out to the private party on the curbside recycling program. l\ir. Teutsch stated he was an advocate for creating public/private partnerships and provided information on some public/private partnerships. Commissioner Hodges asked how long the contract with Hutchinson was and if they closed what would happen. l\ir. Teutsch stated it was an indefinite contract but if they were no longer open staff would have to find another material recovery facility. Commissioner Hodges asked how many yard waste recycling customers there were. Mr. Teutsch stated about 5,500 customers currently participated in the yard waste program. Mr. Kowach stated any customer could set out yard waste recycling. Commissioner Hodges pro\•ided her thoughts on the yard waste program and the current curbside recycling program. Mr. Teutsch provided information on the current programs, proposed programs and the proposed fees. l\'fr. Kowach provided additional information on the current programs, proposed programs and the proposed fees. Mr. Teutsch provided information on the potential future partnerships with businesses such as the hospital. Commissioner Davis asked what the hospital was currenUy doing with their plastic waste and what the impact was on the recycling facility for transporting the material. Mr. Teutsch stated he did not know what the current practice was for the hospital and spoke on what the impact would be on the facility . . Mr. Schrage asked if the material was separated, how many types would be collected separately. Mr. Teutsch stated the seven plastics, metal, glass, cardboard, paper, and soon aluminum foil. He continued to provide information on the uses of the product collected. A conversation ensued between the Commission, Mr. Teutsch, and Mr. Schrage regarding the recycling facility and proposed program. Pagel Commissioner Hodges asked how many customers were there currently systems wide. Mr. Teutsch stated approximately 15,100. Commissioner Hodges asked who would be in charge of enforcing the parking violations. Mr. Schrage stated sanitation would be the eyes in the field but ultimately the police deparhnent. Commissioner Hodges asked if the police deparhnent would be involved in the conversations. Mr. Schrage stated the proposed system would be discussed with the police deparbnent to make sure it was enforceable. Commissioner Hodges asked if the private haulers would be required to use the same days for collecting as the City of Salina. Mr. I<owach stated no. ?vir. Teutsch provided information on a future created position to help with enforcement. Commissioner Hodges asked if there were an}' ordinances on the books that referenced the removal of trash carts from the curb. Mr. Schrage stated yes, the carts were to be removed by the evening of the pickup date. Mr. Kowach stated the alley pickup customers equaled about 15% of the customers. Commissioner Hodges asked how parking would be handled on streets with parking allowed only on one side. Mr. Teutsch stated collecting trash was not easy with parking on the streets and it would be something that would have to be addressed. Daniel Eckhoff, 2664 Highland, asked how he could be kept in the loop on the private trash hauling. Mr. Teutsch stated he could contact him and provide him with his contact information. Mary Mertz, 1936 Queens Road, thanked the Commission for their questions and was currently in favor of eliminating the curbside recycling program. She continued to provide information on the changes to the resolution and asked il it was necessary to state what size of containers could be provided. Mr. Schrage stated it could be left out but was intended to help let citizens know the information. She further provided her thoughts on a pay as you throw option. David Norlin, 1608 E. Republic, thanked staff for their hard work on the matter and provided his thoughts on the elimination of the curbside recycling program as being a current customer. Joan Ratzlaff, Salina, provided her thoughts on the plan that was approved in March, the proposed programs and asked the Commission to not adopt the resolution and allow the Solid Waste Management Committee to review the item in a week and a half. Commissioner Hay stated he would like to see that the.resolution be postponed to allow staff to work with the third party for curbside recycling and allow the Solid Waste Management Committee to re,'iew the item. Commissioner Hoppock provided his thoughts on the plan and asked how Jong the postponement of the item would need to be. Commissioner Davis asked if the resolution would affect the submittal date to the State of Kansas. Mr. Schrage stated the City of Salina was an enterprise fund, a landfill operator and a sanitation operator and required to fulfill the requirement of the Solid Waste Management Plan. He continued to state the next agenda item was on the Solid Waste Pagc4 Management Plan. Jim Teutsch stated the Solid Waste Management Plan was to be approved and submitted to the State of Kansas by December 4, 2018. He continued to state the Solid Waste Management Committee met in January, 2018 and provided information on the motion of the committee at the time and stated there was not a need to take the item back to the Solid Waste Management Committee. Corrunissioner Hoppock asked what the pay as you throw option was. Mr. Teutsch stated it was an incentive program that was included in the business plan and feasibility study. He continued to provide information on the incentive options for pay as you throw programs. Commissioner Hoppock asked if the automated truck could pickup multiple cart sizes. Mr. Teutsch stated yes. Commissioner Hoppock asked if the reference to the cart size could be eliminated in the resolution. Mr. Teutsch stated yes. Mayor Ryan provided his thoughts on the cart sizes. A conversation ensued between the Commissioners regarding the proposed program. Commissioner Hodges provided her thoughts on the elimination of the current curbside recycling program . .Mr. Teutsch stated the reduction in the size of the carts would not affect a large number of the customers. Mr. Schrage asked if this item was required to be submitted to the State of J<ansas. Mr. Teutsch stated what he was sending to the State of Kansas was the record of what took place in 2018. Commissioner Davis asked if the report had to reference the decision on curbside recycling or could that be eliminated to allow time to work it out. Mr. Teutsch stated there was an annual requirement to reaffirm the plan and Addendums A and B would need to be submitted to the State of Kansas. Mr. Kowach stated the plan could be submitted as it currently was and then could be discussed in further detail at a later time. He further stated the cart size could be left out of the resolution with a footnote stating there were ongoing conversations on the cart size. Commissioner Hoppock provided his thoughts on the current curbside recycling program. 18 · 99 Moved by Commissioner Hoppock, seconded by Mayor Ryan, to adopt Resolution No. 18- 7639 authorizing City of Salina staff to commence with such actions to implement the features of the sanitation plan as descnbed herein as supported by the City Commission at recent stud}' sessions including development of fees based on the sanitation senrices and preferred plan, with additional fees, as specified, for additional services, and repealing Resolution No. 18-7540. Mayor Ryan provided his thoughts on the proposed program. Commissioner Davis would like to see more formal action on potential partnerships \\ith private haulers. Commissioner Hodges provided her thoughts on eliminating the yard waste program to allow for the curbside recycling program to remain. Commissioner Davis asked what had to be submitted to the State of Kansas to satisfy the Pages Solid Waste Management Plan requirements. Mr. Teutsch stated if the resolution was approved it would be submitted tomorrow. Mr. Schrage asked what the consequences were to submitting the current resolution then making changes to the resolution in three months. Mr. Teutsch stated there would be none. The Clerk called roll at the request of the Mayor. Aye: (2) Hoppock, Ryan. Nay: (3) Davis, Hay, Hodges. Motion failed. Mayor Ryan asked if there was another option to adopt the item. Conunissioner Hodges provided her thoughts on the matter. Moved by Commissioner Ha)', seconded by Commissioner Davis, to ask staff to send the item back to the Solid \•\f aste Management Committee and staff work \\rith a third party on the curbside recycling program. Mr. Schrage provided information on the role of the Solid Waste Management Plan. Mayor Ryan called the question. Aye: (3). Nay: (2) Hoppock, Ryan. Motion carried. (7.3) Approve Resolution No. 18-7632 reaffirming the Solid \-\1aste Management Plan for Salina/Saline County with addendums. Michael Schrage, Interim City Manager, explained the statutory solid waste management planning responsibilities and the interlocal agreement with Saline County. Jim Teutsch, Operations Manager, explained the plan, addendums and action options. 18-0501 Moved by Commissioner Hay, seconded by Commissioner Davis, to adopt Resolution No. lS.7632 reaffirming the Solid Waste Management Plan for Salina/Saline County with Addendums 1 & 2. Aye: (5). Nay: (0). Motion carried. (7.4) Scheduling and calling a special meeting to conduct City Manager candidate interviews. Natalie Fischer, Director of Human Resources, explained the request and action options. Mayor Ryan asked if the meeting would be at 12:30 p.m. Ms. Fischer stated yes. Commissioner Davis asked where the meeting would take place. l\1s. Fischer stated the meeting would be called to order in Room 107, the interviews would be done in another room and if there was a need for additional ti.me to deliberate, room 1078 would be available. 18-0502 Moved by Commissioner Da\'is, seconded by Commissioner Hoppock, to hold a special meeting on to conduct cit)• manager candidate interviews on Thursday, December 6, 2018 at 12:30 p.m. Aye: (5). Nay: (0). Motion carried. (7.5) Authorize financial conbibution to Salina Airport Authority for economic development services. Michael Schrage, Interim City Manager, explained the request, fiscal impact and action options. Commissioner Hay asked if the county benefited from the economic development and why there was not a funding request from them. Mr. Schrage stated the City of Salina funds Pagc6 were set aside and he would let Mitch Robinson provide information on the request. l\•litch Robinson, Salina Community Economic Development Organization (SCEDO), stated the request did not go before the Saline County Commission. Tim Rogers, Salina Airport Authority Executive Director, stated the county did not have a fund for economic development and the funds the City of Salina collected covered the entire county. Mr. Schrage provided additional information on the economic development fund. Commissioner Hodges asked what the county's level of participation was on the SCEDO. Mr. Robinson stated the City of Salina contributed $250,000 with Saline County and the Salina Airport Authority contributing $20,000 each and the SCEDO providing S30,000 from the reserve fund. Mr. Robinson provided information on the request and the review by the SCEDO board. Mr. Rogers provided information on the Law Firm of Baker Donelson and the projects to be funded. Commissioner Hoppock asked what the approximate number of jobs and salary ranges would be for these projects. Mr. Rogers stated approximately 200 to 300 jobs with salaries ranging from 525 to 535 an hour. Commissioner Hoppock asked when staff expected a decision to be made on the MQ-9 project. Mr. Rogers stated he needed the staff of Baker Donelson to represent the airport Commissioner Hoppock asked if staff had references on Baker Donelson. Mr. Rogers stated Baker Donelson was instrumental in the creation of the tower upgrades and the airport surveillance radar system. He continued to provide information on the support of Baker Donelson throughout the State of Kansas. Commissioner Hodges asked if Mr. Rogers was comfortable with the relationship with Baker Donelson. Mr. Rogers stated yes and it was of the request of the Kansas Deparhnent of Commerce to add to the current contract. Commissioner Hodges asked iI the new incoming Governor or Secretary of Commerce would have any effect on the program. Mr. Rogers stated they would not, the project was mo\•ed to the transition team. Commissioner Hodges asked if there was any type of assurance that another community would not be represented by the same firm for the same project. Mr. Rogers stated Baker Donelson would not represent another city in the United States on the same projects. Conunissioner Hodges asked if the request for lobbying was an A-typical request. Mr. Schrage stated he was not sure if there was a history of requests for lobbying. Mr. Rogers stated Baker Donelson would be advocates to access the levels of information needed to advocate on our behalf. Commissioner Hodges provided her thoughts on the request. Commissioner Hodges stated there was a request for $50,000 that was funded to the Salina Airport Authority. Mr. Rogers stated the request was for the Global Aeronautics Initiative and provided information on the initiative. Commissioner Hodges asked at what point we could expect to see an economic development policy to help verbalize the priorities. Mr. Schrage stated there was an upcoming study session in January 28, 2019 to provide an update on the K-State Global Page 7 Aeronautics Initiative. He also stated a policy had been drafted and provided additional information on the resources available and noted there had not been a time table set for adopting the policy. Conunissioner Hodges stated it was hard to measure the deliverables but this specific request had deliverables listed. Mr. Rogers stated the deliverables for this request would be the jobs. He continued to provide information on the deliverables available. Mr. Schrage continued to provide the measurable on the projects. Commissioner Davis provided information on the request. Moved by Commissioner Davis, seconded by Commissioner Hay, to authorize conbibution of 530,000 to the Salina Airport Authority for the purpose of securing the services of Baker Donelson to assist the Salina Airport Authority in assessing and facilitating success in opportunities associated with the MQ-9 MOD Center project, General Atomics, the Air Force, and the Kansas National Guard and to provide assessments of efforts, strategy development, bid and proposal work, and other advocacy activities in support of efforts identified by the Salina Airport Authority. A)'e: (5). Nay: (0). Motion carried. DEVELOPMENT BUSINESS None. OTHER BUSINESS Commissioner Hodges asked for a five (5) minute break before the executive session at 7:05 p.m. (9.1) Request for executive session (legal). I move the city commission recess into executive session for _ minutes beginning to discuss the road annexation and impact fee agreement with Saline County with legal counseJ based upon the need for consultation with an attorney for the public body which would be deemed privileged in the attorney-client relationship pursuant to KS.A. 45-7319(b)(2). The open meeting will resume in this room at __ p.m. 18-0504 Moved by Commissioner Hoppock, seconded by Co~sioner Davis, to recess into executive session for 30 minutes beginning at 7:10 p.m. to discuss'the road annexation and impact fee agreement with Saline County with legal counsel based upon the need for consultation with an attorney for the public body which would be deemed privileged in the attorney-client relationship, pursuant to KS.A. 45-7319(b)(2),. The open meeting will resume in this room at 7:40 p.m. Aye: (5). Nay: (0). Motion carried. The City Commission recessed into executive session at 7:10 p.m. and reconvened at 7:40 p.m. No action was taken. 18-0505 Mo\•ed by Commissioner Hoppock, seconded by Conunissioner Hodges, to recess into executive session for 20 minutes to discuss the road annexation and impact fee agreement with Saline County with legal counsel based upon the need for consultation with an attome}' for the public body which would be deemed privileged in the attorney-client relationship, pursuant to KS.A. 45· 7319(b)(2),. The open meeting will resume in this room at 8:00 p.m. Aye: (5). Na)•: (0). Motion carried. Page8 18-0306 ... !2 ADJOURNMENT Moved by Commissioner Davis, seconded by Commissioner Hodges, that the regular meeting of the Board of City Commissioners be adjourned. Aye: (5). Nay: (0). Motion carried. The meeting adjourned at 8:02 p.m. [SEAL) AITEST: . ~·~ Shandi Wicks, CMC, City Clerk Karl F. Ryan, Mayor Page9 i (Published in the Salina•Joumal on Oe.c&!!)'Ot'( J • 2018) RESOLUTION NUMB.ER 18-7633 RESOLUTION SETrlNG FORTH FINDINGS AND DETERMINATIONS OF THE O\'ERNING BOD\' OF THE CITY OF SALINA, KANSAS ON THE ADVISABILITY F AND AUTHORIZING THE CONSTRUCTION OF CERTAIN IMPRO\'EME~TS URSUA.NT TO K.S.A. 12-6aOI ~11~q. AND REPEALING RESOLUTION NUMBER 18- 619. WHEREAS, a.peailion was filed with the City Clerk for lhe City of Salina, Kansas {lhe 'City") on No\'ember 29, 2018, proposing certain impro,•emen1s pursuan1 to K.S.A. 12-6a01 11 tq. {the "Petition .. ); and WHEREAS, 1he Petition sets forth: (a) the general nature of1he proposed impto\'ements; b) the estimated or probable cost of 1he proposed imprmoemems; {c) the exrcnt of the proposed mpro,~ment district to be assessed for the cost of the proposed impro,~mrnts; (d) the proposed elhod of assessment: (t") lhe proposed apportionment of the cost betwem the improvement dis1rict d the Ciry at large; (I) a request 1ha1 such impro,<emenli be made \\ithout notice and hearing as uired by K.S.A. 12-6a04(a); and (g) the statement that the Pc1ition was submil}ed under ubsection (c) of K.S.A. 12-6a04; and WHEREAS, the owners or record of 100% the propcm.• liable to be assessed under the tition ha\•e signed the Petition; and WHEREAS, no signatures ha\•c bctn \\ilhdrawn from 1he pttilion before the Go\'Cming ody began consideration of lhe Petition; and WHEREAS, K.S.A. J2-6a04 provides that lhe Governing Body may authorize ~nd order ublit improl'cments withou1 notice and hearing after a sufficiml pc1i1ion has been filed; and WHEREAS, the Go,~ming Body has m•iewed and considered the Prcliminll')' ngineering Estimate and Feasibiliry Repon prepared by the City Engineer and agrees \\ith the onclusions set f onh therein; and WHEREAS, the Governing Body desires to repeal Resolution No. 18-7619 pro\•iding for pedal assessments against real. estate within Pheasant R!dge Addition No. J, and enact this esolu1ion in lieu them>f, to correc:I the legal description of the propeny to be usessed for the mprovcmcnts. NOW THEREFORE, BE IT RESOLVED B\' THE GOVERNING DOD\' OF THE ITI' OF SALINA, KANSAS, AS FOLLOWS: Section I. The Governing Body hereby finds lhat the Petition is sufTtc:ieni.. and nhcr finds and dctcnnines that it is nccessal')' and ad\'isable to make 1he f ollo\\;ng improvements: (a) The na1urc of the impro\•cments arc as follows: The curb, gutter, pa\•emem, and grading for approxima1cly 485 lineal feel of Covey Lane and 383 lineal feel orCo\•ey Coun (the "Street Improvements'') . . u1111m1111111m 1111111111111111111111m11111 HIHlllllDllD .• -.-... REBECCA SEEMAN t~i:;;~~.flEGISTER OF DEEDS SALINE COUNTY KANSAS \~;~;.·;.·,):'Book:1350 Page: 1731-1733 \:.:~r.~/Receipt #: 120465 Recording Fee: so.oo .......,.... Peges Recorded: 3 c,rlrl Date Recorded: 12/14/2018 3:50:11 PM ! I 1 u Boole 1350 Page: 1732 The installation of approximately 342 lineal feet of stoma sewer pipe, inlets, pump station, force main and all appunenances thereto (the "Drainage Improvements"). The installation of approxima1cly I ,328 lineal feet of six-inch water main, fire hydrants, \'ah•es, finings, sen•ice connections for water lines and all appunenances therc10 (the "Water Sys1em lmpro,•emcnts''). The inscallation of approximately 894 lineal fttl of eight-inch saniwy sewer main, scn·h:c connections for sewer lines, manholes, and all appunenances thereto (the "Sanitary Sewer lmpro\~ments"). (collcctive)y, the 11lmprovements"). (b) The estimated cost of the lmpro\•cmenlS is: Fi\'t Hundred Se,·enty-Nine Thou53nd Sixi:y-Fh•e Dollars and Fony Cents ($579,065.40). (c) The boundaries or the improvement district to be assessed arc: wlots I through 6, Block 2 and-lots 8 through 19, Block I, all in Pheasant Ridge Addition No. 3, Ciry of Salina, Saline County, Kansas. (colfccti\'ely, the 11lmpro\'ement District"). (d) The apponionment of cos1 between the lmpro,•emcn1 District and the city ar large is: One hundred percent (100-A) of the total cost or the Improvements shall ~ assessed to lhe lmpro\'ement District and no portion of costs shall be paid by 1he Chy at Large. (e) The me1hod of assessment against property within che lmpro,rement District shall be equally per lot against all lots within the lmpro\'ement District. Section l. The Qo\~ming Body hereby declares that the lmpro\iements described in is Rnolution are necessar)', and authorizes them to be made in accordanct with lhe Petition and e findings set fonh in this Resolution, and funhcr authorizes the IC\•ying of assessments and the ssuance of bonds therefore, all in accordance with K.S.A. 12·6a01 ti seq. The go,•eming body of e City acknowledges that the Petition was submitted under K.S.A. 12-6a04(c) and hereby finds hat the fmpro\•ement District does not include all propen~· which may be deemed to be bmtfitlcd f the conStrucrion or the lmpro,•ements and the ptrsons who signed the Petition are willing to )'the costs of the lmpro,•ements as set fonh in the Pctirion. Section J. The City expects to make capital expenditures from and after the dale of his Rt'SOlution in connection with the Improvements described herein, and intends 10 reimburse tself for such expenditum with the proeeeds of one or more series of general obligation bonds and emporary notes of the City in the ma.~imum principal amount ofS579,06S.40. Section 4. Resolution No. 18-7619 is hereby repealed. 2 f "' I /JC... Boak: 1350 Page: 1733 Srction S. The City Clerk shall file a certified copy of this Resolution with the egistcr of Deeds of Saline County, Kansas. Src:1ion 6. This Resolution shall take effect after its passage and publication once in he official city newspaper. SEAL) ADOPTED AND PASSED this 3rd day of December, 2018. -· . ----... I hereby certify that the above and foregoing is a uue and correct copy of Resolution No. IS-7633 that was adopted by the Governing Body of the City of Salina at their regular meeting on December 3, 2018. Allison Strait Oeput~· Ci1y Clerk J Publisher's Affidavit I, __ _.C..,h.,,.g_.'s;i.i.ty~E.uini.uk.__ ___ , being duly sworn declare that I am a I cgal Coordinator of lHE 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 continuously and uninterruptedly published for five consecutive years prior to first publication or attached notice, and that the Resolution 18-7633 Notice has been correctly published in the entire issue of said newspaper one time, publication being gi\•en in the issue of December7. m!, ('~!:.'°'-t ~ Subscribed and sworn to before me, this 7 'ti? day of f)e~ A.D. 20 J.i:_ Printer's Fee $438.00 -~-·-····- ........ ,... It";. ' a. .......... \ fll')af..... . -=-~ ...... -............. .... Miit .. . . ...., ...... .. •llr .. Clr•• . . • 111-n. ....... ~ ..... ......, ... .. ...._ .... ... ........ .., ........ . ......... ...._.' IMlll ' ...... ,.. ...... ............... .._. .......... ............ ......,. .. ........... _ .. : .......... ....,_ ................. . ........,_, .......... ·~·-1111 .................... ........... I.SJ.ft. ,lllt .......... ..., ·fl•CIJ ....... .. .................. jU>.tltlOCC4•..., .. ................. : ........... ,...."*"., ................. ., .. ! ............... ................. ........... ,., ... Pheasant Ri;dge Addi~· EXCERPT OF MINUTES OF A MEETING OF THE GOVERNING BODY OF THE CllY OF SALINA, KANSAS HELD ON JUNES, 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. Cniwford (presiding), Commissioners Jon Blanooard. Trent Dayis. Melissa Rose Hodges. Md 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 AtrnlORIZING AND PROVIDING FOR THE DF.SIGN, CONSTRUCTION AND IMPROVEMENT OF A PUBUC BUILDING IN THE CITY OF SALINA, KANSAS AND PROVIDING FOR THE PA \'MENT OF THE COSTS THEREOF. Thereupon. Commissioner Blanchard moved that said Resolution be adopted. The motion was sec.anded by Commissioner Hodges. Said Resolution was duly read and considered, and upon being put. the motion for the adoption of said Resolution WZIS eanit.d by the vote of the governing body, the vote being as follows: Yea: Mayor Kaye J. Crawford.. Commissippcrs Jon Blanchard. Trent Davis, Melissa Rose Hodges. and Kar] Ryan. Na~ ~~~~~~~~~~~~~~~~~~~~~~~--- Thereupon, the Mayor declared said Resolution duty adopted and the Resolution was then duly numbered Resolution No. 17-7458 and was signed by the Mayor and attested by the Clerk. •••••••••••••• (Other Proceedin~) [BALANCE OF nus PAGE INTENTIONALLY LEFT BLANK] CERTIFICATE I hereby certify that the foregoing Excerpt of Minutes is a true and conect excerpt of the proceedings of the governing body of the City of Salina, Kansas held on the da1c stated therein, and that the official minutes of sueh proceedings are on file in my office. (S 2 I I RESOLUTION NO. 17·7458 A RESOLUTION AUTHORIZING AND PROVIDING FOR THE DESIGN, CONSTRUCTION AND l.M.PROVEMEl\'T OF A PUBLIC BUILDING IN THE CITY OF SALINA, KANSAS AND PROVIDING FOR THE PA VMENT OF THE COSTS THEREOF. WHEREAS, the City of Selina (the .. City") is authorized and empowered pursuant IO K.S.A. 12· 1736 ~' seq. (the "Act") to erect or COnstl'UC\ acquire a public building or buildings and procure any necessar,.• site therefore and ma~· alter, repair, reconsuuct, mnodel, replace or make additions to, furnish and equip a public building or buildings; and WHEREAS, the City is authorized and empowered pursuant to the Act to issue general obligation bonds for the purpose or financing the costs associated with 1he foregoing; and WHEREAS, the go\ttming body of the City hereb)• finds and de1ermines thaa it Is neteSSU)' to auahorize and provide for the construction and impt0\'emen1 of certain public buildings in 1he City, as more fully described herein, and 10 pro\•ide for the payment of the costs thereof. NOW, THEREFORE, BE IT RESOLVED BY THE CO\IERNINC BOD\' OF THE cm· OF SALINA, KANSAS, AS FOLLOWS: Section J. Project Autborlution. The go\•eming bod)• of the City hettby finds and detennines that ii is nettSSary to make the fallowing impro,~ments: The design, construction and imprc)\'ement of a new police training facility, including an approxirmtely 18,000 square foot building, a garage, adjacent surface parking, Yarious equipment and fumishinss, and all other necessary impro,-ements related thereto (the "Jmpro\'ements"). Section l. Project Financln£. The estimated cost of the lmprovcmenlS is $4,900,000. The cost of ahe lmpro\•emenu and the associated financing costs shall be payable from the proceeds of general obliption bonds of the Chy issued under tht autho~· of the Act. Section 3. ~lmbursement. The City expects to make capital expendhures in connection with the Improvements and Intends to reimburse itself for such expenditures with the proceeds of general obligation bonds and/or temporan.• notes in an amount not to exceed $4.900,000, plus associated financing costs and costs of issuance. Any general obligation bonds and/or tempom)' notes issued under the authorit)• of this Rrsolution may be used 10 reimburse expenditures made on or after the date that is 60 deys before the date of adoption of this Resolution pursuant to U.S. Tttasul)' ResuJation f 1.IS0-2. Se~tlon 4. This Resolution shall take effec1 and be In full force immediately after its adoption by the go,-eming body. I 2017. ADOPTED AND APPROVED by the go,teming body of the City of Salina, Kansas, on June 5, (SEAL) ATTEST: 2 EXCERPT OF MINUTES OF A MEETING OF THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS HELD ON SEPTEMBER 23, 2019 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: Trent Davis, Mayor and Joe Hay, Jr., Melissa Rose Hodges, Mike Hoppock and Karly Ryan, Commissioners. Absent: None. 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 AMENDING RESOLUTION NO. 17-7458 TO PROVIDE ADDITIONAL FUNDING FOR THE COSTS OF DESIGNING, CONSTRUCTING AND IMPROVING A PUBLIC BUILDING IN THE CITY OF SALINA, KANSAS. Thereupon, Commissioner Hay moved that said Resolution be adopted. The motion was seconded by Commissioner Ryan. 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: Hay, Hoppock, Hodges, Ryan and Davis. Nay: None. Thereupon, the Mayor declared said Resolution duly adopted and the Resolution was then duly numbered Resolution No. 19-7743 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 such proceedings are on file in my office. (SEAL) JCityClerk - f w - - RESOLUTION NO. 19-7743 A RESOLUTION AMENDING RESOLUTION NO, 17-74'58 TO PROVIDE ADDmONAL FUNDING FOR THE COSTS OF DESIGNING, CONSTRUCTING AND IMPROVING A PUBLIC Bun.DING IN THE CITY OF SALINA, KANSAS. WHEREAS, the City of Salina, Kansas (the "City") is authorized and empowered pursuant o K.S.A. 12-J 736 et seq. (the "Acf') to erect or construct, acquire a public building or buildinw; d procure any necessary site therefore and may alter, repair, reconstruct. remodel, replace or ake additions to, furnish and c_quip a public building or buildings; and WHEREAS, the City is authorized and empowered pursuant to the Act to issue general bligation bonds for the purpose of financing the costs associated with the foregoing; and WHEREAS, on June S, 2017, the governing body of the City adopted Resolution No. 17- 458 authorizing the design, construction and improvement of a new police training facility, ncluding an approximately 18,000 square foot building, a garage, adjacent surface parking, various ipment and furnishings, and all other necessary improvements related thereto (the 'Improvements") and providing for the costs thereof; and WHEREAS, due to increased costs of the Improvements, the governing body of the City y finds and dctcnnines that it is necessary to autboriz.e and provide for additional funding for e Improvements. NOW, THEREFORE, BE IT RESOLVED BY THE GOVERNING BODY OF THE TY OF SALINA, KANSAS, AS FOLLOWS: Section 1. Amendment. Section 2 of Resolution No. 17-7458 is hereby amended to read follows: The estimated cost of the Improvements is $5.900,000, plus interest on any temporary f'mancing and costs of issuance. The cost of the Improvements and the associated financing costs shaJI be payable from the proceeds of general obligation bonds of the City issued under the authority of the Act. Section 2. Reimbanemeat. The City expects to make capital expenditures in connection ith the Improvements and intends to reimburse itself for such expenditures with the proceeds of ncral obligation bonds and/or temporary notes in an amount not to exceed $5,900,000, plus iated financing costs and costs of issuance. Any general obligation bonds and/or temporary otes issued under the authority of this Resolution may be used to reimburse expenditures made on after the date that is 60 days before the date of adoption of this Resolution pursuant to U.S. rcasury Regulation§ l.J 50·2. Section 3. This Resolution shall take effect and be in full force immediately after its option by the governing body. [Balance of page intentionally left blank] - - - .r -~ z ... w i .., !l . ~ ! ADOPTED AND APPROVED by the governing body of the City of Salina, Kansas, on eptcmber 23, 2019. SEAL) Trent W. Davis, M.D .• Mayor City Clerk's Office Filed . rol~1~9 o:~pn PETITION 4398 TO THE GOVER.i~ING BODY OF THF. CITY OF SALINA, KANSAS: We, the undenigned, owners of record of property located ~itbio the City of Salina, Kansas (the "City") and being the owners of 100% of the arq Hable for assessment set forth below, do hereby respectively request that the Governing Body of the City create and designate an Improvement district for the purpose of making certain improvements in the manner provided by K.S.A. 12-6a01, et seq. 1. The general nature of the proposed improvements are as follows: The curb, gutter, pavement, and grading for approximately 856 lineal feet of Shoreline Drive and I 80 lineal feet of Shoreline Cove (the "Street Improvements"). The installation of approximately 221 lineal feet of six-inch water main, 840 lineal feet of eight-inch water main, fire hydrants, valves, fittings, service connections for water lines and all appurtenances thereto (the "Water System Improvements''). The installation of approximately 1,070 lineal feet of eight-inch sanitary sewer main, service connections for sewer lines, manholes, and all appurtenances thereto (the "Sanitary Sewer Improvements"). (collectively, the "Improvements"). 2. The estimated or probable cost of the Improvements is: Six hundred seventy thousand one hundred sixty-six dollars and forty cents ($670, 166.40). 3. The extent of the proposed improvement district to be assessed is: Stone l...ake Addition Block 4, Lots 1 through 4, Block 5, Lots 3 through 15, all in Stone Lake Addition to the City of Salina, Saline County, Kansas. the "Improvement District"). 4. The proposed method of assessment shall be: Equally per square foot for costs of the various Improvements. S. The proposed apportionment of cost between the Improvement District and the City al Large is: One hundred percent (IOQll;) of the total cost of che lmprovcmcnls shall be assessed to the Improvement District and no ponion of costs shall be paid by the City 11 Large. The signers of this htllion hereby request that the Improvements be made without notice and hearing as required by K.S.A. 1 Z..6a04(a). The signers of this Petition are the o"·ners of 100% of the property proposed to be included in the Improvement Districl and further acknowledge that (A) this Petition b one submitted pursuant to subsedlon (c) of K.S.A. 12-6804, and amendments thereto; and (8) the proposed Improvement District does not include all properties "'hich may be deemed lo benefit from the proposed Improvements. NAMES MAY f'OT BE WJTHDRA WN FROM THE PETITION BY THE SIGf'ii'ERS TIIEREOF AFTER THE GOVERNING BODY COMMENCES CONSIDERATION OF THE PETITION OR l..A TER THAN SEVEN (7) DA VS AITER FILING OF THE PETITION \\111-1 THE CITY CLERK, WHICHEVER OCCURS FIRST. Each signer of this Petition cenifics1, under oath, that: (a) The petitioner and i1s principals do not have a financial interest in any real estate located in 1he city which is subject to delinquent special assessments or ad valorcm taxes as of che date of the petition; (b) 1lic petitioner and its principals do not have a finanrial interest in any real estate located in lhc State of Kansas on which special assessments or ad valorcm tucs were delinquent for a period of more than one year during the five-year period immediately preceding the date of the petition: (c) The petitioner and its principals arc no1 in orcach of any outstanding contraciual obligations owed 10 lhe city as of the date of the pctilion; and (d) The petitioner and its principals have not been convicted or a felony financial crime, including but not limited 10 fraud or embeulemcnt, during the five-year period immediately preceding the date of the petition. DOUGLAS F. BRADLEY TRUST to be made by pc1iliocters for special :uscssment financing in new 2 LEGAL DESCRIPTION OF PROPERTY OWNED WITHIN THE PROPOSED IMPROVEMENT DrSTRICT: Block 4, Lots 1 through 4, and Block S, Lots 3 through 15, all In Stone Lake Addition to the City of Salina, Saline Count)', Kansas. STA TE OF KANSAS ) ) SALINE COUNTY ) I, the undersigned Notary Public, hereby certify that the signature appearing above is genuine and that this document was signed before me on this /'/In day of D@bu. . 2019. My appointment expires: NOTAllY PUIUC• .... .._ l UldC.WN e 117COIRlll.1ap. ll-t5(g?MD 3 I I I CITY OF SALINAI KANSAS REGULAR MEETING OF THE BOARD OF COMMISSIONERS October 21, 2019 4:00p.m. The City Commission convened at 2:30 p.m. for Financial Update and at 3:45 p.m. for Citizens Forum at City-County Building, Room 107. The Regular Meeting of the Board of Conunissioners was called to order at 4:00 p.m. in Room 1071 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 Trent W. Davis, M.D. (presiding), Commissioners Joe Hay, Jr., Melissa Rose Hodges, Mike Hoppock, and Karl Ryan. Also present: Michael Schrage1 City Manager; Jacob Wood, Deputy City Manager; Greg Bengtson, City Attorney; and Allison Hamm, Deputy City Oerk. Mayor Davis asked the Clerk for verification that notice had been sent for today's City Commission meeting. The Clerk replied yes. AWARDS Ai'lD PROCLAMATIONS (3.1) (3.2) The day of October 26, 2019 as "Rolling Hills Zoo Day" in the city of Salina. Robert Jenkins, Rolling Hills Zoo Executive Director, read the proclamation and announced associated events. He added that the tiger cubs were on display today for the first time and will be on display for this Saturday's event. The week of October 20-26, 2019 as "Friends of the Library Week" in the city of Salina. Gretta Kontas, Vice President of the Friends of the Salina Public Library, read the proclamation and announced associated events. Melanie Hedgespeth, Salina Public Library Director, introduced herself and added that she is behind the Friends of the Library. CITIZENS FORUM Deborah Corrales explained a little about Michael Vick's pit bull fighting dogs and talked about the circumstances surrounding that case. She went on to explain the dogs that were left behind and used as therapy dogs. She explained the dogs that she has had as rescue dogs and added that these dogs are not inherently dangerous. She went on to explain the requirements that she had to follow in regard to her breed specific dog and her disagreement with the ban. Commissioner Hodges asked when they would be looking at the breed specific ban again. Mike Schrage, City Manager, stated they have a rough draft from Salina Animal Services staff and believes they are a couple more weeks or so out. Tonya Greer asked the mayor if he has received a letter from Anthony Mays with the Federal Housing Equal Opportunity Department. Mr. Schrage stated it was received, but it went to the Human Relations Commission who handles these situations. He added that it would be handled elsewhere due to a conflict of interest. Tonya Greer went on to state it has been more than two weeks since it was sent, and they hadn't received a response on the investigation. Mr. Schrage stated it was a conflict of Page 1 I "' II> f Ill ! I 1 :ii ~ 8 I I interest for the City to investigate. Lauren Driscoll, Director of Community and Development Services, stated they have 30 days to respond and they responded within three (3) or four (4). She added that she explained the issue surrounding conflict of interest within the letter. PUBLIC HEARINGS AND ITEMS SCHEDULED FOR A CERTAIN TIME (5.1) Public hearing to consider adoption of Resolution No. 19-7752 declaring a certain structure located at 236 5. 4th Street to be unsafe and dangerous, directing that the structure shall be repaired or removed; and establishing a reasonable amount of time within which the repair or removal of such structure shall commence and be completed. Sean Pilcher, Building Official, explained the dangerous structure procedures, fiscal impact, funding available and the code sections that pertain to this matter. Mike Schrage, City Manager, stated that he mentioned it had occurred on Valentine's Day of 2018, but his report had dates from this year. Mr. Pilcher clarified that it was this year. Mr. Schrage acknowledged he is pleased and optimistic on the progress made by Mr. Ratzlaff. He added that they had an obligation to conduct this public hearing due to it having been published already, but enforcement wouldn't be necessary it was just an opportunity to set a deadline and ensure repairs are made. Commissioner Hoppock asked if 60 days was long enough and if it could be extended later on if Mr. Ratzlaff needs more time to complete them all. Mr. Schrage stated they have amended resolutions in the past and they are reviewed on a case by case basis, but it can be extended if needed. Mayor Davis asked what the significance was on the fire proceeds. Mr. Pilcher stated it was a Kansas state statute that every time there is a fire, the City is sent a check for 10% of the insurance proceeds in the case that action is needed by the City. He added that the City has a deadline to return it to the policy holder unless the strucfure is declared dangerous. A conversation ensued between Commissioner Hoppock and Mr. Pilcher on the process of the insurance proceeds. Mr. Schrage stated that state statute provides for that 10% and Salina has opted in the program. He added that it is not required across the state. Commissioner Hodges asked if Item Nos. 5, 6 and 7 were included in the building permit. Mr. Pilcher stated yes, Mr. Ratzlaff would not need to obtain any additional permits. Commissioner Hodges asked when the photos were taken. l\1r. Pilcher stated they were taken October 9, 2019. Commissioner Hodges asked if Mr. Ratzlaff was the property owner and stated that she was not able to find that online. Mr. Pilcher stated that if she searched online, it may not show that as it takes some time to get updated. He added that if a person were to go into the County Treasurer's Office, they can see that he is the property owner. John Ratzlaff, 236 South Fourth Street, stated that he can have the structure secured by the end of this week. He added that it's taken more work to lift the house, but it was finished today and there are only a few more things he needs to do to secure the property. Mr. Schrage thanked him for taking the time to take on the project. Page 2 I I I "' .,, z 19-03ti8 I Mr. Ratzlaff stated he can be done with the major list within 60 days in order to remove it as a dangerous structure. Mayor Davis opened the public hearing. There being no further comments the public hearing was closed. Moved by Commissioner Hoppock, seconded by Commissioner Hodges, to adopt Resolution No. 19-7752 finding that the structure at 236 S. 4th Street is unsafe or dangerous; directing that the structure be repaired or removed and the premises made safe and secure; fixing a time of 60 days (on or before December 20, 2019) within which the repair or removal shall be completed; and authorized staff to proceed with the demolition or repair if the owner(s) fail to comply. Aye: (5). Nay: (0). Motion carried. CONSENT AGENDA (6.1) Approve the minutes of October 14, 2019. 19-0309 Moved by Commissioner Hoppock, seconded by Commissioner Hodges, to approve the consent agenda as presented. Aye: (5). Nay: (0). Motion carried. ADMINISTRATION (7.1) Resolution No. 19-7749 providing for the advisability and authorization of a special improvement district for water, sanitary sewer, street and drainage improvements in Nine South Addition and authorizing the Mayor to execute an Improvement District Development Agreement between the City of Salina and Nine South Development, LLC. Dan Stack, City Engineer, explained the district, improvements and agreement. Commissioner Hodges asked what point it would convert to Commercial zoning. Mr. Schrage stated that regardless of the zoning category, you can maintain an Agricultural assessment by demonstrating an Agricultural use. He then went on to explain the guidelines that determine if it's Agricultural or not. A conversation ensued between Commissioner Hodges and Mr. Schrage regarding the Agricultural rate. Commissioner Hodges then added that she would like to make sure properties are assessed for what they will be developed for and requests that to apply in the future as well. Mayor Davis asked if they were paid for by the city-at-large or the developers from a historical perspective. Mr. Stack stated it was the city-at-large. He added that this one has been in the works for quite a while. bean Andrew, Director of Planning, stated that the section in front of Market Place Apartments was built by the city-at-large and the original portion north of Schilling Road was built by the developer of the Sam's Club development. He added that most of the frontage road in front of Walmart was constructed through special assessments. Mr. Schrage stated that the City offered to install the Market Place section, but the owner at the time turned it do\\'11. Mr. Andrew added that they offered for dedication of the right-of- way and would construct the remainder of the frontage road in front of the previous owner's property at the City's expense, but he declined leaving it untouched. Page 3 119-0310 ~ l w I I Moved by Commissioner Ryan, seconded by Commissioner Hay, to adopt Resolution No. 19-7749 providing for the advisability and authorization of a special improvement district for water, sanitary sewer, street and drainage improvements in Nine South Addition and authorizing the Mayor to execute an Improvement District Development Agreement between the City of Salina and Nine South Development, LLC. Aye: (5). Nay: (0). Motion carried. (7.2) ·Resolution No. 19-7750 providing for the advisability and authorization of a special improvement district for water, sanitary sewer, street and drainage improvements in the Stone Lake Addition Phase 2 and authorize city staff to accept bids for the improvements. Dan Stack, City Engineer, explained the district, improvements and bids received. II.file Schrage, City Manager, stated that since 2010, 2 sections have been sold which contributes to the multiple applications. Mayor Davis asked if residents can use the emergency access road if they perceive an emergency. Mr. Stack stated that the emergency access would be a special key/lock type of approach and is typically not used by residents, but it is possible. He added that their intent was to prevent them from being used other than for emergencies. Mr. Schrage stated it would most likely be a gravel road for fire trucks and their equipment. He added that it was not intended for day-to-day use due to the lack of a paved road or curb and gutters. Commissioner Hodges asked how many lots remain available in Stone Lake Phase I. Dean Andrew, Director of Planning, stated all lots were spoken for. He added that every non-lake lot has a building on it, or is under way, and the lake lots are spoken for and purchased, but not yet built on. A conversation ensued between Commissioner Hodges and Mr. Stack regarding the receiving of values on the lots and the process. Mayor Davis asked what the impact of financing was and asked which part the debt is being paid out of. Debbie Pack, Director of Finance and Administration, stated that it comes into debt service fund and then comes out of debt service fund. She then went on to explain the process. :t>.1r. Schrage added that as debt service expense goes up, the revenue should go up as well except for deferrals. He then went on to explain how deferrals work. Mayor Davis asked if they had deferrals on Stone Lake. Mr. Schrage explained they were delayed and not deferred. He then went on to explain the difference between the two. A conversation ensued between Mayor Davis and Mr. Schrage regarding the statutory debt limit and if they could recoup some of the administrative costs. Mayor Davis stated the list shows all special assessments, amounts, when they start and when they end. Ms. Pack stated they have a list of projects that were funded through special assessments and some were refunded. She added that this list can tell all of that information and can also see how much will drop off each year. She concluded with saying that $50,000 to $200,000 is in debt payment only. Mr. Schrage added clarification on what debt payment is. Page4 I ~ z D. w I! ~ i a ll J I I Commissioner Hoppock asked what the statutory debt limit is currently for the City. Ms. Pack stated the City is at 47% of their limit, not including anything issued in 2019. Mayor Davis stated he would like to see a maximum amount they would spend on special assessments for housing and would like to be able to watch their statutory debt limit closer. Ms. Pack stated that currently only 14% of their statutory debt limit are special assessments. Commissioner Hodges asked if they have data that shows where other communities are at for comparison, or is there a recommended percentage they should be at as a city. Ms. Pack stated she wasn't sure if there is a recommended limit, but would look into it. She added that their bond rating mentions level of debt and it's something they need to keep an eye on, but they also had a lot of big projects in the last few years that added to that. A conversation ensued between Commissioner Hoppock and Mr. Schrage regarding other communities and issues they have had with special assessments. Commissioner Hoppock stated he would like to continue to monitor how many residential lots become available. He then asked what percentage of special assessments are residential and what is commercial as far as projects. Mr. Schrage explained the background of special assessments and the reason behind the Menard's Development and West Diamond Drive Development. Commissioner Hodges asked if it was possible to find out if they could improve their bond rating by reducing their debt limit. Mr. Schrage stated that bond counsel wouldn't give a definitive ans'ver, but they could provide some direction. He added that if i(s a priority, it can be done. A conversation ensued between Mayor Davis and Ms. Pack regarding the statutory limit and the process of changing it. Jon Blanchard, 250 South Ninth Street, stated that the commission is under significant budget constraints and will see an increased pressure on the housing market, so it's important to collect all sales tax available. He then expressed his concern with the special assessment process and the need to create an agreement if someone asks for special assessments. He then concluded by providing informatiol) on other communities and the legislature and how they approach special assessments. Mr. Schrage stated that staff had pursued the issue with the assessor on the Agricultural use issue and its statutory requirement. He added that bond counsel will let them know if it's permissible. Greg Bengtson, City Attorney, stated that bond counsel would be the primary person to consult with on this matter due to their experience. Mayor Davis asked if the City had the right to demand payment at that rate. Mr. Schrage stated he would need to confirm with bond counsel, but the County's approach is consistent ·with the state statute. He then went onto explain what is allowed with Agricultural use. Mayor Davis asked if the City can contest the County Assessor's opinion. Mr. Schrage stated he didn't know for sure, but he thought you could contest in general or weigh in on the Board of Tax Appeal's appeal. Ivlr. Bengtson added that, depending on bond counsel's opinion, they are in a matter of contract law and implementation would require commitment on part of the owner to not utilize the property that triggers the quaWication for Agricultural use. He concluded with stating that it would be best to check with bond counsel. Page5 I "' ~ z A. w ! ! i • l1 J I I Mayor Davis asked if any properties in Stone Lake are considered Agricultural. Mr. Andrew stated that assessed values on vacant lots are assessed as Agricultural value and not residential. Mr. Schrage added that water, sewer and street improvements doesn't change the status. Mr. Schrage stated that there is documentation to prove such assessment and went on to explain the standard that is used to determine if it is assessed as Agricultural. Mayor Davis stated they are not losing special assessments. Mr. Schrage stated that was correct. He then went on to explain the process. Commissioner Hodges stated that the obligation to pay off special assessments remains regardless, and the taxing entities can then capture value created by putting in the infrastructure at an earlier time not an earlier rate. Mayor Davis asked if the 15 years wouldn't start until the property is improved. Mr. Schrage explained the residential assessment and Agricultural assessment; and the entire process of determining what constitutes it a special assessment classification. Todd Welsh, 300 South Ninth Street, shared insight on the subdivision he completed and informed the commission the property was being charged extra because it was platted. He explained his frustration with the Agricultural use classification and the current process of determining whether special assessments begin or are deferred. He then requested that the commission look into implementing a policy on how it's determined. Mr. Welsh provided an update on his developments with River Trail having ten (10) lots to be built on; Stone Lake is completely sold out; Magnolia Hills has one lot available that is currently having slab a put in. He added that most of these additions are on the higher end, but they are now looking at building homes in the $240,000 and $320,000 range. Mr. Welsh concluded by expressing his concern with the emergency access roads and requested the commissioners look at this issue in the future. Commissioner Hodges stated that she agreed with Mr. Welsh and added that she would like to see a policy applied fairly and consistently among all projects so that everyone has the same expectations. Mr. Welsh requested that the developing policy have a start date listed in there of when it will go into effect so that he and other developers can work around it. A conversation ensued between Commissioner Hodges and Mr. Welsh regarding the changes in special assessments throughout the years. Mr. Welsh stated that putting this policy into place so quickly could cause problems for himself and other developers. Commissioner Ryan asked how long it would take for the market to adjust in terms of houses with specials and ones without. Mr. Welsh stated that it is easier to sell a house with specials, but he'd like to see special assessments be reduced. Mr. Schrage stated that a typical buyer would prefer the cheaper house with specials, but it ends up being a higher monthly cost to get into the home. He added that lenders couldn't approve a loan for a home with specials because of their inability to get an assessment on that house. He concluded by stating that they haven't been able to come up with a solution that would change the lending practice. Page6 I I Mr. Welsh stated that banks put specials into consideration when giving loans to prospective homeowners. Mr. Schrage stated that the prior county assessor attempted to factor in the infrastructure of the specially assessed improvements into the assessed value which went to the State Board of Tax Appeals and was overruled. A conversation ensued between Mr. Schrage and Mr. Welsh regarding whether or not improvements can be factored into the assessment to raise the value of the homes. Commissioner Hoppock stated he bought his first house in 1980 and specials were being .used even at that time and seemed to have worked for our community since then. He added that these other issues that have been brought up can be looked at in the future, but as for today, there is a shortage of inventory of lots waiting to be built on and expressed the need to have lots available for individuals to move into our commwtlty. Commissioner Hodges thanked Mr. Welsh for serving as spokesman for the issue and being a good community partner as the commission works through some of these issues. 19-0311 Moved by Commissioner Hay, seconded by Commissioner Hoppock, to adopt Resolution No. 19- 7750 providing for the advisability and authorization of a special improvement district for water, sanitary sewer, street and drainage improvements in the Stone Lake Addition Phase 2 and authorize city staff to accept bids for the improvements. Aye: (4). Nay: (1) Hodges. Motion carried. (7.3) Resolution No. 19-7751 providing for the advisability and authorization of a special improvement district for water, sanitary sewer, street and drainage improvements in Stone Lake Addition Phase 3a and authorizing the Mayor to execute an Improvement District Development Agreement between the City of Salina and Stone Lake Development, LLC. Dan Stack, City Engineer, explained the district, improvements and agreement. Commissioner Hoppock asked what the price range was for homes they were intending to develop in this phase. Kelly Dunn, Salina, stated their price range was between 5180,000 and 5250,000. He added that these would be smaller houses no larger than 1,200 square feet compared to the 1,600 square feet and up for Mr. Welsh's properties. Commissioner Hoppock asked if they would have a combination of basement and slab options. Mr. Dunn stated they could choose either or. Jon Blanchard, 250 South Ninth Street, stated it was irresponsible to add a tax burden to taxpayers. He then asked if it was in the packet that you can't have outstanding property tax in Saline County. Mr. Schrage stated that it was part of the policy, but it's not in the packet. He then added that it would fall on the petitioners. Mr. Blanchard stated that the assessor places assessed value on the land and improvements if there is a house on it. He then went on to explain how infrastructures affect the assessments. He concluded by requesting the com.mission add that provision to the special assessment policy to allow them to start collecting on them as soon as possible. Moved by Commissioner Hoppock, seconded by Commissioner Hay, to adopt Resolution No. 19- 7751 providing for the advisability and authorization of a special improvement district for water, Page 7 I I I z IL w sanitary sewer, street and drainage improvements in Stone Lake Addition Phase 3a and authorizing the Mayor to execute an Improvement District Development Agreement between the City of Salina and Stone Lake Development, LLC. Aye: (4). Nay: (1) Hodges. Motion carried. The City Commission recessed at 6:14 p.m. for a 6-minute break. The meeting resumed at 6:20 p.m. Mayor Davis stated that very few policies are perfect when created. He added that this one for special assessments will need to be tweaked over the years in order to improve it. OEVELOPMEl\"T BUSINESS (8.1) Amended Application #Z19-5A, (filed by the Salina City Planning Commission), requesting amendment of Sections 42-503(1) and 42-504 of Salina's Sign Regulations to clarify what types of signs are and are not allowed in the public right-of-way. (8.la) First reading Ordinance No. 19-11020. Dean Andrew, Director of Planning, explained the text amendments and action options. Commissioner Hoppock asked for clarification on advertisement locations. Mr. Andrew stated that the frame would be considered the shelter and other improvements to the bus stops in the future might create 3-sided shelters. He added that the idea was to have it open so advertisement could be placed on benches or shelters depending on the design at a location. Commissioner Hoppock asked if every bench faced the street. .Mr. Andrew stated that they did for the most part. Commissioner Hoppock stated he objected to having advertisement on benches in residential areas. Mr. Andrew stated that other types of advertisements were currently not allowed in residential areas and they were trying to preserve those areas to keep them looking residential. Commissioner Hay asked if there were restrictions on what can be advertised. Mr. Andrew directed the commission to their packet which has the guidelines for the messaging that is allowed on the signs and added that they are reviewed by OCCK. Greg Bengtson, City Attorney, added that the criteria needs to be cleaned up and stated there was a need to include an appeal process to give citizens that opportunity should it arise. · A conversation ensued between Mayor Davis, Mr. Andrew and Mr. Schrage regarding the placement of signs in someone's yard and the regulation of content on advertisements. Mr. Andrew then clarified the distinction between non-commercial and commercial speech within residential·areas. A conversation ensued between Mayor Davis and Mr. Schrage over possible scenarios where this issue with advertisements might be a problem or a conflict. Mr. Schrage stated that there are several bus stops, but only two currently have advertising on them. Commissioner Hay asked if signs for contractors were not allowed. Mr. Schrage stated that was correct. A conversation ensued between Commissioner Hoppock and Mr. Andrew on examples of residential areas where advertisements would not be allowed. Conunissioner Hodges asked if there were any conversations of linking the classification of Page 8 I I I ... "' the street to whether advertising is allowed or not. Mr. Andrew stated that was an alternate way of looking at it, but it had not been investigated due to their primary concern being to identify how many bus stops there were and the locations of them in terms of adjacent properties. He then added that it was a policy decision for the commission to decide how they want to approach the issue. Commissioner Hoppock stated that putting advertisement on the benches as opposed to the shelter would be less intrusive and oriented to the street. Commissioner Hay asked if there was a loophole with the real estate signs. Lauren Driscoll, Director of Community and Development Services, stated that most real estate signs were temporary and the benches they were referring to in the right-of ·way were more permanent. A conversation ensued between Commissioner Hodges and Mr. Schrage regarding the placement of real estate signs. Mr. Andrew explained the need for them to add wording in the code regarding the benches. Commissioner Hoppock asked representatives from OCCK what the financial impact this program has on them. Michelle Griffin, Transportation Director for OCCK, stated that this request regarding advertisement on benches was requested by the city commission in August of 2014 to help supplement their budget. She explained the background on the agreement, the current request and listed how many stops they currently have including which of those have advertisements and which ones are residential. She concluded by giving their recommendations moving fonvard. Commissioner Hoppock asked if they had met with the Planning Commission. Ms. Griffin stated they met with them on September 17, 2019 but it was last minute. Ms. Driscoll clarified the reason for this issue being brought to commission was because of the request from people wanting to advertise. She added that when they investigated it, they found they had to create a change in the code in order to set up guidelines for these requests. She concluded by saying there was no intent in leaving OCCK out of conversations. Commissioner Hay asked if there was a resolution. Mr. Schrage stated that the resolution predates the code section, but there will be an opportunity to bring it all together in the future. A conversation ensued between Commissioner Hay, Mr. Schrage and Ms. Driscoll regarding the code and the purpose of the resolution. Commissioner Ryan recommended that they send the item back to the Planning Commission so they can get the necessary input from OCCK. Commissioner Hodges asked how much revenue was generated from the advertisement Ms. Griffin stated it wasn't much and amounted to about $400 per year for each contract. Commissioner Hoppock asked if the advertisements were inspected. Ms. Griffin stated yes, staff conducts inspections on them regularly. Commissioner Hoppock asked how many advertisements were out there right now. Ms. Page9 I I I "' "' 19-0313 Griffin stated that there were 15, but four (4) of those were their own. Commissioner Hodges stated that bench advertisements were very different from the framed advertisements and didn't see a problem using bench advertisements in residential areas. She added that she wouldn't want to see very large-scale advertisements in a residential area. Jon Blanchard, 250 South Ninth Street, concurred that it was the recommendation of the city commission to put this into place and that their main concern was the standards be put into place. He continued to state his concern with the content on the advertisements within residential areas. He concluded by saying that OCCK did a great job with keeping a tasteful approach to advertisements placed on the bus stops and recommended they move forward with approving. Commissioner Hoppock asked when the Planning Commission met again. Mr. Andrew stated their next scheduled meeting is Tuesday, November 5, 2019. Commissioner Hay stated he didn't see a problem with signs on the front of the bus stops. Commissioner Hoppock stated he respected the Planning Commission's decision and said he didn't have a problem with it if it's on a bench that faces the street. He added that he would still like to see OCCK have conversations with the Planning Commission. A conversation ensued between the commission on the proposed action options. Moved by Commissioner Hoppock, seconded by Hodges, to send the item back to the Planning Commission and direct them to take into consideration the comments made by the commission and work with staff on changes to the proposed code amendment Greg provided a clarification on the motion. Commissioner Hodges asked if there was something specified in the ordinance or operating agreement with OCCK in terms of making it specific on restrictions. Ms. Driscoll clarified the request and the type of apparatus placed on the bench in the code. She then added that their agreement would reflect that. Mr. Bengtson stated y~, that's correct. Mayor Davis asked if this was referring to the benches placed in the right-of-way. Ms. Driscoll explaiJ1ed what the guidelines would prevent and help. Ms. Griffin asked if postponing this item and sending it back to the Planning Commission would put a hold on their funding contract. Mayor Davis asked if the commissioners were in agreement to send it back to the Planning Commission. A conversation ensued between Ms. Driscoll, Ms. Griffin and Mr. Schrage regarding the location of advertisements, the amount of bus stops that would have them and whether or not they would be allowed in residential areas. A conversation ensued between Commissioner Hoppock and Mr. Schrage regarding the funding request. Ms. Driscoll stated that option 3 would be the best option. Mr. Schrage added that this was an ordinance and there would be a second reading, so any corrections to the wording can be made before second reading at the next meeting. Page IO I I l w 2 i i ii I 119-0314 Clare Mullen, Mobility Manager for OCCK, explained the reason for wanting to advertise on the benches. Commissioner Hoppock stated he did not like the idea of advertisements being placed on the shelter itself. Commissioner Hodges concurred and added that eventually vinyl wraps could end up covering the entire glass shelter. Mr. Andrew rephrased what the purpose of the text amendment was and explained his concern with the ordinance. A conversation ensued between Commissioner Ryan and Mr. Andrew regarding what is needed in order to make changes to the ordinance. Mayor Davis restated the motion. Aye: (3). Nay: (2) Davis, Hay. Motion carried. OTHER BUSINESS Commissioner Hay apologized to participants and citizens that were in attendance at the softball tournaments at Bill Burke Park. He explained that he had received several complaints via email regarding the restrooms and the lack of care for them. He concluded by stating that many teams pay good money to come to town to use our facilities and there is a need to care for those. Mike Schrage, City Manager, stated he had a conversation regarding this prior to the meeting starting, but hadn't had the opportunity to investigate the reason for the lack of upkeep of the facilities. He added he would investigate it further and get it taken care of. Mayor Davis stated there is action that can be taken to minimize the damage being done to our environment regarding the plastic bag issue. He then asked what the process is to have the Solid Waste Management Committee (SW1vf:C) get the conversation going. A conversation ensued between Mayor Davis and Mr. Schrage regarding the request and the next steps. Mr. Schrage gave a brief background of the purpose of the SWMC and their role in the issue. He then stated he could bring the issue up as a staff report for a future commission meeting and action can then be taken at that time. Mayor Davis asked if it could be put on next week's agenda in the form of a conversation item. Jim Kowach, Director of Public Works, stated that it would be relatively easy to look into further due to the issue having been discussed in the past. Commissioner Hodges stated this was similar to the Centennial Park topic and the process taken to get that done and added she is open to having this conversation on plastic bags as well. Mr. Bengtson, City Attorney, clarified there would need to be a vote to add this to the agenda for next week's meeting. Moved by Mayor Davis, seconded by Commissioner Hay, to add the discussion on a policy relating to plastic bags to next week's agenda (October 28, 2019). Aye: (5). Nay: (0). Motion carried. Page 11 I f w ~ ~ il 19-0:i.5 s 119-0316 19-0317 I (9.1) Request for executive session (legal). I move the city commission recess into executive session for_ minutes to discuss with legal counsel the subject of the status of the KDHE-issued Consent Agreement and Final Order (CAFO) pending mediation in the Schilling Environmental Matter based upon the need for consultation with an attorney for the public body which would be deemed privileged in the attorney-client relationship pursuant to KS.A. 75-7319(b)(2). The open meeting will resume in this room at __ p.m. Moved by Commissioner Hodges, seconded by Commissioner Hoppock, to recess into executive session for 20 minutes to discuss with legal counsel the subject of the status of the KDHE-issued Consent Agreement and Final Order (CAFO) pending mediation in the Schilling Environmental Matter based upon the need for consultation with an attorney for the public body which would be deemed privileged in the attorney-client relationship, pursuant to KS.A. 75-7319(b)(2),. The open meeting will resume in this room at 7:44 p.m. Aye: (5). Nay: (0). Motion carried. The City Commission recessed into executive session at 7:24 p.m. and reconvened at 7:44 p.m. No action was taken. Also present in executive session: Mike Schrage, City Manager; and Jacob Wood, Deputy City Manager. 1'.1ike Schrage, City Manager, explained the background, request and action options. Moved by Commissioner Hodges, seconded by Commissioner Hoppock -concur with the request of the Salina public entities that the KDHE agree to amend its Consent Agreement and Final Order (CAFO) pending mediation with the United States and dissent to foregoing quarterly reporting requirements and holding KDHE oversight costs in abeyance until an amendment of the CAFO is negotiated and entered. Aye: (5). Nay: (0). Motion carried. ADJOURNMENT Moved by Commissioner Hay, seconded by Commissioner Hodges, that the regular meeting of the Board of City Commissioners be adjourned. Aye: (5). Nay: (0). Motion carried. The meeting adjourned at 7:46 p.m. [SEAL] ATIEST: ~LO. Shandi Wicks, C~ty Clerk Trent W. Davis, M.D., Mayor Page 12 - - - (Published in the Salina Journal on U t \ 0 'o e "< 'L C0 , 2019) RESOLUTION NUMBER 19-7750 A RESOLUTION SETTING FORTH FINDINGS AND DETERMINATIONS OF THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS ON THE ADVISABILITY OF AND AUTHORIZING THE CONSTRUCTION OF CERTAIN IMPROVEMENTS PURSUANT TO K.S.A. 12-6a01 et seq. WHEREAS, a petition was filed with the City Clerk for the City of Salina, Kansas (the "City") on October 14, 2019, proposing certain improvements pursuant to K.S.A. 12-6a01 et seq. (the "Petition"); and WHEREAS, the Petition sets forth: (a) the general nature of the proposed improvements; (b} the estimated or probable cost of the proposed improvements; (c) the extent of the proposed improvement district to be assessed for the cost of the proposed improvements; (d) the proposed method of assessment; (e) the proposed apportionment of the cost between the improvement district and the City at large; (f) a request that such improvements be made without notice and hearing as required by K.S.A. l2-6a04(a) ); and (g) a statement that the Petition is submitted in accordance with K.S.A. 12-6a04(c), with an acknowledgement that the proposed improvement district does not include all properties which may be deemed to benefit from the proposed improvement; and WHEREAS, the owners of record of 100% the property liable to be assessed under the Petition have signed the Petition; and WHEREAS, no signatures have been withdrawn from the petition before the Governing Body began consideration of the Petition; and WHEREAS, K.S.A. 12-6a04 provides that the Governing Body may authorize and order public improvements without notice and hearing after a sufficient petition has been filed; and WHEREAS, the Governing Body has reviewed and considered the Preliminary Engineering Estimate and Feasibility Report prepared by the City Engineer and agrees with the conclusions set forth therein. NOW THEREFORE, BE IT RESOLVED BY TllE GOVERNING BODY OF THE CITY OF SALINA, KANSAS, AS FOLLOWS: Section J. The Governing Body hereby finds that the Petition is sufficient, and further finds and detennines that it is necessary and advisable to make the following improvements: (a) The nature of the improvements are as follows: The curb, gutter, pavement, and grading for approximately 856 lineal feet of Shoreline Drive and 180 lineal feet of Shoreline Cove (the "Street Improvements"). '!be installation of approximately 221 lineal feet of six-inch water main, 840 lineal feet of eight-inch water main, fire hydrants, valves, fittings, service connections for water lines and all appurtenances thereto (the "Water System Improvements"). The installation of approximately 1,070 lineal feet of eight-inch sanitary sewer main, service connections for sewer lines, manholes, and all appurtenances thereto (the "Sanitary Sewer Improvements"). 111111111111111m11111111111\ll llll llll lllBl ll~l lllll lllll Im 1111111111111 ( 11 t' , I th "I t "' · ··-, REBECCA SEEMAN co cc 1\e y. e mprovemen s . :,·.~····'···~ .• ;·REGISTER OF DEEDS SAUNE COUNTY KANSAS (. • .. t.'• ,,,.,. '. ~::. ;;;;. ;:iBook:1363 Page: 1443-1445 \~~ .. .-:'•/Receipt#: 125689 _1 Recording Fee: $0.00 ..... __ ....-Pages Recorded: 3(.,rv ,..., Date Recorded: 11/5/2019 11:48:38 AM - - - Book: 1363 Page: 1444 (b) The estimated cost of the Improvements is: Six hundred seventy thousand one hundred sixty-six dollars and forty cents ($670, 166.40). (c) The boundaries of the improvement district to be assessed are: "13Jock 4, Lots 1 through 4, an~lock 5, Lots 3 through 15, all in Stone Lake Addition, City of Salina, Saline County, Kansas. (collectively, the "Improvement District"). (d) The apportionment of cost between the Improvement District and the city at large is: One hundred percent (100%) of the total cost of the Improvements shall be assessed to the Improvement District and no portion of costs shall be paid by the City at Large. (c) The method of assessment against property within the Improvement District shall be equally per square foot per lot against all lots within the Improvement District. Section 2. The Governing Body hereby declares that the Improvements described in this Resolution are necessary, and authorizes them to be made in accordance with the Petition and the findings set forth in this Resolution, and further authorizes the levying of assessments and the issuance of bonds therefore, all in accordance with K.S.A. 12-6a01 et seq. and specifically K.S.A. l2-6a04(c). Section 3. The City expects to make capital expenditures from and after the date of this Resolution in connection with the Improvements described herein, and intends to reimburse itself for such expenditures with the proceeds of one or more series of general obligation bonds and temporary notes of the City in the maximum principal amount of $670, 166.40. Section 4. The City Clerk shall file a certified copy of this Resolution with the Register of Deeds of Saline County, Kansas. Section 5. city newspaper. This Resolution shall take effect after its passage and publication once in the official 2 - - - Book: 1363 Page: 1445 ADOPTED AND PASSED this 21 51 day of October, 2019. Trent W. Davis, M.D., Mayor (SEAL) /(1liSOllH8ffilJ1oeputy City Clerk I hereby certify that the above and foregoing is a true and correct copy of Resolution No. 19-7750 that was adopted by the Governing Body of the City of Salina at their regular meeting on October 21, 2019. ~,~(;AA.., t\u1v'A/v1. Allison Hamm Dcpu~ Ci~ Clerk 3 Publisher's Affidavit I, -----llC,..h~ru.i01Jsty~Fui ... n..,k.__ ___ , being duly sworn declare that I am a I.egal 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 Resolution 19-7750 Notice has been correctly published in the entire issue of said newspaper one time, publication being given in the issue of October 28 2019 Clk:~~t Subscribed and sworn to before me, this 3 0 +I, AD. 20 tl01ARV PUBLIC • Slate ol Kansas ~ ~l WENDYCHROBAK ~ My Appl. Exp. 8. u. U>2.,°' I°! (Nlished in lhe Sah Jcumal October 28, 2019) i RE$0l.Ul10N NUllBER tt-7750 A RESOLUTION 6ETT1NG I fORTll FINDINGS ANO DElERMlllATIONS OF Tiil G0¥£11111NG aour OF THE CITY Of SAUNA, KAHSAS Oii Tiil AIMWllUTY Of AIU) AUTHOlllZING THE CONSTRUCTIOfl OF CERTAIN llPRO¥EIEITS PURSUANT TO 'K.S.A. 1MIOl ltM1· WHEREAS. a petlion WIS led '1111 ... Cty Cllllt tor .. Cly ol Sah, Knes (tie 'City') on Octlbll' 14, 2019, prOj)OSilg celllil ~ iusun ID K.S.A. 12~1 ft ~ lb 'Pettilln'); nl . WHEREAS, 111 l'lllion All tonle (a) h genMI! Mllfl ol lie propoMd ~; (b) Ille llhlld Of pdllble COit al .. plCflOllCI ~; (c) ht 1X111t GI h praposed ~ diilrd ID be ..-eel .. the COii o! the Jllqpoaed ,._,..; (d) lie pnlllOltd me!had of ...... ; (el .. plapoeed....,.llOll11811 GI lhtCXllt'*--1111~ dlllrictnltlletylltqe;(l)a llqlllllllallldl~be lllade lllhcd nalicl nl '-'IV as 19q1i11c1 by K.s.A. 12~1) );nltlll• ...... ~ .. p,ijlionls Udlld kl ICCOl1llnce w111 K.S:A. t2-&!04{c), 11111 111 aowledgemef't M the prqlOlld illplMll18ll dllrtCI doll IQ ilCUll 11 ....... whlcll may be dllaied ID blnell -.. proposed ~ nl W!RAS, 111 Olllllll ot ~ ol 100\ lht ploperly lillble ID be l5llll8d under hi....., ....... liglltdthe 1'911ion; nl WllEllEAI. ,., S9Wllnl ... lllen .,..,._ hm .. pelliol1 bebl .. GMilq Body 111g111 cxnsidlTlliOn GI lie 1'don;nl -WllEIEM, K.S.A. t2-6IO' piMlls Iha! .. GMrnilll Body -dlorim nl Oldll .Pit* ··-· dloul nctict nl ~. ............ pllllion i.lllellled;nl lllEllEAS, .. GMnq Badf .. .......,..,cnidnd .. PNh'*y Engnn1g Estimale nl ftmlJlly ~ 111"*'4" .. Ciy e.-r llld .... .. "' concllllora .. lorthh!Wl. 110W lHEREFORE, IE IT RESOLVEDIYTIE GOVElllllG BODY OF 1ltE Cl1Y Of SAUIA, IWISAI, AS RJU.OIS: ..... t. n.'GMIMlll llodJ.....,111111 Nh l'llllon il~nUN'lllllltllll ........ i.-ynl acMlllllt ID INllie 111 labq ~: (•l The ...... allht 1 . ~ ... lobrs: lhe CU!b, . giater, pMllllTt, nl piing .. ~ 156 hat laet o1 ·~ Drive Ind 180 lineal 1111 o1 Sl10lllile CM (fie "511111~'). The Rlal!a!ion of Sec:llon 4. Tile Cly Clelk iwroxinalely 22! inea1 shall file a C8TIJted copy of ltlls teal al !D·ilch waler lllsotl!icrt llilll 1he Regislel ol main, 84ll lineal leel of Deeds ot Sah Couitt. Ka:isas. e1c;1Hnch water mail, h · · l'rjdrirn!s, valves, fllinOS, Sectton 5. This Reso!Won Mni:le connections lhall .. efleGt ·~· Is passage . t>r Wile! lines and al Wld pitiication Ola ii fie oflK:ial llJPllllnBnCeS lheielo cly~- (lhe °Wlltr Sysllrn ~Dilm8R!S'). ADOP1B> A11D PASSED 111s 21st The i'lltallllior1 of . dly al Odobel, 2019. tpprOXin1191y t,070 hat TllRW. Davis, 1111! al~ ..UV M.D,Mayor eewer meil, eel'lice oomectin b ie't1l8T (SEAL) ns, nwtiotes. lllld II ~ ...., • Alison Ham. Dl!MYCiy Cle1t (1118 "Snary. Sew (tt) -hpRMIMID'l. {ooleUMly. .. ._...,,.,...u·1. (b) Thelllilaldcollollbe . ~·: Six luldl8d 9Ml1ly lhauuOO one luldltd 8'llJtix cWlllS nl btY 1*11($810,1111!.401. tel The llolrldlrles ot .. ~distridtobe .....in: Slodt 4, I.all 1 trough 4, 11111 lllodl 5, LcD 3 IWWJI 15, .. kl Stn LIM Adcilion, Cly of Sib. Sah Colllly, r.n.. (c:old;&ly, fie ~llislrtcl"). . Id) The 11JP011io1Y11e1 . ol COii belw8en . .. ~DillriclWld llectyllmgeil: Ont lumd '*°"" (100Yt) at .. WI COit. olfll~ ftlbe..aedlDllle ..-.Dillriclni. no pGllon GI co11b hi lit piid by Ile Cty II l.llgt . (I) :..m. tnellod..: 1111*1 tl3 =-Districl .... Ill tcplly per ..-1oa1~11t egMlllllalltltil .. ..... Dillricl. llCllDll 2. The GMmilg BodylmllydlclnlMlll .... 4llcltied kl .. llalaUiall Ill llQ&Slly, nl ... ID 111 llllde ii ICCIDlll91Cll • .. ~ 1N1 .. N1gs Ill lolll it IE llllllilliae. ....... llllorizls .. _,...,_..al .. 111111Dclbcllds'*"°'8 ..... ~will K.SA·12-el0 k 1111· .., tpdclly K.U . 1NI04(tl • 111111111. TheCly..,.cts ... aplll .... ...... • .. dllll al tis it c:omdOn • fie ........ dllOi>lld l!lnh, 11111 i1llndl ID llhlme M fir .......... .. pllCllds al ona or R1011 Illies al pft obiglliof1 bmcls nl ...,..,. llOlll al .. Cly h tle muillln ~ -.n ol M10.1euo. l L l CITY OF SALINA1 KANSAS SPECIAL MEETING OF THE BOARD OF COMMISSIONERS March 251 2020 4:00p.m. Mayor Hoppock asked the Oerk for verification that notice had been sent for todays City Commission meeting. The Oerk replied yes. The Special Meeting of the Board of Commissioners was called to order at 4:00 p.m. in Room 107, City-County Building. Roll call was taken followed by the Pledge of Allegiance and a moment of silence. Those present and comprising a quorum: Mayor Michael L. Hoppock (presiding), Commissioners Trent W. Davis, M.D., Rod Franz, Melissa Rose Hodges, and Karl Ryan. Also present Michael Schrage, City Manager; Greg Bengtson, City Attorney; and Shandi Wicks, City Clerk. AWARDS AND PROCLAMATIONS None. CITIZENS FORUM Michael Schrage, City Manager, provided information regarding the new format for the meetings due to the guidance from the Centers for Disease Control (CDC) and the Kansas Governor including public input He provided information regarding the meeting requirements for the Kansas Open Meeting Act He also provided the call-in phone number along with the participant number that citizens would need to use. Mayor Hoppock made a few comments regarding the COVID-19 virus, the precautions necessary, thanked City staff, Saline County and Jason Tiller, Saline County Health Officer, for their hard work. He also made comments regarding the effect on local businesses and how the Salina Area Chamber of Commerce could be of assistance to those businesses. He lastly asked for all individuals to pray for our community, the nation, the first responders, and the business community. Kenny Hancock, Salina, provided the information on the level of detail between City staff and the baseball/ softball group on the creation of the development agreement for the baseball/ softball project and asked for a commitment that the City will consider discussing the project within the next 30 days and if that is not reasonable to extend another 30 days. Michael Schrage, City Manager, stated that the request was part of the first agenda item and can be discussed at that ti.me. Jane Anderson, Friends of the River Foundation, provided information on the Smoky Hill River Renewal project. Joan Ratzlaff, Salina, noted that there was a delay between the audio and the visual and urged the staff to think environmentally regarding plastic grass. She continued to provide her thoughts on the flow of the river and the river project. Page 1 l l l PUBUC HEARINGS AND ITEMS SCHEDULED FOR A CERTAIN TIME None. CONSENT AGENDA (6.1) Approve the minutes of March 9, 2020. Moved by Commissioner Ryan, seconded by Commissioner Hodges, to approve the consent agenda as presented. Aye: (5). Nay: (0). Motion carried. ADMINISTRATION (7.1) COVID-19 Related Budgetary Guidance. Michael Schrage, City Manager, explained the possible financial ramifications, revenue sources impacted, the 2020 Smoky Hill River Festival, baseball and softball project, fiscal impact and action options. Debbie Pack, Director of Finance & Administration, presented a financial overview. Michael Schrage, City Manager, provided additional information on the suggested direction to be provided by the City Commission to the City Manager. Commissioner Franz provided his thoughts on the significant impacts and the need to look 6 months to a year out along with need to coordinate with the entities that use the transient guest tax funds. Michael Schrage, City Manager, stated that staff was looking at the transient guest tax significantly. Commissioner Franz continued to provide his thoughts on the potential impact on the finances. Mayor Hoppock stated this was the first of many discussions on this topic but needed to make some decisions and then need to revisit the topic. Mayor Hoppock asked if any of the stimulus dollars were going to flow down to the local governments. Mr. Schrage stated staff spent time on the Families First Coronovirus Response Act that will be discussed later and stated he did not know how the money would land for the stimulus package. Mayor Hoppock provided information on the potential impact of the stimulus plan to the various states and communities. Commissioner Davis stated he had received an email from the National League of Cities regarding the stimulus plan and the size of communities that may receive funds. Commissioner Hodges provided her thoughts on the impact of sales tax and asked if there was a figure in mind to budget to at this time for the general fund expenditures. Ms. Pack stated the original budget for the general fund expenditures was $43.9 million dollars. Commissioner Hodges asked what the reduction would need to look like. Ms. Pack stated the reduction would need to be $2.8 million dollars for a total of $41.1 million dollars. Commissioner Hodges asked if staff could provide a list of contracts and projects that staff was looking to postpone or hold. Mr. Schrage stated if there was a general consensus from the Governing Body, staff could put together the list. Page2 l l l Commissioner Hodges provided her thoughts on the reducing discretionary expenditures. Mr. Schrage stated the conversation had been on the effects to the employees of the organization to now the budgetary ramifications. Commissioner Ryan provided his thoughts on the possible financial ramifications and the need to provide staff with the tools needed and would like to further discuss the river festival and the baseball project. Commissioner Davis provided information regarding the impact of the COVID-19 on the community and the need to look at the sales tax and transient guest tax. He continued to state he was in favor of the discretionary spending, capital improvements and contracts and bids awarded but not yet commenced but was only in favor of projects and services currently underway but not completed. Mayor Hoppock stated the Governing Body needed a list of the capital improvements and contracts to look at. A conversation ensued between the City Commission, Mr. Schrage and Ms. Pack regarding the information to be provided to the Governing Body. Commissioner Hodges asked if the surplus money for dues paid would be transferred to the general fund. Ms. Pack stated there was a set amount that would be transferred into the general fund. Commissioner Hodges asked if staff could provide a list of those transfers. Ms. Pack stated yes. Commissioner Hodges asked if two (2) payments were made for the ST AR Bonds. Ms. Pack stated yes, April and December each year. Commissioner Hodges asked if there was enough money to pay for the April and December payments for 2020. Ms. Pack stated yes and explained where the money comes from. Commissioner Ryan asked if there was a way to shift the money out of the street spending. Ms. Pack stated that staff had reviewed the projects dedicated for the street fund and there was approximately $2 million dollars that could be saved. Commissioner Hodges provided her thoughts on the South Wellfield project and asked if the project could be pushed out as far as we could. Mr. Schrage stated that staff had revisited contracts and the river festival and staff would need time to compile the list and bring it back to the City Commission. Commissioner Ryan stated the South Wellfield was paid for from user fees, correct. Mr. Schrage stated yes. Commissioner Ryan provided his thoughts on the projects utilizing user fees. Mayor Hoppock asked if we could go through the list, starting at the bottom of page 2. Mr. Schrage stated that staff didn't want to complete all of the work but wanted direction from the Governing Body. Commissioner Ryan stated that some of the discretion could fall on the City Manager to make the decisions since he would know best. Mayor Hoppock stated he did not think that it should be laid on the City Manager. Commissioner Davis asked if we planned a meeting next week. Mr. Schrage stated that he was going to ask about holding a meeting next week. A conversation ensued between the City Commission and Mr. Schrage regarding a meeting Page3 l l l next week and budgetary discussions. Commissioner Hodges asked if each director had the discretion to spend up to $20,000. Mr. Schrage stated that the directors did have the authority based on his authority. Commissioner Hodges stated the potential need to limit the spending of the directors and have it reviewed by the City Manager or someone else. She continued to state she was willing to meet more often if necessary. Mr. Schrage stated that generally spending authority was broadened and not limited in situations like this. He continued to state public safety expenditures, water and sewer, and computer technology. Commissioner Ryan asked if an expansion of spending authority would be beneficial for the City Manager. Mr. Schrage stated there was an added agenda item that he could cover later in the meeting. Mr. Schrage stated that staff could provide a higher level of detail on discretionary spending and no new contracts and no new expenditures. Mayor Hoppock stated we would first talk about the cancellation of the 2020 River Festival. Brad Anderson, Director of Arts & Humanities, provided information on the recommendation of the cancellation of the Smoky Hill River Festival. Commissioner Ryan wanted to say he was sorry and stated he did not disagree with his decision and asked if some type of event could happen in the park or a fallback if there was an opportunity to do so. Mr. Anderson stated if time and resources would allow for some type of event at a later time when people were allowed to gather, the Arts and Humanities staff would be ready. Commissioner Hodges thanked Mr. Anderson for his hard work and making the recommendation on behalf of the citizens. Mr. Schrage thanked Mr. Anderson for his leadership. Mayor Hoppock also thanked Mr. Anderson for his leadership. 20-0088 Moved by Commissioner Davis, seconded by Commissioner Hodges, to accept the Arts & Humanities Commission recommendation to cancel the 2020 Smoky Hill River Festival. Aye: (5). Nay: (0). Motion carried. Mr. Schrage provided information regarding the baseball and softball project and the use of transient guest tax funds for the project. Commissioner Davis provided his thoughts on the postponement of the project. Commissioner Hodges asked if the transient guest tax receipts are received two (2) months in arrears like sales tax. Ms. Pack stated that information was received quarterly so we would not know that information until about July. Commissioner Hodges provided her thoughts on the project and thought a 6 month postponement timeframe was best. Commissioner Ryan provided his thoughts on the postponement timeframe of the project. Commissioner Franz stated he would see the postponement timeframe of the project as 90 days. Mayor Hoppock stated he was thinking about a 90 day postponement timeframe. Page4 l 20--0089 Moved by Commissioner Franz, seconded by Commissioner Davis, to postpone further consideration of the East Crawford Recreation Area and Bill Burke Baseball & Softball Improvements Project for 90 days at which time we would reevaluate how to proceed. Aye: (5). Nay: (0). Motion carried. L l "' "' 20-0090 Mr. Schrage stated that he did not have much information that he could additionally provide on the River Renewal Project, other than it was currently in the design phase. Commissioner Davis asked at what time a decision need to be made on the project. Ms. Pack stated there was still final design to occur on the project in later 2020. Mayor Hoppock asked if there was still funding from the Corp of Engineers. Mr. Schrage stated that it was a core piece of the project and there would need to be conversations regarding the project and he did not have a good timeframe to give the Governing Body. Ms. Pack stated the portion of the Corp of Engineers work was late in the project process sometime next year. Commissioner Ryan asked if postponing our design would postpone the Corp of Engineers portion. Ms. Pack stated from her understanding our design portion was separate from the Corp of Engineers portion of the project. Jane Anderson, Salina, stated the Corp of Engineers would not make a decision until January 2021 and provided her thoughts on the project status and potential postponement. Moved by Commissioner Hodges, seconded by Commissioner Franz, to postpone new commitments or expenses associated with the River Renewal Project for a period of 90 days, while maintaining or support for the project going forward. Commissioner Davis stated he would like to keep the item on the same schedule as the baseball project. Mr. Schrage stated that if the project was put out to December, staff may be visiting it sooner. He stated the postponement could be for 90 days and may have to be postpone again in the future. Mayor Hoppock called the question. Aye: (5). Nay: (0). Motion carried. Mr. Schrage provided an update on the proposed wastewater treatment plant upgrades. Commissioner Hodges asked when the improvements needs to be completed. Mr. Schrage stated the improvements would need to be completed within the 5 year period. He stated that staff recommended a 90 day postponement. Commissioner Hodges stated that this project was a mandatory project and the other projects were discretionary. 20-0091 Moved by Commissioner Ryan, seconded by Commissioner Davis, to postpone new commitments or expenses associated with proposed wastewater treatment plant upgrades for a period of 90 days. Aye: (5). Nay: (0). Motion carried. (7.2) General Obligation Bonds and Temporary Notes. (7.2a) Resolution No. 20-7814 authorizing the offering for public sale of General Obligation Temporary Notes and Bonds. (7.2b) First reading Ordinance No. 20-11029 authorizing the issuance and delivery of General Obligation Internal Improvement Bonds, Series 2020-A. Page 5 l ~ w i I L 20-0092 l (7.2c) Resolution No. 20-7820 authorizing the offering for public sale of General Obligation Refunding Bonds. Debbie Pack, Finance Director, explained the request, fiscal impact and action options. Michael Schrage, City Manager, stated that existing commitments were projects that contracts were executed, work had been completed and payment needed to be made. David Arteberry, Stifel Financial Group, provided an update on the bond market. Mayor Hoppock asked what the contingencies were. Mr. Arteberry stated it could be possible to renew the temporary notes and stated he had been in contact with the bank that currently held the notes that would be willing to renew the notes or find a bank within the state that would be willing to take on the renewal of the notes. Commissioner Hodges asked if there had been any bond sales across the State that would show the type of scenario we were facing. Mr. Arteberry stated the City of Shawnee, Kansas sold a bond issue on Monday for $4.9 million dollars and received three (3) bids with an interest rate of 25%. Commissioner Hodges asked if there was a bond rating call this week. Mr. Schrage stated there was a prep call but the bond rating call was scheduled for tomorrow. Commissioner Hodges asked for the status of the special assessment projects. Ms. Pack stated one development was to construct yet this year and the other one would be early next year. She also stated the City of Salina had made a commitment to the developer through the development agreement to reimburse the expenses. Mr. Schrage stated that staff had a conversation with bond counsel regarding the developments but had not had the conversation with the developers yet but plan to do so before we go to market. Mayor Hoppock stated those would not be an obligation of the City of Salina but only if the developer would default they would be an obligation of the City of Salina. Mr. Schrage stated that was correct. Commissioner Franz mentioned the Ninth Street Bridge under existing commitments and new funding and asked if the existing commitment was for design and if the decision was to not proceed, there would be a design available to proceed in the future. Ms. Pack stated that was correct, the department anticipated bidding the project in the fall of 2020 so the delay would not impact the project from its original intent. Commissioner Franz stated the resource for the Police Training Center funding was sales tax and asked if that was a commitment to utilize those funds. Ms. Pack stated that the source of debt payment was not listed on the resolutions or ordinances but was a decision of the City of Salina. Commissioner Hodges provided her thoughts on the special assessment developments. Mr. Schrage stated that staff was committed to having those conversations with the developers. Moved by Commissioner Davis, seconded by Commissioner Franz, to adopt Resolution No. 20- 7814 authorizing the offering for public sale of General Obligation Temporary Notes and Bonds in a maximum amount of $7,335,165 with issuance costs. Aye: (4). Nay: (1) Hodges. Motion carried. Ms. Pack provided information related to the bond issuance. Mr. Arteberry noted the maximum cost for the temporary notes and potential need to amend the motion. Page6 l l 20-0094 l Commissioner Davis asked if the yearly cost was higher than the temporary note due to the 5 year term for the landfill cell. Ms. Pack stated yes. Mr. Schrage stated staff was trying to sync the project with the life of the cell. Moved by Commissioner Hodges, seconded by Commissioner Davis, to pass Ordinance No. 20- 11029 authorizing the issuance and delivery of General Obligation Internal Improvement Bonds, Series 2020-A on first reading. Aye: (5). Nay: (0). Motion carried. Ms. Pack stated that staff's recommendation was to not act on that item and if the City Commission was in agreement, no motion was necessary. The City Commission recessed at 6:45 p.m. for a 5 minute break. The meeting resumed at 6:54p.m. (7.3) Award contract for the abatement (removal) of nuisances related to property maintenance for properties within the city limits of Salina for a period of April 1, 2020 through March 31, 2021. Lauren Driscoll, Director of Community & Development Services, explained the nuisance abatement process, bids received, fiscal impact and action options. Michael Schrage, City Manager, provided information regarding the option to award the contract to other contracts but the low bid. Commissioner Davis asked if United Field Services offered a plan on how they would be responsive to providing the service from over 100 miles away and how they would be providing the equipment needed. Ms. Driscoll stated United Field Services was not very responsive in responding to questions asked by staff. She continued to state that staff had contacted references of the company. Mayor Hoppock stated the costs would not necessarily be costs of the City of Salina but would be added to the property taxes of the property owner affected. Commissioner Franz stated he was concerned about the equipment availability and if sub- contractors could sub the work out to another contractor. Ms. Driscoll stated staff recommended Loux Home Repair and staff would amend the bid document to ask more questions to obtain the information necessary. Commissioner Franz asked if the typical cost for an abatement was $125.00 Ms. Driscoll stated yes for an average lot. Mr. Schrage stated there was an administrative fee on top of it as well. Commissioner Davis asked if the cost was recouped from the property owners and how much was recouped. Ms. Driscoll stated that she did not have that information available but could provide it Mayor Hoppock stated the abatement costs were recouped at some point. Moved by Commissioner Hodges, seconded by Commissioner Ryan, to award the nuisance abatement contract to Loux Home Repair for the amounts indicated in the bid tabulation summary and the contract documents for the period of April 1, 2020 through March 31, 2021, and authorize the Mayor to sign the contract for services. Aye: (5). Nay: (0). Motion carried. (7.4) Resolution No. 20-7822 authorizing temporary COVID-19 related Personnel Manual Updates. Page7 l l l "' "' z 0.. w .. c ,,; "' I 8 Michael Schrage, City Manager, explained the Families First Coronavirus Response Act, guidance from Department of Labor, temporary amendments, fiscal impact and action options. Commissioner Davis stated other than emergency sick leave, most of the leave would be full pay as long as the employees were using hours they already accrued. Mr. Schrage stated yes, if the employee was eligible to use City of Salina accrued leave at their hourly rate, whatever amount was used would be paid in full. Commissioner Davis asked if the employee would need to ask for the extended leave before their accrued leave was used. Mr. Schrage stated that an employee could request extended leave to cover the remaining hours to earn a full paycheck. Commissioner Davis asked if employees that were on call received pay. Natalie Fischer, Director of Human Resources, stated there were very few employees that were on an on- call basis. She continued to explain the variations of staff working after hours. Mayor Hoppock asked how leave was calculated for the Fire Department that worked different shifts. Ms. Fischer stated that staff would need to look at how the leave would be handled for the Fire Department based on the direction the City Commission would like to go. Ms. Fischer provided additional information on the act and the guidelines of the act. Mayor Hoppock asked if an employee would understand this. Ms. Fischer stated probably not. Mr. Schrage stated that he had noticed some administrators that told employees that they would get paid regardless. He noted that he had not done that yet. He continued to state that his hope was to communicate to them that the act was in place and will work with the employees on the provisions. Mayor Hoppock asked if some employees have had impacts with child care with school closing. Ms. Fischer stated that about 15 employees at most were impacted last week and there could be a potential that number may increase. Commissioner Hodges asked about the level of leave available to the employees. Mr. Schrage stated that we had to offset the 2/3 provision by allowing additional leave at the full rate to come to a full paycheck. A conversation ensued between the City Commission and Mr. Schrage regarding the extended leave. Commissioner Hodges stated that the municipality was not expecting repayment for the use of hours under the act. Mr. Schrage stated correct and the amount was capped at the dollar amount that the act provided. Commissioner Hodges asked if we were going to pay the employees for the hours the employee would work anyway, then why can't we take the other step and just pay the employee for the full time. Mr. Schrage stated there were so many instances that an employee would need to elect what they would like to do. A conversation ensued between the City Commission, Mr. Schrage, Greg Bengtson, City Attorney, and Ms. Fischer regarding the leave advancement and compliance of the act. Commissioner Davis asked if companies under 500 employees were captured under this. Mr. Schrage stated companies in excess of 500 employees were not covered. Mr. Schrage stated the act created additional banks of leave that we do not have in the system that we Page8 L l i 0.. w I 8 20-0095 L are obligated to provide to the employee. Commissioner Davis asked what type of credit the City would receive. Mr. Bengtson stated it was a credit against payroll tax. Commissioner Franz provided a scenario on the various leaves available. A conversation ensued between Commissioner Franz, Ms. Fischer and Mr. Schrage regarding the scenarios of leave. Commissioner Franz asked why $200 a day was $25 per hour, and $300 a day was $37.50 per hour. Mr. Schrage stated an employee would be limited to $200 a day. Commissioner Franz asked if the Emergency Family Medical Leave was handled similar to Family Medical Leave Act. Mr. Schrage stated the Emergency Family Medical Leave was an extension of paid leave. Mayor Hoppock asked if staff would be able to account for this. Ms. Fischer stated staff was looking at other software systems to track leave forms and processing the leave. Commissioner Hodges asked if there had been a thought to allow for work from home or flexible schedule directives. Mr. Schrage stated there had been conversatiqns but his concern was essential versus non-essential and if a stay-in place order was put in place. He continued to state that staff had to stay focused on if it was essential or needed right now. Ms. Fischer stated work for department heads was to determine what work could be offered to employees that did not have the needs to work from home. Commissioner Davis asked if those individuals were ones who had children that were home to take care of and would generally be in school and would be working their full schedule. Mr. Schrage stated correct but what he was referring to were people that were on emergency paid sick leave because of the stay-at-home order. Commissioner Davis asked what the reduced leave would be to where an employee could still get their benefits. Ms. Fischer stated the City had been pretty liberal in the past for employees that were on leave to receive benefits. She continued to state the personnel manual stated a full time employee was 40 hours a week and a classified part-time employee was 25 to 30 hours a week. Commissioner Hodges asked if the leave would cover both essential and non-essential personnel. Ms. Schrage stated yes. Mr. Schrage continued to provide information on the use of leave for a non-essential employee. A conversation ensued between the City Commission and Mr. Schrage regarding the components of the resolution. Mr. Bengtson stated in Section 1 of the resolution, possibly adding "or the equivalent for employees who work other than the 40 hours per week work schedule" after 110 hours. A conversation ensued between the City Commission, Mr. Schrage, Mr. Bengtson, and Ms. Fischer regarding the language to· add to the resolution. Moved by Commissioner Hodges, seconded by Commissioner Davis, to adopt Resolution No. 20- 7822 addr-essing personnel measures in response to the COVID-19 Public Health Emergency adding under Section 1 -CM authorized to grant up to 110 hours or the equivalent for employees who work other than 40 hours per week work schedule. Page9 l l l Mr. Bengtson stated the need to make a few non-substantive changes to the resolution in Sections 9-12. Mayor Hoppock called the question. Aye: (5). Nay: (0). Motion carried. (7.5) Follow-up discussion and explanation for the change in the Downtown Streetscape Project related to the License Agreement for sidewalk dining with Lighthouse Properties III, Inc. at Starbucks on the comer of Mulberry and Santa Fe approved by the City Commission on March 9, 2020. Jim Kowach, Director of Public Works, explained the streetscape project, project plans, location of flower bed, impact to sidewalk dining area, fiscal impact, and action options. Michael Schrage, City Manager, provided information on the size of contingency on a $11 million dollar project, the decision by staff, and the work performed by staff. Commissioner Davis stated it was a non-issue for him. Commissioner Hodges stated she noticed a pattern of behavior where commissioners asked questions and asked if the hotel was going to be able to open on April 1, 2020 and if another extension was needed. Mr. Schrage stated he did not think they would be open by April 1 but would be within the 90 day window. Commissioner Franz noted his original question on March 9th but noted that a picture was submitted to him had part of the planter box missing so he questioned it. He also stated that just because a question was asked did not mean that a staff person had to have an answer. Mr. Kowach wanted to thank Commissioner Franz for noticing it and notifying staff and it minimized the additional cost that would have occurred if staff was not notified. Mayor Hoppock provided his thoughts on the request. Mr. Schrage thanked the Governing Body and acknowledged that staff tried their best to be light on their feet to respond to questions asked. Mr. Kowach apologized to the Governing Body and City Manager. 20-0096 Moved by Commissioner Ryan, seconded by Commissioner Franz, to approve use of project funds to pay for the additional $1,000.00 for relocation of the planter in conflict with the sidewalk dining request and license agreement granted 3/9/2020. Aye: (5). Nay: (0). Motion carried. (7.6) Resolution No. 20-7823 granting additional temporary authority to the City Manager related to COVID-19 response. Michael Schrage, City Manager, explained the request, temporary authority, and action options. Mayor Hoppock asked if there was a requirement for the citizen's boards and committees to meet. Mr. Schrage stated that he could touch on that under the next agenda item. Commissioner Davis asked if there was a limit to the City Manager's emergency spending authority. Mr. Schrage stated it would truly need to be an emergency that was imminent and if he could bring it to the Governing Body he preferred to do so. Commissioner Franz stated that he did not think there was a spending limit for the Page 10 l l l ltl ltl z ... w I 20-0~7 B emergency spending. Commissioner Franz asked if the golf course was open. Mr. Schrage stated on a limited schedule. Commissioner Franz asked what Tony's Pizza Events Center operations were. Mr. Schrage stated they were following the CDC guidelines and had cancelled most events or were working on rescheduling those. Mr. Schrage provided information on the necessity to close the recycling center. Moved by Commissioner Davis, seconded by Commissioner Hodges, to adopt Resolution No. 20- 7823 temporarily expanding the authority of the City Manager to act on behalf of the City in response to the COVID-19 emergency, and ratifying previous decisions regarding the COVID-19 Emergency. Aye: (5). Nay: (0). Motion carried. (7.7) Resolution No. 20-7784 cancelling meetings of certain City of Salina, Kansas subordinate boards, committees, and commissions in response to the COVID-19 Public Health Emergency and the Governor's Executive Order No. 20-14. Michael Schrage, City Manager, explained the request for a temporary suspension of meetings, and action options. Commissioner Ryan asked if the Board of Zoning Appeals had an item that had no other option but to go to district court, could the board meet. Mr. Schrage stated he would use discretion based on the information available. Greg Bengtson, City Attorney, stated part of the structure of the resolution was based upon direction of the Governor's Executive Order pertaining to the timeframe the resolution was in effect. Commissioner Hodges thanked staff for keeping an eye on the judicial boards and the applications submitted. 20-0098 Moved by Commissioner Ryan, seconded by Commissioner Davis, to adopting Resolution No. 20- 7784 cancelling meetings of certain City of Salina, Kansas subordinate boards, committees, and commissions in response to the COVID-19 Public Health Emergency and the Governor's Executive Order No. 20-14. Aye: (5). Nay: (0). Motion carried. DEVELOPMENT BUSINESS None. OTHER BUSINESS Commissioner Davis noted that Robby's Cheesecake was still open and through all of this, he was still giving out free lunch sacks to citizens. He also encouraged citizens to help others. Commissioner Ryan asked if legal counsel was still working on a lease for the Expo Center. Michael Schrage, City Manager, stated that he had pulled the City Attorney in a lot of directions lately. Greg Bengtson, City Attorney, stated he had a conversation with Mr. Schrage providing additional information and he was hoping that would be back to the top of his list tomorrow .. ADJOURNMENT Page 11 l l ., "' Moved by Commissioner Ryan, seco~ded by Commissioner Davis, that the special meeting of the Board of City Commissioners be adjourned. Aye: (5). Nay: (0). Motion carried. The meeting adjourned at 9:27 p.m. [SEAL] ATTEST: ~lO~ Shandi Wicks, CMC, City Oerk Page 12 RESOLUTION NO. 20-7814 RESOLUTION AUTHORIZING THE OFFERING FOR SALE OF GENERAL -OBLIGATION BONDS, SERIES 2020-A, AND GENERAL OBLIGATION TEMPORARY NOTES, SERIES 2020-1, 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"): Estimated Ordinance/ Improvement Proiect Description Resolution No. Authority Fund Deoosit* Ord. 02-10071; North 9111 Street Bridge Res No. 19-7677 K.S.A. 12-685 et seq. 2,000,000.00 Pheasant Ridge Addition No. 3 Res. 18-7633 K.S.A. 12-6a01 et seq. 530,165.28 Article 12, §5 ofthe Constitution of the State of Smoky Hill River Renewal Ord. 17-10885 Kansas 1,800,000.00 Police Training Facility Res. 19-7743 K.S.A. 12-1736 5,900,000.00 Stone Lake 2 K.S.A. I 2-6a0 I et seq. 405,000.00 Total: $10,635,165.28 *Excludes costs of issuance and interest on any temporary financing. 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 the issuance of the Issuer's general obligation bonds, 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 (collectively, the "Bond Improvements," and together with the Note Improvements, the "Improvements"): Estimated Ordinance/ Improvement Proiect Description Resolution No. Authority Fund Deposit* Article 12, §5 of the Smoky Hill River Constitution of the State of Renewal Ord. 17-10885 Kansas $2,300,000.00 Police Parkimz Res. 19-7679 K.S.A. 12-1736 et seq. 275,000.00 Golf Irrigation Res. 19-7678 Charter Ordinance No. 39 500,000.00 Landfill Cell #20 Res. 19-7672 K.S.A. 12-2101 et seq. 2,315,000.00 Total: $5,390,000.00 *Excludes costs of issuance and interest on any temporary financing. WHEREAS, the Issuer desires to issue its general obligation bonds in order to permanently finance a -portion of the costs of such Bond Improvements and to retire a portion of the following temporary notes of the Issuer, which were issued to temporarily finance a portion of the costs of the Improvements (the "Refunded Notes"): - - - Dated Maturity/Redemption Original Series Date Date Amount 2019-1 April 24, 2019 May 1, 2020 $6,085,000 2019-2 October 15, 2019 May 1, 2020 5,085,000 ; and WHEREAS, the Issuer has selected the firm of Stifel, Nicolaus & Company, Incorporated, Kansas City, Missouri ("Financial Advisor"), as financial advisor for one or more series of municipal temporary notes and one or more series of general obligation bonds of the Issuer, to be issued in order to provide funds to pay the costs of the Improvements; and WHEREAS, the Issuer desires to authorize the Financial Advisor to proceed with the offering for sale of said general obligation bonds and general obligation temporary notes and related activities; and WHEREAS, one of the duties and responsibilities of the Issuer is to prepare and distribute a preliminary official statement relating to said general obligation bonds and general obligation temporary notes; and WHEREAS, the Issuer desires to authorize the Financial Advisor and Gilmore & Bell, P.C., Kansas City, Missouri, the Issuer's bond counsel ("Bond Counsel"), in conjunction with the Clerk, and other officers and representatives of the Issuer 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. NOW, THEREFORE, BE IT RESOLVED BY THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS, AS FOLLOWS: Section l. The Issuer is hereby authorized to offer for sale the Issuer's General Obligation Bonds, Series 2020-A (the "Bonds"), and General Obligation Temporary Notes, Series 2020-1 (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 representatives of the Issuer, as authorized below. Section 2. The Mayor and Clerk, in conjunction with the Financial Advisor and Bond Counsel, are hereby authorized to cause to be prepared, if necessary, 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, if necessary, to give notice of said bond sale by publishing a summary of the Notice of Sale not less than 6 days before the date of the bond sale in a newspaper of general circulation in Saline County, Kansas, and the Kansas Register and is hereby authorized to distribute copies of the Notice of Sale and Preliminary Official Statement relating to the Obligations to prospective purchasers of the Obligations. Bids 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 the date of such sale, at which meeting the governing body shall review such bids and shall award the sale of the Obligations or reject all bids for a particular series of the Obligations. Section 4. For the purpose of enabling the purchaser(s) of the Obligations (the "Purchaser(s)") to comply with the requirements of Rule 1 Sc2-12 of the Securities and Exchange Commission (the "Rule"), the Mayor, Clerk, City Manager, Finance Director, or other appropriate officers of the Issuer are hereby authorized, if necessary: (a) to approve the form of said Preliminary Official Statement and to execute the "Certificate - - - Deeming Preliminary Official Statement Final" in substantially the form attached hereto as Exhibit A as approval of the Preliminary Official Statement, such official's signature thereon being conclusive evidence of such official's and the Issuer's approval thereof; (b) covenant to provide continuous secondary market disclosure by annually transmitting certain financial information and operating data and other information necessary to comply with the Rule to the Municipal Securities Rulemaking Board; and {c) take such other actions or execute such other documents as such officers in their reasonable judgment deem necessary to enable the Purchaser(s) to comply with the requirement of the Rule. Section 5. If necessary, the Issuer agrees to provide to the Purchaser(s) within seven business days of the date of the sale of the Obligations or within sufficient time to accompany any confirmation that requests payment from any customer of the Purchaser(s), whichever is earlier, sufficient copies of the final Official Statement to enable the Purchaser(s) to comply with the requirements of the Rule and with the requirements of Rule G-32 of the Municipal Securities Rulemaking Board. Section 6. The Mayor, Clerk, City Manager, 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, including providing for the sale of all or a portion of the Obligations through a private placement of such Obligations; and (b) make provision for payment and/or redemption of the Refunded Notes from proceeds of the Obligations. Any sale of the Obligations shall be subject to further approval by the governing body. Section 7. This Resolution shall be in full force and effect from and after its adoption. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] - - - U'> "' ADOPTED by the governing body on March 25, 2020. (SEAL) ATTEST: Shandi Wicks, CMC, City Clerk (Signature Page to Sale Resolution) - - - "' "' To: EXHIBIT A CERTIFICATE DEEMING PRELIMINARY OFFICIAL STATEMENT FINAL March_, 2020 Re: General Obligation Bonds, Series 2020-A; General Obligation Temporary Notes, Series 2020- 1 The undersigned is the duly acting Finance Director of the City of Salina, Kansas (the "Issuer"), and is authorized to deliver this Certificate to the addressee(s) (the "Purchaser(s)") on behalf of the Issuer. The Issuer has previously caused to be delivered to the Purchaser(s) copies of the Preliminary Official Statement (the "Preliminary Official Statement") relating to the above-referenced notes and bonds (the "Obligations"). For the purpose of enabling the Purchaser(s) to comply with the requirements of Rule 15c2-12(b)(l) of the Securities and Exchange Commission (the "Rule"), the Issuer hereby deems the information regarding the Issuer contained in the Preliminary Official Statement to be final as of its date, except for the omission of such information as is permitted by the Rule, such as offering prices, interest rates, selling compensation, aggregate principal amount, principal per maturity, delivery dates, ratings, identity of the underwriters and other terms of the Obligations depending on such matters. CITY OF SALINA, KANSAS By: ~~~~~~~~~~~~~ Title: Finance Director NOTICE OF SALE CITY OF SALINA, KANSAS $7,080,000* GENERAL OBLIGATION TEMPORARY NOTES SERIES 2020-1 $5,250,000* GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2020-A (GENERAL OBLIGATION NOTES AND BONDS PAYABLE FROM UNLIMITED AD VALOREM TAXES) Bids. Email and electronic (as explained below) bids for the purchase of the General Obligation Temporary Notes, Series 2020-1 (the "Notes") and General Obligation Internal Improvement Bonds, Series 2020-A (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 Issuer by the Issuer's Financial Advisor on APRIL 13, 2020 (the "Sale Date") until the following times (the "Submittal Hour"): SERIES Series 2020-1 Notes Series 2020-A Bonds SUBMITTAL HOUR (Central Time) 1:00 p.m. 1:00 p.m. Bids may only be submitted via PARITY®, or via email to the Municipal Advisor at arteberryd@stifel.com. Fax bids and hand-delivered written bids will not be accepted. All bids will be publicly evaluated at said time and place and the award of the Obligations to the successful bidder(s) (the "Successful Bidder(s)") 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. Any qualified bidder may bid on one or both series of the Obligations. 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 April 29, 2020 (the "Dated Date"), and will become due on May l, 2021. 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. Adjustment of Issue Size. The Issuer reserves the right to increase or decrease the total principal amount of the Notes, depending on the purchase price bid, by the Successful Bidder. The Successful Bidder may not withdraw its bid or change the purchase price or interest rate bid as a result of any changes made to the principal amount of the Notes as described herein. If there is an increase or decrease in the final aggregate principal amount of the Notes as described above, the Issuer will notify the Successful Bidder by means of telephone or email, subsequently confirmed in writing, no later than 2:00 p.m. applicable Central Time, on the Sale Date. The actual purchase price for the Notes shall be calculated by applying the percentage of par value bid by the Successful Bidder against the final aggregate principal amount of the Notes, as adjusted, plus accrued interest from the Dated Date to the Closing Date (as hereinafter defined). 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 and interest on each Note will be payable at maturity or earlier redemption to the owner thereof whose name is 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. Such amounts will be payable to the Registered Owner of such Note as of the fifteenth day (whether or not a business day) of the calendar month next preceding each Interest Payment Date (the "Record Date") (a) mailed by the Paying Agent to the address of such Registered Owner as shown on the Note Register or at such other address as is furnished to the Paying Agent in writing by such Registered Owner; or (b) in the case of an interest payment to Cede & Co. or any Registered Owner of $500,000 or more in aggregate principal amount of Notes, by wire transfer to such Registered Owner upon written notice given to the Paying Agent by such Registered Owner, not less than 15 days prior to the Record Date for such interest, containing the wire transfer address to which such Registered Owner wishes to have such wire directed. Note Registration. The Notes will be registered pursuant to a plan of registration approved by the Issuer and the Attorney General of the State of Kansas (the "State"). 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 ofregistered 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. Redemption of Notes Prior to Maturity. General Whenever the Issuer is to select Notes for the purpose of redemption, it will, in the case of Notes in denominations greater than the minimum Authorized Denomination, if less than all of the Notes then outstanding are to be called for redemption, treat each minimum Authorized Denomination of face value of each such fully registered Note as though it were a separate Note in the minimum Authorized Denomination. Optional Redemption. At the option of the Issuer, the Notes will be subject to redemption and payment prior to maturity on November 1, 2020, and thereafter, as a whole at any time or in part (selection of the amount of Notes to be redeemed to be determined by the Issuer in such equitable manner as it may determine) at any time, at the redemption price of 100% (expressed as a percentage of the principal amount), plus accrued interest to the date of redemption. Notice and Effect of Call for Redemption. Unless waived by any owner of Notes to be redeemed, ifthe Issuer shall call any Notes for redemption and payment prior to the maturity thereof, the Issuer shall give written notice of its intention to call and pay said Notes to the Note Registrar. In addition, the Issuer shall cause the Note Registrar to give written notice of redemption to the registered owners of said Notes. 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 Notes to be redeemed, the place of surrender of Notes 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 State law or regulation of the Securities and Exchange Commission in effect as of the date of such notice. If any Note be called for redemption and payment as aforesaid, all interest on such Note shall cease from and after the Redemption Date, provided funds are available for its payment at the price hereinbefore specified. Authority, Purpose and Security for the Notes. The Notes are being issued pursuant to K.S.A. 10-101to10-125, inclusive, specifically including K.S.A. 10-123, K.S.A. 10-620 et seq., K.S.A. 12-6a01 et seq., K.S.A. 12-1736 et seq., and Article 12, Section 5 of the Constitution of the State of Kansas, all as amended and supplemented, and a resolution adopted by the Governing Body (the "Note Resolution") for the purpose of paying a portion of the cost of certain public improvement projects and to pay costs associated with issuance of the Notes. 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 benefitted by the construction of certain public improvements, and if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the Issuer. The balance of the principal and interest on the Notes is payable from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the Issuer. The full faith, credit and resources of the Issuer are irrevocably pledged for the prompt payment of the principal of 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 April 29, 2020 (the "Dated Date"), and will become due in principal installments on October 1 in the years as follows: Principal Principal Year Amount* Year Amount* 2021 $520,000 2029 $230,000 2022 600,000 2030 235,000 2023 615,000 2031 210,000 2024 630,000 2032 220,000 2025 645,000 2033 225,000 2026 205,000 2034 235,000 2027 215,000 2035 240,000 2028 225,000 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, 2021 (the "Interest Payment Dates"). Adjustment of Issue Size. The Issuer reserves the right to increase or decrease the total principal amount of the Bonds or the schedule of principal payments described above, depending on the purchase price and interest rates bid by the Successful Bidder. The Successful Bidder may not withdraw its bid or change the purchase price or interest rates bid as a result of any changes made to the principal amount of the Bonds or the schedule of principal payments as described herein. If there is an increase or decrease in the final aggregate principal amount of the Bonds or the schedule of principal payments as described above, the Issuer will notify the Successful Bidder by means of telephone or email, subsequently confirmed in writing, no later than 2:00 p.m. applicable Central Time, on the Sale Date. The net production as a percentage of the principal amount of the Bonds generated from the bid of the Successful Bidder will not be decreased as a result of any change to the total principal amount of the Bonds or the schedule of principal payments described herein. Notwithstanding the requirements of the section entitled "Establishment of * Prelimina1y: subject to change as provided in "A4justment of Issue Size, " herein. Issue Price," ifrequested by the Financial Advisor, the Successful Bidder shall within 20 minutes of such request provide the Financial Advisor with the initial offering prices of the Bonds to the public so as to allow for proper resizing of the Bonds. 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 Registered 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 Registered Owners. Redemption of Bonds Prior to Maturity. General. Whenever the Issuer is to select Bonds for the purpose of redemption, it will, in the case of Bonds in denominations greater than the minimum Authorized Denomination, if less than all of the Bonds then outstanding are to be called for redemption, treat each minimum Authorized Denomination of face value of each such fully registered Bond as though it were a separate Bond in the minimum Authorized Denomination. Optional Redemption. At the option of the Issuer, Bonds maturing on October 1 in the years 2028, and thereafter, will be subject to redemption and payment prior to maturity on October 1, 2027, and thereafter, as a whole or in part (selection of maturities and the amount of Bonds of each maturity to be redeemed to be determined by the Issuer in such equitable manner as it may determine) at any time, at the redemption price of 100% (expressed as a percentage of the principal amount), plus accrued interest to the date of redemption. Mandatory Redemption. A bidder may elect to have all or a portion of the Bonds scheduled to mature in consecutive years issued as term bonds (the "Term Bonds") scheduled to mature in the latest of said consecutive years and subject to mandatory redemption requirements consistent with the schedule of serial maturities set forth above, subject to the following conditions: (a) not Jess 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/or Redemption. Unless waived by any owner of Bonds to be redeemed, ifthe Issuer shall call any Bonds for redemption and payment prior to the maturity thereof, the Issuer shall give written notice of its intention to call and pay said Bonds to the Bond Registrar. In addition, the Issuer shall cause the Bond Registrar to give written notice of redemption to the registered owners of said Bonds. Each of said written notices shall be deposited in United States first class mail not less than 30 days prior to the 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 State 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 for the Bonds. The Bonds are being issued pursuant to K.S.A. 10-101 to 10-125, inclusive, K.S.A. 10-620 et seq., K.S.A. 12-685 et seq., K.S.A.12-1736 et seq, K.S.A. 12-2101 et seq., Charter Ordinance No. 39 of the Issuer, Article 12 Section 5 of the Constitution of the State of Kansas, all as amended and supplemented, and an ordinance and a resolution adopted by the Governing Body (collectively the "Bond Resolution") for the purpose of paying a portion of the cost of certain public improvement projects (the "Improvements"), to pay the costs associated with the issuance of the Bonds and retire a portion of the Issuer's outstanding general obligation temporary notes. 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 irrevocably pledged for the prompt payment of the principal and interest on the Bonds as the same become due. THE OBLIGATIONS Book-Entry-Only System. The Depository Trust Company, New York, New York ("DTC"), will act as securities depository for the Obligations. The Obligations will initially be issued exclusively in "book entry" form and shall be initially registered in the name of Cede & Co., as the nominee of DTC and no beneficial owner will receive certificates representing their interests in the Obligations. During the term of the Obligations, 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 Obligations to DTC or its nominee as the Registered Owner of the Obligations, 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 Obligations to its participants who shall be responsible for transmitting payments to beneficial owners of the Obligations 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 Obligations, or (b) the Issuer determines that continuation of the book-entry-only form of evidence and transfer of ownership of the Obligations would adversely affect the interests of the beneficial owners of the Obligations, 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 Preliminary Official Statement for further information regarding the book-entry-only system of registration of the Obligations and OTC. Submission of Bids. Email bids shall be addressed to the undersigned, and marked "Proposal for General Obligation Temporary Notes, Series 2020-1" or "Proposal for General Obligation Internal Improvement Bonds, Series 2020-A," as applicable. Electronic bids via PARITY® must be submitted in accordance with its Rules of Participation, as well as the provisions of this Notice of Sale. Any bid submitted shall include the initial offering prices to the public for each maturity of the Bonds. 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. The Issuer shall not be responsible for failure of transmission of any bid. Any bidder desiring to have the Financial Advisor assist in the delivery of such bidder's bid should provide pertinent bidding information to the Financial Advisor not later than 30 minutes prior to the Submittal Hour on the Sale Date. PARITY®. Information about the electronic bidding services of PARJTI'® may be obtained from i-Deal LLC at 1359 Broadway, 2nd Floor, New York, New York 10018, Phone No. (212) 849-5023 and from the following website: W\VW.newissuehome.i-deal.com. 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) the interest rate may not exceed 3.60%; (c) no supplemental interest payments will be considered; (d) the interest rate specified shall be a multiple of 1/100 or 1/8 of I%; and (e) the interest rate shall not be zero (0%) percent. 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 and the net interest cost (expressed in dollars) on the basis of such bid. 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, it will provide the certification as to initial offering price described under the caption "Establishment of Issue Price" in this Notice. 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 3 .60%; ( c) no supplemental interest payments will be considered; (d) each interest rate specified shall be a multiple of 1/20 or 1/8of1 %; (e) no zero (0%) percent interest rates will be permitted; and (f) the maximum difference between the high and low interest rates shall not exceed four percent (3 .00% ). No bid for less than 100. 00% 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. 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 Bonds, it will provide the certification as to initial offering prices described under the caption "Establishment of Issue Price" in this Notice. Good Faith Deposit. All Obligations: The Successful Bidder(s) must supply a good faith deposit (the "Deposit") in the amount of2.00% of the principal amount of the of each respective Obligation as indicated on the first page of this Notice payable to the order of the Issuer to secure the Issuer from any loss resulting from the failure of the Successful Bidder(s) to comply with the terms of its bid. The Deposit must be received by the Issuer by 3:00 p.m. Central Time on the Sale Date. The Deposit shall be submitted by wire transfer in Federal Reserve funds, immediately available for use by the Issuer. No interest on the Deposit will be paid by the Issuer. The Deposit will be held by the Issuer until the Successful Bidder(s) have 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(s) or deducted from the purchase price at the option of the Issuer. If a bid is accepted, but the Issuer fails to deliver the Obligations to the Successful Bidder(s) in accordance with the terms and conditions of this Notice, said Deposit, or the proceeds thereof, will be returned to the Successful Bidder(s). If the Successful Bidder(s) default in the performance of any of the terms and conditions of this Notice, the proceeds of such Deposit will be retained by the Issuer as and for liquidated damages. Basis of Award. The Notes: Subject to the timely receipt of the Deposit as set forth above, 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 supply an estimate of the TIC for the Obligations 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 determine which bid, if any, will be accepted, and its determination is final. For All Obligations: The Issuer reserves the right to reject any and/or all bids and to waive any irregularities in a submitted bid. Any bid received after the Submittal Hour on the Sale Date will not be considered. 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 the State with regard to such dispute. The Issuer's acceptance of the Successful Bidders' proposal for the purchase of the Obligations in accordance with this Notice of Sale shall constitute a purchase agreement between the Issuer and the Successful Bidder(s) for purposes of the laws of the State and a contract between the Issuer and the Successful Bidder(s) 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. Ratings. The outstanding general obligation bonds of the Issuer are rated "Aa3" by Moody's Investors Service. The Issuer has applied to Moody's Investors Service for ratings on the Obligations herein offered for sale. Such application and ratings are further described in the Preliminary Official Statement, hereinafter described. Optional Bond Insurance. The Issuer has not applied for any policy of municipal bond insurance with respect to the Obligations, and will not pay the premium in connection with any policy of municipal bond insurance desired by the Successful Bidder(s). In the event a bidder desires to purchase and pay all costs associated with the issuance of a policy of municipal bond insurance in connection with the Obligations, a commitment from the selected insurer must be attached to such bidder's Official Bid Form, and shall specify all terms and conditions to which the Issuer will be required to agree in connection with the issuance of such insurance policy. The Issuer specifically reserves the right to reject any bid specifying municipal bond insurance, even though such bid may result in the lowest TIC to the Issuer. If the Successful Bidder(s) elect to purchase the Obligations with municipal bond insurance, certain rating agencies will assign their ratings to the Obligations with the understanding that upon delivery of the Obligations, 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(s). Failure of the municipal bond insurer to issue the policy after the award of the Obligations shall not constitute cause for failure or refusal by the Successful Bidder(s) to accept delivery of the Obligations. CUSIP Numbers. CUSIP identification numbers will be assigned and printed on the Obligations, but neither the failure to print such number on any Obligation nor any error with respect thereto shall constitute cause for failure or refusal by the purchaser thereof to accept delivery of and pay for the Obligations in accordance with the terms of this Notice. The Financial Advisor will apply for CUSIP numbers pursuant to Rule G-34 implemented by the Municipal Securities Rulemaking Board. All expenses in relation to the assignment and printing of CUSIP numbers on the Obligations will be paid by the Issuer. Delivery and Payment. The Issuer will pay for preparation of the Obligations and will deliver the Obligations properly prepared, executed and registered without cost on or about APRIL 29, 2020 (the "Closing Date"), to OTC for the account of the Successful Bidder(s). The Successful Bidder(s) will be furnished with a certified transcript of the proceedings evidencing the authorization and issuance of the 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 information 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 Obligations 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 the Notes or for each maturity of the Bonds: (I) 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(f) (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 Obligations for its own account in a capacity other than as an underwriter or wholesaler, and currently has no intent to reoffer the Obligations for sale to the public. 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 Obligations pursuant to this Notice shall each constitute a "competitive sale" as defined in the Regulation. In support thereof: (I) 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 Obligations from at least three bidders that have established industry reputations for underwriting municipal securities such as the Obligations; and (4) the Issuer anticipates awarding the sale of the Obligations, as applicable, to the bidder that provides a bid with the lowest TIC in accordance with the section hereof entitled "Basis of Award." Any bid submitted pursuant to this Notice shall be considered a firm offer for the purchase of the Obligations as specified therein. The Successful Bidder(s) shall constitute an "underwriter" as said term is defined in the Regulation. By submitting its bid, each bidder confirms (I) 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 Obligations, to include provisions requiring compliance with provisions of the Code and the Regulation regarding the initial sale of the Obligations and (2) that it has an established industry reputation for underwriting municipal securities such as the Obligations. 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 20 minutes of a request by the Issuer, the Successful Bidder(s) shall advise the Issuer if a "substantial amount" (as defined in the Regulation (10%)) of any maturity of the Bonds and the Notes 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(s) may elect such option. If the Successful Bidder(s) exercise such option, the Issuer will apply the initial offering price to the public provided in the bid as the issue price for the Obligations. If the Successful Bidder(s) do 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(s). After the Closing Time, the Successful Bidder(s) agree to provide to the Issuer all reasonably requested information related to establishing the issue price of the Obligations if: (a) the Issuer requests the information in connection with an audit or inquiry by the Internal Revenue Service (the "IRS") or the Securities and Exchange Commission (the "SEC") or (b) the information is required to be retained by the Issuer pursuant to future regulation or similar guidance from the IRS, the SEC or other federal or state regulatory authority. Preliminary Official Statement and Official Statement. The Issuer has prepared a Preliminary Official Statement dated April 7, 2020, "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(s), without cost, within seven business days of the acceptance of the Successful Bidder(s)' proposal, with a sufficient number of copies thereof, which may be in electronic format, in order for the Successful Bidder to comply with the requirements of the Rule and Rule G-32 (collectively, the "Rules"). Additional copies may be ordered by the Successful Bidder(s) at its expense. Continuing Disclosure. In the Note Resolution and the Bond Resolution, the Issuer has covenanted to provide annually certain financial information and operating data and other information necessary to comply with the Rule, and to transmit the same to the Municipal Securities Rulemaking Board. This covenant is for the benefit of and is enforceable by any Registered Owner of the Obligations. For further information, reference is made to the caption "CONTINUING DISCLOSURE" in the Preliminary Official Statement. Assessed Valuation and Indebtedness. The total assessed valuation of the taxable tangible property within the Issuer for the year 2019 is $509,082,680. The total general obligation indebtedness of the Issuer as of the Dated Date, including the Obligations being sold, is $71,040,000, including general obligation notes to be issued simultaneously with the Bonds but excluding general obligation notes to be repaid with the proceeds of the Obligations and other available funds. Electronic Transactions. The transactions described herein may be conducted and related documents may be sent, received and stored by electronic means. All bid documents, closing documents, certificates, ordinances, resolutions and related instruments may be executed by electronic transmission. Copies, telecopies, electronic files and other reproductions of original executed documents (or documents executed by electronic transmission) shall be deemed to be authentic and valid counterparts of such documents for all purposes, including the filing of any claim, action or suit in the appropriate court oflaw. 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(s) 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 State 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: April 7, 2020. Email Bid and Good Faith Deposit Delivery Address: Debbie Pack, Director of Finance and Administration City of Salina, Kansas 300 West Ash Street, Room 206 Salina, Kansas 67402 Phone No.: (785) 309-5735 Email: debbie.pack@salina.org Financial Advisor: Stifel, Nicolaus & Company, Incorporated 4801 Main Street, Suite 530 Kansas City, Missouri 64112 Attn: David Arteberry Phone No.: (816) 203-8733 Email: arteberryd@stifel.com CITY OF SALINA, KANSAS By: Shandi Wicks, Clerk TO: Shandi Wicks, Clerk City ofSahna, Kansas OFFICIAL BID FORM PROPOSAL FOR THE PURCHASE OF CITY OF SALINA, KANSAS GENERAL OBLJGA TION TEMPORARY NOTES SERIES 2020-I April 13, 2020 For $7,080,000' prmcipal amount of General Obligation Temporary Notes, Senes 2020-1, of the City ofSalma, Kansas, to be datedApnl 29, 2020, as descnbed m the Notice of Sale (the "Notice") dated April 7, 2020, said Notes to bear interest as follows· *Sub1ect to change; see the Notice. Maturity Mayl 2021 Principal Amount' $7,080,000 Interest Rate % ---- the undersigned will pay the total principal amount of the Notes, plus a premmm or less a discount as set forth below, plus accrued interest to the date of delivery Prmc1pal Amount .. Less Discount (not to exceed 0.50%) Plus Premium (1fany) ... .. Total Purchase Price ...... .... .... .. ...... .. .... .... ..... .. ..... Total interest cost to maturity at the rates specified .. Net interest cost .. .. ........... $7,080,000 oo· .. .. $ ________ _ $ _______ _ .$ ________ _ D The Bidder elects to purchase Mun1c1pal Bond Insurance from [Assured] [AGM] [BAM] ~---~ Circle one or complete blank This proposal is subject to all terms and conditions contamed m the Notice, and ifthe undersigned 1s the Successful Bidder, the undersigned will comply with all of the provisions contamed m the Notice. The transactions described herem may be conducted and related documents may be sent, received and stored by electronic means. All bid documents, closing documents, certificates, ordinances, resolutions and related instruments may be executed by electronic transmission Copies, telecopies, electronic files and other reproductions of origmal executed documents (or documents executed by electronic transmission) shall be deemed to be authentic and vahd counterparts of such documents for all purposes, includmg the filing of any clarm, action or smt in the appropnate court of law The acceptance of this proposal by the Issuer shall constitute a contract between the Issuer and the Successful Bidder for purposes of complying with Rule 15c2-12 of the Secunties and Exchange Commission and a bond purchase agreement for purposes of the laws of the State of Kansas. Submitted by: (LIST ACCOUNT MEMBERS ON REVERSE) By· --------------Telephone No. ACCEPTANCE Pursuant to action duly taken by the Governing Body of the City of Sahna, Kansas, the above proposal is hereby accepted on April 13, 2020 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 Email bids may be sent to the Financial Advisor at arteberryd@stifel com or electronic bids may be submitted vrn PARITY'', at or prior to 1:00 p.m., Central Time, on April 13. 2020. Any bid received after such trme will not be considered TO: Shandi Wicks, Clerk City ofSahna, Kansas OFFICIAL BID FORM PROPOSAL FOR THE PURCHASE OF CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2020-A Apnl 13, 2020 For $5,250,000* pnnc1pal amount of General Obligation Internal Improvement Bonds, Series 2020-A, of the City of Sahna, Kansas, to be dated Apnl 29, 2020, as described in the Notice of Sale (the "Notice") dated Apnl 7, 2020, said Bonds to bear interest as follows Maturity Principal Maturity Principal October 1 Amounf Interest Rate October 1 Amount• Interest Rate 2021 $520,000 % 2029 $230,000 % 2022 600,000 % 2030 235,000 % 2023 615,000 % 2031 210,000 % 2024 630,000 % 2032 220,000 % 2025 645,000 % 2033 225,000 % 2026 205.000 % 2034 235,000 % 2027 215,000 % 2035 240,000 % 2028 225,000 % *Subject to change; see the Notice the undersigned will pay the total pnnc1pal amount of the Bonds, plus a premium as set forth below, plus accrued interest to the date of delivery. D D Principal Amount .. . .. . $5,250,000.00' Plus Premium (if any) .. Total Purchase Pnce ........ . $ _________ _ Total interest cost to maturity at the rates specified . Net mterest cost (adjusted for Premium) .. True Interest Cost $ _________ _ .. $ ________ _ _____ % The Bidder elects to purchase Municipal Bond Insurance from The Bidder elects to have the following Term Bonds. [Assured] [AGM] [BAM] ~---~ Circle one or complete blank Maturity Date October L October l, Years to --------to -------- Amount* $ _____ _ $ _____ _ *subject to mandatory redemption requirements m the amounts and at the times shown above This proposal 1s subject to all terms and conditions contamed in the Notice, and 1fthe undersigned is the Successful Bidder, the undersigned will comply with all of the provmons contamed m the Notice The transactions descnbed herem may be conducted and related documents may be sent, received and stored by electromc means. All bid documents, closmg documents, certificates, ordinances, resolutions and related mstruments may be executed by electronic transm1ss10n Copies, telecop1es, electronic files and other reproduct10ns of ongmal executed documents (or documents executed by electronic transm1ss10n) shall be deemed to be authentic and valid counterparts of such documents for all purposes, mcluding the filing of any claim, action or smt in the appropnate court oflaw. The acceptance of this proposal by the Issuer by execution below shall constitute a contract between the Issuer and the Successful Bidder for purposes of complying with Rule 15c2-12 of the Securities and Exchange Commission and a bond purchase agreement for purposes of the laws of the State of Kansas (LIST ACCOUNT MEMBERS ON REVERSE) Submitted by By: --------------Telephone No. ACCEPTANCE Pursuant to action duly taken by the Govemmg Body of the City of Salina, Kansas. the above proposal 1s hereby accepted on April 13. 2020 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 Email bids may be sent to the Financial Advisor at arteberryd@stifel com or electronic bids may be submitted via PARIT~, at or pnor to l ·OO p.m, Central Time, on Apnl 13. 2020 Any bid received after such tnne will not be considered PRELIMINARY OFFICIAL STATEMENT DATED APRIL 6, 2020 New Issues Book-Entry Only Moody's Ratings: Bonds-"Aa3" Notes-"MIG1 " 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, (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 in this Official Statement. CITY OF SALINA, KANSAS $5,250,000* $7 ,080,000* GENERAL OBLIGATION TEMPORARY NOTES SERIES 2020-1 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2020-A Dated: Date of Delivery Due: As Shown Herein The General Obligation Temporary Notes, Series 2020-1 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 subject to redemption at the option of the City as further described herein. See THE NOTES -"Redemption Provisions" herein. The General Obligation Internal Improvement Bonds, Series 2020-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 annually on 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, 2021 (the "Bond Interest Payment Date"). 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 legality by Gilmore & Bell, P.C., Kansas City, Missouri, Bond Counsel to the City. It is expected that the Notes and Bonds will be available for delivery through the facilities of OTC, in New York, New York, on or about April 29, 2020. BIDS FOR THE PURCHASE OF THE NOTES AND BONDS WILL BE RECEIVED PURSUANTTOTHE NOTICE OF SALE: The Series 2020-1 Notes: On or before 1:00 p.m., Central DaylightTime The Series 2020-A Bonds: On or before 1 :00 p.m., Central Daylight Time On Monday, April 13, 2020 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. * Preliminary; subject to change. Maturity 05-01-21 MATURITY SCHEDULES $7,080,000lll GENERAL OBLIGATION TEMPORARY NOTES SERIES 2020-1 Amount $7,080,000 Base cus1p121 794744 At the option of the City, the Notes will be subject to redemption and payment prior to their Stated Maturity on November 1, 2020, and at any time thereafter, as a whole or in part (selection of the amount of Notes to be redeemed to be determined by the City in such equitable manner as it may determine), at the Redemption Price of 100% (expressed as a percentage of the principal amount), plus accrued interest to the Redemption Date. $5,250,000111 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2020-A Maturity 10-01-21 10-01-22 10-01-23 10-01-24 10-01-25 10-01-26 10-01-27 10-01-2813) 10-01-29131 10-01-3013) 10-01-3113) 10-01-3213) 10-01-3313) 10-01-3413) 10-01-3513) !llpreliminary; subject to change. Amount $520,000 600,000 615,000 630,000 645,000 205,000 215,000 225,000 230,000 235,000 210,000 220,000 225,000 235,000 240,000 SERIAL BONDS Base cus1p121 794744 121 CUSIP numbers have been assigned to this issue by CUSIP Global Services, which is managed on behalf of the American Bankers Association by S&P Capital IQ, a subsidiary of The McGraw-Hill Companies, Inc., and are included solely for the convenience of the Owners of the Notes and Bonds. Neither the City nor the Underwriters shall be responsible for the selection or correctness of the CUSIP numbers set forth above. 131 At the option of the City, Bonds maturing on October 1, 2028 and thereafter, will be subject to redemption and payment prior to their Stated Maturity on October 1, 2027, and at any time 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 the Redemption Price of 100% (expressed as a percentage of the principal amount), plus accrued interest to the Redemption Date. 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. Box736 Salina, Kansas 67402-0736 CITY COMMISSION Mike Hoppock, Mayor Melissa Rose Hodges, Vice Mayor Trent W. Davis, M.D., Commissioner Rod Franz, Commissioner Karl Ryan, Commissioner CITY STAFF Mike Schrage, City Manager Debbie Pack, Finance Director 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 Stifel, Nicolaus & Company, Incorporated Kansas City, Missouri No dealer, broker, salesman or other 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 authorized by the foregoing. 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 Underwriters have 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 Underwriters do 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 Underwriters 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......................................................................................................................................... 6 THE DEPOSITORY TRUST COMPANY................................................................................................... 11 THE FINANCING PLAN......................................................................................................................... 13 SOURCES AND USES OF FUNDS.......................................................................................................... 13 RISK FACTORS AND INVESTMENT CONSIDERATIONS......................................................................... 14 LEGAL MATTERS................................................................................................................................. 16 TAX MATTERS..................................................................................................................................... 17 RATINGS.............................................................................................................................................. 18 MUNICIPAL ADVISOR.......................................................................................................................... 19 UNDERWRITING ................................................................................................................................. 19 ABSENCE OF MATERIAL LITIGATION................................................................................................... 19 CONTINUING DISCLOSURE................................................................................................................. 19 CERTIFICATION OF OFFICIAL STATEMENT.......................................................................................... 20 APPENDIX A: INFORMATION CONCERNING THE CITY FINANCIAL OVERVIEW OF THE CITY.............................................................................................. A-1 GENERAL INFORMATION CONCERNING THE CITY........................................................................ A-2 ECONOMIC INFORMATION CONCERNING THE CITY..................................................................... A-6 DEBT SUMMARY OF THE CITY....................................................................................................... A-9 FINANCIAL INFORMATION CONCERNING THE CITY...................................................................... A-13 APPENDIX B: FORM OF CONTINUING DISCLOSURE UNDERTAKING APPENDIX C: AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDING DECEMBER 31, 2018 APPENDIX D: UNAUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDING DECEMBER 31, 2019 [THIS PAGE INTENTIONALLY LEFf BLANK] General OFFICIAL STATEMENT CITY OF SALINA, KANSAS $7,080,000* GENERAL OBLIGATION TEMPORARY NOTES SERIES 2020-1 $5,250,000* GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2020-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 $7,080,000* General Obligation Temporary Notes, Series 2020-1 (the "Notes"), and its $5,250,000* General Obligation Internal Improvement Bonds, Series 2020-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 certain outstanding general obligation temporary notes of the City. See THE FINANCING PLAN herein. The full faith, credit, and resources of the City are irrevocably pledged for the prompt payment of the principal and interest on the 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 municipal advisor, Stifel, Nicolaus & Company, Incorporated, Kansas City, Missouri (the "Municipal 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 to the City, has not assisted in the preparation of nor reviewed this Official Statement, except to the extent described under the sections captioned THE NOTES, THE BONDS, LEGAL MATIERS, TAX MATIERS, and APPENDIX B -FORM OF 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 Municipal Advisor. Additional Information Additional information regarding the City, the Notes, or the Bonds may be obtained from Stifel, Nicolaus & Company, Incorporated, 4801 Main Street, Kansas City, Missouri 64112, telephone 816-474-1100. *Preliminary; subject to change. 1 THE NOTES Authority The Notes are being 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 to 10-125, inclusive, specifically including K.S.A. 10-123, K.S.A. 10-620 et seq., K.S.A. 12-6a01 et seq., K.S.A. 12-1736 et seq., and Article 12, Section 5 of the Constitution of the State of Kansas, all as amended and supplemented from time to time, 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 in part from special assessments levied upon the property benefitted by the construction of certain public improvements, and if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the Issuer. The balance of the principal and interest on the Notes is payable from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the City. The full faith, credit and resources of the City are hereby irrevocably pledged for the prompt payment of the principal of and interest on the 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 as of April 29, 2020 (the "Dated Date"), shall become due in the amount on the Stated Maturity and are subject to redemption and payment prior to 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 Optional Redemption. At the option of the City, the Notes or portions thereof, will be subject to redemption and payment prior to their Stated Maturity on November 1, 2020, and at any time thereafter as a whole or in part (selection the amount of Notes to be redeemed to be determined by the City in such equitable manner as it may determine), at the Redemption Price of 100% (expressed as a percentage of the principal amount), plus accrued interest thereon to the Redemption Date. Selection of Notes to be Redeemed. Notes shall be redeemed only in an Authorized Denomination. When less than all of the Notes are to be redeemed and paid prior to their Stated Maturity, such Notes shall be redeemed in such manner as the City shall determine, Notes of less than a full Stated Maturity shall be selected by the Note Registrar in minimum Authorized Denomination in such equitable manner as the Note Registrar may determine. In the case of a partial redemption of Notes by lot when Notes 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 Note 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 Note 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 Note to the Note 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 Note or Notes of the aggregate principal amount of the unredeemed portion of the principal amount of such Note. If the 2 Owner of any such Note fails to present such Note to the Note Paying Agent for payment and exchange as aforesaid, such Note 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 Notes to be redeemed, if the City shall call any Notes for redemption and payment prior to the Stated Maturity thereof, the City shall give written notice of its intention to call and pay said Notes to the Note Registrar. In addition, the City shall cause the Note Registrar to give written notice of redemption to the Owners of said Notes. 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 Notes are to be redeemed, the identification (and, in the case of partial redemption of any Notes, the respective principal amounts) of the Notes to be redeemed; (d) a statement that on the Redemption Date the Redemption Price will become due and payable upon each such Note 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 Notes are to be surrendered for payment of the Redemption Price, which shall be the principal office of the Note 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 Note Paying Agent an amount of money sufficient to pay the Redemption Price of all the Notes or portions of Notes that are to be redeemed on such Redemption Date. Official notice of redemption having been given as aforesaid, the Notes or portions of Notes 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 Notes or portion of Notes shall cease to bear interest. For so long as the Securities Depository is effecting book-entry transfers of the Notes, the Note 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 Note (having been mailed notice from the Note Registrar, the Securities Depository, a Participant or otherwise) to notify the Beneficial Owner of the Note so affected, shall not affect the validity of the redemption of such Note. In addition to the foregoing notice, the City shall provide such notices of redemption as are required by the Disclosure Undertaking. The Note 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 Note. 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 3 provided. Upon surrender of any Note at the principal office of the Note Registrar, the Note Registrar shall transfer or exchange such Note for a new Note or Notes in any authorized denomination of the same Stated Maturity and in the same aggregate principal amount as the Note that was presented for transfer or exchange. Notes presented for transfer or exchange shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in a form and with guarantee of signature satisfactory to the Note Registrar, duly executed by the Owner thereof or by the Owner's duly authorized agent. In all cases in which the privilege of transferring or exchanging Notes is exercised, the Note Registrar shall authenticate and deliver Notes in accordance with the provisions of the Note Resolution. The City shall pay the fees and expenses of the Note Registrar for the registration, transfer and exchange of Notes. Any additional costs or fees that might be incurred in the secondary market, other than fees of the Note Registrar, are the responsibility of the Owners of the Notes. In the event any Owner fails to provide a correct taxpayer identification number to the Note Paying Agent, the Note Paying Agent may make a charge against such Owner sufficient to pay any governmental charge required to be paid as a result of such failure. The City and the Note Registrar shall not be required 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 (the "Note Interest 4 Payment Date") to the Person in whose name such Note is registered on the Note Register at the Maturity thereof, upon presentation and surrender of such Note at the principal office of the Note Paying Agent. The interest payable on each Note on the Note 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 the Note Interest Payment Date, the fifteenth day (whether or not a Business Day) of the calendar month next preceding such Note 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 OTC (or a successor Securities Depository), and the following provisions of this section to discontinue use of the system of book-entry transfers through OTC (or a successor Securities Depository): (a) If the City determines (1) that the Securities Depository is unable to properly discharge its responsibilities, or (2) that the Securities Depository is no longer qualified to act as a securities depository 5 and registered clearing agency under the Securities and Exchange Act of 1934, as amended, or (3) that the continuation of a book-entry system to the exclusion of any Notes being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Notes; or (b) if the Note Registrar receives written notice from Participants having interest in not less than 50% of the Notes Outstanding, as shown on the records of the Securities Depository (and certified to such effect by the Securities Depository}, that the continuation of a book-entry system to the exclusion of any Notes being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Notes, then the Note Registrar shall notify the Owners of such determination or such notice and of the availability of certificates to owners requesting the same, and the Note Registrar shall register in the name of and authenticate and deliver Replacement Notes to the Beneficial Owners or their nominees in principal amounts representing the interest of each, making such adjustments as it may find necessary or appropriate as to accrued interest and previous calls for redemption; provided, that in the case of a determination under (a)(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 being 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 to 10-125, inclusive, K.S.A. 10-620 et seq., K.S.A. 12-685 et seq., K.S.A.12-1736 et seq, K.S.A. 12-2101 et seq., Charter Ordinance No. 39 of the City, and Article 12 Section 5 of the Constitution of the State of Kansas, all as amended and supplemented from time to time, 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. 6 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 as of April 29, 2020 {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 Bond Interest Payment Date to which interest has been paid, on the Bond 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, 2028 and thereafter may be called for redemption and payment prior to their Stated Maturity on October 1, 2027, and at any time 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 the Redemption Price of 100% (expressed as a percentage of the principal amount), plus accrued interest thereon to the Redemption Date. Selection of Bonds to be Redeemed. Bonds shall be redeemed only in an Authorized Denomination. When less than all of the Bonds are to be redeemed and paid prior to their Stated Maturity, such Bonds shall be redeemed in such manner as the City shall determine, Bonds of less than a full Stated Maturity shall be selected by the Bond Registrar in minimum Authorized Denomination in such equitable manner as the Bond Registrar may determine. In the case of a partial redemption of Bonds by lot when Bonds of denominations greater than a minimum Authorized Denomination are then Outstanding, then for all purposes in connection with such redemption each minimum Authorized Denomination of face value shall be treated as though it were a separate Bond of a minimum Authorized Denomination. If it is determined that one or more, but not all, of the minimum Authorized Denomination value represented by any Bond is selected for redemption, then upon notice of intention to redeem such minimum Authorized Denomination, the Owner or the Owner's duly authorized agent shall forthwith present and surrender such Bond to the Bond Registrar: (1) for payment of the Redemption Price and interest to the Redemption Date of such minimum Authorized Denomination value called for redemption, and (2) for exchange, without charge to the Owner thereof, for a new Bond or Bonds of the aggregate principal amount of the unredeemed portion of the principal amount of such Bond. If the Owner of any such Bond fails to present such Bond to the 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. 7 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. 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 8 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 Bond 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 Bond Interest Payment Date, the fifteenth day {whether or not a Business Day) of the calendar month next preceding such Bond 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 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. 9 Book-Entry Bonds; Securities Depository The Bonds shall initially be registered to Cede & Co., the nominee for the Securities Depository, and no Beneficial Owner will receive certificates representing their respective interests in the Bonds, except in the event the Bond Registrar issues Replacement Bonds. It is anticipated that during the term of the Bonds, the Securities Depository will make book-entry transfers among its Participants and receive and transmit payment of principal of, premium, if any, and interest on, the Bonds to the Participants until and unless the Bond Registrar authenticates and delivers Replacement Bonds to the Beneficial Owners as described in the following paragraphs. The City may decide, subject to the requirements of the Operational Arrangements of OTC (or a successor Securities Depository), and the following provisions of this section to discontinue use of the system of book-entry transfers through OTC (or a successor Securities Depository): (a) If the City determines (1) that the Securities Depository is unable to properly discharge its responsibilities, or (2) that the Securities Depository is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, or (3) that the continuation of a book-entry system to the exclusion of any Bonds being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Bonds; or (b) if the Bond Registrar receives written notice from Participants having interest in not less than 50% of the Bonds Outstanding, as shown on the records of the Securities Depository (and certified to such effect by the Securities Depository), that the continuation of a book-entry system to the exclusion of any Bonds being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Bonds, then the Bond Registrar shall notify the Owners of such determination or such notice and of the availability of certificates to owners requesting the same, and the Bond Registrar shall register in the name of and authenticate and deliver Replacement Bonds to the Beneficial Owners or their nominees in principal amounts representing the interest of each, making such adjustments as it may find necessary or appropriate as to accrued interest and previous calls for redemption; provided, that in the case of a determination under (a){l) or (a){2) of this 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 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. 10 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 or note 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 OTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction . Transfers of ownership interests in the 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 OTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of OTC. The deposit of Securities with OTC and their registration in the name of Cede & Co. or such other OTC nominee do not effect any change in beneficial ownership. OTC 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 OTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. 6. Redemption notices shall be sent to OTC. 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. 11 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, 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. REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY 12 THE FINANCING PLAN The Note Projects Proceeds from the sale of the Notes will be used to provide interim construction financing for all or a portion of the costs of certain public improvements within the City (collectively, the "Note Projects"), retire a portion of the City's outstanding general obligation temporary notes and to pay costs associated with issuance of the Notes. The projects to be financed with the Notes are as follows: Project Description Police Training Center Pheasant Ridge Addition No. 3 Stone Lake 2 The Bond Projects Ordinance/ Resolution Res. 19-7743 Res. 18-7633 Res. 19-7750 Authority K.S.A. 12-1736 K.S.A. 12-6a01 et seq. K.S.A. 12-6a01 et seq. Total: Principal Amount $6,114,030.07 548,691.01 409,807.26 $7,080,000 Proceeds from the sale of the Bonds will be used to provide long term financing for a portion of the costs of certain public improvements within the City (collectively, the "Bond Projects"), retire a portion of the City's outstanding general obligation temporary notes and to pay the costs associated with the issuance of the Bonds. The Bond Projects are as follows: Project Description Landfill Cell #20 Police Parking Smoky Hill River Renewal Golf Irrigation North 9th Street Bridge Ordinance/ Resolution Res. 19-7672 Res. 19-7679 Ord. 17-10885 Res. 19-7678 Res No. 19-7677 Authority K.S.A. 12-2101 et seq. K.S.A. 12-1736 et seq. Article 12, §5 of the Constitution of the State of Kansas Charter Ordinance No. 39 K.S.A. 12-685 et seq. Total: SOURCES AND USES OF FUNDS Principal Amount $2,004,369.83 255,979.76 2,410,073.60 482,980.68 96,595.14 $5,250,000.00 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/ Discount Total Sources of Funds Uses of Funds: Deposit to Improvement Fund Underwriter's Discount Costs of Issuance Total Application of Funds 13 RISK FACTORS AND INVESTMENT CONSIDERATIONS A PROSPECTIVE PURCHASER OF THE SECURITIES DESCRIBED HEREIN SHOULD BE A WARE 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 UNDERWRITERS. 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. Debt Service Source; Issuer's Tax Revenues The Securities are general obligations of the Issuer payable as to both principal and interest, if necessary, 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 Legislature may from time to time adopt changes in the property tax system or method of imposing and collecting property and/or sales taxes within the State. The effects of such legislative changes could affect the Issuer's property tax and sales tax collections, and the impact could be material. Other future events, such as the loss of a major taxpayer, reductions in assessed value, increases in property tax rates of overlapping taxing units, or a decrease in sales tax revenues could increase effective property tax rates and the resulting increase could be material. Taxpayers may also challenge the value of property assigned by the county appraiser. If a taxpayer valuation challenge is successful, the liability of the Issuer to refund property taxes previously paid under protest may have a material adverse effect on the Issuer's financial situation. See "APPENDIX A-FINANCIAL INFORMATION CONCERNING THE CITY -Appraisal and Assessment Procedures." Kansas Public Employees Retirement System As described in "APPENDIX A -GENERAL INFORMATION CONCERNING THE CITY -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 14 Issuer participates in the Police and Firemen's Retirement System ("KP&F") and the Public Employees Retirement System -Local Group (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, the Plan contribution rates may be adjusted by legislative action over time to address any UAAL. According to KPERS' Valuation Report, the Local Group had an UAAL of approximately $1.458 billion in the calendar year 2017 and KP&F had an UAAL of approximately $859 million. Taxation of Interest on the Securities Opinions of Bond Counsel will be obtained to the effect that interest earned on the Securities is excludable from gross income for federal income tax purposes under current provisions of the Internal Revenue Code of 1986, as amended (the "Code"}, and applicable rulings and regulations under the Code; however, an application for a ruling has not been made and an opinion of counsel is not binding upon the Internal Revenue Service. There can be no assurance that the present provisions of the Code, or the rules and regulations thereunder, will not be adversely amended or modified, thereby rendering the interest earned on the Securities includable in gross income for federal income tax purposes. The City has covenanted in the Note Resolution and the Bond Resolution and in other documents and certificates to be delivered in connection with the issuance of the Securities to comply with the provisions of the Code, including those which require the City to take or omit to take certain actions after the issuance of the Securities. Because the existence and continuation of the excludability of the interest on the Securities depends upon events occurring after the date of issuance of the Securities, the opinion of Bond Counsel described under "TAX MATIERS" assumes the compliance by the City with the provisions of the Code described above and the regulations relating thereto. No opinion is expressed by Bond Counsel with respect to the excludability of the interest on the Securities in the event of noncompliance with such provisions. The failure of the City to comply with the provisions described above may cause the interest on the Securities to become includable in gross income as of the date of issuance. Premium on the Securities The initial offering prices of certain maturities of the Securities that are subject to optional redemption may be in excess of the respective principal amounts thereof. Any person who purchases such a Security in excess of its principal amount, whether during the initial offering or in a secondary market transaction, should consider that the Securities are subject to redemption at par under the various circumstances described under ''THE NOTES- Redemption Provisions" and ''THE BONDS-Redemption Provisions." No Additional Interest or Mandatory Redemption upon Event of Taxability Neither the Bond Resolution nor the Note Resolution provide for the payment of additional interest or penalty on the Securities or the mandatory redemption thereof if the interest thereon becomes includable in gross income for federal income tax purposes. Likewise, neither the Bond Resolution nor the Note Resolution provide for the payment of any additional interest or penalty on the Securities if the interest thereon becomes 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. 15 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. COVID-19 In December 2019, a novel strain of coronavirus disease known as COVID-19 emerged for the first time in humans in Wuhan, China. Since that date, the virus has spread throughout the world, including the United States and State of Kansas, and has been characterized by the World Health Organization as a pandemic. The continued proliferation of COVID-19 throughout the State and the City may adversely affect the City due to the economic ramifications of mandatory business, school, and other closures. Within the State, the Governor has announced the closure of all K-12 schools through the end of the 2019-20 school year and issued an Executive Order instituting a temporary State-wide stay-at-home order. The COVID-19 pandemic could negatively impact the finances and operations of the City and result in increased costs to the City and/or negative impacts on the collection of property and sales taxes within the City due to increased tax payment delinquencies, disruption of the collection or distribution of taxes by the State and/or Saline County, or other related factors that may pressure the City's budget and cash flows. Such factors could negatively affect timely repayment of the Bonds. Significant developments regarding COVID-19 continue to occur daily and the extent to which COVID-19 will impact the City in the future is highly uncertain and cannot be predicted. LEGAL MATIERS 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 THE NOTES, THE BONDS, LEGAL MATIERS, TAX MATIERS, and APPENDIX B-FORM OF CONTINUING DISCLOSURE UNDERTAKING. 16 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. Bank Qualification. The Securities have not been designated as "qualified tax-exempt obligations" for purposes of Code §26S(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 such requirements. Failure to comply with certain of such requirements may cause the inclusion of interest on the Securities in gross income for federal income tax purposes retroactive to the date of issuance of the Securities. Bond Counsel is expressing no opinion regarding other federal, state or local tax consequences arising with respect to the Securities. Other Tax Consequences [Original Issue Discount. For federal income tax purposes, original issue discount ("OID") is the excess of the stated redemption price at maturity of a security over its issue price. The issue price of a security is generally the first price at which a substantial amount of the security of that maturity has been sold to the public. Under Code§ 1288, OID on tax-exempt obligations accrues on a compound basis. The amount of 010 that accrues to an owner of a Security during any accrual period generally equals: (a) the issue price of such Security plus the amount of OID accrued in all prior accrual periods; multiplied by (b) the yield to maturity on such Security (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period); minus (c) any interest payable on such Security during such accrual period. The amount of 010 so accrued in a particular accrual period will be considered to be received ratably on each day of the accrual 17 period, will be excludable from gross income for federal income tax purposes, and will increase the owner's tax basis in such Security. Prospective investors should consult their own tax advisors concerning the calculation and accrual ofOID. 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 May 1, 2020 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 the Notes includes all payments on the Notes.] [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 premium.] Sale, Exchange or Retirement of Securities. Upon the sale, exchange or retirement (including redemption) of a Security, an owner of the Security generally will recognize gain or loss in an amount equal to the difference between the amount of cash and the fair market value of any property received on the sale, exchange or retirement of the Security (other than in respect of accrued and unpaid interest) and such owner's adjusted tax basis in the Security. To the extent the Securities are held as a capital asset, such gain or loss will be capital gain or loss and will be long-term capital gain or loss if the Security has been held for more than 12 months at the time of sale, exchange or retirement. Reporting Requirements. In general, information reporting requirements will apply to certain payments of principal, interest and premium paid on Securities, and to the proceeds paid on the sale of Securities, other than certain exempt recipients (such as corporations and foreign entities). A backup withholding tax will apply to such payments if the owner fails to provide a taxpayer identification number or certification of foreign or other exempt status or fails to report in full dividend and interest income. The amount of any backup withholding from a payment to an owner will be allowed as a credit against the owner's federal income tax liability. Collateral Federal Income Tax Consequences. Prospective purchasers of the Securities should be aware that ownership of the Securities may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, individual recipients of Social Security or Railroad Retirement benefits, certain S corporations with "excess net passive income," foreign corporations subject to the branch profits tax, life insurance companies, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry or have paid or incurred certain expenses allocable to the Securities. Bond Counsel expresses no opinion regarding these tax consequences. Purchasers of Securities should consult their tax advisors as to the applicability of these tax consequences and other federal income tax consequences of the purchase, ownership and disposition of the Securities, including the possible application of state, local, foreign and other tax laws. RATINGS Moody's Investors Service has assigned a "MIGl" rating on the Notes and a "Aa3" rating on the 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. 18 MUNICIPAL ADVISOR Stifel, Nicolaus & Company, Incorporated, 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, 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 net 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 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 connection with the issuance of the Securities, the Issuer will enter into a continuing disclosure undertaking (the "Disclosure Undertaking") wherein the Issuer covenants to annually provide certain financial information and operating data (collectively, the "Annual Report") and other information necessary to comply with the Rule, and to transmit the same to the Municipal Securities Rulemaking Board. Pursuant to the Disclosure Undertaking, this Issuer has agreed to file its Annual Report with the national repository ("EMMA") not more than 180 days after the end of the City's Fiscal Year, commencing with Fiscal Year ended in December 31, 2018. 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 -FORM OF 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. Certain operating data for the fiscal year ended December 31, 2014 was timely filed in summary form. Additional details related to such summary information were included in the City's audited financial statements for the fiscal year ended December 31, 2014 that were filed on October 26, 2015. 2. 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 19 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. The Issuer's audited financial statements for each of the last five fiscal years were not completed by the filing deadlines primarily because of challenges with financial software conversion (which has since been completed}, staff turnover and delayed receipt of component unit audits. In compliance with the Issuer's prior disclosure undertakings, the Issuer timely filed unaudited financial statements and promptly filed audited financial statements when they became available. 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 20 APPENDIX A FINANCIAL OVERVIEW OF THE CITY 2019 Estimated Actual Valuation (1) 2019 Assessed Valuation Outstanding General Obligation Bonds (2) Population (2018 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 Utility System Revenue Bonds Outstanding Special Obligation 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 $ 3,294,115,685 $ 509,082,680 $ 63,960,000 $ $ $ $ $ $ $ $ $ 46,716 1,369 1.94% 12.56% 7,080,000 46,354,852 656,261 10,330,000 22,570,000 122,192,447 239,587,299 5,129 7.27% 47.06% (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) Excludes outstanding Notes to be retired with proceeds from the sale of the Notes and Bonds and other available funds. (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 2018 U.S. Census Bureau estimate of 46,716. The City is the county seat for Saline County which had an estimated 2018 U.S. Census Bureau population of 54,401. 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 Mike Hoppock Melissa Rose Hodges Trent W. Davis, M.D. Karl F. Ryan Rod Franz Title Mayor Vice Mayor Commissioner Commissioner Commissioner Term Expires 2022 2022 2024 2024 2022 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. The following table and graph show the population for the City for selected years as provided by the U.S. Census Bureau. Year 2018 2017 2016 2015 2014 A-2 U.S. Census Bureau Population 46,716 46,994 47,336 47,813 47,867 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 201 full-time employees for out of the 446 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 31 vehicles and provides emergency medical services. The Department was recently upgraded to an Insurance Services Office rating of 2. The police department employs 109 personnel, of which 82 are sworn positions. The Department operates 45 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 7,300. Additionally, there are a number of parochial institutions that operate two grade schools, two junior high schools, and one senior 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 642 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 716 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. The University of Kansas School of Medicine and School of Nursing have a campus in Salina. This campus is aimed at students with a strong desire to practice medicine in rural areas. The School of Medicine has 8 students and the School of Nursing started with 17 students and has a capacity of 48 students. 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 United Airlines. The airline offers daily scheduled passenger air service to Denver International Airport and Chicago O'Hare International Airport. A-3 Utilities and Infrastructure Evergy, Inc. supplies electricity and Kansas Gas Service provides natural gas to the City. The City owns its own water and sewage system. Additionally, the City is responsible for street maintenance and police and fire protection for the Airport. SBC provides telephone service. Two cellular phone companies provide service to the City. 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 $942.056 million as of Spring, 2019. 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 each of whom serve four-year terms. The board of trustees appoints an executive director to serve as the managing officer of KPERS and manage a staff to carry out daily operations of the system. As of June 30, 2018, KPERS serves approximately 312,000 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 approximately 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, the majority of which comes from the State General Fund. A-4 (b) Local Group -all participating cities, counties, library boards, water districts and political subdivisions are included in this group. Local employers contribute at a different rate than the State/School Group rate. 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), KPERS Tier 2 members (covered employment on or after July 1, 2009), or KPERS Tier 3 members (covered employment on or after January 1, 2015). 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 8.89% of the employee's gross salary for calendar year 2019. The Issuer's contribution is projected to change to 8.61% of gross compensation for calendar year 2020. In addition, the Issuer contributes 1% of the employee's gross salary for Death and Disability Insurance for covered employees. According to the Valuation Report as of December 31, 2018 (the "2018 Valuation Report") the KPERS Local Group, of which the Issuer is a member, carried an unfunded accrued actuarial liability ("UAAL") of approximately $1.502 billion at the end of 2018. The amount of the UAAL in 2018 changed from the previous year's amount due to the factors discussed in the 2018 Valuation Report; such report also 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. A copy of the 2018 Valuation 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 2018 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 2018 Valuation Report sets the employer contribution rate for the period beginning January 1, 2021, for the KPERS Local Group, and KPERS' actuaries identified that an employer contribution rate of 8.87% of covered payroll would be necessary, in addition to statutory contributions by covered employees, to eliminate the UAAL by the end of the actuarial period set forth in the 2018 Valuation Report. The statutory contribution rate of employers currently equals the 2018 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. The required employer contribution rate may increase up to the maximum statutorily allowed rate, which is 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 2018 Valuation Report, KP&F carried an UAAL of approximately $933 million at the end of 2018. For KP&F, the Issuer's employees currently annually contribute 7.15% of their gross salary to the plan. For the year beginning January 1, 2019, the Issuer contributes 22.13% of employees' gross compensation. Beginning January 1, 2020, the Issuer's contribution is projected to change to 21.93% of gross compensation for calendar year 2020. The Issuer is 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. A-5 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 and tennis courts. 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. 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, Rev Group, Exide Battery, Advance Auto Parts Distribution Center, and Signify. 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 2017 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 the Economic Impact Report, from December 31, 2017, businesses and organizations at the Salina Regional Airport and Airport Industrial Center employed 5,996 employees with a total level economic activity for 2017 for approximately $1,168,468,359. The report also cited that the Airport/Airport Industrial Center accounted for 14.3 percent of the employment in Saline County and 37 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 2019 to be 25,643 persons and year-to-date 2020 to be 25,766. The estimated median household income for the City in 2018 was $49,079 and owner-occupied housing rates in the City were 64.7%. 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. A-6 In recent years, Dillon Companies, Inc., a subsidiary of Kroger Company, recently opened a 77,000 square foot facility. Dick's Sporting Goods and Marshalls clothing store opened in a building formerly occupied by Sutherland Lumber Company. In addition, several new restaurants have opened or expanded, including Olive Garden, Longhorn Steakhouse, Starbucks, Taco Bell and Daimaru Steakhouse. 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. 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. In April 2018, United Airlines began daily service from Salina to Chicago and Denver. The airline provides maximum connection opportunities for both business and leisure travelers. Customers also have the opportunity to accrue frequent flier miles in United's MileagePlus loyalty program. With 550 daily United and United Express flights from Chicago and 370 daily United and United Express flights from Denver, Salina travelers have access to destinations around the globe. Salina passengers enjoy service aboard the quiet, comfortable Bombardier- manufactured Canadair Regional Jet, CRJ200. SkyWest Airlines is a top CRJ200 operator and has been named manufacturer's most reliable operator in North America five times. 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 1-70. The Airport also accommodates a wide variety of aircraft including business jets, military, flight training and general aviation aircraft. During 2019, the Salina Air Traffic Control Tower logged over 76,000 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 2.2 million gallons of fuel to the wide variety of aircraft utilizing the Airport during 2019 and 118,337 as of January 2020. 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. A-7 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 Salina Regional Health Center Schwan's Global Supply Chain, Inc. Unified School District No. 305 Great Plains Manufacturing Exide Technologies City of Salina Salina Vortex REV Group Wal mart Signify Source: Salina Chamber of Commerce Product/Business Healthcare Manufacturing School System Agricultural & Landscaping Equipment Battery Manufacturer City Government Manufacturing Manufacturing Discount Retail Manufacturing Estimated Employment 1,875 1,700 1,500 1,100 600 425 375 300 250 190 The following table shows the per capita personal income for residents of Saline County and the State during the years indicated: Year 2018 2017 2016 2015 2014 2013 2012 Source: Kansas Statistical Abstract Labor Force Saline County N/A 47,945 44,732 43,552 41,447 41,096 40,235 State of Kansas $50,155 47,603 47,221 47,161 46,393 45,838 44,795 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 Employed Unemployed Rate 2019 (dee) 25,338 24,583 755 3.0% 2018 25,685 24,784 781 3.1 2017 26,055 25,198 857 3.3 2016 26,194 25,170 1,024 3.9 2015 26,353 25,313 1,040 3.9 A-8 State of Kansas: Total Unemployment Year Labor Force Emplo~ed Unemplo~ed Rate 2019 (dee) 1,486,620 1,439,563 47,057 3.2% 2018 1,491,587 1,445,819 45,768 3.1 2017 1,478,783 1,425,216 53,567 3.6 2016 1,484,001 1,422,122 61,879 4.2 2015 1,499,009 1,435,884 63,125 4.2 Source: Kansas Department of Labor 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 Maturi~ Outstandingl1l 12-15-08 2008-B Internal Improvements $3,525,000 07-01-24 $390,000 07-15-09 2009-A Internal Improvements 23,695,000 10-01-20 595,000 05-01-10 2010-A Refunding & Improvement 6,875,000 10-01-20 330,000 10-15-10 2010-B Refunding 7,860,000 10-01-23 1,170,000 07-15-11 2011-A Internal Improvements 6,565,000 10-01-21 740,000 07-15-12 2012-A Internal Improvements 2,365,000 10-01-27 1,340,000 07-15-12 2012-B Refunding 3,785,000 10-01-20 180,000 02-15-13 2013-A Taxable Improvements 1,360,000 10-01-28 905,000 07-15-13 2013-B Improvements 4,330,000 10-01-33 2,920,000 07-30-14 2014-A Improvements 7,570,000 10-01-34 4,600,000 07-29-15 2015-A Revenue and Internal Imp. 6,825,000 10-01-35 5,515,000 07-27-16 2016-A Internal Improvements 6,570,000 10-01-36 5,785,000 07-27-16 2016-B Refunding 13,750,000 10-01-31 12,430,000 07-27-17 2017-A Improvements 9,310,000 10-01-37 8,745,000 11-27-18 2018-A Improvements 2,090,000 10-01-33 1,975,000 04-24-19 2019-A Improvements (the Bonds) 11,090,000 10-01-39 11,090,000 05-01-20 2020-A Improvements 5,250,000121 10-01-40 5,250,ooot2l Total $63,960,000 tiJ Includes the Bonds. t2l Preliminary; subject tc;> change. 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. A-9 Temporary Notes: Final Original Date Maturity Note Amount Series Issued Date Amount Outstanding 2019-1 04-24-19 05-01-20 $6,085,000 $0(1) 2019-2 10-15-19 07-01-20(2) 5,085,000 0111 2020-1 05-01-20 10-01-40 7,080,000l3l 7,080,000l3l $7,080,000 Ill To be redeemed with proceeds from the Notes and Bonds and other available funds. 12lConditionally called for redemption on May 1, 2020. !3lPreliminary; subject to change. Utility System 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 Pledged Amount Final Amount Issued Revenue Series of Issue Maturi~ Outstanding 09-11-19 Water and Sewer System 2019 $10,330,000 10-01-31 $10,330,000 Lease Obligations (as of December 31, 2019): Vear Original Final Amount Item Issued Amount Vear Outstanding HVACSystem 2012 $1,100,000 2027 $656,261 Special Obligation Revenue Bonds: The following special obligation revenue bonds are payable solely from sales tax collected within certain special districts in the City. Revenue bonds do not represent a general obligation indebtedness of the City for which the City's taxing ability has been pledged. Date Pledged Amount Final Amount Issued Revenue Series of Issue Maturi~ Outstanding 12-21-18 Sales Tax Revenue 2018-A $18,250,000 12-01-38 $18,250,000 12-21-18 Sales Tax Revenue 2018-B 4,320,000 12-01-38 4,320,000 Total: $22,570,000 State Loans The following is a list of outstanding loans the City has taken out through the Kansas Department of Health and Environment ("KDHE") or Kansas Department of Transpiration ("KDOT") revolving loan fund programs. KDHE loans are typically repaid by net revenues from municipal water or sewer systems. KDOT loans can be repaid from a variety of sources including, but not limited to, property taxes, special assessments, special highway fund allocations and sales taxes. Regardless of the intended source of repayment, the loans are ultimately secured by the City's ability to levy unlimited ad valorem property taxes. A-10 Project Vear Final Original Amount Number Purpose Originated Payment Date Amount Outstanding KDHE 2629 Water 2014 08-01-34 $8,562,911 $ 6,411,458 KDHE 2841 Water 2015 08-01-35 4,250,000 3,693,394 KDHE 2917 Water 2019 02-01-40 32,000,000 32,000,000* KDHE 2957 Water 2019 02-01-40 4,250,000 4,250,000* $46,354,852 *Construction on these projects is in process. The City has not yet drawn down the entire principal amounts shown above but is expected to do so in order to complete the projects. 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. Amount Outstanding $ 20,175,000 220,693 109,280,000 Estimated Share of the City Jurisdiction Salina Airport Authority Saline County* Unified School District No. 305 Amount $ 20,175,000 163,268 101,854,179 $122,192,447 *As of June 30, 2019, all other jurisdictions as of December 31, 2019. Annual Debt Payments Percentage 100.00% 73.98 93.20 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 2020-A Bonds Vear Principal Interest Principal Interest Total 2020 $4,895,000 $909,329 2021 4,865,000 1,671,789 2022 4,790,000 1,502,298 2023 4,610,000 1,317,644 2024 4,390,000 1,138,598 2025 4,055,000 1,024,004 2026 3,745,000 913,534 2027 3,500,000 806,839 2028 3,180,000 710,294 2029 2,895,000 619,936 2030 2,410,000 539,224 2031 2,430,000 469,321 2032 2,330,000 397,426 2033 2,305,000 325,594 2034 2,110,000 253,813 2035 1,885,000 188,250 A-11 2036 1,610,000 130,763 2037 1,240,000 83,175 2038 725,000 43,950 2039 740,000 22,200 $58, 710,000 $13,067,981 *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 December31 Valuation Valuation Population Capita 2019 $59,170,000 11.69% 1.80% 46,716 $1,266.59 2018 54,885,000 11.25 1.74 46,716 1,174.87 2017 59,985,000 12.46 1.94 46,994 1,276.44 2016 56,875,000 12.03 1.87 47,336 1,201.52 2015 57,535,000 12.43 1.94 47,813 1,203.33 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 general obligation notes as well as providing general obligation note and/or bond funding for approximately $26.3 million of improvements. A portion of the debt service payments on bonds issued for these projects are anticipated to be paid from local sales tax and utility system fees. The City has recently discussed the delaying several of these projects in light of the COVID-19 situation. 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 in the vicinity of the Salina Regional Airport and 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 reached a mediated 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 provided for a 10% local share of initial project costs paid by the City. The Consent Decree provided for a remedial investigation and feasibility study {Rl/FS) to determine the extent and severity of the contamination and to determine the best method of remediation. The Rl/FS has been completed within budget and the parties are awaiting the issuance of the Kansas Department of Health and Environment's Corrective Action Decision (CAD). Issuance of the CAD will provide the basis for the resumption of mediation with the Federal Government to determine respective financial responsibilities for remediating the contamination. If a mediated settlement results in identification of a potentially material local share of the remediation cost, it may be necessary for the City to issue debt to fund the local share. The exact timing and amount, if any, of such borrowing cannot be determined at this time. A-12 Debt Payment Record The City has always met principal and interest payments on all outstanding bonds and temporary notes when due and payable. Legal Debt Limits Cities within Kansas are permitted to issue bonds in an aggregate amount not to exceed 30% of the total assessed valuation of the city. Bonds issued for the purpose of improving, acquiring, enlarging, or extending municipal utilities, including storm and sanitary sewer systems; bonds issued to pay the cost of improvements to intersections and streets in front of city or school district property; bonds for bridges as authorized by a vote of the electors of a city; bonds issued to refund outstanding bonds; and bonds payable from revenue sources other than the general taxing authority of the city are not included in total aggregate debt for purposes of computing a city's debt limitation. FINANCIAL INFORMATION CONCERNING THE CITY Accounting, Budgeting and Auditing Procedures The City follows a modified accrual basis of accounting for all tax supported funds of the City, including the General Fund. An annual budget of estimated receipts and disbursements for the coming calendar year is required by statute to be prepared for all funds (unless specifically exempted). The budget is prepared utilizing the modified accrual basis which is 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 budget lists estimated receipts by funds and sources and estimated disbursements by funds and purposes. The proposed budget is presented to the governing body of the City prior to August 1, with a public hearing required to be held prior to August 15, with the final budget to be adopted by a majority vote of the governing body of the City prior to August 25 of each year (or October 1 if the City must conduct an election to increase property taxes above the tax lid described below). Budgets may be amended upon action of the governing body after notice and public hearing, provided that no additional tax revenues may be raised after the original budget is adopted. 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 became effective on January 1, 2017, 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; A-13 (E) expiration of any abatement of property from property tax; or (F) expiration of a tax increment financing district, rural housing incentive district, neighborhood revitalization area or any other similar property tax rebate or redirection program. (2) Increased property tax revenues that will be spent on: (A) Bond, temporary notes, no fund warrants, state infrastructure loans and interest payments not exceeding the amount of ad valorem property taxes levied in support of such payments, and payments made to a public building commission and lease payments but only to the extent such payments were obligations that existed prior to July 1, 2016; (B) payment of special assessments not exceeding the amount of ad valorem property taxes levied in support of such payments; (C) court judgments or settlements of legal actions against the city or county and legal costs directly related to such judgments or settlements; (D) expenditures of city or county funds that are specifically mandated by federal or state law with such mandates becoming effective on or after July 1, 2015, and loss of funds from federal sources after January 1, 2017, where the city or county is contractually obligated to provide a service; (E) expenses relating to a federal, state or local disaster or federal, state or local emergency, including, but not limited to, a financial emergency, declared by a federal or state official. The board of county commissioners may request the governor to declare such disaster or emergency; or (F) increased costs above the consumer price index for law enforcement, fire protection or emergency medical services. (3) Any increased property tax revenues generated for law enforcement, fire protection or emergency medical services shall be expended exclusively for these purposes but shall not be used for the construction or remodeling of buildings. (4) The property tax revenues levied by the city or county have declined: (A) In one or more of the next preceding three calendar years and the increase in the amount of funding for the budget or appropriation from revenue produced from property taxes does not exceed the average amount of funding from such revenue of the next preceding three calendar years, adjusted to reflect changes in the consumer price index for all urban consumers as published by the United States department of labor for the preceding calendar year; or (B) the increase in the amount of ad valorem tax to be levied is less than the change in the consumer price index plus the loss of assessed property valuation that has occurred as the result of legislative action, judicial action or a ruling by the board of tax appeals." The Tax Lid also provides that "[w]henever a city or county is required by law to levy taxes for the financing of the budget of any political or governmental subdivision of this state that is not authorized by law to levy taxes on its own behalf, and the governing body of such city or county is not authorized or empowered to modify or reduce the amount of taxes levied therefore, the tax levies of the political or governmental subdivision shall not be included in or considered in computing the aggregate limitation upon the property tax levies of the city or county." Because of ambiguities in the Tax Lid, it is unclear how the various exceptions will be interpreted and how the provisions 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 governmental units from creating indebtedness unless there are funds on hand in the proper accounts and unencumbered by previous action with which to pay such indebtedness. An exception to this A-14 cash-basis operation is made where provision has been made for payment of obligations by bonds or other specific debt obligations authorized by law. The financial records of the City are audited annually by a firm of independent certified public accountants in accordance with generally accepted auditing standards. In recent years, the annual audit has been performed by Mize Houser & Company, P.A., Certified Public Accountants, Topeka, Kansas. Copies of the audit reports for the past five (5) years are on file in the Clerk's office and are available for review. The audit for the Fiscal Year ended December 31, 2018 is attached hereto as APPENDIX C. The City has historically prepared a Comprehensive Annual Financial Report, which includes audited financial statements and other pertinent credit information. Appropriate periodic credit information necessary for maintaining the ratings on the Bonds will be provided by the City to the rating agencies rating the Bonds. The Governmental Accounting Standards Board (GASB) issued Statement No. 34, Basic Financial Statements-and Management's Discussion and Analysis-for State and Local Governments in June 1999 ("Statement 34"), which established new requirements for the annual financial reports of state and local governments. Among the major changes embodied in Statement 34, governments will now be required to: (a) report on the overall state of the government's financial health, not just its overall "funds" in a newly required Management's Discussion and Analysis (MD&A), (b) provide the most complete information available about the cost of delivering services to their citizens in the annual report which will now also include financial statements prepared using full accrual accounting for all of the government's activities, (c) include information about the government's public infrastructure assets - such as bridges, roads and storm sewers, and (d) prepare an introductory narrative section analyzing the government's financial performance. The City has implemented Statement No. 34 in its financial statements. The financial information contained in the Appendices to this Official Statement are an integral part of this document and are intended to be read in conjunction herewith. 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: 2015 2016 2017 2018 Property Taxes $9,244,160 $9,217,596 $10,115,784 $9,743,497 Sales Tax 12,930,811 12,780,891 12,906,032 32,900 Other Taxes 5,663,843 6,347,717 5,215,264 5,444,880 Intergovernmental 975,720 1,301,106 1,133,310 1,144,717 Charges for Services 6,046,903 6,472,698 6,153,450 6,366,094 Investment Revenue 0 102,045 3,336 45,477 Miscellaneous 498,557 507,330 1,709,491 452,916 Total Revenues $35,359,034 $36,729,383 $37,236,667 $36,490,207 Expenditures: General Government $5,342,433 $5,422,010 $5,423,241 $5,648,579 Public Safety 21,267,630 21,664,398 21,628,730 22,952,925 Public Works 4,875,641 5,066,426 5,328,315 5,350,056 Public Health and Sanitation 754,347 703,606 749,656 793,780 Culture and Recreation 4,039,856 4,147,736 4,424,221 4,494,713 Planning and Development 586,358 980,950 752,825 766,471 Capital Outlay 1,041,690 1,098,587 896,026 860,115 Total Expenditures $37,907,955 $39,083, 713 $39,203,014 $40,866,639 Revenues Over (Under) $(2,548,921) $(2,354,330) $(1,966,347) $$(4,376,432) Other Sources (Uses) 2,962,350 2,546,500 3,816,500 4,236,500 A-15 Net Change in Fund Balance Fund Balance January 1 Restatement of Prior Year Balance Fund Balance December 31 Assessed Valuation $413,429 $4,254,432 172,325 $4,840,186 192,170 $4,840,186 0 $5,032,356 1,850,153 $5,032,356 0 $6,882,509 $(139,932) $6,882,509 0 $6,742,577 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 Pro(!ertv• Utilities Vehicle Valuation 2019 $421,108,311 $11,173,863 $22,113,195 $54,687,311 $509,082,680 2018 403,835,383 10,130,718 20,485,144 53,336,677 487,787,922 2017 399,918,216 10,900,308 19,671,685 50,970,796 481,461,005 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 *Personal 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. 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 CONCERNING THE CITY -"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 2019 2018 2017 2016 2015 2014 2013 S(!ecial Assessments Residential Real Estate Equalization Ratio N/A 11.17% 11.04 11.36 11.28 11.65 11.55 Estimated Actual Value $3,294,115,685 3,150,409,123 3,097,885,103 3,046,949,034 2,968,008,193 2,917,267,724 2,889,385,914 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 A-16 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 2i Amount 2i 2019* 29.720 $15,037,337 $8,552,180 56.9% $8,552,180 56.9% 2018 28.394 13,780,643 13,427,810 97.4 13,590,888 98.6 2017 26.129 12,728,983 12,381,334 97.3 12,602,044 99.0 2016 27.603 11,564,876 11,320,197 97.9 11,524,101 99.6 2015 27.311 11,209,245 10,984,630 98.0 11,169,600 99.6 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 *Represents collections through December 31, 2019. A-17 Tax Levies Nov Nov Nov Nov Nov Nov 2014 2015 2016 2017 2018 2019 Levy Levy Levy Levy Levy Levy City of Salina 27.080 27.311 27.603 26.129 28.394 29.720 Salina Library 6.034 5.895 5.893 5.989 6.014 5.913 State Education & Other 1.500 1.500 1.500 1.500 1.500 1.500 Unified School District No. 305 55.605 56.120 55.743 56.501 57.522 55.508 Airport Authority 4.486 4.396 4.396 4.225 4.998 4.447 Central Kansas Extension District 1.285 1.502 1.510 1.475 1.476 1.198 Saline County 37.047 38.275 37.508 37.321 38.437 41.097 Total 134.037 134.999 134.153 133.140 138.341 139.383 Largest Taxpayers According to the Saline County Clerk's Office, the following table lists the largest taxpayers in the City, their November 2019 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 Evergy, Inc. Utility $13,682,027 2.69% SFC Global Supply Chain Inc Manufacturing 6,855,966 1.35 Kansas Gas Service Utility 4,415,353 0.87 RAF Salina LLC Retail Shopping Center 4,296,499 0.85 S&B Motels Inc Motel 3,774,927 0.74 Central Mall Realty Holding LLC Retail Shopping Center 2,868,321 0.56 Union Pacific Railroad Co. Railroad 2,570,668 0.51 Menard Inc. Home Improvement Store 2,465,098 0.49 Individual Residential 2,440,724 0.48 Sam's Real Estate Business Trust/Walmart Discount Store 2,286,508 0.45 Total $45,656,091 8.99% 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: *Through February 2020. Year 2020* 2019 2018 2017 2016 2015 2014 A-18 Value $2,084,451 20,544,765 71,862,718 59,975,197 97,910,328 56,989,007 24,214,432 Sales Tax Sales tax collections are the responsibility of the Kansas Department of Revenue. The Department of Revenue distributes the local option countywide and citywide sales taxes on a monthly basis. Countywide sales taxes are distributed between the levying county and the cities located within the county based on population and relative tax levies. Citywide local option sales taxes are distributed solely to the levying city. Statewide sales taxes are retained entirely by the state. In 1982 the voters of Saline County, in accordance with Kansas statutes, approved a 1% countywide local option sales tax. In 1992 voters of the City approved a local option .50% citywide sales tax for purposes of helping fund general operations expenditures of the City. Both of these taxes were approved in perpetuity. In May of 2016, voters approved a .75% citywide retailers sales tax that will be in existence for 20 years and will be used for capital improvements and economic development. The 2016 sales tax replaced an existing sales tax of .40%. 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. 11lAs of February 2020 Vear 2020111 2019 2018 2017 2016 2015 2014 2013 Citywide Local Option Sales & Use Tax Receipts $2,437;227 14,922,404 14,632,584 14,404,702 10,458,630 10,372,573 10,099,512 9,705,026 City's Portion of 1% Countywide Local Option Sales & Use Tax Receipts $1,372,223 7,608,604 7,415,804 7,368,869 7,312,618 7,376,708 7,188,934 6,998,806 l21Collections prior to October 1, 2016 represent taxes attributable to a .40% sales tax that was replaced with the . 75% 2016 sales tax. Prior to October 1, 2016 the citywide aggregate sales and use tax rate was .90%. The aggregate rate was increased to 1.25% as a result of the approval of the 2016 sales tax discussed above. Source: Kansas Department of Revenue 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. A-19 Property Valuation Challenges. Taxpayers may challenge the appraised value of their property by paying property taxes under protest. Such challenges are subject to administrative and judicial review. Taxes paid under protest are distributed to taxing jurisdictions in the same manner as all other property tax collections. If a taxpayer's challenge to the appraiser's valuation is successful, the county is liable to refund the amount of property taxes attributable to the protested value that was previously paid under protest. The county will then withhold from future property tax distributions to other taxing jurisdictions an amount equal to the jurisdiction's pro rata share of such refund. Any such withholdings from future property tax distributions may have a material adverse effect on the City's financial situation. 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, 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 A-20 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 2018 Preliminary Kansas Appraisal/Sales Ratio Study, the equalization ratio for residential real property in Saline County was 11.17%, and commercial and industrial property was 22.55%. A-21 [THIS PAGE lNTENTIONALL Y LEFT BLANK] APPENDIX B Form of Continuing Disclosure Undertaking [THIS PAGE INTENTIONALLY LEFT BLANK] CONTINUING DISCLOSURE UNDERTAKING $5,250,000* CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2020-A $7,080,000* CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES SERIES 2020-1 DATED APRIL 29, 2020 This CONTINUING DISCLOSURE UNDERTAKING dated as of April 29, 2020 (the "Continuing Disclosure Undertaking"), is executed and delivered by the City of Salina, Kansas (the "Issuer"). RECITALS 1. This Continuing Disclosure Undertaking is executed and delivered by the Issuer in connection with the issuance of the above-described bonds and notes (collectively, the "Obligations") which are being issued simultaneously herewith as of April 29, 2020, pursuant to the Bond Resolution and Note Resolution (collectively, the "Resolution") adopted by the governing body of the Issuer. 2. The Issuer is entering into this Continuing Disclosure Undertaking for the benefit of the Beneficial Owners of the Obligations and in order to assist the Participating Underwriter in complying with Rule l 5c2-l 2 of the Securities and Exchange Commission under the Securities Exchange Act of 1934 (the "Rule"). The Issuer is the only "obligated person" with responsibility for continuing disclosure hereunder. The Issuer covenants and agrees as follows: Section 1. Definitions. In addition to the definitions set forth in the Resolution, which apply to any capitalized term used in this Continuing Disclosure Undertaking unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Report" means any Annual Report provided by the Issuer pursuant to, and as described in, Section 2 of this Continuing Disclosure Undertaking, which may include the Issuer's CAFR, so long as the CAFR contains the financial information and operating data described in Section 2(a)(l) and (2). "Beneficial Owner" means any registered owner of any Obligations 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 Obligations (including persons holding Obligations through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Obligations for federal income tax purposes. "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 office or designated payment office of the paying agent or Continuing Disclosure Undertaking the Dissemination Agent 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. "Dissemination Agent" means any entity designated in writing by the Issuer to serve as dissemination agent pursuant to this Continuing Disclosure Undertaking and which has filed with the Issuer a written acceptance of such designation. "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 Obligation" means a (a) debt obligation; (b) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (c) guarantee of (a) or (b) in this definition; provided however, the term Financial Obligation shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule. "Fiscal Year" means the 12-month period beginning on January 1 and ending on December 31 or any other 12-month period selected by the Issuer as the Fiscal Year of the Issuer for financial reporting purposes. "Material Events" means any of the events listed in Section 3 of this Continuing Disclosure Undertaking. "MSRB" means the Municipal Securities Rulemaking Board, or any successor repository designated as such by the Securities and Exchange Commission in accordance with the Rule. "Participating Underwriter" means any of the original underwriter(s) of the Obligations required to comply with the Rule in connection with the offering of the Obligations. Section 2. Provision of Annual Reports. (a) The Issuer shall, not later than 180 days after the end of the City's Fiscal Year, commencing with the Fiscal Year ending December 31, 2019, file with the MSRB, through EMMA, the following financial information and operating data (the "Annual Report"): (1) The audited financial statements of the Issuer for the prior Fiscal Year, prepared on a modified accrual basis of accounting other than GAAP. A more detailed explanation of the accounting basis is contained in the Official Statement related to the Obligations. If audited financial statements are not available by the time the Annual Report is required to be provided pursuant to this Section, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement relating to the Obligations, and the audited financial statements shall be provided in the same manner as the Annual Report promptly after they become available. (2) Updates as of the end of the Fiscal Year of certain financial information and operating data contained in the final Official Statement related to the Obligations, Continuing Disclosure Undertaking B-2 as described in Exhibit A, in substantially the same format contained in the final Official Statement with such adjustments to formatting or presentation determined to be reasonable by the Issuer. 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 Rule), which have been provided to the MSRB and are available through EMMA or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB on EMMA. The Issuer shall clearly identify each such other document so included by reference. In each case, the Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in this Section; provided that the audited financial statements of the Issuer 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, and the Annual Report deadline provided above shall automatically become 180 days after the end of the Issuer's new Fiscal Year. (b) Pursuant to Section ( d)(3) of the Rule, the provisions of Section 2 hereof shall not apply to the Notes, because they have a stated maturity of less than 18 months. ( c) The Annual Report shall be filed with the MSRB in such manner and format as is prescribed by the MSRB. Section 3. Reporting of Material Events. Not later than 10 Business Days after the occurrence of any of the following events, the Issuer shall give, or cause to be given to the MSRB, through EMMA, notice of the occurrence of any of the following events with respect to the Obligations ("Material Events"): ( 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 Obligations, or other material events affecting the tax status of the Obligations; (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 Obligations, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the obligated person; (13) the consummation ofa merger, consolidation, or acquisition involving the obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an Continuing Disclosure Undertaking B-3 action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (14) appointment of a successor or additional trustee or the change of name of the trustee, if material; (15) incurrence of a Financial Obligation of the obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the obligated person, any of which affect security holders, if material; and (16) default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the obligated person, any of which reflect financial difficulties. Except as provided in Section 2(b) hereof, if the Issuer has not submitted the Annual Report to the MSRB by the date required in Section 2(a), the Issuer shall send a notice to the MSRB of the failure of the Issuer to file on a timely basis the Annual Report, which notice shall be given by the Issuer in accordance with this Section 3. Section 4. Termination of Reporting Obligation. The Issuer's obligations under this Continuing Disclosure Undertaking shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Obligations. If the Issuer's obligations under this Continuing Disclosure Undertaking are assumed in full by some other entity, such person shall be responsible for compliance with this Continuing 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 substitution occurs prior to the final maturity of the Obligations, the Issuer shall give notice of such termination or substitution in the same manner as for a Material Event under Section 3. Section 5. Dissemination Agents. The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Continuing Disclosure Undertaking, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. Any 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 Continuing Disclosure Undertaking. Section 6. Amendment; Waiver. Notwithstanding any other provision of this Continuing Disclosure Undertaking, the Issuer may amend this Continuing Disclosure Undertaking and any provision of this Continuing 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 Rule and all current amendments thereto and interpretations thereof that are applicable to this Continuing Disclosure Undertaking. In the event of any amendment or waiver of a provision of this Continuing Disclosure Undertaking, 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, 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) Continuing Disclosure Undertaking B-4 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 Continuing Disclosure Undertaking shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Continuing 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 required by this Continuing 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 specifically required by this Continuing Disclosure Undertaking, the Issuer shall have no obligation under this Continuing Disclosure Undertaking to update such information or include it in any future Annual Report or notice of occurrence of a Material Event. Section 8. Default. If the Issuer fails to comply with any provision of this Continuing Disclosure Undertaking, any Participating Underwriter or any Beneficial Owner of the Obligations may take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order, to cause the Issuer to comply with its obligations under this Continuing Disclosure Undertaking. A default under this Continuing Disclosure Undertaking shall not be deemed an event of default under the Resolution or the Obligations, and the sole remedy under this Continuing Disclosure Undertaking in the event of any failure of the Issuer to comply with this Continuing Disclosure Undertaking shall be an action to compel performance. Section 9. Beneficiaries. This Continuing Disclosure Undertaking shall inure solely to the benefit of the Issuer, the Participating Underwriter, and the Beneficial Owners from time to time of the Obligations, and shall create no rights in any other person or entity. Section 10. Severability. If any provision in this Continuing Disclosure Undertaking, the Resolution or the Obligations shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 11. Electronic Transactions. The arrangement described herein may be conducted and related documents may be sent, received, or 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 12. Governing Law. This Continuing Disclosure Undertaking shall be governed by and construed in accordance with the laws of the State of Kansas. [Remainder of Page Intentionally Left Blank.] Continuing Disclosure Undertaking B-5 IN WITNESS WHEREOF, the Issuer has caused this Continuing Disclosure Undertaking to be executed as of the day and year first above written. CITY OF SALINA, KANSAS (SEAL) Mayor City Clerk Continuing Disclosure Undertaking B-6 EXHIBIT A TO CONTINUING DISCLOSURE UNDERTAKING FINANCIAL INFORMATION AND OPERATING DATA TO BE INCLUDED IN ANNUAL REPORT The financial information and operating data contained in the following sections and tables contained in Appendix A of the final Official Statement (with such modifications to the formatting and general presentation thereof as deemed appropriate by the Issuer) relating to the Obligations: • Financial Overview of the City • FINANCIAL INFORMATION CONCERNING THE CITY-Assessed Valuation • FINANCIAL INFORMATION CONCERNING THE CITY -Estimated Actual Valuation • FINANCIAL INFORMATION CONCERNING THE CITY -Tax Collections • FINANCIAL INFORMATION CONCERNING THE CITY -Tax Levies • FINANCIAL INFORMATION CONCERNING THE CITY -Largest Taxpayers B-7 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIXC December 31, 2018 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, 2018, including financial statements as audited by the firm of Mize Houser & Company, P.A., Certified Public Accountants, Topeka, Kansas. [THIS PAGE INTENTIONALLY LEFf BLANK] COMPREHENSIVE ANNUAL FINANCIAL REPORT OF CITY OF SALINA, KANSAS 300 West Ash Street P.O. Box 736 Salina, Kansas 67402-0736 For the Fiscal Year Ended December 31, 2018 Prepared by Department of Finance and Administration of City of Salina, Kansas CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2018 Letter of Transmittal Organizational Chart List of Principal Officials Independent Auditor's Report Management's Discussion and Analysis Basic Financial Statements: Government-wide Financial Statements Statement of Net Position Statement of Activities Fund Financial Statements Balance Sheet -Governmental Funds TABLE OF CONTENTS INTRODUCTORY SECTION FINANCIAL SECTION 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 i -iv v vi 1 - 3 4-15 16 17 18 19 20 21 22 23 24 25 26 27 28-29 30 CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2018 TABLE OF CONTENTS -CONTINUED FINANCIAL SECTION -CONTINUED Notes to the Basic Financial Statements Required Supplementary Information Other Postemployment Benefits Schedule of Changes in the City's Total OPEB Liability and Related Ratios Other Postemployment Benefits -KPERS Schedule of Changes in the City's Total OPEB Liability and Related Ratios KPERS Pension Plan Schedule of City's Proportionate Share of the Net Pension Liability Schedule of City Contributions Combining Statements and Individual Fund Schedules Combining Statements -Nonmajor Funds Fund Descriptions Combining Balance Sheet -Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Governmental Funds Combining Balance Sheet -Nonmajor Special Revenue Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Special Revenue Funds Combining Balance Sheet -Nonmajor Permanent Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Permanent Funds Individual Fund Schedules of Revenues, Expenditures and Changes in Fund Balance -Budget and Actual (Non-GAAP Basis): Bicentennial Center Fund Business Improvement District 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 31 -70 71 72 73 73 74-75 76 77 78-79 80 -81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 Internal Service Fund Descriptions CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2018 TABLE OF CONTENTS-CONTINUED FINANCIAL SECTION -CONTINUED Combining Statement of Net Position -Internal Service Funds Combining Statement of Revenues, Expenses, and Changes in Net Position -Internal Service Funds Combining Statement of Cash Flows -Internal Service Funds Fiduciary Fund Descriptions -Agency Funds Combining Balance Sheet -Agency Funds Combining Statement of Changes in Assets and Liabilities -Agency Funds STATISTICAL SECTION Net Position by Component-Last Ten Fiscal Years Changes in Net Position -Last Ten Fiscal Years Fund Balances, Governmental Fund -Last Ten Fiscal Years Changes in Fund Balances, Governmental Funds -Last Ten Fiscal Years Tax Revenues by Source, Governmental Funds -Last Ten Fiscal Years Assessed and Estimated Actual Value of Taxable Property-Last Ten Fiscal Years Direct and Overlapping Property Tax Rates-Last Ten Fiscal Years Principal Property Taxpayers Property Tax Levies and Distributions Direct Sales Rate by Taxing Entity Water Sales by Class of Customer Ratio of Outstanding Debt by Type Ratio of Net General Bonded Debt Outstanding Direct and Overlapping Governmental Activities Debt Legal Debt Margin Pledged Revenue Coverage Demographic and Economic Statistics Principal Employers Page 99 100 101 102 -103 104 105 106 Schedule 107 2 108 3 109 4 110 5 111 6 112 7 113 8 114 9 115 10 116 11 117 12 118 13 119 14 120 15 121 16 122 17 123 18 124 INTRODUCTORY SECTION DEPARTMENT OF FINANCE AND ADMINISTRATION 300 West Ash, P.O. Box 736 Salina, Kansas 67 402-0736 September 25, 2019 City of ~ Salina To the Citizens of the City of Salina, Kansas: TELEPHONE (785) 309-5735 FAX (785) 309-5738 TDD (785) 309-5747 Website: www.salina-ks.gov The Comprehensive Annual Financial Report of the City of Salina, Kansas (the "City") for the year ended December 31, 2018, is hereby submitted. The City's Finance Department prepared the report. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of all various funds and account groups of the City. We believe that all disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. Report Format The Comprehensive Annual Financial Report is presented in three sections: Introductory, Financial and Statistical. The introductory section includes a description of the City, including services provided, and explanation of the City's accounting system and budgetary controls, and a brief discussion of the City's economic condition and outlook. The City's organizational chart is also included to assist the reader in understanding the structure of the City. The financial section includes the Independent auditor's report, Management's discussion & analysis, Government wide financial statements, Fund financial statements, Notes to the financial statements, and Individual and combining statements and schedules. The statistical section includes selected financial and demographic information, generally presented on a multi-year basis. The reader is specifically directed to Management's Discussion and Analysis (MD&A) which immediately follows the independent auditor's report. MD&A provides a narrative explanation and overview of significant features and trends reflected by data in the financial statements. Accounting Systems and Internal Controls A critical part of the control system is the City's comprehensive Budgetary and Financial Policies, which establish guidelines for budgetary and financial practices. The Budgetary and Financial Policies are reviewed by the City Commission and updated each year as a part of the budget process. City staff is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft or misuse and that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits require estimates and judgment by management. The objective of budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Commission. The legal level of budgetary control is maintained at the Fund level, in accordance with State Statutes. However, management control is maintained at the department level. The City uses an encumbrance accounting system, in which estimated purchase amounts are recorded prior to the release of purchase orders to vendors. Open encumbrances are reported as reservations of fund balance at December 31, 2018 in the general fund and the special revenue funds. Various internal compliance procedures are implemented to ensure proper implementation of the budget as well as to maintain a degree of accountability for both revenues and expenditures. Independent Audit Kansas Statutes Annotated 75-1122 requires an annual audit of the books of account, financial records and transactions of all administrative departments of the City by independent certified public accountants selected by the City Commission. This requirement has been complied with and the auditor's opinion has been included in this report. Profile of the Community The Town of Salina was organized in 1858 under the Town and Village Act in the State of Kansas, and became a City of the First Class on July 9, 1920. The City has had a Commission-City Manager form of government since 1921. The Commission is comprised of five members elected at large. Each year the commission chooses one member to act as Mayor. The City Manager is appointed by the Commission, and acts as its primary agent in accordance with state statute. Other city officers and employees are appointed by the City Manager. The current population of the City is 46,994. The reporting entity includes the City of Salina as well as two discretely presented component units, both proprietary fund types. The Salina Airport Authority operates the Salina Municipal Airport and Airport Industrial Center, and the Salina Housing Authority administers public housing programs within the City of Salina. The entity also includes one blended component unit. Salina Field House Qualified Active Low- Income Community Business, Inc. (SFH QalicB). SFH QalicB was created for the purpose of providing an indoor sports facility in the downtown core of the city of Salina. In addition, the City of Salina participates in a joint venture with Saline County, the City-County Building Authority. This report includes all funds and account groups of the City. The City provides a full range of services including police and fire protection, development services, construction and maintenance of streets, drainage facilities and other infrastructure; recreational activities and cultural events; emergency medical services and convention facilities. In addition to general government activities, the City also provides water, wastewater, sanitation, and solid waste services; therefore, these activities are included in the reporting entity. Economic Outlook and Strength The City benefits from its location at the junction of Interstate Highways 70 and 135. This convenient location has drawn numerous national and regional companies to open manufacturing or distribution centers in or adjacent to the community. Such companies include Pepsi-Cola, Exide Technologies, Blue Philips Lighting Company, EIDorado National, and Schwan's Global Supply Chain. Manufacturing, retail trade, and service industries rank as the three primary employers in the City. No single industry is dominant. The City of Salina retains its position near the top of a list of first class cities with respect to "trade pull factor." According to the Kansas Department of Revenue's Annual City Trade Pull Factor report, Salina had a pull of factor of 1.48 in 2017. The pull factor measures the degree to which a city or county area captures retail trade from outside the jurisdiction. A pull factor of greater than 1 indicates that a city is attracting more retail trade from outside the city/county than it is losing to other counties. It is apparent from this that Salina continues to serve as a regional economic hub in 2018. Major Initiatives In April, 2016, voters elected to replace the .40 cent capital improvement sales tax with a .75 cent capital improvement sales tax for a term of 20 years. Priorities for the sales tax are improving neighborhood streets and drainage, preserving stable property tax rates, ensuring a quality park system, constructing and maintaining community improvements, funding equipment for maintenance, repayment of future bonds for large projects and attracting quality jobs. As a result of this initiative, the City has seen a 38% increase in sales tax collections in 2018 as compared to 2016. In 2018, the Salina Field House completed its first year in business. It hosted 16 tournaments and over 91,000 attendees and continues to grow in the number of events that it is drawing to the City. ii Old Chicago Pizza opened for business in the City's downtown corridor in late 2018. STAR Bonds were issued in December, 2018, for the Downtown Revitalization Project. As a result of this funding, several projects are now moving forward including the City's Downtown Streetscape project, the Alley Entertainment Center, a car museum and the new downtown hotel. Other major projects that were on going included gutter and paving on North 9th Street, South Well Field improvements, continued improvements to the water distribution system and preliminary design on the Smoky Hill River Renewal and Police Training Center projects. The City continues to address fiduciary pressures generated by a recessionary economy. General adjustments to the pay plan for cost of living changes at a rate of 2.5% were implemented in 2018. The City also allowed for merit review increases up to 3%. Capital Improvement Planning The City's Capital Improvement Plan (CIP) consists of two components. One component consists of "routine" capital-including vehicle and equipment replacement, technology replacement, building repair and improvement, routine pavement maintenance activity, utility system enhancements and similar items. The amount of funding for these projects may fluctuate based on needs and funding availability, however, planned amounts are allocated over a multi-year period. Source of funding for routine capital is current cash resources from the fund appropriate to the nature of the purchase. The second component of the CIP includes major projects that typically require issuance of bonds or notes, although these projects may also be supplemented with available cash and grant financing. The plan is updated each year after an extensive evaluation of the demands on future financial resources. The Capital Improvement program is scheduled for a major revision as the result of the sales tax to be used for that purpose. Construction initiated:* 2019 2020 2021 2022 2023 Sales tax $ 4,380,000 $ 4,385,000 $ 4,390,000 $ 4,395,000 $ 4,250,000 Water & wastewater fund 2,000,000 2,000,000 2,000,000 General obligation bonds 5,225,000 19,700,000 Revenue Bonds/Loans 11,255,000 6,000,000 28,000,000 Other sources 785,800 $ 21,645,800 $ 30,085,000 $34,390,000 $6,395,000 $ 6,250,000 *The year a project is scheduled reflects the year that construction is initiated. Preliminary work (design, acquisition) may precede this date by one or more years, and permanent financing may not occur until one (or more years depending on project magnitude) subsequent to this date. Financial Policies The City has adopted a formal set of Budgetary and Financial Policies, addressing such items as fund balances, capital improvements, operating budgets, long term debt management, accounting, auditing and financial reporting, revenues, cash management and investments. Financial policies contribute to financial stability by: 1. Providing consistent guidance in decision making 2. Establishing appropriate levels of fund balances 3. Governing the use of one time or unanticipated resources 4. Providing a multi-year capital improvements process 5. Establishing responsibilities and deadlines for budget preparation 6. Providing for a balanced annual operating budget 7. Providing guidelines on the use of debt, including appropriate purposes and terms 8. Provide a linkage between capital improvement scheduling and long term debt management planning iii 9. Require annual audits and financial reporting in conformance with Generally Accepted Accounting Procedures 10. Require timely and regular interim financial reporting to the Governing body 11. Ensure the safety of cash and near cash resources (timely collection of Accounts Receivable, etc.). Acknowledgments The preparation of the Comprehensive Annual Financial Report was made possible by the dedicated Finance staff of the City of Salina and the professional advice and efforts of the Mize Houser auditing team. Finally, preparation of this report would not have been possible without the support of the City Commission. Sincerely, Michael 0. Schrage City Manager iv Municipal Court Risk Management Development Services Lauren Driscoll Building Services Neighborhood Services Planning & Zoning Community Relations Parks & Recreation Chris Cotton Public Works Jim Kowach Engineering Parks Division Public Services Recreation Division Streets Golf Course Traffic Control Facility Maintenance Flood Control Animal Services Sanitation *Tony's Pizza Event Solid Waste Center Central Garage Computer Technology Jack Rolfs Organizational Chart CITIZENS CITY COMMISSION Karl Ryan, Mayor Trent Davis Melissa Rose Hadges Mike Hoppock Joe Hay City Manager Michael Schrage Deputy City Manager Vacant Utilities Martha Tasker Finance/ Administration Debbie Pack Water Plant Division Wastewater Plant Division Utility Division Water Distribution Wastewater Collection City Clerk Water Customer Accounting Finance Arts & Humanities Brad Nelson v Legal Services Clark Mize & Linville Chartered* Greg Bengston Continuous Process Improvement Scott Gardner Fire Kevin Royse Fire Administration Fire Suppression Fire Prevention EMS Human Resources Natalie Fischer Police Brad Nelson Administration Patrol Division Support Division Investigative Division vi City of Salina, Kansas List of Principal Officials City Commission Karl Ryan, Mayor Trent Davis, Vice Mayor Mike Hoppock, Commissioner Melissa Rose Hodges, Commissioner Joe Hay, Commissioner City Executive Staff Michael Schrage, City Manager Lauren Driscoll, Director of Development Services Debbie Pack, Director of Finance and Administration Jack Rolfs, Director of Computer Technology Natalie Fischer, Director of Human Resources Greg Bengston, City Attorney Brad Nelson, Chief of Police Kevin Royse, Fire Chief Daniel Stack, City Engineer Jim Kowach, Director of Public Works Martha Tasker, Director of Utilities Chris Cotton, Director of Parks and Recreation Brad Anderson, Director of Arts and Humanities Scott Gardner, Continuous Process Improvement vi FINANCIAL SECTION I Mayor and City Commissioners City of Salina, Kansas Report on the Financial Statements INDEPENDENT AUDITOR'S REPORT -MI ZE£""'1 1HOUSER '-/OMPANYr.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 , 2018, 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 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 Field House Qualified Active Low-Income Community Business, Inc. (SFH QalicB), which is included within the financial statements as a major governmental fund. This activity represents 4% and 1 %, respectively, of the total assets and total revenues of the governmental funds. Those financial statements were audited by other auditors whose report has been furnished to us, and our opinion , insofar as it relates to the amounts included for SFH QalicB, is based solely on the report of the other auditors. We also did not audit the financial statements of the Housing Authority of the City of Salina, which is a discretely presented component unit in the accompanying financial statements and which statements reflect total assets and deferred outflows of resources of $7,486,949 as of June 30, 2018 and total revenues of $2,507,375 for the year then ended. 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 Housing Authority of the City of Salina, is based solely on the reports of the other auditors. 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 Pork, 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 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. 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, 2018, 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 75 for other postemployment benefits during the current year. As a result of the implementation, a restatement was made to the net position at December 31, 2017. Our opinion is not modified with respect to this matter. Prior Period Restatement As discussed in Note 3 to the financial statements, certain errors in amounts previously reported as of December 31, 2017, were discovered by management of the City during the current year. Accordingly, these amounts have been restated in the December 31, 2018, financial statements now presented, and adjustments have been made to net position to correct the error. Our opinion is not modified with respect to these matters. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 4 through 15, the other postemployment benefit schedules on page 70 and 71, the schedule of the City's proportionate share of the net pension liability on page 72, and the schedule of City contributions on page 72 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. 2 Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's financial statements as a whole. The introductory section, combining and individual nonmajor fund financial statements and schedules, and statistical tables as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying account and other records used to prepare the basic financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Certified Public Accountants Lawrence, Kansas September 25, 2019 3 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31 , 2018 (Unaudited) This section of the report contains an overview and analysis of the City of Salina's financial statements for the fiscal year ended December 31 , 2018. The information contained here, as well as the information contained in the letter of transmittal, are intended to provide the reader of the financial statements with a well-rounded picture of the City's financial condition. Financial Highlights • On an accrual basis, the City's government-wide net position increased $11 .1 million from current operations with net position increases of $9 .8 million and $1 .3 million in governmental activities and business-type activities, respectively. + At the close of 2018, the City's governmental funds reported combined ending fund balances of $19.1 million, a decrease of $2.7 million from the prior year. This primarily resulted from issuance of temporary notes in the Capital Projects Fund and the capital project expenditures in the SFH QalicB Fund . The General Fund balance decreased $140 thousand over the prior year. + At the close of 2018, the City's enterprise funds reported a combined ending Net Position of $90.4 million, an increase of $1 .3 million over prior year. Positive performance was shared by the Water and Sewer Fund and the Sanitation Fund, with the Water and Sewer Fund providing the bulk of the change ($1 .8 million). The Solid Waste Disposal Fund saw a negative performance as a result of additional costs related to the opening of the Drive Thru Recycling Center. + Revenues from governmental activities increased by $4.2 million from the prior year and revenues from business type activities increased $.5 million from the prior year. + Revenues from investments continue to be minimal. The Basic Financial Statements The basic financial statements of the City include the government-wide financial statements and the fund financial statements. The notes to the financial statements follow the basic financial statements and are essential for the reader's understanding of the financial statements. Other supplementary information, including the combining schedules for non-major funds and the budgetary comparison reports, are at the end of this report to provide additional information for the reader. Government-wide Financial Statements The government-wide financial statements present the results of the City's operations using the accrual basis of accounting, the same basis as is used by private sector businesses. These statements focus on the long-term financial picture of the City as a whole. The Statement of Net Position reports all of the City's assets and liabilities. Net position, the difference between assets and deferred outflows of resources and liabilities, are an important measure of the City's overall financial health. Net position represents the total accumulated and unused resources available to the City for the purpose of providing services. Over time, the increases and decreases in net position can be monitored to determine if the City's financial position is improving or deteriorating. The Statement of Activities shows how net position has changed during the fiscal year. One unique feature of this statement is how it shows the revenues and expenses related to specific programs and how much of those programs were supported by the general taxes of the City. Since this statement is prepared on the accrual basis of accounting, all revenues and expenses are included, regardless of when cash is actually received. Both statements show the operations of the City broken down between governmental and business-type activities. Governmental activities are the operations of the City generally supported by taxes, such as public safety (police, fire, and EMS), public works, 4 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) public health, and culture & recreation. Business-type activities are operations of the City that are intended to recover a significant portion of their costs through user fees and charges. These include water and sewer, refuse collection, the golf course, and operation of the City solid waste facility. The government-wide financial statements include the Salina Airport Authority and Salina Housing Authority as discretely presented component units of the City and the Salina Field House Qualified Active Low-Income Community Business, Inc. (SFH QalicB) as a blended component unit. Note 1, item A in the Notes to the Financial Statements provides a more complete explanation of the relationship between these entities and the City of Salina. Fund Financial Statements The City uses three types of funds to manage its resources: governmental funds, proprietary funds, and fiduciary funds. A fund is a fiscal entity with a set of self-balancing accounts recording financial resources together with all related liabilities and residual equities and balances, and the changes therein. These accounting entities are separated for the purpose of carrying on specific activities or attaining certain objectives in accordance with regulations, restrictions, or limitations. Governmental fund financial statements are prepared on a modified accrual basis. Under this basis, revenues are recognized when they become measurable and available, and expenditures are recognized when the related fund liability is incurred with the exception of long term debt and similar items which are recorded when due. The focus is on the short-term financial picture of the operations of the individual fund, rather than long-term citywide view provided by the government-wide statements. Major governmental funds are presented in individual columns, while non-major governmental funds are aggregated into an "Other Governmental Funds" column. A combining statement for the non-major funds is presented as supplementary information in the back of the report. The information presented in these statements can be compared to the governmental activities information in the government-wide statements. The reconciliation at the end of the fund financial statements details the relationship between the two types of financial statements. Proprietary funds fall into two categories: enterprise funds and internal service funds. All proprietary funds are prepared on the accrual basis of accounting and are used to account for business-type activities. Enterprise fund statements present the same information that is in the government-wide statements for business-type activities, but in greater detail. The City of Salina currently operates four enterprise funds: Sanitation, Solid Waste Disposal, Golf Course, and Water and Sewer. Internal service funds are used to account for the cost of operations shared by various departments of the City. The city operates three internal service funds. Two of these are for self-insurance activity: Workers Compensation Reserve, and Health Insurance. The remaining accounts for the Central Garage operation. A combining statement for these internal service funds can be found in the supplementary information following the notes to the financial statements. Fiduciary funds are used by the City to account for resources held by the City for a third party. Agency funds are a special class of fiduciary fund in which liabilities always equal assets, and thus there is no net position. The City of Salina operates twelve agency funds. Schedules for these funds may be viewed in the supplementary section of this report. Permanent funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used. Permanent funds operated by the City include the Citizenship Trust, Cemetery and Mausoleum Endowments, and the Tri-centennial Commission fund. Notes to the Financial Statements The notes to the financial statements are an integral part of the basic financial statements since they contain valuable additional information necessary for gaining a complete understanding of the City's financial statements. 5 Other Information CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) In addition to the basic financial statements and the notes described above, this report also presents the general fund and major special revenue fund's budgetary statements as required supplementary information directly following the notes to the basic financial statements. The combining statements for the non-major funds are shown after the required supplementary information. Finally, the statistical section includes selected statistical data about the City's operations and economy. The City as a Whole This section will identify, discuss, and analyze significant differences and trends that will enhance the reader's understanding of the City's financial position. Tax Base and Economy The City of Salina relies on three major groups of revenues to support its operations. Each of these revenue streams has a different revenue base. In declining order of magnitude, they are charges for services, sales taxes, and property taxes. Sales taxes and property taxes apply primarily to governmental activities, while charges for services apply to both governmental (20%) and business-type (80%) activities. Charges for services account for about 41% ($37.5 million) of the City's revenue stream. Charges for service depend on both the rate that is set for the activity, as well as the volume of services provided. Significant services include water and wastewater fees, sanitation and landfill fees, licenses and permits, inspection fees and golf course fees. Charges for services increased $.7 million (2%) from the prior year with the sanitation fund increasing $121K (4.2%) and water and sewer fund increasing $347K (2%). The increase in charges for services in the sanitation fund fund and the increase in the water and sewer fund are a result of an increase in user fees. Sales taxes are the next largest component of the revenue mix, providing 24.7% ($22.2 million) of the total revenues. The City receives a 1.25% City-wide sales tax, and also a portion of the County-wide 1 % sales tax. Forty- four percent, (a rate of .75%) of the City-wide sales tax is required to be used for special purposes. The remaining .5%, along with the City portion of the County-wide tax is available for general purposes. The City is affected by the formula used to distribute the County-wide sales tax among participating jurisdictions (only Cities and the County participate, School and other special districts do not). The formula is based, in part, on the property tax efforts of each jurisdiction. As the portion of the overlapping levy attributable to the City of Salina changes so does the City's allocated portion of the County-wide sales tax. This change is recognized bi-annually and can affect the overall allocation of the City's portion of the County-wide sales tax. In 2018, this allocation increased slightly which did not have a significant impact on the tax revenues. In 2008, Salina voters approved an increase of the special purpose .25% tax to a .40% tax. The extended tax is to sunset March 31, 2019. The tax was also modestly re-purposed, for Capital and Economic Development purposes only, as well as retaining a property tax stabilization component. In May 2017, Salina voters approved an increase in the special purpose .40% tax to a .75% tax (thus repealing the 2008 increase). This change became effective October 1, 2017 for twenty years. Property taxes are the third major component of the revenue mix, accounting for 13.9% ($12.5 million) of total revenues. Property taxes consist of two components: Real estate and personal property taxes which are determined by the mill levy set by the city and the assessed value of the property; and motor vehicle taxes which are established by a countywide average tax rate and the assessed value of the vehicle. Real estate assessed value increased by 3.0%. The total City mill levy decreased 5.3%. The overlapping levy decreased in 2018 by .75%. 6 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) Personal property value continued to slide, presumably as a result of removing business equipment from the tax base. Personal property value has now dropped to $10.1 million from its peak of $39. 7 million in 2007. At the 2018 tax rate, this exemption is equivalent to over $775K in annual lost revenue. Motor vehicle value increased 4.6%. Motor vehicle taxes are distributed based on a formula using prior year's tax effort (similar to the Countywide Sales Tax Distribution). The following table summarizes the comparative property assessed values and tax levy rates: Comparati1.e Property Values and Tax Le"Y Rates Fiscal (Budget) Year Real Estate and Personal Property Assessed Valuation City Mill Le"Y ($ per $1,000) Operating (General Fund) Debt Sel'l.ice Total City Rate Total 01.erlapping Le"Y Percent of Total Taxes Collected Ratio ofTotal Taxes (including delinquent collections) to taxes le.;ed Motor Vehicle Valuation 2018 2017 Change $ 434,451,245 $ 422,364,328 $12,086,917 20.339 21.694 (1.355) 5.79 5.909 (0.119) 26.129 27.603 (1.474) 133.14 134.153 (1.013) 95.9% 99.9% -4.0% 98.4% 101.7% -3.3% $ 53,336,677 $ 50,970,796 $ 2,365,881 The unemployment rate in Salina increased slightly from 2.7% at the end of 2017 to 3.3% at the end of 2018, reflecting general economic conditions. This is still slightly below the statewide and significantly below the national unemployment rate. The total labor force increased to 30, 17 4 from 27,684 in 2017. In 2018, the top ten property taxpayers accounted for 10.26% of total assessed value. This is less concentrated than ten years ago (at 15.48%). Statement of Net Position Net position may, over time, provide an indicator of a government's financial position. In the case of the City of Salina, assets and deferred outflows of resources exceeded liabilities by $223.8 million at December 31, 2018. This represents an increase in net assets of $11.1 million over 2017. A comparative Condensed Statement of Net Position at December 31, 2018 and 2017: 7 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) Condensed Staterrent of Net FbsrtJon As of Decerrber 31 (n $000) Governrrental Activrties Business-Type Activrt1es Total A"1rrary Governrrent % of %of 2018-2017 2018 2017 2018 2017 2018 Total 2017 Total change Cash and mvestrrents $ 34,302 $ 24,491 $ 32,140 $ 30,336 $ 66,442 17% $ 54,827 15% $ 11,615 Other current assets 16,774 13,836 2,630 2,338 19,404 5% 16,174 4% 3,230 Noncurrent (caprtal) assets 210,515 206,600 90,181 91,306 300,696 78% 297,906 81% 2,790 Total assets 261,591 244,927 124,951 123,980 386,542 100% 368,907 100% 17,635 Total deferred outflows of resources 5,527 5,968 802 887 6,329 100% 6,855 100% ~) Total assets and deferred outflows of resources 267,118 250,895 125,753 124,867 392,871 375,762 17,109 Current hab1hbes 28,623 12,540 3,814 3,879 32,437 21% 16,419 11% 16,018 Noncurrent llabllrtJes 90,931 102,076 31,332 31,685 122,263 79% 133,761 89% (11,498) Total hab1hbes 119,554 114,616 35,146 35,564 154,700 100% 150,180 100% 4,520 Total deferred inflows of resources 14,113 12,578 224 220 14,337 12,798 ~ Net pos rt1on- Net investrrent 1n caprtal assets 144,845 129,921 62,368 63,316 207,213 92% 193,237 91% 13,976 Restricted for perrranent funds 514 502 514 0% 502 0% 12 Restricted for debt service 1,851 1,510 1,512 1,512 3,363 2% 3,022 1% 341 Unrestricted (13,759) (8,232) 26,503 24,255 12,744 6% 16,023 8% (3,279) Total net posrt10n 133,451 123,701 90,383 89,083 223,834 100% 212,784 100% 11,050 Percent of total net posrtJon 60% 58% 40% 42% 100% 100% Cash and investrrents as a percentage of current habllrties 120% 195% 843% 782% 205% 334% The largest segment of the City's net position reflects its investment in capital assets (land, buildings, streets and drainage facilities, utility plant, vehicles, equipment, etc.), less any debt used to acquire those assets that is still outstanding. These assets are used to provide services to citizens. As a result, resources required to retire related debt cannot come from liquidation of the asset. Such resources generally must be provided from other sources, such as future taxes or user charges. A small portion of net position is restricted for debt service and permanent funds. The remainder (unrestricted) of net position may be used to meet the City's obligations to citizens and creditors. In 2018, the amount of net investment in capital assets increased by $14.0 million. Amount restricted for debt service increased by $341 thousand. Unrestricted decreased by $3.3 million. Outside of these changes, 2018 resulted in a $11.1 million increase to the net position. Total liabilities increased in governmental activities and slightly decreased in business-type activities. In governmental activities, current liabilities increased and non-current liabilities decreased primarily due to an increase in temporary notes and a decrease in general obligation bonds. 8 Statement of Activities CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31 , 2018 (Unaudited) A Condensed Statement of Activities is shown below. Pro gram Revenues: Charges for Services Operating Grants and Contributions Capital Grants and Contributions General Revenues: Property Taxes Sales Taxes Other Taxes Investment Revenue Other Miscellaneous Total Revenues: Expenses: General Government Public Safety Public Works Public Health and Sanitation Culture and Recreation Planning and Development So lid Waste Disposal Water and Sewer Sanitation Go~ Course Interest on Long Term Debt Total Expenses Increase in net assets before transfers Transfers and other extraordinary items Change in Net Position Net Position January1 Prior Period Adjustment Net Position January 1, restated Net Position December 31 Condensed Statement of Activities For the Year Ended December 31 (In $000) Governmental Activities 201! 2017 $ 1),411 $ 1),1)0 4,300 4,635 12,508 22,209 7,240 1!3 4,541 12,960 2\738 6,899 93 ~~ 62 ,548 58,334 12,0t3 23,892 1),458 1,256 7,040 2,369 3,403 9,781 23,120 1),345 1,126 6,880 1,835 3,523 ~~ ~~ 123,701 115,869 ~ 125,2tl 115,869 Business·Type Activities 201! 2017 $ 27,061 s 26,703 233 153 2,382 15,tlO 2,4tl 926 6,530 129 1)3 2,364 15,650 2,178 852 5,891 (4,832) (4,367) ~~ 89,083 ~) 88,685 9 87,559 87,559 Total Primary Government 201! % 2017 % 201!-2017 Change s 37,472 42% s 36,803 43% $ 669 4,300 4,635 5% 5% 12,508 14% 22,209 25% 7,240 8% 413 0% 12,0t3 15% 23,892 30% 1),458 t3% 1,256 2% 7,040 9% 2,369 3% 2,382 15,tlO 2,4tl 926 9,933 __ (1) ~ 212,784 _____j_gQ 2t3,904 s 223,836 3% 3% f'/o 4,541 5% 0% 12,960 15% 2\738 25% 6,899 8% 222 0% 9,781 t3% 23,120 30% 1),345 14% 1, 126 f'/o 6,880 9% 1,835 2% 2,364 15,650 2,178 852 9,414 203,428 203,428 $ 212,784 3% 21'/, 3% f'/o (241) 4,635 (452) 471 341 tl4 2,232 772 '[30 130 534 'fl (460) 241 74 5tl 57 576 9,356 ~ 1),476 s 11,052 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) Governmental Activities. Charges for services attributable to governmental activities totaled $10.4 million, operating grants for those purposes were $4.3 million and capital grants for those purposes were $4.6 million. Charges for services and capital grants increased from the prior year, while operating grants decreased slightly. The balance was funded by general revenues. Sales taxes accounted for $22.2 million of general revenues, with property taxes providing $12.5 million. The net position increased by $8.2 million as a result of governmental activities. This increase was primarily related to the increase in sales and other taxes. Total expenses for governmental activities for the year ending December 31, 2018 were $59.1 million compared to $54.8 million in 2017. Governmental activities represent 74% of the City's total expenses. The largest element of governmental activity expense was public safety, accounting for 30% of the total. Business Type Activities. Business-type activities are primarily supported by user charges, with a very small amount coming from investment and miscellaneous revenues. Total expenses for business-type activities for the year were $21 million, or 26% of the City's total expenses. The majority of this expense ($15.2 million) is attributable to water and sewer operations, with the other activities costing a combined total of $5.7 million. Net position increased by $1.7 million. This increase was primarily related to the increase in water and sewer fund revenues and a decrease in water and sewer fund expenses. Fund Financial Analysis Governmental Funds Fund Balances: The table below shows the Governmental Fund balances for major funds as of December 31, 2018 and December 31, 2017. Gm.emmental Fund Balances as of December 31, (in OOO's) Fund 2018 2017 Change General $ 6,743 $ 6,883 $ (140) Tourism and Com.ention 458 213 245 Special Gas 1,532 1,082 450 Sales Tax Capital 1,984 2,084 (100) Schilling Capital lmprm.ement 2,136 3,024 (888) Debt Service 1,851 1,510 341 Capital Projects (694) 895 (1,589) SFH QalicB 1,218 1,715 (497) Other Go-.emmental Funds 3,861 4,353 (492) $19,089 $ 21,759 $ (2,670) Total governmental fund balances decreased by $2.7 million. The reasons for these changes are varied. The Schilling Capital Improvement Fund, which was created to account for U.S. Government and other funds received for the abatement of groundwater contamination, continues to decrease as the City uses funds previously distributed. The Capital Projects Fund decrease was largely the result of the use of funds to fund capital outlays on projects. The SFH QalicB fund was created to account for funds for the Salina Field House. 10 Revenues and Expenditures: CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) The following table shows a comparison of revenues and expenditures (including other sources and uses) for major funds for the years ending December 31, 2018 and 2017. Consolidated Statement of Re-.enues and Expenditures for Major Go-.emmental Funds For the years ended December 31 Modified Accrual Basis (in $000's) Fund 2018 2017 Change Re-.enues (Including Other Financing Sources) General $ 41,532 $ 41,864 $ (332) Tourism and Con-.ention 1,795 1,685 110 Special Gas 1,653 1,598 55 Sales Tax Capital 8,225 8,265 (40) Schilling Capital lmprowment 15 12 3 Debt Service 6,602 6,659 (57) Capital Projects 13,555 12, 125 1,430 SFH QalicB 504 248 256 Other Gowrnmental Funds 4, 161 4,067 94 Total Rewnues 78,042 76,523 1,519 Less Other Sources (21,622) (19,924) (1,698) Rewnues, net of other sources $ 56,420 $ 56,599 $ (179) Expenditures (Including Other Finacing Uses) General $ 41,672 $ 40,013 $ 1,659 Tourism and Conwntion 1,550 1,655 (105) Special Gas 1,203 1,328 (125) Sales Tax Capital 8,324 7,848 476 Schilling Capital lmprowment 904 1,049 (145) Debt Service 6,955 6,398 557 Capital Projects 15, 144 4,407 10,737 SFH QalicB 1,001 5,344 (4,343) Other Gowrnmental Funds 4,653 3,399 1,254 Total Expenditures 81,406 71,441 9,965 Less Other Uses (4, 186) (4, 160) (26) Expenditures, net of other uses $ 77,220 $ 67,281 $ 9,939 Total revenues, including other sources, were down $179 thousand compared to 2017, with no funds showing substantial changes between the two years. Total expenditures increased $9.9 million over 2017. The majority of that increase was in the Capital Projects Fund as a result of increased spending on projects, specifically the Downtown Streetscape project. 11 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) Proprietary Funds The City of Salina operates four enterprise funds as well as five internal service funds. A summarized comparative Statement of Net Position follows for each enterprise fund: Corrparative Surrmary Staterrent of Net Posit10n as of Decerrber 31 (1n $000's) Solid Waste Disposal Water and Sew er 2018 2017 Olange 2018 2017 Olange Current Assets $ 6,569 $ 6,709 $ (140) $ 26,338 $ 24,014 $ 2,324 Cap~I Assets 2,350 3,196 (846) 86,535 86,888 (353) Deferred Outflows 72 79 (7) 610 676 (66) Total Assets and deferred outflows $ 8,991 $ 9,984 $ (993) $ 113,483 $ 111,578 $ 1,905 Current Liabilities $ 461 $ 445 $ 16 $ 3,183 $ 3,299 $ (116) Noncurrent Liabilities 2,847 3,272 (425) 27,576 27,440 136 Deferred Inflows 30 30 144 143 Total Liabilities $ 3,338 $ 3,747 $ (409) $ 30,903 $ 30,882 $ 21 Net 1nvestrrent in capital assets $ 1,570 $ 2,041 $ (471) $ 59,502 $ 60,053 $ (551) Restricted 1,512 1,512 l.klrestricted 4,083 4,196 (113) 21,566 19,131 2,435 Total Net Position $ 5,653 $ 6,237 $ (584) $ 82,580 $ 80,696 $ 1,884 wrrent Assets as a percentage ot current habilities 1425% 1508% 827% 728% Sanitation Golf Course 2018 2017 Olange 2018 2017 Olange Current Assets $ 1,747 $ 1,787 $ (40) $ 116 $ 164 $ (48) Cap~I Assets 886 826 60 410 395 15 Deferred Outflows 92 102 (10) 27 32 (5) Total Assets $ 2,725 $ 2,715 $ 10 $ 553 $ 591 $ (38) Current Liabilities $ 106 $ 87 $ 19 $ 64 $ 48 $ 16 Noncurrent Liabilities 684 733 (49) 225 240 (15) Deferred Inflows 38 38 11 11 Total Liabilibes $ 828 $ 858 $ (30) $ 300 $ 299 $ Net investrrent in capital assets $ 886 $ 826 $ 60 $ 410 $ 395 $ 15 Restricted Unrestricted 1,011 1,031 (20) (157) (103) (54) Total Net Position $ 1,897 $ 1,857 $ 40 $ 253 $ 292 $ (39) Current Assets as a percentage of current habilities 1648% 2054% 181% 342% 12 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) Revenues, Expenses, and Changes in Net Position All enterprise funds show healthy results, with all funds reflecting increases in net position. Corrparative Sunmary of Revenues, Expenses and Changes in Net Fbsition for the Year 8lded Decerrber 31 (h $000's) Solid Waste Disposal Water and Sew er 2018 2017 Change 2018 2017 Change Operating Revenues $ 3,116 $ 3,185 $ (69) $ 20,207 $ 19,861 $ 346 Operating Expenses 2,353 2,320 33 14,348 14,721 (373) Operating hcome 763 865 (102) 5,859 5,140 719 Non-operating revenues (expenses) 17 (20) 37 (667) (832) 165 hcome (Loss) before Transfers 780 845 (65) 5,192 4,308 884 Transfers in (out) (690) (540) (150) (3,650) (3,450) (200) Change in Net Fbsition 90 305 (215) 1,542 858 684 Net Fbsition January 1 6,237 5,932 305 80,697 79,838 859 Restatement (674) (674) 341 341 Net Fbsition January 1, restated 5,563 5,932 (369) 81,038 79,838 1,200 Net Fbsition Decerrber 31 $ 5,653 $ 6,237 $ (584) $ 82,580 $ 80,696 $ 1,884 Sanrtation Golf Course 2018 2017 Change 2018 2017 Change Operating Revenues $ 3,006 $ 2,886 $ 120 $ 884 $ 876 $ 8 Operating Expenses 2,419 2,178 241 926 852 74 Operating hcome 587 708 (121) (42) 24 (66) Non-operating revenues (expenses) 11 6 5 661 661 hcome (Loss) before Transfers 598 714 (116) (41) 24 (65) Transfers in (out) (492) (377) (115) Change in Net Fbsition 106 337 (231) (41) 24 (65) Net Fbsition January 1 1,856 1,520 336 292 268 24 Restatement (66) (66) 2 2 Net Fbsition January 1, restated 1,790 1,520 270 294 268 26 Net Fbsition Decerrber 31 $ 1,896 $ 1,857 $ 39 $ 253 $ 292 $ (39) 13 Budgetary Highlights CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) The objective of budgetary controls is to ensure compliance with legal prov1s1ons embodied in the annual appropriated budget approved by the City Commission. The legal level of budgetary control is maintained at the fund level, in accordance with State Statutes. Management control is maintained at the departmental level. Within the departments, considerable discretion is permitted. The City uses an encumbrance accounting system, in which estimated purchase orders are recorded prior to the release of purchase orders to vendors. Open purchase orders are reported as reservations of budgetary basis fund balances at December 31, 2018. Formal budgetary amendments are limited to those circumstances in which the need is perceived to alter the total fund budget. Re- allocation among departments or line items are not typically recorded as budgetary amendments. However, in addition to formal amendments, departments within the City are allowed to transfer budget between line items within a department. Budgets may also be transferred from department to department within each fund. As a result of these transfers, the original budget and the final budgets may not be the same for departments within a fund. Capital Assets and Debt Administration Capital Assets The total amount invested in Capital Assets for the City at December 31, 2018 was $300,696, 162 net of accumulated depreciation. The following table illustrates the Capital Asset balance by various classes of assets at December 31, 2018 and 2017: Capital Asset Balances Net of Depreciation as of December 31 (In OOO's) Business-type Go1.emmental Activity Actiloity Total 2018 2017 2018 2017 2018 Equipment, Furniture and Fixtures $ 2,374 $ 2,040 $ 1,489 $ 1,484 $ 3,863 Vehicles 2,957 3,521 1,208 1,041 4, 165 Buildings and lmpro1.ements 31,759 33,079 8,941 9,362 40,700 Land 24,094 24,093 2,060 1,542 26,154 Land Leased Under Capital Assets 423 423 Infrastructure 116,365 114,958 72,312 75,727 188,677 Leasehold lmpro1.ements 326 326 Construction in Progress 32,217 28,909 4, 171 2, 150 36,388 Total $ 210,515 $206,600 $ 90, 181 $ 91,306 $300,696 -- Changes to capital assets may be summarized as follows: Changes to Capital Assets, 2018 (in OOO's) Additions Retirements Depreciation Go1.emmental Actiloity $ 15,859 (5,898) (5,663) Net Additions $ 4,298 ==~==-- Business-Type Actiloity $ 3,221 (327) (4,113) $ (1,219) Total $ 19,080 (6,225) (9,776) $ 3,079 2017 $ 3,524 4,562 42,441 25,635 190,685 31,059 $297,906 Additional information on the City's capital assets can be found in Note 4,D. of the notes to the basic financial statements. 14 Debt Management CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) The City's general policy for general obligation bonds is to issue them for no more than 10 years for the City at Large portion, with some exceptions permitted for extraordinary projects. On special assessment bonds, the maturity may extend to 15 years. The outstanding general obligation bonds for governmental activities at December 31, 2018 totaled $57,250,888. In addition, there were temporary notes outstanding in the amount of $18,123,505, as well as a financing operating lease in the amount of $845,338. Business-type activities had $11,898,051 in revenue bonds outstanding, as well as $5,557,686 in general obligation bonds. Revenues generated by user fees are pledged to retire all of the bonds issued by business-type activities. In addition, a loan payable is outstanding in the amount of $10,632,351. The City engaged in the following debt transactions during 2018: • On July 30th, the City issued 2018-1, $6,000,000 of temporary notes. The proceeds were used to finance construction to Downtown Streetscape, Police Training Facility Design and 2 special assessment projects. • On November 27th, the City issued 2018-2, $13,500,000 in temporary notes to pay off the 2018-1 notes as well as finance construction of the Downtown Streetscape and Police Training Facility. This note will be partially refinanced into a long term bond issue in 2019 and partially in 2020. • On November 271h, the City issued 2018A, $2,090,000 in General Obligation Bonds to finance construction costs for the Grand Prairie II and River Trail Second Addition special assessment projects, as well as to finance the Beechcraft Road project. • On December 1, 2018, the City issued $18,520,000 in Senior Special Obligation Revenue Bonds and $4,320,000 in Subordinate Special Obligation Revenue Bonds to fund STAR Bond district projects. Additional information on the City's debt can be found in Note 4, E. of the notes to the basic financial statements. Requests for Information This financial report is intended to give the reader a general overview of the City's finances. Questions about information in this report or requests for additional information should be directed to the Director of Finance, Room 206, 300 West Ash Street, Salina, Kansas, 67401. 15 [THIS PAGE INTENTIONALLY LEFf BLANK] BASIC FINANCIAL STATEMENTS CITY OF SALINA, KANSAS STATEMENT OF NET POSITION December31, 2018 Pnma~ Government Total Total Governmental Business-type Activities Act1v1t1es ASSETS AND DEFERRED OUTFLOWS OF RESOURCES Current assets Cash and investments Rece1vabtes (net of aHowance for uncollectrbles) Accounts Taxes Interest Inventory Restncted cash and investments Prepaid expenses Total current assets Noncurrent assets Capital assets, nondeprec1able Construcbon 1n progress Land Capital assets, depreciable Less Accumulated deprec1abon Total noncurrent assets Total assets Deferred outflows of resources KPERS OPEB deferred outflows of resources OPEB deferred outflows of resources Pension deferred outflows of resources Deferred charge on bond issuance Total deferred outflows of resources Total assets and deferred outflows of resources L1ab1hbes Current hab1l1t1es Accounts payable Retamage payable Accrued habdrttes Accrued interest payable Deposits payable Current portion of compensated absences Current portion of temporary notes payable Current portK>n of loans payable Current porlK>n of revenue bonds payable Current porbon of special assessment debt payable Current portion of general obhgat1on bonds payable Total current l1abt1rt1es Noncurrent hab1ht1es Accrued hab1lrt:Jes Compensated absences Secunty deposits returnable Net OPEB obllgatK>n Net KPERS OPES obl1gat1on Net pens10n hab1hty Loans payable Revenue bonds payable Special assessment debt payable General obllgauon bonds payable Landfill post-closure care hab1lrlles Total noncurrent habdrt1es Total hab1lrt1es Deferred mftows of resources Unavailable revenue -property taxes KPERS OPEB deferred mflows of resources Penston deferred 1nftows of resources Total deferred mftows of resources Total hab1llt1es and deferred mftows of resources Net Position Net investment 1n capital assets Restncted for Permanent funds Expendable OebtseMce Unrestncted Total net position 3'1,302, 149 32,140,053 1,951,605 2,148,480 12,744,529 298,248 16 263,000 481,548 1,516,561 51,076,092 34,770 097 32,217,207 4, 171, 178 24,516,33'1 2,059,834 275,280,664 151,140,172 121,498 751 67, 190,476 210,515,454 90,180 708 261,591,546 124,950,805 98,101 42,043 71,407 9,096 5,260,473 533,024 96 738 217 652 5,526,719 801815 $ 267,118,265 $ 125,752,620 1,491,889 3'18,222 846,849 226,977 564,494 107,944 249,3'17 183,858 1,611,375 383,182 18,123,505 527,499 728,696 5,877,280 1,166,063 28,623,336 3,813,844 55,264 1,204,110 286,335 3,093,240 394,062 382,848 164,078 27,918,983 3,114,818 12,185,053 10,104,852 11,169,355 46,091,030 4,116,515 1,981,498 90,930,528 31,331,513 119,553,864 35, 145 357 12,267,726 9,290 3,981 1835545 220 027 14112 561 224 008 $ 133,666,425 35,369,365 $ 144,845,530 62,367,728 514,201 1,851,358 1,512,125 (13,759,249) 26,503,402 $ 133,451,840 90,383,255 The notes to the basic finanaal statements are an integral part of this statement 16 Com~nent Umts Total Sahna Sahna Primary Housing Airport Government Aulhont:i Authon~ 66,442,202 2,004,471 255,390 4, 100,085 12,548 145,403 12,744,529 298,264 744,548 36,351 1,516,561 136,383 42457 7,098 85,846 189 2,232,210 407,891 36,388,385 161,977 8,921 26,576,168 1,454,559 9,965,118 426,420,836 8,403,404 78,425,642 188,689,227 4,834,319 44,538,812 300,696,162 5,185 621 43,860,869 386,542,351 7417831 44,268,760 140,144 4,294 80,503 5,793,497 69,118 111,199 314 390 1,266,357 6,328 534 69,118 1 381,850 $ 392,870,885 7,486,949 45,650,610 1,840,111 48,850 1,086,778 1,073,826 564,494 35,803 73,104 357,291 218,063 183,858 96,092 1,994,557 2,759 18,123,505 527,499 728,696 2,153 7,043,343 1,967,000 32,437, 180 183,504 3,3'17,098 55,264 23,020 1,490,445 24,833 48,680 3,487,302 546,926 8,886 11,126 31,033,801 345,226 605,630 22,289,905 11,169,355 4,901 50,207,545 19,395,792 1,981,498 122,262,041 401,965 20,066, 129 154,699,221 585,469 23,413,227 12,267,726 7,277 69,884 13,271 184 3,964 2,055,572 21346 64,402 14,336,569 28 807 138,250 $ 169,035,790 614,276 23,551,477 $ 207,213,258 5,330,745 22,491,023 514,201 14,718 3,363,483 12,744,153 1,527,210 1391,890) $ 223,835,095 6,872,673 22,099,133 Governmental acttvttles: General government Public safety Public works Pubhc health and samtat1on Culture and recreation Planning and development Interest on long-term debt Total governmental acbV1bes Business-type activities: Solid Waste Disposal Water and Sewer Sanitabon Golf Course Total business-type acbV1l1es Total pnmary government Component units: Salina Housing Authonty Salina Airport Authonty Total component units CITY OF SALINA, KANSAS STATEMENT OF ACTIVITIES For the Year Ended December 31, 2018 Net [Expenses] Revenue and Chan~es in Net Pos1bon P~ram Revenues Pnma~ Government Com~nent Units Operabng Capital Total Total Charges for Grants and Grants and Governmental Business-type Ex~nses Services Contnbutlons Contnbut1ons Act1v1t1es Acllv1t1es $ 12,012,840 3,569,2&4 $ 667,179 $ 4,634,742 $ [3,141,655] 23,891,543 4,815,110 1,134,717 [17,941,716] 10,458,094 284,724 1,872,213 [8,301, 157] 1,256,142 46,990 266,676 [942,476] 7,039,683 1,544,676 200,676 [5,294,331] 2,369,562 149,8&4 158,041 [2,061,657] 2,117,439 [2, 117 ,439] 59,145,303 10,410,628 4,299,502 4,634,742 [39,800,431] 2,382,082 3,097,271 715,189 15,190,160 20,202,022 5,011,862 2,418,930 3,005,740 586,810 926,287 755,655 [170,632) 20,917,459 27,060,688 6,143,229 $ 80,062,762 $37,471,316 $ 4,299,502 41634,742 [39,800,431) 6,143,229 2,604,085 335,160 $ 2,027,232 117,316 6,019,332 2,499,892 1,474,356 8,6231417 $ 2,835,052 $ 2,027,232 $ 1,591,672 General Revenues: Property taxes levied for General purposes 8,623,057 Debt service 2,456,875 Motor vehicle tax General purposes 1,428,001 Sales tax General purposes 13,292,626 Selective purposes 8,916,814 Other taxes General purposes 7,240,099 Investment revenues 182,895 233,355 M1sceHaneous 1,061,810 152,814 Transfers, net 4,831,500 [4,831,500) Subtotal general revenues 48,033,677 [4,445,331] Change 1n net pos1bon 8,233,246 1,697,898 Net pos1bon -beginning 123,700,850 89,082,816 Pnor penod adjustment 1,517,744 [397,459) Net poS1bon -beginning, restated 125,218,594 88,685,357 Net posltlon -ending $ 133,451,840 $ 90,3831255 The notes to the basic financial statements are an integral part of this statement 17 Total Salina Salina Pnmary Housing Airport Government Authon!)'. Authon!)'. $ [3,141,655] [17,941,716] [8,301, 157] [942,476] [5,294,331] [2,061,657] [2, 117 ,439) ---- [39,800,431) ---- 715,189 5,011,862 586,810 [170,632) ---- 6,143,229 ---- [33,657,202) ---- [124,377] [2,045,084) [124,377) [2,045,084) 8,623,057 2,338,967 2,456,875 1,428,001 13,292,626 8,916,814 7,240,099 416,250 15,124 3,745 1,214,624 12,543 5,375 ---- 43,588,346 27,667 2,348,087 9,931,144 [96,710) 303,003 212, 783,666 6,976,479 21,808,184 1,120,285 [Z,096) [12,054) 213,903,951 6,969,383 21,796,130 $ 223,835,095 ~ $22,099,133 CITY OF SALINA, KANSAS BALANCE SHEET GOVERNMENTAL FUNDS December31, 2018 Tourism and Special Sales Tax General Convention Gas Capital ASSETS Cash and investments $ 5,210,942 $ 853 $ 1,266,574 $ 2,263,217 Restricted cash Receivables (net) Accounts 1,492,279 457,529 Taxes 9,749,815 320,324 Interest 298,248 Inventory 151,514 Due from other funds 24,544 Total assets $ 16,927,342 $ 458,382 $ 1,586,898 $ 2,263,217 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable $ 542,039 $ -$ 26,383 $ 121,237 Retainage payable 28,056 157,656 Temporary notes payable Due to other funds Total liabilities 542,039 54,439 278,893 Deferred inflows of resources Unavailable revenue -property taxes 9,576,319 Unavailable revenue -other 66,407 Total deferred inflows of resources 9,642,726 Fund balance: Nonspendable 151,514 Restricted 458,382 1,359,237 Committed 1,436,972 Assigned 340,106 173,222 547,352 Unassigned 6,250,957 Total fund balances 6,742,577 458,382 1,532,459 1,984,324 Total liabilities, deferred inflows of resources and fund balances $ 16,927,342 $ 458,382 $ 1,586,898 $ 2,263,217 Schilling Other Total Capital Debt Capital SFH Governmental Governmental Improvement Service Projects QalicB Funds Funds $ $ $ $ 2,151,875 $ 1,801,968 $ 13,270,861 $ 7,663 $ 4,033,111 $ 30,007,064 1,516,561 1,516,561 494,287 1,797 2,445,892 2,674,390 12,744,529 298,248 151,514 196,939 221,483 2,151,875 $ 4,476,358 $ 13,467,800 $ 2,018,511 $ 4,034,908 $ 47,385,291 15,749 $ -$ 352,630 $ 243,131 $ 149,019 $ 1,450,188 300,662 360,475 846,849 13,508,505 13,508,505 196,939 24,544 221,483 15,749 14,161,797 800,545 173,563 16,027,025 2,625,000 12,201,319 66,407 2,625,000 12,267,726 151,514 1,851,358 978,694 4,647,671 1,955,918 133,122 1,217,966 2,581,440 7,325,418 180,208 325,755 1,566,643 [827,119) [24,544) 5,399,294 2,136,126 1,851,358 [693,997) 1,217,966 3,861,345 19,090,540 2,151,875 $ 4,476,358 $ 13,467,800 $ 2,018,511 $ 4,034,908 $ 47,385,291 The notes to the basic financial statements are an integral part of this statement. 18 CITY OF SALINA, KANSAS RECONCILIATION OF THE TOTAL GOVERNMENTAL FUND BALANCE TO NET POSITION OF GOVERNMENTAL ACTIVITIES December 31, 2018 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 as 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 as a revenue in the funds and as a deferred inflow of resources in the governmental activities in the statement of net position. Certain intrafund transactions have been elimniated between the City's primary funds and the QALICB blended component unit. 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 Temporary notes payable Bonds payable Loans payable 331,845,971 121,346, 178 2,756,097 3,470,619 27,764,434 4,615,000 51,968,310 12,185,053 $ 19,090,540 96,738 210,499,793 5,403,295 [1,833,402] [494,287] 3,556,620 Accrued interest on the bonds 107,944 [102,867,457] Net Position of Governmental Activities The notes to the basic financial statements are an integral part of this statement. 19 $ 133,451,840 [THIS PAGE INTENTIONALLY LEFf BLANK] CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS For the Year Ended December 31, 2018 Tourism and Special Sales Tax General Convention Gas Capital REVENUES: Taxes Real estate taxes $ 8,409,449 $ -$ -$ Delinquent taxes 213,608 Motor vehicle taxes 1,120,440 General sales taxes 13,292,626 Selective sales taxes 8,203,532 Other taxes 5,444,880 1,795,219 Intergovernmental 1,144,717 1,446,395 Special assessments Licenses and permits Charges for services 6,366,094 Investment revenue 45,477 5 7,234 21,363 Donations Miscellaneous 452,916 39,146 Total revenues 36,490,207 1,795,224 1,492,775 8,224,895 EXPENDITURES: Current General government 5,648,579 Public safety 22,952,925 Public works 5,350,056 468,535 Public health and sanitation 793,780 Culture and recreation 4,494,713 Planning and development 766,471 737,957 Miscellaneous Capital outlay 860, 115 734,079 5,755,835 Debt service Principal retirement Interest and other charges Total expenditures 40,866,639 737,957 1,202,614 5,755,835 Excess [deficiency] of revenue and other sources over [under] expenditures and other [uses] [4,376,432) 1,057,267 290,161 2,469,060 OTHER FINANCING SOURCES [USES] Issuance of bonds Issuance of temporary notes Bond premium Capital contribution Transfers in 5,041,500 160,000 Transfers [out] [805,000) [812,346) [2,568,350) Total other financing sources [uses] 4,236,500 [812,346) 160,000 [2,568,350) Net change in fund balance [139,932) 244,921 450,161 [99,290) Fund balance -Beginning of year 6,882,509 213,461 1,082,298 2,083,614 Prior period adjustment Fund balance -Beginning of year, restated 6,882,509 213,461 1,082,298 2,083,614 Fund balance -End of year $ 6,742,577 $ 458,382 $ 1,532,459 $ 1,984,324 Schilling Other Total Capital Debt Capital SFH Governmental Governmental Improvement Service Projects QalicB Funds Funds $ -$ 2,394,143 $ -$ -$ -$ 10,803,592 62,732 276,340 307,561 1,428,001 13,292,626 713,282 8,916,814 7,240,099 423,318 1,282,570 4,297,000 1,545,758 1,545,758 2,500 2,500 492,917 479,229 7,338,240 15,186 21,230 10,707 36,190 157,392 237,660 237,660 336,904 55,048 884,014 15, 186 4,331,424 760,222 503,624 2,806,479 56,420,036 5,648,579 22,952,925 343,811 6,162,402 442,359 1,236,139 1,760,504 6,255,217 38,678 641,823 2,184,929 35 35 903,638 6,759,029 761,892 569,901 16,344,489 5,252,865 8,180,000 810,000 14,242,865 1,702,255 204,886 200,044 84,535 2,191,720 903,638 6,955,120 15,143,915 1,000,614 4,652,968 77,219,300 [888,452) [2,623,696) [14,383,693) [496,990) [1,846,489) [20,799,264) 2,090,000 2,090,000 6,000,000 6,000,000 69,837 69,837 4,634,742 4,634,742 2,270,782 1,354,914 8,827,196 [4, 185,696) 2,270,782 12,794,579 1,354,914 17,436,079 [888,452) [352,914) [1,589, 114) [496,990) [491,575) [3,363, 185) 3,024,578 1,509,863 895, 117 1,714,956 4,352,920 21,759,316 694,409 694,409 3,024,578 2,204,272 895,117 1,714,956 4,352,920 22,453,725 $ 2,136,126 $ 1,851,358 $ [693,997) $ 1,217,966 $ 3,861,345 $ 19,090,540 The notes to the basic financial statements are an integral part of this statement. 20 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, 2018 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 Capital outlays Depreciation expense Interest on long-term debt in the statement of activities differs from the amount reported in the governmental funds because interest is recorded as an expenditure in the funds when it is due, and thus requires the use of current financial resources. In the statement of activities, however, interest expense is recognized as the interest accrues, regardless of when it is due. This is [4,493] 10,493,901 [6, 183,227] $ [3,363, 185] 4,306,181 the amount by which interest decreased. 74,281 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. 1, 197,416 Certain intrafund transactions have been eliminated between the City's primary funds and the QALICB blended component unit. [370,373] 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. [87,828] Pension payments are reported as expenditures in the governmental funds and do not affect the statement of net activities. 38,061 Bond, temporary note, loan 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. [7,978,572] 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. 14,417 ,265 Changes In Net Position of Governmental Activities $ 8,233,246 The notes to the basic financial statements are an integral part of this statement. 21 Revenues Taxes Real estate taxes Delinquent taxes Motor vehicle taxes General sales tax Other taxes Intergovernmental Charges for services Investment revenue Miscellaneous Total revenues Expenditures General government Pu bile safety Public works Public health and sanitation Culture and recreation Planning and development Capital outlay 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 balance, January 1 Prior year cancelled encumbrances 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, 2018 Budgeted Amounts Actual Original Final $ 8,409,449 $ 8,625,000 $ 8,625,000 213,608 180,000 180,000 1, 120,631 1,090,219 1,090,219 13,292,626 13,427,924 13,427,924 5,444,880 6,980,396 6,980,396 1,144,717 1,202,000 1,202,000 5,585,009 5,302,753 5,302,753 52,956 452,920 450,175 450,175 35,716,796 37,258,467 37,258,467 5,270,589 3,566,591 3,566,591 22,864,626 21,199,918 21,199,918 5,350,076 5,656,606 5,656,606 793,780 4,612,107 5,207,030 5,207,030 766,471 1,960,187 1,960,187 1,076,672 1,750,000 1,750,000 40,734,321 39,340,332 39,340,332 [5,017,525) [2,081,865) [2,081,865) 5,041,500 3,390,000 3,390,000 [805,000) [2,892,809) [2,892,809) 4,236,500 497,191 497, 191 [781,025) [1,584,674) [1,584,674) 5,067,124 1,584,674 1,584,674 835 Unreserved fund balance, December 31 4,286,934 $ -$ - Reconcillat1on to GAAP Interest receivable Accounts receivable Taxes receivable Inventory Deferred revenue Current year encumbrances GAAP Fund Balance, December 31 298,248 1,492,279 9,749,815 151,514 [9,576,319) 340,106 $ 6,742,577 See independent auditor's report on the financial statements. 22 Vanance with Final Budget Pos1t1ve [Negative] $ [215,551] 33,608 30,412 [135,298) [1,535,516) [57,283) 282,256 52,956 2,745 [1,541,671) [1,703,998) [1,664, 708) 306,530 [793,780] 594,923 1,193,716 673,328 [1,393,989) [2,935,660] 1,651,500 2,087,809 3,739,309 803,649 3,482,450 835 $ 4,286,934 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, 2018 Budgeted Amounts Actual Original Final Revenues Other taxes $ 1,814,240 $ 1,639,980 $ 1,814,240 Investment revenue 5 180 Total revenues 1,814,245 1,640,160 1,814,240 Expenditures Planning and development 737,956 893,000 1,001,894 Total expenditures 737,956 893,000 1,001,894 Excess [deficiency] of revenues over [under] expenditures 1,076,289 747,160 812,346 Other financing sources [uses] Transfers [out] [812,346] (685,000] (812,346] Total other financing sources [uses] [812,346] (685,000] [812,346] Excess (deficiency] of revenues and other sources over [under] expenditures and other [uses] 263,943 62,160 Unreserved fund balance, January 1 (263,090] 113,974 847 Unreserved fund balance, December 31 853 $ 176,134 $ 847 Reconciliation to GAAP Accounts receivable 457,529 GAAP Fund Balance, December 31 $ 458,382 See independent auditor's report on the financial statements. 23 Variance with Final Budget Positive [Negative] $ 5 5 263,938 263,938 263,943 263,943 (263,937] $ 6 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, 2018 Budgeted Amounts Actual Original Final Revenues Intergovernmental $ 1,448,959 $ 1,406,420 $ 1,406,420 Miscellaneous 39,146 Investment revenue 7,234 6,000 6,000 Total revenues 1,495,339 1,412,420 1,412,420 Expenditures Public works 468,535 486,959 486,959 Capital outlay 897,350 946,243 946,243 Total expenditures 1,365,885 1,433,202 1,433,202 Excess [deficiency] of revenues over [under] expenditures 129,454 [20,782] [20,782] Other financing sources [uses] Transfers in 160,000 160,000 160,000 Total other financing sources [uses] 160,000 160,000 160,000 Excess [deficiency] of revenues and other sources over [under] 289,454 139,218 139,218 expenditures and other [uses] Unreserved fund balance, January 1 749,459 512,412 512,412 Unreserved fund balance, December 31 1,038,913 $ 651,630 $ 651,630 Reconciliation to GAAP Taxes receivable 320,324 Current year encumbrances 173,222 GAAP Fund Balance, December 31 $ 1,532,459 See independent auditor's report on the financial statements. 24 Variance with Final Budget Positive [Negative] $ 42,539 39, 146 1,234 82,919 18,424 48,893 67,317 150,236 150,236 237,047 $ 387,283 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GMP BASIS) SALES TAX CAPITAL FUND For the Year Ended December 31, 2018 Budgeted Amounts Actual Original Final Revenues Taxes Selective sales taxes $ 8,203,531 $ 8,043,656 $ 8,269,993 Investment revenue 21,363 5,000 5,000 Total revenues 8,224,894 8,048,656 8,274,993 Expenditures Capital outlay 5,934,357 4,620,500 6,470,500 Total expenditures 5,934,357 4,620,500 6,470,500 Excess [deficiency] of revenues over [under] expenditures 2,290,537 3,428,156 1,804,493 Other financing sources [uses] Transfers [out] [2,568,350] [3,750,000] [2,500,000] Total other financing sources [uses] [2,568,350] [3,750,000] [2,500,000] Excess [deficiency) of revenues and other sources over [under] expenditures and other [uses] [277,813) [321,844) [695,507) Unreserved fund balance, January 1 1,658,876 785,304 1,797,359 Prior year cancelled encumbrances 55,909 Unreserved fund balance, December 31 1,436,972 $ 463,460 $ 1,101,852 Reconciliation to GMP Current year encumbrances 547,352 GMP Fund Balance, December 31 $ 1,984,324 See independent auditor's report on the financial statements. 25 Variance with Final Budget Positive [Negative] $ [66,462) 16,363 [50,099] 536,143 536,143 486,044 [68,350] [68,350] 417,694 [138,483) 55,909 $ 335,120 CITY OF SALINA, KANSAS STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31 , 2018 Business-Type Activrbes Ente!E:rise Funds Sohd Waste Water and Assets and deferred outflows of resources Dis~sal Sewer Sanitabon Golf Course Current assets Cash and investments $ 6,379,586 $ 24,185,482 $1,493,590 $ 81,395 Receivables (net of allowance for uncollectrbles) Accounts 189,486 1,705,202 253,792 Interest 16 Inventory and prepaid supplies 447 071 34,477 Total current assets 6,569,088 26,337,755 1,747,382 115,872 Capital assets Nondepreciable capital assets. Construction in progress 4,171,178 Land 682,000 1,362,834 15,000 Depreciable capital assets Capital assets 11,313,026 136,225,697 2,388,377 1,213,072 Less accumulated depreciation 9,644,947 55,224,969 1,502,563 817,997 Total capital assets 2,350,079 86,534,740 885,814 410,075 Total assets 8,919,167 112,872,495 2,633,196 525,947 Deferred outflows of resources KPERS OPEB deferred outflows of resources 4,204 28,029 7,007 2,803 OPEB deferred outflows of resources 1,113 5,744 1,723 516 Pension deferred outflows of resources 66,559 359,237 83,106 24,122 Deferred charge on bond issuance 217 652 Total deferred outflows of resources 71,876 610,662 91,836 ~ Total assets and deferred outflows of resources $ 81991,043 $113,483,157 $ 2,725,032 $ 553,388 Lrabrhties and deferred innows of resources Current liabihbes Accounts payable $ 24,243 279,295 $ 25,454 $ 19,230 Retarnage payable 226,977 Interest payable 5,975 243,372 Meter deposits payable 183,858 Current portK)n of compensated absences payable 40,428 217,595 80,342 44,817 Current portion of accrued claims payable Current portion of loans payable 527,499 Current porbon of general obligation bonds payable 390,000 776,063 Current portion of revenue bonds payable 728 696 Total current habilltres 460,646 3,183,355 105,796 64,047 Noncurrent liabrlitres Compensated absences payable 30,210 162,598 60,037 33,490 Accrued claims payable Net OPEB obhgation 48,232 248,841 74,624 22,365 Net KPERS OPEB obhgation 16,408 109,385 27,346 10,939 Net pension liabrhty 380,308 2,054,012 522,400 158,098 Payable from restncted assets Loans payable 10,104,852 General obligation bonds payable 390,000 3,726,515 Revenue bonds payable 11,169,355 Landfill post-closure care liabilities 1,981,498 Total noncurrent hab1l1bes 2,846,656 27,575,558 684,407 224,892 Total liabrhtres 3,307,302 30,758,913 790,203 288,939 Deferred inflows of resources KPERS OPEB deferred inflows of resources 398 2,654 664 265 Pension deferred inflows of resources 29,965 141,462 37,524 ----1.!.,QZ£ Total deferred innows of resources 30,363 144116 38,188 ~ Total habilrbes and deferred inflows of resources $ 3,337,665 $ 30,903,029 $ 828,391 ~ Net positron Net investment rn capital assets $ 1,570,079 $ 59,501,760 $ 885,814 $ 410,075 Restncted Restricted for bond retirement 1,512,125 Unrestncted 4,083,299 21,566,243 1,010,827 ~ Total net position $ 5,653,378 $ 82,580,128 $1,896,641 $ 253, 108 The notes to the basic financial statements are an integral part of !hrs statement 26 Total Internal Enterprise Service Funds Funds $ 32,140,053 $4,295,085 2, 148,480 16 481,548 111,486 34,770,097 4,406,571 4,171,178 2,059,834 151,140,172 168,234 67,190,476 152,573 90,180,708 15,661 124,950,805 4,422,232 42,043 1,401 9,096 533,024 25,285 217,652 801,815 26,686 $ 125,752,620 $4,448,918 $ 348,222 $ 41,701 226,977 249,347 183,858 383,182 33,989 564,494 527,499 1,166,063 728,696 3,813,844 640,184 286,335 25,399 55,264 394,062 164,078 5,469 3,114,818 154,549 10,104,852 4,116,515 11,169,355 1,981,498 31,331,513 240,681 35,145,357 880,865 3,981 133 220,027 11,300 224,008 11433 $ 35,369,365 $ 892,298 $ 62,367,728 $ 15,661 1,512,125 26,503,402 3,540,959 $ 90,383,255 $3,556,620 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the Year Ended December 31, 2018 Business-Type Activities: Ente!Erise Funds Solid Waste Water and Dis[!osal Sewer Sanitation Golf Course Operating revenues Charges for services $ 3,097,271 $ 20,202,022 $ 3,005,740 $ 755,655 $ Miscellaneous 18,894 5,101 128,819 Total operating revenues 3, 116, 165 20,207,123 3,005,740 884,474 Operating expenses General government Public works 1,506,857 11,023,621 2,256,647 Recreation 890,552 Depreciation 846,019 3,324,365 162,283 35,735 Total operating expenses 2,352,876 14,347,986 2,418,930 926,287 Operating income [loss] 763,289 5,859,137 586,810 [41,813) Nonoperating revenues [expenses] Investment revenue 46,505 175,346 10,882 622 Interest expense [29,206] [835,262] Accretion of bond premium 11,560 Amortization of bond issuance costs [18,472) Total nonoperating revenues [expenses] 17,299 [666,828) 10,882 622 Income [loss] before transfers 780,588 5,192,309 597,692 [41,191) Transfers from [to] other funds Transfers in Transfers [out] [690,000) [3,650,000J [491,500) Total transfers [690,000) [3,650,000J [491,500) Change in net position 90,588 1,542,309 106,192 [41,191] Net posrt1on, January 1 6,237,212 80,696,866 1,856,553 292,185 Prior penod adjustment [674,422) 340,953 [66,104) 2,114 Net pos1t1on, January 1, restated 5,562,790 81,037,819 1,790,449 294,299 Net position, December 31 $ 5,653,378 $ 82,580,128 $1,896,641 $ 253,108 $ The notes to the baste financial statements are an integral part of this statement 27 Total Internal Enterprise Service Funds Funds 27,060,688 $8,747,300 152,814 73,258 27,213,502 8,820,558 7,830,946 14,787,125 890,552 4,368,402 7 699 20,046,079 7,838,645 7,167,423 981,913 233,355 25,503 [864,468] 11,560 [18,472) [638,025) 25,503 6,529,398 1,007,416 190,000 [4,831,500) [4,831,500) 190,000 1,697,898 1,197,416 89,082,816 2,363,597 [397,459) [4,393) 88,685,357 2,359,204 90,383,255 $ 3,556,620 CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2018 Business-Type Activities Ente!Erise Funds Sohd Waste Water and Dis~osal Sewer Sanitation Golf Course Cash flows from operating activities Cash received from customers and users $3,101,871 $19,995,276 $2,970,093 $ 755,655 Cash paid to suppliers of goods or services [902,799) [7,214,728] [1,313,103) [386,081] Cash paid to employees [606,310) (3,951,533) (939,329) (502,013) Other operating receipts 18,894 5,101 128,819 Net cash provided by [used in) operating activities 1,611,656 8,834,116 717,661 [3,620) Cash flows from capital and related financing act1v1t1es Purchase and construction of capital assets (2,783,648] (312,009) (52,880] Proceeds from loans 2,354,809 Principal payments -loans [585,268] Principal payments -general obligation bonds (375,000] [752,342) Principal payments -revenue bonds [705,000) Interest paid [34,168) [817,579) Net cash provided by [used in] capital and related financing activities [409,168) [3,289,028] [312,009) [52,880) Cash flows from investing activities Interest received 46,505 175,346 10,882 622 Cash flows from noncapital financing activities Transfers in Transfers [out] [690,000J [3,650,000) [491,500) Net cash provided by [used 1n) noncapital financing activities [690,000) [3,650,000) [491,500) Net increase [decrease] in cash and cash equivalents 558,993 2,070,434 [74,966) [55,878) Cash and cash equivalents, January 1 6,515,002 22,115,048 1,568,556 137,273 Prior period adjustment [694,409) Cash and cash equivalents, January 1, restated 5,820,593 22,115,048 1,568,556 137,273 Cash and cash equivalents, December 31 $6,379,586 $ 24, 185,482 $1,493,590 $ 81,395 The notes to the basic financial statements are an integral part of this statement. 28 Total Internal Enterprise Service Funds Funds $ 26,822,895 $8,749,455 (9,816,711) [7,495,431) (5,999,185) (297,532] 152,814 73,257 11,159,813 1,029,749 [3, 148,537] 2,354,809 [585,268] [1, 127,342) (705,000) [851,74IJ [4,063,085) 233,355 25,503 190,000 [4,831,500) [4,831,500) 190,000 2,498,583 1,245,252 30,335,879 3,049,833 [694,409) 29,641,470 3,049,833 $ 32, 140,053 $4,295,085 CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (Continued) For the Year Ended December 31 , 2018 Business-Type Activities: Enterprise Funds Total Internal Solid Waste Water and Enterprise Disposal Sewer Sanitation Golf Course Funds Reconciliation of operating [loss] income to net cash provided by [used in] operating activities Operating income [loss] $ 763,289 $ 5,859,137 $ 586,810 $ [41 ,813] $ 7, 167,423 Adjustments to reconcile operating income [loss] to net cash provided by [used in] operating activities Depreciation expense 846,019 3,324,365 162,283 35,735 4,368,402 [Increase] decrease in accounts receivable 4,600 [214,490] [35,647] [245,537] [Increase] decrease in inventory [38,509] [7,787] [46,296] [Increase] decrease in deferred outflows 6,593 46,400 10,214 3,995 67,202 Increase [decrease] in accounts payable [642] [255,816] 6,779 9,866 [239,813] Increase [decrease] in retainage payable 216,296 216,296 Increase [decrease] in accrued compensated absences 7,756 602 12.440 6,372 27,170 Increase [decrease] in claims payable Increase [decrease] in net pension liability [22,019] [148,227] [35,024] [13,522] [218,792] Increase [decrease] in net KPERS OPEB obligation 3,230 21 ,534 5,383 2,154 32,301 Increase [decrease] in net OPEB obligation 2,507 12,934 3,879 1,162 20,482 Increase [decrease] in meter deposits payable 7,744 7,744 Increase [decrease] in deferred inflows 323 2,146 544 218 3,231 Net cash provided by [used in] operating activities $ 1,611 ,656 $ 8,834, 116 $ 717,661 $ [3,620) $11 ,159,813 The notes to the basic financial statements are an integral part of this statement. 29 $ Service Funds 981,913 7,699 53,639 4,554 [16,189] 5,818 2,154 [11,010] 1,076 95 $ 1,029,749 ASSETS Cash and investments Total assets CITY OF SALINA, KANSAS STATEMENT OF ASSETS AND LIABILITIES AGENCY FUNDS December 31, 2018 LIABILITIES AND FUND BALANCES Liabilities Accounts payable Total liabilities The notes to the basic financial statements are an integral part of this statement. 30 $ 312,065 $ 312,065 $ 312,065 $ 312,065 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 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 (see note below for descriptions) to emphasize that it is legally separated from the government. The blended component unit is reported as a governmental fund of the City (see note below for description) to emphasize that it is a part of the city. 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, 2018. Blended Component Unit Salina Field House Qualified Active Low-Income Community Business, Inc. (SFH QalicB) -SFH QalicB was created to function as a qualified low-income community business, as defined in Section 45D(d)(2) of the Internal Revenue Code of 1986 for the purpose of providing an indoor sports facility in the downtown corridor of the city of Salina. The purpose of the facility is to cater to local residents as well as host regional sports tournaments with the anticipation of becoming a regional destination for youth athletics. This mix of participation is expected to provide the most consistent visitation and tourism for the downtown district. The SFH QalicB is managed and controlled by a five-member Board of Directors appointed by the Salina City Commission. The field house is staffed by City of Salina employees. SFH QalicB has a December 31 fiscal year end. SFH QalicB is a not-for-profit organization exempt from income tax under Section 501(c)(3) of the Internal Revenue Code and is exempt from similar state and local taxes. 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 Salina Field House QALICB, Inc. 300 W. Ast St. 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. 31 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) A. Reporting Entity (Continued) Joint Ventures (Continued) Total unencumbered cash, December 31, 2018 Total change in unencumbered cash, year ended December 31, 2018 Total cash receipts, year ended December 31, 2018 Total cash receipts from City of Salina (Kansas Regulatory Basis) Building $ Authority (Audited) 1,294,585 121,544 2,417,371 478, 114 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. 32 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December31, 2018 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) 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. 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 58% of the .75 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. 33 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) 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. SFH QalicB fund -To account for the activities of Salina Field House Qualified Active Low-Income Community Business, Inc. as a component unit blended into the financial statements. 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. Properly 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 2019. It is not practicable to apportion delinquent taxes held by the County Treasurer at the end of the accounting period, and further, the amounts thereof are not material in relationship to the financial statements taken as a whole. 34 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities and Equity (Continued) 2. Receivables and Payables (Continued) The determination of assessed valuations and the collection of property taxes for all political subdivisions in the State of Kansas are the responsibility of the various counties. The County Appraiser annually determines assessed valuations on January 1 and the County Clerk spreads the annual assessment on the tax rolls. The County Treasurer is the tax collection agent for all taxing entities within the County. In accordance with state statutes, property taxes levied during the current year are a revenue source to be used to finance the budget of the ensuing year. Property taxes are levied and liens against property are placed on November 1 of the year prior to the fiscal year for which they are budgeted. Payments are due November 1, becoming delinquent, with penalty, December 21. Payments of 50% are accepted through December 20, with the second 50% then being due on or before May 10 of the following year. This procedure eliminates the need to issue tax anticipation notes since funds will be on hand prior to the beginning of each fiscal year. The City Treasurer draws down all available funds from the County Treasurer's office in two-month intervals. Taxes remaining due and unpaid at February 15 and July 1 are subject to collection procedures prescribed in state statutes. 3. Inventories and Prepaid Items Inventories are valued at cost using the first-in/first-out (FIFO) method. The costs of governmental fund-type inventories are recorded as expenditures when consumed. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. 4. Capital Assets Capital assets, which include property, plant, equipment and infrastructure assets, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. Capital assets used in governmental fund types of the City are recorded at cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at their estimated fair value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the assets or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type is included in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. Property, plant and equipment of the primary government, are depreciated using the straight-line method over the following estimated useful lives: Assets Buildings Other equipment Vehicles Infrastructure 35 Years 50 5-15 6-10 30-50 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 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. Temporarv Notes Upon authorization for the issuance of general obligation bonds for certain improvements, Kansas law permits the temporary financing of such improvements by the issuance of temporary notes. Temporary notes issued may not exceed the aggregate amount of bonds authorized, are interest bearing and have a maturity date not later than four years from the date of issuance of such temporary notes. Temporary notes outstanding are retired from the proceeds of the sale of general obligation bonds. 7. Long-term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 36 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 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: Major Go1emmental Funds Tounsm Sch1lhng Other Total and Special Sales Tax Capital Debt Capital SFH Gowmmental Gowmmental General Conwnt1on Gas Capt I al lmE!!t.ement SeN1ce Projects Qal1cB Funds Funds Fund Balances Nonspendable for liwntory $ 151,514 $ $ $ $ $ s 151,514 Restncted for. Public wor1<s 1,359,237 1,359,237 Pubhc health and sanitation 234 234 Culture and recreation 122,447 122,447 Planning and de\elopment 458,382 222,360 680,742 Debt payments 1,851,358 633,653 2,485,011 Commrtted for Public safety 192,399 192,399 Culture and recreation 475,773 475,773 Planning and dewlopment 1,217,966 147,250 1,365,216 Cemetery 508,366 508,366 Capital impro1ements 1,436,972 1,955,918 133,122 1,257,652 4,783,664 Assigned for General gowmment 20,250 20,250 Public safety 33,216 175,681 208,897 Pubhc 'NOrks 9,000 9,000 Culture and recreation 5,404 150,074 155,478 Capital improwments 272,236 173,222 547,352 180,208 1, 173,018 Unassigned 6,250,957 (827,119] ---(24,544) 5,399,294 Total Fund Balances ~ ~ ~ ~ ~ ~ ~~ s 3,861,345 s 19,090,540 37 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 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, changes in the pension and OPEB plan liability proportion and assumptions, net difference between projected and actual earnings on pension plan and OPEB plan investments and differences between pension and OPEB plan liability expected and actual experience are reported 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, differences between expected and actual experience, changes in assumptions, and changes in the pension liability and OPEB plan proportion are reported as deferred inflows. 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. 38 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 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 2018 budget was amended for the Tourism and Convention Fund, Debt Service Fund and Golf Course 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, the SFH QalicB fund, non-major debt service funds, trust funds, and the following special revenue funds: Community Development Revolving, Downtown TIF District #1, South 9th CID, State Grants, 911 Communications, Kenwood Cove Capital, Special Law Enforcement, Police Grants, Federal Grants, DARE Donations, War Memorial Maintenance, Federal CARE Grant, Police Department Federal Forfeiture, Homeowners' Assistance, Private Grants 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, 2018 in the Bicentennial Fund, Business Improvement District Fund and Special Parks and Recreation 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, 2018, the statutory limit for the City was $146,336,377, providing a debt margin of $78,095,920. 39 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December31, 2018 Note 3. RESTATEMENT OF EQUITY Note 4. A. The City implemented GASB 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions for the KPERS and health insurance postemployment benefits for the year ended December 31, 2018. Additionally, following the close of the previous fiscal year, it was discovered that several capital assets were misclassified or incorrectly recorded and that a portion of the City's long-term liabilities had been misclassified between funds. According, the beginning net position/fund balances were restated, the effects of which are as follows: Debt Solid Waste Water and Central Governmental Service Disposal Sewer Samtalion Golf Course Garage Activities EYlli! EYlli! Fund EYlli! .E!mQ Fund Net Position/Fund Balance, $ 123,700,850 $ 1,509,863 $ 6,237,212 $ 80,696,866 $ 1,856,553 $ 292,185 $ 10,853 December 31, 2017 Capital Asset Adjustment [382,983) 187,181 [89,654) [2,514) Adoption of GASB 75 1,308,967 19,987 51,123 23,550 4,628 [4,393) Long-term Liabht1es Adjustment 591 760 694,409 [694,409) 102,649 Net Position/Fund Balance, December 31, 2017, Restated $ 125,218,594 $ 2,204,272 $ 5,562,790 $ 81,037,819 $ 1,790,449 $ 294,299 $ 6,460 DETAILED NOTES ON ALL FUNDS Deposits and Investments The City's cash is considered to be active funds by management and is invested according to KSA 9-1401. The statute requires that banks eligible to hold active funds have a main or branch bank in the county in which the City is located or in a county adjacent to the City and the banks provide an acceptable rate for active funds. Various City investments are considered to be idle funds by management and are invested according to KSA 12-1675. The statute requires that the City invest its idle funds in only temporary notes of the City, bank certificates of deposit, repurchase agreements, and if eligible banks do not offer an acceptable rate for the funds: U.S. Treasury bills or notes or the Municipal Investment Pool (KMIP). Maturities of the above investments may not exceed two years by statute. Some of the City's investments are of bond proceeds invested pursuant to KSA 10-131. This statute allows additional investment authority beyond that of KSA 12-1675. Investments of bond proceeds may follow KSA 12-1675 or include other investments such as the KMIP, direct obligations of the U.S. government or any agency thereof, investment agreements with a financial institution the obligations of which at the time of investment are rated in either of the three highest rating categories by Moody's investors service or Standard and Poor's corporation, and various other investments as specified in KSA 10-131. At December 31, 2018, the City has the following investments: ln1.estment Type Fair Value Kansas Municipal ln1.estment Pool $ 311,705 S&P AAAf/S1+ Total fair value $ 311,705 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. 40 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) A. Deposits and Investments (Continued) 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. As of December 31, 2018 the City's deposits were considered fully secured. Restricted cash is comprised of a construction account, an interest reserve account (the "Interest Reserve"), and an expense reserve account (the "Operating Reserve") related to the SFH QalicB blended component unit. The Interest Reserve and the Operating Reserve accounts are available as part of the loans payable financing (see Note 4E). As of December 31, 2018, the balance of the construction account, Interest Reserve, and Operating Reserve was $1,029,223, $361,543, and $125,795, respectively. 41 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) B. Receivables Receivables as of year-end, including the applicable allowances for doubtful accounts, are as follows: Primary Government Receivables Accounts Taxes nterest Gross receivables Less allowance for uncollect1bles Total Pnmary Government Receivables Accounts Taxes nterest Gross receivables Less allowance for uncollect1bles Total Component Un~s Salina Airport Authomy Accounts Less alowance foruncollect1bles Total Salina Airport Authonty Salina Housing Authority Accounts Less· allowance foruncollect1bles nterest Total Salina Housing Authority Total General $ 6,847,561 9,749,815 298,248 16,895,624 [5,355,282] $ 11,540,342 C. lnterfund Receivables and Payables Tounsm and Special Convention Gas $ 457,529 $ 320,324 457,529 320,324 $ 457,529 $ 320,324 Debt SFH Other Service Qa~cB Governmental $ $ 494,287 $ 2,428 2,674,390 2,674,390 494,287 2,428 [631] $2,674,390 $ 494,287 $ 1,797 Solid Water Waste and Disposal Sewer Sanitation $ 189,486 $ 3,176,509 $ 472,773 16 189,502 3,176,509 472,773 [1.471,307] [218,981] $ 189,502 $ 1,705,202 $ 253,792 The composition of interfund balances as of December 31, 2018, is as follows: Fund Types General Fund Capital Project Fund SFH QalicB Fund Police Grants Fund Due From $ 24,544 196,939 $ 221,483 Due To $ 196,939 24,544 $ 221,483 Subtotal $ 7,801,805 12,744,529 298,248 20,844,582 [5,355,913] $ 15.488,669 Total $ 11,640,573 12,744,529 298,264 24,683,366 [7,046,201] $ 17,637, 165 $ 145.403 145,403 12,901 [790] 437 12,548 $ 157,951 The City uses interfund receivables and payables between the General Fund and Other Governmental Funds as needed when pooled cash is negative within a fund until investments mature or grant proceeds are received. All payables are cleared in less than one year. 42 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) D. Capital Assets Capital asset activity for the year ended December 31, 2018, was as follows: Balance Adj Bal Balance 12/31/2017 .Adjustments 12/31/2017 .Add1bons Retirements 12/31/2018 C1tygovemmental activities Gove mm ental activities Capital assets, not being depreciated Construcbon in progress $ 28,909,568 $ [203,661] $ 28,705,907 $ 8,876,538 $5,365,238 $ 32,217,207 Land 24,092,859 676 24,093,535 24,093,535 Leased land under capital lease 422,799 422,799 Capital assets, being depreciated Infrastructure 199,315,338 [50,398] 199,264,940 5,365,238 204,630, 178 Buildings and improvements 53,009,679 5,179 53,014,858 53,014,858 Vehicles 10,386,499 [105,845] 10,280,654 352,834 442,158 10,191,330 Equipment, furniture and fixtures 6,614,011 79,349 6,693,360 515,538 90,793 7,118,105 Leasehold improvements 326,193 326,193 Total capital assets 322 ,327 ,954 [274,700] 322,053,254 15,859,140 5,898,189 332,014,205 Less accumulated depreciation for· Infrastructure 84,357,444 10,031 84,367,475 3,897,782 88,265,257 Buildings and improvements 19,930,451 3,588 19,934,039 1,321,956 21,255,995 Vehicles 6,866,276 58,203 6,924,479 746,753 437,665 7,233,567 Equipmen~ furniture and fixtures 4,573,829 36,461 4,610,290 224,435 90,793 4,743,932 Total accumulated depreciation 115,728,000 108,283 115,836,283 6,190,926 528,458 121,498,751 Governmental activities capital assets, net $ 206,599,954 $ [382,983] $ 206,216,971 $ 9,668,214 $5,369,731 $ 210,515,454 Business-type acbvibes Capital assets, not being depreciated Construcbon in progress $ 2,149,789 $ $ 2,149,789 $ 2,093,612 $ 72,223 $ 4,171,178 Land 1,541,806 8,858 1,550,664 509,170 2,059,834 Capital assets, being depreciated Infrastructure 119,457,650 [359,560] 119,098,090 72,223 119,170,313 Buildings and improvements 22,579,933 3 22,579,936 22,579,936 Vehicles 3,690,852 [11,130] 3,679,722 394,676 254,752 3,819,646 Equipment, furniture and fixtures 5,337,060 82,139 5,419,199 151,078 5,570,277 Total capital assets 154,757,090 [279,690] 154,477,400 3,220,759 326,975 157,371,184 Less accumulated deprec1abon for· Infrastructure 43,729,964 [358,386] 43,371,578 3,486,539 46,858,117 Buildings and improvements 13,217,925 294 13,218,219 421,287 13,639,506 Vehicles 2,650,242 1,140 2,651,382 215,184 254,752 2,611,814 Equipment, furniture and fixtures 3,853,399 [17,755] 3,835,644 245,395 4,081,039 Total accumulated depreciabon 63,451,530 [374,707] 63,076,823 4,368,405 254,752 67,190,476 Business-type activities capital assets, net $ 91,305,560 $ 95,017 $ 91,400,577 $ [1,147,646] $ 72,223 $ 90,180,708 43 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31 , 2018 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 $ 74,669 Public safety 728,118 Public works 4,240,242 Public health 26,959 Culture and recreation 813,760 Planning and development 307, 178 Total depreciation $ 6,190,926 Business-type Activities: Solid Waste Disposal $ 846,019 Water and Sewer 3,324,368 Sanitation 162,283 Golf Course Division 35,735 Total depreciation $ 4,368,405 E. Long-Term Debt Following is a summary of changes in long-term debt for fiscal year 2018: Restated Balance Balance January 1, December 31, 2018 Additions Deletions 2018 Governmental activities: General obligation bonds 56,096,954 2, 159,836 $ 6,288,480 51,968,310 Financing lease 157,868 157,868 Loans payable 12,171,090 13,963 12,185,053 Net OPEB liability 2,932,464 395,831 235,055 3,093,240 Net KPERS OPEB liability 307,478 101,230 25,860 382,848 Net pension liability 28,966,518 1,047,535 27,918,983 Accrued compensation 2,797,958 1,628,901 1,611,374 2,815,485 Temporary notes 6,811,742 19,508,505 8,196,742 18,123,505 Total 110,242,072 $ 23,808,266 17,562,914 116,487,424 Business-type activities: General obligation bonds 6,417,784 $ 1,135,206 5,282,578 Revenue bonds 12,606,747 708,696 11,898,051 Loans payable 8,862,810 2,354,809 585,268 10,632,351 Net OPEB liability 373,580 50,427 29,945 394,062 Net KPERS OPEB liability 131,776 43,384 11,082 164,078 Net pension liability 3,333,610 218,792 3,114,818 Accrued compensation 642,347 410,353 383, 183 669,517 Total 32,368,654 2,858,973 $ 3,072, 172 32, 155,455 Component Units: General obligation bonds s 24,087,000 $ 2,660,000 21,427,000 Less unamortized discount [79,485] (15,277] (64,208] Special assessment debt 9,207 2,153 7,054 Net KPERS OPEB obligation 12,054 928 11,126 Net pension liability 603,456 2,174 605,630 Total component units 24,632,232 2,174 2,647,804 21,986,602 44 Amounts Due Within One Year 5,877,280 1,611,375 18,123,505 $ 25,612, 160 $ 1.166,063 728,696 527,499 383,182 2,805,440 $ 1,967,000 2,153 1,969, 153 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) The following is a detailed listing of the city's long-term debt including general obligation bonds, revenue bonds, temporary notes and loans payable: Primary Government General Obligation Bonds Internal lmpro-.ements 2008B, due 7/1/2028 Internal lrnpro-.ements 2009A, due 10/1/2029 Internal lmpro-.ements 2010A, due 10/1/2025 Internal lmpro-.ements 2010B, due 10/1/2023 Internal lmpro-.ements 2011A, due 10/1/2031 Internal lmpro\ements 2012A, due 10/1/2027 Refunding 2012B, due 10/1/2020 Internal lrnpro-.ements 2013A, due 10/1/28 Internal lmpro-.ements 2013B, due 10/1/33 Internal lmpro-.ements 2014A, due 10/1/34 lmpro\ement and Refunding 2015A, due 10/1/35 Internal lmpro-.ements 2016A, due 10/1/36 Refunding 2016B, due 10/1/2031 Internal lmpro-.ements 2017A, due 10/1/37 Internal lmpro-.ements 2018A, due 10/1/33 Total general obligation bonds Re-.enue Bonds Re-.enue 2011, due 10/1/31 Total re\enue bonds Temporary Notes Series 2016-2, due 9/1/2019 Series 2018-2, due 11/15/2019 Total temporary notes Loans Payable Kansas Public Water Supply, due 8/1/2034 Kansas Public Water Supply, due 8/1/2035 Dakotas & CNMC Notes, due 12/10/2050 Total loans payable 45 Original Interest Bonds Issue Rates Outstanding $ 3,525,000 3.65% to 5.00% $ 1,035,000 23,695,000 2.00% to 5.00% 2,981,936 6,916,592 2.00% to 3.875% 655,545 7,973,044 0.50% to 3.00% 1,763,477 6,587,985 2.00% to 5.00% 1,098,449 2,383,903 1.00% to 2.45% 1,506,342 3,817, 108 1.00% to 1.40% 423,027 1,369,380 3.00% to 4.00% 1,001,255 4,485,073 0.60% to 3.65% 3,286,304 7,839,050 2.50% to 3.75% 5,455,241 7,157,688 2.00% to 4.00% 6,142,786 6,681,766 2.00% to 3.00% 6,160,590 15,141,004 2.00% to 5.00% 14,371,647 9,388,370 3.00% to 3.375% 9,209,452 2,090,000 3.15% to 4.00% 2,159,837 $ 57,250,888 $ 16, 193,925 2.00% to 4.60% $ 11,898,051 $ 11,898,051 $ 4,615,000 13,500,000 $ 9,330,000 4,250,000 12,640,000 1.00% 2.50% 2.12% 2.78% 1.58% $ 4,615,000 13,508,505 $ 18, 123,505 $ 6,771,038 3,861,313 12, 185,053 $ 22,817,404 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Component Unit Salina Airport Authority General Obligation Bonds General Obligation 2009B, due 2021 General Obligation 2011A, due 2023 General Obligation 2015A, due 2025 Temporary Note 2016-1, due 2019 General Obligation 2017A, due 2030 General Obligation 2017B, due 2025 Less unamortized bond premium Less unamortized bond discount Total general obligation bonds Special Assessment Debt Hangar 600 Sanitary Sewer, due 2021 Total special assessment debt Total Original Issue $6,080,000 11,820,000 3,075,000 657,000 10,255,000 4,835,000 27,599 Interest Rates 4.78 3.89% 2.67% 0.90% 3.04% 3.02% 4.47% Bonds Outstanding $ 1, 185,000 2,885,000 1,740,000 657,000 10, 150,000 4,810,000 33,023 [97,231] 21,362,792 7,054 7,054 $21,369,846 Annual debt service requirements to maturity for general obligation bonds to be paid with tax levies: General Obligation -Primary Gowmment Bonds Interest Year Outstanding Due Total 2019 $ 7,043,343 $ 1,665,570 $ 8,708,913 2020 4,893,342 1,476,903 6,370,245 2021 4,618,090 1,339,636 5,957,726 2022 4,701,939 1,186,542 5,888,481 2023 4,541,940 1,011,191 5,553, 131 2024-2028 17,204,968 3,276,338 20,481,306 2029-2033 9,998,082 1,462,000 11,460,082 2034-2037 4,249,184 276,500 4,525,684 Total $ 57,250,888 $ 11,694,680 $ 68,945,568 46 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Year 2019 $ 2020 2021 2022 2023 2024 -2028 2029 -2031 Total $ General Obligation -Component Units Bonds Interest Outstanding Due 1,310,000 $ 648,278 1,350,000 612,110 1,400,000 565,880 1,455,000 511,135 1,500,000 464,310 8,205,000 1,616,160 5,550,000 348,263 20,770,000 $ 4,766,136 Total $ 1,958,278 1,962, 110 1,965,880 1,966, 135 1,964,310 9,821, 160 5,898,263 $ 25,536, 136 Annual debt service requirements to maturity for revenue bonds to be paid with utility revenues: Re1.enue Bonds -Primary Government Bonds Interest Year Outstanding Due Total 2019 $ 728,696 $ 487,991 $ 1,216,687 2020 748,696 466,242 1,214,938 2021 773,696 798,696 1,572,392 2022 798,696 414,148 1,212,844 2023 828,696 382,348 1,211,044 2024-2028 4,688,480 1,376,895 6,065,375 2029-2031 3,331,091 308,750 3,639,841 Total $ 11,898,051 $ 4,235,070 $ 16, 133, 121 Annual debt service requirements to maturity for temporary notes -to be paid through the issuance of general obligation bonds: Temporary Notes -Primary Government Notes Interest Year Outstanding Due Total 2019 $ 18, 123,505 $ 372,400 $ 18,495,905 Total $ 18, 123,505 $ 372,400 $ 18,495,905 47 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Kansas Public Water Supply Loans. 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: Kansas Water Supply Loans -Primary Go1.emment Loans Interest Year Outstanding Due Total 2019 $ 527,499 $ 247,835 $ 775,334 2020 539,863 235,471 775,334 2021 552,523 222,811 775,334 2022 565,483 209,851 775,334 2023 578,754 196,580 775,334 2024-2028 3, 104, 194 772,476 3,876,670 2029-2033 3,486,921 389,749 3,876,670 2034-2035 1,277,114 46,434 1,323,548 Total $ 10,632,351 $ 2,321,207 $ 12,953,558 Dakotas and CNMC Notes. Dakotas Note A -On July 27, 2016, a $6,016,500 promissory note with a maturity date of December 10, 2050 was provided to SFH QalicB by Dakotas XXll, LLC. Interest accrues on the unpaid principal balance at an interest rate of 1.582625% with annual interest only payments, partially in arrears and partially in advance, commencing on December 10, 2016 and continuing on the tenth day of each December thereafter through December 10, 2025. On July 27, 2023, payment of all accrued and unpaid interest through July 27, 2023 is due. Commencing on December 10, 2023 and continuing on the tenth day of each December thereafter through December 10, 2026, accrued and unpaid interest shall be due and payable annually, partially in arrears and partially in advance for interest accruing through the end of each calendar year. Commencing on December 10, 2026 and continuing through the maturity date, annual payments of principal and interest in an amount equal to $293,276 are due. At maturity, the entire outstanding principal balance plus all accrued and unpaid interest thereon is due and payable in full. The loan may not be prepaid prior to July 27, 2023 and is secured by the Loan and Security Agreement. As of December 31, 2018, the note balance was $6,016,500. Dakotas Note B -On July 27, 2016, a $2,623,500 promissory note with a maturity date of December 10, 2050 was provided to the SFH QalicB by Dakotas XXll, LLC. Interest accrues on the unpaid principal balance at an interest rate of 1.582625% with annual interest only payments, partially in arrears and partially in advance, commencing on December 10, 2016 and continuing on the tenth day of each December thereafter through December 10, 2025. On July 27, 2023, payment of all accrued and unpaid interest through July 27, 2023 is due. Commencing on December 10, 2023 and continuing on the tenth day of each December thereafter through December 10, 2025, accrued and unpaid interest shall be due and payable annually, partially in arrears and partially in advance for interest accruing through the end of each calendar year. Commencing on December 10, 2026 and continuing through the maturity date, annual payments of principal and interest in an amount equal to $127,883 are due. At maturity, the entire outstanding principal balance plus all accrued and unpaid interest thereon is due and payable in full. The loan may not be prepaid prior to July 27, 2023 and is secured by the Loan and Security Agreement. As of December 31, 2018, the note balance was $2,623,500. 48 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) CNMC Note A -On July 27, 2016, a $2,674,000 promissory note with a maturity date of December 10, 2050 was provided to the SFH QalicB by CNMC Sub-COE 114, LLC. Interest accrues on the unpaid principal balance at an interest rate of 1.582625% with annual interest only payments, partially in arrears and partially in advance, commencing on December 10, 2016 and continuing on the tenth day of each December thereafter through December 10, 2025. On July 27, 2023, payment of all accrued and unpaid interest through July 27, 2023 is due. Commencing on December 10, 2023 and continuing on the tenth day of each December thereafter through December 10, 2025, accrued and unpaid interest shall be due and payable annually, partially in arrears and partially in advance for interest accruing through the end of each calendar year. Commencing on December 10, 2026 and continuing through the maturity date, annual payments of principal and interest in an amount equal to $130,345 are due. At maturity, the entire outstanding principal balance plus all accrued and unpaid interest thereon is due and payable in full. The loan may not be prepaid prior to July 27, 2023 and is secured by the Loan and Security Agreement. As of December 31, 2018, the note balance was $2,674,000. CNMC Note B -On July 27, 2016, a $1,326,000 promissory note with a maturity date of December 10, 2050 was provided to the SFH QalicB by CNMC Sub-COE 114, LLC. Interest accrues on the unpaid principal balance at an interest rate of 1.582625% with annual interest only payments, partially in arrears and partially in advance, commencing on December 10, 2016 and continuing on the tenth day of each December thereafter through December 10, 2025. On July 27, 2023, payment of all accrued and unpaid interest through July 27, 2023 is due. Commencing on December 10, 2023 and continuing on the tenth day of each December thereafter through December 10, 2025, accrued and unpaid interest shall be due and payable annually, partially in arrears and partially in advance for interest accruing through the end of each calendar year. Commencing on December 10, 2026 and continuing through the maturity date, annual payments of principal and interest in an amount equal to $64,636 are due. At maturity, the entire outstanding principal balance plus all accrued and unpaid interest thereon is due and payable in full. The loan may not be prepaid prior to July 27, 2023 and is secured by the Loan and Security Agreement. As of December 31, 2018, the note balance was $1,326,000. As of December 31, 2018, the principal balance of these four loans net of $454,947 of unamortized debt issuance costs was $12, 185,053. 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 2019 $ 2,249 $ 315 $ 2,564 2020 2,350 215 2,565 2021 2,455 110 2,565 Total $ 7,054 $ 640 $ 7,694 49 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Special assessments. As provided by Kansas statutes, projects financed in part by special assessments are financed through general obligation bonds of the City and are retired from the debt service fund. Special assessments paid prior to the issuance of bonds are recorded as revenue in the appropriate project. Special assessments received after the issuance of bonds are recorded as revenue in the debt service fund. The special assessments are not recorded as revenue when levied against the respective property owners as such amounts are not available to finance current year operations. The special assessment debt is a contingent obligation of the City to the extent of property owner defaults, which have historically been immaterial. Premises lease. On July 27, 2016, SFH QalicB entered into a lease agreement with the City for the use of the Salina Field House, as defined in the Net Lease agreement (the "Property"), under a direct financing lease. The lease term is 30 years, as defined in the Net Lease agreement. Beginning on July 1, 2017 and on the first day of each December thereafter through December 1, 2046, annual payments are due, in advance, as specified in the Net Lease agreement. For the year ended December 31, 2018, SFH QalicB earned $492,917 of rental income under the terms of the Net Lease. As of December 31, 2018, rental income of $79,912 remained receivable from the City. The following is a schedule, by year, of total minimum lease payments by the City to SFH QalicB under the direct financing lease as of December 31, 2018: 2019 $ 130,000 2020 130,000 2021 130,000 2022 130,000 2023 162,500 2024-2028 2,405,000 2029-2033 3,250,000 2034-2038 3,250,000 2039-2043 3,250,000 2044-2046 1,625,000 $ 14,462,500 Ground Lease. On October 24, 2018, SFH QalicB entered into a lease agreement with Salina Regional Medical Education, LLC for the use of property for parking of passenger vehicles and non-commercial trucks (the Parking Lot) by the public. SFH QalicB will have the option to acquire the Parking Lot for $1 upon the end of the lease term, which is 100 years, as defined in the Ground Lease. A one-time basic rent payment of $250,000 was due on the commencement date. There are no additional minimum lease payments due. Sales tax and Revenue (STAR) Bonds. STAR Bonds are authorized to be issued pursuant to K.S.A. 12-17, 160, et seq., as amended (the STAR Bond Act). The STAR Bond Act provides a form of tax increment financing that enables the issuance of bonds payable from certain State and local sales and compensating use tax revenues and transient guest tax revenues generated from STAR bond projects constructed within a STAR bond project district. To implement STAR bond financing, a local government must adopt a resolution that specifies a proposed STAR bond project district's boundary and describes the overall district plan, hold a public hearing on the district and plan, and pass a resolution that establishes the ST AR bond project district. Additionally, there may be one or more projects within a STAR bond district. In accordance with the STAR Bond Act, the City has no liability for payment of bonds in the event that revenues received from sources noted above are inadequate to pay the debt incurred with the issuance of the STAR bonds. 50 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) In connection with the issuance of STAR bonds, the City of Salina and the State of Kansas enter into a Tax Distribution Agreement. The agreement provides that the principal of, accreted value, and interest on the ST AR bonds will be paid proportionally by the City of Salina and the State of Kansas, based on each entity's respective share of sales taxes generated within the district. These proportional shares may change in the future if the sales taxes assessed by the local or state governments are modified. On June 1, 2015, the City of Salina Commission adopted Ordinance 15-10776 establishing the district known as the Salina STAR Bond Project District. On August 22, 2016, the City held a public hearing and approved Ordinance 16-10856 adopting the STAR Bond Project Plan. On December 1, 2018, the City of Salina issued $18,250,000 in Senior Special Obligation Revenue Bonds (Series 2018-A) and $4,320,000 in Subordinate Special Obligation Revenue Bonds (Series 2018-B). The City's portion of the proceeds from these bond issuances is recorded as a capital contribution in the financial statements. 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, 2018. The future minimum lease payments for the lease are as follows: Year Amount 2019 $ 93,926 2020 93,926 2021 93,926 2022 93,926 2023 93,926 2024-2027 375,708 Total $ 845,338 G. Reconciliation of Transfers A reconciliation of interfund transfers follows: Transfer In Transfer Out Major Funds: General fund $5,041,500 $ Tourism and conwntion fund Special gas fund 160,000 Sales tax capital fund Debt ser.lice 2,270,782 Other gowmmental funds 1,354,914 Solid waste disposal fund Water and sewer fund Sanitation fund Central garage fund 190,000 Total Transfers $9,017, 196 $ The City uses interfund transfers to share administrative costs between funds. 51 805,000 812,346 2,568,350 690,000 3,650,000 491,500 9,017, 196 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31 , 2018 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. 52 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December31, 2018 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 1.2% of total payroll for the fiscal year ended June 30, 2018. The actuarially determined employer contribution rates (not including the 1.00% contribution rate for the Death and Disability Program) and the statutory contribution rates are as follows: Local employees Police and Firemen Actuarial Employer Rate 8.39% 20.09% Statutory Employer Capped Rate 8.39% 20.09% Member contribution rates as a percentage of eligible compensation for the fiscal year 2018 are 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, 2018, 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, 2018. The contributions used exclude contributions made for prior service, excess benefits and irregular payments. At June 30, 2018, the City's proportion for the Local employees group was 0.790%, which was a decrease of .021% from its proportion measured at June 30, 2017. At June 30, 2018, the City's proportion for the Police and Firemen group was 2.081%, which was a decrease of .110% from its proportion measured at June 30, 2017. 53 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December31, 2018 Note 5. OTHER INFORMATION (Continued) A. Defined Benefit Pension Plan (Continued) Net Pension Liability. At December 31, 2018 and 2017, the City and its component units reported a liability of $31,984,657 and $33,276,991, 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, 2017, which was rolled forward to June 30, 2018, using the following actuarial assumptions: Assumptions Rate Price inftation 2.75% Wage inftatron 3.50% Salary increases, including wage increases 3.5% to 12.0% including inftation Long-term rate of return, net of investment expense, and including price innation 7.75% Mortality rates were based on the RP-2014 Mortality Tables, with age setbacks and age set forwards as well as other adjustments based on different membership groups. Future mortality improvements are anticipated using Scale MP-2016. The actuarial assumptions used in the December 31, 2017 valuation were based on the results of an actuarial experience study conducted for the period of January 1, 2013, through December 31, 2015. The experience study is dated November 18, 2016. 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, 2018 are summarized in the following table: Long-Term Expected Asset Long-Term Allocation Real Rate of Return Global Equity 47.00% 6.85% Fixed Income 13.00% 1.25% Yield driven 8.00% 6.55% Real Return 11.00% 1.71% Real estate 11.00% 5.05% Alternatives 8.00% 9.85% Short-term investments 2.00% -0.25% 100.00% Discount Rate. The discount rate used to measure the total pension liability was 7.75%. 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. 54 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 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 7.75%, 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 (6.75%) or 1-percentage point higher (8.75%) than the current rate: Local 1% Decrease (6.75%) $ 16,154,118 28,531,728 Discount Rate (7. 75%) $ 11,014,328 20,019,473 1 % Increase (8. 75%) $ 6,670,741 12,892,837 Police & Firemen Total $ 44,685,846 $ 31,033,801 $ 19,563,578 =-====-..... -===--==- Pension Expense. For the year ended December 31, 2018, the City recognized Local pension expense of $870,226 and Police and Firemen pension expense of $2,385,738, 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. The Salina Housing Authority's and Salina Airport Authority's portion of the Local pension expense were $31, 100 and $39,859, respectively Deferred Outflows of Resources and Deferred Inflows of Resources. At December 31, 2018, 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 Net differences between projected and actual earnings on in-..estments Changes in assumptions Changes in proportion Total Police & Firemen Differences between actual and expected experience Net differences between projected and actual earnings on in-..estments Changes in assumptions Changes in proportion Total 55 Deferred outftows of resources $ 39,766 257,660 476,967 446, 147 $ 1,220,540 Deferred outflows of resources $ 1,223,246 521,008 1,054,212 51,284 $ 2,849,750 Deferred inflows of resources $ 312,097 53,041 435,326 $ 800,464 Deferred inflows of resources $ 92,492 55,255 1, 107,361 $ 1,255, 108 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) A. Defined Benefit Pension Plan (Continued) At December 31, 2018, the Salina Housing Authority and Salina Airport Authority 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 Dillerences between actual and expected experience Net differences between projected and actual earnings on investments Changes in assumptions Changes in proportion Total Housing Authority Airport Authority Deferred outftows Deferred inftows Deterred outftows Deferred inftows of resources $ 1,670 10,829 18,592 1,806 of resources $ 11,937 2,525 6,884 of resources of resources $ 2,187 $ 17,161 14,168 26,226 2,916 55,201 44,325 $ 32,897 $ 21,346 $ 97,782 ==$ ~=64==-,40=2 $1,723,207 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, 2019. 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 2019 $ 341,010 $ 985,459 $ 1,326,469 2020 202,538 586, 107 788,645 2021 (100,494] (33,058] (133,552] 2022 (7,653] 64,997 57,344 2023 (15,325] (8,863] (24, 188] Total $ 420,076 $ 1,594,642 $ 2,014,718 $36,221 and $13,417 reported as deferred outflows of resources related to pensions resulting from Salina Housing Authority and Salina Airport Authority contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2019. Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Housing Airport Authority Authority Deferred Deferred Year ended [Inflows] Outflows [Inflows] Outflows December 31, Amount Amount Total 2019 $ (2,591] $ 10,978 $ 8,387 2020 11, 125 12,657 23,782 2021 7, 101 112 7,213 2022 (4,816] 8,685 3,869 2023 732 948 1,680 Total $ 11,551 $ 33,380 $ 44,931 56 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) 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 {l.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, $183,514 is considered to be due within one year. Changes in the balances of claims liabilities during the past two years are as follows: 2018 2017 Unpaid claims, January 1 $ 221,913 $ 255,154 Incurred claims (including IBNRs) 886,086 622,556 Claim payments [869,221) [655,797) Unpaid claims, December 31 $ 238,778 $ 221,913 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: 57 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) D. Risk Management (Continued) E. Contingent Liabilities Unpaid claims, January 1 Incurred claims (including IBNRs) Claim payments Unpaid claims, December 31 2018 2017 $ 395,691 $ 294,333 3,670,930 4,244,648 [3,685,641] [4,143,290] $ 380,980 $ 395,691 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, 2018. 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. F. 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 $1,981,498 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 $4,892,995 as the remaining estimated capacity is filled over the remaining life expectancy of 14 7 years. These amounts are based on what it would cost to perform all closure and postclosure care in 2018. 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. 58 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) G. Capital Projects Capital projects often extend over two or more fiscal years. The following is a schedule, which compares the project authorization including allowable interest revenue to total project expenditures from project inception to December 31, 2018. Markley-Magnolia W Sewer $ 5,150,000 $ 200,790 Cloud from Ohio to Lewe 155,014 69,242 Ninth and Cloud Intersection Realignment 1,100,000 1,048,542 Bicentennial Center lmprowments 10,200,000 12,344,709 Lakewood Middle School Safe Route 81,375 47,509 Bicentennial Center Owners Rep 96,000 84,000 Water Well 13 & 14 Maintenance 52, 184 50,830 Pawment Condition Surwy 36,222 33,909 Community Fieldhouse 6,937,827 8,727,749 Community Fieldhouse 713,858 733,992 Wastewater Treatment Plant Feasibil 154,395 154,395 Channel Road Erosion Repairs 58,858 Rebuild High SeNce Pump P-203 24,187 13,688 Pump Stations and Force Mains 1,483,000 1,280,581 2016 Water Meters 30,000 18, 128 2017 Country Club Road lmprowments 1,200,000 1,088, 188 Dowtown STAR District 58,000 136, 120 Downtown CID -Alley 2,317 Downtown TIF 2,009 2017 Mill & Inlay 1,577,502 1,574,583 2017 Major Concrete Rehab 469,472 465,748 Downtown Streetscape 12, 165,000 3,514,351 Smoky Hill Riwr Renewal 3,200,000 2,632,848 Downtown Santa Fe Water Main Replacement 1,351, 100 762,367 S Well Field & WTP Phase 1 1,964,525 1,583,269 2017 Sidewalks 69,092 73,665 Police Training Facility 4,900,000 297,358 Beechcrafl Road lmprowments-Airport Authority 1,500,000 12,884 2017 Sanitary Sewer Line Cleaning 519,358 297 Indiana Aw Trail 79,262 74,992 Preliminary Design Broadway lmpr 50,000 50,248 2018 Pawment Sealing 325,000 252,778 Northbound 9th Street Bridge 103,768 92,060 2018 Microsurfacing 750,000 731,987 2018 UBAS 800,000 673,029 2018 Brick Streets 99,243 99,486 2018 Bridge Maintenance 86,520 82,684 2018 Chip Seal/Bituminous 175,000 169,866 2018 Mastic Surface Treatment 30,000 30,305 2018 Mill & Inlay 1,550,000 1,353,589 2018 Minor Concrete Rehab 40,510 40,773 2018 Sidewalks 80,493 83, 114 2018 Traffic Control Main/Street Markings 75,000 56,371 9th Street Kirwin to Crawford 665,752 630,458 2018 Sanitary Sewer Point Repair 50,000 18,859 Landfill Cell #20 Design 60,000 50,714 2018 Park lmprowments 194,000 198 Manhole & Value Adj 10,000 306 Community Theater HVAC Replacement 46,000 207 North Lime Drying Lagoon Yearly Maintenance 120,000 37,260 59 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December31, 2018 Note 5. OTHER INFORMATION (Continued) 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 Authority on or about September 9, 1966. The property is now known to contain areas of extensive soil and groundwater contamination, which is a result of the use and disposal of chlorinated solvents during military operations at the Base from 1942 until Base closure in 1965. The U.S. Department of Defense is responsible for the investigation and remediation of contamination caused by military activities at current and former military bases. The U.S. Army Corps of Engineers (Corps) is the lead agency for the Department at formerly used defense sites. The Corps has investigated the soil and groundwater contamination at the Site under the regulatory oversight of the U.S. Environmental Protection Agency (EPA) and the Kansas Department of Health and Environment (KDHE). The Site is not designated as a National Priority List Superfund site, but investigation and remediation are required to be in compliance with the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). Potential liability for contamination under CERCLA extends broadly to parties associated with the release or presence of hazardous substances, including not only those entities involved with contaminant use and disposal, but in some cases other current and former owners and operators of contaminated sites. As a current owner of extensive amounts of property at the Site, the Authority is potentially liable under CERCLA, although the Authority believes that it has meritorious defenses to such liability. The Authority is considered to be a Potentially Responsible Party (PRP) for the Site, primarily due to its status as a property owner. The Authority, City of Salina, Unified School District No. 305 and the Kansas Board of Regents (Kansas State University Polytechnic Campus), (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 Authority was notified that the Corps 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. 60 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) H. Environmental Matters (Continued) On or about May 27, 2010, the Salina Public Entities filed their Complaint against the United States of America, the United States Department of Defense and Secretary of Defense, Robert M. Gates, in his official capacity (collectively, "Defendants"). On or about September 22, 2010, the Salina Public Entities filed their First Amended Complaint in four counts: Count I Citizen Suit Claim Pursuant to 42 U.S.C.§ 9659(a)(2), Count II Citizen Suit Claim Pursuant to 42 U.S.C.§ 9659(a)(1), Count Ill Claim for Recovery of Response Costs Pursuant to 42 U.S.C.§ 9607(a) and Count IV Claim for Declaratory Judgment Pursuant to 42 U.S.C.§ 9613(g)(2). On or about October 6, 2010, Defendants filed their motion to dismiss and to strike, primarily with respect to the citizen suit claims. On or about March 25, 2011, Judge Murguia entered his Memorandum and Order. The Judge granted the Defendants' motion to dismiss Counts I and II (citizen suit claims) for lack of subject matter jurisdiction. He also granted the Defendants' motion to dismiss the Salina Public Entities' requests for attorney fees, with the exception of non-litigation attorney fees. He denied the Defendants' motion to strike the Salina Public Entities' allegations of a conflict of interest. The Salina Public Entities' claims under Counts Ill and IV for response costs under CERCLA 9607(a) are not affected by the Judge's rulings. The Salina Public Entities disagree with most of the Judge's filings and, if necessary, plan to take an interlocutory appeal to the Tenth Circuit to contest the rulings. On or about April 22, 2011, Defendants filed their Answer to First Amended Complaint and Counterclaim against the Salina Public Entities. Count I of the Counterclaim alleges a claim for contribution under CERCLA, 42 U.S.C.§ 9613(f)(1). Count II of the Counterclaim alleges a claim for cost recovery under CERCLA, 42 U.S.C.§ 9607(a)(1). Count II alleges costs incurred by the U.S. Environmental Protection Agency of approximately $1,838,241 as of September 30, 2007, and alleges costs incurred by the Corps of approximately $14,915,228 as of April 17, 2009. The Salina Public Entities intend to vigorously contest the claims brought against them and will assert, among other defenses, the third party defense under 42 U.S.C.§ 9607(b)(3). 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 of Salina. 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. The Remedial Investigation (RI) portion of the CAFO scope of work was completed during Q1 2018. The Feasibility Study portion of the CAFO scope of work was also completed during Q1 2018. The Feasibility Study (FS) and Proposed Plan (PP) portions of the CAFO scope of work were completed during 2018 and submitted to KDHE. The Corrective Action Decision (CAD) document is scheduled to be issued by KDHE during 2019. 61 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) H. Environmental Matters (Continued) Although the claims and counterclaims in the lawsuit have been dismissed without prejudice, the Authority 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 Authority 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. Other Postemployment Healthcare Benefits Plan Description. The City offers postemployment health insurance to retirement employees. The benefits are provided through a single employer defined benefit postemployment healthcare plan administered by the City. The Employee Benefit Plan (the Plan) provides medical and dental benefits to eligible early retirees and their spouses. KSA 12-5040 requires all local governmental entities in the state that provide a group health care plan to make participation available to all retirees and dependents until the retiree reaches the age of 65 years. No separate financial report is issued for the Plan. Funding Policy. The contribution requirements of plan participants and the City are established and amended by the City. The required contribution is based on projected pay-as-you-go financing requirements. In 2018, the City did not contribute to the plan. At December 31, 2018, the following employees were covered by the benefit terms: Active employees 441 32 473 Retirees and covered spouses Total The total OPEB liability of $3,487,302 was measured as of December 31, 2017 and was determined by an actuarial valuation as of that date. The total OPEB liability in the December 31, 2017 actuarial valuation was determined using the following assumptions and other inputs, applied to all periods in the measurement, unless otherwise specified: Valuation date Actuarial cost method lnftation Salary increases Discount rate Healthcare cost trend rates Retiree's share of benefit related costs December 31, 2017 Entry age normal as a level percentage of payroll 2.75% 3.50% 3.44% Medical & Pharmacy: 6.8% for 2017, decreasing 0.60% per year to an ultimate rate of 5.1 % for 2020 and through 2030 Dental: 5.00% to 2020 100% of the premium The discount rate was based on an index rate for 20-year, tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher. Mortality rates were based on the RP 2014 Mortality Tables. with age setbacks and age set forwards as well as other adjustments based on different membership groups. Future mortality improvements are anticipated using Scale MP-2017. 62 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December31, 2018 Note 5. OTHER INFORMATION (Continued) I. Other Postemployment Healthcare Benefits (Continued) Changes in the total OPEB liability are as follows: Balance 1/1/2018 Service cost Interest Benefit paid Changes in assumptions Balance 12/31/2018 $ 3,306,044 226,762 128,578 [265,000] 90,918 $ 3,487,302 The following presents the total OPEB liability of the City, as well as what the City's total OPEB liability would be if it were calculated using a discount rate that is one percentage point lower (2.44%) or one percentage point higher (4.44%) than the current discount rate: Total OPEB Liability $ 1% Decrease {2.44%) 3,767, 121 $ Discount Rate {3.44%) 3,487,302 $ 1% increase {4.44%) 3,226,016 The following presents the total OPEB liability of the City, as well as what the City's total OPEB liability would be if it were calculated using healthcare cost trend rates that are one percentage point lower (5.8% decreasing to 3.1 % ) or one percentage point higher (7 .8% decreasing to 5.1 % ) than the current healthcare cost trend rate: 1% Decrease Total OPEB Liability $ 3,084,533 $ Healthcare Cost Trend Rates 3,487,302 $ 1% increase 3,966,000 For the year ended December 31, 2018, the City recognized OPEB expense of $446,258. Deferred Outflows of Resources and Deferred Inflows of Resources. At December 31, 2018, the City reported deferred outflows related to other postemployment benefits from the following sources: Deferred outflows of resources Changes of assumptions $ 80,503 -----'-- Total $ 80,503 ======= Amounts reported as deferred outflows of resources will be recognized in OPEB expense as follows: Deferred Year ended [Inflows] Outflows June 30, Amount 2019 $ 10,414 2020 10,414 2021 10,414 2022 10,414 2023 10,414 2024+ 28,433 Total $ 80,503 63 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) J. Other Postemployment Benefits (KPERS) Plan Description. The City participates in a multiple-employer defined benefit other postemployment benefit (OPEB) plan (the Plan) which is administered by the Kansas Public Employees Retirement System (KPERS). The Plan provides long-term disability benefits and a life insurance benefit for disabled members to KPERS members, as provided by K.S.A. 74-04927. The Plan is administered through a trust held by KPERS that is funded to pay annual benefit payments. However, because the trust's assets are used to pay employee benefits other than OPEB, the trust does not meet the criteria in paragraph 4 of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. Accordingly, the Plan is considered to be administered on a pay-as-you-go basis. Benefits. Benefits are established by statute and may be amended by the KPERS Board of Trustees. The Plan provides long-term disability benefits equal to 60 percent (prior to January 1, 2006, 66 2/3 percent) of annual compensation, offset by other benefits. Members receiving long-term disability benefits also receive credit towards their KPERS retirement benefits and have their group life insurance coverage continued under the waiver of premium provision. The monthly long-term disability benefit is 60 percent of the member's monthly compensation, with a minimum of $100 and a maximum of $5,000. The monthly benefit is subject to reduction by deductible sources of income, which include Social Security primary disability or retirement benefits, workers compensation benefits, other disability benefits from any other sources by reason of employment, and earnings from any form of employment. If the disability begins before age 60, benefits are payable while the disability continues until the member's 55t11 birthday or retirement date, whichever occurs first. If the disability begins after age 60, benefits are payable while the disability continues, for a period of five years or until the member retires, whichever occurs first. Benefit payments for disabilities caused or contributed to by substance abuse or non-biologically based mental illnesses are limited to the shorter of the term of the disability or 24 months per lifetime. The death benefit paid to beneficiaries of disabled members is 150% of the greater of 1) the member's annual rate of compensation at the time of disability, or 2) the members previous 12 months of compensation at the time of the last date on payroll. If the member has been disabled for five or more years, the annual compensation or salary rate at the time of death will be indexed using the consumer price index, less one percentage point, to compute the death benefit. If a member is diagnosed as terminally ill with a life expectancy of 12 months or less, the member may be eligible to receive up to 100% of the death benefit rather than having the benefit paid to the beneficiary. If a member retires or disability benefits end, the member may convert the group life insurance coverage to an individual insurance policy. Employees covered by benefit terms. At June 30, 2018, the valuation date, the following employees were covered by the benefit terms: Actiw employees Disabled members Total 282 4 286 Total OPEB Liability. The City and its component units reported a total KPERS OPEB liability of $566,938 reported as of December 31, 2018, was measured as of June 30, 2018, and was determined by an actuarial valuation as of December 31, 2017, which was rolled forward to June 30, 2018, using the following actuarial assumptions: 64 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December31, 2018 Note 5. OTHER INFORMATION (Continued) J. Other Postemployment Benefits (KPERS) (Continued) Valuation date December 31, 2017 Actuarial cost method Entry age normal Inflation 2.75% Salary increases 3.00% Discount rate (based on 20 year municipal bond rate with an a1.erage rating of AA/Aa or better, obtained through the Bond Buyer General Obligation 20-Bond Municipal Index) 3.87% The discount rate was based on the bond buyer general obligation 20-bond municipal index. Mortality rates were based on the RP 2014 Mortality Tables, with age setbacks and age set forwards as well as other adjustments based on different membership groups. Future mortality improvements are anticipated using Scale MP-2016. The actuarial assumptions used in the December 31, 2017 valuation were based on the results of an actuarial experience study for the period of July 1, 2014 through June 30, 2016. Other demographic assumptions are set to be consistent with the actuarial assumptions reflected in the December 31, 2017 KPERS pension valuation. The changes in the total OPEB liability are as follows: Balance 1/1/2018 Ser\<ice cost Interest Effect of economic/demographic gains or losses Changes in assumptions Benefit payments Balance 12/3112018 Total KPERS OPEB Liability 9!Y. Housing Authority Airport Authority Total $ 439,254 $ 7,096 $ 12,054 $ 458,404 52,380 17,061 75, 173 [6,574] [30,368] $ 546,926 $ 1,743 252 [205] 8,886 2,825 533 [4,199] [87) $ 11, 126 56,948 17,846 70,974 [6,866] [30,368] $ 566,938 Sensitivity of the total KPERS OPEB liability to changes in the discount rate. The following presented the total KPERS OPEB liability of the City, as well as what the City's total KPERS OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.87%) or 1-percentage-point higher (4.87%) than the current discount rate: 1% Decrease Discount Rate 1% increase {2.87%} (3.87%} {4.87%} Total OPEB Liability -City $ 569,284 $ 546,926 $ 524,594 Total OPEB Liability -Housing Authority $ 9,144 $ 8,886 $ 8,588 Total OPEB Liability -Airport Authority $ 11,395 $ 11, 126 $ 10,800 65 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) J. Other Postemployment Benefits (KPERS) (Continued) Sensitivity of the total KPERS OPEB liability to changes in the healthcare cost trend rates. The following presented the total KPERS OPEB liability of the City calculated using the current healthcare cost trend rates as well as what the City's total KPERS OPEB liability would be if it were calculated using trend rates that are 1 percentage point lower or 1 percentage point higher than the current trend rates. The reader should note that healthcare trend rates do not affect the liabilities related to the long-term disability benefits sponsored by KPERS, but this exhibit is provided as it is a required disclosure under GASB 75. Healthcare Cost 1% Decrease Trend Rates 1% increase Total OPES Liability -City $ 546,926 $ 546,926 $ 546,926 Total OPEB Liability -Housing Authority $ 8,886 $ 8,886 $ 8,886 Total OPEB Liability -Airport Authority $ 11, 126 $ 11, 126 $ 11, 126 For the year ended June 30, 2018, the City recognized OPEB expense of $75,561. Deferred Outflows of Resources and Deferred Inflows of Resources. At December 31, 2018, the City reported deferred outflows and inflows related to other postemployment benefits from the following sources: City Housing Authority Airport Authonty Deferred Deferred Deferred Deferred Outftows of lnft01Ns of Resources Resources lnftows of Resources lnftows of Resources Differences between expected and actual experience $ 67,415 $ - $ - $ 3,766 Changes of assumptions 13,271 184 198 Total $ 67,415 $ 13,271 $ 184 $ 3,964 $72,729 and $4,294 reported as deferred outflows of resources related to OPEB resulting from City and Airport Authority contributions subsequent to the measurement date, respectively, will be recognized as a reduction of the OPEB liability in the year ended December 31, 2019. Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in OPEB expense as follows: Year Ended Housing Airport June 30, City Authority Authority 2019 $ (6, 120] $ (21] $ (458] 2020 (6,120] (21] [458] 2021 (6,120] (21] [458] 2022 (6, 120] (21] (458] 2023 [6, 120] [21] [458] Thereafter [23,544] (79] [1,674] Total $[54,144] $ (184] $ (3,964] K. Deficit Fund Balance The Police Grants Fund maintained a deficit fund balance of $(24,544] at December 31, 2018. 66 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) L. Tax Abatements In 2018, the City of Salina participated in real property tax abatements for five local companies. Property tax abatements are authorized under Kansas state statutes K.S.A. 12-1740 et seq. and K.S.A. 79-201a and subject to City policy. The City provides property tax abatements to encourage existing industry to expand, assist new business start-ups, recruit new companies from out-of-state or internationally, encourage high technology and research based businesses, encourage training and development of Salina area employees, and encourage location and retention of businesses which are good "corporate citizens" that will add to the quality of life in the community through leadership and support of civic and philanthropic organizations. Property tax abatements reduce ad valorem property taxes. The percentage of reduction ranges from 40.5% to 100%, but in all cases, the maximum duration is for ten years as per state statute. To receive an abatement, applicants must submit an application, which undergoes due diligence and analysis before being considered by the City Commission. If the abatement is authorized, the applicant must sign a performance agreement that specifies annual compliance measures. Each year, the applicant submits a renewal application, along with compliance information, which is reviewed by City staff for conformance with agreement provisions. If compliance is not met, appeals can be made to the City Commission to determine the amount of incentives, if any, to be received by the property owner. The City of Salina negotiates property tax abatements on an individual basis. Ad Valorem Property Tax Abatements Company Salina Vortex Corp (facility improvements) Great Plains Mfg (facility improvements) Veris Technologies (facility addition/improvements) Twin Oaks (facility addition/improvements) Salina Field House (facility) Total Abatement Start End 2015 2024 2014 2023 2015 2024 2015 2024 2017 2026 % 75% 100% 40.5% 55% 100% 2018 Tax Abated $ 15,432 4,808 1,525 1,838 58,518 $ 82,120 Tax Increment Financing (TIF). TIFs are an economic development tool established by the Kansas TIF Act (K.S.A. 12-1770 et seq.) and subject to City policy to aid in financing projects for substantial public benefit. Public benefits can include creating jobs or retaining existing employment, eliminating blight, strengthening the employment and economic base of the City, increasing property values and tax revenues, reducing poverty, creating economic stability, upgrading older neighborhoods, facilitating economic self-sufficiency, promoting projects that are of community wide importance, or implementing the economic development goals of the City. The program works by reimbursing a portion of the incremental increase in property taxes resulting from improvements and a portion of local sales tax generated within the district to the property owner. The base value, or what the property was valued at prior to improvements, is shielded from the rebate. To receive a TIF, applicants must submit a detailed, written proposal to the City, which will undergo due diligence and analysis before being considered by the City Commission. The City Commission then determines if it will commence the statutory process to create a redevelopment district. If the TIF district is authorized, the City and applicant will enter into an agreement that specifies performance, certification, and reimbursement requirements. City Staff will work with the property owner to certify eligible expenses and compliance with agreement provisions. Once the project begins to generate TIF revenues (sales tax and/or property tax), City staff works with the distributing agency and property owner to generate and track reimbursements. Because reimbursements are not paid until after improvements are put in place, agreement compliance is met, eligible expenses are certified, and sales and/or property tax distributions are made to the City, there are no provisions for recapturing taxes. The City of Salina negotiates TIFs on an individual basis. 67 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) L. Tax Abatements (Continued) TIF Project Plans District Lambertz Total Purpose Construction of 10. 79 acres of shopping center, including single and multi-tenant retail space, and related public and private infrastructure Base Year Expires 2007 2027 2018 Reimbursements Sales Tax Property Tax $ 212,624 $ 217,595 $ 212,624 $ 217,595 Community Improvement Districts (CID). CIDs are an economic development tool established by the Kansas CID Act (K.S.A. 12-6a26 et seq.) and subject to City policy to assist with the development of community improvements which can benefit a development and the public. In all CIDs, public improvements were financed initially by the developer and are reimbursed annually via a two percent (2%) transportation district sales tax on retail or taxable services occurring within the district. To establish a CID, the applicant first submits a CID petition which is signed by the owners of all of the land within the proposed district. The City Commission then considers the request to establish a CID. If the CID is authorized, the City and applicant will enter into an agreement that specifies performance, certification, and reimbursement requirements. City Staff will work with the property owner to certify eligible expenses and compliance with agreement provisions. Once the project begins to generate CID revenues, City Staff works with the distributing agency and property owner to make and track reimbursements. Because reimbursements are not paid until after improvements are put in place, agreement compliance is met, eligible expenses are certified, and CID sales tax distributions are made to the City, there are no provisions for recapturing taxes. The City of Salina negotiates CIDs on an individual basis. Name South 9th Street Total Rate 2.00% Community Improvement District (CID) Start Expires Purpose Assist with improvements to hotel 3/1/2016 12/31/2037 and conference center 2018 Eligible Reimbursement Amount* $ 260,274 $ 260,274 Neighborhood Revitalization Areas (NRA). NRAs are authorized under Kansas state statutes K.S.A. 12-117 and subject to City policy to spur investment and revitalization of properties which can benefit a neighborhood and the public. The program works by rebating a portion of the incremental increase in property taxes resulting from improvements back to the property owner. The base value, or what the property was valued at prior to improvements, is shielded from the rebate. Participation in the program and percentage of rebate and duration are determined separately by the City, County, and School District. The current City of Salina adopted plan is a 4 year plan running from 2014 -2018. It allows for a 10 year rebate and provides rebates from 25% to 100% depending on year in plan and type of improvement. To receive an NRA, taxpayers must submit an application, which undergoes due diligence and analysis before being approved by the City. If the NRA is approved, each year, the applicant must submit proof that property taxes have been paid in full. Because the rebate is not given until after improvements are put in place and property taxes paid, there are no provisions for recapturing taxes. The City of Salina approves NRAs on an individual basis. 68 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) L. Tax Abatements (Continued) Property/Business Name Serio Guzman James M. Monroe Christina Litwiller Jeremy Cessna William & Mary Warhurst Holly Fain Arlene Cox Gloria Williams Michelle Rogan Samuel A. Rock Jessica A Ziegler Devin or Jessica Know Ravey Investments LLC Lamont Outland Michelle Bunch Jermaine and Tykea Polk Mary Marshall Angela Fishburn Kress Building LLC Heritage at Hawthorne Partners, LLC Will & Mary Warhurst Donnie & Ramona Marrs TJTM, Inc. TroyValcil Michelle Malone Timothy & Linda Rickman Yvette Gelinas Charles H Carroll Jr Trust Latisha Pierce Tanya Shiehzadeh Robert & Brenda Burns Property Partners LLC Phill Hemmer AP Property Holdings, LLC Gregory Davis Micheal Money Traniesh Byrd Mark Martin Living Trust Philip C Krug Living Trust Jana Endsley Kanesha Samilton Maria E Padilla Kansas Property Investors, LLC, JK Webb Properlles LLC Alan and Nancy Franzen Brandon Sears Santa Fe Properties, LLC Rusty A Leister Living Trust Heritage at Hawthorne Partners II, LLC. Greg Huston ts. Terry A Swearingen Total Neighborhood Revitalization Act (NRA) Address 241 N. Front Street 620 W. Hamilton Street 148 N. 12th Street 219 N. Front Street 714 Park Street 204 Forest Avenue 200 Forest Avenue 903 N. 10th Street 240 S. Clark Street 1329 N. 4th Street 221 N. 2nd Street 207 N. Penn 157 N. Seventh, 203 W. Ash, 205 W. Ash, 207 W Ash & 209 W. Ash 1206 N. 7th Street 634 N. 8th Street 226 N. 2nd Street 937 N. 3rd Street 1219 N. 8th Street 134 S. Santa Fe Ave 715 N. 9th Street 809W. Ash 2035 E. Iron #JOOR 2035 E. Iron #213C/105R/302R/202R/205R/006R/301RA/301 RB/001 R/002R/003R/004R/005R 853 Navaho 815 N. 2nd Street 719 E. Ash 1115 N. 8th Street 156-158 S. Santa Fe 705 N. 2nd Street 703 N. 2nd Street 1205 N. 4th Street 116 & 118 N. Santa Fe (2nd Floor Loft Apartments) 2035 E. Iron Avenue, Unit #203R 201 E. Iron Avenue 156-158 N. 11th Street 2035 E. Iron Avenue, Unit #206R 701 N. 2nd Street 2035 E. Iron #104R 2035 E Iron #304R 1321 N. 3rd Street 214 W Grand Avenue 810 N. 5th Street 230 S. Broadway Blvd 120 S. Santa Fe Avenue 1413 Arapahoe 900 N. 12th Street 131 N. Santa Fe Avenue/128 S. Santa Fe Avenue 600 N. Santa Fe Avenue 715 N. 9th Street, Phase II 10:.!5 W Grawtord Street 69 2018 Ile! Rebate Paid Res $ 257 Res 571 Res 348 Res 323 Res 258 Res 474 Res 476 Res 358 Res 478 Res 92 Res 478 Res 658 Com 2,492 Res 408 Res 419 Res 518 Res 399 Res 384 Com 2,592 Com 4,605 Res 822 Res 992 Res 18,739 Res 259 Res 46 Res 642 Res 621 Com 12,456 Res 1,158 Res 924 Res 807 Com 6,055 Res 15,392 Com 46,159 Res 2,455 Res 4,217 Res 791 Com 1,730 Res 3,777 Res 815 Res 978 Res 1,332 Com 13,061 Com 6,074 Res 865 Res 182 Com 15,462 Com 11,334 Com 8,116 Res 3,867 $ 196,714 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December31, 2018 Note 5. OTHER INFORMATION (Continued) M. Subsequent Events On April 16, 2019, the City was issued two Kansas Public Water Supply Loans in the amounts of $4,250,000 and $32,000,000, respectively. For both loans, the City will make the first payment on August 1, 2020 and the last payment on February 1, 2040. Both loans have interest rates of 2.33%. On April 24, 2019, the City issued Series 2019-A general obligation internal improvement bonds in the amounts of $11,090,000. The bonds will be used to partially retire Temporary Note 2018-2 that matures November 1, 2019 and to finance various capital projects. The City will make the first payment on the bonds on April 1, 2020 and the last payment on October 1, 2039. The interest rate on the bonds ranges from 3.00% to4.00%. On April 24, 2019, the City issued Series 2019-1 temporary notes in the amounts of $6,085,000. The temporary notes will be used to finance various capital projects. The maturity date of the temporary notes is May 1, 2020 and the interest rate on the notes is 1.58%. 70 REQUIRED SUPPLEMENTARY INFORMATION CITY OF SALINA, KANSAS REQUIRED SUPPLEMENTARY INFORMATION OTHER POSTEMPLOYMENT BENEFITS Schedule of Changes in the City's Total OPES Liability and Related Ratios Last Ten Fiscal Years* Total OPES liability Service cost Interest Benefit paid Changes in assumptions Net change in total OPES liability Total OPES liability -beginning Total OPES liability -ending Co1.ered payroll Total OPES liability as a percentage of cowred-employee payroll Actuarially determined contribution Actual contribution Contributions as a percentage of co1.ered payroll * -Data became available with the inception of GASS 75 during fiscal year 2018, therefore 10 years of data is unavailable. 71 2018 $ 226,762 128,578 [265,000) 90,918 181,258 3,306,044 $ 3,487,302 $ 24,740,225 14.10% $ 265,000 $ 265,000 1.07% CITY OF SALINA, KANSAS REQUIRED SUPPLEMENTARY INFORMATION (CONTINUED) OTHER POSTEMPLOYMENT BENEFITS -KPERS Schedule of Changes in the City's Total OPEB Liability and Related Ratios Last Ten Fiscal Years* Total OPEB liability Sen.foe cost Interest Effect of economic/demographic gains or losses Effect of assumptions changes or inputs Benefit payments Net change in total OPEB liability Total OPEB liability -beginning Total OPEB liability -ending Cowred payroll Total OPEB liability as a percentage of cowred-employee payroll Actuarially determined contribution Actual contribution Contributions as a percentage of cowred payroll * -Data became available with the inception of GASB 75 during fiscal year 2018, therefore 10 years of data is unavailable. 72 2018 $ 52,380 17,061 75, 173 [6,574) [30,368) 107,672 439,254 $ 546,926 $ 13,652, 194 4.01% $ 109,466 $ 109,466 0.80% CITY OF SALINA, KANSAS REQUIRED SUPPLEMENTARY INFORMATION (CONTINUED) KPERS PENSION PLAN Schedule of the City's Proportionate Share of the Net Pension Liability Last Ten Fiscal Years* Police and Police and Police and Local Firemen Local Firemen Local Firemen 12131115 12131115 12131116 12131116 12131117 1.m1L.1Z Local 12131118 City's proportion of the net pension liability 0.764% 2.258% 0.761% 2.180% 0.811% 2.191% 0.790% City's proportionate share of the net pension liability s 10,027,679 $16,395,794 $11, 770,699 $ 20,251,512 $11,753,246 $20,546,882 City's co-.ered-employee payroll s 12,931 ,197 $10,161,866 $13,251,236 $10,730,033 $13,548,056 s 10,593,419 City's proportionate share of the net pension liability as a percentage of its CO\oered--employee payroll 77.55% Plan fiduciary net position as a percentage of the total pension liability 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, therebre 10 years of data is una1,0iJable. 161.35% 74.60% 88.83% 188.74% 86.75% 193.96% 68.55% 69.30% 72.15% 70.99% Schedule of the City's Contributions Contractually required contribution Contributions in relation to the contractually required contribution Contribution deficiency (excess] Local 12131115 $ 1,256,217 1,256,217 Last Ten Fiscal Years* Police and Police and Firemen Local Firemen 12/31/15 12/31/16 12/31/16 s 2,527,995 $ 1,243,711 $ 2,361,273 2,527,995 1,243,711 2,361,273 $ $ $ Police and Local Firemen 12/31/17 12/31/17 $ 1, 179,745 $ 1,986,933 1,179,745 1,986,933 $ $ $11,014,328 s 13,944,989 78.98% 74.22% Local 12/31/18 s 1,205,334 1,205,334 City's co...,red-employee payroll $13,251,236 $10,730,033 s 13,548,056 $10,593,419 $13,944,989 $10,441,055 $14,366,294 Contributions as a percentage of co\o€red employee payroll 9.48% • -Data became available with the inception of GASB 68 during fiscal year 2015, therefore 10 years of data is unavailable. 23.56% 9.18% 73 22.29% 8.46% 19.03% 8.39% Police and Firemen 12131118 2.081% $20,019,473 $10,441 ,055 191.74% 71.53% Police and Firemen 12/31/18 $ 2,181,617 2,181,617 $ $10,859,219 20.09% [THIS PAGE INTENTIONALLY LEFf BLANK] COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES CITY OF SALINA, KANSAS COMBINING STATEMENTS-NONMAJOR 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 2.34% of the .75 cent sales tax designated for economic Development purposes. Downtown TIF District #1 fund -To account for revenues and expenditures related to the Tax Increment Financing District that was formed as part of the Downtown Revitalization Project. South 9th CID fund -To account for incremental sales tax revenues received and disbursed back to the developer as part of the Community Improvement District formed in 2015. State Grants fund -To account for grant revenue and expenditures received from the State of Kansas. 911 communications fund -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. 74 CITY OF SALINA, KANSAS COMBINING STATEMENTS -NONMAJOR FUNDS NONMAJOR SPECIAL REVENUE FUNDS -CONTINUED Homeowners' assistance fund -To receive donations and/or other funds to assist low and moderate income persons in improving their homes. Private grants fund -To account for revenues and expenditures related to grants received from private entities with specific purposes. Animal shelter donations fund -To accumulate donations and account for expenses to benefit the animal shelter. 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 year2076. 75 CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2018 Total Total Non major Nonmajor Non major Debt Special Revenue Permanent Service Funds Funds Fund ASSETS Cash and investments $ 2,885,257 $ 514,201 $ 633,653 Receivables Accounts 1,797 Total assets $ 2,887,054 $ 514,201 $ 633,653 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 149,019 $ -$ Due to other funds 24,544 Total liabilities 173,563 Fund balances: Restricted 345,041 Committed 2,067,239 514,201 Assigned 325,755 Unassigned [24,544) Total fund balances 2,713,491 514,201 Total liabilities and fund balances $ 2,887,054 $ 514,201 $ See independent auditor's report on the financial statements. 76 - 633,653 633,653 633,653 Total Nonmajor Governmental Funds $ 4,033,111 1,797 $ 4,034,908 $ 149,019 24,544 173,563 978,694 2,581,440 325,755 [24,544) 3,861,345 $ 4,034,908 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended December 31, 2018 Total Total Non major Non major Non major Debt Special Revenue Permanent Service Funds Funds Fund REVENUES Taxes $ 713,282 $ -$ - Intergovernmental 807,067 475,503 Charges for services 469,969 9,260 Licenses and permits 2,500 Investment revenue 18,110 3,283 14,797 Donations 237,660 Miscellaneous 55,048 Total revenues 2,303,636 12,543 490,300 EXPENDITURES Current Culture and recreation 1,760,504 Public safety 343,811 Public health and sanitation 442,359 Planning and development 641,823 Miscellaneous 35 Debt service Principal retirement 810,000 Interest and other charges 84,535 Capital outlay 569,901 Total expenditures 3,758,398 35 894,535 Excess [deficiency] of revenues over [under] expenditures [1,454,762] 12,508 [404,235] Other financing sources [uses] Transfers in 1,354,914 Total other financing sources [uses] 1,354,914 Net change in fund balance [99,848] 12,508 [404,235] Fund balance -Beginning of year 2,813,339 501,693 1,037,888 Fund balance -End of year $ 2,713,491 $ 514,201 $ 633,653 See independent auditor's report on the financial statements. 77 Total Non major Governmental Funds $ 713,282 1,282,570 479,229 2,500 36,190 237,660 55,048 2,806,479 1,760,504 343,811 442,359 641,823 35 810,000 84,535 569,901 4,652,968 [1,846,489] 1,354,914 1,354,914 [491,575] 4,352,920 $ 3,861,345 ASSETS Cash and investments Receivables Accounts Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Due to other funds Total liabilities Fund balance: Restricted Committed Assigned Unassigned Total fund balance [deficit] Total liabilities and fund balances CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS For the Year Ended December 31 , 2018 Business Bicentennial Improvement Neighborhood Center District Park $ 154,748 $ 24,964 $ 24,251 1,797 $ 154,748 $ 26,761 $ 24,251 $ 57,067 $ 18,803 $ - 57,067 18,803 7,958 97,681 24,251 97,681 7,958 24,251 $ 154,748 $ 26,761 $ 24,251 Special Parks & Special Recreation Alcohol $ 272,521 $ 234 $ 272,521 $ 234 $ -$ 122,447 234 150,074 272,521 234 $ 272,521 $ 234 Community Sales Tax Downtown Development Economic TIF Revolving Develoi;iment District #1 $ 186,307 $ 902,997 $ 237,956 $ $ 186,307 $ 902,997 $ 237,956 $ $ - $ 5,512 $ - $ 5,512 186,307 897,485 237,956 186,307 897,485 237,956 $ 186,307 $ 902,997 $ 237,956 $ South 9th CID 46,548 $ 46,548 $ 45,301 $ 45,301 1,247 1,247 46,548 $ State 911 Grants Communications 8,013 $ 8,013 $ - $ 8,013 8,013 372,254 372,254 15,693 15,693 180,880 175,681 356,561 8,013 _$ ___ 37_2..,.2_54_ See independent auditor's report on the financial statements. 78 ASSETS Cash and investments Receivables Accounts Total assets CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS (Continued) For the Year Ended December 31, 2018 Kenwood Special Cove Law Police Capital Enforcement Grants $ 108,313 $ 82 $ $ 108,313 $ 82 $ - - LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 1,564 $ -$ - Due to other funds 24,544 Total liabilities 1,564 24,544 Fund balance: Restricted Committed 106,749 82 Assigned Unassigned [24,544) Total fund balance [deficit] 106 749 82 [24,544) Total liabilities and fund balances $ 108,313 $ 82 $ - Federal DARE Grants Donations $ 3,325 $ 26,616 $ 3,325 $ 26,616 $ -$ 1,298 1,298 3,325 25,318 3,325 25,318 $ 3,325 $ 26,616 Police War Federal Department Animal Memorial Arts & CARE Federal Homeowners' Private Shelter Maintenance Humanities Grant Forfeiture Funds Assistance Grants Donations Totals $ 31,959 $ 3,108 $ 26,141 $ 99 $ 14,215 $ 1,954 $ 438,652 $ 2,885,257 1,797 $ 31,959 $ 3,108 $ 26,141 $ 99 $ 14,215 $ 1,954 $ 438,652 $ 2,887,054 $ 1,542 $ 1,402 $ -$ -$ -$ -$ 837 $ 149,019 1,542 1,402 30,417 1,706 30,417 1,706 $ 31,959 $ 3,108 26, 141 1,954 99 14,215 26,141 99 14,215 1,954 $ 26,141 $ 99 $ 14,215 $ 1,954 See independent auditor's report on the financial statements. 79 24,544 837 173,563 345,041 437,815 2,067,239 325,755 [24,544] 437,815 2,713,491 $ 438,652 $ 2,887,054 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS For the Year Ended December 31, 2018 Business Bicentennial Improvement Neighborhood Center District Park Revenues Taxes $ -$ -$ - Intergovernmental Charges for services 84,870 Licenses and permits 2,500 Investment revenue 1,105 145 152 Donations Miscellaneous Total Revenues 1,105 85,015 2,652 Expenditures Current Culture and recreation 762,968 Public safety Public health and sanitation Planning and development 93,225 Capital outlay Total Expenditures 762,968 93,225 Excess [deficiency] of revenues over [under] expenditures [761,863] [8,210] 2,652 Other financing sources [uses] Transfers in 801,564 Total other financing sources [uses] 801.564 Net change in fund balance 39,701 [8,210] 2,652 Fund balance, beginning of year 57,980 16,168 21,599 Fund balance, end of year $ 97,681 $ 7,958 $ 24,251 Special Parks & Special Recreation Alcohol $ -$ 191,676 191,676 1,533 70 193,209 191,746 191,676 44,909 44,909 191,676 148,300 70 148,300 70 124,221 164 $ 272,521 $ 234 Community Development $ Revolving - 1,195 1,195 1,195 1,195 185,112 Sales Tax Economic Development $ 347,167 5,800 352,967 457,585 457,585 Downtown TIF District #1 $ 134,867 1,458 136,325 [104,618] __ 1"'--36"-'-,3;_2_5 [104,618] 1,002,103 136,325 101,631 $ South 9th CID 231,248 248 14,953 246,449 536,053 536,053 [289,604] [289,604] 290,851 $ State Grants - 9,000 57 9,057 7,480 7,480 1,577 1,577 6,436 911 Communications $ 332,898 2,246 335,144 343,811 343,811 [8,667] [8,667) 365,228 $ 186,307 $ 897,485 $ 237,956 $ 1,247 $ 8,013 .._$ __ 3_56 __ ._56_1 See independent auditor's report on the financial statements. 80 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, 2018 Kenwood Special Cove Law Police Capital Enforcement Grants Revenues Taxes $ -$ -$ - Intergovernmental 6,817 Charges for services Licenses and permits Investment revenue 656 Donations Miscellaneous Total Revenues 656 6,817 Expenditures Current Culture and recreation Public safety Public health and sanitation Planning and development Capital outlay 56,420 3,507 Total Expenditures 56,420 3,507 Excess [deficiency] of revenues over [under] expenditures [55,764] 3,310 Other financing sources [uses] Transfers in 68,350 Total other financing sources [uses] 68.350 Net change in fund balance 12,586 3,310 Fund balance, beginning of year 94,163 81 [27,854] Fund balance, end of year $106,749 $ 82 $ [24,544) Federal DARE Grants Donations $ -$ 21 132 19,142 21 19,274 12,545 12,545 21 6,729 21 6,729 3,304 18,589 $ 3,325 $ 25,318 War Memorial Maintenance $ - 206 206 1,855 1,855 [1,649) [1,649] 32,066 $ 30,417 Police Federal Department Arts & CARE Federal Homeowners' Private Humanities Grant Forfeiture Funds Assistance Grants $ $ -$ -$ -$ -$ - 385,099 127 168 86 13 21,848 2,689 [3,584) 407,074 168 2,775 [3,571) 995,681 995,681 [588,607] 168 2,775 [3,571) 485,000 485.000 [103,607] 168 2,775 [3,571] 105,313 25,973 98 11,440 5,525 1,706 $ 26,141 $ 99 $ 14,215 $ 1,954 See independent auditor's report on the financial statements. 81 Animal Shelter Donations Totals $ -$ 713,282 75,000 807,067 469,969 2,500 2,690 18, 110 237,660 237,660 55,048 315,350 2,303,636 1,760,504 343,811 250,683 442,359 641,823 569,901 250,683 3,758,398 64,667 [1,454,762) 1,354,914 1 .354.914 64,667 [99,848] 373,148 2,813,339 $437,815 $ 2,713,491 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, 2018 Cemetery Mausoleum Tricentennial Endowment Endowment Commission Total $ 506,324 $ 2,042 .;:;..$ __ 5;;..:.,8;;...;3;...;;_5 $ 514,201 $ 506,324 $ 2,042 .=,.$ _ __;5~,8;;.;;3;.;;.5 $ 514,201 506,324 2,042 5,835 514,201 $ 506,324 $ 2,042 .=..$ _ __;5~,8;.;;3~5 $ 514,201 See independent auditor's report on the financial statements. 82 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR PERMANENT FUNDS For the Year Ended December 31, 2018 Cemetery Mausoleum Tricentennial Endowment Endowment Commission Revenues Charges for services $ 9,260 $ -$ Investment revenue 3,233 13 Total revenues 12,493 13 Expenditures Miscellaneous 35 Total expenditures 35 Net change in fund balance 12,458 13 Fund balances -beginning of year 493,866 2,029 Fund balances -end of year $ 506,324 $ 2,042 $ See independent auditor's report on the financial statements. 83 - 37 37 37 5,798 5,835 Total $ 9,260 3,283 12,543 35 35 12,508 501,693 $ 514,201 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GMP BASIS) BICENTENNIAL CENTER FUND For the Year Ended December 31, 2018 Budgeted Amounts Actual Original Revenues Investment revenue $ 1,105 $ -$ Total revenues 1,105 Expenditures Culture and recreation 762,968 762,332 Total expenditures 762,968 762,332 Excess [deficiency] of revenues over [under] expenditures [761,863) [762,332] Other financing sources [uses] Transfers in 801,564 700,000 Total other financing sources [uses] 801,564 700,000 Excess [deficiency) of revenues and other sources over [under] expenditures and other [uses] 39,701 [62,332) Unreserved fund balance, January 1 57,980 74,481 Unreserved fund balance/GMP fund balance December 31 $ 97,681 $ 12,149 $ See independent auditor's report on the financial statements. 84 Final - 762,332 762,332 [762,332) 700,000 700,000 [62,332) 74,481 12,149 Variance with Final Budget Positive [Negative] $ 1,105 1,105 [636] [636) 469 101,564 101,564 102,033 [16,501) $ 85,532 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, 2018 Budgeted Amounts Actual Original Revenues Charges for services $ 85,937 $ 89,175 $ Investment revenue 145 15 Total revenues 86,082 89,190 Expenditures Planning and development 93,225 89,190 Total expenditures 93,225 89,190 Excess [deficiency) of revenues over [under] expenditures [7, 143) Unreserved fund balance, January 1 13,304 18,182 Unreserved fund balance, December 31 6,161 $ 18,182 $ Reconciliation to GAAP Accounts receivable 1,797 GAAP Fund Balance, December 31 $ 7,958 See independent auditor's report on the financial statements. 85 Final 89,175 15 89,190 89,190 89,190 18,182 18,182 Variance with Final Budget Positive [Negative] $ [3,238) 130 [3,108] [4,035] [4,035] [7,143) [4,878] $ [12,021] CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GMP BASIS) NEIGHBORHOOD PARK FUND For the Year Ended December 31, 2018 Budgeted Amounts Actual Original Revenues Licenses and permits $ 2,500 $ 10,000 $ Investment revenue 152 500 Total revenues 2,652 10,500 Expenditures Capital outlay Total expenditures Excess [deficiency] of revenues over [under] expenditures 2,652 10,500 Unreserved fund balance, January 1 21,599 4,873 Unreserved fund balance/GMP fund balance December 31 $ 24,251 $ 15,373 $ See independent auditor's report on the financial statements. 86 Final 10,000 500 10,500 10,500 4,873 15,373 Variance with Final Budget Positive [Negative] $ [7,500] [348] [7,848] [7,848] 16,726 $ 8,878 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, 2018 Budgeted Amounts Actual Original Revenues Intergovernmental $ 191,676 $ 189,192 $ Investment revenue 1,533 1,000 Total revenues 193,209 190,192 Expenditures Capital outlay 194,983 194,000 Total expenditures 194,983 194,000 Excess [deficiency] of revenues over [under] expenditures [1,774] [3,808] Unreserved fund balance, January 1 124,221 115,137 Unreserved fund balance, December 31 122,447 $ 111,329 $ Reconciliation to GAAP Current year encumbrances 150,074 GAAP Fund Balance, December 31 $ 272,521 See independent auditor's report on the financial statements. 87 Final 189,192 1,000 190,192 194,000 194,000 [3,808] 115, 137 111,329 Variance with Final Budget Positive [Negative] $ 2,484 533 3,017 [983] [983] 2,034 9,084 $ 11,118 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GMP BASIS) SPECIAL ALCOHOL FUND For the Year Ended December 31, 2018 Budgeted Amounts Actual Original Revenues Intergovernmental $ 191,676 $ 216,086 $ Investment revenue 70 Total revenues 191,746 216,086 Expenditures Public health and sanitation 191,676 216,086 Total expenditures 191,676 216,086 Excess [deficiency] of revenues over [under] expenditures 70 Unreserved fund balance, January 1 164 34,899 Unreserved fund balance/GMP fund balance December 31 $ 234 $ 34,899 $ See independent auditor's report on the financial statements. 88 Final 216,086 216,086 216,086 216,086 34,899 34,899 Variance with Final Budget Positive [Negative] $ [24,410) 70 [24,340) 24,410 24,410 70 [34,735] $ [34,665) 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, 2018 Budgeted Amounts Actual Original Final $ 347,167 $ 332,818 $ 332,818 5,800 2,000 2,000 352,967 334,818 334,818 457,585 458,840 458,840 457,585 458,840 458,840 Excess [deficiency] of revenues over [under] expenditures [104,618] [124,022] Unreserved fund balance, January 1 1,002,103 667,262 Unreserved fund balance/GAAP fund balance December 31 $ 897,485 $ 543,240 $ See independent auditor's report on the financial statements. 89 [124,022] 667,262 543,240 Variance with Final Budget Positive [Negative] $ 14,349 3,800 18,149 1,255 1,255 19,404 334,841 $ 354,245 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, 2018 Budgeted Amounts Actual Original Revenues Charges for services $ 385,099 $ 347,200 $ Investment revenue 127 2,000 Miscellaneous 21,848 133,650 Total revenues 407,074 482,850 Expenditures Culture and recreation 995,681 1,048,635 Total expenditures 995,681 1,048,635 Excess [deficiency] of revenues over [under] expenditures [588,607] [565,785] Other financing sources [uses] Transfers in 485,000 525,000 Total other financing sources [uses] 485,000 525,000 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [103,607] [40,785] Unreserved fund balance, January 1 105,313 190,338 Unreserved fund balance/GAAP fund balance December 31 $ 1,706 $ 149,553 $ See independent auditor's report on the financial statements. 90 Final 347,200 2,000 133,650 482,850 1,048,635 1,048,635 [565,785] 525,000 525,000 [40,785] 190,338 149,553 Variance with Final Budget Positive [Negative] $ 37,899 [1,873] [111,802] (75,776] 52,954 52,954 [22,822] [40,000] [40,000] [62,822] [85,025] $ [147,847) 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 , 2018 Budgeted Amounts Actual Original Revenues Taxes Real estate taxes $ 2,394,142 $ 2,674,498 Delinquent taxes 62,732 55,000 Motor vehicle taxes 305,481 296,922 Special assessments 1,545,758 1,620,000 Investment revenue 21,230 Miscellaneous 58,932 Total revenues 4,329,343 4,705,352 Expenditures Debt Service Principal retirement 5,252,865 5,057,920 Interest and other charges 1,702,255 2,086,687 Total expenditures 6,955,120 7,144,607 Excess [deficiency] of revenues over [under] expenditures [2,625, 777] [2,439,255] Other financing sources [uses] Transfers in 2,270,782 2,000,000 Total other financing sources [uses] 2,270,782 2,000,000 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [354,995] [439,255) Unreserved fund balance, January 1 1,462,554 814,255 Prior period adjustment 694,409 Unreserved fund balance, January 1, restated 2,156,963 814,255 Unreserved fund balance, December 31 1,801,968 $ 375,000 Reconciliation to GAAP Taxes receivable 2,674,390 Deferred revenue [2,625,000J GAAP Fund Balance, December 31 $ 1,851,358 See independent auditor's report on the financial statements. 91 Final $ 2,744,775 62,732 305,480 1,546,859 4,659,846 5,494,365 1,688,616 7,182,981 [2,523,135] 2,000,000 2,000,000 [523,135] 1,195,141 1, 195, 141 $ 672,006 Variance with Final Budget Positive [Negative] $ [350,633] 1 [1, 101] 21,230 [330,503] 241,500 [13,639] 227,861 [102,642] 270,782 270,782 168,140 267,413 694,409 961,822 $ 1,129,962 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, 2018 Budgeted Amounts Actual Original Revenues Charges for services $ 3,101,872 $ 2,844,000 Investment revenue 31, 711 4,000 Miscellaneous 18,894 49,310 Total revenues 3,152,477 2,897,310 Expenditures Public works 1,893,824 1,698,164 Total expenditures 1,893,824 1,698,164 Excess [deficiency] of revenues over [under] expenditures 1,258,653 1,199,146 Other financing sources [uses] Transfers [out] [690,000] [1, 175,000] Total other financing sources [uses] [690,000] [1, 175,000] Excess [deficiency) of revenues and other sources over [under) expenditures and other [uses] 568,653 24,146 Unreserved fund balances, January 1 3,880,930 3,107,520 Prior period adjustment [694,409) Prior year cancelled encumbrances 249,242 Unreserved fund balances, December 31 $ 4,004,416 $ 3,131,666 See independent auditor's report on the financial statements. 92 Final $ 2,844,000 4,000 49,310 2,897,310 1,698,164 1,698,164 1, 199, 146 [1, 175,000] [1, 175,000] 24,146 3,107,520 $ 3,131,666 Variance with Final Budget Positive [Negative] $ 257,872 27,711 [30,416] 255,167 [195,660] [195,660] 59,507 485,000 485,000 544,507 773,410 (694,409] 249,242 $ 872,750 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, 2018 Budgeted Amounts Actual Original Revenues Charges for services $ 20,205,846 $ 20,469,600 Investment revenue 97,347 25,000 Miscellaneous 5,101 10,000 Total revenues 20,308,294 20,504,600 Expenditures Public works 10,965,681 14,491, 199 Total expenditures 10,965,681 14,491, 199 Excess [deficiency] of revenues over [under] expenditures 9,342,613 6,013,401 Other financing sources [uses] Transfers in 122,200 Transfers [out] [6,266,000] [6,850,000] Total other financing sources [uses] [6,266,000] [6,727,800) Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 3,076,613 [714,399] Unreserved fund balances, January 1 11,301,601 12,691,809 Prior period adjustment [2, 116,375] Prior year cancelled encumbrances 21,352 Unreserved fund balances, December 31 $ 12,283, 191 $ 11,977,410 See independent auditor's report on the financial statements. 93 Final $ 20,469,600 25,000 10,000 20,504,600 14,491, 199 14,491, 199 6,013,401 122,200 [6,850,000] [6,727,800] [714,399] 12,691,809 $ 11,977,410 Variance with Final Budget Positive [Negative] $ [263,754] 72,347 [4,899] [196,306] 3,525,518 3,525,518 3,329,212 [122,200] 584,000 461,800 3,791,012 [1,390,208] [2, 116,375] 21,352 $ 305,781 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, 2018 Budgeted Amounts Actual Original Final Revenues Charges for services $ 2,941,279 $ 3,048,426 $ 3,048,426 Investment revenue 10,882 2,500 2,500 Total revenues 2,952,161 3,050,926 3,050,926 Expenditures Public works 2,542,409 2,472,097 2,472,097 Total expenditures 2,542,409 2,472,097 2,472,097 Excess [deficiency] of revenues over [under] expenditures 409,752 578,829 578,829 Other financing sources [uses] Transfers [out] [491,500] [411,500) [411,500] Total other financing sources [uses] [491,500] [411,500] [411,500] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [81,748] 167,329 167,329 Unreserved fund balance, January 1 1,544,357 1,191,230 1,191,230 Prior year cancelled encumbrances 5,525 Unreserved fund balances, December 31 $ 1,468,134 $ 1,358,559 $ 1,358,559 See independent auditor's report on the financial statements. 94 Variance with Final Budget Positive [Negative] $ [107,147] 8,382 [98,765) [70,312) [70,312] [169,077) [80,000] [80,000) [249,077] 353,127 5,525 $ 109,575 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, 2018 Budgeted Amounts Actual Original Revenues Charges for services $ 755,270 $ 825,900 $ Investment revenue 545 Miscellaneous 129,204 50,000 Total revenues 885,019 875,900 Expenditures Recreation 950,840 838,456 Total expenditures 950,840 838,456 Excess [deficiency] of revenues over [under] expenditures [65,821] 37,444 Other financing sources [uses] Transfers [out] [25,000] Total other financing sources [uses] [25,000] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [65,821] 12,444 Unreserved fund balance, January 1 116,032 133,136 Unreserved fund balances, December 31 $ 50,211 $ 145,580 $ See independent auditor's report on the financial statements. 95 Final 761,000 79,840 840,840 954,700 954,700 [113,860] [113,860] 116,032 2,172 Variance with Final Budget Positive [Negative] $ [5,730] 545 49,364 44,179 3,860 3,860 48,039 48,039 $ 48,039 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, 2018 Budgeted Amounts Actual Original Revenues Charges for services $ 408,974 $ 250,000 $ Investment revenue 6,315 2,500 Miscellaneous 6,854 Total revenues 422,143 252,500 Expenditures General government 254,669 281,306 Total expenditures 254,669 281,306 Excess [deficiency] of revenues over [under] expenditures 167,474 [28,806) Unreserved fund balance, January 1 919,375 862,316 Unreserved fund balances, December 31 $ 1,086,849 $ 833,510 $ See independent auditor's report on the financial statements. 96 Final 250,000 2,500 252,500 281,306 281,306 [28,806) 862,316 833,510 Variance with Final Budget Positive [Negative] $ 158,974 3,815 6,854 169,643 26,637 26,637 196,280 57,059 $ 253,339 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GMP BASIS) HEAL TH INSURANCE FUND For the Year Ended December 31, 2018 Budgeted Amounts Actual Original Final Revenues Charges for services $ 7,010,936 $ 7,044,200 $ 7,044,200 Investment revenue 18,520 5,000 5,000 Miscellaneous 60,258 5,000 5,000 Total revenues 7,089,714 7,054,200 7,054,200 Expenditures General government 6,028,279 6,402,432 6,402,432 Total expenditures 6,028,279 6,402,432 6,402,432 Excess [deficiency) of revenues over [under] expenditures 1,061,435 651,768 651,768 Unreserved fund balance, January 1 2,050,972 3,086,108 3,086,108 Unreserved fund balances, December 31 $ 3,112,407 $ 3,737,876 $ 3,737,876 See independent auditor's report on the financial statements. 97 Variance with Final Budget Positive [Negative] $ [33,264) 13,520 55,258 35,514 374,153 374,153 409,667 [1,035, 136) $ [625,469) Revenues CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GMP BASIS) CENTRAL GARAGE FUND For the Year Ended December 31, 2018 Budgeted Amounts Original Final Variance with Final Budget Positive [Negative) Charges for services Investment revenue Miscellaneous $ 1,327 ,390 $ 668 6,146 - $ 40 17,500 - $ 1,327,390 Total revenues Expenditures General government Total expenditures Excess [deficiency) of revenues over [under] expenditures Other financing sources [uses] Transfers in Total other financing sources [uses] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] Unreserved fund balance, January 1 Unreserved fund balance, December 31 1,334,204 1,491,671 1,491,671 [157,467) 190,000 190,000 32,533 21,595 $ 54,128 $ 40 628 __ ..:...;17'-!.,5~0;..:;_0 [11,354] 17,540 17,540 1,316,664 1,435,015 1,435,015 [56,656] 1,435,015 1,435,015 [56,656] [1,417,475] [1,417,475] 1,260,008 1,416,850 1,416,850 [1,226,850] 1,416,850 1,416,850 [1,226,850] [625) [625) 33,158 734 734 20,861 109 $ 109 _$_....;;...54,;.:.,0;...1~9 See independent auditor's report on the financial statements. 98 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. 99 CITY OF SALINA, KANSAS COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS December 31, 2018 Workers' Compensation Health ASSETS Reserve Insurance Current assets: Cash and investments $ 1,087,616 $ 3,112,407 Inventory and prepaid supplies Total current assets 1,087,616 3,112,407 Capital assets: Capital assets Less: accumulated depreciation Total capital assets Total assets 1,087,616 3, 112,407 Deferred outflows of resources: KPERS OPEB deferred outflows of resources Pension deferred outflows of resources Total deferred outflows of resources Total assets and deferred outflows of resources $ 1,087,616 $ 3, 112,407 Liabilities: Current liabilities (payable from current assets): Accounts payable $ 767 $ - Current portion of compensated absences payable Current portion of accrued claims payable 183,514 380,980 Total current liabilities (payable from current assets) 184,281 380,980 Noncurrent liabilities: Compensated absences payable Accrued claims payable 55,264 Net KPERS OPEB obligation Net pension liability Total noncurrent liabilities 55,264 Total liabilities 239,545 380,980 Deferred inflows of resources KPERS OPEB deferred inflows of resources Pension deferred inflows of resources Total deferred inflows of resources Total liabilities and deferred inflows of resources $ 239,545 $ 380,980 Net Position Invested in capital assets, net of related debt $ -$ - Unrestricted 848,071 2,731,427 Total net position $ 848,071 $ 2,731,427 See independent auditor's report on the financial statements. 100 Total Internal Central Service Garage Funds $ 95,062 $4,295,085 111,486 111,486 206,548 4,406,571 168,234 168,234 152,573 152,573 15,661 15,661 222,209 4,422,232 1,401 1,401 25,285 25,285 26,686 26,686 $248,895 $ 4,448,918 $ 40,934 $ 41,701 33,989 33,989 564,494 74,923 640, 184 25,399 25,399 55,264 5,469 5,469 154,549 154,549 185,417 240,681 260,340 880,865 133 133 11,300 11,300 11,433 11,433 $271,773 $ 892,298 $ 15,661 $ 15,661 (38,539) 3,540,959 $ [22,878) $ 3,556,620 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION INTERNAL SERVICE FUND For the Year Ended December 31, 2018 Workers' Compensation Health Central Reserve Insurance Garage Operating revenues Charges for services $ 408,974 $ 7,010,936 $ 1,327,390 Miscellaneous 6,855 60,258 6,145 Total operating revenues 415,829 7,071,194 1,333,535 Operating expenses General government 271,535 6,013,569 1,545,842 Depreciation 7,699 Total operating expenses 271,535 6,013,569 1,553,541 Operating income [loss] 144,294 1,057,625 [220,006) Nonoperating revenues [expenses] Investment revenue 6,315 18,520 668 Total other operating revenues [expenses] 6,315 18,520 668 Income [loss] before transfers 150,609 1,076, 145 [219,338) Transfers from [to] other funds Transfers in 190,000 Total transfers 190,000 Change in net position 150,609 1,076,145 [29,338) Net position, January 1 697,462 1,655,282 10,853 Prior period adjustment [4,393) Net position, January 1, restated 697,462 1,655,282 6,460 Net position, December 31 $ 848,071 $ 2,731,427 $ [22,878) See independent auditor's report on the financial statements. 101 Total Internal Service Funds $ 8,747,300 73,258 8,820,558 7,830,946 7,699 7,838,645 981,913 25,503 25,503 1,007,416 190,000 190,000 1,197,416 2,363,597 [4,393] 2,359,204 $ 3,556,620 CITY OF SALINA, KANSAS COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the Year Ended December 31, 2018 Workers' Compensation Health Reserve Insurance Cash flows from operating activities Cash received from customers and users $ 425,839 $ 6,996,225 Cash paid to suppliers of goods or services [270,848] [6,047,211] Cash paid to employees Other operating receipts 6,855 60,258 Net cash provided by [used in] operating activities 161,846 1,009,272 Cash flows from investing activities Interest received 6,315 18,520 Cash flows from noncapital financing activities Transfers in Net cash provided by [used 1n] noncapital financing activities Net increase [decrease] in cash and cash equivalents 168, 161 1,027,792 Cash and cash equivalents, January 1 919,455 2,084,615 Cash and cash equivalents, December 31 $ 1,087,616 $ 3, 112,407 See independent auditor's report on the financial statements. 102 Total Internal Central Service Garage Funds $ 1,327,391 $ 8,749,455 [1, 177 ,372] [7,495,431] [297,532] [297,532] 6,144 73,257 [141,369) 1,029,749 668 25,503 190,000 190,000 190,000 190,000 49,299 1,245,252 45,763 3,049,833 $ 95,062 $4,295,085 CITY OF SALINA, KANSAS COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS (Continued) For the Year Ended December 31, 2018 Reconciliation of operating [loss] income to net cash provided by [used in] operating activities Workers' Compensation Health Reserve Insurance Central Garage Total Internal Service Funds Operating income [loss] $ 144,294 $ 1,057,625 $ [220,006] $ 981,913 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 KPERS OPES liability Increase (decrease] in claims payable Increase (decrease] in deferred inflows 687 [33,642] 16,865 [14,711] 7,699 53,639 4,554 16,766 5,818 [11,010] 1,076 95 7,699 53,639 4,554 [16,189] 5,818 (11,010] 1,076 2,154 95 Net cash provided by [used in] operating activities $ 161,846 $1,009,272 $ [141,369] $1,029,749 See independent auditor's report on the financial statements. 103 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. DTF federal forfeiture fund -To account for revenues and expenditures related to the sale of assets acquired during drug enforcement activities as they related to federal cases. Expenses are limited to equipment and training for the Drug Task Force. DTF local fund -To account for revenues and expenditures related to the sale of assets acquired during drug enforcement activities as they relate to local cases. Expenses are limited to equipment and training for the Drug Task Force. DTF reserve fund -To account for revenues and expenditures related to State of Kansas Drug Tax Distributions. Expenses are limited to equipment and training for the Drug Task Force. Beechcraft remediation settlement fund -To account for revenues and expenditures related to the bankruptcy of Beechcraft and the former Schilling Airforce Base remediation case. Bail bond escrow fund -To account for funds being held in escrow for bonds issued by Municipal Court. 104 Special Fire Assessment Insurance Escrow Proceeds ASSETS Cash and investments $ 108,806 $ 18,967 Total assets $ 108,806 $ 18,967 LIABILITIES: Accounts payable $ 108,806 $ 18,967 Total hab1ht1es $ 108,806 $ 18,967 CITY OF SALINA, KANSAS COMBINING BALANCE SHEET AGENCY FUNDS December31,2018 Court Police Secllon DTF Payroll Bond and lnvest1gat1on 125 Federal ~ ~ ~ ~ Plan Forfeiture $ (339,790) $ 18,811 ~ $ 30,797 $215,856 _$ __ s (339,790) $ 18,811 ~ $ 30,797 $215,856 _$ __ s (339,790) $ 18,811 ~ $ 30,797 $215,856 L__: $ (339,790) $ 18,811 ~ $ 30,797 $215,856 _s __ See independent aud1to(s report on the financial statements 105 Beechcraft Ball DTF DTF Remed1t1on Bond ~ Reserve Settlement Escrow Totals $41,241 $33,475 $ 179,386 $1,135 $312,065 $41,241 $33,475 $ 179,386 $1,135 $312,065 $41,241 $33,475 $ 179,386 $1,135 $312,065 $41,241 $33,475 $ 179,386 $1,135 $312,065 CITY OF SALINA, KANSAS COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS For the Year Ended December 31, 2018 Balance December 31, 2017 Additions Deductions Cash and investments Special Assessment Escrow $ 90,849 $ 17,957 $ Fire Insurance Proceeds 18,869 47,855 Payroll Clearing [365,473) 25,683 Court Bond and Restitution 23,818 Police Investigation Account 3,379 2 Citizenship Trust 94,580 41,498 Section 125 Plan Fund 291,014 353,619 DTF Federal Forfeiture 3,696 DTF Local 47,216 23,527 DTF Reserve 26,299 13, 102 Beechcraft Remediation Settlement 154,181 25,205 Bail Bond Escrow 1,127 8 Total Assets $ 389,555 $ 548,456 $ Accounts Payable Special Assessment Escrow $ 90,849 $ 17,957 $ Fire Insurance Proceeds 18,869 47,855 Payroll Clearing [365,473) 25,683 Court Bond and Restitution 23,818 Police Investigation Account 3,379 2 Citizenship Trust 94,580 41,498 Section 125 Plan Fund 291,014 353,619 DTF Federal Forfeiture 3,696 DTF Local 47,216 23,527 DTF Reserve 26,299 13, 102 Beechcraft Remediation Settlement 154,181 25,205 Bail Bond Escrow 1,127 8 Total liabilities $ 389,555 $ 548,456 $ See independent auditor's report on the financial statements. 106 - 47,757 5,007 105,281 428,777 3,696 29,502 5,926 625,946 - 47,757 5,007 105,281 428,777 3,696 29,502 5,926 625,946 Balance December 31, 2018 $ 108,806 18,967 [339,790) 18,811 3,381 30,797 215,856 41,241 33,475 179,386 1,135 $ 312,065 $ 108,806 18,967 [339,790) 18,811 3,381 30,797 215,856 41,241 33,475 179,386 1,135 $ 312,065 STATISTICAL SECTION Schedule 1 City of Salina, Kansas Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) (in OOO's) Fiscal Year 2QQl! 2Q1Q 2Q11 2012 W2 ~ 2015 N1.§ 2017 N1i! Amount % Amount % Amount % Amount % Amount % Amount % Amount % Amount % Amount % Amount % Governmental activities Net investment in capital assets $101,974 85% $113,001 96% $109,289 93% $112,929 94% $116,585 90% $ 115,589 90% $ 130,401 122% $124,635 108% $129,921 105% $ 144,846 109% Restricted 1,174 1% 988 1% 1,712 1% 1,082 1% 1,210 1% 876 1% 1,224 1% 1,738 1% 2,012 2% 2,366 2% Unrestricted ~ 14% ----1&Q!! 3% ~ 5% --22.1.l 5% ~ 9% ~ 9% ~-23% (10,505) -9% ~ -7% ~ -10% Total governmental activities net position $119,854 100% $117,797 100% $117,334 100% $119,522 100% $129,423 100% $ 127,878 100% $ 106,703 100% $115,868 100% $123,701 100% $ 133,453 100% Business-type activities Net investment in capital assets $ 48,234 79% $ 48,078 75% $ 44,227 63% $ 50,857 69% $ 57,103 75% $ 61,721 75% $ 68,107 80% $ 62,427 71% $ 63,316 71% $ 62,368 69% Restricted 1,553 3% 1,553 2% 1,553 2% 1,553 2% 1,553 2% 1,512 2% 1,512 2% 1,512 2% 1,512 2% 1,512 2% Unrestricted ~ 19% 14,306 22% 24,528 35% 21,450 29% ~ 23% ~ 24% ----1.M.!Q 18% 23,621 27% 24,255 27% 26,503 29% Total business-type activities net position $ 61,269 100% $ 63,937 100% $ 70,308 100% $ 73,860 100% $ 76,450 100% $ 82,778 100% $ 85,229 100% $ 87,560 100% $ 89,083 100% $ 90,383 100% Primary government Net investment in capital assets $150,208 83% $161,080 89% $153,516 82% $163,786 85% $173,688 84% $ 177,311 84% $ 198,508 103% $187,062 92% $193,237 91% $ 207,213 93% Restricted 2,727 2% 2,541 1% 3,216 2% 2,635 1% 2,763 1% 2,388 1% 2,736 1% 3,250 2% 3,524 2% 3,878 2% Unrestricted ~ 16% ~ 10% 30,867 16% 26,961 14% 29,422 14% 30,959 15% ~ -5% -.!1J..!&. 6% 16,023 8% 12,744 6% Total primary government net position $181,123 100% $181,736 100% $187,599 100% $193,382 100% $ 205,873 100% $ 210,658 100% $ 191,932 100% $203,428 100% $212,784 100% $ 223,835 100% Source: City of Salina Comprehensive Annual Financial Reports, 2009 -2018 107 Schedule 2 City of Salina, Kansas Changes m Net Pos1t1on Last Ten Fiscal Years (accrual basis of accounting) (in OOO's) Fiscal Year 2009 ~ ~ 2012 ~ ZQli ~ ZQ.1§ 2017 ~ Expenses Governmental actlv1bes General government $ 14,664 10,845 $ 13,614 11,278 $ 10,978 12,175 10,743 9,188 $ 9,780 $ 12,013 Public safety 16,539 18,592 18,579 19,066 19,649 20,208 21,084 22,232 23,120 23,892 Public works 9,781 9,782 9,858 10,957 11,064 11.401 9,049 9,773 10,345 10,458 Pubhc health and sanitation 1,390 1,365 1,368 1,383 1,369 347 995 1,095 1,126 1,256 Culture and recreation 5,397 8,572 6,693 5,338 4,809 5,156 6,517 6,612 6,880 7,040 Planning and development 3,375 3,716 3,450 3,362 3,399 3,236 1,915 2,047 1,835 2,369 Interest on long tenn debt ~ ~ ~ ~ ----1lli ~ ---1fil! ---1..ill. ---1..!.!I. Total governmental act1v1ties expenses 51,146 55,128 55,212 53,298 53,221 54,340 52,077 53,918 54,811 59,145 Business-type act1vrt1es. Sohd waste disposal 2,287 3,010 2,945 2,067 3,532 1,867 1,766 2,335 2,365 2,382 Water and sewer 12,995 14,050 13,597 14,897 15,418 14,938 11,712 14,807 15,650 15,190 Sanitation 2,224 2,261 2,261 2,441 2,237 2,399 1,909 2,043 2,178 2,419 Golf course ~ _____lli ~ ____m. ~ __fill _!R! ____lg __!lg _____!@_ Total business-type act1v1bes expenses 18,403 20,138 19,628 20,128 21,955 20,041 16,208 19,977 21,045 20,917 Total pnmary government expenses $ 69,549 $ 75,266 $ 74,840 $ 73,426 $ 75,176 $ 74,381 $ 68,285 $ 73,895 $ 75,856 $ 80,062 Program Revenues Governmental activ1t1es Charges for services General government 4,599 5,143 6,106 6,328 $ 5,548 5,662 3,151 3,134 3,470 3,569 Public safety 2,913 3,969 3,766 4,290 4,656 4,222 4,600 4,891 4,601 4,815 Public works 164 198 262 306 277 255 193 238 348 285 Pubhc health and sanitation 42 37 43 46 34 46 46 44 50 47 Culture and recreation 1,936 2,817 3,140 1,728 1,466 1,533 1,501 1,638 1,541 1,545 Planning and development 267 144 153 158 161 167 73 140 91 150 Operating grants and contnbuttons 3,163 3,415 2,907 4,495 4,200 4,015 3,394 4,332 4,541 4,299 Capital grants and conblbutions _____ill. ~ Total governmental activities program revenues 13,084 15,723 16,377 17,351 16,342 15,900 12,958 15,150 14,642 19,345 Business-type act1v1t1es· Charges for services Sohd waste disposal 2,903 2,853 2,904 3,137 3,138 3,024 2,519 2,795 3,165 3,097 Water and sewer 14,980 16,520 17,904 19,099 17,938 18,742 19,059 19,322 19,855 20,202 Sanitation 2,292 2,310 2,334 2,462 2,514 2,553 2,529 2,751 2,885 3,006 Golf course 757 736 636 783 719 811 820 789 798 756 Operating grants and contnbutions 202 Capital grants and conblbubons 3,804 ~ __ 1_1_5 Total business-type act1vrt1es program revenues 20,932 22,419 27,784 25,755 24,309 25,245 24,927 25,657 26,703 27,061 Total pnmary government program revenues $ 34,016 $ 38,142 $ 44,161 $ 43,106 $ 40,651 $ 41,145 $ 37,885 $ 40,807 $ 41,345 $ 46,406 Net (Expense) Rovenue Governmental act1v1t1es $ (38,062) $ (39,405) $ (38,835) $ (35,947) $ (36,879) $ (38,440) $ (39,119) $ (38,768) $ (40,169) $ (39,800) Business-type activrt1es ~ ~ ~ ~ 2,354 5,204 ~ ~ ~ ~ Total pnmary government net expense $ (35,533) $ (37,124) $ (30,679) $ (30,320) $ (34,525) $ (33,236) $ (30,400) $ (33,088) $ (34,511) $ (33,657) General Revenues and Other Changes In Net Position Governmental act1v1t1es· Taxes Property taxes, general purpose 9,019 7,803 $ 7,783 8,272 8,031 8,315 8,242 8,196 $ 9,101 $ 8,623 Property taxes, debt seMce 1.711 2,230 2,779 2,439 2,362 2,578 2,766 3,022 2,487 2,457 Motor vehicle taxes 1,135 1,145 1,150 1,153 1,200 1,250 1,312 1,370 1,372 1,428 Sales tax, general purpose 11,669 11,118 11,767 12,165 12,260 12,689 12,931 12,781 12,906 13,292 Selecbve sales tax 3,380 4,108 4,080 4,210 4,281 4,461 4,558 4,901 8,832 8,917 Other taxes 5,791 6,298 6,390 6,486 6,630 7,231 7,363 7,991 6,900 7,241 Investment revenues 277 81 77 66 67 98 86 148 92 183 Miscellaneous 505 565 872 660 9,918 1,160 2,371 5,842 2,003 1,062 Transfers, net ----122. ___ 9_2 ~ __ 3_0 ~ _____:IE_ ~ ---1&QQ ~ -1&ll Total governmental activities 33,742 33,440 35,097 35,481 45,748 38,569 43,448 47,851 48,002 48,034 Business-type act1v1t1es· Investment revenues 242 67 84 79 49 51 56 78 129 233 Miscellaneous 352 341 330 434 279 97 103 153 Reimbursements 180 132 79 Transfers, net ___fil2) ___jW ---11.W __QQ) ~ ~ ___ill!!!) ~ ~ Total business-type act1V1bes ~ --11§. _.ill ~ ___J2ll) ~ ~~~~ Total pnmary government $ 34,081 $ 33,756 $ 35,312 $ 35,964 $ 45,126 $ 38,897 $ 39,855 $ 44,427 $ 43,867 $ 43,589 Change In Net Position Governmental activities $ (4,320) $ (5,965) $ (3,738) $ (466) $ 8,869 $ 129 $ 4,329 $ 9,083 $ 7,833 8,233 Business-type actJv1bes ~ ~ ___!!2I! ~ _____1Zg ~ ~ 2,256 --.!.,fil ~ Total pnmary government $ (1,452) $ (3,368) $ 4,633 $ 5,644 $ 10,601 $ 5,661 $ 9,455 $ 11,339 $ 9,356 $ 9,931 Soorce Crty of Salina Comprehensive Annual F1nanc1al Reports, 2009 -2018 108 General Fund Reserved Nonspendable Restricted Committed Assigned Unreserved/unassigned Total general fund Restatement Restated fund balance All other governmental funds Reserved Nonspendable Restricted Committed Assigned Unreserved/unassigned Total all other governmental funds 2009 2010 $ 508 $ 99 ~ ~ $ 5,088 3,617 156 $ 3,773 $ 11,092 $ 6,413 ~ _J1.J1Q) $ 15,116 $ 5,283 Schedule 3 City of Salina, Kansas Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in OOO's) Fiscal Year 2011 (Note 1) 2012 2013 2014 2015 2016 $ $ $ $ $ $ 90 116 81 107 111 131 293 540 331 239 199 136 ~ ~ ~ ~ ~ ~ $ 3,837 $ 3,828 $ 3,550 $ 4,254 $ 4,840 ~ $ $ $ $ $ $ 3,611 3,319 3,446 2,910 2,793 3,142 127 (516) 7,486 9,886 8,695 14,284 4,323 4,087 3,146 1,280 619 1,043 __l!Q2ZJ ~ $ 8,061 $ 6,890 $ 14,078 $ 14,076 !.......!2Z2. $ 11,646 Note 1: Prior year amounts have not been restated for the implementation of GASB Statement 54 in fiscal year 2011 . Source: City of Salina Comprehensive Annual Financial Reports, 2009 -2018 109 2017 2018 $ $ 153 152 214 340 ~ ~ ~ $ 6,743 $ $ 4,191 4,648 10,072 7,325 641 1,227 (28)~ $ 14,876 $ 12,348 Schedule 4 City of Salina, Kansas Changes in Fund Balances. Governmental Funds Last Ten Fiscal Years {modified accrual basis of accounting) {in OOO's) Fiscal Year ~ ~ 2011 ZQ.1.2 .2Q11 2014 ZQ.1.§_ 2Q12 2Q1l ~ Revenues Taxes {see Schedule 5) $ 32,706 $ 32,702 $ 33,949 $ 34,724 $ 34,764 $ 36,523 $ 37,171 $ 36,261 $ 41,597 $ 41,956 Intergovernmental 3,153 3,404 2,901 4,467 4,192 4,006 3,365 4,325 4,536 4,297 Special assessments 1,269 1,365 1,535 2,315 1,706 1,610 1,679 1,669 1,539 1,546 Licenses and permits 10 11 6 6 9 7 10 7 6 3 Charges for services 6,767 6,934 9,730 6,464 6,536 6,276 6,416 6,953 6,660 7,336 Investment revenue 210 64 69 47 40 59 47 142 79 157 Reimbursements 140 70 32 36 9,015 123 491 1,406 Donabons 241 63 141 111 236 Miscellaneous ~ ~ ~ ~ ____!!_!Q 799 ~ 4,315 1,651 ~ Total revenues ~ ....£:21!!. ~ ~ 59,072 51,646 ~ 57,219 56,599 56,421 Expenditures General government 3,007 3,549 3,461 3,574 4,269 3,966 5,342 5,422 5,423 5,649 Public safety 17,863 16,229 18,118 16,564 19,155 19,559 21,266 21,664 21,629 22,953 Public works 6,643 6,634 6,569 7,004 7,220 7,443 5,333 5,776 6,046 6,162 Public health and sanitation 1,353 1,332 1,330 1,343 1,344 319 982 1,076 1,097 1,236 Culture and recreation 4,947 5,777 5,900 4,449 3,939 4,292 5,659 5,617 6,143 6,255 Planning and development 3,269 3,609 3,344 3,256 3,293 3,232 1,910 2,042 1,601 2,165 Miscellaneous 32 Capital outlay 17,707 16,603 9,647 7,327 13,047 11,009 25,527 24,001 16,261 16,344 Debt service Principal 4,667 5,959 4,411 6,592 5,038 5,261 6,250 17,902 5,066 14,243 Interest 1,596 2,256 2,064 2,103 1,667 1,664 1,633 3,152 1,771 2,192 Deposit to escrow 107 __ 9_2 ---- Total expenditures 61,072 66,069 55,064 56,304 59,172 56,965 74,104 66,656 67,261 ~ Other financing sources (uses) Bonds and notes issued 23,695 7,034 6,565 6,150 5,690 5,365 6,625 34,692 11,490 8,090 Bond and note premium 1,369 47 23 60 165 302 369 1,503 95 70 Transfers in 3,617 5,076 7,994 3,466 4,907 3,001 7,642 7,065 6,339 13,462 Transfers out (3,422) (4,964) (5,692) (3,456) (3,907) (2,999) (3,913) (3,555) (4,160) (4,166) Other ~ ----Total other financing sources {uses) 25,259 ~ 9,046 ~ 6,875 5,669 10,923 39,905 15,764 17,436 Net change in fund balance $ 6,660 $(11,696) $ 2,803 ~ $ 6,775 ~ $ (12.046) $ 10,266 $ 5,082 $ (3,362) Debt service as a percentage of non-capital expenditures 17% 21% 17% 26% 16% 16% 20% 50% 16% 37% Source City of Salina Comprehensive Annual F1nanc1al Reports, 2009 -2016 110 Schedule 5 City of Salina, Kansas Tax Revenues by Source, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in OOO's) Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Real estate $ 9,971 $ 9,756 $ 10,288 $ 10,466 $ 10,145 $ 10,657 $ 10,729 $ 10,972 $ 11,377 $ 10,804 Delinquent 760 278 274 245 248 235 279 246 210 276 Motor vehicle 1,135 1,145 1,150 1,153 1,200 1,250 1,312 1,370 1,372 1,428 General sales 11,669 11,117 11,767 12,165 12,260 12,689 12,931 12,781 12,906 13,293 Selective sales 3,380 4,108 4,080 4,210 4,281 4,461 4,558 4,901 8,832 8,917 Other taxes 5,791 6,298 6,390 6,485 6,630 7,231 7,362 7,991 6,900 7,240 Total taxes $ 32,706 $ 32,702 $ 33,949 $ 34,724 $ 34,764 $ 36,523 $ 37,171 $ 38,261 $ 41,597 $ 41,958 Source· City of Salina Comprehensive Annual Financial Reports, 2009 -2018 111 Fiscal (Budget) Year Real Estate 2009 $ 356,678,712 2010 $ 358,979,211 2011 $ 367,750,803 2012 $ 369,416,422 2013 $ 370,390,092 2014 $ 376, 131,346 2015 $ 381,087,426 2016 $ 389,872,825 2017 $ 391,895,060 2018 $ 403,835,383 Schedule 6 City of Salina, Kansas Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years Assessed Value Total, Excluding Motor Vehicle Personal Property State Assessed Motor Vehicles Tax Rate (Note 1~ $ 28,373,980 $ 14,929,456 $ 399,982, 148 25.886 $ 51,351,656 $ 24,760,806 $ 13,730,609 $ 397,470,626 25.855 $ 50,330,252 $ 19,918,188 $ 14,685,585 $ 402,354,576 26.022 $ 47,406,062 $ 18,654,394 $ 15,779,466 $ 403,850,282 26.272 $ 47,553,744 $ 17,769,120 $ 16,948,264 $ 405,107,476 26.927 $ 48,882,411 $ 13,652,885 $ 17,670,147 $ 407,454,378 27.080 $ 48,865,900 $ 12,607,815 $ 18,984,453 $ 412,679,694 27.311 $ 50,350,566 $ 11,653,719 $ 19,323,055 $ 420,849,599 27.603 $ 51,833,505 $ 11,146,213 $ 19,323,055 $ 422,364,328 27.311 $ 50,970, 796 $ 10,130,718 $ 20,485, 144 $ 434,451,245 26.129 $ 53,336,677 Total, Taxable Assessed Value $ 451,333,804 $ 447,800,878 $ 449,760,638 $ 451,404,026 $ 453,989,887 $ 456,320,278 $ 463,030,260 $ 472,683, 104 $ 473,335,124 $ 487,787,922 Estimated Total Market Value (Note 2) $ 2,914,775,730 $ 2,893,359,541 $ 2,869,531,746 $ 2,884, 188,981 $ 2,889,385,914 $ 2,917,267,724 $ 2,957,531,741 $ 3,046,949,034 $ 3,097,885,103 $ 3,150,409,123 Assessed Value to Est. Market Value 15.48 15.48 15.67 15.65 15.71 15.64 15.66 15.51 15.28 15.48 Note 1: The tax rate for motor vehicles is set based on the average countywide tax rate. The City of Salina then receives a share of that based on tax effort. Note 2: The estimated market value excludes the value of the State assessed properties. Market value information is not available for those properties. However, state assessed property is generally assessed at 33% of market value, except for railroads, which are assessed at 15% of market value. Note 3: The Direct rate is expressed in dollars per thousand dollars of assessed value. Source: Saline County Clerk 112 City of Salina Fiscal Debt Total (Budget) Operating Service City Year Millage Millage Millage 2009 21.749 4.137 25.886 2010 20.082 5.773 25.855 2011 19.236 6.786 26.022 2012 20.326 5.946 26.272 2013 20.242 5.948 26.190 2014 20.539 6.388 26.927 2015 20.692 6.388 27.080 2016 19.950 7.361 27.311 2017 21.694 5.909 27.603 2018 20.339 5.790 26.129 Source: Saline County Treasurer Schedule 7 City of Salina, Kansas Direct and Overlapping Property Tax Rates Last Ten Fiscal Years (rate per $1,000 of assessed value) Saline County Debt Total Operating Service County Operating Millage Millage Millage Millage 29.347 29.347 46.339 31.303 31.303 45.341 31.432 31.432 45.818 32.576 32.576 47.127 34.823 34.823 47.133 37.895 37.895 46.599 38.047 38.047 44.088 38.275 38.275 44.465 37.508 37.508 44.069 37.321 37.321 45.130 USO 305 (2) Other (1) Debt Total Service USO Millage Millage Other Total 12.208 58.547 10.971 124.751 13.155 58.496 12.401 128.055 13.095 58.913 12.131 128.498 11.693 58.820 11.989 129.657 11.516 58.649 12.135 131.797 11.517 58.116 12.941 135.879 11.517 55.605 13.305 134.037 11.655 56.120 13.293 134.999 11.674 55.743 13.299 134.153 11.371 56.501 13.189 133.140 (1) The "Other" column includes the State of Kansas, the Salina Airport Authority, the Salina Public Library and Kansas State Extension District #3. (2) A small portion of Salina is covered by USO 306, USO 307, or USO 400. Total Tax Rates are different in the areas covered by these jurisdictions. 113 Schedule 8 City of Salina, Kansas Principal Property Taxpayers Current Year and Ten Years Ago 2008 (2007 Assessed Value) 2018 (2017 Assessed Value) Assessed % of Total Assessed % of Total Taxpayer Type of Business Valuation Valuation Rank Valuation Valuation Rank Westar Energy (Western Resources) SFC Global Supply Chain, Inc. (Schwan's) RAF Salina, LLC Kansas Gas Service Central Mall Realty Holding LLC S&B Motels Sams Real Estate Business Trust/Walmart Menard Inc. Individual Wal-Mart Real Estate Business Trust Great Plains Manufacturing Union Pacific Southwestern Bell Salina Regional Health Center Combined Valuation of the Ten Largest Taxpayers City Valuation Percent of Total City Assessed Valuation Source: Saline County Clerk's Office or recent OS Utility Pizza Manufacturing Regional Shopping Center Utility Regional Shopping Center Motel Discount Retail Stores Home Improvement Residential Discount Retail Stores Manufacturing Railroad Telephone Utility Hospital and Medical Offices 114 $ 7,287,074 12,382,582 2,633,187 9,003,313 2,388,908 1,913,209 3,627,525 2,308,375 4,783,821 5,580,586 $ 51,908,580 $ 335,262,182 2.17% 3 $ 11,856,980 2.73% 1 3.69% 1 7,508,620 1.73% 2 NIA 4,674,872 1.08% 3 0.79% 7 3,784,188 0.87% 4 2.69% 2 3,696,437 0.85% 5 0.71% 8 3,424,974 0.79% 6 NIA 2,529,908 0.58% 7 NIA 2,501,856 0.58% 8 0.57% 10 2,333,789 0.54% 9 1.08% 6 2,282,451 0.53% 10 0.69% 9 NIA 1.43% 5 1.66% 4 -$ 44,594,075 $ 434,451,245 15.48% 10.26% Fiscal (Budget) Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Schedule 9 City of Salina, Kansas Property Tax Levies and Distributions Last Ten Fiscal Years Current Year Tax Distributions Taxes Levied for the fiscal Delinquent year Amount Percentage Collections (1) $ 10,354,161 $ 9,923,959 95.8% $ 759,764 $ 10,276,905 $ 9,704,937 94.4% $ 278,656 $ 10,415,491 $ 10,287,770 98.8% $ 273,843 $ 10,570,420 $ 10,411,299 98.5% $ 245,086 $ 10,576,448 $ 10,145,404 95.9% $ 248,184 $ 10,908,147 $ 10,776,688 98.8% $ 398,820 $ 11,316,065 $ 10,460,246 92.4% $ 617,496 $ 11,740,993 $ 10,972,299 93.5% $ 245,577 $ 11,254,398 $ 11,239,051 99.9% $ 209,950 $ 11,260,358 $ 10,803,591 95.9% $ 276,340 Total Tax Distributions Amount $ 10,683,723 $ 9,983,593 $10,561,613 $ 10,656,385 $ 10,393,588 $ 11, 175,508 $11,077,742 $11,217,876 $ 11,449,001 $ 11,079,931 Percentage of levy 103.2% 97.1% 101.4% 100.8% 98.3% 102.5% 97.9% 95.5% 101.7% 98.4% (1) Delinquent collections are reported in the aggregate for all previous years. Data is not currently available for "collected in subsequent years" Source: Saline County Treasurer's Office 115 City Direct Tax Rate General Special purpose County-wide Tax Rate Portion of County-wide tax allocated to City (July Percentage) 2009 0.50% 0.25%/0.40% 1.00% 62.46% Schedule 10 City of Salina, Kansas Direct Sales Rate by Taxing Entity Last Ten Fiscal Years Fiscal Year 2010 2011 2012 2013 0.50% 0.50% 0.50% 0.50% 0.40% 0.40% 0.40% 0.40% 1.00% 1.00% 1.00% 1.00% 61.58% 63.34% 61.72% 60.86% 2014 2015 2016 0.50% 0.50% 0.50% 0.40% 0.40% 0.40% 1.00% 1.00% 1.00% 60.23% 60.28% 60.28% In addition to the direct tax, the City receives a portion of the Countywide sales tax, based on a formula distribution. The formula is based on property tax effort and population, and is adjusted in January and July of each year. In May, 2016, the voters approved an increase in the Special Purpose Tax rate from .40% to .75%, to be effective October 1, 2016. Source: Kansas Department of Revenue 116 2017 2018 0.50% 0.50% 0.75% 0.75% 1.00% 1.00% 60.28% 59.85% 2009 2010 # Accls Water # Accts Water Rate Class Biiied Sold Biiied Sold Resldential 17,792 1,043,774 17,838 1,127.864 Commercial 1,589 339,507 1.568 350,633 Industrial 46 152,910 44 183,166 Government 104 41,793 85 42,714 Apartment 182 71,503 172 71,121 Schools 84 39,815 85 46,386 lndus1rial special 1 32,934 1 44,457 Consumed In production 18 26,223 17 32,604 Rural waler 1 22.824 1 23,854 Hospitals 13 20.488 12 18,503 Religious/non profit 39 7,312 39 5,569 Other taxable deductions Engineering studies 8 6,176 8 5,266 Providing taxable service 2 4,869 2 5,494 Sale of component parts 8 5,200 8 5,851 Fire hydrant 2 1,032 3 2,424 Industrial consumed Jn production 3 2,314 3 4,083 Sales of farm equipment 1 205 1 213 19,893 1,8181879 19,887 1,970,202 Water Rate Schedule: Monthly meter charge (5/8") s 4.44 s 4.51 Commodity charge (per 000 gal.): O -2000 gal. $ 2.34 s 2.55 2001 -10,000 gal Over 10,000 gal. Excess use charge $ 4.68 s 5.10 Wastewater Rate Schedule: Monthly base charge $ 6.31 s 6.42 Uni! cost (per ODO gal.): $ 2.88 $ 3.08 Water sold is expressed In 1housands of gallons. Number of Accounts billed ls the annual number of billings for each class divided by 12. Monthly meter charge Increases wilh the size of the meter. Schedule 11 City of Sallna, Kansas Water Sales by Class of Customer Last Ten Flscal Years 2011 2012 2013 # Accts Water # Accts Water # Accts Water Biiied Sold Biiied Sold Biiied Sold 17,899 1,194,629 17,893 1,225,931 17,966 989,788 1,574 372.499 1,565 38,547 1,579 348,968 44 180,277 42 174,595 40 182,529 97 55,910 99 54,618 99 46,484 168 72,562 169 70,263 168 67,155 85 53,679 81 57,027 84 44,187 1 44,051 1 40,448 1 20.439 13 22,728 12 19,266 12 18,665 1 28,621 1 25,930 1 21,530 10 15,674 10 17,896 9 26,482 38 5,690 38 5,399 37 4,810 699 7 3,754 8 6,104 8 6,822 2 4,827 2 6,118 2 3.495 8 5,454 8 5,726 6 5,972 3 1,389 4 2,533 3 1,922 3 3,260 3 3,543 3 4,417 1 56 1 83 1 107 19,954 2,065,759 19 937 1,754,027 20,018 1,793,771 $4.60 $4.74 $4.88 $3.77 $3.88 $4.04 $7.54 $7.76 $8.08 $6.57 $6.77 $6.97 $4.48 $4.61 $4.79 Reslden11a1 Wastewater is calculated based on Winter Quarter waler consumption. Other accounts are based on monthly water consumption. 2008 Water Consumpllon Rate Structure changed from a decreasing tier structure to one rate and Excess Use Charge which is double the consump!lon rate Source: City of Salina Waler Customer Accounling Office. 117 2014 2015 2016 2017 2018 # Accts Water # Accts Water # Accts Water # Accls Water # Accts Water Biiied Sold Biiied Sold Billed Sold Biiied Sold Biiied Sold 18,042 1,003,100 18,086 987,540 18,125 950,697 18,124 988,572 18,130 963,387 1,599 353,675 1,600 350,767 1,603 345,232 1,606 345,250 1,614 340,960 42 193,233 44 202.407 44 191,236 44 193,503 44 211,843 97 45,346 97 41,928 99 45,136 99 41,552 98 35,932 166 60,865 164 61.400 163 57,039 163 58,378 157 71.559 84 45,328 85 45,545 85 41,176 83 36,039 81 30,810 12 19.264 12 17,338 9 9,580 8 9,652 7 6,966 1 22,993 1 21,915 1 23,384 1 25,624 1 22,345 10 32,184 9 31,858 9 33,728 9 35,132 9 31,856 37 4,973 37 4,986 36 5,224 36 4,749 36 4.458 8 5,095 8 4,807 7 4,573 7 4,772 7 4,471 1 3,561 1 3,167 1 3,921 1 3,347 1 2.331 6 6,850 5 3,900 4 3,129 4 2,917 4 2.190 2 1,474 3 1,727 3 1,790 3 2,829 3 3,588 3 2,388 3 1,930 3 1,962 3 2,107 1 48 1 53 1 54 1 104 1 56 20,111 1,801,577 20,153 1 779,999 20,193 1 717,766 20,192 1,753,343 20,196 1,734,098 $5.03 $5.20 $5.36 55.52 $5.74 $4.24 $4.45 $4.48 $4.77 $4.96 $8.48 $8.90 $9.16 $9.54 $9.92 $7.11 $7.22 $7.36 $7.51 $7.81 $4.94 $5.Q1 $5.19 $5.29 $5.51 Governmental Activities General Obligation Loans Schedule 12 City of Salina. Kansas Ratio of Outstanding Debt by Type Last Ten Fiscal Years Business-T~~e Activities General Obligation Water Revenue Loans Fiscal Year Bonds Payable Capital Lease Temporary Notes Bonds Bonds Pa~able 2009 $ 52,067,590 $ $ $ $ 2,320,000 $ 2,320,000 $ 5,862,516 2010 $ 53.120,952 $ $ $ 2,500,000 $ 8,614,576 $ 1,580,000 $ 2011 $ 55,225,670 $ $ $ 3,400,000 $ 7,417,907 $ 16,193,925 $ 2012 $ 49, 109,575 $ $ $ 1,485,000 $ 9,613,926 $ 15,850,228 $ 2013 $ 49,631, 797 $ $ $ 3,800,000 $ 8,519,799 $ 15.226,532 $ 2014 $ 50,033,555 $ $ 176,235 $ 5,000,000 $ 9,587,351 $ 14,592,836 $ 6,208.102 2015 $ 50,840,632 $ $ 479,366 $ 5,995,000 $ 8,539,773 $ 13,949,139 $ 5,753,620 2016 $ 51,816,399 $12,157,127 $ 321,174 $ 11,505,000 $ 7,640,381 $ 13,285,443 $ 7,432,024 2017 $ 55,994,305 $12,171,090 $ 157,868 $ 6,811,742 $ 6,520,433 $ 12,606,747 $ 8,862,810 2018 $ 51,968,310 $12.185,053 $ $ 18,123,505 $ 5,282,578 $ 11,898,051 $10,632,351 Source: City of Salina Comprehensive Annual Financial Reports. 2009 -2018 118 Percentage Temporary Total Primary of Personal Notes Government Income Per Capita $ $ 62,570, 106 3.5% $ 1,346.09 $ $ 65,815,528 3.8% $ 1,425.20 $ $ 82,237,502 4.3% $ 1,723.80 $ $ 76,058,729 3.8% $ 1,583.07 $ $ 77,178,128 3.7% $ 1,613.05 $ $ 85,598,079 4.1% $ 1,788.25 $ $ 85,557,530 4.1% $ 1,789.42 $ $ 104, 157,548 5.0% $ 2,200.39 $ $ 103,124,995 4.9% $ 2, 194.43 $ $ 110,089,848 4.9% $ 2,342.64 Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Schedule 13 City of Salina, Kansas Ratio of Net General Bonded Debt Outstanding Last Ten Fiscal Years General Bonded Debt Outstanding Percentage of Temporary Less Debt Net General Actual Taxable General Obligation Bonds Capital Lease Notes Total Service Fund Bonded Debt Value of Per Capita $ 54,387,590 $ 61,735,528 $ 62,443,577 $ -$ -$54,387,590 $ 735,291 $53,652,299 11.9% $1,154.23 $ -$ 2,500,000 $ 64,235,528 $ 571,873 $ 63,663,655 14.2% $1,378.60 $ 58,723,501 $ $ 58,151,596 $ $ 59,620,906 $ $ 59,380,405 $ $ 59,456,780 $ $ 62,514,738 $ $ 57,250,888 $ 176,235 479,366 321,174 157,868 $ 3,400,000 $ 65,843,577 $ 1,236,026 $ 64,607,551 14.4% $1,354.26 $ 1,485,000 $60,208,501 $ 582,412 $59,626,089 13.2% $1,241.05 $ 3,800,000 $ 61,951,596 $ 707, 763 $ 61,243,833 13.5% $ 1,280.02 $ 5,000,000 $64,797,141 $ 407,864 $64,389,277 14.1% $1,345.17 $ 5,995,000 $65,854,771 $ 745,339 $65,109,432 14.1% $1,361.75 $ 11,505,000 $ 71,282,954 $ 1,248,914 $ 70,034,040 14.8% $1,479.51 $ 6,811,742 $ 69,484,348 $ 1,509,863 $ 67,974,485 14.4% $1,446.45 $18,123,505 $75,374,393 $ 1,851,358 $73,523,035 15.1% $1,564.52 Source: City of Salina Comprehensive Annual Financial Reports, 2009 -2018 119 Schedule 14 City of Salina, Kansas Direct and Overlapping Governmental Activities Debt As of December 31, 2018 Net General Obligation Percentage Bonded Debt Applicable to City Jurisdiction Outstanding of Salina Direct: City of Salina $ 73,523,035 100.00% Overlapping: Salina Airport Authority 21,427,000 100.00% Saline County 224,409 73.45% USD 305 117,030,000 93.11% Total Overlapping Debt 138,681,409 Total Direct and Overlapping Debt $ 212,204,444 Per Capita Direct and Overlapping debt Amount Applicable to the City of Salina $ 73,523,035 21,427,000 164,823 108,969,011 130,560,834 $ 204,083,869 $ 4,268.38 Percentage of debt applicable to the City of Salina is based on the proportion that the assessed valuation of the City of Salina bears to the assessed valuation of the overlapping entity. Source: Saline County Clerk 120 Legal Debt Margin Calculation for 2018 Assessed Valuation Debt Limit (30% of Assessed Value) Debt applicable to limit: Total Bonded Debt Less GO Debt Attributable to Exempt Purposes Less Revenue Bonds Less Capital Leases Less Loans Payable Less Fund Balance designated for Debt Service Total Debt Applicable to Limitation Legal debt margin Debt Limit Total net debt applicable to limit Legal debt margin Total net debt applicable to the limit as a percentage of debt limit 487,787,922 146,336,377 $ 110,089,848 (5,282,578) (11,898,051) (22,817,404) p,851,358) ~457 $ 78,095,920 2009 $ 135,400,141 53,652,299 $ 81,747,842 40% 2010 $ 134,340,263 $ 58,411,185 $ 75,929,078 $ 43% Schedule 15 City of Salina, Kansas Legal Debt Margin Last Ten Fiscal Years 2011 2012 134,928,191 $ 135,421,208 57,747,032 49,309,445 77,181,159 $ 86,111,763 43% 36% 121 Fiscal Year 2013 2014 2015 2016 2017 2018 $ 136.196,966 136,896,083 138,909,078 141,804,931 142,000,537 146,336,377 52,724,034 54,625,691 56,090,293 62,072,485 61,296,184 68,240,457 $ 83,472,932 $ 82,270,392 $ 82,818,785 $ 79,732,446 $ 80,704,353 $ 78,095,920 39% 40% 40% 44% 43% 47% Schedule 16 City of Salina, Kansas Pledged Revenue Coverage Last Ten Fiscal Years Water/Sewer Revenue Bonds Less Utility Service Operating Net Available Debt Service Fiscal Year Charges Expenses Revenue Principal 2009 $15,151,305 $ 10,693,654 $ 4,457,651 $ 1,276,243 2010 $ 16,565,880 $ 11,803,594 $ 4,762,286 $ 740,000 2011 $ 17,976,508 $11,905, 114 $ 6,071,394 $ 1,580,000 2012 $19,163,426 $12,222,431 $ 6,940,995 $ 340,000 2013 $17,974,089 $ 13,373,088 $ 4,601,001 $ 620,000 2014 $18,964,164 $12,112,288 $ 6,851,876 $ 630,000 2015 $19,139,612 $ 9,859,974 $ 9,279,638 $ 640,000 2016 $19,389,348 $ 11,800,4 73 $ 7,588,875 $ 660,000 2017 $19,958,862 $ 13, 148,035 $ 6,810,827 $ 675,000 2018 $ 20,382,469 $12,973,621 $ 7,408,848 $ 705,000 Source: City of Salina Comprehensive Annual Financial Reports, 2009 -2018 City of Salina Debt Service Schedules 122 Interest $ 455,294 $ 91,450 $ 496,760 $ 596,992 $ 590,191 $ 577,791 $ 565,191 $ 549,191 $ 529,391 $ 509,141 Debt Service Coverage 2.57 5.73 2.92 7.41 3.80 5.67 7.70 6.28 5.65 6.10 Per Capita Personal Income Fiscal Year Population (Saline County) 2009 46,483 $ 38,392 2010 46,180 $ 37,880 2011 47,707 $ 40,512 2012 48,045 $ 41,762 2013 47,846 $ 43,078 2014 47,867 $ 43,736 2015 47,813 $ 44,065 2016 47,336 $ 44,230 2017 46,994 $ 44,732 2018 46,994 $ 47,945 Sources: Population: Kansas Division of the Budget. Employment: Kansas Department of Labor Personal Income, Salina (interpolated) $ 1,784,575,336 $ 1,749,298,400 $ 1,932,705,984 $ 2,006,455,290 $ 2,061,109,988 $ 2,093,511, 112 $ 2, 106,879,845 $ 2,093,647,612 $ 2, 102, 135,608 $ 2,253,127,330 Schedule 17 City of Salina, Kansas Demographic and Economic Statistics Last Ten Fiscal Years Unemployment Labor Force, USO 305 Rate City of Salina Headcount 6.0% 26,769 7,432 6.7% 26,379 7,346 6.7% 26,258 7,289 6.3% 26,185 7,305 5.1% 26,441 7,305 5.3% 26,303 7,388 3.9% 26,170 7,369 3.3% 27,684 7,386 2.7% 27,684 7,176 3.3% 30,174 7,180 Personal income for Salina is derived from the population and per capita personal income for Saline County Per Capita Personal income as reported by the Bureau of Economic Analysis 2017 Per Capita Personal Income staff projection 2008 -2017 Employment City of Salina Percentage Free and Per Capita .5 Reduced City .5 cent cent sales Lunch sales tax Tax 58.7% $4,965,147 $ 106.82 57.8% $4,803,553 $ 104.02 58.7% $5,076,751 $ 106.42 59.1% $5,241,205 $ 109.09 60.7% $ 5,326,723 $ 111.33 61.3% $5,555,601 $ 116.06 61.8% $5,670,040 $ 118.59 68.7% $5,727,260 $ 120.99 62.1% $5,755,869 $ 122.48 61.7% $5,770,174 $ 122.79 Increase in per capita Sales Tax (10 years) Increase in per capita Personal Income USD305 headcount and free and reduced lunch data derived from Kansas Department of Education./USD 305 Budget Document Asao/oof per capita personal income 0.278% 0.275% 0.263% 0.261% 0.258% 0.265% 0.269% 0.274% 0.274% 0.256% 14.3% 20.5% Free and Reduced Lunch percentage is an average of the percentages for each building reported. School Data is reported at beginning of school year, eg 2017-2018 school year is reported as 2017. 123 Schedule 18 City of Salina, Kansas Principal Employers Current Year and Nine Years Ago 2009 Employer Type of Business Salina Regional Health Center Health Care Schwan's Global Supply Chain Frozen Pizza Manufacturing Unified School District No 305 Public School System Great Plains Manufacturing Agricultrual & Landscaping Equipment Exide Technologies Automotive Battery Manufacturer City of Salina City Government REV Group Manufacturing Salina Vortex Manufacturing Walmart Retail Blue Philips Lighting Company Fluorescent Lamps Raytheon Aircraft Aircraft Manufacturing Eldorado National Susses/Recreational Vehicle Total Source: Salina Chamber of Commerce Em~lo~ees Rank 124 2,093 1,850 935 650 800 493 600 357 255 8,033 1 2 3 5 4 7 6 8 9 Percentage of Labor Force 7.8% 6.9% 3.5% 2.4% 3.0% 1.8% 2.2% 1.3% 1.0% 30.0% Emplo~ees 1,800 1,700 1,500 1,100 600 425 300 250 250 230 8,155 2018 Percentage of Labor Rank Force 1 6.0% 2 5.6% 3 5.0% 4 3.6% 5 2.0% 6 1.4% 7 1.0% 8 0.8% 9 0.8% 10 0.8% 27.0% [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX D 2019 Unaudited Financial Statements The following report provides unaudited revenues, expenditures and fund balances for the City for fiscal year ending December 31, 2019 prepared on a cash basis. This information has been provided by City staff and is believed to be accurate but is subject to revision both before and during the auditing process. [THIS PAGE INTENTIONALLY LEFI' BLANK) Budgeted Funds 2019 Budget 2019 Actuals Ending Fund Balance Revenues Expenditures Net Change Revenues Expenditures Net Change 12/31/2019 Target Balance Budgeted Funds: Tax Funds General 100 42,904,224 41,466,380 1,437,844 43,953,627 41,551,143 2,402,484 7,019,276 8,500,000 Debt Service 500 6,254,642 7,319,220 (1,064,578) 6,237,206 6,949,849 (712,644) 1,089,324 200,000 . -. ----Special Revenue Funds --------Sales Tax Capital 210 8,501,016 9,614,958 (1,113,942) 8,500,559 8,259,987 240,572 1,832,941 750,000 Sales Tax EcoDevo 220 356,987 480,000 (123,013) 344,976 533,897 (188,922) 708,563 50,000 Tourism 240 1,656,712 1,656,562 150 1,895,818 1,895,818 853 Special Gas 270 1,580,590 1,472,073 108,517 2,019,141 1,348,775 670,366 1,794,474 500,000 Arts & Humanities 200 1,057,948 1,039,097 18,851 1,040,274 992,216 48,058 49,764 100,000 Business Improvement District 230 90,528 90,500 28 83,701 85,201 (1,500) 4,661 Special Parks 250 213,851 259,000 (45,149) 227,304 6,620 220,684 348,866 50,000 Special Alcohol 260 213,751 213,751 227,304 227,304 234 Neighborhood Parks 280 5,550 10,000 (4,450) 4,500 4,500 28, 751 TPEC 290 764,496 725,000 39,496 765,916 663,614 102,302 199,983 . ---Enterprise Funds Sanitation 300 3,453,500 3,547,723 (94,223) 3,228,431 2,970,966 257,465 1,725,600 500,000 Solid Waste 320 2,880,000 3,071,997 (191,997) 3,489,733 2,995,684 494,049 4,512,594 500,000 0 Golf 340 966,347 955,806 10,541 907,198 935,700 (28,502) 21,709 100,000 ' Water/Wastewater 370 21,107,519 19,307,493 1,800,026 20,306,491 16,280,904 4,025,586 12,604,765 5,000,000 lnterna~e Funds ------Central Garage 450 1,641,184 1,564,013 77,171 1,574,530 1,474,000 100,531 154,659 100,000 Workers' Compensation 410 318,433 430,418 (111,985) 312,961 336,880 (23,920) 933,943 750,000 Health 420 6,553,584 6,547,553 6,031 6,104,976 7,028,930 (923,954) 2,188,453 1,500,000 [THIS PAGE INTENTIONALLY LEFf BLANK] ft Mixed Sources \. ·-............ ....._. "1ii fcnsts,c.OntroltdMIWU'f,Md ,.,. re<ycMdwoodorfk. Printed by: lmageMaster, LLC www.i~emasttt.com () =i -< 0 "Tl en )> c:: z }> " )> z en )> en • " m z m JJ )> !"'" 0 OJ !"'" Ci ~ 0 z -I m :;:: "'O 0 JJ )> ~ z s m ~en en m JJ m en I\) c I\) c I ...... l> z c z -I m JJ z )> !"'" :;:: "'O JJ 0 < m :;:: m z -I OJ 0 z 0 en en m JJ m en I\) c I\) c > CERTIFICATE DEEMING PRELIMINARY OFFICIAL STATEMENT FINAL To: Robert W. Baird & Co., Inc. Red Bank, New Jersey UMB Bank, N.A. Kansas City, Missouri April 7, 2020 Re: General Obligation Bonds, Series 2020-A; General Obligation Temporary Notes, Series 2020-1 The undersigned is the duly acting Finance Director of the City of Salina, Kansas (the "Issuer"), and is 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-l 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 underwriters and other terms of the Obligations depending on such matters. CITY OF SALINA, KANSAS By: _..__LQ--'-'"'-~......._,_~~-- Title: Finance Director 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, (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 in this Official Statement. New Issues Book-Entry Only $7,050,000 GENERAL OBLIGATION TEMPORARY NOTES SERIES 2020-1 Dated: Date of Delivery Moody's Ratings: Bonds-"Aa3" Notes-"MIGl" CITY OF SALINA, KANSAS $5,210,000 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2020-A Due: As Shown Herein The General Obligation Temporary Notes, Series 2020-1 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 subject to redemption at the option of the City as further described herein. See THE NOTES -"Redemption Provisions" herein. The General Obligation Internal Improvement Bonds, Series 2020-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 annually on 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, 2021 (the "Bond Interest Payment Date"). 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 legality by Gilmore & Bell, P.C., Kansas City, Missouri, Bond Counsel to the City. It is expected that the Notes and Bonds will be available for delivery through the facilities of DTC, in New York, New York, on or about April 29, 2020. This Official Statement is dated April 20, 2020. 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. Maturity OS-01-21 MATURITY SCHEDULES $7,050,000 GENERAL OBLIGATION TEMPORARY NOTES SERIES 2020-1 Amount $7,0S0,000 Rate 1.000% Yield 1.000% Base cus1p121 794744 DBS At the option of the City, the Notes will be subject to redemption and payment prior to their Stated Maturity on November 1, 2020, and at any time thereafter, as a whole or in part (selection of the amount of Notes to be redeemed to be determined by the City in such equitable manner as it may determine), at the Redemption Price of 100% (expressed as a percentage of the principal amount), plus accrued interest to the Redemption Date. $5,210,000 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2020-A SERIAL BONDS Base cus1p121 Maturitll Amount Rate Yield 794744 10-01-21 $49S,OOO 3.000% l.OSO% CL4 10-01-22 S80,000 3.000 l.OSO CM2 10-01-23 S9S,000 3.000 l.lSO CNO 10-01-24 610,000 3.000 1.200 CPS 10-01-2S 630,000 3.000 1.300 CQ3 10-01-26 21S,OOO 3.000 1.400 CRl 10-01-27 22S,000 3.000 l.SOO CS9 10-01-28(2) 230,000 3.000 1.6SO CT7 10-01-31(2) 220,000 2.000 2.100 cwo 10-01-32(2) 22S,OOO 2.12S 2.200 CX8 10-01-33(2) 230,000 2.2SO 2.300 CY6 10-01-34(2) 23S,OOO 2.37S 2.400 CZ3 10-01-35(2) 240,000 2.500 2.500 DA7 TERM BONDS 10-01-3012) 480,000 2.000% 2.000% CV2 (ll CUSIP numbers have been assigned to this issue by CUSIP Global Services, which is managed on behalf of the American Bankers Association by S&P Capital IQ, a subsidiary of The McGraw-Hill Companies, Inc., and are included solely for the convenience of the Owners of the Notes and Bonds. Neither the City nor the Underwriters shall be responsible for the selection or correctness of the CUSIP numbers set forth above. 121 At the option of the City, Bonds maturing on October 1, 2028 and thereafter, will be subject to redemption and payment prior to their Stated Maturity on October 1, 2027, and at any time 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 the Redemption Price of 100% (expressed as a percentage of the principal amount), plus accrued interest to the Redemption Date. The Term Bonds are also subject to mandatory redemption. See THE BONDS-"Redemption Provisions" herein. 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-LOOK/NG 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. 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 Mike Hoppock, Mayor Melissa Rose Hodges, Vice Mayor Trent W. Davis, M.D., Commissioner Rod Franz, Commissioner Karl Ryan, Commissioner CITY STAFF Mike Schrage, City Manager Debbie Pack, Finance Director 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 Stifel, Nicolaus & Company, Incorporated Kansas City, Missouri No dealer, broker, salesman or other 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 authorized by the foregoing. 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 Underwriters have 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 Underwriters do 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 Underwriters 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......................................................................................................................................... 6 THE DEPOSITORY TRUST COMPANY................................................................................................... 11 THE FINANCING PLAN......................................................................................................................... 13 SOURCES AND USES OF FUNDS.......................................................................................................... 13 RISK FACTORS AND INVESTMENT CONSIDERATIONS......................................................................... 14 LEGAL MATTERS................................................................................................................................. 16 TAX MATTERS..................................................................................................................................... 17 RATINGS.............................................................................................................................................. 18 MUNICIPAL ADVISOR.......................................................................................................................... 19 UNDERWRITING ................................................................................................................................. 19 ABSENCE OF MATERIAL LITIGATION................................................................................................... 19 CONTINUING DISCLOSURE................................................................................................................. 19 CERTIFICATION OF OFFICIAL STATEMENT.......................................................................................... 20 APPENDIX A: INFORMATION CONCERNING THE CITY FINANCIAL OVERVIEW OF THE CITY.............................................................................................. A-1 GENERAL INFORMATION CONCERNING THE CITY........................................................................ A-2 ECONOMIC INFORMATION CONCERNING THE CITY..................................................................... A-6 DEBT SUMMARY OF THE CITY....................................................................................................... A-9 FINANCIAL INFORMATION CONCERNING THE CITY...................................................................... A-13 APPENDIX B: FORM OF CONTINUING DISCLOSURE UNDERTAKING APPENDIX C: AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDING DECEMBER 31, 2018 APPENDIX D: UNAUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDING DECEMBER 31, 2019 General OFFICIAL STATEMENT CITY OF SALINA, KANSAS $7,050,000 GENERAL OBLIGATION TEMPORARY NOTES SERIES 2020-1 $5,210,000 GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2020-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 $7,050,000 General Obligation Temporary Notes, Series 2020-1 (the "Notes"), and its $5,210,000 General Obligation Internal Improvement Bonds, Series 2020-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 certain outstanding general obligation temporary notes of the City. See THE FINANCING PLAN herein. The full faith, credit, and resources of the City are irrevocably pledged for the prompt payment of the principal and interest on the 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 municipal advisor, Stifel, Nicolaus & Company, Incorporated, Kansas City, Missouri (the "Municipal 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 to the City, has not assisted in the preparation of nor reviewed this Official Statement, except to the extent described under the sections captioned THE NOTES, THE BONDS, LEGAL MATTERS, TAX MATTERS, and APPENDIX B -FORM OF 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 Municipal Advisor. Additional Information Additional information regarding the City, the Notes, or the Bonds may be obtained from Stifel, Nicolaus & Company, Incorporated, 4801 Main Street, Kansas City, Missouri 64112, telephone 816-474-1100. 1 THE NOTES Authority The Notes are being 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 to 10-125, inclusive, specifically including K.S.A. 10-123, K.S.A. 10-620 et seq., K.S.A. 12-6a01 et seq., and K.S.A. 12-1736 et seq, 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 in part from special assessments levied upon the property benefitted by the construction of certain public improvements, and if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the Issuer. The balance of the principal and interest on the Notes is payable from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the City. The full faith, credit and resources of the City are hereby irrevocably pledged for the prompt payment of the principal of and interest on the 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 as of April 29, 2020 (the "Dated Date"), shall become due in the amount on the Stated Maturity and are subject to redemption and payment prior to 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 Optional Redemption. At the option of the City, the Notes or portions thereof, will be subject to redemption and payment prior to their Stated Maturity on November 1, 2020, and at any time thereafter as a whole or in part (selection the amount of Notes to be redeemed to be determined by the City in such equitable manner as it may determine), at the Redemption Price of 100% (expressed as a percentage of the principal amount), plus accrued interest thereon to the Redemption Date. Selection of Notes to be Redeemed. Notes shall be redeemed only in an Authorized Denomination. When less than all of the Notes are to be redeemed and paid prior to their Stated Maturity, such Notes shall be redeemed in such manner as the City shall determine, Notes of less than a full Stated Maturity shall be selected by the Note Registrar in minimum Authorized Denomination in such equitable manner as the Note Regi~trar may determine. In the case of a partial redemption of Notes by lot when Notes 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 Note 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 Note 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 Note to the Note 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 Note 2 or Notes of the aggregate principal amount of the unredeemed portion of the principal amount of such Note. If the Owner of any such Note fails to present such Note to the Note Paying Agent for payment and exchange as aforesaid, such Note 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 Notes to be redeemed, if the City shall call any Notes for redemption and payment prior to the Stated Maturity thereof, the City shall give written notice of its intention to call and pay said Notes to the Note Registrar. In addition, the City shall cause the Note Registrar to give written notice of redemption to the Owners of said Notes. 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 Notes are to be redeemed, the identification (and, in the case of partial redemption of any Notes, the respective principal amounts) of the Notes to be redeemed; (d) a statement that on the Redemption Date the Redemption Price will become due and payable upon each such Note 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 Notes are to be surrendered for payment of the Redemption Price, which shall be the principal office of the Note 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 Note Paying Agent an amount of money sufficient to pay the Redemption Price of all the Notes or portions of Notes that are to be redeemed on such Redemption Date. Official notice of redemption having been given as aforesaid, the Notes or portions of Notes 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 Notes or portion of Notes shall cease to bear interest. For so long as the Securities Depository is effecting book-entry transfers of the Notes, the Note 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 Note (having been mailed notice from the Note Registrar, the Securities Depository, a Participant or otherwise) to notify the Beneficial Owner of the Note so affected, shall not affect the validity of the redemption of such Note. In addition to the foregoing notice, the City shall provide such notices of redemption as are required by the Disclosure Undertaking. The Note 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 Note. 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. 3 Registration. Transfer and Exchange of Notes As long as any of the Notes remain Outstanding, each Note when issued shall be registered in the name of the Owner thereof on the Note Register. Notes may be transferred and exchanged only on the Note Register as hereinafter provided. Upon surrender of any Note at the principal office of the Note Registrar, the Note Registrar shall transfer or exchange such Note for a new Note or Notes in any authorized denomination of the same Stated Maturity and in the same aggregate principal amount as the Note that was presented for transfer or exchange. Notes presented for transfer or exchange shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in a form and with guarantee of signature satisfactory to the Note Registrar, duly executed by the Owner thereof or by the Owner's duly authorized agent. In all cases in which the privilege of transferring or exchanging Notes is exercised, the Note Registrar shall authenticate and deliver Notes in accordance with the provisions of the Note Resolution. The City shall pay the fees and expenses of the Note Registrar for the registration, transfer and exchange of Notes. Any additional costs or fees that might be incurred in the secondary market, other than fees of the Note Registrar, are the responsibility of the Owners of the Notes. In the event any Owner fails to provide a correct taxpayer identification number to the Note Paying Agent, the Note Paying Agent may make a charge against such Owner sufficient to pay any governmental charge required to be paid as a result of such failure. The City and the Note Registrar shall not be required 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. 4 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 (the "Note Interest Payment Date") to the Person in whose name such Note is registered on the Note Register at the Maturity thereof, upon presentation and surrender of such Note at the principal office of the Note Paying Agent. The interest payable on each Note on the Note 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 the Note Interest Payment Date, the fifteenth day (whether or not a Business Day) of the calendar month next preceding such Note 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 PAVING 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 Saturdavs. 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 5 Securities Depository), and the following provisions of this section to discontinue use of the system of book-entry transfers through OTC (or a successor Securities Depository): (a) If the City determines (1) that the Securities Depository is unable to properly discharge its responsibilities, or (2) that the Securities Depository is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, or (3) that the continuation of a book-entry system to the exclusion of any Notes being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Notes; or (b) if the Note Registrar receives written notice from Participants having interest in not less than 50% of the Notes Outstanding, as shown on the records of the Securities Depository (and certified to such effect by the Securities Depository), that the continuation of a book-entry system to the exclusion of any Notes being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Notes, then the Note Registrar shall notify the Owners of such determination or such notice and of the availability of certificates to owners requesting the same, and the Note Registrar shall register in the name of and authenticate and deliver Replacement Notes to the Beneficial Owners or their nominees in principal amounts representing the interest of each, making such adjustments as it may find necessary or appropriate as to accrued interest and previous calls for redemption; provided, that in the case of a determination under (a)(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 being 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 to 10-125, inclusive, K.S.A. 10-620 et seq., K.S.A. 12-685 et seq., K.S.A.12-1736 et seq, K.S.A. 12-2101 et seq., Charter Ordinance No. 39 of the City, and Article 12 Section 5 of the Constitution of the State of Kansas, all as amended and supplemented from time to time, and an ordinance and resolution adopted by the governing body of the City authorizing the issuance of the Bonds (collectively, the "Bond Resolution"). 6 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. 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 as of April 29, 2020 (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 Bond Interest Payment Date to which interest has been paid, on the Bond 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, 2028 and thereafter may be called for redemption and payment prior to their Stated Maturity on October 1, 2027, and at any time 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 the Redemption Price of 100% (expressed as a percentage of the principal amount), plus accrued interest thereon to the Redemption Date. Mandatory Redemption. The Bonds maturing on October 1, 2030 (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% (expressed as a percentage of the principal amount), plus accrued interest to the Redemption Date. The payments which are to be deposited into the Principal and Interest Account shall be sufficient to redeem, and the Issuer shall redeem on October 1 in each year, the following principal amount of such Term Bonds: *Final Maturity ofTerm Bonds Principal Amount $235,000 245,000 7 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: (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. 8 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. 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 forthe 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 Bond 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. 9 "Record Date" means, for the interest payable on any Bond Interest Payment Date, the fifteenth day (whether or not a Business Day) of the calendar month next preceding such Bond 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 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 PAVING 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 OTC (or a successor Securities Depository), and the following provisions of this section to discontinue use of the system of book-entry transfers through OTC (or a successor Securities Depository): (a) If the City determines (1) that the Securities Depository is unable to properly discharge its responsibilities, or (2) that the Securities Depository is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, or (3) that the continuation of a book-entry system to the exclusion of any Bonds being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Bonds; or (b) if the Bond Registrar receives written notice from Participants having interest in not less than 50% of the Bonds Outstanding, as shown on the records of the Securities Depository (and certified to such effect by the Securities Depository), that the continuation of a book-entry system to the exclusion of any Bonds being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Bonds, then the Bond Registrar shall notify the Owners of such determination or such notice and of the availability of certificates to owners requesting the same, and the Bond Registrar shall register in the name of and authenticate and deliver Replacement Bonds to the Beneficial Owners or their nominees in principal amounts representing the interest of each, making such adjustments as it may 10 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 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 or note 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, clea ring 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. 11 Beneficial Owners will not receive written confirmation from OTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book- entry system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. 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 OTC. 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 12 (or a successor securities depository). In that event, certificates will be printed and delivered to OTC. 12. The information in this section concerning OTC and DTC's book-entry system has been obtained from sources that the Issuer believes to be reliable, but the Issuer takes no responsibility for the accuracy thereof. THE FINANCING PLAN The Note Projects Proceeds from the sale of the Notes will be used to provide interim construction financing for all or a portion of the costs of certain public improvements within the City (collectively, the "Note Projects"), retire a portion of the City's outstanding general obligation temporary notes and to pay costs associated with issuance of the Notes. The projects to be financed with the Notes are as follows: Project Description Police Training Center Pheasant Ridge Addition No. 3 Stone Lake 2 The Bond Projects Ordinance/ Resolution Res. 19-7743 Res. 18-7633 Res. 19-7750 Authority K.S.A. 12-1736 K.S.A. 12-6a01 et seq. K.S.A. 12-6a01 et seq. Total: Principal Amount $6,094,674.75 546,874.62 408.450.63 $7,050,000.00 Proceeds from the sale of the Bonds will be used to provide long term financing for a portion of the costs of certain public improvements within the City (collectively, the "Bond Projects"), retire a portion of the City's outstanding general obligation temporary notes and to pay the costs associated with the issuance of the Bonds. The Bond Projects are as follows: Project Description Landfill Cell #20 Police Parking Smoky Hill River Renewal Golf Irrigation North 9th Street Bridge Ordinance/ Resolution Res. 19-7672 Res. 19-7679 Ord. 17-10885 Res. 19-7678 Res No. 19-7677 Authority K.S.A. 12-2101 et seq. K.S.A. 12-1736 et seq. Article 12, §5 of the Constitution of the State of Kansas Charter Ordinance No. 39 K.S.A. 12-685 et seq. Total: SOURCES AND USES OF FUNDS Principal Amount $1,977,937.66 262,688.69 2,372,415.58 495,065.07 101.893.00 $5,210,000.00 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 Net Original Issue Premium Total Sources of Funds 13 $7,050,000.00 $7,050,000.00 $5,210,000.00 240,610.40 $5,450,610.40 Uses of Funds: Deposit to Improvement Fund Underwriter's Discount Cost of Issuance Total Application of Funds $6,990,440.93 15,510.00 44,049.07 $7,050,000.00 RISK FACTORS AND INVESTMENT CONSIDERATIONS $5,345, 725.93 38,938.55 65,945.92 $5,450,610.40 A PROSPECTIVE PURCHASER OF THE SECURITIES DESCRIBED HEREIN SHOULD BE A WARE 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 UNDERWRITERS. 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. Debt Service Source; Issuer's Tax Revenues The Securities are general obligations of the Issuer payable as to both principal and interest, if necessary, 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 Legislature may from time to time adopt changes in the property tax system or method of imposing and collecting property and/or sales taxes within the State. The effects of such legislative changes could affect the Issuer's property tax and sales tax collections, and the impact could be material. Other future events, such as the loss of a major taxpayer, reductions in assessed value, increases in property tax rates of overlapping taxing units, or a decrease in sales tax revenues could increase effective property tax rates and the resulting increase could be material. Taxpayers may also challenge the value of property assigned by the county appraiser. If a taxpayer valuation challenge is successful, the liability of the Issuer to refund property taxes previously paid under protest may have a material adverse effect on the Issuer's financial situation. See "APPENDIX A -FINANCIAL INFORMATION CONCERNING THE CITY -Appraisal and Assessment Procedures." 14 Kansas Public Employees Retirement System As described in "APPENDIX A -GENERAL INFORMATION CONCERNING THE CITY -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 Police and Firemen's Retirement System ("KP&F") and the Public Employees Retirement System -Local Group (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, the Plan contribution rates may be adjusted by legislative action over time to address any UAAL. According to KPERS' Valuation Report, the Local Group had an UAAL of approximately $1.458 billion in the calendar year 2017 and KP&F had an UAAL of approximately $859 million. Taxation of Interest on the Securities Opinions of Bond Counsel will be obtained to the effect that interest earned on the Securities is excludable from gross income for federal income tax purposes under current provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and applicable rulings and regulations under the Code; however, an application for a ruling has not been made and an opinion of counsel is not binding upon the Internal Revenue Service. There can be no assurance that the present provisions of the Code, or the rules and regulations thereunder, will not be adversely amended or modified, thereby rendering the interest earned on the Securities includable in gross income for federal income tax purposes. The City has covenanted in the Note Resolution and the Bond Resolution and in other documents and certificates to be delivered in connection with the issuance of the Securities to comply with the provisions of the Code, including those which require the City to take or omit to take certain actions after the issuance of the Securities. Because the existence and continuation of the excludability of the interest on the Securities depends upon events occurring after the date of issuance of the Securities, the opinion of Bond Counsel described under ''TAX MATIERS" assumes the compliance by the City with the provisions of the Code described above and the regulations relating thereto. No opinion is expressed by Bond Counsel with respect to the excludability of the interest on the Securities in the event of noncompliance with such provisions. The failure of the City to comply with the provisions described above may cause the interest on the Securities to become includable in gross income as of the date of issuance. Premium on the Securities The initial offering prices of certain maturities of the Securities that are subject to optional redemption may be in excess of the respective principal amounts thereof. Any person who purchases such a Security in excess of its principal amount, whether during the initial offering or in a secondary market transaction, should consider that the Securities are subject to redemption at par under the various circumstances described under "THE NOTES- Redemption Provisions" and "THE BONDS-Redemption Provisions." No Additional Interest or Mandatory Redemption upon Event of Taxability Neither the Bond Resolution nor the Note Resolution provide for the payment of additional interest or penalty on the Securities or the mandatory redemption thereof if the interest thereon becomes includable in gross income for federal income tax purposes. Likewise, neither the Bond Resolution nor the Note Resolution provide for the payment of any additional interest or penalty on the Securities if the interest thereon becomes subject to income taxation by the State of Kansas. 15 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. COVID-19 In December 2019, a novel strain of coronavirus disease known as COVID-19 emerged for the first time in humans in Wuhan, China. Since that date, the virus has spread throughout the world, including the United States and State of Kansas, and has been characterized by the World Health Organization as a pandemic. The continued proliferation of COVID-19 throughout the State and the City may adversely affect the City due to the economic ramifications of mandatory business, school, and other closures. Within the State, the Governor has announced the closure of all K-12 schools through the end of the 2019-20 school year and issued an Executive Order instituting a temporary State-wide stay-at-home order. The COVID-19 pandemic could negatively impact the finances and operations of the City and result in increased costs to the City and/or negative impacts on the collection of property and sales taxes within the City due to increased tax payment delinquencies, disruption of the collection or distribution of taxes by the State and/or Saline County, or other related factors that may pressure the City's budget and cash flows. Such factors could negatively affect timely repayment of the Bonds and the Notes. Significant developments regarding COVID-19 continue to occur daily and the extent to which COVID-19 will impact the City in the future is highly uncertain and cannot be predicted. 16 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 THE NOTES, THE BONDS, LEGAL MATTERS, TAX MATTERS, and APPENDIX B-FORM OF CONTINUING DISCLOSURE UNDERTAKING. TAX MATTERS 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. Bank Qualification. The Securities have not been designated as "qualified tax-exempt obligations" for purposes of Code §26S(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 such requirements. Failure to comply with certain of such requirements may cause the inclusion of interest on the Securities in gross income for federal income tax purposes retroactive to the date of issuance of the Securities. Bond Counsel is expressing no opinion regarding other federal, state or local tax consequences arising with respect to the Securities. 17 Other Tax Consequences Original Issue Discount. For federal income tax purposes, original issue discount ("010") is the excess of the stated redemption price at maturity of a security over its issue price. The issue price of a security is generally the first price at which a substantial amount of the security of that maturity has been sold to the public. Under Code § 1288, 010 on tax-exempt obligations accrues on a compound basis. The amount of 010 that accrues to an owner of a Security during any accrual period generally equals: (a) the issue price of such Security plus the amount of 010 accrued in all prior accrual periods; multiplied by (b) the yield to maturity on such Security (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period); minus (c) any interest payable on such Security during such accrual period. The amount of 010 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 Security. Prospective investors should consult their own tax advisors concerning the calculation and accrual of OID. 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 May 1, 2021 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 the Notes includes all payments on the Notes. 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 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 18 consequences of the purchase, ownership and disposition of the Securities, including the possible application of state, local, foreign and other tax laws. RATINGS Moody's Investors Service has assigned a "MIGl" rating on the Notes and a "Aa3" rating on the 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. MUNICIPAL ADVISOR Stifel, Nicolaus & Company, Incorporated, 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 UMB Bank, (the "Notes Underwriter") at a price equal to the principal amount of the Notes, less an underwriting discount of $15,510.00. 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 a net original issue premium of $240,610.40, less an underwriting discount of $38,938.55. 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 connection with the issuance of the Securities, the Issuer will enter into a continuing disclosure undertaking (the "Disclosure Undertaking") wherein the Issuer covenants to annually provide certain financial information and operating data (collectively, the "Annual Report") and other information necessary to comply with the Rule, and to transmit the same to the Municipal Securities Rulemaking Board. Pursuant to the Disclosure Undertaking, this Issuer has agreed to file its Annual Report with the national repository ("EMMA") not more than 180 days after the end of the City's Fiscal Year, commencing with Fiscal Year ended in December 31, 2018. 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 19 and is enforceable by the Beneficial Owners of the Securities. For more information regarding the Disclosure Undertaking, see "APPENDIX B -FORM OF 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. Certain operating data for the fiscal year ended December 31, 2014 was timely filed in summary form. Additional details related to such summary information were included in the City's audited financial statements for the fiscal year ended December 31, 2014 that were filed on October 26, 2015. 2. 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. The Issuer's audited financial statements for each of the last five fiscal years were not completed by the filing deadlines primarily because of challenges with financial software conversion (which has since been completed), staff turnover and delayed receipt of component unit audits. In compliance with the Issuer's prior disclosure undertakings, the Issuer timely filed unaudited financial statements and promptly filed audited financial statements when they became available. 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 20 APPENDIX A FINANCIAL OVERVIEW OF THE CITY 2019 Estimated Actual Valuation (1) 2019 Assessed Valuation Outstanding General Obligation Bonds (2) Population (2018 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 Utility System Revenue Bonds Outstanding Special Obligation 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 $ 3,294,115,685 $ 509,082,680 $ 63,920,000 $ $ $ $ $ $ $ $ $ 46,716 1,368 1.94% 12.56% 7,050,000 46,354,852 656,261 10,330,000 22,570,000 122,192,447 239,517,299 5,127 7.27% 47.05% (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) Excludes outstanding Notes to be retired with proceeds from the sale of the Notes and Bonds and other available funds. (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 2018 U.S. Census Bureau estimate of 46, 716. The City is the county seat for Saline County which had an estimated 2018 U.S. Census Bureau population of 54,401. 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 Mike Hoppock Melissa Rose Hodges Trent W. Davis, M.D. Karl F. Ryan Rod Franz Title Mayor Vice Mayor Commissioner Commissioner Commissioner Term Expires 2022 2022 2024 2024 2022 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. The following table and graph show the population for the City for selected years as provided by the U.S. Census Bureau. Year 2018 2017 2016 2015 2014 A-2 U.S. Census Bureau Population 46,716 46,994 47,336 47,813 47,867 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 201 full-time employees for out of the 446 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 31 vehicles and provides emergency medical services. The Department was recently upgraded to an Insurance Services Office rating of 2. The police department employs 109 personnel, of which 82 are sworn positions. The Department operates 45 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 7,300. Additionally, there are a number of parochial institutions that operate two grade schools, two junior high schools, and one senior 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 642 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 716 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. The University of Kansas School of Medicine and School of Nursing have a campus in Salina. This campus is aimed at students with a strong desire to practice medicine in rural areas. The School of Medicine has 8 students and the School of Nursing started with 17 students and has a capacity of 48 students. 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 United Airlines. The airline offers daily scheduled passenger air service to Denver International Airport and Chicago O'Hare International Airport. A-3 Utilities and Infrastructure Evergy, Inc. supplies electricity and Kansas Gas Service provides natural gas to the City. The City owns its own water and sewage system. Additionally, the City is responsible for street maintenance and police and fire protection for the Airport. SBC provides telephone service. Two cellular phone companies provide service to the City. 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 $942.056 million as of Spring, 2019. 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 each of whom serve four-year terms. The board of trustees appoints an executive director to serve as the managing officer of KPERS and manage a staff to carry out daily operations of the system. As of June 30, 2018, KPERS serves approximately 312,000 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 approximately 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, the majority of which comes from the State General Fund. (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. 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), KPERS Tier 2 members (covered employment on or after July 1, 2009), or KPERS Tier 3 members (covered employment on or after January 1, 2015). 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 8.89% of the employee's gross salary for calendar year 2019. The Issuer's contribution is projected to change to 8.61% of gross compensation for calendar year 2020. In addition, the Issuer contributes 1% of the employee's gross salary for Death and Disability Insurance for covered employees. According to the Valuation Report as of December 31, 2018 (the "2018 Valuation Report") the KPERS Local Group, of which the Issuer is a member, carried an unfunded accrued actuarial liability ("UAAL") of approximately $1.502 billion at the end of 2018. The amount of the UAAL in 2018 changed from the previous year's amount due to the factors discussed in the 2018 Valuation Report; such report also 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. A copy of the 2018 Valuation 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 2018 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 2018 Valuation Report sets the employer contribution rate for the period beginning January 1, 2021, for the KPERS Local Group, and KPERS' actuaries identified that an employer contribution rate of 8.87% of covered payroll would be necessary, in addition to statutory contributions by covered employees, to eliminate the UAAL by the end of the actuarial period set forth in the 2018 Valuation Report. The statutory contribution rate of employers currently equals the 2018 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. The required employer contribution rate may increase up to the maximum statutorily allowed rate, which is 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 2018 Valuation Report, KP&F carried an UAAL of approximately $933 million at the end of 2018. For KP&F, the Issuer's employees currently annually contribute 7.15% of their gross salary to the plan. For the year beginning January 1, 2019, the Issuer contributes 22.13% of employees' gross compensation. Beginning January 1, 2020, the Issuer's contribution is projected to change to 21.93% of gross compensation for calendar year 2020. The Issuer is 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. A-5 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 and tennis courts. 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. 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, Rev Group, Exide Battery, Advance Auto Parts Distribution Center, and Signify. 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 2017 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 the Economic Impact Report, from December 31, 2017, businesses and organizations at the Salina Regional Airport and Airport Industrial Center employed 5,996 employees with a total level economic activity for 2017 of approximately $1,168,468,359. The report also cited that the Airport/Airport Industrial Center accounted for 14.3 percent of the employment in Saline County and 37 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 2019 to be 25,643 persons and year-to-date 2020 to be 25,766. The estimated median household income for the City in 2018 was $49,079 and owner-occupied housing rates in the City were 64. 7%. 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. A-6 In recent years, Dillon Companies, Inc., a subsidiary of Kroger Company, recently opened a 77,000 square foot facility. Dick's Sporting Goods and Marshalls clothing store opened in a building formerly occupied by Sutherland Lumber Company. In addition, several new restaurants have opened or expanded, including Olive Garden, Longhorn Steakhouse, Starbucks, Taco Bell and Daimaru Steakhouse. 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. 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. In April 2018, United Airlines began daily service from Salina to Chicago and Denver. The airline provides maximum connection opportunities for both business and leisure travelers. Customers also have the opportunity to accrue frequent flier miles in United's MileagePlus loyalty program. With 550 daily United and United Express flights from Chicago and 370 daily United and United Express flights from Denver, Salina travelers have access to destinations around the globe. Salina passengers enjoy service aboard the quiet, comfortable Bombardier- manufactured Canadair Regional Jet, CRJ200. SkyWest Airlines is a top CRJ200 operator and has been named manufacturer's most reliable operator in North America five times. 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 1-70. The Airport also accommodates a wide variety of aircraft including business jets, military, flight training and general aviation aircraft. During 2019, the Salina Air Traffic Control Tower logged over 76,000 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 2.2 million gallons of fuel to the wide variety of aircraft utilizing the Airport during 2019 and 118,337 as of January 2020. 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. A-7 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 Salina Regional Health Center Schwan's Global Supply Chain, Inc. Unified School District No. 305 Great Plains Manufacturing Exide Technologies City of Salina Salina Vortex REV Group Wal mart Signify Source: Salina Chamber of Commerce Product/Business Healthcare Manufacturing School System Agricultural & Landscaping Equipment Battery Manufacturer City Government Manufacturing Manufacturing Discount Retail Manufacturing Estimated Employment 1,875 1,700 1,500 1,100 600 425 375 300 250 190 The following table shows the per capita personal income for residents of Saline County and the State during the years indicated: Year 2018 2017 2016 2015 2014 2013 2012 Source: Kansas Statistical Abstract Labor Force Saline County N/A 47,945 44,732 43,552 41,447 41,096 40,235 State of Kansas $50,155 47,603 47,221 47,161 46,393 45,838 44,795 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 Employed Unemployed Rate 2019 (dee) 25,338 24,583 755 3.0% 2018 25,685 24,784 781 3.1 2017 26,055 25,198 857 3.3 2016 26,194 25,170 1,024 3.9 2015 26,353 25,313 1,040 3.9 A-8 State of Kansas: Year 2019 (dee) 2018 2017 2016 2015 Total Labor Force 1,486,620 1,491,587 1,478,783 1,484,001 1,499,009 Em(!lo~ed 1,439,563 1,445,819 1,425,216 1,422,122 1,435,884 Source: Kansas Department of Labor DEBT SUMMARY OF THE CITY Current Indebtedness Unemployment Unem(!lo~ed Rate 47,057 3.2% 45,768 3.1 53,567 3.6 61,879 4.2 63,125 4.2 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 Pur(!ose of Issue Maturih'. Outstanding* 12-15-08 2008-B Internal Improvements $3,525,000 07-01-24 $390,000 07-15-09 2009-A Internal Improvements 23,695,000 10-01-20 595,000 05-01-10 2010-A Refunding & Improvement 6,875,000 10-01-20 330,000 10-15-10 2010-B Refunding 7,860,000 10-01-23 1,170,000 07-15-11 2011-A Internal Improvements 6,565,000 10-01-21 740,000 07-15-12 2012-A Internal Improvements 2,365,000 10-01-27 1,340,000 07-15-12 2012-B Refunding 3,785,000 10-01-20 180,000 02-15-13 2013-A Taxable Improvements 1,360,000 10-01-28 905,000 07-15-13 2013-B Improvements 4,330,000 10-01-33 2,920,000 07-30-14 2014-A Improvements 7,570,000 10-01-34 4,600,000 07-29-15 2015-A Revenue and Internal Imp. 6,825,000 10-01-35 5,515,000 07-27-16 2016-A Internal Improvements 6,570,000 10-01-36 5,785,000 07-27-16 2016-B Refunding 13,750,000 10-01-31 12,430,000 07-27-17 2017-A Improvements 9,310,000 10-01-37 8,745,000 11-27-18 2018-A Improvements 2,090,000 10-01-33 1,975,000 04-24-19 2019-A Improvements (the Bonds) 11,090,000 10-01-39 11,090,000 04-29-20 2020-A Improvements 5,210,000 10-01-35 5,210,000 Total $63,920,000 *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. A-9 Temporary Notes: Final Original Date Maturity Note Amount Series Issued Date Amount Outstanding 2019-1 04-24-19 05-01-20 $6,085,000 $0(1) 2019-2 10-15-19 07-01-20(2) 5,085,000 O(l) 2020-1 04-29-20 05-01-21 7,050,000 7,050,000 $7,050,000 Ill To be redeemed with proceeds from the Notes and Bonds and other available funds. 12iconditionally called for redemption on May 4, 2020. Utility System 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 Pledged Amount Final Amount Issued Revenue Series of Issue Maturitv Outstanding 09-11-19 Water and Sewer System 2019 $10,330,000 10-01-31 $10,330,000 Lease Obligations (as of December 31, 2019}: Year Original Final Amount Item Issued Amount Year Outstanding HVAC System 2012 $1,100,000 2027 $656,261 Special Obligation Revenue Bonds: The following special obligation revenue bonds are payable solely from sales tax collected within certain special districts in the City. Revenue bonds do not represent a general obligation indebtedness of the City for which the City's taxing ability has been pledged. Date Pledged Amount Final Amount Issued Revenue Series of Issue Maturitv Outstanding 12-21-18 Sales Tax Revenue 2018-A $18,250,000 12-01-38 $18,250,000 12-21-18 Sales Tax Revenue 2018-B 4,320,000 12-01-38 4,320,000 Total: $22,570,000 State Loans The following is a list of outstanding loans the City has taken out through the Kansas Department of Health and Environment ("KDHE") or Kansas Department of Transpiration ("KDOT") revolving loan fund programs. KDHE loans are typically repaid by net revenues from municipal water or sewer systems. KDOT loans can be repaid from a variety of sources including, but not limited to, property taxes, special assessments, special highway fund allocations and sales taxes. Regardless of the intended source of repayment, the loans are ultimately secured by the City's ability to levy unlimited ad valorem property taxes. A-10 Project Year Final Original Amount Number Purpose Originated Payment Date Amount Outstanding KDHE 2629 Water 2014 08-01-34 $8,562,911 $ 6,411,458 KDHE 2841 Water 2015 08-01-35 4,250,000 3,693,394 KDHE 2917 Water 2019 02-01-40 32,000,000 32,000,000* KDHE 2957 Water 2019 02-01-40 4,250,000 4,250,000* $46,354,852 *Construction on these projects is in process. The City has not yet drawn down the entire principal amounts shown above but is expected to do so in order to complete the projects. 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. Amount Outstanding $ 20,175,000 220,693 109,280,000 Estimated Share of the City Jurisdiction Salina Airport Authority Saline County* Unified School District No. 305 Amount $ 20,175,000 163,268 101,854,179 $122, 192,44 7 *As of June 30, 2019, all other jurisdictions as of December 31, 2019. Annual Debt Payments Percentage 100.00% 73.98 93.20 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 2020-A Bonds Year Principal Interest Principal Interest Total 2020 $4,895,000 $909,329 $5,804,329 2021 4,865,000 1,671,789 $495,000 $203,290 7,235,079 2022 4,790,000 1,502,298 580,000 128,088 7,000,386 2023 4,610,000 1,317,644 595,000 110,687 6,633,331 2024 4,390,000 1,138,598 610,000 92,838 6,231,436 2025 4,055,000 1,024,004 630,000 74,537 5,783,541 2026 3,745,000 913,534 215,000 55,637 4,929,171 2027 3,500,000 806,839 225,000 49,187 4,581,026 2028 3,180,000 710,294 230,000 42,437 4,162,731 2029 2,895,000 619,936 235,000 35,537 3,785,473 2030 2,410,000 539,224 245,000 30,838 3,225,062 2031 2,430,000 469,321 220,000 25,937 3,145,258 2032 2,330,000 397,426 225,000 21,538 2,973,964 2033 2,305,000 325,594 230,000 16,757 2,877,351 2034 2,110,000 253,813 235,000 11,581 2,610,394 2035 1,885,000 188,250 240,000 6,000 2,319,250 2036 1,610,000 130,763 0 0 1,740,763 A-11 2037 2038 2039 1,240,000 725,000 740.000 $58,710,000 83,175 43,950 22.200 $13,067,981 0 0 0 $5,210,000 *Excludes payments made prior to the closing date of the Bonds. Historical Debt Information 0 0 0 $904,889 1,323,175 768,950 762.200 $77,892,870 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 2019 $59,170,000 11.69% 1.80% 46,716 $1,266.59 2018 54,885,000 11.25 1.74 46,716 1,174.87 2017 59,985,000 12.46 1.94 46,994 1,276.44 2016 56,875,000 12.03 1.87 47,336 1,201.52 2015 57,535,000 12.43 1.94 47,813 1,203.33 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 general obligation notes as well as providing general obligation note and/or bond funding for approximately $26.3 million of improvements. A portion of the debt service payments on bonds issued for these projects are anticipated to be paid from local sales tax and utility system fees. The City has recently discussed the delaying several of these projects in light of the COVID-19 situation. 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 in the vicinity of the Salina Regional Airport and 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 reached a mediated 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 provided for a 10% local share of initial project costs paid by the City. The Consent Decree provided for a remedial investigation and feasibility study (Rl/FS) to determine the extent and severity of the contamination and to determine the best method of remediation. The Rl/FS has been completed within budget and The Kansas Department of Health and Environment's Corrective Action Decision (CAD) was issued on July 29, 2019. Issuance of the CAD provided the basis for the resumption of mediation with the Federal Government to determine respective financial responsibilities for remediating the contamination. Settlement negotiations are ongoing. If a mediated settlement results in identification of a potentially material local share of the remediation cost, it may be necessary for the City to issue debt to fund the local share. The exact timing and amount, if any, of such borrowing cannot be determined at this time. A-12 Debt Payment Record The City has always met principal and interest payments on all outstanding bonds and temporary notes when due and payable. Legal Debt Limits Cities within Kansas are permitted to issue bonds in an aggregate amount not to exceed 30% of the total assessed valuation of the city. Bonds issued for the purpose of improving, acquiring, enlarging, or extending municipal utilities, including storm and sanitary sewer systems; bonds issued to pay the cost of improvements to intersections and streets in front of city or school district property; bonds for bridges as authorized by a vote of the electors of a city; bonds issued to refund outstanding bonds; and bonds payable from revenue sources other than the general taxing authority of the city are not included in total aggregate debt for purposes of computing a city's debt limitation. FINANCIAL INFORMATION CONCERNING THE CITY Accounting, Budgeting and Auditing Procedures The City follows a modified accrual basis of accounting for all tax supported funds of the City, including the General Fund. An annual budget of estimated receipts and disbursements for the coming calendar year is required by statute to be prepared for all funds (unless specifically exempted). The budget is prepared utilizing the modified accrual basis which is 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 budget lists estimated receipts by funds and sources and estimated disbursements by funds and purposes. The proposed budget is presented to the governing body of the City prior to August 1, with a public hearing required to be held prior to August 15, with the final budget to be adopted by a majority vote of the governing body of the City prior to August 25 of each year (or October 1 if the City must conduct an election to increase property taxes above the tax lid described below). Budgets may be amended upon action of the governing body after notice and public hearing, provided that no additional tax revenues may be raised after the original budget is adopted. 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 became effective on January 1, 2017, 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 A-13 (F) expiration of a tax increment financing district, rural housing incentive district, neighborhood revitalization area or any other similar property tax rebate or redirection program. (2) Increased property tax revenues that will be spent on: (A) Bond, temporary notes, no fund warrants, state infrastructure loans and interest payments not exceeding the amount of ad valorem property taxes levied in support of such payments, and payments made to a public building commission and lease payments but only to the extent such payments were obligations that existed prior to July 1, 2016; (B) payment of special assessments not exceeding the amount of ad valorem property taxes levied in support of such payments; (C) court judgments or settlements of legal actions against the city or county and legal costs directly related to such judgments or settlements; (D) expenditures of city or county funds that are specifically mandated by federal or state law with such mandates becoming effective on or after July 1, 2015, and loss of funds from federal sources after January 1, 2017, where the city or county is contractually obligated to provide a service; (E) expenses relating to a federal, state or local disaster or federal, state or local emergency, including, but not limited to, a financial emergency, declared by a federal or state official. The board of county commissioners may request the governor to declare such disaster or emergency; or (F) increased costs above the consumer price index for law enforcement, fire protection or emergency medical services. (3) Any increased property tax revenues generated for law enforcement, fire protection or emergency medical services shall be expended exclusively for these purposes but shall not be used for the construction or remodeling of buildings. (4) The property tax revenues levied by the city or county have declined: (A) In one or more of the next preceding three calendar years and the increase in the amount of funding for the budget or appropriation from revenue produced from property taxes does not exceed the average amount of funding from such revenue of the next preceding three calendar years, adjusted to reflect changes in the consumer price index for all urban consumers as published by the United States department of labor for the preceding calendar year; or (B) the increase in the amount of ad valorem tax to be levied is less than the change in the consumer price index plus the loss of assessed property valuation that has occurred as the result of legislative action, judicial action or a ruling by the board of tax appeals." The Tax Lid also provides that "[w]henever a city or county is required by law to levy taxes for the financing of the budget of any political or governmental subdivision of this state that is not authorized by law to levy taxes on its own behalf, and the governing body of such city or county is not authorized or empowered to modify or reduce the amount of taxes levied therefore, the tax levies of the political or governmental subdivision shall not be included in or considered in computing the aggregate limitation upon the property tax levies of the city or county." Because of ambiguities in the Tax Lid, it is unclear how the various exceptions will be interpreted and how the provisions 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 governmental units from creating indebtedness unless there are funds on hand in the proper accounts and unencumbered by previous action with which to pay such indebtedness. An exception to this cash-basis operation is made where provision has been made for payment of obligations by bonds or other specific A-14 debt obligations authorized by law. The financial records of the City are audited annually by a firm of independent certified public accountants in accordance with generally accepted auditing standards. In recent years, the annual audit has been performed by Mize Houser & Company, P.A., Certified Public Accountants, Topeka, Kansas. Copies of the audit reports for the past five (5) years are on file in the Clerk's office and are available for review. The audit for the Fiscal Year ended December 31, 2018 is attached hereto as APPENDIX C. The City has historically prepared a Comprehensive Annual Financial Report, which includes audited financial statements and other pertinent credit information. Appropriate periodic credit information necessary for maintaining the ratings on the Bonds will be provided by the City to the rating agencies rating the Bonds. The Governmental Accounting Standards Board (GASB) issued Statement No. 34, Basic Financial Statements-and Management's Discussion and Analysis-for State and Local Governments in June 1999 ("Statement 34"), which established new requirements for the annual financial reports of state and local governments. Among the major changes embodied in Statement 34, governments will now be required to: (a) report on the overall state of the government's financial health, not just its overall "funds" in a newly required Management's Discussion and Analysis (MD&A), (b) provide the most complete information available about the cost of delivering services to their citizens in the annual report which will now also include financial statements prepared using full accrual accounting for all of the government's activities, (c) include information about the government's public infrastructure assets - such as bridges, roads and storm sewers, and (d) prepare an introductory narrative section analyzing the government's financial performance. The City has implemented Statement No. 34 in its financial statements. The financial information contained in the Appendices to this Official Statement are an integral part of this document and are intended to be read in conjunction herewith. 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: 2015 2016 2017 2018 Property Taxes $9,244,160 $9,217,596 $10,115,784 $9,743,497 Sales Tax 12,930,811 12,780,891 12,906,032 32,900 Other Taxes 5,663,843 6,347,717 5,215,264 5,444,880 Intergovernmental 975,720 1,301,106 1,133,310 1,144,717 Charges for Services 6,046,903 6,472,698 6,153,450 6,366,094 Investment Revenue 0 102,045 3,336 45,477 Miscellaneous 498,557 507,330 1,709,491 452,916 Total Revenues $35,359,034 $36,729,383 $37,236,667 $36,490,207 Expenditures: General Government $5,342,433 $5,422,010 $5,423,241 $5,648,579 Public Safety 21,267,630 21,664,398 21,628,730 22,952,925 Public Works 4,875,641 5,066,426 5,328,315 5,350,056 Public Health and Sanitation 754,347 703,606 749,656 793,780 Culture and Recreation 4,039,856 4,147,736 4,424,221 4,494,713 Planning and Development 586,358 980,950 752,825 766,471 Capital Outlay 1,041,690 1,098,587 896,026 860,115 Total Expenditures $37,907,955 $39,083,713 $39,203,014 $40,866,639 Revenues Over (Under) $(2,548,921) $(2,354,330) $( 1,966,34 7) $$(4,376,432) Other Sources (Uses) 2,962,350 2,546,500 3,816,500 4,236,500 Net Change in Fund Balance $413,429 192,170 1,850,153 $(139,932) A-15 Fund Balance January 1 Restatement of Prior Year Balance Fund Balance December 31 Assessed Valuation $4,254,432 172,325 $4,840,186 $4,840,186 0 $5,032,356 $5,032,356 0 $6,882,509 $6,882,509 0 $6,742,577 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 Pro(!ertv• Utilities Vehicle Valuation 2019 $421,108,311 $11,173,863 $22,113,195 $54,687,311 $509,082,680 2018 403,835,383 10,130,718 20,485,144 53,336,677 487, 787,922 2017 399,918,216 10,900,308 19,671,685 50,970,796 481,461,005 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 *Personal 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. 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 CONCERNING THE CITY -"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 2019 2018 2017 2016 2015 2014 2013 S(!ecial Assessments Residential Real Estate Equalization Ratio N/A 11.17% 11.04 11.36 11.28 11.65 11.55 Estimated Actual Value $3,294,115,685 3,150,409,123 3,097,885,103 3,046,949,034 2,968,008,193 2,917,267,724 2,889,385,914 The City has pursued a policy of utilizing special benefit districts to assign the cost of certain internal improvement projects to the property that directly benefits from the construction. Kansas statutes allow for the creation of special benefit districts to pay for the cost of a variety of improvements including street construction, storm water drains, sanitary sewer system improvements, street lighting, water system improvements, recreational facilities, flood control projects, bridges, and parking facilities. The City has typically utilized special benefit districts to pay for the costs associated with constructing streets, sidewalks, curbs, gutters, and lighting in new residential developments within the City. When a developer requests the use of Special Assessments to finance public improvements, the City requires that they pay 20% of the estimated cost of the project in cash, or file a letter of credit equivalent to 35% of the estimated cost of the project. The letter of credit is released when Certificates of Occupancy have been issued for 35% of the lots in the development. Special benefit districts have also been created to pay for the cost of improvements to streets and sidewalks in the City's downtown area. A-16 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 2i Amount 2i 2019* 29.720 $15,037,337 $8,552,180 56.9% $8,552,180 56.9% 2018 28.394 13,780,643 13,427,810 97.4 13,590,888 98.6 2017 26.129 12,728,983 12,381,334 97.3 12,602,044 99.0 2016 27.603 11,564,876 11,320,197 97.9 11,524,101 99.6 2015 27.311 11,209,245 10,984,630 98.0 11,169,600 99.6 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 *Represents collections through December 31, 2019. A-17 Tax Levies Nov Nov Nov Nov Nov Nov 2014 2015 2016 2017 2018 2019 Levy Levy Levy Levy Levy Levy City of Salina 27.080 27.311 27.603 26.129 28.394 29.720 Salina Library 6.034 5.895 5.893 5.989 6.014 5.913 State Education & Other 1.500 1.500 1.500 1.500 1.500 1.500 Unified School District No. 305 55.605 56.120 55.743 56.501 57.522 55.508 Airport Authority 4.486 4.396 4.396 4.225 4.998 4.447 Central Kansas Extension District 1.285 1.502 1.510 1.475 1.476 1.198 Saline County 37.047 38.275 37.508 37.321 38.437 41.097 Total 134.037 134.999 134.153 133.140 138.341 139.383 Largest Taxpayers According to the Saline County Clerk's Office, the following table lists the largest taxpayers in the City, their November 2019 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 Evergy, Inc. Utility $13,682,027 2.69% SFC Global Supply Chain Inc Manufacturing 6,855,966 1.35 Kansas Gas Service Utility 4,415,353 0.87 RAF Salina LLC Retail Shopping Center 4,296,499 0.85 S&B Motels Inc Motel 3,774,927 0.74 Central Mall Realty Holding LLC Retail Shopping Center 2,868,321 0.56 Union Pacific Railroad Co. Railroad 2,570,668 0.51 Menard Inc. Home Improvement Store 2,465,098 0.49 Individual Residential 2,440,724 0.48 Sam's Real Estate Business Trust/Walmart Discount Store 2,286,508 0.45 Total $45,656,091 8.99% 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: *Through February 2020. Year 2020* 2019 2018 2017 2016 2015 2014 A-18 Value $2,084,451 20,544,765 71,862,718 59,975,197 97,910,328 56,989,007 24,214,432 Sales Tax Sales tax collections are the responsibility of the Kansas Department of Revenue. The Department of Revenue distributes the local option countywide and citywide sales taxes on a monthly basis. Countywide sales taxes are distributed between the levying county and the cities located within the county based on population and relative tax levies. Citywide local option sales taxes are distributed solely to the levying city. Statewide sales taxes are retained entirely by the state. In 1982 the voters of Saline County, in accordance with Kansas statutes, approved a 1% countywide local option sales tax. In 1992 voters of the City approved a local option .50% citywide sales tax for purposes of helping fund general operations expenditures of the City. Both of these taxes were approved in perpetuity. In May of 2016, voters approved a. 75% citywide retailers sales tax that will be in existence for 20 years and will be used for capital improvements and economic development. The 2016 sales tax replaced an existing sales tax of .40%. 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. (llAs of February 2020 Year 2020(l) 2019 2018 2017 2016 2015 2014 2013 Citywide Local Option Sales & Use Tax Receipts $2,437,227 14,922,404 14,632,584 14,404,702 10,458,630 10,372,573 10,099,512 9,705,026 City's Portion of 1% Countywide Local Option Sales & Use Tax Receipts $1,372,223 7,608,604 7,415,804 7,368,869 7,312,618 7,376,708 7,188,934 6,998,806 (2lCollections prior to October 1, 2016 represent taxes attributable to a .40% sales tax that was replaced with the . 75% 2016 sales tax. Prior to October 1, 2016 the citywide aggregate sales and use tax rate was .90%. The aggregate rate was increased to 1.25% as a result of the approval of the 2016 sales tax discussed above. Source: Kansas Department of Revenue 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. A-19 Property Valuation Challenges. Taxpayers may challenge the appraised value of their property by paying property taxes under protest. Such challenges are subject to administrative and judicial review. Taxes paid under protest are distributed to taxing jurisdictions in the same manner as all other property tax collections. If a taxpayer's challenge to the appraiser's valuation is successful, the county is liable to refund the amount of property taxes attributable to the protested value that was previously paid under protest. The county will then withhold from future property tax distributions to other taxing jurisdictions an amount equal to the jurisdiction's pro rata share of such refund. Any such withholdings from future property tax distributions may have a material adverse effect on the City's financial situation. 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 Propertv: 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, 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 A-20 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 2018 Preliminary Kansas Appraisal/Sales Ratio Study, the equalization ratio for residential real property in Sal ine County was 11.17%, and commercial and industrial property was 22 .55%. A-21 APPENDIX B Form of Continuing Disclosure Undertaking CONTINUING DISCLOSURE UNDERTAKING $5,210,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2020-A $7,050,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES SERIES 2020-1 DATED APRIL 29, 2020 This CONTINUING DISCLOSURE UNDERTAKING dated as of April 29, 2020 (the "Continuing Disclosure Undertaking"), is executed and delivered by the City of Salina, Kansas (the "Issuer"). RECITALS 1. This Continuing Disclosure Undertaking is executed and delivered by the Issuer in connection with the issuance of the above-described bonds and notes (collectively, the "Obligations") which are being issued simultaneously herewith as of April 29, 2020, pursuant to the Bond Resolution and Note Resolution (collectively, the "Resolution") adopted by the governing body of the Issuer. 2. The Issuer is entering into this Continuing Disclosure Undertaking for the benefit of the Beneficial Owners of the Obligations and in order to assist the Participating Underwriter in complying with Rule 15c2-12 of the Securities and Exchange Commission under the Securities Exchange Act of 1934 (the "Rule"). The Issuer is the only "obligated person" with responsibility for continuing disclosure hereunder. The Issuer covenants and agrees as follows: Section 1. Definitions. In addition to the definitions set forth in the Resolution, which apply to any capitalized term used in this Continuing Disclosure Undertaking unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Report" means any Annual Report provided by the Issuer pursuant to, and as described in, Section 2 of this Continuing Disclosure Undertaking, which may include the Issuer's CAFR, so long as the CAFR contains the financial information and operating data described in Section 2(a)(l) and (2). "Beneficial Owner" means any registered owner of any Obligations 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 Obligations (including persons holding Obligations through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Obligations for federal income tax purposes. "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 office or designated payment office of the paying agent or Continuing Disclosure Undertaking the Dissemination Agent 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. "Dissemination Agent" means any entity designated in writing by the Issuer to serve as dissemination agent pursuant to this Continuing Disclosure Undertaking and which has filed with the Issuer a written acceptance of such designation. "EMMA" means the Electronic Municipal Market Access system for municipal secunties disclosures established and maintained by the MSRB, which can be accessed at www.emma.msrb.org. "Financial Obligation" means a (a) debt obligation; (b) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (c) guarantee of (a) or (b) in this definition; provided however, the term Financial Obligation shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule. "Fiscal Year" means the 12-month period beginning on January 1 and ending on December 31 or any other 12-month period selected by the Issuer as the Fiscal Year of the Issuer for financial reporting purposes. "Material Events" means any of the events listed in Section 3 of this Continuing Disclosure Undertaking. "MSRB" means the Municipal Securities Rulemaking Board, or any successor repository designated as such by the Securities and Exchange Commission in accordance with the Rule. "Participating Underwriter" means any of the original underwriter(s) of the Obligations required to comply with the Rule in connection with the offering of the Obligations. Section 2. Provision of Annual Reports. (a) The Issuer shall, not later than 180 days afterthe end of the City's Fiscal Year, commencing with the Fiscal Year ending December 31, 2019, file with the MSRB, through EMMA, the following financial information and operating data (the "Annual Report"): (1) The audited financial statements of the Issuer for the prior Fiscal Year, prepared on a modified accrual basis of accounting other than GAAP. A more detailed explanation of the accounting basis is contained in the Official Statement related to the Obligations. If audited financial statements are not available by the time the Annual Report is required to be provided pursuant to this Section, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement relating to the Obligations, and the audited financial statements shall be provided in the same manner as the Annual Report promptly after they become available. (2) Updates as of the end of the Fiscal Year of certain financial information and operating data contained in the final Official Statement related to the Obligations, Continuing Disclosure Undertaking 2 as described in Exhibit A, in substantially the same format contained in the final Official Statement with such adjustments to formatting or presentation determined to be reasonable by the Issuer. 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 Rule), which have been provided to the MSRB and are available through EMMA or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB on EMMA. The Issuer shall clearly identify each such other document so included by reference. In each case, the Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in this Section; provided that the audited financial statements of the Issuer 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, and the Annual Report deadline provided above shall automatically become 180 days after the end of the Issuer's new Fiscal Year. (b) Pursuant to Section ( d)(3) of the Rule, the provisions of Section 2 hereof shall not apply to the Notes, because they have a stated maturity of less than 18 months. (c) The Annual Report shall be filed with the MSRB in such manner and format as is prescribed by the MSRB. Section 3. Reporting of Material Events. Not later than 10 Business Days after the occurrence of any of the following events, the Issuer shall give, or cause to be given to the MSRB, through EMMA, notice of the occurrence of any of the following events with respect to the Obligations ("Material Events"): ( 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 Obligations, or other material events affecting the tax status of the Obligations; (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 Obligations, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the obligated person; ( 13) the consummation of a merger, consolidation, or acquisition involving the obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an Continuing Disclosure Undertaking 3 action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (14) appointment of a successor or additional trustee or the change of name of the trustee, if material; ( 15) incurrence of a Financial Obligation of the obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the obligated person, any of which affect security holders, if material; and ( 16) default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the obligated person, any of which reflect financial difficulties. Except as provided in Section 2(b) hereof, if the Issuer has not submitted the Annual Report to the MSRB by the date required in Section 2(a), the Issuer shall send a notice to the MSRB of the failure of the Issuer to file on a timely basis the Annual Report, which notice shall be given by the Issuer in accordance with this Section 3. Section 4. Termination of Reporting Obligation. The Issuer's obligations under this Continuing Disclosure Undertaking shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Obligations. If the Issuer's obligations under this Continuing Disclosure Undertaking are assumed in full by some other entity, such person shall be responsible for compliance with this Continuing 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 substitution occurs prior to the final maturity of the Obligations, the Issuer shall give notice of such termination or substitution in the same manner as for a Material Event under Section 3. Section 5. Dissemination Agents. The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist 1t m carrying out its obligations under this Continuing Disclosure Undertaking, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. Any 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 Continuing Disclosure Undertaking. Section 6. Amendment; Waiver. Notwithstanding any other provision of this Continuing Disclosure Undertaking, the Issuer may amend this Continuing Disclosure Undertaking and any provision of this Continuing 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 Rule and all current amendments thereto and interpretations thereof that are applicable to this Continuing Disclosure Undertaking. In the event of any amendment or waiver of a provision of this Continuing Disclosure Undertaking, 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, 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) Continuing Disclosure Undertaking 4 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 Continuing Disclosure Undertaking shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Continuing 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 required by this Continuing 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 specifically required by this Continuing Disclosure Undertaking, the Issuer shall have no obligation under this Continuing Disclosure Undertaking to update such information or include it in any future Annual Report or notice of occurrence of a Material Event. Section 8. Default. If the Issuer fails to comply with any provision of this Continuing Disclosure Undertaking, any Participating Underwriter or any Beneficial Owner of the Obligations may take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order, to cause the Issuer to comply with its obligations under this Continuing Disclosure Undertaking. A default under this Continuing Disclosure Undertaking shall not be deemed an event of default under the Resolution or the Obligations, and the sole remedy under this Continuing Disclosure Undertaking in the event of any failure of the Issuer to comply with this Continuing Disclosure Undertaking shall be an action to compel performance. Section 9. Beneficiaries. This Continuing Disclosure Undertaking shall inure solely to the benefit of the Issuer, the Participating Underwriter, and the Beneficial Owners from time to time of the Obligations, and shall create no rights in any other person or entity. Section 10. Severability. If any provision in this Continuing Disclosure Undertaking, the Resolution or the Obligations shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 11. Electronic Transactions. The arrangement described herein may be conducted and related documents may be sent, received, or 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 12. Governing Law. This Continuing Disclosure Undertaking shall be governed by and construed in accordance with the laws of the State of Kansas. [Remainder of Page Intentionally Left Blank.] Continuing Disclosure Undertaking 5 IN WITNESS WHEREOF, the Issuer has caused this Continuing Disclosure Undertaking to be executed as of the day and year first above written. CITY OF SALINA, KANSAS (SEAL) Mayor City Clerk Continuing Disclosure Undertaking S-1 EXHIBIT A TO CONTINUING DISCLOSURE UNDERTAKING FINANCIAL INFORMATION AND OPERATING DATA TO BE INCLUDED IN ANNUAL REPORT The financial information and operating data contained in the following sections and tables contained in Appendix A of the final Official Statement (with such modifications to the formatting and general presentation thereof as deemed appropriate by the Issuer) relating to the Obligations: • Financial Overview of the City • FINANCIAL INFORMATION CONCERNING THE CITY -Assessed Valuation • FINANCIAL INFORMATION CONCERNING THE CITY -Estimated Actual Valuation • FINANCIAL INFORMATION CONCERNING THE CITY -Tax Collections • FINANCIAL INFORMATION CONCERNING THE CITY -Tax Levies • FINANCIAL INFORMATION CONCERNING THE CITY - Largest Taxpayers APPENDIXC December 31, 2018 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, 2018, including financial statements as audited by the firm of Mize Houser & Company, P.A., Certified Public Accountants, Topeka, Kansas. COMPREHENSIVE ANNUAL FINANCIAL REPORT OF CITY OF SALINA, KANSAS 300 West Ash Street P.O. Box 736 Salina, Kansas 67402-0736 For the Fiscal Year Ended December 31, 2018 Prepared by Department of Finance and Administration of City of Salina, Kansas CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2018 Letter of Transmittal Organizational Chart List of Principal Officials Independent Auditor's Report Management's Discussion and Analysis Basic Financial Statements: Government-wide Financial Statements Statement of Net Position Statement of Activities Fund Financial Statements Balance Sheet -Governmental Funds TABLE OF CONTENTS INTRODUCTORY SECTION FINANCIAL SECTION 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 i-iv v vi 1 - 3 4 -15 16 17 18 19 20 21 22 23 24 25 26 27 28-29 30 CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2018 TABLE OF CONTENTS -CONTINUED FINANCIAL SECTION -CONTINUED Notes to the Basic Financial Statements Required Supplementary Information Other Postemployment Benefits Schedule of Changes in the City's Total OPEB Liability and Related Ratios Other Postemployment Benefits -KPERS Schedule of Changes in the City's Total OPEB Liability and Related Ratios KPERS Pension Plan Schedule of City's Proportionate Share of the Net Pension Liability Schedule of City Contributions Combining Statements and Individual Fund Schedules Combining Statements -Nonmajor Funds Fund Descriptions Combining Balance Sheet -Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Governmental Funds Combining Balance Sheet -Nonmajor Special Revenue Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Special Revenue Funds Combining Balance Sheet -Nonmajor Permanent Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Permanent Funds Individual Fund Schedules of Revenues, Expenditures and Changes in Fund Balance -Budget and Actual (Non-GAAP Basis): Bicentennial Center Fund Business Improvement District 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 31 -70 71 72 73 73 74-75 76 77 78-79 80-81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 Internal Service Fund Descriptions CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2018 TABLE OF CONTENTS-CONTINUED FINANCIAL SECTION -CONTINUED Combining Statement of Net Position -Internal Service Funds Combining Statement of Revenues, Expenses, and Changes in Net Position -Internal Service Funds Combining Statement of Cash Flows -Internal Service Funds Fiduciary Fund Descriptions -Agency Funds Combining Balance Sheet -Agency Funds Combining Statement of Changes in Assets and Liabilities -Agency Funds STATISTICAL SECTION Net Position by Component -Last Ten Fiscal Years Changes in Net Position -Last Ten Fiscal Years Fund Balances, Governmental Fund -Last Ten Fiscal Years Changes in Fund Balances, Governmental Funds -Last Ten Fiscal Years Tax Revenues by Source, Governmental Funds -Last Ten Fiscal Years Assessed and Estimated Actual Value of Taxable Property-Last Ten Fiscal Years Direct and Overlapping Property Tax Rates-Last Ten Fiscal Years Principal Property Taxpayers Property Tax Levies and Distributions Direct Sales Rate by Taxing Entity Water Sales by Class of Customer Ratio of Outstanding Debt by Type Ratio of Net General Bonded Debt Outstanding Direct and Overlapping Governmental Activities Debt Legal Debt Margin Pledged Revenue Coverage Demographic and Economic Statistics Principal Employers Page 99 100 101 102 -103 104 105 106 Schedule 1 107 2 108 3 109 4 110 5 111 6 112 7 113 8 114 9 115 10 116 11 117 12 118 13 119 14 120 15 121 16 122 17 123 18 124 INTRODUCTORY SECTION DEPARTMENT OF FINANCE AND ADMINISTRATION 300 West Ash, P.O. Box 736 Salina, Kansas 67402-0736 City Of !:; 5alll1a September 25, 2019 To the Citizens of the City of Salina, Kansas: TELEPHONE (785) 309-5735 FAX (785) 309-5738 TDD (785) 309-5747 Website: www.salina-ks.gov The Comprehensive Annual Financial Report of the City of Salina, Kansas (the "City") for the year ended December 31, 2018, is hereby submitted. The City's Finance Department prepared the report. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of all various funds and account groups of the City. We believe that all disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. Report Format The Comprehensive Annual Financial Report is presented in three sections: Introductory, Financial and Statistical. The introductory section includes a description of the City, including services provided, and explanation of the City's accounting system and budgetary controls, and a brief discussion of the City's economic condition and outlook. The City's organizational chart is also included to assist the reader in understanding the structure of the City. The financial section includes the Independent auditor's report, Management's discussion & analysis, Government wide financial statements, Fund financial statements, Notes to the financial statements, and Individual and combining statements and schedules. The statistical section includes selected financial and demographic information, generally presented on a multi-year basis. The reader is specifically directed to Management's Discussion and Analysis (MD&A) which immediately follows the independent auditor's report. MD&A provides a narrative explanation and overview of significant features and trends reflected by data in the financial statements. Accounting Systems and Internal Controls A critical part of the control system is the City's comprehensive Budgetary and Financial Policies, which establish guidelines for budgetary and financial practices. The Budgetary and Financial Policies are reviewed by the City Commission and updated each year as a part of the budget process. City staff is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft or misuse and that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits require estimates and judgment by management. The objective of budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Commission. The legal level of budgetary control is maintained at the Fund level, in accordance with State Statutes. However, management control is maintained at the department level. The City uses an encumbrance accounting system, in which estimated purchase amounts are recorded prior to the release of purchase orders to vendors. Open encumbrances are reported as reservations of fund balance at December 31, 2018 in the general fund and the special revenue funds. Various internal compliance procedures are implemented to ensure proper implementation of the budget as well as to maintain a degree of accountability for both revenues and expenditures. Independent Audit Kansas Statutes Annotated 75-1122 requires an annual audit of the books of account, financial records and transactions of all administrative departments of the City by independent certified public accountants selected by the City Commission. This requirement has been complied with and the auditor's opinion has been included in this report. Profile of the Community The Town of Salina was organized in 1858 under the Town and Village Act in the State of Kansas, and became a City of the First Class on July 9, 1920. The City has had a Commission-City Manager form of government since 1921. The Commission is comprised of five members elected at large. Each year the commission chooses one member to act as Mayor. The City Manager is appointed by the Commission, and acts as its primary agent in accordance with state statute. Other city officers and employees are appointed by the City Manager. The current population of the City is 46,994. The reporting entity includes the City of Salina as well as two discretely presented component units, both proprietary fund types. The Salina Airport Authority operates the Salina Municipal Airport and Airport Industrial Center, and the Salina Housing Authority administers public housing programs within the City of Salina. The entity also includes one blended component unit. Salina Field House Qualified Active Low- Income Community Business, Inc. (SFH QalicB}. SFH QalicB was created for the purpose of providing an indoor sports facility in the downtown core of the city of Salina. In addition, the City of Salina participates in a joint venture with Saline County, the City-County Building Authority. This report includes all funds and account groups of the City. The City provides a full range of services including police and fire protection, development services, construction and maintenance of streets, drainage facilities and other infrastructure; recreational activities and cultural events: emergency medical services and convention facilities. In addition to general government activities, the City also provides water, wastewater, sanitation, and solid waste services; therefore, these activities are included in the reporting entity. Economic Outlook and Strength The City benefits from its location at the junction of Interstate Highways 70 and 135. This convenient location has drawn numerous national and regional companies to open manufacturing or distribution centers in or adjacent to the community. Such companies include Pepsi-Cola, Exide Technologies, Blue Philips Lighting Company, EIDorado National, and Schwan's Global Supply Chain. Manufacturing, retail trade, and service industries rank as the three primary employers in the City. No single industry is dominant. The City of Salina retains its position near the top of a list of first class cities with respect to "trade pull factor." According to the Kansas Department of Revenue's Annual City Trade Pull Factor report, Salina had a pull of factor of 1.48 in 2017. The pull factor measures the degree to which a city or county area captures retail trade from outside the jurisdiction. A pull factor of greater than 1 indicates that a city is attracting more retail trade from outside the city/county than it is losing to other counties. It is apparent from this that Salina continues to serve as a regional economic hub in 2018. Major Initiatives In April, 2016, voters elected to replace the .40 cent capital improvement sales tax with a .75 cent capital improvement sales tax for a term of 20 years. Priorities for the sales tax are improving neighborhood streets and drainage, preserving stable property tax rates, ensuring a quality park system, constructing and maintaining community improvements, funding equipment for maintenance, repayment of future bonds for large projects and attracting quality jobs. As a result of this initiative, the City has seen a 38% increase in sales tax collections in 2018 as compared to 2016. In 2018, the Salina Field House completed its first year in business. It hosted 16 tournaments and over 91,000 attendees and continues to grow in the number of events that it is drawing to the City. ii Old Chicago Pizza opened for business in the City's downtown corridor in late 2018. STAR Bonds were issued in December, 2018, for the Downtown Revitalization Project. As a result of this funding, several projects are now moving forward including the City's Downtown Streetscape project, the Alley Entertainment Center, a car museum and the new downtown hotel. Other major projects that were on going included gutter and paving on North 91h Street, South Well Field improvements, continued improvements to the water distribution system and preliminary design on the Smoky Hill River Renewal and Police Training Center projects. The City continues to address fiduciary pressures generated by a recessionary economy. General adjustments to the pay plan for cost of living changes at a rate of 2.5% were implemented in 2018. The City also allowed for merit review increases up to 3%. Capital Improvement Planning The City's Capital Improvement Plan (CIP) consists of two components. One component consists of "routine" capital-including vehicle and equipment replacement, technology replacement, building repair and improvement, routine pavement maintenance activity, utility system enhancements and similar items. The amount of funding for these projects may fluctuate based on needs and funding availability, however, planned amounts are allocated over a multi-year period. Source of funding for routine capital is current cash resources from the fund appropriate to the nature of the purchase. The second component of the CIP includes major projects that typically require issuance of bonds or notes, although these projects may also be supplemented with available cash and grant financing. The plan is updated each year after an extensive evaluation of the demands on future financial resources. The Capital Improvement program is scheduled for a major revision as the result of the sales tax to be used for that purpose. Construction initiated: * 2019 2020 Sales tax $ 4,380,000 $ 4,385,000 Water & wastewater fund General obligation bonds 5,225,000 19,700,000 Revenue Bonds/Loans 11,255,000 6,000,000 Other sources 785,800 $ 21,645,800 $ 30,085,000 2021 $ 4,390,000 2,000,000 28,000,000 $34,390,000 2022 $ 4,395,000 2,000,000 $6,395,000 2023 $ 4,250,000 2,000,000 $ 6,250,000 *The year a project is scheduled reflects the year that construction is initiated. Preliminary work (design, acquisition) may precede this date by one or more years, and permanent financing may not occur until one (or more years depending on project magnitude) subsequent to this date. Financial Policies The City has adopted a formal set of Budgetary and Financial Policies, addressing such items as fund balances, capital improvements, operating budgets, long term debt management, accounting, auditing and financial reporting, revenues, cash management and investments. Financial policies contribute to financial stability by: 1. Providing consistent guidance in decision making 2. Establishing appropriate levels of fund balances 3. Governing the use of one time or unanticipated resources 4. Providing a multi-year capital improvements process 5. Establishing responsibilities and deadlines for budget preparation 6. Providing for a balanced annual operating budget 7. Providing guidelines on the use of debt, including appropriate purposes and terms 8. Provide a linkage between capital improvement scheduling and !ong term debt management planning iii 9. Require annual audits and financial reporting in conformance with Generally Accepted Accounting Procedures 10. Require timely and regular interim financial reporting to the Governing body 11. Ensure the safety of cash and near cash resources (timely collection of Accounts Receivable, etc.). Acknowledgments The preparation of the Comprehensive Annual Financial Report was made possible by the dedicated Finance staff of the City of Salina and the professional advice and efforts of the Mize Houser auditing team. Finally, preparation of this report would not have been possible without the support of the City Commission. Sincerely, Michael D. Schrage City Manager iv I I Municipal Court Risk Management Development Services Lauren Driscoll Building Services Neighborhood Services Planning & Zoning Community Relations Parks & Recreation Chris Cotton Public Works Jim Kowach Engineering Parks Division Public Services Recreation Division Streets Golf Course Traffic Control Facility Maintenance Flood Control Animal Services Sanitation *Tony's Pizza Event Solid Waste Center Central Garage Computer Technology Jack Rolfs Orga rniz ,il't 1i(o1nal Char·t IJ CITIZENS II. -:'A ~ --~ ~ CITY COMMISSION Karl Ryan, Mayor Trent Davis Melissa Rose Hodges Mike Hoppock Joe Hay City Manager Michael Schrage L ________ Deputy City Manager Vacant Utilities Martha Tasker Water Plant Division Wastewater Plant Division Utility Division Water Distribution Wastewater Collection Finance/ Administration Debbie Pack City Clerk Water Customer Accounting Finance Arts & Humanities Brad Nelson v Legal Services Clark Mize & Linville Chartered* Greg Bengston Continuous Process Improvement Scott Gardner Fire Kevin Royse Fire Administration Fire Suppression Fire Prevention EMS Human Resources Natalie Fischer Police Brad Nelson Administration Patrol Division Support Division Investigative Division vi City of Salina, Kansas List of Principal Officials City Commission Karl Ryan, Mayor Trent Davis, Vice Mayor Mike Hoppock, Commissioner Melissa Rose Hodges, Commissioner Joe Hay, Commissioner City Executive Staff Michael Schrage, City Manager Lauren Driscoll, Director of Development Services Debbie Pack, Director of Finance and Administration Jack Rolfs, Director of Computer Technology Natalie Fischer, Director of Human Resources Greg Bengston, City Attorney Brad Nelson, Chief of Police Kevin Royse, Fire Chief Daniel Stack, City Engineer Jim Kowach, Director of Public Works Martha Tasker, Director of Utilities Chris Cotton, Director of Parks and Recreation Brad Anderson, Director of Arts and Humanities Scott Gardner, Continuous Process Improvement vi FINANCIAL SECTION Mayor and City Commissioners City of Salina, Kansas Report on the Financial Statements INDEPENDENT AUDITOR'S REPORT • M I Z EcM£,~~. 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, 2018, 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 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 Field House Qualified Active Low-Income Community Business, Inc. (SFH QalicB), which is included within the financial statements as a major governmental fund. This activity represents 4% and 1%, respectively, of the total assets and total revenues of the governmental funds. Those financial statements were audited by other auditors whose report has been furnished to us , and our opinion, insofar as it relates to the amounts included for SFH QalicB, is based solely on the report of the other auditors. We also did not audit the financial statements of the Housing Authority of the City of Salina, which is a discretely presented component unit in the accompanying financial statements and which statements reflect total assets and deferred outflows of resources of $7,486,949 as of June 30, 2018 and total revenues of $2,507,375 for the year then ended. 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 Housing Authority of the City of Salina, is based solely on the reports of the other auditors. 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 CoRege 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 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. 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, 2018, 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 75 for other postemployment benefits during the current year. As a result of the implementation, a restatement was made to the net position at December 31, 2017. Our opinion is not modified with respect to this matter. Prior Period Restatement As discussed in Note 3 to the financial statements, certain errors in amounts previously reported as of December 31, 2017, were discovered by management of the City during the current year. Accordingly, these amounts have been restated in the December 31, 2018, financial statements now presented, and adjustments have been made to net position to correct the error. Our opinion is not modified with respect to these matters. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 4 through 15, the other postemployment benefit schedules on page 70 and 71, the schedule of the City's proportionate share of the net pension liability on page 72, and the schedule of City contributions on page 72 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. 2 Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's financial statements as a whole. The introductory section, combining and individual nonmajor fund financial statements and schedules, and statistical tables as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying account and other records used to prepare the basic financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Certified Public Accountants Lawrence, Kansas September 25, 2019 3 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31 , 2018 (Unaudited) This section of the report contains an overview and analysis of the City of Salina's financial statements for the fiscal year ended December 31, 2018. The information contained here, as well as the information contained in the letter of transmittal, are intended to provide the reader of the financial statements with a well-rounded picture of the City's financial condition. Financial Highlights • On an accrual basis, the City's government-wide net position increased $11.1 million from current operations with net position increases of $9.8 million and $1.3 million in governmental activities and business-type activities, respectively. • At the close of 2018, the City's governmental funds reported combined ending fund balances of $19.1 million, a decrease of $2. 7 million from the prior year. This primarily resulted from issuance of temporary notes in the Capital Projects Fund and the capital project expenditures in the SFH QalicB Fund. The General Fund balance decreased $140 thousand over the prior year. • At the close of 2018, the City's enterprise funds reported a combined ending Net Position of $90.4 million, an increase of $1 .3 million over prior year. Positive performance was shared by the Water and Sewer Fund and the Sanitation Fund, with the Water and Sewer Fund providing the bulk of the change ($1.8 million). The Solid Waste Disposal Fund saw a negative performance as a result of additional costs related to the opening of the Drive Thru Recycling Center. • Revenues from governmental activities increased by $4.2 million from the prior year and revenues from business type activities increased $.5 million from the prior year. • Revenues from investments continue to be minimal. The Basic Financial Statements The basic financial statements of the City include the government-wide financial statements and the fund financial statements. The notes to the financial statements follow the basic financial statements and are essential for the reader's understanding of the financial statements. Other supplementary information, including the combining schedules for non-major funds and the budgetary comparison reports, are at the end of this report to provide additional information for the reader. Government-wide Financial Statements The government-wide financial statements present the results of the City's operations using the accrual basis of accounting, the same basis as is used by private sector businesses. These statements focus on the long-term financial picture of the City as a whole. The Statement of Net Position reports all of the City's assets and liabilities. Net position, the difference between assets and deferred outflows of resources and liabilities, are an important measure of the City's overall financial health. Net position represents the total accumulated and unused resources available to the City for the purpose of providing services. Over time, the increases and decreases in net position can be monitored to determine if the City's financial position is improving or deteriorating. The Statement of Activities shows how net position has changed during the fiscal year. One unique feature of this statement is how it shows the revenues and expenses related to specific programs and how much of those programs were supported by the general taxes of the City. Since this statement is prepared on the accrual basis of accounting , all revenues and expenses are included, regardless of when cash is actually received. Both statements show the operations of the City broken down between governmental and business-type activities. Governmental activities are the operations of the City generally supported by taxes, such as public safety (police, fire , and EMS), public works, 4 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) public health, and culture & recreation. Business-type activities are operations of the City that are intended to recover a significant portion of their costs through user fees and charges. These include water and sewer, refuse collection, the golf course, and operation of the City solid waste facility. The government-wide financial statements include the Salina Airport Authority and Salina Housing Authority as discretely presented component units of the City and the Salina Field House Qualified Active Low-Income Community Business, Inc. (SFH QalicB) as a blended component unit. Note 1, item A in the Notes to the Financial Statements provides a more complete explanation of the relationship between these entities and the City of Salina. Fund Financial Statements The City uses three types of funds to manage its resources: governmental funds, proprietary funds, and fiduciary funds. A fund is a fiscal entity with a set of self-balancing accounts recording financial resources together with all related liabilities and residual equities and balances, and the changes therein. These accounting entities are separated for the purpose of carrying on specific activities or attaining certain objectives in accordance with regulations, restrictions, or limitations. Governmental fund financial statements are prepared on a modified accrual basis. Under this basis, revenues are recognized when they become measurable and available, and expenditures are recognized when the related fund liability is incurred with the exception of long term debt and similar items which are recorded when due. The focus is on the short-term financial picture of the operations of the individual fund, rather than long-term citywide view provided by the government-wide statements. Major governmental funds are presented in individual columns, while non-major governmental funds are aggregated into an "Other Governmental Funds" column. A combining statement for the non-major funds is presented as supplementary information in the back of the report. The information presented in these statements can be compared to the governmental activities information in the government-wide statements. The reconciliation at the end of the fund financial statements details the relationship between the two types of financial statements. Proprietary funds fall into two categories: enterprise funds and internal service funds. All proprietary funds are prepared on the accrual basis of accounting and are used to account for business-type activities. Enterprise fund statements present the same information that is in the government-wide statements for business-type activities, but in greater detail. The City of Salina currently operates four enterprise funds: Sanitation, Solid Waste Disposal, Golf Course, and Water and Sewer. Internal service funds are used to account for the cost of operations shared by various departments of the City. The city operates three internal service funds. Two of these are for self-insurance activity: Workers Compensation Reserve, and Health Insurance. The remaining accounts for the Central Garage operation. A combining statement for these internal service funds can be found in the supplementary information following the notes to the financial statements. Fiduciary funds are used by the City to account for resources held by the City for a third party. Agency funds are a special class of fiduciary fund in which liabilities always equal assets, and thus there is no net position. The City of Salina operates twelve agency funds. Schedules for these funds may be viewed in the supplementary section of this report. Permanent funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used. Permanent funds operated by the City include the Citizenship Trust, Cemetery and Mausoleum Endowments, and the Tri-centennial Commission fund. Notes to the Financial Statements The notes to the financial statements are an integral part of the basic financial statements since they contain valuable additional information necessary for gaining a complete understanding of the City's financial statements. 5 Other Information CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) In addition to the basic financial statements and the notes described above, this report also presents the general fund and major special revenue fund's budgetary statements as required supplementary information directly following the notes to the basic financial statements. The combining statements for the non-major funds are shown after the required supplementary information. Finally, the statistical section includes selected statistical data about the City's operations and economy. The City as a Whole This section will identify, discuss, and analyze significant differences and trends that will enhance the reader's understanding of the City's financial position. Tax Base and Economy The City of Salina relies on three major groups of revenues to support its operations. Each of these revenue streams has a different revenue base. In declining order of magnitude, they are charges for services, sales taxes, and property taxes. Sales taxes and property taxes apply primarily to governmental activities, while charges for services apply to both governmental (20%) and business-type (80%) activities. Charges for services account for about 41% ($37.5 million) of the City's revenue stream. Charges for service depend on both the rate that is set for the activity, as well as the volume of services provided. Significant services include water and wastewater fees, sanitation and landfill fees, licenses and permits, inspection fees and golf course fees. Charges for services increased $.7 million (2%) from the prior year with the sanitation fund increasing $121 K (4.2%) and water and sewer fund increasing $347K (2%). The increase in charges for services in the sanitation fund fund and the increase in the water and sewer fund are a result of an increase in user fees. Sales taxes are the next largest component of the revenue mix, providing 24. 7% ($22.2 million) of the total revenues. The City receives a 1.25% City-wide sales tax, and also a portion of the County-wide 1 % sales tax. Forty- four percent, (a rate of .75%) of the City-wide sales tax is required to be used for special purposes. The remaining .5%, along with the City portion of the County-wide tax is available for general purposes. The City is affected by the formula used to distribute the County-wide sales tax among participating jurisdictions (only Cities and the County participate, School and other special districts do not). The formula is based, in part, on the property tax efforts of each jurisdiction. As the portion of the overlapping levy attributable to the City of Salina changes so does the City's allocated portion of the County-wide sales tax. This change is recognized bi-annually and can affect the overall allocation of the City's portion of the County-wide sales tax. In 2018, this allocation increased slightly which did not have a significant impact on the tax revenues. In 2008, Salina voters approved an increase of the special purpose .25% tax to a .40% tax. The extended tax is to sunset March 31, 2019. The tax was also modestly re-purposed, for Capital and Economic Development purposes only, as well as retaining a property tax stabilization component. In May 2017, Salina voters approved an increase in the special purpose .40% tax to a .75% tax (thus repealing the 2008 increase). This change became effective October 1, 2017 for twenty years. Property taxes are the third major component of the revenue mix, accounting for 13.9% ($12.5 million) of total revenues. Property taxes consist of two components: Real estate and personal property taxes which are determined by the mill levy set by the city and the assessed value of the property; and motor vehicle taxes which are established by a countywide average tax rate and the assessed value of the vehicle. Real estate assessed value increased by 3.0%. The total City mill levy decreased 5.3%. The overlapping levy decreased in 2018 by . 75%. 6 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) Personal property value continued to slide, presumably as a result of removing business equipment from the tax base. Personal property value has now dropped to $10.1 million from its peak of $39. 7 million in 2007. At the 2018 tax rate, this exemption is equivalent to over $775K in annual lost revenue. Motor vehicle value increased 4.6%. Motor vehicle taxes are distributed based on a formula using prior year's tax effort (similar to the Countywide Sales Tax Distribution). The following table summarizes the comparative property assessed values and tax levy rates: Comparati\.e Property Values and Tax Le-.y Rates Fiscal (Budget) Year Real Estate and Personal Property Assessed Valuation City Mill Le-.y ($ per $1, 000) Operating (General Fund) Debt Sen.ice Total City Rate Total 01.erlapping Le-.y Percent of Total Taxes Collected Ratio of Total Taxes (including delinquent collections) to taxes le\1ed Motor Vehicle Valuation 2018 2017 Change $434,451,245 $422,364,328 $12,086,917 20.339 21.694 (1.355) 5.79 5.909 (0.119) 26.129 27.603 (1.474) 133.14 134.153 (1.013) 95.9% 99.9% -4.0% 98.4% 101.7% -3.3% $ 53,336,677 $ 50,970,796 $ 2,365,881 The unemployment rate in Salina increased slightly from 2.7% at the end of 2017 to 3.3% at the end of 2018, reflecting general economic conditions. This is still slightly below the statewide and significantly below the national unemployment rate. The total labor force increased to 30,174 from 27,684 in 2017. In 2018, the top ten property taxpayers accounted for 10.26% of total assessed value. This is less concentrated than ten years ago (at 15.48%). Statement of Net Position Net position may, over time, provide an indicator of a government's financial position. In the case of the City of Salina, assets and deferred outflows of resources exceeded liabilities by $223.8 million at December 31, 2018. This represents an increase in net assets of $11.1 million over 2017. A comparative Condensed Statement of Net Position at December 31, 2018 and 2017: 7 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) Condensed Staterrent of Net Fbsnion As of Decerrber 31 (In $000) Governrrental Activrt1es Business-Type Acuvrties Total A"1rrary Governrrent % of % of 2018-2017 2018 2017 2018 2017 2018 Total 2017 Total change cash and investrrents $ 34,302 $ 24,491 $ 32,140 $ 30,336 $ 66,442 17% $ 54,827 15% $ 11,615 Other current assets 16,774 13,836 2,630 2,338 19,404 5% 16,174 4% 3,230 Noncurrent (capital) assets 210,515 206,600 90,181 91,306 300,696 78% 297,906 81% 2,790 --- Total assets 261,591 244,927 124,951 123,980 386,542 100% 368,907 100% 17,635 --- Total deferred outflows of resources 5,527 5,968 802 887 6,329 100% 6,855 100% (526) --- Total assets and deferred outflows of resources 267,118 250,895 125,753 124,867 392,871 375,762 17,109 --- Current liabilities 28,623 12,540 3,814 3,879 32,437 21% 16,419 11% 16,016 Noncurrent liabditles 90,931 102,076 31,332 31,685 122,263 79% 133,761 89% (11,498) --- Total habilrties 119,554 114,616 35,146 35,564 154,700 100% 150,180 100% 4,520 Total deferred inflows of resources 14,113 12,576 224 220 14,337 12,796 1,539 Net position- Net 1nvestrrent m capital assets 144,645 129,921 62,366 63,316 207,213 92% 193,237 91% 13,976 Restricted for perrranent funds 514 502 514 0% 502 0% 12 Restricted for debt service 1,851 1,510 1,512 1,512 3,363 2% 3,022 1% 341 Unrestricted (13,759) (6,232) 26,503 24,255 12,744 6% 16,023 6% (3,279) Total net posnion 133,451 123,701 90,363 69,063 223,634 100% 212,764 100% 11,050 Percent of total net position 60% 56% 40% 42% 100% 100% cash and 1nvestrrents as a percentage of current hab1lrties 120% 195% 643% 782% 205% 334% The largest segment of the City's net position reflects its investment in capital assets (land, buildings, streets and drainage facilities, utility plant, vehicles, equipment, etc.), less any debt used to acquire those assets that is still outstanding. These assets are used to provide services to citizens. As a result, resources required to retire related debt cannot come from liquidation of the asset. Such resources generally must be provided from other sources, such as future taxes or user charges. A small portion of net position is restricted for debt service and permanent funds. The remainder (unrestricted) of net position may be used to meet the City's obligations to citizens and creditors. In 2018, the amount of net investment in capital assets increased by $14.0 million. Amount restricted for debt service increased by $341 thousand. Unrestricted decreased by $3.3 million. Outside of these changes, 2018 resulted in a $11.1 million increase to the net position. Total liabilities increased in governmental activities and slightly decreased in business-type activities. In governmental activities, current liabilities increased and non-current liabilities decreased primarily due to an increase in temporary notes and a decrease in general obligation bonds. 8 Statement of Activities CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) A Condensed Statement of Activities is shown below. Program Revenues Charges lo r Services Operating Grants and Contributions Capltal Grants and Contributions General Revenues· PropertyTaxes Sales Taxes Other Taxes Investment Revenue Other Miscellaneous Total Revenues Expenses· General Government Public Safety Public Vlbrks P ubhc Health and Sanitat10 n Culture and Recreat10n P lanmng and Development Sohd \11/aste Disposal Water and Sewer Sanitation Golf Course Interest on Long Term Debt Total Expenses Increase in net assets before transfers Transfers and other extraordinary Items Change in Net Position Net Position January 1 Prior Period Adjustment Net Position January\ restated Net Position December 31 Condensed Statement of Activities For the Year Ended December 31 (In $000) Governmental Act1vit1es 2011 2017 $ tl,411 $ tl,tlO 4,300 4,635 12,508 22,209 7,240 113 4,541 12,960 2\738 6,899 93 ~~ 62,548 58,334 12,0t3 23,892 tl,458 '256 7,040 2,369 9,781 23,120 tl,345 '126 6,880 \835 ~~ ~~ 3,403 3,523 ~~ ~~ 123,701 tf5,869 ~ 125,219 tf5,869 $ t33,453 $ 123,701 =-= _........... Business-Type Activities 2011 2017 $ 27,061 $ 26,703 233 153 2,382 '6,190 2,419 926 6,530 129 '()3 2,364 '6,650 2,178 852 5,891 (4,832) (4,367) ~~ 89,083 ~) 88,685 87,559 87,559 $ 90,383 $ 89,083 == 9 Total PnmaryGovemment 2011 % 2017 % 2011-2017 Change $ 37,472 42% $ 36,803 43% $ 669 4,300 4,635 5% 5% 12,508 14% 22,209 25% 7,240 8% 416 0% 12,0t3 '6% 23,892 30% tl,458 t3% \256 2% 7,040 9% 2,369 3% 2,382 '6,190 2,419 926 ~ 3% 19% 3% 1% 4,541 5% 0% 12,960 '6% 2\738 25% 6,899 8% 222 0% 9,781 t3% 23,120 30% tl,345 14% 1,126 1% 6,880 9% \835 2% 2,364 3% '6,650 21% 2,178 3% 852 1% (241) 4,635 (452) 471 341 194 (891) 4,726 2,232 772 1t3 t30 160 534 11 (460) 241 74 2% ___ 39_3 ~ tl0% 75,855 tl0% 4,207 519 9,933 __ (1) ~ 212,784 ~ 2t3,904 $ 223,836 = 9,414 ~) ~ 203,428 203,428 $ 212,784 -===- 57 576 9,356 \120 tl,476 $ 1\052 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) Governmental Activities. Charges for services attributable to governmental activities totaled $10.4 million, operating grants for those purposes were $4.3 million and capital grants for those purposes were $4.6 million. Charges for services and capital grants increased from the prior year, while operating grants decreased slightly. The balance was funded by general revenues. Sales taxes accounted for $22.2 million of general revenues, with property taxes providing $12.5 million. The net position increased by $8.2 million as a result of governmental activities. This increase was primarily related to the increase in sales and other taxes. Total expenses for governmental activities for the year ending December 31, 2018 were $59.1 million compared to $54.8 million in 2017. Governmental activities represent 74% of the City's total expenses. The largest element of governmental activity expense was public safety, accounting for 30% of the total. Business Type Activities. Business-type activities are primarily supported by user charges, with a very small amount coming from investment and miscellaneous revenues. Total expenses for business-type activities for the year were $21 million, or 26% of the City's total expenses. The majority of this expense ($15.2 million) is attributable to water and sewer operations, with the other activities costing a combined total of $5. 7 million. Net position increased by $1. 7 million. This increase was primarily related to the increase in water and sewer fund revenues and a decrease in water and sewer fund expenses. Fund Financial Analysis Governmental Funds Fund Balances: The table below shows the Governmental Fund balances for major funds as of December 31, 2018 and December 31, 2017. Gowmmental Fund Balances as of December 31, (in OOO's) Fund 2018 2017 Change General $ 6,743 $ 6,883 $ (140) Tourism and Conwntion 458 213 245 Special Gas 1,532 1,082 450 Sales Tax Capital 1,984 2,084 (100) Schilling Capital lmprowment 2, 136 3,024 (888) Debt Seniice 1,851 1,510 341 Capital Projects (694) 895 (1,589) SFH QalicB 1,218 1,715 (497) Other Gowmmental Funds 3,861 4,353 (492) $19,089 $ 21,759 $ (2,670) Total governmental fund balances decreased by $2.7 million. The reasons for these changes are varied. The Schilling Capital Improvement Fund, which was created to account for U.S. Government and other funds received for the abatement of groundwater contamination, continues to decrease as the City uses funds previously distributed. The Capital Projects Fund decrease was largely the result of the use of funds to fund capital outlays on projects. The SFH QalicB fund was created to account for funds for the Salina Field House. 10 Revenues and Expenditures: CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) The following table shows a comparison of revenues and expenditures (including other sources and uses) for major funds for the years ending December 31, 2018 and 2017. Consolidated Statement of Re-.enues and Expenditures for Major Go-.emmental Funds For the years ended December 31 Modified Accrual Basis (in $000's) Fund 2018 2017 Change Re-.enues (Including Other Financing Sources) General $ 41,532 $ 41,864 $ (332) Tourism and Con-.ention 1,795 1,685 110 Special Gas 1,653 1,598 55 Sales Tax Capital 8,225 8,265 (40) Schilling Capital lmpro-.ement 15 12 3 Debt Service 6,602 6,659 (57) Capital Projects 13,555 12, 125 1,430 SFH QalicB 504 248 256 Other Go-.ernmental Funds 4, 161 4,067 94 Total Re-.enues 78,042 76,523 1,519 Less Other Sources (21,622) (19,924) (1,698) Re-.enues, net of other sources $ 56,420 $ 56,599 $ (179) Expenditures (Including Other Finacing Uses) General $ 41,672 $ 40,013 $ 1,659 Tourism and Con-.ention 1,550 1,655 (105) Special Gas 1,203 1,328 (125) Sales Tax Capital 8,324 7,848 476 Schilling Capital lmpro-.ement 904 1,049 (145) Debt Service 6,955 6,398 557 Capital Projects 15, 144 4,407 10,737 SFH QalicB 1,001 5,344 (4,343) Other Go-.ernmental Funds 4,653 3,399 1,254 Total Expenditures 81,406 71,441 9,965 Less Other Uses (4, 186) (4, 160) (26) Expenditures, net of other uses $ 77,220 $ 67,281 $ 9,939 Total revenues, including other sources, were down $179 thousand compared to 2017, with no funds showing substantial changes between the two years. Total expenditures increased $9.9 million over 2017. The majority of that increase was in the Capital Projects Fund as a result of increased spending on projects, specifically the Downtown Streetscape project. 11 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) Proprietary Funds The City of Salina operates four enterprise funds as well as five internal service funds. A summarized comparative Statement of Net Position follows for each enterprise fund: Co"l)arative Surrmary Statement of Net Position as of Decerrber 31 (in $000's) Solid Waste Disposal Water and Sew er 2018 2017 Change 2018 2017 Change Current Assets $ 6,569 $ 6,709 $ (140) $ 26,338 $ 24,014 $ 2,324 Capital Assets 2,350 3,196 (846) 86,535 86,888 (353) Deferred Outflows 72 79 (7) 610 676 (66) Total Assets and deferred outflows $ 8,991 $ 9,984 $ (993) $ 113,483 $ 111,578 $ 1,905 Current Liabilities $ 461 $ 445 $ 16 $ 3,183 $ 3,299 $ (116) Noncurrent Liabilities 2,847 3,272 (425) 27,576 27,440 136 Deferred Inflows 30 30 144 143 1 Total Liabilities $ 3,338 $ 3,747 $ (409) $ 30,903 $ 30,882 $ 21 Net investment in capital assets $ 1,570 $ 2,041 $ (471) $ 59,502 $ 60,053 $ (551) Restricted 1,512 1,512 Unrestricted 4,083 4,196 (113) 21,566 19, 131 2,435 Total Net Position $ 5,653 $ 6,237 $ (584) $ 82,580 $ 80,696 $ 1,884 (.;urrent Assets as a percentage ot current liabilities 1425% 1508% 827% 728% Sanitation Golf Course 2018 2017 Change 2018 2017 Change Current Assets $ 1,747 $ 1,787 $ (40) $ 116 $ 164 $ (48) Capital Assets 886 826 60 410 395 15 Deferred Outflows 92 102 (10) 27 32 (5) Total Assets $ 2,725 $ 2,715 $ 10 $ 553 $ 591 $ (38) Current Liabilities $ 106 $ 87 $ 19 $ 64 $ 48 $ 16 Noncurrent Liabilities 684 733 (49) 225 240 (15) Deferred Inflows 38 38 11 11 Total Liabilities $ 828 $ 858 $ (30) $ 300 $ 299 $ Net investment in capital assets $ 886 $ 826 $ 60 $ 410 $ 395 $ 15 Restricted Unrestricted 1,011 1,031 (20) (157) (103) (54) Total Net Position $ 1,897 $ 1,857 $ 40 $ 253 $ 292 $ (39) Current Assets as a percentage of current liabilities 1648% 2054% 181% 342% 12 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) Revenues, Expenses, and Changes in Net Position All enterprise funds show healthy results, with all funds reflecting increases in net position. Corlllarative Summary of Revenues, Expenses and Changes in Net Posit10n for the Year Ended Decerrber 31 (n $OOO's) Solid Waste Disposal Water and Sew er 2018 2017 Change 2018 2017 Change Operating Revenues $ 3,116 $ 3,185 $ (69) $ 20,207 $ 19,861 $ 346 Operating Expenses 2,353 2,320 33 14,348 14,721 (373) Operating lncon-e 763 865 (102) 5,859 5,140 719 Non-operating revenues (expenses) 17 (20) 37 (667) (832) 165 lncon-e (Loss) before Transfers 780 845 (65) 5,192 4,308 884 Transfers m (out) (690) (540) (150) (3,650) (3,450) (200) Change in Net Position 90 305 (215) 1,542 858 684 Net Position January 1 6,237 5,932 305 80,697 79,838 859 Restaten-ent (674) (674) 341 341 Net Position January 1, restated 5,563 5,932 (369) 81,038 79,838 1,200 Net Position Decerrber 31 $ 5,653 $ 6,237 $ (584) $ 82,580 $ 80,696 $ 1,884 Sanitation Golf Course 2018 2017 Change 2018 2017 Change Operating Revenues $ 3,006 $ 2,886 $ 120 $ 884 $ 876 $ 8 Operating Expenses 2,419 2,178 241 926 852 74 Operating ncon-e 587 708 (121) (42) 24 (66) Non-operating revenues (expenses) 11 6 5 661 661 ncon-e (Loss) before Transfers 598 714 (116) (41) 24 (65) Transfers in (out) (492) (377) (115) Change in Net Position 106 337 (231) (41) 24 (65) Net Position January 1 1,856 1,520 336 292 268 24 Restaten-ent (66) (66) 2 2 Net Position January 1, restated 1,790 1,520 270 294 268 26 Net Position Decerrber 31 $ 1,896 $ 1,857 $ 39 $ 253 $ 292 $ (39) 13 Budgetary Highlights CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) The objective of budgetary controls is to ensure compliance with legal prov1s1ons embodied in the annual appropriated budget approved by the City Commission. The legal level of budgetary control is maintained at the fund level, in accordance with State Statutes. Management control is maintained at the departmental level. Within the departments, considerable discretion is permitted. The City uses an encumbrance accounting system, in which estimated purchase orders are recorded prior to the release of purchase orders to vendors. Open purchase orders are reported as reservations of budgetary basis fund balances at December 31, 2018. Formal budgetary amendments are limited to those circumstances in which the need is perceived to alter the total fund budget. Re- allocation among departments or line items are not typically recorded as budgetary amendments. However, in addition to formal amendments, departments within the City are allowed to transfer budget between line items within a department. Budgets may also be transferred from department to department within each fund. As a result of these transfers, the original budget and the final budgets may not be the same for departments within a fund. Capital Assets and Debt Administration Capital Assets The total amount invested in Capital Assets for the City at December 31, 2018 was $300,696, 162 net of accumulated depreciation. The following table illustrates the Capital Asset balance by various classes of assets at December 31, 2018 and 2017: Capital Asset Balances Net of Depreciation as of December 31 (In OOO's) Business-type Go1.ernmental Actillity Actillity Total 2018 2017 2018 2017 2018 Equipment, Furniture and Fixtures $ 2,374 $ 2,040 $ 1,489 $ 1,484 $ 3,863 Vehicles 2,957 3,521 1,208 1,041 4,165 Buildings and lmpro1.ements 31,759 33,079 8,941 9,362 40,700 Land 24,094 24,093 2,060 1,542 26,154 Land Leased Under Capital Assets 423 423 Infrastructure 116,365 114,958 72,312 75,727 188,677 Leasehold lmpro1.ements 326 326 Construction m Progress 32,217 28,909 4, 171 2, 150 36,388 Total $210,515 $206,600 $ 90, 181 $ 91,306 $ 300,696 Changes to capital assets may be summarized as follows: Changes to Capital Assets, 2018 (in OOO's) Additions Retirements Depreciation Go1.emmental Actillity $ 15,859 (5,898) (5,663) Net Additions $ 4,298 ===--====-====-- Business-Type Actillity $ 3,221 (327) (4, 113) $ (1,219) Total $ 19,080 (6,225) (9,776) $ 3,079 2017 $ 3,524 4,562 42,441 25,635 190,685 31,059 $ 297,906 Additional information on the City's capital assets can be found in Note 4,D. of the notes to the basic financial statements. 14 Debt Management CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) The City's general policy for general obligation bonds is to issue them for no more than 10 years for the City at Large portion, with some exceptions permitted for extraordinary projects. On special assessment bonds, the maturity may extend to 15 years. The outstanding general obligation bonds for governmental activities at December 31, 2018 totaled $57,250,888. In addition, there were temporary notes outstanding in the amount of $18,123,505, as well as a financing operating lease in the amount of $845,338. Business-type activities had $11,898,051 in revenue bonds outstanding, as well as $5,557,686 in general obligation bonds. Revenues generated by user fees are pledged to retire all of the bonds issued by business-type activities. In addition, a loan payable is outstanding in the amount of $10,632,351. The City engaged in the following debt transactions during 2018: • On July 30th, the City issued 2018-1, $6,000,000 of temporary notes. The proceeds were used to finance construction to Downtown Streetscape, Police Training Facility Design and 2 special assessment projects. • On November 27th, the City issued 2018-2, $13,500,000 in temporary notes to pay off the 2018-1 notes as well as finance construction of the Downtown Streetscape and Police Training Facility. This note will be partially refinanced into a long term bond issue in 2019 and partially in 2020. • On November 271h, the City issued 2018A, $2,090,000 in General Obligation Bonds to finance construction costs for the Grand Prairie II and River Trail Second Addition special assessment projects, as well as to finance the Beechcraft Road project. • On December 1, 2018, the City issued $18,520,000 in Senior Special Obligation Revenue Bonds and $4,320,000 in Subordinate Special Obligation Revenue Bonds to fund STAR Bond district projects. Additional information on the City's debt can be found in Note 4, E. of the notes to the basic financial statements. Requests for Information This financial report is intended to give the reader a general overview of the City's finances. Questions about information in this report or requests for additional information should be directed to the Director of Finance, Room 206, 300 West Ash Street, Salina, Kansas, 67 401. 15 BASIC FINANCIAL STATEMENTS CITY OF SALINA, KANSAS STATEMENT OF NET POSITION December 31, 2018 Pnma!1 Government Total Total Governmental Business-type Act1V1t1es Act1V1ttes ASSETS AND DEFERRED OUTFLOWS OF RESOURCES Current assets Cash and investments Receivables (net of allowance for uncollectibles) Accounts Taxes Interest Inventory Restncted cash and investments Prepaid expenoes Total current ao .. ts Noncurrent assets Capital assets, nondepreciable Construction in progress Land Capital assets, depreciable Less Accumulated depreciation Total noncurrent assets Total assets Deferred outftows of resources KPERS OPEB deferred outflows of resources OPEB deferred outftows of resources Pension deferred outflows of resources Deferred charge on bond issuance Total deferred outnOYJs of resources Total assets and deferred outflows of resources L1ab1l1bes Current llab1hlles Accounts payable Retainage payable Accrued hab1l1t1es Accrued interest payable Deposits payable Current portion of compensated absences Current portion of temporary notes payable Current portion of loans payable Current portion of revenue bonds payable Current portion of special assessment debt payable Current portion of general obhgabon bonds payable Total current hab~1t1es Noncurrent l1ab1htles Accrued ltab11lt1es Compensated absences Secunty deposits retumable Net OPEB obhgabon Net KPERS OPEB obhgabon Net pension hab1hty Loans payable Revenue bonds payable Special assessment debt payable General obl1gabon bonds payable Landfill post-dosure care hab1hbes Total noncurrent l1abdrtJes Total hab1hbes Deferred 1nftows of resources Unavailable revenue -property taxes KPERS OPEB deferred 1nftows of resources Pen~on deferred inflows of resources Total deferred inflows of resources Total hab1htles and deferred 1nftows of resources Net Position Net investment in caprtal assets Restncted for Permanent funds Expendable Debt service Unrestncted Total net position 34,302,149 $ 32,140,053 1,951,605 2,148,480 12,744,529 298,248 16 263,000 481,548 1,516,561 51,076,092 34,770,097 32,217,207 4,171,178 24,516,334 2,059,834 275,280,664 151,140,172 121,498,751 67,190,476 210,515,454 90,180,708 261,591,546 124,950,805 98,101 42,043 71,407 9,096 5,260,473 533,024 96,738 217,652 5,526,719 801,815 $ 267,118,265 $ 125,752,620 1,491,889 348,222 846,849 226,977 564,494 107,944 249,347 183,858 1,611,375 383,182 18,123,505 527,499 728,696 5,877,280 1,166,063 28,623,336 3,813,844 55,264 1,204,110 286,335 3,093,240 394,062 382,848 164,078 27,918,983 3,114,818 12,185,053 10,104,852 11,169,355 46,091,030 4,116,515 1,981,498 90,930 528 31 331,513 119,553 864 35 145,357 12,267,726 9,290 3,981 1,835 545 220,027 14,112 561 224,008 $ 133,666,425 $ 35,369,365 $ 144,845,530 $ 62,367,728 514,201 1,851,358 1,512,125 [13,759,249] 26,503,402 $ 133,451,840 90,383,255 The notes to the basic finanaal statements are an integral part of this statement 16 Component Umts Total Salina Salina Pnmary Housing Anport Government Authon!x Autho~ 66,442,202 2,004,471 $ 255,390 4,100,085 12,548 14M03 12,744,529 298,264 744,548 36,351 1,516,561 136,383 42,457 7,098 85,846,189 2,232,210 407,891 36,388,385 161,977 8,921 26,576,168 1,454,559 9,965,118 426,420,836 8,403,404 78,425,642 188,689,227 4,834,319 44,538,812 300,696, 162 5,185,621 43,860,869 386,542,351 7,417,831 44,268,760 140,144 4,294 80,503 5,793,497 69,118 111,199 314,390 1,266,357 6 328,534 69118 1,381,850 $ 392,870,885 7,486,949 $ 45,650,610 1,840,111 48,850 1,086,778 1,073,826 564,494 35,803 73,104 357,291 218,063 183,858 96,092 1,994,557 2,759 18,123,505 527,499 728,696 2,153 7,043,343 1,967,000 32,437,180 183,504 3,347,098 55,264 23,020 1,490,445 24,833 48,680 3,487,302 546,926 8,886 11,126 31,033,801 345,226 605,630 22,289,905 11,169,355 4,901 50,207,545 19,395,792 1,981,498 122,262,041 401 965 20,066,129 154,699,221 585,469 23,413,227 12,267,726 7,277 69,884 13,271 184 3,964 2 055,572 21346 64,402 14 336,569 28 807 138,250 $ 169,035,790 614,276 23,551,477 $ 207 ,213,258 5,330,745 $ 22,491,023 514,201 14,718 3,363,483 12,744,153 1,527,210 [391,890) $ 223,835,095 $ 6,872,673 22,099,133 Governmental activities: General government Public safety Publtcworks Public health and sanitation Culture and recreation Planning and development Interest on long-term debt Total governmental act1vit1es Business-type activities: Solid Waste Disposal Water and Sewer Sanitation Go~Course Total business-type activities Total primary government Component units: Salina Housing Authonty Salina Airport Authority Total component units CITY OF SALINA, KANSAS STATEMENT OF ACTIVITIES For the Year Ended December 31, 2018 Net [Expenses] Revenue and Pro2ram Revenues Operating Capital Charges for Grants and Grants and E~enses Services Contnbut1ons Contributions $ 12,012,840 $ 3,569,26'( $ 667,179 $ 4,634,742 23,891,543 4,815,110 1,134,717 10,458,094 284,724 1,872,213 1,256,142 46,990 266,676 7,039,683 1,544,676 200,676 2,369,562 149,86'( 158,041 2,117,439 59,145,303 10,410,628 4,299,502 4,634,742 2,382,082 3,097,271 15,190,160 20,202,022 2,418,930 3,005,740 926,287 755,655 20,917,459 27,060,688 $ 80,062,762 $37,471,316 $ 4,299,502 $ 4,634,742 $ 2,604,085 $ 335,160 $ 2,027,232 $ 117,316 6,019,332 2,499,892 1,474,356 $ 8,623,417 $ 2,835,052 $ 2,027,232 $ 1,591,672 General Revenues: Property taxes levied for General purposes Debt service Motor vehide tax General purposes Sales tax General purposes Selective purposes Other taxes General purposes Investment revenues Miscellaneous Transfers, net Subtotal general revenues Change in net position Net position -beginning Prior period adJusllment Net position -beginning, restated Changes in Net Position Primary Government Total Total Governmental Business-type Activities Act1villes $ [3,141,655] $ [17,941,716] [8,301,157] [942,476] [5,294,331] [2,061,657] [2, 117,439] [39,800,431] 715,189 5,011,862 586,810 [170,632] 6,143,229 [39,800,431) 6,143,229 8,623,057 2,456,875 1,428,001 13,292,626 8,916,814 7,240,099 182,895 233,355 1,061,810 152,814 4,831,500 [4,831,500] 48,033,677 [4,«5,331] 8,233,246 1,697,898 123,700,850 89,082,816 1,517,744 [397,459] 125,218,594 88,685,357 Total Primary Government $ [3,141,655] [17,941,716] [8,301,157] [942,476] [5,294,331] [2,061,657] [2, 117 ,439] [39,800,431] 715,189 5,011,862 586,810 [170,632] 6,143,229 [33,657,202] 8,623,057 2,456,875 1,428,001 13,292,626 8,916,814 7,240,099 416,250 1,214,624 43,588,346 9,931,144 212,783,666 1,120,285 213,903,951 $ Component Units Salina Housing Authono/ [124,377] [124,377] 15,124 12,543 27,667 [96,710] 6,976,479 f.Z,096] 6,969,383 $ Salina Airport Authorio/ [2,045,084] [2,045,084] 2,338,967 3,745 5,375 2,348,087 303,003 21,808,184 [12,054) 21,796,130 Net position -ending $133,451,840 $ 90,383,255 $ 223,835,095 $6,872,673 $22,099,133 The notes to the basic financial statements are an integral part of this statement. 17 CITY OF SALINA, KANSAS BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2018 Tourism and Special Sales Tax General Convention Gas Capital ASSETS Cash and investments $ 5,210,942 $ 853 $ 1,266,574 $ 2,263,217 Restricted cash Receivables (net) Accounts 1,492,279 457,529 Taxes 9,749,815 320,324 Interest 298,248 Inventory 151,514 Due from other funds 24,544 Total assets $ 16,927,342 $ 458,382 $ 1,586,898 $ 2,263,217 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable $ 542,039 $ -$ 26,383 $ 121,237 Retainage payable 28,056 157,656 Temporary notes payable Due to other funds Total liabilities 542,039 54,439 278,893 Deferred inflows of resources Unavailable revenue -property taxes 9,576,319 Unavailable revenue -other 66,407 Total deferred inflows of resources 9,642,726 Fund balance: Non spendable 151,514 Restricted 458,382 1,359,237 Committed 1,436,972 Assigned 340,106 173,222 547,352 Unassigned 6,250,957 Total fund balances 6,742,577 458,382 1,532,459 1,984,324 Total liabilities, deferred inflows of resources and fund balances $ 16,927,342 $ 458,382 $ 1,586,898 $ 2,263,217 Schilling Other Total Capital Debt Capital SFH Governmental Governmental Improvement Service Projects QalicB Funds Funds $ $ $ $ 2,151,875 $ 1,801,968 $ 13,270,861 $ 7,663 $ 4,033, 111 $ 30,007,064 1,516,561 1,516,561 494,287 1,797 2,445,892- 2,674,390 12,744,529 298,248 151,514 196,939 221,483 2,151,875 $ 4,476,358 $ 13,467,800 $ 2,018,511 $ 4,034,908 $ 47,385,291 15,749 $ -$ 352,630 $ 243, 131 $ 149,019 $ 1,450,188 300,662 360,475 846,849 13,508,505 13,508,505 196,939 24,544 221,483 15,749 14, 161,797 800,545 173,563 16,027,025 2,625,000 12,201,319 66,407 2,625,000 12,267,726 151,514 1,851,358 978,694 4,647,671 1,955,918 133,122 1,217,966 2,581,440 7,325,418 180,208 325,755 1,566,643 [827, 119] [24,544] 5,399,294 2,136,126 1,851,358 [693,997] 1,217,966 3,861,345 19,090,540 2,151,875 $ 4,476,358 $ 13,467,800 $ 2,018,511 $ 4,034,908 $ 47,385,291 The notes to the basic financial statements are an integral part of this statement. 18 CITY OF SALINA, KANSAS RECONCILIATION OF THE TOTAL GOVERNMENTAL FUND BALANCE TO NET POSITION OF GOVERNMENTAL ACTIVITIES December 31, 2018 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 as 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 as a revenue in the funds and as a deferred inflow of resources in the governmental activities in the statement of net position. Certain intrafund transactions have been elimniated between the City's primary funds and the QALICB blended component unit. 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 Temporary notes payable Bonds payable Loans payable 331,845,971 121,346,178 2,756,097 3,470,619 27,764,434 4,615,000 51,968,310 12,185,053 $ 19,090,540 96,738 210,499,793 5,403,295 (1,833,402) (494,287) 3,556,620 Accrued interest on the bonds 107,944 (102,867,457) Net Position of Governmental Activities The notes to the basic financial statements are an integral part of this statement. 19 $ 133,451,840 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS For the Year Ended December 31, 2018 Tourism and Special Sales Tax General Convention Gas Capital REVENUES: Taxes Real estate taxes $ 8,409,449 $ -$ -$ Delinquent taxes 213,608 Motor vehicle taxes 1, 120,440 General sales taxes 13,292,626 Selective sales taxes 8,203,532 Other taxes 5,444,880 1,795,219 Intergovernmental 1,144,717 1,446,395 Special assessments Licenses and permits Charges for services 6,366,094 Investment revenue 45,477 5 7,234 21,363 Donations Miscellaneous 452,916 39,146 Total revenues 36,490,207 1,795,224 1,492,775 8,224,895 EXPENDITURES: Current General government 5,648,579 Public safety 22,952,925 Public works 5,350,056 468,535 Public health and sanitation 793,780 Culture and recreation 4,494,713 Planning and development 766,471 737,957 Miscellaneous Capital outlay 860, 115 734,079 5,755,835 Debt service Principal retirement Interest and other charges Total expenditures 40,866,639 737,957 1,202,614 5,755,835 Excess [deficiency] of revenue and other sources over [under] expenditures and other [uses] [4,376,432) 1,057,267 290,161 2,469,060 OTHER FINANCING SOURCES [USES] Issuance of bonds Issuance of temporary notes Bond premium Capital contribution Transfers in 5,041,500 160,000 Transfers [out] [805,000) [812,346) [2,568,350] Total other financing sources [uses] 4,236,500 [812,346] 160,000 [2,568,350) Net change in fund balance [139,932] 244,921 450,161 [99,290] Fund balance -Beginning of year 6,882,509 213,461 1,082,298 2,083,614 Prior period adjustment Fund balance -Beginning of year, restated 6,882,509 213,461 1,082,298 2,083,614 Fund balance -End of year $ 6,742,577 $ 458,382 $ 1,532,459 $ 1,984,324 Schilling Other Total Capital Debt Capital SFH Governmental Governmental Improvement Service Projects QalicB Funds Funds $ -$ 2,394, 143 $ -$ -$ -$ 10,803,592 62,732 276,340 307,561 1,428,001 13,292,626 713,282 8,916,814 7,240,099 423,318 1,282,570 4,297,000 1,545,758 1,545,758 2,500 2,500 492,917 479,229 7,338,240 15,186 21,230 10,707 36,190 157,392 237,660 237,660 336,904 55,048 884,014 15,186 4,331,424 760,222 503,624 2,806,479 56,420,036 5,648,579 22,952,925 343,811 6,162,402 442,359 1,236,139 1,760,504 6,255,217 38,678 641,823 2,184,929 35 35 903,638 6,759,029 761,892 569,901 16,344,489 5,252,865 8,180,000 810,000 14,242,865 1,702,255 204,886 200,044 84,535 2, 191,720 903,638 6,955,120 15,143,915 1,000,614 4,652,968 77,219,300 [888,452) [2,623,696) [14,383,693) [496,990) [1,846,489) [20,799,264) 2,090,000 2,090,000 6,000,000 6,000,000 69,837 69,837 4,634,742 4,634,742 2,270,782 1,354,914 8,827,196 [4, 185,696) 2,270,782 12,794,579 1,354,914 17,436,079 [888,452) [352,914) [1,589,114) [496,990) [491,575) [3,363, 185) 3,024,578 1,509,863 895,117 1,714,956 4,352,920 21,759,316 694,409 694,409 3,024,578 2,204,272 895,117 1,714,956 4,352,920 22,453,725 $ 2,136,126 $ 1,851,358 $ [693,997) $ 1,217,966 $ 3,861,345 $ 19,090,540 The notes to the basic financial statements are an integral part of this statement. 20 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, 2018 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 Capital outlays Depreciation expense Interest on long-term debt in the statement of activities differs from the amount reported in the governmental funds because interest is recorded as an expenditure in the funds when it is due, and thus requires the use of current financial resources. In the statement of activities, however, interest expense is recognized as the interest accrues, regardless of when it is due. This is [4,493) 10,493,901 [6, 183,227) $ [3,363, 185) 4,306,181 the amount by which interest decreased. 74,281 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. 1, 197 ,416 Certain intrafund transactions have been eliminated between the City's primary funds and the QALICB blended component unit. [370,373) 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. [87,828) Pension payments are reported as expenditures in the governmental funds and do not affect the statement of net activities. 38,061 Bond, temporary note, loan 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. [7,978,572) 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. 14,417,265 Changes In Net Position of Governmental Activities $ 8,233,246 The notes to the basic financial statements are an integral part of this statement. 21 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, 2018 Budgeted Amounts Actual Original Final Revenues Taxes Real estate taxes $ 8,409,449 $ 8,625,000 $ 8,625,000 Delinquent taxes 213,608 180,000 180,000 Motor vehicle taxes 1,120,631 1,090,219 1,090,219 General sales tax 13,292,626 13,427,924 13,427,924 Other taxes 5,444,880 6,980,396 6,980,396 Intergovernmental 1,144,717 1,202,000 1,202,000 Charges for services 5,585,009 5,302,753 5,302,753 Investment revenue 52,956 Miscellaneous 452,920 450, 175 450, 175 Total revenues 35,716,796 37,258,467 37,258,467 Expenditures General government 5,270,589 3,566,591 3,566,591 Public safety 22,864,626 21,199,918 21,199,918 Public works 5,350,076 5,656,606 5,656,606 Public health and san1talion 793,780 Culture and recreation 4,612, 107 5,207,030 5,207,030 Planning and development 766,471 1,960, 187 1,960, 187 Capital outlay 1,076,672 1,750,000 1,750,000 Total expenditures 40,734,321 39,340,332 39,340,332 Excess [deficiency] of revenues over [under] expenditures [5,017,525) [2,081,865) [2,081,865) Other financing sources [uses] Transfers 1n 5,041,500 3,390,000 3,390,000 Transfers [out] [805,000) [2,892,809) [2,892,809) Total other financing sources [uses] 4,236,500 497, 191 497 191 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] (781,025] [1,584,674] [1,584,674] Unreserved fund balance, January 1 5,067, 124 1,584,674 1,584,674 Prior year cancelled encumbrances 835 Unreserved fund balance, December 31 4,286,934 $ -$ - Reconciliation to GAAP Interest receivable Accounts receivable Taxes receivable Inventory Deferred revenue Current year encumbrances GAAP Fund Balance, December 31 298,248 1,492,279 9,749,815 151,514 [9,576,319] 340, 106 $ 6,742,577 See independent auditor's report on the financial statements. 22 Variance with Final Budget Positive [Negative] $ [215,551] 33,608 30,412 [135,298] [1,535,516] (57,283] 282,256 52,956 2,745 [1,541,671) [1, 703,998] (1,664, 708] 306,530 [793,780] 594,923 1, 193,716 673,328 [1,393,989] [2,935,660) 1,651,500 2,087,809 3,739,309 803,649 3,482,450 835 $ 4,286,934 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, 2018 Budgeted Amounts Actual Original Final Revenues Other taxes $ 1,814,240 $ 1,639,980 $ 1,814,240 Investment revenue 5 180 Total revenues 1,814,245 1,640,160 1,814,240 Expenditures Planning and development 737,956 893,000 1,001,894 Total expenditures 737,956 893,000 1,001,894 Excess (deficiency] of revenues over [under] expenditures 1,076,289 747, 160 812,346 Other financing sources [uses] Transfers [out] [812,346] [685,000] [812,346] Total other financing sources [uses] [812,346] [685,000] [812,346] Excess [deficiency] of revenues and other sources over [under] expenditures and other (uses] 263,943 62, 160 Unreserved fund balance, January 1 [263,090] 113,974 847 Unreserved fund balance, December 31 853 $ 176,134 $ 847 Reconciliation to GAAP Accounts receivable 457,529 GAAP Fund Balance, December 31 $ 458,382 See independent auditor's report on the financial statements. 23 Variance with Final Budget Positive [Negative] $ 5 5 263,938 263,938 263,943 263,943 [263,937] $ 6 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, 2018 Budgeted Amounts Actual Original Revenues Intergovernmental $ 1,448,959 $ 1,406,420 $ Miscellaneous 39,146 Investment revenue 7,234 6,000 Total revenues 1,495,339 1,412,420 Expenditures Public works 468,535 486,959 Capital outlay 897,350 946,243 Total expenditures 1,365,885 1,433,202 Excess [deficiency] of revenues over [under] expenditures 129,454 [20,782] Other financing sources [uses] Transfers in 160,000 160,000 Total other financing sources [uses] 160,000 160,000 Excess [deficiency] of revenues and other sources over [under] 289,454 139,218 expenditures and other [uses] Unreserved fund balance, January 1 749,459 512,412 Unreserved fund balance, December 31 1,038,913 $ 651,630 $ Reconciliation to GAAP Taxes receivable 320,324 Current year encumbrances 173,222 GAAP Fund Balance, December 31 $ 1,532,459 See independent auditor's report on the financial statements. 24 Final 1,406,420 6,000 1,412,420 486,959 946,243 1,433,202 [20,782] 160,000 160,000 139,218 512,412 651,630 Variance with Final Budget Positive [Negative] $ 42,539 39,146 1,234 82,919 18,424 48,893 67,317 150,236 150,236 237,047 $ 387,283 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, 2018 Budgeted Amounts Actual Original Final Revenues Taxes Selective sales taxes $ 8,203,531 $ 8,043,656 $ 8,269,993 Investment revenue 21,363 5,000 5,000 Total revenues 8,224,894 8,048,656 8,274,993 Expenditures Capital outlay 5,934,357 4,620,500 6,470,500 Total expenditures 5,934,357 4,620,500 6,470,500 Excess [deficiency] of revenues over [under] expenditures 2,290,537 3,428,156 1,804,493 Other financing sources [uses] Transfers [out] [2,568,350] [3,750,000] [2,500,000] Total other financing sources [uses] [2,568,350] [3,750,000] [2,500,000] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [277,813] [321,844] [695,507] Unreserved fund balance, January 1 1,658,876 785,304 1,797,359 Prior year cancelled encumbrances 55,909 Unreserved fund balance, December 31 1,436,972 $ 463,460 $ 1,101,852 Reconciliation to GAAP Current year encumbrances 547,352 GAAP Fund Balance, December 31 $ 1,984,324 See independent auditor's report on the financial statements. 25 Variance with Final Budget Positive [Negative] $ [66,462] 16,363 [50,099] 536,143 536, 143 486,044 [68,350] [68,350] 417,694 [138,483] 55,909 $ 335, 120 CITY OF SALINA, KANSAS STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31, 2018 Business-Type AcliVJties: Ente~rise Funds Solid Waste Water and Assets and deferred outflows of resources Dis~osal Sewer Sanitabon Golf Course Current assets Cash and investments $ 6,379,586 $ 24,185,482 $1,493,590 $ 81,395 Receivables (net of allowance for uncollecbbles) Accounts 189,486 1,705,202 253,792 Interest 16 Inventory and prepaid supphes 447,071 34,477 Total current assets 6,569,088 26,337,755 1,747,382 115,872 Capital assets Nondepreciable capital assets Construction in progress 4,171,178 Land 682,000 1,362,834 15,000 Depreciable caprtal assets Capital assets 11,313,026 136,225,697 2,388,377 1,213,072 Less· accumulated depreciation 9,644,947 55,224,969 1,502,563 817,997 Total capital assets 2,350,079 86,534,740 885,814 410,075 Total assets 8,919,167 112,872,495 2,633,196 525,947 Deferred outflows of resources· KPERS OPEB deferred outflows of resources 4,204 28,029 7,007 2,803 OPEB deferred outflows of resources 1,113 5,744 1,723 516 Pension deferred outflows of resources 66,559 359,237 83,106 24,122 Deferred charge on bond issuance 217,652 Total deferred outflows of resources 71,876 610,662 91,836 27,441 Total assets and deferred outflows of resources $ 8,991,043 $113,483,157 $2,725,032 $ 553,388 L1abil1bes and deferred inftows of resources Current l1ab1ht1es Accounts payable $ 24,243 $ 279,295 $ 25,454 $ 19,230 Retainage payable 226,977 Interest payable 5,975 243,372 Meter deposits payable 183,858 Current portion of compensated absences payable 40,428 217,595 80,342 44,817 Current portion of accrued claims payable Current portion of loans payable 527,499 Current portion of general obl1gat1on bonds payable 390,000 776,063 Current portion of revenue bonds payable 728,696 Total current habihbes 460,646 3,183,355 105,796 64,047 Noncurrent liabilities: Compensated absences payable 30,210 162,598 60,037 33,490 Accrued claims payable Net OPEB obligabon 48,232 248,841 74,624 22,365 Net KPERS OPEB obhgat1on 16,408 109,385 27,346 10,939 Net pension hability 380,308 2,054,012 522,400 158,098 Payable from restricted assets Loans payable 10,104,852 General obhgat1on bonds payable 390,000 3,726,515 Revenue bonds payable 11,169,355 Landfill post-closure care liab1hties 1,981,498 Total noncurrent l1abdities 2,846,656 27,575,558 684,407 224,892 Total hab1ht1es 3,307,302 30,758,913 790,203 288,939 Deferred inftows of resources KPERS OPEB deferred 1nftows of resources 398 2,654 664 265 Pension deferred inftows of resources 29,965 141,462 37,524 11,076 Total deferred inftows of resources 30,363 144,116 38,188 11,341 Total hab1ht1es and deferred inftows of resources $ 3,337,665 $ 30,903,029 $ 828,391 ~ Net posrt1on Net investment in capital assets $ 1,570,079 $ 59,501,760 $ 885,814 $ 410,075 Restncted Restncted for bond rebrement 1,512,125 Unrestricted 4,083,299 21,566,243 1,010,827 [156,967) Total net position $ 5,653,378 $ 82,580,128 $1,896,641 $ 253,108 The notes to the basic financial statements are an integral part of this statement. 26 Total Internal Enterprise Service Funds Funds $ 32,140,053 $4,295,085 2,148,480 16 481,548 111,486 34,770,097 4,406,571 4,171,178 2,059,834 151,140,172 168,234 67,190,476 152,573 90,180,708 15,661 124,950,805 4,422,232 42,043 1,401 9,096 533,024 25,285 217,652 801,815 26,686 $ 125, 752,620 $4,448,918 $ 348,222 $ 41,701 226,977 249,347 183,858 383,182 33,989 564,494 527,499 1,166,063 728,696 3,813,844 640,184 286,335 25,399 55,264 394,062 164,078 5,469 3,114,818 154,549 10,104,852 4,116,515 11,169,355 1,981,498 31,331,513 240,681 35,145,357 880,865 3,981 133 220,027 11,300 224,008 11,433 $ 35,369,365 $ 892,298 $ 62,367,728 $ 15,661 1,512,125 26,503,402 3,540,959 $ 90,383,255 $3,556,620 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the Year Ended December 31, 2018 Business-Type Activities: Entererise Funds Total Solid Waste Water and Enterpnse Diseosal Sewer Sanitation Golf Course Operating revenues Charges for services $ 3,097,271 $ 20,202,022 $3,005,740 $ 755,655 $ Miscellaneous 18,894 5,101 128,819 Total operating revenues 3,116,165 20,207,123 3,005,740 884,474 Operating expenses General government Public works 1,506,857 11,023,621 2,256,647 Recreation 890,552 Depreciation 846,019 3,32.il,365 162,283 35,735 Total operating expenses 2,352,876 14,347,986 2,418,930 926,287 Operating income [loss] 763,289 5,859,137 586,810 [41,813) Nonoperating revenues [expenses] Investment revenue 46,505 175,346 10,882 622 Interest expense [29,206] [835,262] Accretion of bond premium 11,560 Amortization of bond issuance costs [18,472) Total nonoperating revenues [expenses] 17,299 [666,828) 10,882 622 Income [loss] before transfers 780,588 5,192,309 597,692 [41,191) Transfers from [to] other funds Transfers in Transfers [out] [690,000) [3,650,000) [491,500) Total transfers [690,000) [3,650,000) [491,500) Change in net position 90,588 1,542,309 106, 192 [41,191] Net position, January 1 6,237,212 80,696,866 1,856,553 292, 185 Prior period adjustment [674,422) 340,953 [66,104) 2,114 Net position, January 1, restated 5,562,790 81,037,819 1,790,449 294,299 Net position, December 31 $ 5,653,378 $ 82,580, 128 $ 1,896,641 $ 253,108 $ The notes to the basic financial statements are an integral part of this statement. 27 Funds 27,060,688 152,814 27,213,502 14,787,125 890,552 4,368,402 20,046,079 7,167,423 233,355 [864,468] 11,560 [18,472) [638,025) 6,529,398 [4,831,500) [4,831,500) 1,697,898 89,082,816 [397,459) 88,685,357 90,383,255 Internal Service Funds $ 8,747,300 73,258 8,820,558 7,830,946 7,699 7,838,645 981,913 25,503 25,503 1,007,416 190,000 190,000 1, 197 ,416 2,363,597 [4,393] 2,359,204 $ 3,556,620 CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2018 Business-Type Act1v1t1es Ente!Erise Funds Solid Waste Water and DISl:!OSal Sewer Sanitation Golf Course Cash flows from operating activities Cash received from customers and users $ 3, 101,871 $19,995,276 $ 2,970,093 $ 755,655 Cash paid to suppliers of goods or services [902,799] [7,214,728] [1,313,103] [386,081] Cash paid to employees [606,310] [3,951,533] [939,329] [502,013] Other operating receipts 18,894 5,101 128,819 Net cash provided by [used in] operating activities 1,611,656 8,834, 116 717,661 [3,620) Cash flows from capital and related financing activities Purchase and construction of capital assets [2,783,648] [312,009] [52,880] Proceeds from loans 2,354,809 Principal payments -loans [585,268] Pnncipal payments -general obligation bonds [375,000] [752,342] Principal payments -revenue bonds [705,000] Interest paid [34, 168) [817,579) Net cash provided by [used 1n] capital and related financmg act1v1t1es [409, 168) [3,289,028) [312,009) [52,880) Cash flows from investing act1v1ties Interest received 46,505 175,346 10,882 622 Cash flows from noncap1tal financing activities Transfers in Transfers [out] [690,000) [3,650,000) [491,500) Net cash provided by [used in] noncapital financing activities [690,000) [3,650,000) [491,500) Net increase [decrease] in cash and cash equivalents 558,993 2,070,434 [74,966) [55,878) Cash and cash equivalents, January 1 6,515,002 22, 115,048 1,568,556 137,273 Prior period adjustment [694,409) Cash and cash equivalents, January 1, restated 5,820,593 22, 115,048 1,568,556 137,273 Cash and cash equivalents, December 31 $6,379,586 $ 24, 185,482 $1,493,590 $ 81,395 The notes to the basic financial statements are an integral part of this statement. 28 Total Internal Enterpnse Service Funds Funds $ 26,822,895 $ 8,749,455 [9,816, 711] [7,495,431] [5,999, 185] [297,532] 152,814 73,257 11,159,813 1,029,749 [3, 148,537] 2,354,809 [585,268] [1, 127,342] [705,000] [851,747) [4,063,085] 233,355 25,503 190,000 [4,831,500) [4,831,500) 190,000 2,498,583 1,245,252 30,335,879 3,049,833 [694,409) 29,641,470 3,049,833 $ 32, 140,053 $4,295,085 CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (Conbnued) For the Year Ended December 31, 2018 Business-Type Act1v1t1es. Enterprise Funds Total Internal Solid Waste Water and Enterpnse Disposal Sewer Sanitation Golf Course Funds Reconciliation of operating [loss] income to net cash provided by [used 1n] operating act1v1ties Operating income [loss] $ 763,289 $ 5,859, 137 $586,810 $ (41,813) $ 7, 167,423 Adiustments to reconcile operating income [loss] to net cash provided by [used in] operating act1v1ties Depreciation expense 846,019 3,324,365 162,283 35,735 4,368,402 [Increase] decrease in accounts receivable 4,600 (214,490) (35,647) (245,537) [Increase] decrease in inventory (38,509) (7,787) (46,296) [Increase) decrease 1n deferred outftows 6,593 46,400 10,214 3,995 67,202 Increase [decrease) 1n accounts payable (642) [255,816) 6,779 9,866 (239,813) Increase (decrease) m retainage payable 216,296 216,296 Increase [decrease] m accrued compensated absences 7,756 602 12,440 6,372 27, 170 Increase [decrease) m claims payable Increase [decrease] in net pension hab1hty (22,019) (148,227] (35,024] (13,522] (218,792] Increase [decrease] in net KPERS OPEB obligation 3,230 21,534 5,383 2,154 32,301 Increase [decrease] in net OPEB obligation 2,507 12,934 3,879 1,162 20,482 Increase [decrease] 1n meter deposits payable 7,744 7,744 Increase [decrease] 1n deferred 1nftows 323 2,146 544 218 3,231 Net cash provided by [used in] operating act1v1t1es $ 1,611,656 $ 8,8341116 $ 717,661 $ [3,620) $11,159,813 The notes to the basic financial statements are an integral part of this statement. 29 $ Service Funds 981,913 7,699 53,639 4,554 (16, 189) 5,818 2, 154 (11,010) 1,076 95 $ 1,029,749 ASSETS Cash and investments Total assets CITY OF SALINA, KANSAS STATEMENT OF ASSETS AND LIABILITIES AGENCY FUNDS December 31, 2018 LIABILITIES AND FUND BALANCES Liabilities Accounts payable Total liabilities The notes to the basic financial statements are an integral part of this statement. 30 $ 312,065 $ 312,065 $ 312,065 $ 312,065 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 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 (see note below for descriptions) to emphasize that it is legally separated from the government. The blended component unit is reported as a governmental fund of the City (see note below for description) to emphasize that it is a part of the city. 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, 2018. Blended Component Unit Salina Field House Qualified Active Low-Income Community Business, Inc. (SFH QalicB) -SFH QalicB was created to function as a qualified low-income community business, as defined in Section 45D(d)(2) of the Internal Revenue Code of 1986 for the purpose of providing an indoor sports facility in the downtown corridor of the city of Salina. The purpose of the facility is to cater to local residents as well as host regional sports tournaments with the anticipation of becoming a regional destination for youth athletics. This mix of participation is expected to provide the most consistent visitation and tourism for the downtown district. The SFH QalicB is managed and controlled by a five-member Board of Directors appointed by the Salina City Commission. The field house is staffed by City of Salina employees. SFH QalicB has a December 31 fiscal year end. SFH QalicB is a not-for-profit organization exempt from income tax under Section 501(c)(3) of the Internal Revenue Code and is exempt from similar state and local taxes. 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 Salina Field House OALICB, Inc. 300 W. Ast St. 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. 31 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) A. Reporting Entity (Continued) Joint Ventures (Continued) Total unencumbered cash, December 31, 2018 Total change in unencumbered cash, year ended December 31, 2018 Total cash receipts, year ended December 31, 2018 Total cash receipts from City of Salina (Kansas Regulatory Basis) Building $ Authority (Audited) 1,294,585 121,544 2,417,371 478, 114 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. 32 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) 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. 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 58% of the .75 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. 33 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) 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. SFH QalicB fund -To account for the activities of Salina Field House Qualified Active Low-Income Community Business, Inc. as a component unit blended into the financial statements. 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 2019. It is not practicable to apportion delinquent taxes held by the County Treasurer at the end of the accounting period, and further, the amounts thereof are not material in relationship to the financial statements taken as a whole. 34 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities and Equity (Continued) 2. Receivables and Payables (Continued) The determination of assessed valuations and the collection of property taxes for all political subdivisions in the State of Kansas are the responsibility of the various counties. The County Appraiser annually determines assessed valuations on January 1 and the County Clerk spreads the annual assessment on the tax rolls. The County Treasurer is the tax collection agent for all taxing entities within the County. In accordance with state statutes, property taxes levied during the current year are a revenue source to be used to finance the budget of the ensuing year. Property taxes are levied and liens against property are placed on November 1 of the year prior to the fiscal year for which they are budgeted. Payments are due November 1, becoming delinquent, with penalty, December 21. Payments of 50% are accepted through December 20, with the second 50% then being due on or before May 10 of the following year. This procedure eliminates the need to issue tax anticipation notes since funds will be on hand prior to the beginning of each fiscal year. The City Treasurer draws down all available funds from the County Treasurer's office in two-month intervals. Taxes remaining due and unpaid at February 15 and July 1 are subject to collection procedures prescribed in state statutes. 3. Inventories and Prepaid Items Inventories are valued at cost using the first-in/first-out (FIFO) method. The costs of governmental fund-type inventories are recorded as expenditures when consumed. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. 4. Capital Assets Capital assets, which include property, plant, equipment and infrastructure assets, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. Capital assets used in governmental fund types of the City are recorded at cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at their estimated fair value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the assets or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type is included in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. Property, plant and equipment of the primary government, are depreciated using the straight-line method over the following estimated useful lives: Assets Buildings Other equipment Vehicles Infrastructure 35 Years 50 5 -15 6 -10 30-50 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 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. Temporarv Notes Upon authorization for the issuance of general obligation bonds for certain improvements, Kansas law permits the temporary financing of such improvements by the issuance of temporary notes. Temporary notes issued may not exceed the aggregate amount of bonds authorized, are interest bearing and have a maturity date not later than four years from the date of issuance of such temporary notes. Temporary notes outstanding are retired from the proceeds of the sale of general obligation bonds. 7. Long-term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 36 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 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: Maior Governmental Fl.l'lds Tounsm Schilling Other Total and Special Sales Tax Caprtal Debt Capital SFH Governmental Governmental General Convention Gas Capital mprovemerrt Ser.1ce Pro1ects QalicB Funds Funds Fund Balances Nonspendable for Inventory $ 151,514 $ -$ -$ -$ $ -$ $ -$ -$ 151,514 Restncted tor Public works -1,359,237 1,359,237 Public health and sanitation 234 234 Culture and recreation 122,447 122,447 Plam1ng and development 458,382 222,360 680,742 Debt payments 1,851,358 633,653 2,485,011 Committed for P Lbl1c safety 192,399 192,399 Culture and recreation 475,773 475,773 Plam1ng and development 1,217,966 147,250 1,365,216 Cemetery 508,366 508,366 Caprtal improvements -1,436,972 1,955,918 133,122 1,257,652 4,783,664 Assigned !or General government 20,250 20,250 Pubhc safety 33,216 175,681 208,897 Public works 9,000 9,000 Culture and recreation 5,404 150,074 155,478 Capital improvements 272,236 173,222 547,352 180,208 1,173,018 Unassigned 6,250,957 [827,119] [24,544[ 5,399,294 --- --- Total Fund Balances $6,742,577 ~ $1,532,459 ~ ~ ~ $ [693,997] $1,217,966 $ 3,861,345 $19,090,540 37 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December31, 2018 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, changes in the pension and OPEB plan liability proportion and assumptions, net difference between projected and actual earnings on pension plan and OPEB plan investments and differences between pension and OPEB plan liability expected and actual experience are reported 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, differences between expected and actual experience, changes in assumptions, and changes in the pension liability and OPEB plan proportion are reported as deferred inflows. 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. 38 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 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 2018 budget was amended for the Tourism and Convention Fund, Debt Service Fund and Golf Course 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, the SFH QalicB fund, non-major debt service funds, trust funds, and the following special revenue funds: Community Development Revolving, Downtown TIF District #1, South 9th CID, State Grants, 911 Communications, Kenwood Cove Capital, Special Law Enforcement, Police Grants, Federal Grants, DARE Donations, War Memorial Maintenance, Federal CARE Grant, Police Department Federal Forfeiture, Homeowners' Assistance, Private Grants 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, 2018 in the Bicentennial Fund, Business Improvement District Fund and Special Parks and Recreation 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, 2018, the statutory limit for the City was $146,336,377, providing a debt margin of $78,095,920. 39 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 3. RESTATEMENT OF EQUITY The City implemented GASB 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions for the KPERS and health insurance postemployment benefits for the year ended December 31, 2018. Additionally, following the close of the previous fiscal year, it was discovered that several capital assets were misclassified or incorrectly recorded and that a portion of the City's long-term liabilities had been misclassified between funds. According, the beginning net position/fund balances were restated, the effects of which are as follows: Debt Solid Waste Water and Central Governmental Service Disposal Sewer Sanitation Golf Course Garage ~ .EJmQ .EJmQ .EJmQ .EJmQ fwlQ .EJmQ Net Pos1t1on/Fund Balance, $ 123,700,850 $ 1,509,863 $ 6,237,212 $ 80,696,866 $ 1,856,553 $ 292, 185 $ 10,853 December31, 2017 Capital Asset Adjustment (382,983] 187, 181 (89,654] (2,514] Adoption of GASB 75 1,308,967 19,987 51,123 23,550 4,628 (4,393] Long-term L1ablibes Adjustment 591 760 694 409 [694,409) 102 649 Net Position/Fund Balance, December 31, 2017, Restated $ 125,218,594 $ 2,204,272 $ 5,562,790 $ 81,037,819 $ 1,790,449 $ 294,299 $ 6,460 Note4. DETAILED NOTES ON ALL FUNDS A. Deposits and Investments The City's cash is considered to be active funds by management and is invested according to KSA 9-1401. The statute requires that banks eligible to hold active funds have a main or branch bank in the county in which the City is located or in a county adjacent to the City and the banks provide an acceptable rate for active funds. Various City investments are considered to be idle funds by management and are invested according to KSA 12-1675. The statute requires that the City invest its idle funds in only temporary notes of the City, bank certificates of deposit, repurchase agreements, and if eligible banks do not offer an acceptable rate for the funds: U.S. Treasury bills or notes or the Municipal Investment Pool (KMIP). Maturities of the above investments may not exceed two years by statute. Some of the City's investments are of bond proceeds invested pursuant to KSA 10-131. This statute allows additional investment authority beyond that of KSA 12-1675. Investments of bond proceeds may follow KSA 12-1675 or include other investments such as the KMIP, direct obligations of the U.S. government or any agency thereof, investment agreements with a financial institution the obligations of which at the time of investment are rated in either of the three highest rating categories by Moody's investors service or Standard and Poor's corporation, and various other investments as specified in KSA 10-131. At December 31, 2018, the City has the following investments: Investment Type Kansas Municipal lmestment Pool Total fair value Fair Value $ 311,705 S&P AAAf/S1+ $ 311,705 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. 40 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) A. Deposits and Investments (Continued) 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. As of December 31, 2018 the City's deposits were considered fully secured. Restricted cash is comprised of a construction account, an interest reserve account (the "Interest Reserve"), and an expense reserve account (the "Operating Reserve") related to the SFH QalicB blended component unit. The Interest Reserve and the Operating Reserve accounts are available as part of the loans payable financing (see Note 4E). As of December 31, 2018, the balance of the construction account, Interest Reserve, and Operating Reserve was $1,029,223, $361,543, and $125,795, respectively. 41 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) B. Receivables Receivables as of year-end, including the applicable allowances for doubtful accounts, are as follows: Primary Government Receivables Accounts Taxes nterest Gross receivables Less: alowance for uncollectibles Total Primary Government Receivables· Accounts Taxes nterest Gross receivables Less alowance for uncollect1bles Total Component Units Sahna Airport Authority Accounts Less. alowance foruncollect1bles Total Sahna Arport Authority Salina Housing Authority Accounts Less alowance foruncollectibles nterest Total Salina Housilg Authority Total General $ 6,847,561 9,749,815 298,248 16,895,624 [5,355,282] $ 11,540,342 C. lnterfund Receivables and Payables Tourism and Special Convention Gas $ 457,529 $ - 320,324 ---457,529 320,324 $457,529 $ 320,324 Debt SFH Other Service QalicB Governmental $ $ 494,287 $ 2,428 2,674,390 2,674,390 494,287 2,428 [631] $2,674,390 $ 494,287 $ 1,797 Sohd Water Waste and Disposal Sewer Sanrtation $ 189,486 $ 3,176,509 $ 472,773 16 189,502 3,176,509 472,773 [1,471,307] [218,981] $ 189,502 $ 1,705,202 $ 253,792 The composition of interfund balances as of December 31, 2018, is as follows: Fund Types Due From Due To General Fund $ 24,544 $ Capital Project Fund 196,939 SFH QalicB Fund 196,939 Police Grants Fund 24,544 $ 221,483 $ 221,483 Subtotal $ 7.801,805 12.744.529 298,248 20,844,582 [5,355,913] $ 15,488,669 Total $ 11,640,573 12,744,529 298,264 24,683,366 [7,046,201] $ 17,637, 165 $ 145,403 145,403 12,901 [790] 437 12,548 $ 157,951 The City uses interfund receivables and payables between the General Fund and Other Governmental Funds as needed when pooled cash is negative within a fund until investments mature or grant proceeds are received. All payables are cleared in less than one year. 42 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) D. Capital Assets Capital asset activity for the year ended December 31, 2018, was as follows: Balance AdJ. Bal. Balance 12/31/2017 Adjustments 12/31/2017 Additions Rebrements 12/31/2018 City governmental acti~ties Governmental acti111bes · Capital assets, not being depreciated Construction in progress $ 28,909,568 $ [203,661] $ 28,705,907 $ 8,876,538 $ 5,365,238 $ 32,217,207 Land 24,092,859 676 24,093,535 24,093,535 Leased land under capital lease 422,799 422,799 Capital assets, being depreciated Infrastructure 199,315,338 [50,398] 199,264,940 5,365,238 204,630, 178 Buildings and improvements 53,009,679 5,179 53,014,858 53,014,858 Vehicles 10,386,499 [105,845] 10,280,654 352,834 442,158 10,191,330 Equipment, furniture and fixtures 6,614,011 79,349 6,693,360 515,538 90,793 7,118,105 Leasehold improvements 326,193 326,193 Total capital assets 322,327 ,954 (274,700] 322,053,254 15,859,140 5,898,189 332,014,205 Less accumulated depreciation for Infrastructure 84,357,444 10,031 84,367,475 3,897,782 88,265,257 Buildings and improvements 19,930,451 3,588 19,934,039 1,321,956 21,255,995 Vehicles 6,866,276 58,203 6,924,479 746,753 437,665 7,233,567 Equipment, furniture and fixtures 4,573,829 36,461 4,610,290 224,435 90,793 4,743,932 Total accumulated deprec1abon 115,728,000 108,283 115,836,283 6,190,926 528,458 121,498,751 Governmental acb111ties capital assets, net $ 206,599,954 $ (382,983] $ 206,216,971 $ 9,668,214 $ 5,369,731 $210,515,454 Business-type acti111bes: Capital assets, not being depreciated Construction in progress $ 2,149,789 $ -$ 2,149,789 $ 2,093,612 $ 72,223 $ 4,171,178 Land 1,541,806 8,858 1,550,664 509,170 2,059,834 Capital assets, being depreciated Infrastructure 119 ,457 ,650 (359,560] 119,098,090 72,223 119,170,313 Buildings and improvements 22,579,933 3 22,579,936 22,579,936 Vehicles 3,690,852 (11,130) 3,679,722 394,676 254,752 3,819,646 Equipment, furniture and fixtures 5,337,060 82,139 5,419,199 151,078 5,570,277 Total capital assets 154,757,090 [279,690] 154,477,400 3,220,759 326,975 157,371, 184 Less accumulated depreciation for. Infrastructure 43,729,964 (358,386) 43,371,578 3,486,539 46,858,117 Buildings and improvements 13,217,925 294 13,218,219 421,287 13,639,506 Vehicles 2,650,242 1,140 2,651,382 215,184 254,752 2,611,814 Equipment, furniture and fixtures 3,853,399 [17,755] 3,835,644 245,395 4,081,039 Total accumulated depreciation 63,451,530 (374,707] 63,076,823 4,368,405 254,752 67,190,476 Business-type acti~bes capital assets, net $ 91,305,560 $ 95,017 $ 91,400,577 $ (1, 147,646) $ 72,223 $ 90,180,708 43 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 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 $ 74,669 Public safety 728, 118 Public works 4,240,242 Public health 26,959 Culture and recreation 813,760 Planning and development 307,178 Total depreciation $ 6,190,926 Business-type Activities: Solid Waste Disposal $ 846,019 Water and Sewer 3,324,368 Sanitation 162,283 Golf Course Division 35,735 Total depreciation $ 4,368,405 E. Long-Term Debt Following is a summary of changes in long-term debt for fiscal year 2018: Restated Balance Balance January 1, December 31, 2018 Additions Deletions 2018 Governmental act1vit1es General obhgabon bonds $ 56,096,954 $ 2,159,836 $ 6,288,480 $ 51,968,310 F 1nancing lease 157,868 157,868 Loans payable 12,171,090 13,963 12,185,053 Net OPEB liability 2,932,464 395,831 235,055 3,093,240 Net KPERS OPEB hab1hty 307,478 101,230 25,860 382,848 Net pension l1abilrty 28,966,518 1,047,535 27,918,983 Accrued compensation 2,797,958 1,628,901 1,611,374 2,815,485 Temporary notes 6,811,742 19,508,505 8,196,742 18,123,505 Total $ 110,242,072 $ 23,808,266 $ 17,562,914 $ 116,487,424 Business-type actiV1ties: General obhgabon bonds $ 6,417,784 $ $ 1,135,206 $ 5,282,578 Revenue bonds 12,606,747 708,696 11,898,051 Loans payable 8,862,810 2,354,809 585,268 10,632,351 Net OPEB liability 373,580 50,427 29,945 394,062 Net KPERS OPEB liability 131,776 43,384 11,082 184,078 Net pension liability 3,333,610 218,792 3,114,818 Accrued compensation 842,347 410,353 383183 669,517 Total $ 32,368,654 $ 2,858,973 $ 3,072,172 $ 32,155,455 Component Units General obligation bonds $ 24,087,000 $ $ 2,660,000 $ 21,427,000 Less unamortized discount [79,485) (15,277] (84,208) Special assessment debt 9,207 2,153 7,054 Net KPERS OPEB obligation 12,054 928 11,126 Net pension liability 603,456 2,174 605,630 Total component units $ 24,632,232 $ 2,174 $ 2,647,804 $ 21,986,602 44 Amounts Due Within One Year $ 5,877,280 1,611,375 18,123,505 $ 25,612,160 $ 1,166,063 728,696 527,499 383,182 $ 2,805,«0 $ 1,967,000 2,153 $ 1,969,153 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) The following is a detailed listing of the city's long-term debt including general obligation bonds, revenue bonds, temporary notes and loans payable: Primary Government General Obligation Bonds Internal lmpro-.ements 2008B, due 7/1/2028 Internal lmpro-.ements 2009A, due 10/1/2029 Internal lmpro-.ements 2010A, due 10/1/2025 Internal lmpro-.ements 2010B, due 10/1/2023 Internal lmpro-.ements 2011A, due 10/1/2031 Internal lmpro-.ements 2012A, due 10/1/2027 Refunding 2012B, due 10/1/2020 Internal lmpro-.ements 2013A, due 10/1/28 Internal lmpro-.ements 2013B, due 10/1/33 Internal lmpro-.ements 2014A, due 10/1/34 lmpro-.ement and Refunding 2015A, due 10/1/35 Internal lmpro-.ements 2016A, due 10/1/36 Refunding 2016B, due 10/1/2031 Internal lmpro-.ements 2017A, due 10/1/37 Internal lmpro-.ements 2018A, due 10/1/33 Total general obligation bonds Re-.enue Bonds Re-.enue 2011, due 10/1/31 Total re-.enue bonds Temporary Notes Series 2016-2, due 9/1/2019 Series 2018-2, due 11/15/2019 Total temporary notes Loans Payable Kansas Public Water Supply, due 8/1/2034 Kansas Public Water Supply, due 8/1/2035 Dakotas & CNMC Notes, due 12/10/2050 Total loans payable 45 Original Interest Bonds Issue Rates Outstanding $ 3,525,000 3.65% to 5.00% $ 1,035,000 23,695,000 2.00% to 5.00% 2,981,936 6,916,592 2.00% to 3.875% 655,545 7,973,044 0.50% to 3.00% 1,763,477 6,587,985 2.00% to 5.00% 1,098,449 2,383,903 1.00% to 2.45% 1,506,342 3,817,108 1.00% to 1.40% 423,027 1,369,380 3.00% to 4.00% 1,001,255 4,485,073 0.60% to 3.65% 3,286,304 7,839,050 2.50% to 3.75% 5,455,241 7, 157,688 2.00% to 4.00% 6, 142,786 6,681,766 2.00% to 3.00% 6, 160,590 15,141,004 2.00% to 5.00% 14,371,647 9,388,370 3.00% to 3.375% 9,209,452 2,090,000 3.15% to 4.00% 2, 159,837 $ 57,250,888 $ 16, 193,925 2.00% to 4.60% $ 11,898,051 $ 11,898,051 $ 4,615,000 13,500,000 $ 9,330,000 4,250,000 12,640,000 1.00% 2.50% 2.12% 2.78% 1.58% $ 4,615,000 13,508,505 $ 18, 123,505 $ 6,771,038 3,861,313 12, 185,053 $ 22,817,404 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Component Unit Salina Airport Authority General Obligation Bonds General Obligation 2009B, due 2021 General Obligation 2011A, due 2023 General Obligation 2015A, due 2025 Temporary Note 2016-1, due 2019 General Obligation 2017A, due 2030 General Obligation 2017B, due 2025 Less unamortized bond premium Less unamortized bond discount Total general obligation bonds Special Assessment Debt Hangar 600 Sanitary Sewer, due 2021 Total special assessment debt Total Original Issue $6,080,000 11,820,000 3,075,000 657,000 10,255,000 4,835,000 27,599 Interest Rates 4.78 3.89% 2.67% 0.90% 3.04% 3.02% 4.47% Bonds Outstanding $ 1, 185,000 2,885,000 1,740,000 657,000 10, 150,000 4,810,000 33,023 [97,231] 21,362,792 7,054 7,054 $21,369,846 Annual debt service requirements to maturity for general obligation bonds to be paid with tax levies: General Obligation -Primary Goi.emment Bonds Interest Year Outstanding Due Total 2019 $ 7,043,343 $ 1,665,570 $ 8,708,913 2020 4,893,342 1,476,903 6,370,245 2021 4,618,090 1,339,636 5,957,726 2022 4,701,939 1, 186,542 5,888,481 2023 4,541,940 1,011,191 5,553,131 2024-2028 17,204,968 3,276,338 20,481,306 2029-2033 9,998,082 1,462,000 11,460,082 2034-2037 4,249, 184 276,500 4,525,684 Total $ 57,250,888 $ 11,694,680 $ 68,945,568 46 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) General Obligation -Component Units Bonds Interest Year Outstanding Due Total 2019 $ 1,310,000 $ 648,278 $ 1,958,278 2020 1,350,000 612,110 1,962, 110 2021 1,400,000 565,880 1,965,880 2022 1,455,000 511, 135 1,966,135 2023 1,500,000 464,310 1,964,310 2024 -2028 8,205,000 1,616,160 9,821, 160 2029 -2031 5,550,000 348,263 5,898,263 Total $ 20,770,000 $ 4,766, 136 $ 25,536,136 Annual debt service requirements to maturity for revenue bonds to be paid with utility revenues: Re\A!nue Bonds -Primary Go\A!mment Bonds Interest Year Outstanding Due Total 2019 $ 728,696 $ 487,991 $ 1,216,687 2020 748,696 466,242 1,214,938 2021 773,696 798,696 1,572,392 2022 798,696 414, 148 1,212,844 2023 828,696 382,348 1,211,044 2024-2028 4,688,480 1,376,895 6,065,375 2029-2031 3,331,091 308,750 3,639,841 Total $ 11,898,051 $ 4,235,070 $ 16, 133, 121 Annual debt service requirements to maturity for temporary notes -to be paid through the issuance of general obligation bonds: Temporary Notes -Primary Go\A!mment Notes Interest Year Outstanding Due Total 2019 $ 18, 123,505 $ 372,400 $ 18,495,905 Total $ 18, 123,505 $ 372,400 $ 18,495,905 47 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Kansas Public Water Supply Loans. 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: Kansas Water Supply Loans -Primary Go\emment Loans Interest Year Outstanding Due Total 2019 $ 2020 2021 2022 2023 2024-2028 2029-2033 2034-2035 527,499 539,863 552,523 565,483 578,754 3, 104, 194 3,486,921 1,277, 114 10,632,351 Total =$===== $ $ 247,835 $ 775,334 235,471 775,334 222,811 775,334 209,851 775,334 196,580 775,334 772,476 3,876,670 389,749 3,876,670 46,434 1,323,548 2,321,207 $ 12,953,558 Dakotas and CNMC Notes. Dakotas Note A -On July 27, 2016, a $6,016,500 promissory note with a maturity date of December 10, 2050 was provided to SFH QalicB by Dakotas XXll, LLC. Interest accrues on the unpaid principal balance at an interest rate of 1.582625% with annual interest only payments, partially in arrears and partially in advance, commencing on December 10, 2016 and continuing on the tenth day of each December thereafter through December 10, 2025. On July 27, 2023, payment of all accrued and unpaid interest through July 27, 2023 is due. Commencing on December 10, 2023 and continuing on the tenth day of each December thereafter through December 10, 2026, accrued and unpaid interest shall be due and payable annually, partially in arrears and partially in advance for interest accruing through the end of each calendar year. Commencing on December 10, 2026 and continuing through the maturity date, annual payments of principal and interest in an amount equal to $293,276 are due. At maturity, the entire outstanding principal balance plus all accrued and unpaid interest thereon is due and payable in full. The loan may not be prepaid prior to July 27, 2023 and is secured by the Loan and Security Agreement. As of December 31, 2018, the note balance was $6,016,500. Dakotas Note B -On July 27, 2016, a $2,623,500 promissory note with a maturity date of December 10, 2050 was provided to the SFH QalicB by Dakotas XXll, LLC. Interest accrues on the unpaid principal balance at an interest rate of 1.582625% with annual interest only payments, partially in arrears and partially in advance, commencing on December 10, 2016 and continuing on the tenth day of each December thereafter through December 10, 2025. On July 27, 2023, payment of all accrued and unpaid interest through July 27, 2023 is due. Commencing on December 10, 2023 and continuing on the tenth day of each December thereafter through December 10, 2025, accrued and unpaid interest shall be due and payable annually, partially in arrears and partially in advance for interest accruing through the end of each calendar year. Commencing on December 10, 2026 and continuing through the maturity date, annual payments of principal and interest in an amount equal to $127,883 are due. At maturity, the entire outstanding principal balance plus all accrued and unpaid interest thereon is due and payable in full. The loan may not be prepaid prior to July 27, 2023 and is secured by the Loan and Security Agreement. As of December 31, 2018, the note balance was $2,623,500. 48 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) CNMC Note A-On July 27, 2016, a $2,674,000 promissory note with a maturity date of December 10, 2050 was provided to the SFH QalicB by CNMC Sub-COE 114, LLC. Interest accrues on the unpaid principal balance at an interest rate of 1.582625% with annual interest only payments, partially in arrears and partially in advance, commencing on December 10, 2016 and continuing on the tenth day of each December thereafter through December 10, 2025. On July 27, 2023, payment of all accrued and unpaid interest through July 27, 2023 is due. Commencing on December 10, 2023 and continuing on the tenth day of each December thereafter through December 10, 2025, accrued and unpaid interest shall be due and payable annually, partially in arrears and partially in advance for interest accruing through the end of each calendar year. Commencing on December 10, 2026 and continuing through the maturity date, annual payments of principal and interest in an amount equal to $130,345 are due. At maturity, the entire outstanding principal balance plus all accrued and unpaid interest thereon is due and payable in full. The loan may not be prepaid prior to July 27, 2023 and is secured by the Loan and Security Agreement. As of December 31, 2018, the note balance was $2,674,000. CNMC Note B -On July 27, 2016, a $1,326,000 promissory note with a maturity date of December 10, 2050 was provided to the SFH QalicB by CNMC Sub-COE 114, LLC. Interest accrues on the unpaid principal balance at an interest rate of 1.582625% with annual interest only payments, partially in arrears and partially in advance, commencing on December 10, 2016 and continuing on the tenth day of each December thereafter through December 10, 2025. On July 27, 2023, payment of all accrued and unpaid interest through July 27, 2023 is due. Commencing on December 10, 2023 and continuing on the tenth day of each December thereafter through December 10, 2025, accrued and unpaid interest shall be due and payable annually, partially in arrears and partially in advance for interest accruing through the end of each calendar year. Commencing on December 10, 2026 and continuing through the maturity date, annual payments of principal and interest in an amount equal to $64,636 are due. At maturity, the entire outstanding principal balance plus all accrued and unpaid interest thereon is due and payable in full. The loan may not be prepaid prior to July 27, 2023 and is secured by the Loan and Security Agreement. As of December 31, 2018, the note balance was $1,326,000. As of December 31, 2018, the principal balance of these four loans net of $454,947 of unamortized debt issuance costs was $12, 185,053. 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 2019 $ 2,249 $ 315 $ 2,564 2020 2,350 215 2,565 2021 2,455 110 2,565 Total $ 7,054 $ 640 $ 7,694 49 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Special assessments. As provided by Kansas statutes, projects financed in part by special assessments are financed through general obligation bonds of the City and are retired from the debt service fund. Special assessments paid prior to the issuance of bonds are recorded as revenue in the appropriate project. Special assessments received after the issuance of bonds are recorded as revenue in the debt service fund. The special assessments are not recorded as revenue when levied against the respective property owners as such amounts are not available to finance current year operations. The special assessment debt is a contingent obligation of the City to the extent of property owner defaults, which have historically been immaterial. Premises lease. On July 27, 2016, SFH QalicB entered into a lease agreement with the City for the use of the Salina Field House, as defined in the Net Lease agreement (the "Property"), under a direct financing lease. The lease term is 30 years, as defined in the Net Lease agreement. Beginning on July 1, 2017 and on the first day of each December thereafter through December 1, 2046, annual payments are due, in advance, as specified in the Net Lease agreement. For the year ended December 31, 2018, SFH QalicB earned $492,917 of rental income under the terms of the Net Lease. As of December 31, 2018, rental income of $79,912 remained receivable from the City. The following is a schedule, by year, of total minimum lease payments by the City to SFH OalicB under the direct financing lease as of December 31, 2018: 2019 $ 130,000 2020 130,000 2021 130,000 2022 130,000 2023 162,500 2024-2028 2,405,000 2029-2033 3,250,000 2034-2038 3,250,000 2039-2043 3,250,000 2044-2046 1,625,000 $ 14,462,500 Ground Lease. On October 24, 2018, SFH QalicB entered into a lease agreement with Salina Regional Medical Education, LLC for the use of property for parking of passenger vehicles and non-commercial trucks (the Parking Lot) by the public. SFH QalicB will have the option to acquire the Parking Lot for $1 upon the end of the lease term, which is 100 years, as defined in the Ground Lease. A one-time basic rent payment of $250,000 was due on the commencement date. There are no additional minimum lease payments due. Sales tax and Revenue (STAR) Bonds. STAR Bonds are authorized to be issued pursuant to K.S.A. 12-17, 160, et seq., as amended (the STAR Bond Act). The STAR Bond Act provides a form of tax increment financing that enables the issuance of bonds payable from certain State and local sales and compensating use tax revenues and transient guest tax revenues generated from STAR bond projects constructed within a STAR bond project district. To implement STAR bond financing, a local government must adopt a resolution that specifies a proposed STAR bond project district's boundary and describes the overall district plan, hold a public hearing on the district and plan, and pass a resolution that establishes the STAR bond project district. Additionally, there may be one or more projects within a STAR bond district. In accordance with the STAR Bond Act, the City has no liability for payment of bonds in the event that revenues received from sources noted above are inadequate to pay the debt incurred with the issuance of the STAR bonds. 50 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) In connection with the issuance of STAR bonds, the City of Salina and the State of Kansas enter into a Tax Distribution Agreement. The agreement provides that the principal of, accreted value, and interest on the STAR bonds will be paid proportionally by the City of Salina and the State of Kansas, based on each entity's respective share of sales taxes generated within the district. These proportional shares may change in the future if the sales taxes assessed by the local or state governments are modified. On June 1, 2015, the City of Salina Commission adopted Ordinance 15-10776 establishing the district known as the Salina STAR Bond Project District. On August 22, 2016, the City held a public hearing and approved Ordinance 16-10856 adopting the STAR Bond Project Plan. On December 1, 2018, the City of Salina issued $18,250,000 in Senior Special Obligation Revenue Bonds (Series 2018-A) and $4,320,000 in Subordinate Special Obligation Revenue Bonds (Series 2018-B). The City's portion of the proceeds from these bond issuances is recorded as a capital contribution in the financial statements. 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, 2018. The future minimum lease payments for the lease are as follows: Year Amount 2019 $ 93,926 2020 93,926 2021 93,926 2022 93,926 2023 93,926 2024-2027 375,708 Total $ 845,338 G. Reconciliation of Transfers A reconciliation of interfund transfers follows: Transfer In Transfer Out Major Funds: General fund $5,041,500 $ Tourism and conwntion fund Special gas fund 160,000 Sales tax capital fund Debt ser\4ce 2,270,782 Other gowmmental funds 1,354,914 Solid waste disposal fund Water and sewer fund Sanitation fund Central garage fund 190,000 Total Transfers $9,017, 196 $ The City uses interfund transfers to share administrative costs between funds. 51 805,000 812,346 2,568,350 690,000 3,650,000 491,500 9,017, 196 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31 , 2018 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. 52 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 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 1.2% of total payroll for the fiscal year ended June 30, 2018. The actuarially determined employer contribution rates (not including the 1.00% contribution rate for the Death and Disability Program) and the statutory contribution rates are as follows: Local employees Police and Firemen Actuarial Statutory Employer Employer Rate Capped Rate 8.39% 20.09% 8.39% 20.09% Member contribution rates as a percentage of eligible compensation for the fiscal year 2018 are 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, 2018, 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, 2018. The contributions used exclude contributions made for prior service, excess benefits and irregular payments. At June 30, 2018, the City's proportion for the Local employees group was 0.790%, which was a decrease of .021% from its proportion measured at June 30, 2017. At June 30, 2018, the City's proportion for the Police and Firemen group was 2.081 %, which was a decrease of .110% from its proportion measured at June 30, 2017. 53 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) A. Defined Benefit Pension Plan (Continued) Net Pension Liability. At December 31, 2018 and 2017, the City and its component units reported a liability of $31,984,657 and $33,276,991, 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, 2017, which was rolled forward to June 30, 2018, using the following actuarial assumptions: Assumptions Rate Price inflation 2. 75% Wage inflation 3.50% Salary increases, including wage increases 3.5% to 12.0% including inflation Long-term rate of return, net of investment expense, and including price inflation 7. 75% Mortality rates were based on the RP-2014 Mortality Tables, with age setbacks and age set forwards as well as other adjustments based on different membership groups. Future mortality improvements are anticipated using Scale MP-2016. The actuarial assumptions used in the December 31, 2017 valuation were based on the results of an actuarial experience study conducted for the period of January 1, 2013, through December 31, 2015. The experience study is dated November 18, 2016. 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, 2018 are summarized in the following table: Long-Term Expected Asset Long-Term Allocation Real Rate of Return Global Equity 47.00% 6.85% Fixed Income 13.00% 1.25% Yield dri1.en 8.00% 6.55% Real Return 11.00% 1.71% Real estate 11.00% 5.05% Altemati1.es 8.00% 9.85% Short-term in1.estments 2.00% -0.25% 100.00% Discount Rate. The discount rate used to measure the total pension liability was 7.75%. 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. 54 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 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 7.75%, 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 (6.75%) or 1-percentage point higher (8.75%) than the current rate: 1% Decrease (6.75%) $ 16, 154, 118 28,531J28 Discount Rate (7.75%) 1% Increase (8.75%) Local $ 11,014,328 $ 6,670, 741 Police & Firemen Total 20,019,473 12,892,837 $ 44,685,846 $ 31,033,801 $ 19,563,578 ======= Pension Expense. For the year ended December 31, 2018, the City recognized Local pension expense of $870,226 and Police and Firemen pension expense of $2,385,738, 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. The Salina Housing Authority's and Salina Airport Authority's portion of the Local pension expense were $31, 100 and $39,859, respectively Deferred Outflows of Resources and Deferred Inflows of Resources. At December 31, 2018, 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 Net differences between projected and actual earnings on inwstments Changes in assumptions Changes in proportion Total Police & Firemen Differences between actual and expected experience Net differences between projected and actual earnings on inwstments Changes in assumptions Changes in proportion Total 55 Deferred outftows Deferred inftows of resources of resources $ 39,766 $ 312,097 257,660 476,967 53,041 446, 147 435,326 $ 1,220,540 $ 800,464 Deferred outftows Deferred inflows of resources $ 1,223,246 521,008 1,054,212 51,284 of resources $ 92,492 55,255 1, 107,361 $ 2,849,750 $ 1,255,108 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) A. Defined Benefit Pension Plan (Continued) At December 31, 2018, the Salina Housing Authority and Salina Airport Authority 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 expenence Net d11ferences between projected and actual earnings on imestments Changes in assumptions Changes in proportion Total Housing Authority Airport Authority Deferred out11ows Deferred inftows Deferred outftows Deferred inftows of resources of resources of resources of resources $ 1,670 $ 11,937 $ 2,187 $ 17,161 10,829 14,168 18,592 2,525 26,226 2,916 1,806 6,884 55,201 44,325 $ 32,897 $ 21,346 $ 97,782 $ 64,402 $1,723,207 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, 2019. 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 2019 $ 341,010 $ 985,459 $ 1,326,469 2020 202,538 586, 107 788,645 2021 [100,494) [33,058] [133,552) 2022 [7,653) 64,997 57,344 2023 [15,325) [8,863) [24, 188) Total $ 420,076 $ 1,594,642 $ 2,014,718 $36,221 and $13,417 reported as deferred outflows of resources related to pensions resulting from Salina Housing Authority and Salina Airport Authority contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2019. Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Housing Airport Authority Authority Deferred Deferred Year ended [Inflows] Outflows [Inflows] Outflows December 31, Amount Amount Total 2019 $ [2,591) $ 10,978 $ 8,387 2020 11, 125 12,657 23,782 2021 7, 101 112 7,213 2022 [4,816) 8,685 3,869 2023 732 948 1,680 Total $ 11,551 $ 33,380 $ 44,931 56 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) 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 (l.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, $183,514 is considered to be due within one year. Changes in the balances of claims liabilities during the past two years are as follows: 2018 2017 Unpaid claims, January 1 $ 221,913 $ 255, 154 Incurred claims (including IBNRs) 886,086 622,556 Claim payments [869,221) [655,797) Unpaid claims, December 31 $ 238,778 $ 221,913 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: 57 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) D. Risk Management (Continued) E. Contingent Liabilities Unpaid claims, January 1 Incurred claims (including IBNRs) Claim payments Unpaid claims, December 31 2018 2017 $ 395,691 $ 294,333 3,670,930 4,244,648 [3,685,641) [4, 143,290) $ 380,980 $ 395,691 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, 2018. 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. F. 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 $1,981,498 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 $4,892,995 as the remaining estimated capacity is filled over the remaining life expectancy of 147 years. These amounts are based on what it would cost to perform all closure and postclosure care in 2018. 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. 58 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) G. Capital Projects Capital projects often extend over two or more fiscal years. The following is a schedule, which compares the project authorization including allowable interest revenue to total project expenditures from project inception to December 31, 2018. Markley-Magnolia W Sewer $ 5,150,000 $ 200,790 Cloud from Ohio to Le1.ee 155,014 69,242 Ninth and Cloud Intersection Realignment 1,100,000 1,048,542 Bicentennial Center lmpro1.ements 10,200,000 12,344,709 Lakewood Middle School Safe Route 81,375 47,509 Bicentennial Center Owners Rep 96,000 84,000 Water Well 13 & 14 Maintenance 52, 184 50,830 Pa1.ement Condition Sur1.ey 36,222 33,909 Community Fieldhouse 6,937,827 8,727,749 Community Fieldhouse 713,858 733,992 Wastewater Treatment Plant Feasibil 154,395 154,395 Channel Road Erosion Repairs 58,858 Rebuild High Ser\ice Pump P-203 24, 187 13,688 Pump Stations and Force Mains 1,483,000 1,280,581 2016 Water Meters 30,000 18, 128 2017 Country Club Road lmpro1.ements 1,200,000 1,088,188 Dowtown STAR District 58,000 136,120 Downtown CID -Alley 2,317 Downtown llF 2,009 2017 Mill & Inlay 1,577,502 1,574,583 2017 Major Concrete Rehab 469,472 465,748 Downtown Streetscape 12, 165,000 3,514,351 Smoky Hill Ri1.er Renewal 3,200,000 2,632,848 Downtown Santa Fe Water Main Replacement 1,351,100 762,367 S Well Field & WTP Phase 1 1,964,525 1,583,269 2017 Sidewalks 69,092 73,665 Police Training Facility 4,900,000 297,358 Beechcraft Road lmpro1.ements-Airport Authority 1,500,000 12,884 2017 Sanitary Sewer Line Cleaning 519,358 297 Indiana A1.e Trail 79,262 74,992 Preliminary Design Broadway lmpr 50,000 50,248 2018 Pa1.ement Sealing 325,000 252,778 Northbound 9th Street Bridge 103,768 92,060 2018 Microsurfacing 750,000 731,987 2018 UBAS 800,000 673,029 2018 Brick Streets 99,243 99,486 2018 Bridge Maintenance 86,520 82,684 2018 Chip Seal/Bituminous 175,000 169,866 2018 Mastic Surface Treatment 30,000 30,305 2018 Mill & Inlay 1,550,000 1,353,589 2018 Minor Concrete Rehab 40,510 40,773 2018 Sidewalks 80,493 83,114 2018 Traffic Control Main/Street Markings 75,000 56,371 9th Street Kirwin to Crawford 665,752 630,458 2018 Sanitary Sewer Point Repair 50,000 18,859 Landfill Cell #20 Design 60,000 50,714 2018 Park lmpro1.ements 194,000 198 Manhole & Value Adj 10,000 306 Community Theater HVAC Replacement 46,000 207 North Lime Drying Lagoon Yearly Maintenance 120,000 37,260 59 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) 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 Authority on or about September 9, 1966. The property is now known to contain areas of extensive soil and groundwater contamination, which is a result of the use and disposal of chlorinated solvents during military operations at the Base from 1942 until Base closure in 1965. The U.S. Department of Defense is responsible for the investigation and remediation of contamination caused by military activities at current and former military bases. The U.S. Army Corps of Engineers (Corps) is the lead agency for the Department at formerly used defense sites. The Corps has investigated the soil and groundwater contamination at the Site under the regulatory oversight of the U.S. Environmental Protection Agency (EPA) and the Kansas Department of Health and Environment (KDHE). The Site is not designated as a National Priority List Superfund site, but investigation and remediation are required to be in compliance with the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). Potential liability for contamination under CERCLA extends broadly to parties associated with the release or presence of hazardous substances, including not only those entities involved with contaminant use and disposal, but in some cases other current and former owners and operators of contaminated sites. As a current owner of extensive amounts of property at the Site, the Authority is potentially liable under CERCLA, although the Authority believes that it has meritorious defenses to such liability. The Authority is considered to be a Potentially Responsible Party (PRP) for the Site, primarily due to its status as a property owner. The Authority, City of Salina, Unified School District No. 305 and the Kansas Board of Regents (Kansas State University Polytechnic Campus), (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 Authority was notified that the Corps 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. 60 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) H. Environmental Matters (Continued) On or about May 27, 2010, the Salina Public Entities filed their Complaint against the United States of America, the United States Department of Defense and Secretary of Defense, Robert M. Gates, in his official capacity (collectively, "Defendants"). On or about September 22, 2010, the Salina Public Entities filed their First Amended Complaint in four counts: Count I Citizen Suit Claim Pursuant to 42 U.S.C.§ 9659(a)(2), Count II Citizen Suit Claim Pursuant to 42 U.S.C.§ 9659(a)(1), Count Ill Claim for Recovery of Response Costs Pursuant to 42 U.S.C.§ 9607(a) and Count IV Claim for Declaratory Judgment Pursuant to 42 U.S.C.§ 9613(g)(2). On or about October 6, 2010, Defendants filed their motion to dismiss and to strike, primarily with respect to the citizen suit claims. On or about March 25, 2011, Judge Murguia entered his Memorandum and Order. The Judge granted the Defendants' motion to dismiss Counts I and II (citizen suit claims) for lack of subject matter jurisdiction. He also granted the Defendants' motion to dismiss the Salina Public Entities' requests for attorney fees, with the exception of non-litigation attorney fees. He denied the Defendants' motion to strike the Salina Public Entities' allegations of a conflict of interest. The Salina Public Entities' claims under Counts Ill and IV for response costs under CERCLA 9607(a) are not affected by the Judge's rulings. The Salina Public Entities disagree with most of the Judge's filings and, if necessary, plan to take an interlocutory appeal to the Tenth Circuit to contest the rulings. On or about April 22, 2011, Defendants filed their Answer to First Amended Complaint and Counterclaim against the Salina Public Entities. Count I of the Counterclaim alleges a claim for contribution under CERCLA, 42 U.S.C.§ 9613(f)(1). Count II of the Counterclaim alleges a claim for cost recovery under CERCLA, 42 U.S.C.§ 9607(a)(1). Count II alleges costs incurred by the U.S. Environmental Protection Agency of approximately $1,838,241 as of September 30, 2007, and alleges costs incurred by the Corps of approximately $14,915,228 as of April 17, 2009. The Salina Public Entities intend to vigorously contest the claims brought against them and will assert, among other defenses, the third party defense under 42 U.S.C.§ 9607(b)(3). 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 of Salina. 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. The Remedial Investigation (RI) portion of the CAFO scope of work was completed during 01 2018. The Feasibility Study portion of the CAFO scope of work was also completed during 01 2018. The Feasibility Study (FS) and Proposed Plan (PP) portions of the CAFO scope of work were completed during 2018 and submitted to KDHE. The Corrective Action Decision (CAD) document is scheduled to be issued by KDHE during 2019. 61 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) H. Environmental Matters (Continued) Although the claims and counterclaims in the lawsuit have been dismissed without prejudice, the Authority 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 Authority 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. Other Postemployment Healthcare Benefits Plan Description. The City offers postemployment health insurance to retirement employees. The benefits are provided through a single employer defined benefit postemployment healthcare plan administered by the City. The Employee Benefit Plan (the Plan) provides medical and dental benefits to eligible early retirees and their spouses. KSA 12-5040 requires all local governmental entities in the state that provide a group health care plan to make participation available to all retirees and dependents until the retiree reaches the age of 65 years. No separate financial report is issued for the Plan. Funding Policy. The contribution requirements of plan participants and the City are established and amended by the City. The required contribution is based on projected pay-as-you-go financing requirements. In 2018, the City did not contribute to the plan. At December 31, 2018, the following employees were covered by the benefit terms: Active employees 441 32 473 Retirees and covered spouses Total The total OPEB liability of $3,487,302 was measured as of December 31, 2017 and was determined by an actuarial valuation as of that date. The total OPEB liability in the December 31, 2017 actuarial valuation was determined using the following assumptions and other inputs, applied to all periods in the measurement, unless otherwise specified: Valuation date Actuarial cost method Inflation Salary increases Discount rate Healthcare cost trend rates Retiree's share of benefit related costs December 31, 2017 Entry age normal as a level percentage of payroll 2.75% 3.50% 3.44% Medical & Pharmacy: 6.8% for 2017, decreasing 0.60% per year to an ultimate rate of 5.1 % for 2020 and through 2030 Dental: 5.00% to 2020 100% of the premium The discount rate was based on an index rate for 20-year, tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher. Mortality rates were based on the RP 2014 Mortality Tables, with age setbacks and age set forwards as well as other adjustments based on different membership groups. Future mortality improvements are anticipated using Scale MP-2017. 62 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) I. Other Postemployment Healthcare Benefits (Continued) Changes in the total OPEB liability are as follows: Balance 1/1/2018 Sen.1ce cost Interest Benefit paid Changes in assumptions Balance 12131/2018 $ 3,306,044 226,762 128,578 [265,000) 90,918 $ 3,487,302 The following presents the total OPEB liability of the City, as well as what the City's total OPEB liability would be if it were calculated using a discount rate that is one percentage point lower (2.44%) or one percentage point higher (4.44%) than the current discount rate: Total OPEB Liability $ 1% Decrease (2.44%) 3,767,121 $ Discount Rate (3.44%) 3,487,302 $ 1% increase (4.44%) 3,226,016 The following presents the total OPEB liability of the City, as well as what the City's total OPEB liability would be if it were calculated using healthcare cost trend rates that are one percentage point lower (5.8% decreasing to 3.1%) or one percentage point higher (7.8% decreasing to 5.1%) than the current healthcare cost trend rate: 1% Decrease Total OPEB Liability $ 3,084,533 $ Healthcare Cost Trend Rates 3,487,302 $ 1% increase 3,966,000 For the year ended December 31, 2018, the City recognized OPEB expense of $446,258. Deferred Outflows of Resources and Deferred Inflows of Resources. At December 31, 2018, the City reported deferred outflows related to other postemployment benefits from the following sources: Deferred outftows of resources Changes of assumptions $ 80,503 ------ Total $ 80,503 ====== Amounts reported as deferred outflows of resources will be recognized in OPEB expense as follows: Deferred Year ended [lnftows] Outftows June 30, Amount 2019 $ 10,414 2020 10,414 2021 10,414 2022 10,414 2023 10,414 2024+ 28,433 Total $ 80,503 63 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) J. Other Postemployment Benefits (KPERS) Plan Description. The City participates in a multiple-employer defined benefit other postemployment benefit (OPEB) plan (the Plan) which is administered by the Kansas Public Employees Retirement System (KPERS). The Plan provides long-term disability benefits and a life insurance benefit for disabled members to KPERS members, as provided by K.S.A. 74-04927. The Plan is administered through a trust held by KPERS that is funded to pay annual benefit payments. However, because the trust's assets are used to pay employee benefits other than OPEB, the trust does not meet the criteria in paragraph 4 of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. Accordingly, the Plan is considered to be administered on a pay-as-you-go basis. Benefits. Benefits are established by statute and may be amended by the KPERS Board of Trustees. The Plan provides long-term disability benefits equal to 60 percent (prior to January 1, 2006, 66 2/3 percent) of annual compensation, offset by other benefits. Members receiving long-term disability benefits also receive credit towards their KPERS retirement benefits and have their group life insurance coverage continued under the waiver of premium provision. The monthly long-term disability benefit is 60 percent of the member's monthly compensation, with a minimum of $100 and a maximum of $5,000. The monthly benefit is subject to reduction by deductible sources of income, which include Social Security primary disability or retirement benefits, workers compensation benefits, other disability benefits from any other sources by reason of employment, and earnings from any form of employment. If the disability begins before age 60, benefits are payable while the disability continues until the member's 65111 birthday or retirement date, whichever occurs first. If the disability begins after age 60, benefits are payable while the disability continues, for a period of five years or until the member retires, whichever occurs first. Benefit payments for disabilities caused or contributed to by substance abuse or non-biologically based mental illnesses are limited to the shorter of the term of the disability or 24 months per lifetime. The death benefit paid to beneficiaries of disabled members is 150% of the greater of 1) the member's annual rate of compensation at the time of disability, or 2) the members previous 12 months of compensation at the time of the last date on payroll. If the member has been disabled for five or more years, the annual compensation or salary rate at the time of death will be indexed using the consumer price index, less one percentage point, to compute the death benefit. If a member is diagnosed as terminally ill with a life expectancy of 12 months or less, the member may be eligible to receive up to 100% of the death benefit rather than having the benefit paid to the beneficiary. If a member retires or disability benefits end, the member may convert the group life insurance coverage to an individual insurance policy. Employees covered by benefit terms. At June 30, 2018, the valuation date, the following employees were covered by the benefit terms: Active employees Disabled members Total 282 4 286 Total OPEB Liability. The City and its component units reported a total KPERS OPEB liability of $566,938 reported as of December 31, 2018, was measured as of June 30, 2018, and was determined by an actuarial valuation as of December 31, 2017, which was rolled forward to June 30, 2018, using the following actuarial assumptions: 64 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) J. Other Postemployment Benefits (KPERS) (Continued) Valuation date December 31, 2017 Actuarial cost method Entry age normal Inflation 2. 75% Salary increases 3.00% Discount rate (based on 20 year municipal bond rate with an awrage rating of AA/Aa or better, obtained through the Bond Buyer General Obligation 20-Bond Municipal Index) 3.87% The discount rate was based on the bond buyer general obligation 20-bond municipal index. Mortality rates were based on the RP 2014 Mortality Tables, with age setbacks and age set forwards as well as other adjustments based on different membership groups. Future mortality improvements are anticipated using Scale MP-2016. The actuarial assumptions used in the December 31, 2017 valuation were based on the results of an actuarial experience study for the period of July 1, 2014 through June 30, 2016. Other demographic assumptions are set to be consistent with the actuarial assumptions reflected in the December 31, 2017 KPERS pension valuation. The changes in the total OPEB liability are as follows: Balance 1/1/2018 Service cost Interest Effect of economic/demographic gains or losses Changes in assumptions Benefit payments Balance 12131/2018 Total KPERS OPEB Liability 9!Y_ Housing Authority Airport Authority Total $ 439,254 $ 7,096 $ 12,054 $ 458,404 52,380 17,061 75,173 (6,574] [30,368] $ 546,926 $ 1,743 252 (205] 8,886 $ 2,825 533 (4,199] [87] 11, 126 56,948 17,846 70,974 (6,866] (30,368] $ 566,938 Sensitivity of the total KPERS OPEB liability to changes in the discount rate. The following presented the total KPERS OPEB liability of the City, as well as what the City's total KPERS OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.87%) or 1-percentage-point higher (4.87%) than the current discount rate: 1% Decrease Discount Rate 1% increase {2.87%) {3.87%) {4.87%) Total OPEB Liability -City $ 569,284 $ 546,926 $ 524,594 Total OPEB Liability -Housing Authority $ 9,144 $ 8,886 $ 8,588 Total OPEB Liability -Airport Authority $ 11,395 $ 11, 126 $ 10,800 65 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) J. Other Postemployment Benefits (KPERS) (Continued) Sensitivity of the total KPERS OPEB liability to changes in the healthcare cost trend rates. The following presented the total KPERS OPEB liability of the City calculated using the current healthcare cost trend rates as well as what the City's total KPERS OPEB liability would be if it were calculated using trend rates that are 1 percentage point lower or 1 percentage point higher than the current trend rates. The reader should note that healthcare trend rates do not affect the liabilities related to the long-term disability benefits sponsored by KPERS, but this exhibit is provided as it is a required disclosure under GASB 75. Healthcare Cost 1% Decrease Trend Rates 1% increase Total OPEB Liability -City $ 546,926 $ 546,926 $ 546,926 Total OPEB Liability -Housing Authority $ 8,886 $ 8,886 $ 8,886 Total OPEB Liability -Airport Authority $ 11, 126 $ 11, 126 $ 11, 126 For the year ended June 30, 2018, the City recognized OPEB expense of $75,561. Deferred Outflows of Resources and Deferred Inflows of Resources. At December 31, 2018, the City reported deferred outflows and inflows related to other postemployment benefits from the following sources: City Housing Authority Airport Authority Deferred Deferred Deferred Deferred Outflows of lnftows of lnftows of Inflows of Resources Resources Resources Resources Differences between expected and actual experience $ 67,415 $ -$ -$ 3,766 Changes of assumptions 13,271 184 198 Total $ 67,415 $ 13,271 $ 184 $ 3,964 $72,729 and $4,294 reported as deferred outflows of resources related to OPEB resulting from City and Airport Authority contributions subsequent to the measurement date, respectively, will be recognized as a reduction of the OPEB liability in the year ended December 31, 2019. Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in OPEB expense as follows: Year Ended Housing Airport June 30, City Authority Authority 2019 $ [6, 120) $ [21) $ [458) 2020 [6, 120) [21) [458) 2021 [6, 120) [21) [458) 2022 [6, 120) [21) [458] 2023 [6, 120) [21) [458] Thereafter [23,544) [79) [1,674) Total $[54, 144) $ [184) $ [3,964) K. Deficit Fund Balance The Police Grants Fund maintained a deficit fund balance of $[24,544] at December 31, 2018. 66 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) L. Tax Abatements In 2018, the City of Salina participated in real property tax abatements for five local companies. Property tax abatements are authorized under Kansas state statutes K.S.A. 12-1740 et seq. and K.S.A. 79-201a and subject to City policy. The City provides property tax abatements to encourage existing industry to expand, assist new business start-ups, recruit new companies from out-of-state or internationally, encourage high technology and research based businesses, encourage training and development of Salina area employees, and encourage location and retention of businesses which are good "corporate citizens" that will add to the quality of life in the community through leadership and support of civic and philanthropic organizations. Property tax abatements reduce ad valorem property taxes. The percentage of reduction ranges from 40.5% to 100%, but in all cases, the maximum duration is for ten years as per state statute. To receive an abatement, applicants must submit an application, which undergoes due diligence and analysis before being considered by the City Commission. If the abatement is authorized, the applicant must sign a performance agreement that specifies annual compliance measures. Each year, the applicant submits a renewal application, along with compliance information, which is reviewed by City staff for conformance with agreement provisions. If compliance is not met, appeals can be made to the City Commission to determine the amount of incentives, if any, to be received by the property owner. The City of Salina negotiates property tax abatements on an individual basis. Ad Valorem Property Tax Abatements Company Salina Vortex Corp (facility improvements) Great Plains Mfg (facility improvements) Veris Technologies (facility addition/improvements) Twin Oaks (facility addition/improvements) Salina Field House (facility) Total Abatement Start End 2015 2024 2014 2023 2015 2024 2015 2024 2017 2026 % 75% 100% 40.5% 55% 100% 2018 Tax Abated $ 15,432 4,808 1,525 1,838 58,518 $ 82,120 Tax Increment Financing (TIF). TIFs are an economic development tool established by the Kansas TIF Act (K.S.A. 12-1770 et seq.) and subject to City policy to aid in financing projects for substantial public benefit. Public benefits can include creating jobs or retaining existing employment, eliminating blight, strengthening the employment and economic base of the City, increasing property values and tax revenues, reducing poverty, creating economic stability, upgrading older neighborhoods, facilitating economic self-sufficiency, promoting projects that are of community wide importance, or implementing the economic development goals of the City. The program works by reimbursing a portion of the incremental increase in property taxes resulting from improvements and a portion of local sales tax generated within the district to the property owner. The base value, or what the property was valued at prior to improvements, is shielded from the rebate. To receive a TIF, applicants must submit a detailed, written proposal to the City, which will undergo due diligence and analysis before being considered by the City Commission. The City Commission then determines if it will commence the statutory process to create a redevelopment district. If the TIF district is authorized, the City and applicant will enter into an agreement that specifies performance, certification, and reimbursement requirements. City Staff will work with the property owner to certify eligible expenses and compliance with agreement provisions. Once the project begins to generate TIF revenues (sales tax and/or property tax), City staff works with the distributing agency and property owner to generate and track reimbursements. Because reimbursements are not paid until after improvements are put in place, agreement compliance is met, eligible expenses are certified, and sales and/or property tax distributions are made to the City, there are no provisions for recapturing taxes. The City of Salina negotiates TIFs on an individual basis. 67 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December31, 2018 Note 5. OTHER INFORMATION (Continued) L. Tax Abatements (Continued) TIF Project Plans District Lambertz Total Purpose Construction of 10. 79 acres of shopping center, including single and multi-tenant retail space, and related public and private infrastructure Base Year Expires 2007 2027 2018 Reimbursements Sales Tax Property Tax $ 212,624 $ 217,595 $ 212,624 $ 217,595 Community Improvement Districts (CID). CIDs are an economic development tool established by the Kansas CID Act {K.S.A. 12-6a26 et seq.) and subject to City policy to assist with the development of community improvements which can benefit a development and the public. In all CIDs, public improvements were financed initially by the developer and are reimbursed annually via a two percent (2%) transportation district sales tax on retail or taxable services occurring within the district. To establish a CID, the applicant first submits a CID petition which is signed by the owners of all of the land within the proposed district. The City Commission then considers the request to establish a CID. If the CID is authorized, the City and applicant will enter into an agreement that specifies performance, certification, and reimbursement requirements. City Staff will work with the property owner to certify eligible expenses and compliance with agreement provisions. Once the project begins to generate CID revenues, City Staff works with the distributing agency and property owner to make and track reimbursements. Because reimbursements are not paid until after improvements are put in place, agreement compliance is met, eligible expenses are certified, and CID sales tax distributions are made to the City, there are no provisions for recapturing taxes. The City of Salina negotiates CIDs on an individual basis. Name South 9th Street Total Community Improvement District (CID) Rate Start Expires Purpose Assist with improvements to hotel 2.00% 3/1/2016 12/31/2037 and conference center 2018 Eligible Reimbursement Amount* $ 260,274 $ 260,274 Neighborhood Revitalization Areas (NRA). NRAs are authorized under Kansas state statutes K.S.A. 12-117 and subject to City policy to spur investment and revitalization of properties which can benefit a neighborhood and the public. The program works by rebating a portion of the incremental increase in property taxes resulting from improvements back to the property owner. The base value, or what the property was valued at prior to improvements, is shielded from the rebate. Participation in the program and percentage of rebate and duration are determined separately by the City, County, and School District. The current City of Salina adopted plan is a 4 year plan running from 2014 -2018. It allows for a 10 year rebate and provides rebates from 25% to 100% depending on year in plan and type of improvement. To receive an NRA, taxpayers must submit an application, which undergoes due diligence and analysis before being approved by the City. If the NRA is approved, each year, the applicant must submit proof that property taxes have been paid in full. Because the rebate is not given until after improvements are put in place and property taxes paid, there are no provisions for recapturing taxes. The City of Salina approves NRAs on an individual basis. 68 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December31, 2018 Note 5. OTHER INFORMATION (Continued) L. Tax Abatements (Continued) Property/Business Name Seno Guzman James M. Monroe Christina Litwiller Jeremy Cessna William & Mary Warhurst Holly Fam Ar1eneCox Gloria Williams Michelle Rogan Samuel A Rock Jessica A. Ziegler Devin or Jessica Know Ravey Investments LLC Lamont Outland Michelle Bunch Jermaine and Tykea Polk Mary Marshall Angela Fishburn Kress Budding LLC Heritage at Hawthorne Partners, LLC Will & Mary Warhurst Donnie & Ramona Marrs TJTM, Inc. TroyValcd Michelle Malone Timothy & Linda Rickman Yvette Gelinas Char1es H Carroll Jr Trust Latisha Pierce Tanya Shiehzadeh Robert & Brenda Bums Property Partners LLC Ph1ll Hemmer AP Property Holdings, LLC Gregory Davis Micheal Money Tramesh Byrd Mark Martin L1v1ng Trust Philip C Krug Living Trust Jana Endsley Kanesha Samdton Mana E Padilla Kansas Property Investors, LLC, JK Webb Properties LLC Alan and Nancy Franzen Brandon Sears Santa Fe Properties, LLC Rusty A Leister Living Trust Hentage at Hawthorne Partners 11, LLC. Greg Huston & I erry A sweanngen Total Neighborhood Revitalization Act (NRA) Address 241 N. Front Street 620 W. Hamilton Street 148 N. 12th Street 219 N. Front Street 714 Park Street 204 Forest Avenue 200 Forest Avenue 903 N. 10th Street 240 S. Clark Street 1329 N. 4th Street 221 N. 2nd Street 207 N Penn 157 N. Seventh, 203 W. Ash, 205 W. Ash, 207 W. Ash & 209 W. Ash 1206 N. 7th Street 634 N. 8th Street 226 N. 2nd Street 937 N. 3rd Street 1219 N. 8th Street 134 S. Santa Fe Ave 715 N. 9th Street 809W. Ash 2035 E. Iron #300R 2035 E. Iron #213C/105R/302R/202R/205R/006R/301 RA/301 RB/001 R/002R/003R/004R/005R 853 Navaho 815 N 2nd Street 719 E. Ash 1115 N. 8th Street 156-158 S. Santa Fe 705 N. 2nd Street 703 N. 2nd Street 1205 N. 4th Street 116 & 118 N. Santa Fe (2nd Floor Loft Apartments) 2035 E. Iron Avenue, Unit #203R 201 E. Iron Avenue 156-158 N. 11th Street 2035 E. Iron Avenue, Unit #206R 701 N. 2nd Street 2035 E Iron #104R 2035 E Iron #304R 1321 N. 3rd Street 214 W. Grand Avenue 810 N. 5th Street 230 S. Broadway Blvd 120 S. Santa Fe Avenue 1413 Arapahoe 900 N. 12th Street 131 N. Santa Fe Avenue/128 S. Santa Fe Avenue 600 N. Santa Fe Avenue 715 N. 9th Street, Phase II 1025 w <.;rawtord Street 69 2018 il:R! Rebate Paid Res $ 257 Res 571 Res 348 Res 323 Res 258 Res 474 Res 476 Res 358 Res 478 Res 92 Res 478 Res 658 Com 2,492 Res 408 Res 419 Res 518 Res 399 Res 384 Com 2,592 Com 4,605 Res 822 Res 992 Res 18,739 Res 259 Res 46 Res 642 Res 621 Com 12,456 Res 1,158 Res 924 Res 807 Com 6,055 Res 15,392 Com 46, 159 Res 2,455 Res 4,217 Res 791 Com 1,730 Res 3,777 Res 815 Res 978 Res 1,332 Com 13,061 Com 6,074 Res 865 Res 182 Com 15,462 Com 11,334 Com 8,116 Res 3,867 $ 196,714 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) M. Subsequent Events On April 16, 2019, the City was issued two Kansas Public Water Supply Loans in the amounts of $4,250,000 and $32,000,000, respectively. For both loans, the City will make the first payment on August 1, 2020 and the last payment on February 1, 2040. Both loans have interest rates of 2.33%. On April 24, 2019, the City issued Series 2019-A general obligation internal improvement bonds in the amounts of $11,090,000. The bonds will be used to partially retire Temporary Note 2018-2 that matures November 1, 2019 and to finance various capital projects. The City will make the first payment on the bonds on April 1, 2020 and the last payment on October 1, 2039. The interest rate on the bonds ranges from 3.00% to4.00%. On April 24, 2019, the City issued Series 2019-1 temporary notes in the amounts of $6,085,000. The temporary notes will be used to finance various capital projects. The maturity date of the temporary notes is May 1, 2020 and the interest rate on the notes is 1.58%. 70 REQUIRED SUPPLEMENTARY INFORMATION CITY OF SALINA, KANSAS REQUIRED SUPPLEMENTARY INFORMATION OTHER POSTEMPLOYMENT BENEFITS Schedule of Changes in the City's Total OPEB Liability and Related Ratios Last Ten Fiscal Years* Total OPEB liability SeNice cost Interest Benefit paid Changes in assumptions Net change in total OPEB liability Total OPEB liability -beginning Total OPEB liability -ending Co\tered payroll Total OPEB liability as a percentage of co\tered-employee payroll Actuarially determined contribution Actual contribution Contributions as a percentage of co\tered payroll * -Data became available with the inception of GASB 75 during fiscal year 2018, therefore 10 years of data is unavailable. 71 2018 $ 226,762 128,578 [265,000] 90,918 181,258 3,306,044 $ 3,487,302 $ 24,740,225 14.10% $ 265,000 $ 265,000 1.07% CITY OF SALINA, KANSAS REQUIRED SUPPLEMENTARY INFORMATION (CONTINUED) OTHER POSTEMPLOYMENT BENEFITS -KPERS Schedule of Changes in the City's Total OPEB Liability and Related Ratios Last Ten Fiscal Years* Total OPEB liability Sen.1ce cost Interest Effect of economic/demographic gains or losses Effect of assumptions changes or inputs Benefit payments Net change in total OPEB liability Total OPEB liability -beginning Total OPEB liability -ending Cowred payroll Total OPEB liability as a percentage of cowred-employee payroll Actuarially determined contribution Actual contribution Contributions as a percentage of cowred payroll * -Data became available with the inception of GASB 75 during fiscal year 2018, therefore 10 years of data is unavailable. 72 2018 $ 52,380 17,061 75, 173 [6,574] [30,368] 107,672 439,254 $ 546,926 $ 13,652, 194 4.01% $ 109,466 $ 109,466 0.80% CITY OF SALINA, KANSAS REQUIRED SUPPLEMENTARY INFORMATION (CONTINUED) KPERS PENSION PLAN Schedule of the City's Proportionate Share of the Net Pension Liability Last Ten Fiscal Years* Pofice and Police and Police and Local Firemen Local Firemen Local Firemen 12131/15 lm1L1.§ 12131/16 12131/16 12131/17 12131/17 Local 12131/18 City's proportion of the net pension liability 0.764% 2.258% 0.761% 2.180% 0.811% 2.191% 0.790% City's proportionate share of the net pension liability s 10,027,679 s 16, 395, 794 $11,770,699 $20,251,512 s 11, 753,246 $20,546,882 City's cowred-employee payroll $12,931,197 $10,161,866 $13,251,236 $10,730,033 $13,548,056 $10,593,419 City's proportionate share of the net pension liability as a percentage of its coyered-empfoyee payroll 77.55% Plan fiduciary net position as a percentage of the total pension liability 71.98% ·.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. 161.35% 74.60% 88.83% 188.74% 86.75% 193.96% 68.55% 69.30% 72.15% 70.99% Schedule of the City's Contributions Contractually required contribution Contributions in relation to the contractually required contribution Contribution deficiency [excess] City's c01ered-employee payroll Contributions as a percentage of co1ered employee payroll Local 12/31/15 $ 1,256,217 1,256,217 $ $13,251 ,236 9.48% • -Data became a-.ailable with the inception of GASS 68 during fiscal year 2015, therefore 10 years of data is una-.ailable. Last Ten Fiscal Years* Police and Police and Firemen Local Firemen 12/31/15 12/31/16 12/31/16 $ 2,527,995 $ 1,243,711 $ 2,361 ,273 2,527,995 1,243,711 2,361 ,273 $, $ $ $10,730,033 $13,548,056 $10,593,419 23.56% 9.18% 22.29% 73 Police and Local Firemen 12/31/17 12/31/17 $ 1, 179,745 $ 1,986,933 1, 179,745 1,986,933 $ $ $13,944,989 $10,441,055 8.46% 19.03% $11,014,328 $13,944,989 78.98% 74.22% Local 12/31/18 $ 1,205,334 1,205,334 $ $14,366,294 8.39% Police and Firemen 12131/18 2.081% $20,019,473 $10.441,055 191.74% 71.53% Police and Firemen 12/31 /18 $ 2,181 ,617 2,181 ,617 $ $10,859,219 20.09% COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES CITY OF SALINA, KANSAS COMBINING STATEMENTS -NONMAJOR 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 2.34% of the .75 cent sales tax designated for economic Development purposes. Downtown TIF District #1 fund -To account for revenues and expenditures related to the Tax Increment Financing District that was formed as part of the Downtown Revitalization Project. South 91h CID fund -To account for incremental sales tax revenues received and disbursed back to the developer as part of the Community Improvement District formed in 2015. State Grants fund -To account for grant revenue and expenditures received from the State of Kansas. 911 communications fund -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. 74 CITY OF SALINA, KANSAS COMBINING STATEMENTS-NONMAJOR FUNDS NONMAJOR SPECIAL REVENUE FUNDS -CONTINUED Homeowners' assistance fund -To receive donations and/or other funds to assist low and moderate income persons in improving their homes. Private grants fund -To account for revenues and expenditures related to grants received from private entities with specific purposes. Animal shelter donations fund -To accumulate donations and account for expenses to benefit the animal shelter. 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. 75 CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2018 Total Total Non major Non major Non major Debt Special Revenue Permanent Service Funds Funds Fund ASSETS Cash and investments $ 2,885,257 $ 514,201 $ 633,653 Receivables Accounts 1,797 Total assets $ 2,887,054 $ 514,201 $ 633,653 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 149,019 $ -$ Due to other funds 24,544 Total liabilities 173,563 Fund balances: Restricted 345,041 Committed 2,067,239 514,201 Assigned 325,755 Unassigned [24,544] Total fund balances 2,713,491 514,201 Total liabilities and fund balances $ 2,887,054 $ 514,201 $ See independent auditor's report on the financial statements. 76 - 633,653 633,653 633,653 Total Non major Governmental Funds $ 4,033, 111 1,797 $ 4,034,908 $ 149,019 24,544 173,563 978,694 2,581,440 325,755 [24,544] 3,861,345 $ 4,034,908 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended December 31, 2018 Total Total Non major Nonmajor Non major Debt Special Revenue Permanent Service Funds Funds Fund REVENUES Taxes $ 713,282 $ -$ - Intergovernmental 807,067 475,503 Charges for services 469,969 9,260 Licenses and permits 2,500 Investment revenue 18, 110 3,283 14,797 Donations 237,660 Miscellaneous 55,048 Total revenues 2,303,636 12,543 490,300 EXPENDITURES Current Culture and recreation 1,760,504 Public safety 343,811 Public health and sanitation 442,359 Planning and development 641,823 Miscellaneous 35 Debt service Principal retirement 810,000 Interest and other charges 84,535 Capital outlay 569,901 Total expenditures 3,758,398 35 894,535 Excess [deficiency] of revenues over [under] expenditures [ 1,454' 762] 12,508 [404,235] Other financing sources [uses] Transfers in 1,354,914 Total other financing sources [uses] 1,354,914 Net change in fund balance [99,848] 12,508 [404,235] Fund balance -Beginning of year 2,813,339 501,693 1,037,888 Fund balance -End of year $ 2,713,491 $ 514,201 $ 633,653 See independent auditor's report on the financial statements. 77 Total Non major Governmental Funds $ 713,282 1,282,570 479,229 2,500 36,190 237,660 55,048 2,806,479 1,760,504 343,811 442,359 641,823 35 810,000 84,535 569,901 4,652,968 [1,846,489] 1,354,914 1,354,914 [491,575] 4,352,920 $ 3,861,345 ASSETS Cash and investments Receivables Accounts Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Due to other funds Total liabilities Fund balance: Restricted Committed Assigned Unassigned Total fund balance [deficit] Total liabilities and fund balances CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS For the Year Ended December 31, 2018 Business Bicentennial Improvement Neighborhood Center District Park $ 154,748 $ 24,964 $ 24,251 1,797 $ 154,748 $ 26,761 $ 24,251 $ 57,067 $ 18,803 $ - 57,067 18,803 7,958 97,681 24,251 97,681 7,958 24,251 $ 154,748 $ 26,761 $ 24,251 Special Parks & Special Recreation Alcohol $ 272,521 $ 234 $ 272,521 $ 234 $ -$ 122,447 234 150,074 272,521 234 $ 272,521 $ 234 Community Sales Tax Downtown Development Economic TIF Revolving Development District #1 $ 186,307 $ 902,997 $ 237,956 $ $ 186,307 $ 902,997 $ 237,956 $ $ - $ 5,512 $ - $ 5,512 186,307 897,485 237,956 186,307 897,485 237,956 $ 186,307 $ 902,997 $ 237,956 $ South 9th CID 46,548 $ 46,548 $ 45,301 $ 45,301 1,247 1,247 46,548 $ State 911 Grants Communications 8,013 $ 8,013 $ - $ 8,013 8,013 372,254 372,254 15,693 15,693 180,880 175,681 356,561 8,013 _$ ___ 37_2 ..... 2_5_4 See independent auditor's report on the financial statements. 78 ASSETS Cash and investments Receivables Accounts Total assets CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS (Continued) For the Year Ended December 31, 2018 Kenwood Special Cove Law Police Capital Enforcement Grants $ 108,313 $ 82 $ $ 108,313 $ 82 $ - - LIABILITIES AND FUND BALANCES Liabilities· Accounts payable $ 1,564 $ -$ - Due to other funds 24,544 Total liabilities 1,564 24,544 Fund balance: Restricted Committed 106,749 82 Assigned Unassigned [24,544] Total fund balance [deficit] 106,749 82 [24,544] Total liabilities and fund balances $ 108,313 $ 82 $ - Federal DARE Grants Donations $ 3,325 $ 26,616 $ 3,325 $ 26,616 $ -$ 1,298 1,298 3,325 25,318 3,325 25,318 $ 3,325 $ 26,616 Police War Federal Department Animal Memorial Arts & CARE Federal Homeowners' Private Shelter Maintenance Humanities Grant Forfeiture Funds Assistance Grants Donations Totals $ 31,959 $ 3,108 $ 26,141 $ 99 $ 14,215 $ 1,954 $ 438,652 $ 2,885,257 1,797 $ 31,959 $ 3,108 $ 26,141 $ 99 $ 14,215 $ 1,954 $ 438,652 $ 2,887,054 $ 1,542 $ 1,402 $ - $ - $ - $ - $ 837 $ 149,019 ___ 1~,5_4_2 1,402 30,417 1,706 30,417 1,706 $ 31,959 $ 3,108 26, 141 1,954 99 14,215 26,141 99 14,215 1,954 $ 26, 141 $ 99 $ 14,215 $ 1,954 See independent auditor's report on the financial statements. 79 24,544 __ 8""-'3_7 173,563 345,041 437,815 2,067,239 325,755 [24,544) 437,815 2,713,491 $ 438,652 $ 2,887,054 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS For the Year Ended December 31, 2018 Business Bicentennial Improvement Neighborhood Center District Park Revenues Taxes $ -$ -$ - Intergovernmental Charges for services 84,870 Licenses and permits 2,500 Investment revenue 1,105 145 152 Donations Miscellaneous Total Revenues 1,105 85,015 2,652 Expenditures Current Culture and recreation 762,968 Public safety Public health and sanitation Planning and development 93,225 Capital outlay Total Expenditures 762,968 93,225 Excess [deficiency] of revenues over [under] expenditures [761,863] [8,210] 2,652 Other financing sources [uses] Transfers in 801,564 Total other financing sources [uses] 801.564 Net change in fund balance 39,701 [8,210] 2,652 Fund balance, beginning of year 57,980 16,168 21,599 Fund balance, end of year $ 97,681 $ 7,958 $ 24,251 Special Parks & Special Recreation Alcohol $ -$ 191,676 191,676 1,533 70 193,209 191,746 191,676 44,909 44,909 191,676 148,300 70 148,300 70 124,221 164 $ 272,521 $ 234 Community Development $ Revolving - 1,195 1,195 1,195 1,195 185,112 Sales Tax Economic Development $ 347,167 5,800 352,967 457,585 457,585 [104,618] (104,618] 1,002,103 $ Downtown TIF District #1 134,867 1,458 136,325 136,325 136,325 101,631 $ South State 9th CID Grants 231,248 $ - 9,000 248 57 14,953 246,449 9,057 536,053 7,480 536,053 7,480 [289,604] ___ 1_._,5_7_7 (289,604] 290,851 1,577 6,436 911 Communications $ 332,898 2,246 335,144 343,811 343,811 [8,667] (8,667] 365,228 $ 186,307 $ 897,485 $ 237,956 $ 1,247 $ 8,013 $ 356,561 -~~-- See independent auditor's report on the financial statements. 80 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, 2018 Kenwood Special Cove Law Police Capital Enforcement Grants Revenues Taxes $ -$ -$ - Intergovernmental 6,817 Charges for services Licenses and permits Investment revenue 656 1 Donations Miscellaneous Total Revenues 656 6,817 Expenditures Current Culture and recreation Public safety Public health and sanitation Planning and development Capital outlay 56,420 3,507 Total Expenditures 56,420 3,507 Excess [deficiency] of revenues over [under] expenditures [55,764] 1 3,310 Other financing sources [uses] Transfers in 68,350 Total other financing sources [uses] 68.350 Net change in fund balance 12,586 1 3,310 Fund balance, beginning of year 94,163 81 [27,854] Federal Grants $ - 21 21 21 21 3,304 Fund balance, end of year $106,749 $ 82 $ ~24,544] $ 3,325 DARE Donations $ 132 19, 142 19,274 12,545 12,545 6,729 6,729 18,589 $ 25,318 War Memorial Maintenance $ - 206 206 1,855 1,855 [1,649] [1,649) 32,066 $ 30,417 Police Federal Department Arts & CARE Federal Homeowners' Private Humanities Grant Forfeiture Funds Assistance Grants $ $ -$ -$ -$ -$ - 385,099 127 168 1 86 13 21,848 2,689 [3,584] 407,074 168 1 2,775 [3,571] 995,681 995,681 [588,607] 168 1 2,775 [3,571] 485,000 485.000 [103,607) 168 1 2,775 [3,571) 105,313 25,973 98 11,440 5,525 1,706 $ 26,141 $ 99 $ 14,215 $ 1,954 See independent auditor's report on the financial statements. 81 Animal Shelter Donations Totals $ -$ 713,282 75,000 807,067 469,969 2,500 2,690 18, 110 237,660 237,660 55,048 315,350 2,303,636 1,760,504 343,811 250,683 442,359 641,823 569,901 250,683 3,758,398 64,667 [1,454,762] 1,354,914 1.354.914 64,667 [99,848) 373,148 2,813,339 $437,815 $ 2,713,491 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, 2018 Cemetery Mausoleum Tricentennial Endowment Endowment Commission Total $ 506,324 $ 2,042 .;:;..$ _ __;5:..!.,,8~3'-"-5 $ 514,201 $ 506,324 $ 2,042 .;;..$ _ ____;5;;.:.,8;;.;;3;.;.5 $ 514,201 506,324 2,042 5,835 514,201 $ 506,324 $ 2,042 .... $ __ 5 ..... 8_3_5 $ 514,201 See independent auditor's report on the financial statements. 82 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR PERMANENT FUNDS For the Year Ended December 31, 2018 Cemetery Mausoleum Tricentennial Endowment Endowment Commission Revenues Charges for services $ 9,260 $ -$ Investment revenue 3,233 13 Total revenues 12,493 13 Expenditures Miscellaneous 35 Total expenditures 35 Net change in fund balance 12,458 13 Fund balances -beginning of year 493,866 2,029 Fund balances -end of year $ 506,324 $ 2,042 $ See independent auditor's report on the financial statements. 83 - 37 37 37 5,798 5,835 Total $ 9,260 3,283 12,543 35 35 12,508 501,693 $ 514,201 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, 2018 Budgeted Amounts Actual Original Revenues Investment revenue $ 1,105 $ -$ Total revenues 1,105 Expenditures Culture and recreation 762,968 762,332 Total expenditures 762,968 762,332 Excess [deficiency] of revenues over [under] expenditures [761,863] [762,332] Other financing sources [uses] Transfers in 801,564 700,000 Total other financing sources [uses] 801,564 700,000 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 39,701 [62,332] Unreserved fund balance, January 1 57,980 74,481 Unreserved fund balance/GAAP fund balance December 31 $ 97,681 $ 12, 149 $ See independent auditor's report on the financial statements. 84 Final - 762,332 762,332 [762,332] 700,000 700,000 [62,332] 74,481 12,149 Variance with Final Budget Positive [Negative] $ 1,105 1,105 [636] [636] 469 101,564 101,564 102,033 [16,501] $ 85,532 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, 2018 Budgeted Amounts Actual Original Revenues Charges for services $ 85,937 $ 89,175 $ Investment revenue 145 15 Total revenues 86,082 89,190 Expenditures Planning and development 93,225 89,190 Total expenditures 93,225 89,190 Excess [deficiency] of revenues over [under] expenditures [7, 143) Unreserved fund balance, January 1 13,304 18, 182 Unreserved fund balance, December 31 6,161 $ 18, 182 $ Reconciliation to GAAP Accounts receivable 1,797 GAAP Fund Balance, December 31 $ 7,958 See independent auditor's report on the financial statements. 85 Final 89,175 15 89,190 89,190 89,190 18, 182 18,182 Variance with Final Budget Positive [Negative] $ (3,238) 130 [3,108] [4,035] [4,035] [7, 143] [4,878] $ [12,021] CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (NON -GAAP BASIS) NEIGHBORHOOD PARK FUND For the Year Ended December 31, 2018 Budgeted Amounts Actual Original Revenues Licenses and permits $ 2,500 $ 10,000 $ Investment revenue 152 500 Total revenues 2,652 10,500 Expenditures Capital outlay Total expenditures Excess [deficiency] of revenues over [under] expenditures 2,652 10,500 Unreserved fund balance, January 1 21,599 4,873 Unreserved fund balance/GAAP fund balance December 31 $ 24,251 $ 15,373 $ See independent auditor's report on the financial statements. 86 Final 10,000 500 10,500 10,500 4,873 15,373 Variance with Final Budget Positive [Negative] $ [7,500] [348) [7,848] [7,848] 16,726 $ 8,878 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, 2018 Budgeted Amounts Actual Original Revenues Intergovernmental $ 191,676 $ 189,192 $ Investment revenue 1,533 1,000 Total revenues 193,209 190, 192 Expenditures Capital outlay 194,983 194,000 Total expenditures 194,983 194,000 Excess [deficiency] of revenues over [under] expenditures [1,774] [3,808] Unreserved fund balance, January 1 124,221 115,137 Unreserved fund balance, December 31 122,447 $ 111,329 $ Reconciliation to GAAP Current year encumbrances 150,074 GAAP Fund Balance, December 31 $ 272,521 See independent auditor's report on the financial statements. 87 Final 189,192 1,000 190,192 194,000 194,000 [3,808] 115,137 111,329 Variance with Final Budget Positive [Negative] $ 2,484 533 3,017 [983] [983] 2,034 9,084 $ 11,118 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, 2018 Budgeted Amounts Actual Original Revenues Intergovernmental $ 191,676 $ 216,086 $ Investment revenue 70 Total revenues 191,746 216,086 Expenditures Public health and sanitation 191,676 216,086 Total expenditures 191,676 216,086 Excess [deficiency] of revenues over [under] expenditures 70 Unreserved fund balance, January 1 164 34,899 Unreserved fund balance/GAAP fund balance December 31 $ 234 $ 34,899 $ See independent auditor's report on the financial statements. 88 Final 216,086 216,086 216,086 216,086 34,899 34,899 Variance with Final Budget Positive [Negative] $ [24,410] 70 [24,340] 24,410 24,410 70 [34,735] $ ~34,665) 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, 2018 Budgeted Amounts Actual Original Final $ 347,167 $ 332,818 $ 332,818 5,800 2,000 2,000 352,967 334,818 334,818 457,585 458,840 458,840 457,585 458,840 458,840 Excess [deficiency] of revenues over [under] expenditures [104,618] [124,022] Unreserved fund balance, January 1 1,002,103 667,262 Unreserved fund balance/GAAP fund balance December 31 $ 897,485 $ 543,240 $ See independent auditor's report on the financial statements. 89 [124,022] 667,262 543,240 Variance with Final Budget Positive [Negative] $ 14,349 3,800 18,149 1,255 1,255 19,404 334,841 $ 354,245 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, 2018 Budgeted Amounts Actual Original Revenues Charges for services $ 385,099 $ 347,200 $ Investment revenue 127 2,000 Miscellaneous 21,848 133,650 Total revenues 407,074 482,850 Expenditures Culture and recreation 995,681 1,048,635 Total expenditures 995,681 1,048,635 Excess (deficiency] of revenues over [under] expenditures [588,607] [565,785] Other financing sources [uses] Transfers in 485,000 525,000 Total other financing sources [uses] 485,000 525,000 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] (103,607] (40,785] Unreserved fund balance, January 1 105,313 190,338 Unreserved fund balance/GAAP fund balance December 31 $ 1,706 $ 149,553 $ See independent auditor's report on the financial statements. 90 Final 347,200 2,000 133,650 482,850 1,048,635 1,048,635 [565,785] 525,000 525,000 (40,785] 190,338 149,553 Variance with Final Budget Positive [Negative] $ 37,899 (1,873] (111,802] (75,776] 52,954 52,954 (22,822] [40,000] (40,000] (62,822] (85,025] $ [147,847) 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, 2018 Budgeted Amounts Actual Original Revenues Taxes Real estate taxes $ 2,394, 142 $ 2,674,498 Delinquent taxes 62,732 55,000 Motor vehicle taxes 305,481 296,922 Special assessments 1,545,758 1,620,000 Investment revenue 21,230 Miscellaneous 58,932 Total revenues 4,329,343 4,705,352 Expenditures Debt Service Principal retirement 5,252,865 5,057,920 Interest and other charges 1,702,255 2,086,687 Total expenditures 6,955,120 7,144,607 Excess [deficiency] of revenues over [under] expenditures [2,625,777] [2,439,255] Other financing sources [uses] Transfers in 2,270,782 2,000,000 Total other financing sources [uses] 2,270,782 2,000,000 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [354,995] [439,255] Unreserved fund balance, January 1 1,462,554 814,255 Prior period adjustment 694,409 Unreserved fund balance, January 1, restated 2,156,963 814,255 Unreserved fund balance, December 31 1,801,968 $ 375,000 Reconciliation to GAAP Taxes receivable 2,674,390 Deferred revenue [2,625,000] GAAP Fund Balance, December 31 $ 1,851,358 See independent auditor's report on the financial statements. 91 Final $ 2,744,775 62,732 305,480 1,546,859 4,659,846 5,494,365 1,688,616 7,182,981 [2,523, 135] 2,000,000 2,000,000 [523,135] 1,195,141 1,195,141 $ 672,006 Variance with Final Budget Positive [Negative] $ [350,633] 1 [1, 101] 21,230 [330,503] 241,500 [13,639] 227,861 [102,642] 270,782 270,782 168,140 267,413 694,409 961,822 $ 1,129,962 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, 2018 Budgeted Amounts Actual Original Revenues Charges for services $ 3, 101,872 $ 2,844,000 Investment revenue 31,711 4,000 Miscellaneous 18,894 49,310 Total revenues 3,152,477 2,897,310 Expenditures Public works 1,893,824 1,698,164 Total expenditures 1,893,824 1,698,164 Excess [deficiency] of revenues over [under] expenditures 1,258,653 1, 199, 146 Other financing sources [uses] Transfers [out] [690,000] (1,175,000] Total other financing sources [uses] (690,000] [1,175,000] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 568,653 24,146 Unreserved fund balances, January 1 3,880,930 3,107,520 Prior period adjustment (694,409] Prior year cancelled encumbrances 249,242 Unreserved fund balances, December 31 $ 4,004,416 $ 3,131,666 See independent auditor's report on the financial statements. 92 Final $ 2,844,000 4,000 49,310 2,897,310 1,698,164 1,698,164 1, 199, 146 [1,175,000] (1,175,000] 24,146 3,107,520 $ 3,131,666 Variance with Final Budget Positive [Negative] $ 257,872 27,711 [30,416] 255,167 [195,660] [195,660] 59,507 485,000 485,000 544,507 773,410 [694,409] 249,242 $ 872,750 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, 2018 Budgeted Amounts Actual Original Revenues Charges for services $ 20,205,846 $ 20,469,600 Investment revenue 97,347 25,000 Miscellaneous 5,101 10,000 Total revenues 20,308,294 20,504,600 Expenditures Public works 10,965,681 14,491,199 Total expenditures 10,965,681 14,491, 199 Excess [deficiency] of revenues over [under] expenditures 9,342,613 6,013,401 Other financing sources [uses] Transfers in 122,200 Transfers [out] [6,266,000) [6,850,000] Total other financing sources [uses] [6,266,000) [6,727,800] Excess [deficiency] of revenues and other sources over [under) expenditures and other [uses] 3,076,613 [714,399] Unreserved fund balances, January 1 11,301,601 12,691,809 Prior period adjustment [2, 116,375) Pnor year cancelled encumbrances 21,352 Unreserved fund balances, December 31 $ 12,283,191 $ 11,977,410 See independent auditor's report on the financial statements. 93 Final $ 20,469,600 25,000 10,000 20,504,600 14,491,199 14,491, 199 6,013,401 122,200 [6,850,000] [6,727,800] [714,399) 12,691,809 $ 11,977,410 Variance with Final Budget Positive [Negative] $ [263,754] 72,347 [4,899] [196,306] 3,525,518 3,525,518 3,329,212 [122,200) 584,000 461,800 3,791,012 [1,390,208) [2, 116,375) 21,352 $ 305,781 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, 2018 Budgeted Amounts Actual Original Final Revenues Charges for services $ 2,941,279 $ 3,048,426 $ 3,048,426 Investment revenue 10,882 2,500 2,500 Total revenues 2,952,161 3,050,926 3,050,926 Expenditures Public works 2,542,409 2,472,097 2,472,097 Total expenditures 2,542,409 2,472,097 2,472,097 Excess [deficiency] of revenues over [under) expenditures 409,752 578,829 578,829 Other financing sources [uses] Transfers [out] [491,500) [411,500) [411,500] Total other financing sources [uses] [491,500] [411,500] [411,500] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [81,748] 167,329 167,329 Unreserved fund balance, January 1 1,544,357 1,191,230 1, 191,230 Prior year cancelled encumbrances 5,525 Unreserved fund balances, December 31 $ 1,468,134 $ 1,358,559 $ 1,358,559 See independent auditor's report on the financial statements. 94 Variance with Final Budget Positive [Negative] $ [107, 147] 8,382 [98,765) [70,312) [70,312) [169,077) [80,000) [80,000] [249,077] 353,127 5,525 $ 109,575 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, 2018 Budgeted Amounts Actual Original Revenues Charges for services $ 755,270 $ 825,900 $ Investment revenue 545 Miscellaneous 129,204 50,000 Total revenues 885,019 875,900 Expenditures Recreation 950,840 838,456 Total expenditures 950,840 838,456 Excess [deficiency] of revenues over [under] expenditures [65,821] 37,444 Other financing sources [uses] Transfers [out] [25,000] Total other financing sources [uses] [25,000) Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [65,821] 12,444 Unreserved fund balance, January 1 116,032 133, 136 Unreserved fund balances, December 31 $ 50,211 $ 145,580 $ See independent auditor's report on the financial statements. 95 Final 761,000 79,840 840,840 954,700 954,700 [113,860] [113,860] 116,032 2,172 Variance with Final Budget Positive [Negative] $ [5,730] 545 49,364 44,179 3,860 3,860 48,039 48,039 $ 48,039 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, 2018 Budgeted Amounts Actual Original Revenues Charges for services $ 408,974 $ 250,000 $ Investment revenue 6,315 2,500 Miscellaneous 6,854 Total revenues 422,143 252,500 Expenditures General government 254,669 281,306 Total expenditures 254,669 281,306 Excess [deficiency] of revenues over [under] expenditures 167,474 [28,806] Unreserved fund balance, January 1 919,375 862,316 Unreserved fund balances, December 31 $ 1,086,849 $ 833,510 $ See independent auditor's report on the financial statements. 96 Final 250,000 2,500 252,500 281,306 281,306 [28,806] 862,316 833,510 Variance with Final Budget Positive [Negative] $ 158,974 3,815 6,854 169,643 26,637 26,637 196,280 57,059 $ 253,339 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, 2018 Budgeted Amounts Actual Original Final Revenues Charges for services $ 7,010,936 $ 7,044,200 $ 7,044,200 Investment revenue 18,520 5,000 5,000 Miscellaneous 60,258 5,000 5,000 Total revenues 7,089,714 7,054,200 7,054,200 Expenditures General government 6,028,279 6,402,432 6,402,432 Total expenditures 6,028,279 6,402,432 6,402,432 Excess [deficiency] of revenues over [under] expenditures 1,061,435 651,768 651,768 Unreserved fund balance, January 1 2,050,972 3,086,108 3,086,108 Unreserved fund balances, December 31 $ 3,112,407 $ 3,737,876 $ 3,737,876 See independent auditor's report on the financial statements. 97 Variance with Final Budget Positive [Negative] $ [33,264] 13,520 55,258 35,514 374,153 374,153 409,667 [1,035,136] $ [625,469J Revenues 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, 2018 Budgeted Amounts Original Final Variance with Final Budget Positive [Negative] Charges for services Investment revenue Miscellaneous $ 1,327,390 $ 668 6,146 - $ 40 17,500 - $ 1,327,390 Total revenues Expenditures General government Total expenditures Excess [deficiency) of revenues over [under] expenditures Other financing sources [uses] Transfers in Total other financing sources [uses] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses) Unreserved fund balance, January 1 Unreserved fund balance, December 31 1,334,204 1,491,671 1,491,671 [157,467] 190,000 190,000 32,533 21,595 $ 54,128 $ 40 628 __ ...;..;17'-..1..,5;:;..;0;..;;..0 [11,354] 17,540 17,540 1,316,664 1,435,015 1,435,015 [56,656] 1,435,015 1,435,015 [56,656] [1,417,475] [1,417,475) 1,260,008 1,416,850 1,416,850 [1,226,850] 1,416,850 1,416,850 [1,226,850] [625) [625) 33,158 734 734 20,861 109 $ 109 .;...$ _ __;,..54.;..:.,0;...1;..;.9 See independent auditor's report on the financial statements. 98 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. 99 CITY OF SALINA, KANSAS COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS December 31, 2018 Workers' Compensation Health ASSETS Reserve Insurance Current assets: Cash and investments $ 1,087,616 $ 3,112,407 Inventory and prepaid supplies Total current assets 1,087,616 3,112,407 Capital assets: Capital assets Less: accumulated depreciation Total capital assets Total assets 1,087,616 3,112,407 Deferred outflows of resources: KPERS OPEB deferred outflows of resources Pension deferred outflows of resources Total deferred outflows of resources Total assets and deferred outflows of resources $ 1,087,616 $ 3, 112,407 Liabilities: Current liabilities (payable from current assets): Accounts payable $ 767 $ - Current portion of compensated absences payable Current portion of accrued claims payable 183,514 380,980 Total current liabilities (payable from current assets) 184,281 380,980 Noncurrent liabilities: Compensated absences payable Accrued claims payable 55,264 Net KPERS OPEB obligation Net pension liability Total noncurrent liabilities 55,264 Total liabilities 239,545 380,980 Deferred inflows of resources KPERS OPEB deferred inflows of resources Pension deferred inflows of resources Total deferred inflows of resources Total liabilities and deferred inflows of resources $ 239,545 $ 380,980 Net Position Invested in capital assets, net of related debt $ -$ - Unrestricted 848,071 2,731,427 Total net position $ 848,071 $2,731,427 See independent auditor's report on the financial statements. 100 Total Internal Central Service Garage Funds $ 95,062 $4,295,085 111,486 111,486 206,548 4,406,571 168,234 168,234 152,573 152,573 15,661 15,661 222,209 4,422,232 1,401 1,401 25,285 25,285 26,686 26,686 $248,895 $4,448,918 $ 40,934 $ 41,701 33,989 33,989 564,494 74,923 640,184 25,399 25,399 55,264 5,469 5,469 154,549 154,549 185,417 240,681 260,340 880,865 133 133 11,300 11,300 11,433 11,433 $ 271,773 $ 892,298 $ 15,661 $ 15,661 [38,539] 3,540,959 $ [22,878] $ 3,556,620 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION INTERNAL SERVICE FUND For the Year Ended December 31, 2018 Workers' Compensation Health Central Reserve Insurance Garage Operating revenues Charges for services $ 408,974 $ 7,010,936 $ 1,327,390 Miscellaneous 6,855 60,258 6,145 Total operating revenues 415,829 7,071,194 1,333,535 Operating expenses General government 271,535 6,013,569 1,545,842 Depreciation 7,699 Total operating expenses 271,535 6,013,569 1,553,541 Operating income [loss] 144,294 1,057,625 [220,006] Nonoperating revenues [expenses] Investment revenue 6,315 18,520 668 Total other operating revenues [expenses] 6,315 18,520 668 Income [loss] before transfers 150,609 1,076,145 [219,338] Transfers from [to] other funds Transfers in 190,000 Total transfers 190,000 Change in net position 150,609 1,076,145 [29,338] Net position, January 1 697,462 1,655,282 10,853 Prior period adjustment [4,393] Net position, January 1, restated 697,462 1,655,282 6,460 Net position, December 31 $ 848,071 $ 2,731,427 $ ~22,878] See independent auditor's report on the financial statements. 101 Total Internal Service Funds $ 8,747,300 73,258 8,820,558 7,830,946 7,699 7,838,645 981,913 25,503 25,503 1,007,416 190,000 190,000 1, 197,416 2,363,597 [4,393] 2,359,204 $ 3,556,620 CITY OF SALINA, KANSAS COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the Year Ended December 31, 2018 Workers' Compensation Health Reserve Insurance Cash flows from operating activities Cash received from customers and users $ 425,839 $6,996,225 Cash paid to suppliers of goods or services [270,848] [6,047,211] Cash paid to employees Other operating receipts 6,855 60,258 Net cash provided by [used in] operating activities 161,846 1,009,272 Cash flows from investing activities Interest received 6,315 18,520 Cash flows from noncapital financing activities Transfers in Net cash provided by [used in] noncapital financing activities Net increase [decrease] in cash and cash equivalents 168,161 1,027,792 Cash and cash equivalents, January 1 919,455 2,084,615 Cash and cash equivalents, December 31 $ 1,087,616 $ 3, 112,407 See independent auditor's report on the financial statements. 102 Total Internal Central Service Garage Funds $1,327,391 $ 8,749,455 [1, 177,372] [7,495,431] [297,532] [297,532] 6,144 73,257 [141,369] 1,029,749 668 25,503 190,000 190,000 190,000 190,000 49,299 1,245,252 45,763 3,049,833 $ 95,062 $4,295,085 CITY OF SALINA, KANSAS COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS (Continued) For the Year Ended December 31, 2018 Reconciliation of operating [loss] income to net cash provided by [used in] operating activities Workers' Compensation Health Reserve Insurance Central Garage Total Internal Service Funds Operating income [loss] $ 144,294 $1,057,625 $ (220,006] $ 981,913 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 KPERS OPEB liability Increase [decrease] in claims payable Increase [decrease] in deferred inflows 687 (33,642] 16,865 [14,711] 7,699 53,639 4,554 16,766 5,818 [11,010] 1,076 95 7,699 53,639 4,554 (16,189] 5,818 (11,010] 1,076 2,154 95 Net cash provided by [used in] operating activities $ 161,846 $1,009,272 $ (141,369] $1,029,749 See independent auditor's report on the financial statements. 103 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. DTF federal forfeiture fund -To account for revenues and expenditures related to the sale of assets acquired during drug enforcement activities as they related to federal cases. Expenses are limited to equipment and training for the Drug Task Force. DTF local fund -To account for revenues and expenditures related to the sale of assets acquired during drug enforcement activities as they relate to local cases. Expenses are limited to equipment and training for the Drug Task Force. DTF reserve fund -To account for revenues and expenditures related to State of Kansas Drug Tax Distributions. Expenses are limited to equipment and training for the Drug Task Force. Beechcraft remediation settlement fund -To account for revenues and expenditures related to the bankruptcy of Beechcraft and the former Schilling Airforce Base remediation case. Bail bond escrow fund -To account for funds being held in escrow for bonds issued by Municipal Court. 104 Special Fire Assessment Insurance Escrow Proceeds ASSETS Cash and investments $ 108 806 $18,967 Total assets $ 108,806 $ 18 967 LIABILITIES Accounts payable 108,806 $ 18,967 Total hab1l1t1es 108,806 $ 18,967 CITY OF SALINA, KANSAS COMBINING BALANCE SHEET AGENCY FUNDS December 31, 2018 Court Police Sec!Jon DTF Payroll Bond and lnvesbgat1on 125 Federal ~ ~ Account C1t1zensh1p Plan Forfeiture $[339,790] $ 18,811 L.2.fil $ 30,797 $215,856 _$ __ $ [339,790] $ 18,811 L.2.fil $ 30,797 $215,856 _s __ $ [339,790] $ 18,811 L.2.fil $ 30,797 $215,856 _$ __ $ [339,790] $ 18,811 ~ $ 30,797 $215,856 _s __ See independent aud1to~s report on the financial statements. 105 Beechcraft Bail DTF DTF Remedrt1on Bond Local Reserve Settlement Escrow Totals $41,241 $33,475 $ 179,386 $1135 $312,065 $41,241 $33,475 $ 179,386 $1,135 $312,065 $41241 $33,475 $ 179,386 $1,135 $312,065 $41,241 $ 33,475 $ 179 386 $1,135 $312,065 CITY OF SALINA, KANSAS COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS For the Year Ended December 31, 2018 Balance December 31, 2017 Additions Deductions Cash and investments Special Assessment Escrow $ 90,849 $ 17,957 $ Fire Insurance Proceeds 18,869 47,855 Payroll Clearing [365,473] 25,683 Court Bond and Restitution 23,818 Police Investigation Account 3,379 2 Citizenship Trust 94,580 41,498 Section 125 Plan Fund 291,014 353,619 DTF Federal Forfeiture 3,696 DTF Local 47,216 23,527 DTF Reserve 26,299 13,102 Beechcraft Remediation Settlement 154,181 25,205 Bail Bond Escrow 1,127 8 Total Assets $ 389,555 $ 548,456 $ Accounts Payable Special Assessment Escrow $ 90,849 $ 17,957 $ Fire Insurance Proceeds 18,869 47,855 Payroll Clearing [365,473] 25,683 Court Bond and Restitution 23,818 Police Investigation Account 3,379 2 Citizenship Trust 94,580 41,498 Section 125 Plan Fund 291,014 353,619 DTF Federal Forfeiture 3,696 DTF Local 47,216 23,527 DTF Reserve 26,299 13,102 Beechcraft Remediation Settlement 154,181 25,205 Bail Bond Escrow 1,127 8 Total liabilities $ 389,555 $ 548,456 $ See independent auditor's report on the financial statements. 106 - 47,757 5,007 105,281 428,777 3,696 29,502 5,926 625,946 - 47,757 5,007 105,281 428,777 3,696 29,502 5,926 625,946 Balance December 31, 2018 $ 108,806 18,967 [339,790] 18,811 3,381 30,797 215,856 41,241 33,475 179,386 1,135 $ 312,065 $ 108,806 18,967 [339,790] 18,811 3,381 30,797 215,856 41,241 33,475 179,386 1,135 $ 312,065 STATISTICAL SECTION Schedule 1 City of Salina, Kansas Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) (in OOO's) Fiscal Year 2009 2010 2011 2012 2013 ~ 2015 2016 2017 ~ Amount % Amount % Amount % Amount % Amount % Amount % Amount % Amount % Amount % Amount % Governmental activities Net investment in capital assets $101,974 85% $113,001 96% $109,289 93% $112,929 94% $116,585 90% $ 115,589 90% $ 130,401 122% $124,635 108% $129,921 105% $ 144,846 109% Restricted 1,174 1% 988 1% 1,712 1% 1,082 1% 1,210 1% 876 1% 1,224 1% 1,738 1% 2,012 2% 2,366 2% Unrestricted 16 706 14% ~ 3% ~ 5% ---221.1. 5% ~ 9% ~ 9% ~ -23% ~ -9% ~ -7% ~ -10% Total governmental activities net position $119,854 100% $117 797 100% $117 334 100% $119,522 100% $129,423 100% $ 127,878 100% $ 106,703 100% $115,868 100% $123,701 100% $ 133,453 100% Business-type activities Net investment in capital assets $ 48,234 79% $ 48,078 75% $ 44,227 63% $ 50,857 69% $ 57.103 75% $ 61.721 75% $ 68,107 80% $ 62,427 71% $ 63,316 71% $ 62,368 69% Restricted 1,553 3% 1,553 2% 1,553 2% 1,553 2% 1,553 2% 1,512 2% 1,512 2% 1,512 2% 1,512 2% 1,512 2% Unrestricted ~ 19% ~ 22% 24,528 35% 21,450 29% ~ 23% ~ 24% ____!M1Q 18% 23,621 27% 24,255 27% 26,503 29% Total business-type activities net position $ 61,269 100% $ 63,937 100% $ 70,308 100% $ 73,860 100% $ 76,450 100% $ 82,778 100% $ 85,229 100% $ 87,560 100% $ 89,083 100% $ 90,383 100% Primary government Net investment in capital assets $150,208 83% $161,080 89% $153,516 82% $163,786 85% $173,688 84% $ 177,311 84% $ 198,508 103% $187,062 92% $193,237 91% $ 207,213 93% Restricted 2,727 2% 2,541 1% 3,216 2% 2,635 1% 2,763 1% 2,388 1% 2,736 1% 3,250 2% 3,524 2% 3,878 2% Unrestricted 28,188 16% ~ 10% 30,867 16% 26,961 14% 29,422 14% 30,959 15% ~ -5% ~ 6% 16,023 8% ~ 6% Total primary government net position $181,123 100% $181,736 100% $187,599 100% $193,382 100% $205,873 100% $ 210,658 100% $ 191,932 100% $ 203,428 100% $212784 100% $ 223,835 100% Source: City of Salina Comprehensive Annual Financial Reports, 2009 -2018 107 Schedule 2 City of Salina, Kansas Changes 1n Net Posrt1on Last Ten Fiscal Years (a=ual baS1s of accounting) (In OOO's) Fiscal Year ~ 2Q1Q W1 '1Q1l ~ 2Qll Zill. 2Q1.§ 2017 2018 Expenses Governmental activ1t1es General government 14.~ 10,845 $ 13,614 $ 11,278 10,978 $ 12,175 $ 10,743 $ 9,188 $ 9,780 $ 12,013 Public safety 16,539 18,592 18,579 19,066 19,649 20,208 21,084 22,232 23,120 23,892 Public works 9,781 9,782 9,858 10,957 11,064 11,401 9,049 9,773 10,345 10,458 Public health and sanrtabon 1,390 1,365 1,368 1,383 1,369 347 995 1,095 1,126 1,256 Culture and recreation 5,397 8,572 6,693 5,338 4,809 5,156 6,517 6,612 6,880 7,040 Planning and development 3,375 3,716 3,450 3,362 3,399 3,236 1,915 2,047 1,835 2,369 Interest on long term debt ~ ~ ---1...lli. ~ ---1..lli ---1.ZZi ___bill ---1.ill. ---1J..1L Total governmental act1v1t1es expenses ~ 55,128 55,212 53298 53,221 54340 52,077 53 918 ~ 59145 Business-type ac1Jv11ies Solid waste disposal 2,287 3,010 2,945 2,067 3,532 1,867 1,766 2,335 2,365 2,382 Water and sewer 12,995 14,050 13,597 14,897 15,418 14,938 11,712 14,807 15,650 15,190 Sanitation 2,224 2,261 2,261 2.«1 2,237 2,399 1,909 2,043 2,178 2,419 Golf course __fil ~ ~ ____fil ~ ___lli ______fil ~ ~ ~ Total business-type act1v1t1es expenses ~ 20 138 19628 20,128 ~ 20,041 16,208 ~ 21 045 20917 Total pnmary government expenses $ 69,549 $ 75,266 $ 74,840 $ 73,426 $ 75,176 $ 74,381 $ 68,285 $ 73 895 $ 75,856 $ 80,062 Program Revenues Governmental ac1Jvrt1es Charges for services General government $ 4,599 $ 5,143 $ 6,106 $ 6,328 5,548 $ 5,662 $ 3,151 $ 3,134 3,470 $ 3,569 Public safety 2,913 3,969 3,766 4,290 4,656 4,222 4,600 4,891 4,601 4,815 Public works 164 198 262 306 277 255 193 238 348 285 Public health and sanitation 42 37 43 46 34 46 46 44 50 47 Culture and recreation 1,936 2,817 3,140 1,728 1,466 1,533 1,501 1,638 1,541 1,545 Planning and development 267 144 153 158 161 167 73 140 91 150 Operabng grants and contnbulions 3,163 3,415 2,907 4,495 4,200 4,015 3,394 4,332 4,541 4,299 Capital grants and contnbut1ons _____ill ~ Total governmental act1V1bes program revenues 13084 15 723 16,377 17,351 16,342 15,900 12,958 ~ 14642 19 345 Business-type act1v1t1es Charges for services Sohd waste disposal 2,903 2,853 2,904 3,137 3,138 3,024 2,519 2,795 3,165 3,097 Water and sewer 14,980 16,520 17,904 19,099 17,938 18,742 19,059 19,322 19,855 20,202 Sanitabon 2,292 2,310 2,334 2,462 2,514 2,553 2,529 2,751 2,885 3,006 Golf course 757 736 636 783 719 811 820 789 798 756 Operaling grants and contnbut1ons 202 Capital grants and contributions ~ ----1Zi __ 1_1_5 Total business-type act1V1bes program revenues 20,932 22,419 27,784 25 755 24309 25,245 24,927 25,657 26,703 27,061 Total pnmary government program revenues $ 34,016 $ 38,142 $ 44161 $ 43106 $ 40 651 $ 41145 $ 37,885 $ 40,807 $ 41,345 $ 46,406 Net (Expense) Revenue Governmental ac!Jvrt1es $ (38,062) $ (39,405) $ (38,835) $ (35,947) $ (36,879) $ (38,440) $ (39, 119) $ (38,768) $ (40,169) $ (39,800) Business-type acbv1t1es ~ ---2.ill ~ --2.lli. ~ ~~ ~~~ Total pnmary government net expense $ (35,533) $ (37, 124) $ (30,679) $ (30,320) $ (34,525) $ (33,236) $ (30,400) $ (33,088) $ (34,511) $ (33,657) General Revenues and Other Changes In Net Position Governmental ac!Jvrt1es Taxes Property taxes, general purpose $ 9,019 7,803 $ 7,783 8,272 $ 8,031 $ 8,315 $ 8,242 8,196 $ 9,101 $ 8,623 Property taxes, debt service 1,711 2,230 2,779 2,439 2,362 2,578 2,766 3,022 2,487 2,457 Motor vehicle taxes 1,135 1,145 1,150 1,153 1,200 1,250 1,312 1,370 1,372 1,428 Sales tax, general purpose 11,669 11,118 11,767 12,165 12,260 12,689 12,931 12,781 12,906 13,292 Selecbve sales tax 3,380 4,108 4,080 4,210 4,281 4,461 4,558 4,901 8,832 8,917 Other taxes 5,791 6,298 6,390 6,486 6,630 7,231 7,363 7,991 6,900 7,241 Investment revenues 277 81 77 66 67 98 86 148 92 183 Miscellaneous 505 565 872 660 9,918 1,160 2,371 5,842 2,003 1,062 Transfers, net ~ ___ 9_2 ~ __ 30_ ~ ---1E.. ~ ~ ~ ~ Total governmental act1V1bes 33 742 33440 35097 35,481 45 748 38,569 43,448 47 851 48002 48034 Business-type ac1Jv1bes Investment revenues 242 67 84 79 49 51 56 78 129 233 Miscellaneous 352 341 330 434 279 97 103 153 Reimbursements 180 132 79 Transfers, net ~ ____fil) ____ilfil!) __QQ) ~ ~~~~ Total business-type act1v1t1es ~ ___lli. __1ji ___fil __Jill) ~ ~~~~ Total pnmary government $ 34 081 $ 33,756 $ 35,312 $ 35,964 $ 45,126 $ 38,897 $ 39,855 $ 44,427 $ 43 867 $ 43 589 Change in Net Position Governmental ac1Jvrt1es $ (4,320) $ (5,965) $ (3,738) $ (466) $ 8,869 129 $ 4,329 $ 9,083 $ 7,833 8,233 BuS1ness-fype ac1Jvrt1es ~ ___bfil ~ ___fil!Q_ ---1.lli ~ ~ ~ -----1..fil. ~ Total pnmary government ~ $ (3,368) $ 4,633 $ 5644 $ 10601 $ 5661 $ 9455 $ 11 339 $ 9,356 $ 9,931 Source City of Salina Comprehensive Annual Financial Reports, 2009 -2018 108 Schedule 3 City of Salina, Kansas Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in OOO's) Fiscal Year 2011 2009 2010 (Note 1) 2012 2013 2014 2015 2016 2017 2018 General Fund Reserved $ 508 $ 99 $ $ $ $ $ $ $ $ Nonspendable 90 116 81 107 111 131 153 152 Restricted Committed Assigned 293 540 331 239 199 136 214 340 Unreserved/unassigned ~ ~ ~ ~ ~ ~ ~ 4,765 6,516 6,251 Total general fund $ 5,088 3,617 $ 3,837 $ 3,828 $ 3,550 $ 4,254 $ 4,840 $ 5,032 $ 6,883 $ 6,743 Restatement 156 Restated fund balance $ 3,773 All other governmental funds Reserved $ 11 ,092 $ 6,413 $ $ $ $ $ $ $ $ Non spendable Restricted 3,611 3,319 3,446 2,910 2,793 3,142 4,191 4,648 Committed 127 (516) 7,486 9,886 8,695 14,284 10,072 7,325 Assigned 4,323 4,087 3,146 1,280 619 1,043 641 1,227 Unreserved/unassigned ~ ~ ~ (6,823) (28) (852) Total all other governmental funds $ 15,116 $ 5,283 ~ $ 6,890 $ 14,078 $ 14,076 ~ $ 11 ,646 $ 14,876 $ 12,348 Note 1: Prior year amounts have not been restated for the implementation of GASB Statement 54 in fiscal year 2011. Source: City of Salina Comprehensive Annual Financial Reports, 2009 -2018 109 Schedule4 Crty of Salina, Kansas Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in OOO's) Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Revenues Taxes (see Schedule 5) $ 32,706 $ 32,702 $ 33,949 $ 34,724 $ 34,764 $ 36,523 $ 37,171 $ 38,261 $ 41,597 $ 41,958 Intergovernmental 3,153 3,404 2,901 4,487 4,192 4,008 3,385 4,325 4,536 4,297 Special assessments 1,269 1,385 1,535 2,315 1,706 1,810 1,679 1,669 1,539 1,546 Licenses and permits 10 11 6 8 9 7 10 7 6 3 Charges for services 6,767 8,934 9,730 8,484 8,536 8,276 6,416 6,953 6,880 7,338 Investment revenue 210 64 69 47 40 59 47 142 79 157 Reimbursements 140 70 32 36 9,015 123 491 1,406 Donations 241 83 141 111 238 Miscellaneous 438 ~ 599 537 810 799 1,853 4 315 1 851 884 Total revenues 44,693 47,018 48,821 ~ 59,072 51,846 51, 135 57,219 56,599 56,421 Expenditures General government 3,007 3,549 3,461 3,574 4,269 3,986 5,342 5,422 5,423 5,649 Public safety 17,883 18,229 18,118 18,564 19,155 19,559 21,268 21,664 21,629 22,953 Pubhc works 6,643 6,634 6,569 7,004 7,220 7,443 5,333 5,778 6,048 6,162 Pubhc health and sanitation 1,353 1,332 1,330 1,343 1,344 319 982 1,078 1,097 1,236 Culture and recreation 4,947 5,777 5,900 4,449 3,939 4,292 5,659 5,817 6,143 6,255 Planning and development 3,269 3,609 3,344 3,256 3,293 3,232 1,910 2,042 1,801 2,185 Miscellaneous 32 Capital outlay 17,707 18,603 9,847 7,327 13,047 11,009 25,527 24,001 18,281 16,344 Debt service Principal 4,667 5,959 4,411 8,592 5,038 5,261 6,250 17,902 5,088 14,243 Interest 1,596 2,258 2,084 2,103 1,867 1,864 1,833 3,152 1,771 2,192 Deposit to escrow 107 __ 9_2 Total expenditures 61,072 66,089 55,064 56,304 59,172 56,965 74,104 86 856 67,281 77,219 Other financing sources (uses) Bonds and notes issued 23,695 7,034 6,565 6,150 5,690 5,365 6,825 34,892 11,490 8,090 Bond and note premium 1,369 47 23 60 185 302 369 1,503 95 70 Transfers 1n 3,617 5,076 7,994 3,488 4,907 3,001 7,642 7,065 8,339 13,462 Transfers out (3,422) (4,984) (5,692) (3,458) (3,907) (2,999) (3,913) (3,555) (4,160) (4,186) Other 156 Total other financing sources (uses) 25,259 ~ ~ ~ ____MZi 5 669 10,923 39 905 15,764 17,436 Net change in fund balance $ 8,880 $(11,898) $ 2,803 L....lli. $ 6,775 $ 550 $ !12,046) $ 10,268 $ 51082 $ !3,362) Debt service as a percentage of non-capital expenditures 17% 21% 17% 28% 18% 18% 20% 50% 16% 37% Source: City of Salina Comprehensive Annual Financial Reports, 2009 -2018 110 Schedule 5 City of Salina, Kansas Tax Revenues by Source, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in OOO's) Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Real estate $ 9,971 $ 9,756 $ 10,288 $ 10,466 $ 10,145 $ 10,657 $ 10,729 $ 10,972 $ 11,377 $ 10,804 Delinquent 760 278 274 245 248 235 279 246 210 276 Motor vehicle 1,135 1,145 1,150 1,153 1,200 1,250 1,312 1,370 1,372 1,428 General sales 11,669 11, 117 11,767 12,165 12,260 12,689 12,931 12,781 12,906 13,293 Seleclive sales 3,380 4,108 4,080 4,210 4,281 4,461 4,558 4,901 8,832 8,917 Other taxes 5,791 6,298 6,390 6,485 6 630 7,231 7,362 7,991 6,900 7,240 Total taxes $ 32,706 $ 32,702 $ 33,949 $ 34,724 $ 34,764 $ 36,523 $ 37,171 $ 38,261 $ 41,597 $ 41,958 Source City of Salina Comprehensive Annual Financial Reports, 2009 -2018 111 Schedule6 City of Salina, Kansas Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years Assessed Value Fiscal Estimated Total Assessed (Budget) Total, Excluding Motor Vehicle Total, Taxable Market Value Value to Est. Year Real Estate Personal Property State Assessed Motor Vehicles Tax Rate (Note 1) Assessed Value (Note 2) Market Value 2009 $ 356,678,712 $ 28,373,980 $ 14,929,456 $ 399,982,148 25.886 $ 51,351,656 $ 451,333,804 $ 2,914,775,730 15.48 2010 $ 358,979,211 $ 24,760,806 $ 13,730,609 $ 397,470,626 25.855 $ 50,330,252 $ 447,800,878 $ 2,893,359,541 15.48 2011 $ 367,750,803 $ 19,918,188 $ 14,685,585 $ 402,354,576 26.022 $ 47,406,062 $ 449,760,638 $ 2,869,531,746 15.67 2012 $ 369,416,422 $ 18,654,394 $ 15,779,466 $ 403,850,282 26.272 $ 47,553,744 $ 451,404,026 $ 2,884,188,981 15.65 2013 $ 370,390,092 $ 17,769,120 $ 16,948,264 $ 405, 107,476 26.927 $ 48,882,411 $ 453,989,887 $ 2,889,385,914 15.71 2014 $ 376, 131,346 $ 13,652,885 $ 17,670,147 $ 407,454,378 27.080 $ 48,865,900 $ 456,320,278 $ 2,917,267,724 15.64 2015 $ 381,087,426 $ 12,607,815 $ 18,984,453 $ 412,679,694 27.311 $ 50,350,566 $ 463,030,260 $ 2,957,531,741 15.66 2016 $ 389,872,825 $ 11,653,719 $ 19,323,055 $ 420,849,599 27.603 $ 51,833,505 $ 472,683, 104 $ 3,046,949,034 15.51 2017 $ 391,895,060 $ 11,146,213 $ 19,323,055 $ 422,364,328 27.311 $ 50,970,796 $ 473,335, 124 $ 3,097,885,103 15.28 2018 $ 403,835,383 $ 10,130,718 $ 20,485, 144 $ 434,451,245 26.129 $ 53,336,677 $ 487,787,922 $ 3,150,409,123 15.48 Note 1: The tax rate for motor vehicles is set based on the average countywide tax rate. The City of Salina then receives a share of that based on tax effort. Note 2: The estimated market value excludes the value of the State assessed properties. Market value information is not available for those properties. However, state assessed property is generally assessed at 33% of market value, except for railroads, which are assessed at 15% of market value. Note 3: The Direct rate is expressed in dollars per thousand dollars of assessed value. Source: Saline County Clerk 112 Schedule 7 City of Salina, Kansas Direct and Overlapping Property Tax Rates Last Ten Fiscal Years (rate per $1,000 of assessed value) Ci of Salina Saline Coun USO 305 2 Other (1 Fiscal Debt Total Debt Total Debt Total (Budget) Operating Service City Operating Service USD Year Millaae Millaae Millaae Millage Milla e Other Total 2009 21.749 4.137 25.886 29.347 29.347 46.339 12.208 58.547 10.971 124.751 2010 20.082 5.773 25.855 31.303 31.303 45.341 13.155 58.496 12.401 128.055 2011 19.236 6.786 26.022 31.432 31.432 45.818 13.095 58.913 12.131 128.498 2012 20.326 5.946 26.272 32.576 32.576 47.127 11.693 58.820 11.989 129.657 2013 20.242 5.948 26.190 34.823 34.823 47.133 11.516 58.649 12.135 131.797 2014 20.539 6.388 26.927 37.895 37.895 46.599 11.517 58.116 12.941 135.879 2015 20.692 6.388 27.080 38.047 38.047 44.088 11.517 55.605 13.305 134.037 2016 19.950 7.361 27.311 38.275 38.275 44.465 11.655 56.120 13.293 134.999 2017 21.694 5.909 27.603 37.508 37.508 44.069 11.674 55.743 13.299 134. 153 2018 20.339 5.790 26.129 37.321 37.321 45.130 11.371 56.501 13.189 133.140 Source: Saline County Treasurer (1) The "Other" column includes the State of Kansas, the Salina Airport Authority, the Salina Public Library and Kansas State Extension District #3. (2) A small portion of Salina is covered by USO 306, USO 307, or USO 400. Total Tax Rates are different in the areas covered by these jurisdictions. 113 Schedule 8 City of Salina, Kansas Principal Property Taxpayers Current Year and Ten Years Ago 2008 (2007 Assessed Value) 2018 (2017 Assessed Value) Assessed % of Total Assessed % of Total Taxpayer Type of Business Valuation Valuation Rank Valuation Valuation Rank Westar Energy (Western Resources) SFC Global Supply Chain, Inc. (Schwan's) RAF Salina, LLC Kansas Gas Service Central Mall Realty Holding LLC S&B Motels Sams Real Estate Business TrusUWalmart Menard Inc. Individual Wal-Mart Real Estate Business Trust Great Plains Manufacturing Union Pacific Southwestern Bell Salina Regional Health Center Combined Valuation of the Ten Largest Taxpayers City Valuation Percent of Total City Assessed Valuation Source: Saline County Clerk's Office or recent OS Utility Pizza Manufacturing Regional Shopping Center Utility Regional Shopping Center Motel Discount Retail Stores Home Improvement Residential Discount Retail Stores Manufacturing Railroad Telephone Utility Hospital and Medical Offices 114 $ 7,287,074 12,382,582 2,633,187 9,003,313 2,388,908 1,913,209 3,627,525 2,308,375 4,783,821 5,580,586 $ 51,908,580 $ 335,262, 182 2.17% 3 $ 11,856,980 2.73% 1 3.69% 1 7,508,620 1.73% 2 NIA 4,674,872 1.08% 3 0.79% 7 3,784,188 0.87% 4 2.69% 2 3,696,437 0.85% 5 0.71% 8 3,424,974 0.79% 6 NIA 2,529,908 0.58% 7 NIA 2,501,856 0.58% 8 0.57% 10 2,333,789 0.54% 9 1.08% 6 2,282,451 0.53% 10 0.69% 9 NIA 1.43% 5 1.66% 4 -$ 44,594,075 $ 434,451,245 15.48% 10.26% Fiscal (Budget) Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Schedule 9 City of Salina, Kansas Property Tax Levies and Distributions Last Ten Fiscal Years Current Year Tax Distributions Taxes Levied for the fiscal Delinquent year Amount Percentage Collections ( 1) $ 10,354,161 $ 9,923,959 95.8% $ 759,764 $ 10,276,905 $ 9,704,937 94.4% $ 278,656 $ 10,415,491 $ 10,287,770 98.8% $ 273,843 $ 10,570,420 $ 10,411,299 98.5% $ 245,086 $ 10,576,448 $ 10,145,404 95.9% $ 248,184 $ 10,908,147 $ 10,776,688 98.8% $ 398,820 $ 11,316,065 $ 10,460,246 92.4% $ 617,496 $ 11,740,993 $ 10,972,299 93.5% $ 245,577 $ 11,254,398 $ 11,239,051 99.9% $ 209,950 $ 11,260,358 $ 10,803,591 95.9% $ 276,340 Total Tax Distributions Amount $ 10,683,723 $ 9,983,593 $10,561,613 $ 10,656,385 $ 10,393,588 $ 11, 175,508 $ 11,077,742 $11,217,876 $ 11,449,001 $ 11,079,931 Percentage of levy 103.2% 97.1% 101.4% 100.8% 98.3% 102.5% 97.9% 95.5% 101.7% 98.4% (1) Delinquent collections are reported in the aggregate for all previous years. Data is not currently available for "collected in subsequent years" Source: Saline County Treasurer's Office 115 Schedule 10 City of Salina, Kansas Direct Sales Rate by Taxing Entity Last Ten Fiscal Years Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 City Direct Tax Rate General 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% Special purpose 0.25%/0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% County-wide Tax Rate 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% Portion of County-wide tax allocated to City (July Percentage) 62.46% 61.58% 63.34% 61.72% 60.86% 60.23% 60.28% 60.28% In addition to the direct tax, the City receives a portion of the Countywide sales tax, based on a formula distribution. The formula is based on property tax effort and population, and is adjusted in January and July of each year. In May, 2016, the voters approved an increase in the Special Purpose Tax rate from .40% to .75%, to be effective October 1, 2016. Source: Kansas Department of Revenue 116 2017 2018 0.50% 0.50% 0.75% 0.75% 1.00% 1.00% 60.28% 59.85% Schedule 11 City of Salina, Kansas Water Sales by Class of Customer Last Ten Fiscal Years 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 # Accts Water # Accts Water # Accts Water # Accts Water # Accts Water # Accts Water # Accts Water # Accts Water # Accts Water # Accts Water Rate Class Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Residential 17,792 1,043,774 17,838 1,127,864 17,899 1, 194,629 17,893 1,225,931 17,966 989,788 18,042 1,003,100 18,086 987,540 18,125 950,697 18,124 988,572 18,130 963,387 Commercial 1,589 339,507 1,568 350,633 1,574 372.499 1,565 38,547 1,579 348,968 1,599 353,675 1,600 350,767 1,603 345,232 1,606 345,250 1,614 340,960 Industrial 46 152,910 44 183,166 44 180,277 42 174,595 40 182,529 42 193,233 44 202,407 44 191,236 44 193,503 44 211,843 Government 104 41,793 85 42,714 97 55,910 99 54,618 99 46,484 97 45,346 97 41,928 99 45,136 99 41,552 98 35,932 Apartment 182 71,503 172 71,121 168 72,562 169 70,263 168 67,155 166 60,865 164 61,400 163 57,039 163 58,378 157 71,559 Schools 84 39,815 85 46,386 85 53,679 81 57,027 84 44, 187 84 45,328 85 45,545 85 41,176 83 36,039 81 30,810 Industrial special 1 32,934 1 44.457 1 44,051 1 40,448 1 20,439 Consumed in production 18 26,223 17 32,604 13 22,728 12 19,266 12 18,665 12 19,264 12 17,338 9 9,580 8 9,652 7 6,966 Rural water 1 22,824 1 23,854 1 28,621 1 25,930 1 21,530 1 22,993 1 21,915 1 23,384 1 25,624 1 22,345 Hospitals 13 20,488 12 18,503 10 15,674 10 17,896 9 26,482 10 32,184 9 31,858 9 33,728 9 35,132 9 31,856 Religious/non profit 39 7,312 39 5,569 38 5,690 38 5,399 37 4,810 37 4,973 37 4,986 36 5,224 36 4.749 36 4,458 other taxable deductions 699 Engineering studies 8 6, 176 8 5,266 7 3,754 8 6,104 8 6,822 8 5,095 8 4,807 7 4,573 7 4,772 7 4.471 Providing taxable service 2 4,869 2 5,494 2 4,827 2 6,118 2 3,495 1 3,561 1 3, 167 1 3,921 1 3,347 1 2,331 Sale of component parts 8 5,200 8 5,851 8 5,454 8 5,726 6 5,972 6 6,850 5 3,900 4 3,129 4 2,917 4 2,190 Fire hydrant 2 1,032 3 2,424 3 1,389 4 2,533 3 1,922 2 1,474 3 1,727 3 1.790 3 2.829 Industrial consumed in production 3 2,314 3 4,083 3 3,260 3 3,543 3 4,417 3 3,588 3 2,388 3 1,930 3 1,962 3 2,107 Sales of farm equipment 1 205 1 213 1 56 1 83 1 107 1 48 1 53 1 54 1 104 1 56 19,893 1,818,879 19,887 1,970,202 19,954 2,065,759 19,937 1,754,027 20,018 1,793,771 20,111 1,801,577 20,153 1,779,999 20,193 1,717,766 20,192 1,753,343 20, 196 1, 734,098 Water Rate Schedule: Monthly meter charge (5/8") $ 4.44 $ 4.51 $4.60 $4.74 $4.88 $5.03 $5.20 $5.36 $5.52 $5.74 Commodity charge (per 000 gal.): O -2000 gal. $ 2.34 $ 2.55 53.77 $3.88 $4.04 $4.24 $4.45 54.48 $4.77 $4.96 2001 -10,000 gal Over 10,000 gal. Excess use charge $ 4.68 $ 5.10 57.54 $7.76 $8.08 $8.48 $8.90 $9.16 $9.54 $9.92 Wastewater Rate Schedule: Monthly base charge 5 6.31 5 6.42 $6.57 $6.77 $6.97 57.11 57.22 57.36 $7.51 $7.81 Unit cost (per 000 gal.): 5 2.88 s 3.08 $4.48 $4.61 $4.79 54.94 $5.01 $5.19 55.29 $5.51 Water sold is expressed in thousands of gallons. Number of Accounts billed is the annual number of billings for each class divided by 12. Monthly meter charge increases 'Nith the size of the meter. Residential Wastewater is calculated based on Winter Quarter water consumption. Other accounts are based on monthty water consumption. 2008 Water Consumption Rate Structure changed from a decreasing tier structure to one rate and Excess Use Charge 'Nhich is double the consumption rate Source: City of Salina Water Customer Accounting Office. 117 Schedule 12 City of Salina, Kansas Ratio of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities Business-T~pe Activities General General Percentage Obligation Loans Obligation Water Revenue Loans Temporary Total Primary of Personal Fiscal Year Bonds Payable Capital Lease Temporary Notes Bonds Bonds Payable Notes Government Income Per Capita 2009 $ 52,067,590 $ $ $ $ 2,320,000 $ 2,320,000 $ 5,862,516 $ $ 62,570, 106 3.5% $ 1,346.09 2010 $ 53, 120,952 $ $ $ 2,500,000 $ 8,614,576 $ 1,580,000 $ $ $ 65,815,528 3.8% $ 1,425.20 2011 $ 55,225,670 $ $ $ 3,400,000 $ 7,417,907 $ 16, 193,925 $ $ $ 82,237,502 4.3% $ 1,723.80 2012 $49, 109,575 $ $ $ 1,485,000 $ 9,613,926 $ 15,850,228 $ $ $ 76,058,729 3.8% $ 1,583.07 2013 $49,631,797 $ $ $ 3,800,000 $ 8,519,799 $ 15,226,532 $ $ $ 77,178,128 3.7% $ 1,613.05 2014 $ 50,033,555 $ $ 176,235 $ 5,000,000 $ 9,587,351 $ 14,592,836 $ 6,208, 102 $ -$ 85,598,079 4.1% $ 1,788.25 2015 $ 50,840,632 $ $ 479,366 $ 5,995,000 $ 8,539,773 $ 13,949, 139 $ 5,753,620 $ $ 85,557,530 4.1% $ 1,789.42 2016 $ 51,816,399 $12,157,127 $ 321, 174 $ 11,505,000 $ 7,640,381 $ 13,285,443 $ 7,432,024 $ $ 104, 157,548 5.0% $ 2,200.39 2017 $ 55,994,305 $12,171,090 $ 157,868 $ 6,811,742 $ 6,520,433 $ 12,606,747 $ 8,862,810 $ $ 103, 124, 995 4.9% $ 2, 194.43 2018 $51,968,310 $ 12, 185,053 $ $ 18, 123,505 $ 5,282,578 $ 11,898,051 $10,632,351 $ $ 110,089,848 4.9% $ 2,342.64 Source: City of Salina Comprehensive Annual Financial Reports. 2009 -2018 118 Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Schedule 13 City of Salina, Kansas Ratio of Net General Bonded Debt Outstanding Last Ten Fiscal Years General Bonded Debt Outstanding Percentage of Temporary Less Debt Net General Actual Taxable General Obligation Bonds Capital Lease Notes Total Service Fund Bonded Debt Value of Per Capita $ 54,387,590 $ 61,735,528 $ 62,443,577 $ - $ -$ 54,387,590 $ 735,291 $ 53,652,299 11.9% $1, 154.23 $ - $ 2,500,000 $ 64,235,528 $ 571,873 $ 63,663,655 14.2% $1,378.60 $ 58,723,501 $ $58,151,596 $ $ 59,620,906 $ $ 59,380,405 $ $ 59,456, 780 $ $ 62,514,738 $ $ 57,250,888 $ 176,235 479,366 321,174 157,868 $ 3,400,000 $ 65,843,577 $ 1,236,026 $ 64,607,551 14.4% $1,354.26 $ 1,485,000 $ 60,208,501 $ 582,412 $ 59,626,089 13.2% $1,241.05 $ 3,800,000 $61,951,596 $ 707,763 $61,243,833 13.5% $1,280.02 $ 5,000,000 $64,797,141 $ 407,864 $64,389,277 14.1% $1,345.17 $ 5,995,000 $65,854,771 $ 745,339 $65,109,432 14.1% $1,361.75 $11,505,000 $ 71,282,954 $ 1,248,914 $ 70,034,040 14.8% $1,479.51 $ 6,811,742 $69,484,348 $ 1,509,863 $67,974,485 14.4% $1,446.45 $18,123,505 $75,374,393 $ 1,851,358 $73,523,035 15.1% $1,564.52 Source: City of Salina Comprehensive Annual Financial Reports, 2009 -2018 119 Schedule 14 City of Salina, Kansas Direct and Overlapping Governmental Activities Debt As of December 31, 2018 Net General Obligation Percentage Bonded Debt Applicable to City Jurisdiction Outstanding of Salina Direct: City of Salina $ 73,523,035 100.00% Overlapping: Salina Airport Authority 21,427,000 100.00% Saline County 224,409 73.45% USD 305 117,030,000 93.11% Total Overlapping Debt 138,681,409 Total Direct and Overlapping Debt $ 212,204,444 Per Capita Direct and Overlapping debt Amount Applicable to the City of Salina $ 73,523,035 21,427,000 164,823 108,969,011 130,560,834 $ 204,083,869 $ 4,268.38 Percentage of debt applicable to the City of Salina is based on the proportion that the assessed valuation of the City of Salina bears to the assessed valuation of the overlapping entity. Source: Saline County Clerk 120 Legal Debt Margin Calculation for 2018 Assessed Valuation Debt Limit (30% of Assessed Value) Debt applicable to limit: Total Bonded Debt Less GO Debt Attributable to Exempt Purposes Less Revenue Bonds Less Capital Leases Less Loans Payable Less Fund Balance designated for Debt Service Total Debt Applicable to Limitation Legal debt margin Debt Limit Total net debt applicable to limit Legal debt margin Total net debt applicable to the limit as a percentage of debt limit $ 487,787,922 146,336,377 $ 110,089.848 (5,282,578) (11.898,051) (22,817.404) (1,851,358) $ 68,240.457 $ 78,095,920 2009 $ 135.400.141 53,652,299 $ 81~ 40% Schedule 15 City of Salina, Kansas Legal Debt Margin Last Ten Fiscal Years 2010 2Q11 2012 $ 134,340,263 $ 134,928,191 $ 135.421,208 58.411,185 57,747,032 49,309.445 $ 75,929,078 $ 77,181,159 $ 86,111,763 43% 43% 36% 121 Fiscal Year 2013 2014 2015 2016 2017 2018 $ 136.196,966 136,896,083 138,909,078 141,804,931 142,000,537 146,336,377 52,724,034 54,625,691 56,090,293 62,072,485 61,296,184 68,240.457 $ 83.472,932 $ 82.270,39~ $ 82,818,785 $ 79,732,446 $ 80,704,353 $ 78,095,920 39% 40% 40% 44% 43% 47% Schedule 16 City of Salina, Kansas Pledged Revenue Coverage Last Ten Fiscal Years Water/Sewer Revenue Bonds Less Utility Service Operating Net Available Debt Service Fiscal Year Char1\!es Ex[;!enses Revenue Principal Interest 2009 $15,151,305 $ 10,693,654 $ 4,457,651 $ 1,276,243 $ 455,294 2010 $ 16,565,880 $ 11,803,594 $ 4,762,286 $ 740,000 $ 91,450 2011 $17,976,508 $11,905,114 $ 6,071,394 $ 1,580,000 $ 496,760 2012 $ 19, 163,426 $ 12,222,431 $ 6,940,995 $ 340,000 $ 596,992 2013 $17,974,089 $ 13,373,088 $ 4,601,001 $ 620,000 $ 590, 191 2014 $18,964,164 $12,112,288 $ 6,851,876 $ 630,000 $ 577,791 2015 $19,139,612 $ 9,859,974 $ 9,279,638 $ 640,000 $ 565,191 2016 $19,389,348 $11,800,473 $ 7,588,875 $ 660,000 $ 549,191 2017 $ 19,958,862 $13,148,035 $ 6,810,827 $ 675,000 $ 529,391 2018 $ 20,382,469 $12,973,621 $ 7,408,848 $ 705,000 $ 509,141 Source: City of Salina Comprehensive Annual Financial Reports, 2009 -2018 City of Salina Debt Service Schedules 122 Debt Service Covera1\!e 2.57 5.73 2.92 7.41 3.80 5.67 7.70 6.28 5.65 6.10 Per Capita Personal Income Fiscal Year Population (Saline County) 2009 46,483 $ 38,392 2010 46,180 $ 37,880 2011 47,707 $ 40,512 2012 48,045 $ 41,762 2013 47,846 $ 43,078 2014 47,867 $ 43,736 2015 47,813 $ 44,065 2016 47,336 $ 44,230 2017 46,994 $ 44,732 2018 46,994 $ 47,945 Sources: Population: Kansas Division of the Budget. Employment: Kansas Department of Labor Personal Income, Salina (interpolated) $ 1, 784,575,336 $ 1,749,298,400 $ 1,932,705,984 $ 2,006,455,290 $ 2,061, 109,988 $ 2,093,511,112 $ 2, 106,879,845 $ 2,093,647,612 $ 2, 102, 135,608 $ 2,253,127,330 Schedule 17 City of Salina, Kansas Demographic and Economic Statistics Last Ten Fiscal Years Unemployment Labor Force, USD 305 Rate City of Salina Headcount 6.0% 26,769 7,432 6.7% 26,379 7,346 6.7% 26,258 7,289 6.3% 26,185 7,305 5.1% 26,441 7,305 5.3% 26,303 7,388 3.9% 26,170 7,369 3.3% 27,684 7,386 2.7% 27,684 7,176 3.3% 30,174 7,180 Personal income for Salina is derived from the population and per capita personal income for Saline County Per Capita Personal income as reported by the Bureau of Economic Analysis 2017 Per Capita Personal Income staff projection 2008 -2017 Employment City of Salina Percentage Free and Per Capita .5 Reduced City .5 cent cent sales Lunch sales tax Tax 58.7% $4,965,147 $ 106.82 57.8% $4,803,553 $ 104.02 58.7% $ 5,076,751 $ 106.42 59.1% $ 5,241,205 $ 109.09 60.7% $5,326,723 $ 111.33 61.3% $ 5,555,601 $ 116.06 61.8% $5,670,040 $ 118.59 68.7% $5,727,260 $ 120.99 62.1% $5,755,869 $ 122.48 61.7% $5,770,174 $ 122.79 Increase in per capita Sales Tax (1 O years) Increase in per capita Personal Income USD305 headcount and free and reduced lunch data derived from Kansas Department of Education./USD 305 Budget Document Asa%of per capita personal income 0.278% 0.275% 0.263% 0.261% 0.258% 0.265% 0.269% 0.274% 0.274% 0.256% 14.3% 20.5% Free and Reduced Lunch percentage is an average of the percentages for each building reported. School Data is reported at beginning of school year, eg 2017-2018 school year is reported as 2017. 123 Schedule 18 City of Salina, Kansas Principal Employers Current Year and Nine Years Ago 2009 Emplo~ Type of Business Salina Regional Health Center Health Care Schwan's Global Supply Chain Frozen Pizza Manufacturing Unified School District No 305 Public School System Great Plains Manufacturing Agricultrual & Landscaping Equipment Exide Technologies Automotive Battery Manufacturer City of Salina City Government REV Group Manufacturing Salina Vortex Manufacturing Walmart Retail Blue Philips Lighting Company Fluorescent Lamps Raytheon Aircraft Aircraft Manufacturing Eldorado National Susses/Recreational Vehicle Total Source: Salina Chamber of Commerce Employees Rank 124 2,093 1,850 935 650 800 493 600 357 255 8,033 1 2 3 5 4 7 6 8 9 Percentage of Labor Force 7.8% 6.9% 3.5% 2.4% 3.0% 1.8% 2.2% 1.3% 1.0% 30.0% Emplo~ees 1,800 1,700 1,500 1,100 600 425 300 250 250 230 8,155 2018 Percentage of Labor Rank Force 1 6.0% 2 5.6% 3 5.0% 4 3.6% 5 2.0% 6 1.4% 7 1.0% 8 0.8% 9 0.8% 10 0.8% 27.0% APPENDIX D 2019 Unaudited Financial Statements The following report provides unaudited revenues, expenditures and fund balances for the City for fiscal year ending December 31, 2019 prepared on a cash basis. This information has been provided by City staff and is believed to be accurate but is subject to revision both before and during the auditing process. Budgeted Funds 2019 Budget 2019 Actuals Ending Fund Balance Revenues Expenditures Net Change Revenues Expenditures Net Change 12/31/2019 Target Balance Budgeted Funds: Tax Funds General 100 42,904,224 41,466,380 1,437,844 43,953,627 41,551,143 2,402,484 7,019,276 8,500,000 Debt Service 500 6,254,642 7,319,220 (1,064,578) 6,237,206 6,949,849 (712,644) 1,089,324 200,000 -Special Revenue Funds Sales Tax Capital 210 8,501,016 9,614,958 (1,113,942) 8,500,559 8,259,987 240,572 1,832,941 750,000 Sales Tax EcoDevo 220 356,987 480,000 (123,013) 344,976 533,897 (188,922) 708,563 50,000 Tourism 240 1,656,712 1,656,562 150 1,895,818 1,895,818 853 Special Gas 270 1,580,590 1,472,073 108,517 2,019,141 1,348,775 670,366 1,794,474 500,000 Arts & Humanities 200 1,057,948 1,039,097 18,851 1,040,274 992,216 48,058 49,764 100,000 Business Improvement District 230 90,528 90,500 28 83,701 85,201 (1,500) 4,661 Special Parks 250 213,851 259,000 (45,149) 227,304 6,620 220,684 348,866 50,000 Special Alcohol 260 213,751 213,751 227,304 227,304 234 Neighborhood Parks 280 5,550 10,000 (4,450) 4,500 4,500 28, 751 TPEC 290 764,496 725,000 39,496 765,916 663,614 102,302 199,983 . ----Enterprise Funds -~ . Sanitation 300 3,453,500 3,547,723 (94,223) 3,228,431 2,970,966 257,465 1,725,600 500,000 Solid Waste 320 2,880,000 3,071,997 (191,997) 3,489,733 2,995,684 494,049 4,512,594 500,000 Golf 340 966,347 955,806 10,541 907,198 935,700 (28,502) 21,709 100,000 Water/Wastewater 370 21,107,519 19,307,493 1,800,026 20,306,491 16,280,904 4,025,586 12,604,765 5,000,000 -~-Internal Service Funds --. --. ----Central Garage 450 1,641,184 1,564,013 77,171 1,574,530 1,474,000 100,531 154,659 100,000 Workers' Compensation 410 318,433 430,418 (111,985) 312,961 336,880 (23,920) 933,943 750,000 Health 420 6,553,584 6,547,553 6,031 6,104,976 7,028,930 (923,954) 2,188,453 1,500,000 CONTINUING DISCLOSURE UNDERTAKING $5,210,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2020-A $7,050,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES SERIES 2020-1 DATED APRIL 29, 2020 This CONTINUING DISCLOSURE UNDERTAKING dated as of April 29, 2020 (the "Continuing Disclosure Undertaking"), is executed and delivered by the City of Salina, Kansas (the "Issuer"). RECITALS 1. This Continuing Disclosure Undertaking is executed and delivered by the Issuer in connection with the issuance of the above-described bonds and notes (collectively, the "Obligations") which are being issued simultaneously herewith as of April 29, 2020, pursuant to the Bond Resolution and Note Resolution (collectively, the "Resolution") adopted by the governing body of the Issuer. 2. The Issuer is entering into this Continuing Disclosure Undertaking for the benefit of the Beneficial Owners of the Obligations and in order to assist the Participating Underwriter in complying with Rule 15c2-l 2 of the Securities and Exchange Commission under the Securities Exchange Act of 1934 (the "Rule"). The Issuer is the only "obligated person" with responsibility for continuing disclosure hereunder. The Issuer covenants and agrees as follows: Section 1. Definitions. In addition to the definitions set forth in the Resolution, which apply to any capitalized term used in this Continuing Disclosure Undertaking unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Report" means any Annual Report provided by the Issuer pursuant to, and as described in, Section 2 of this Continuing Disclosure Undertaking, which may include the Issuer's CAFR, so long as the CAFR contains the financial information and operating data described in Section 2(a)(l) and (2). "Beneficial Owner" means any registered owner of any Obligations 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 Obligations (including persons holding Obligations through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Obligations for federal income tax purposes. "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 office or designated payment office of the paying agent or Continuing Disclosure Undertaking the Dissemination Agent 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 Issuers Comprehensive Annual Financial Report , if any. "Dissemination Agent" means any entity designated in writing by the Issuer to serve as dissemination agent pursuant to this Continuing Disclosure Undertaking and which has filed with the Issuer a written acceptance of such designation. "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 Obligation" means a (a) debt obligation; (b) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (c) guarantee of (a) or (b) in this definition; provided however, the term Financial Obligation shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule. "Fiscal Year" means the 12-month period beginning on January 1 and ending on December 31 or any other 12-month period selected by the Issuer as the Fiscal Year of the Issuer for financial reporting purposes. "Material Events" means any of the events listed in Section 3 of this Continuing Disclosure Undertaking. "MSRB" means the Municipal Securities Rulemaking Board, or any successor repository designated as such by the Securities and Exchange Commission in accordance with the Rule. "Participating Underwriter" means any of the original underwriter(s) of the Obligations required to comply with the Rule in connection with the offering of the Obligations. Section 2. Provision of Annual Reports. (a) The Issuer shall, not later than 180 days after the end of the City's Fiscal Year, commencing with the Fiscal Year ending December 31, 2019, file with the MSRB, through EMMA, the following financial information and operating data (the "Annual Report"): (1) The audited financial statements of the Issuer for the prior Fiscal Year, prepared on a modified accrual basis of accounting other than GAAP. A more detailed explanation of the accounting basis is contained in the Official Statement related to the Obligations. If audited financial statements are not available by the time the Annual Report is required to be provided pursuant to this Section, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement relating to the Obligations, and the audited financial statements shall be provided in the same manner as the Annual Report promptly after they become available. (2) Updates as of the end of the Fiscal Year of certain financial information and operating data contained in the final Official Statement related to the Obligations, Continuing Disclosure Undertaking 2 as described in Exhibit A, in substantially the same format contained in the final Official Statement with such adjustments to formatting or presentation determined to be reasonable by the issuer. 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 Rule), which have been provided to the MSRB and are available through EMMA or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB on EMMA. The Issuer shall clearly identify each such other document so included by reference. In each case, the Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in this Section; provided that the audited financial statements of the Issuer 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, and the Annual Report deadline provided above shall automatically become 180 days after the end of the Issuer's new Fiscal Year. (b) Pursuant to Section ( d)(3) of the Rule, the provisions of Section 2 hereof shall not apply to the Notes, because they have a stated maturity ofless than 18 months. ( c) The Annual Report shall be filed with the MSRB in such manner and format as is prescribed by the MSRB. Section 3. Reporting of Material Events. Not later than 10 Business Days after the occurrence of any of the following events, the Issuer shall give, or cause to be given to the MSRB, through EMMA, notice of the occurrence of any of the following events with respect to the Obligations ("Material Events"): ( 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 Obligations, or other material events affecting the tax status of the Obligations; (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 Obligations, if material; ( 11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the obligated person; ( 13) the consummation of a merger, consolidation, or acquisition involving the obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an Continuing Disclosure Undertaking 3 action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; ( 14) appointment of a successor or additional trustee or the change of name of the trustee, if material; (15) incurrence of a Financial Obligation of the obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the obligated person, any of which affect security holders, if material; and ( 16) default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the obligated person, any of which reflect financial difficulties. Except as provided in Section 2(b) hereof, if the Issuer has not submitted the Annual Report to the MSRB by the date required in Section 2(a), the Issuer shall send a notice to the MSRB of the failure of the Issuer to file on a timely basis the Annual Report, which notice shall be given by the Issuer in accordance with this Section 3. Section 4. Termination of Reporting Obligation. The Issuer's obligations under this Continuing Disclosure Undertaking shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Obligations. If the Issuer's obligations under this Continuing Disclosure Undertaking are assumed in full by some other entity, such person shall be responsible for compliance with this Continuing 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 substitution occurs prior to the final maturity of the Obligations, the Issuer shall give notice of such termination or substitution in the same manner as for a Material Event under Section 3. Section 5. Dissemination Agents. The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Continuing Disclosure Undertaking, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. Any 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 Continuing Disclosure Undertaking. Section 6. Amendment; Waiver. Notwithstanding any other provision of this Continuing Disclosure Undertaking, the Issuer may amend this Continuing Disclosure Undertaking and any provision of this Continuing 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 Rule and all current amendments thereto and interpretations thereof that are applicable to this Continuing Disclosure Undertaking. In the event of any amendment or waiver of a provision of this Continuing Disclosure Undertaking, 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, 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) Continuing Disclosure Undertaking 4 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 Continuing Disclosure Undertaking shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Continuing 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 required by this Continuing 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 specifically required by this Continuing Disclosure Undertaking, the Issuer shall have no obligation under this Continuing Disclosure Undertaking to update such information or include it in any future Annual Report or notice of occurrence of a Material Event. Section 8. Default. If the Issuer fails to comply with any provision of this Continuing Disclosure Undertaking, any Participating Underwriter or any Beneficial Owner of the Obligations may take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order, to cause the Issuer to comply with its obligations under this Continuing Disclosure Undertaking. A default under this Continuing Disclosure Undertaking shall not be deemed an event of default under the Resolution or the Obligations, and the sole remedy under this Continuing Disclosure Undertaking in the event of any failure of the Issuer to comply with this Continuing Disclosure Undertaking shall be an action to compel performance. Section 9. Beneficiaries. This Continuing Disclosure Undertaking shall inure solely to the benefit of the Issuer, the Participating Underwriter, and the Beneficial Owners from time to time of the Obligations, and shall create no rights in any other person or entity. Section 10. Severability. If any provision in this Continuing Disclosure Undertaking, the Resolution or the Obligations shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 11. Electronic Transactions. The arrangement described herein may be conducted and related documents may be sent, received, or 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 12. Governing Law. This Continuing Disclosure Undertaking shall be governed by and construed in accordance with the laws of the State of Kansas. [Remainder of Page Intentionally Left Blank.] Continuing Disclosure Undertaking 5 IN WITNESS WHEREOF, the Issuer has caused this Continuing Disclosure Undertaking to be executed as of the day and year first above written. CITY OF SALINA, KANSAS Shandi Wicks. CMC, City Clerk Continuing Disclosure Undertaking S-1 EXHIBIT A TO CONTINUING DISCLOSURE UNDERTAKING FINANCIAL INFORMATION AND OPERATING DATA TO BE INCLUDED IN ANNUAL REPORT The financial information and operating data contained in the following sections and tables contained in Appendix A of the final Official Statement (with such modifications to the formatting and general presentation thereof as deemed appropriate by the Issuer) relating to the Obligations: • Financial Overview of the City • FINANCIAL INFORMATION CONCERNING THE CITY -Assessed Valuation • FINANCIAL INFORMATION CONCERNING THE CITY -Estimated Actual Valuation • FINANCIAL INFORMATION CONCERNING THE CITY -Tax Collections • FINANCIAL INFORMATION CONCERNING THE CITY -Tax Levies • FINANCIAL INFORMATION CONCERNING THE CITY -Largest Taxpayers EXCERPT OF MINUTES OF A MEETING OF THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS HELD ON APRIL 13, 2020 The governing body met in regular session at the usual meeting place in the City, at 2:30 p.m., the following members being present and participating, to-wit: Present: Mike Hoppock, Mayor; Melissa Rose Hodges, Vice Mayor; Trent W. Davis, M.D., Commissioner; Rod Franz, Commissioner; and Karl Ryan, Commissioner. 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 Temporary Notes, Series 2020-1, dated April 29, 2020, of the City were received on April 13, 2020. A tabulation of said bids is set forth as EXHIBIT A hereto. The Finance Director reported that staff determined that the bid of UMB Bank N .A., Kansas City, Missouri, was the best bid for the Notes, a copy of which is attached hereto as EXHIBIT B. Thereupon, there was presented a Resolution entitled: A RESOLUTION AUTHORIZING AND DIRECTING THE ISSUANCE, SALE AND DELIVERY OF GENERAL OBLIGATION TEMPORARY NOTES, SERIES 2020-1, OF THE CITY OF SALINA, KANSAS; PROVIDING FOR THE LEVY AND COLLECTION OF AN ANNUAL TAX, IF NECESSARY, FOR THE PURPOSE OF PAYING THE PRINCIPAL OF AND INTEREST ON SAID NOTES AS THEY BECOME DUE; MAKING CERTAIN COVENANTS AND AGREEMENTS TO PROVIDE FOR THE PAYMENT AND SECURITY THEREOF; AND AUTHORIZING CERTAIN OTHER DOCUMENTS AND ACTIONS CONNECTED THEREWITH. Thereupon, Commissioner Ryan 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, as follows: Aye: Mike Hoppock, Mayor; Melissa Rose Hodges, Vice Mayor; Trent W. Davis, M.D., Commissioner; Rod Franz, Commissioner; and Karl Ryan, Commissioner. Nay: None. Thereupon, the Mayor declared the Resolution duly adopted and the Resolution was then duly numbered Resolution No. 20-7817 and was signed by the Mayor and attested by the Clerk. * * * * * * * * * * * * * * 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. Shandi Wicks, CMC, City Clerk (S (Signature Page to Excerpt of Minutes-2020-1 Notes) EXHIBIT A BID TABULATION SERIES 2020-1 CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES A-1 BID RESULTS CITY OF SALINA, KANSAS $7,050,000 GENERAL OBLIGATION TEMPORATY NOTES SERIES 2020-1 Bidder Name NIC UMBBank 1.218785 Commerce Bank 1.877943 Oppenheimer 2.3123 EXHIBITB BID OF PURCHASER B-1 TO: Shandi Wicks, Clerk City of Salina, Kansas OFFICIAL BID FORM PROPOSAL FOR THE PURCHASE OF CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES SERIES 2020-1 April 13, 2020 For $7,080,000' principal amount of General Obligation Temporary Notes, Series 2020-1, of the City of Salina, Kansas, to be dated April 29, 2020, as described in the Notice of Sale (the ·'Notice") dated April 7, 2020, said Notes to bear interest as follows: Maturity May 1 2021 Principal Amount* $7,080,000 Interest Rate 1.00% *Subject to change; see the Notice. the undersigned will pay the total principal amount of the Notes, plus a premium or less a discount as set forth below, plus accrued interest to the date of delivery. Principal Amount ............................................................................................................................................................. $7,080,000.00' Less Discount (not to exceed 0.50%) (15.576.00) Plus Premium (if any) ....................................................................................................................................................................... 0.00 Total Purchase Price ......................................................................................................................................................... $7.064.424.00' Net interest cost ..................................................................................................................................................................... $86.769.33' D The Bidder elects to purchase Municipal Bond Insurance from: [Assured] [AGM] [BAM] _[ ____ ~]. Circle one or complete blank. This proposal is subject to all terms and conditions contained in the Notice, and ifthe undersigned is the Successful Bidder, the undersigned will comply with all of the provisions contained in the Notice. The transactions described herein may be conducted and related documents may be sent, received and stored by electronic means. All bid documents, closing documents, certificates, ordinances, resolutions and related instruments may be executed by electronic transmission. Copies, telecopies, electronic files and other reproductions of original executed documents (or documents executed by electronic transmission) shall be deemed to be authentic and valid counterparts of such documents for all purposes, including the filing of any claim, action or suit in the appropriate court of law. The acceptance of this proposal by the Issuer shall constitute a contract between the Issuer and the Successful Bidder for purposes of complying with Rule 15c2-12 of the Securities and Exchange Commission and a bond purchase agreement for purposes of the laws of the State of Kansas. (LIST ACCOUNT MEMBERS ON REVERSE) ACCEPTANCE Submitted by: UMB Bank N.A., Kansas City, MO By: ~~R Telephone No. (816)860-7223 Pursuant to action duly taken by the Governing Body of the City of Salina, Kansas, the above proposal is hereby accepted on April 13, 2020. Attest: Shandi Wicks, CMC, City Clerk NOTE: No additions or alterations in the above proposal form shall be made, and any erasures may cause rejection of any bid. Email bids may be sent to the Financial Advisor at arteberryd@stifel.com or electronic bids may be submitted via PARITY®. at or prior to 1 :00 p.m., Central Time, on April 13, 2020. Any bid received after such time will not be considered. *Pursuant to the Notice of Sale, principal amount and discount revised post-sale as shown on Exhibit A. City of Salina, Kansas General Obligation Temporary Notes Series 2020-1 Pricing Summary Maturity Type of Bond 0510112021 Sena! Coupon Total Bid Information Par Amount of Bonds Gross Production Total Underwnter's Discount (0.220%) Bid (99 780%) Total Purchase Pnce Bond Year Dollars Average Life Average Coupon Net Interest Cost (NIC) True Interest Cost (TIC) Coupon I 000% Stifel, Nicolaus & Company Public Finance Yield I 000% Maturity Value 7,050,000 00 $7 ,050,000.00 Exhibit A to Bid Form Price Dollar Price 100 000% 7,050,000 00 S7 ,050,000.00 $7,050,000 00 $7,050,000.00 $(15,510 00) 7,034,490 00 $7,034,490 00 $7,089 17 I 006 Years I 0000000% I 2187846% 12177234% 41312 RESOLUTION NO. 20-7817 OF THE CITY OF SALINA, KANSAS ADOPTED APRIL 13, 2020 GENERAL OBLIGATION TEMPORARY NOTES SERIES 2020-1 Section 10 I. Section 201. Section 202. Section 203. Section 204. Section 205. Section 206. Section 207. Section 2Q8. Section 209. Section 210. Section 211. Section 212. Section 213. Section 301. Section 302. Section 303. Section 40 I. Section 402. Section 501. Section 502. Section 503. Section 504. Section 505. Section 506. Section 507. Section 601. Section 602. RESOLUTION TABLE OF CONTENTS ARTICLE I DEFINITIONS Definitions of Words and Terms ............................................................................... 2 ARTICLE II AUTHORIZATION AND DETAILS OF THE NOTES Authorization of the Notes ........................................................................................ 8 Description of the Notes ........................................................................................... 8 Designation of Paying Agent and Note Registrar ..................................................... 9 Method and Place of Payment of the Notes .............................................................. 9 Payments Due on Saturdays, Sundays and Holidays .............................................. IO Registration, Transfer and Exchange of Notes ........................................................ 10 Execution, Registration, Authentication and Delivery of Notes ............................. 11 Mutilated, Lost, Stolen or Destroyed Notes ............................................................ 12 Cancellation and Destruction of Notes Upon Payment... ........................................ 12 Book-Entry Notes; Securities Depository ............................................................... 12 Nonpresentment ofNotes ........................................................................................ 13 Preliminary and Final Official Statement. .............................................................. 13 Sale of the Notes ..................................................................................................... 14 ARTICLE III REDEMPTION OF NOTES Redemption of Notes .............................................................................................. 14 Selection of Notes to be Redeemed ........................................................................ 14 Notice and Effect of Call for Redemption .............................................................. 15 ARTICLE IV SECURITY FOR NOTES Security for the Notes ............................................................................................. 16 Levy and Collection of Annual Tax ........................................................................ 17 ARTICLE V ESTABLISHMENT OF FUNDS AND ACCOUNTS DEPOSIT AND APPLICATION OF NOTE PROCEEDS Creation of Funds and Accounts ............................................................................. 17 Deposit of Note Proceeds ........................................................................................ 17 Application of Moneys in the Improvement Fund .................................................. 18 Substitution oflmprovements; Reallocation of Proceeds ....................................... 18 Application of Moneys in Debt Service Account. .................................................. 18 Application of Moneys in the Rebate Fund ............................................................ 18 Deposits and Investment of Moneys ....................................................................... 19 ARTICLE VI DEFAULT AND REMEDIES Remedies ................................................................................................................. 19 Limitation on Rights of Owners .............................................................................. 20 Section 603 . Section 701. Section 80 I. Section 802. Section 90 I. Section 902. Section I 001. Section 1002. Section I 003. Section 1004. Section 1005. Section 1006. Section 1007. Section 1008. Section 1009. Remedies Cumulative ............................................................................................. 20 ARTICLE VII DEFEASANCE Defeasance .............................................................................................................. 20 ARTICLE VIII TAX COVENANTS General Covenants .................................................................................................. 21 Survival of Covenants ............................................................................................. 21 ARTICLE IX CONTINUING DISCLOSURE REQUIREMENTS Disclosure Requirements ........................................................................................ 21 Failure to Comply with Continuing Disclosure Requirements ............................... 21 ARTICLE X MISCELLANEOUS PROVISIONS Annual Audit. .......................................................................................................... 22 Amendments ........................................................................................................... 22 Notices, Consents and Other Instruments by Owners ............................................. 23 Notices .................................................................................................................... 23 Electronic Transactions ........................................................................................... 24 Further Authority .................................................................................................... 24 Severability ............................................................................................................. 24 Governing Law ....................................................................................................... 24 Effective Date ......................................................................................................... 24 [BALANCE OF PAGE INTENTIONALLY LEFT BLANK] II RESOLUTION NO. 20-7817 A RESOLUTION AUTHORIZING AND DIRECTING THE ISSUANCE, SALE AND DELIVERY OF GENERAL OBLIGATION TEMPORARY NOTES, SERIES 2020-1, OF THE CITY OF SALINA, KANSAS; PROVIDING FOR THE LEVY AND COLLECTION OF AN ANNUAL TAX, IF NECESSARY, FOR THE PURPOSE OF PAYING THE PRINCIPAL OF AND INTEREST ON SAID NOTES AS THEY BECOME DUE; 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") is a municipal corporation, duly created, organized and existing under the Constitution and laws of the State; and WHEREAS, pursuant to the provisions of the laws of the State of Kansas applicable thereto, by proceedings duly had, the governing body of the Issuer has caused the following improvements (collectively, the "Improvements") to be made in the City, to-wit: Ordinance/ Improvement Project Description Resolution No. Authority Fund Deposit* Pheasant Ridge Addition No. 3 Res. 18-7633 K.S.A. 12-6a01 et seq. 542,254.57 Police Training Facility Res. 19-7679 K.S.A. 12-1736 et seq. 6,043, 186.36 Stone Lake 2 Res. 19-7750 K.S.A. 12-6a01 et seq. 405,000.00 Total: $6,990,440.93 *Excludes costs of issuance and underwriter's discount. 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 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 Improvements prior to the completion thereof and the issuance of the Issuer's general obligation bonds, and it is desirable and in the interest of the Issuer that such funds be raised by the issuance of temporary notes of the Issuer pursuant to the Act; and WHEREAS, the Issuer proposes to issue its temporary notes to pay a portion of the costs of the Improvements; and WHEREAS, the governing body of the Issuer has advertised the sale of the Notes and at a meeting held in the City on this date, awarded the sale of such Notes to the best bidder; and WHEREAS, the governing body of the Issuer hereby finds and determines that it is necessary for the Issuer to authorize the issuance and delivery of the Notes in the principal amount of$7,050,000 to pay a portion of the costs of the Improvements, refund the Refunded Notes and pay certain costs of issuing the Notes. 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 Note Resolution shall have the meanings hereinafter set forth. Unless the context shall otherwise indicate, words importing the singular number shall include the plural and vice versa, and words importing persons shall include firms, associations and corporations, including public bodies, as well as natural persons. "Act" means the Constitution and statutes of the State including K.S.A. 10-101 to 10-125, inclusive, 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- 1736 et seq., all as amended and supplemented from time to time. "Authorized Denomination" means $5,000 or any integral multiples thereof. "Beneficial Owner" of the Notes includes any Owner of the Notes and any other Person who, directly or indirectly has the investment power with respect to any of the Notes. "Bond and Interest Fund" means the Bond and Interest Fund of the Issuer for its general obligation bonds. "Bond Counsel" means the firm of Gilmore & Bell, P.C., or any other attorney or firm of attorneys whose expertise in matters relating to the issuance of obligations by states and their political subdivisions is nationally recognized and acceptable to the Issuer. "Business Day" means a day other than a Saturday, Sunday or holiday 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. "City" means the City of Salina, Kansas. "Clerk" means the duly appointed and acting Clerk of the Issuer or, in the Clerk's absence, the duly appointed Deputy, Assistant 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 Notes, including but not limited to all publication, printing, signing and mailing expenses in connection therewith, registration fees, financial advisory fees, all legal fees and expenses of Bond Counsel and other legal counsel, expenses incurred in connection with compliance with the Code, and all expenses incurred in connection with receiving ratings on the Notes. "Dated Date" means April 29, 2020. 2 "Debt Service Account" means the Debt Service Account for General Obligation Temporary Notes, Series 2020-1 (within the Bond and Interest Fund) created pursuant to Section 501 hereof. "Debt Service Requirements" means the aggregate principal payments and interest payments on the Notes for the period of time for which calculated; provided, however, that for purposes of calculating such amount, principal and interest shall be excluded from the determination of Debt Service Requirements to the extent that such principal or interest is payable from amounts deposited in trust, escrowed or otherwise set aside for the payment thereof with the Paying Agent or other commercial bank or trust company located in the State and having full trust powers. "Defaulted Interest" means interest on any Note 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. "Director of Finance" means the duly appointed and acting Director of Finance of the Issuer or, in the Directors absence, the duly appointed Deputy, Assistant or Acting Director of Finance of the Issuer. 3 "Disclosure Undertaking" means the Continuing Disclosure Undertaking dated as of the Issue Date relating to certain obligations contained in the SEC Rule. "DTC" means The Depository Trust Company, a limited-purpose trust company organized under the laws of the State of New York, and its successors and assigns, including any successor securities depository duly appointed. "DTC Representation Letter" means the Blanket Letter of Representation from the Issuer and the Paying Agent to DTC which provides for a book-entry system, or any agreement between the Issuer and Paying Agent and a successor securities depository duly appointed. "Event of Default" means each of the following occurrences or events: (a) Payment of the principal and of the redemption premium, if any, of any of the Notes 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 Notes 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 Notes or in this Note Resolution (other than the covenants relating to continuing disclosure requirements) 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 Notes then Outstanding. "Federal Tai: Certificate" means the Issuer's Federal Tax Certificate dated as of the Issue Date, as the same may be amended or supplemented in accordance with the provisions thereof. "Financeable Costs" means the amount of expenditure for an Improvement which has been duly authorized by action of the governing body of the Issuer to be financed by general obligation bonds, less: (a) the amount of any temporary notes or general obligation bonds of the Issuer which are currently Outstanding and available to pay such Financeable Costs; and (b) any amount ofFinanceable 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 by or referred to in Section 501 hereof. "Improvement Fund" means the Improvement Fund for General Obligation Temporary Notes, Series 2020-1 created pursuant to Section 501 hereof. "Improvements" means the improvements referred to in the preamble to this Note Resolution 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 Note Resolution. "Interest Payment Date(s)" means the Maturity of the Note. 4 "Issue Date" means the date when the Issuer delivers the Notes to the Purchaser in exchange for the Purchase Price. "Issuer" means the City and any successors or assigns. "Maturity" when used with respect to any Note means the date on which the principal of such Note 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. "Note Payment Date" means any date on which principal of or interest on any Note is payable. "Note Register" means the books for the registration, transfer and exchange of Notes kept at the office of the Note Registrar. "Note Registrar" means the State Treasurer and its successors and assigns. "Note Resolution" means this resolution relating to the Notes. "Notes" means the General Obligation Temporary Notes, Series 2020-1, authorized and issued by the Issuer pursuant to this Note Resolution. "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 (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 ( c) To the Purchaser: UMB Bank N.A. Investment Banking Division 1010 Grand Blvd., 2nd Floor 5 Kansas City, Missouri 64106 (d) To the RatingAgency(ies): Moody's Municipal Rating Desk 7 World Trade Center 250 Greenwich Street 23rd Floor New York, New York 10007 "Notice Representative" means: (a) With respect to the Issuer, the Clerk. (b) With respect to the Note Registrar and Paying Agent, the Director of Bond Services. ( c) With respect to any Purchaser, the manager of its Municipal Bond Department. (d) With respect to any Rating Agency, any Vice President thereof. "Official Statement" means Issuer's Official Statement relating to the Notes. "Outstanding" means, when used with reference to the Notes, as of a particular date of determination, all Notes theretofore authenticated and delivered, except the following Notes: (a) Notes theretofore canceled by the Paying Agent or delivered to the Paying Agent for cancellation; (b) Notes deemed to be paid in accordance with the provisions of Article VII hereof; and (c) Notes in exchange for or in lieu of which other Notes have been authenticated and delivered hereunder. "Owner" when used with respect to any Note means the Person in whose name such Note is registered on the Note Register. Whenever consent of the Owners is required pursuant to the terms of this Note Resolution, and the Owner of the Notes, as set forth on the Note Register, is Cede & Co., the term Owner shall be deemed to be the Beneficial Owner of the Notes. "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 6 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 (I) 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. "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 Notes plus accrued interest to the date of delivery, less a bid discount of $15,510.00. "Purchaser" means UMB Bank N.A., Kansas City, Missouri, the original purchaser of the Notes, and any successors and assigns. "Rating Agency" means any company, agency or entity that provides financial ratings for the Notes. "Rebate Fund" means the Rebate Fund for General Obligation Temporary Notes, Series 2020-1 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" when used with respect to any Note to be redeemed means the date fixed for the redemption of such Note pursuant to the terms of this Note Resolution. "Redemption Price" when used with respect to any Note to be redeemed means the price at which such Note is to be redeemed pursuant to the terms of this Note Resolution, including the applicable redemption premium, if any, but excluding installments of interest whose Stated Maturity is on or before the Redemption Date. "Refunded Notes" means (a) a portion of the Series 2019-1 Notes maturing on May 1, 2020, in the aggregate principal amount of$6,085,000 and (b) a portion of the Series 2019-2 Notes to be redeemed on May 4, 2020, in the aggregate principal amount of $5,085,000. "Replacement Notes" means Notes issued to the Beneficial Owners of the Notes 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, OTC, and its successors and assigns. 7 "Series 2019-1 Notes" means the Issuer's General Obligation Temporary Notes, Series 2019-1, dated April 24, 2019. "Series 2019-2 Notes" means the Issuer's General Obligation Temporary Notes, Series 2019-2, dated October 15, 2019. "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 Note or any installment ofinterest thereon means the date specified in such Note and this Note Resolution as the fixed date on which the principal of such Note or such installment of interest is due and payable. "Substitute Improvements" means the substitute or additional improvements of the Issuer described in Article V hereof. "Treasurer" means the duly appointed and/or elected Treasurer or, in the Treasurer's absence, the duly appointed Deputy Treasurer or acting Treasurer of the Issuer. "United States Government Obligations" means bonds, notes, certificates of indebtedness, treasury bills or other securities constituting direct obligations of, or obligations the principal of and interest on which are fully and unconditionally guaranteed as to 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 NOTES Section 201. Authorization of the Notes. There shall be issued and hereby are authorized and directed to be issued the General Obligation Temporary Notes, Series 2020-1, of the Issuer in the principal amount of $7,050,000 for the purpose of providing funds to: (a) pay a portion of the costs of the Improvements; (b) refund a portion of the Refunded Notes; and (c) pay Costs of Issuance. Section 202. Description of the Notes. The Notes shall consist of fully registered notes in Authorized Denominations, and shall be numbered in such manner as the Note Registrar shall determine. 8 All of the Notes shall be dated as of the Dated Date, shall become due in the amounts, on the Stated Maturity, subject to redemption and payment prior to the Stated Maturity as provided in Article III hereof, and shall bear interest at the rates per annum as follows: Stated Maturity Mayl 2021 Principal Amount $7,050,000 Annual Rate of Interest 1.000% The Notes 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 Article II hereof. Each of the Notes, 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 Note Registrar. The State Treasurer is hereby designated as the Paying Agent for the payment of principal of and interest on the Note and Note Registrar with respect to the registration, transfer and exchange of Notes. The Mayor of the Issuer is hereby authorized and empowered to execute on behalf of the Issuer an agreement with the Note Registrar and Paying Agent for the Notes. The Issuer will at all times maintain a Paying Agent and Note 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 Note Registrar by (a) filing with the Paying Agent or Note Registrar then performing such function a certified copy of the proceedings giving notice of the termination of such Paying Agent or Note Registrar and appointing a successor, and (b) causing notice of appointment of the successor Paying Agent and Note Registrar to be given by first class mail to each Owner. 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 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 Notes. The principal of, or Redemption Price, if any, 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 and interest on each Note 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 Paying Agent. Such amounts 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 Paying Agent to the address of such Owner shown on the Note Register or at such other address as is furnished to the Paying Agent in writing by such Owner; or (b) in the case of a 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. 9 Notwithstanding the foregoing provisions of this Section, 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 in this paragraph. The Issuer shall notify the 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 45 days after receipt of such notice by the Paying Agent) and shall deposit with the Paying Agent at the time of such notice an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Paying Agent for such deposit prior to the date of the proposed payment. Following receipt of such funds the Paying Agent shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment. The Paying Agent shall promptly notify the Issuer of such Special Record Date and, in the name and at the expense of the Issuer, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, by first class mail, postage prepaid, to each Owner of a Note entitled to such notice at the address of such Owner as it appears on the Note 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 Notes 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 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. Section 206. Registration, Transfer and Exchange of Notes. The Issuer covenants that, as long as any of the Notes remain Outstanding, it will cause the Note Register to be kept at the office of the Note Registrar as herein provided. 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 provided in this Section. Upon surrender of any Note at the principal office of the Note Registrar, the Note Registrar shall transfer or exchange such Note for a new Note or Notes in any Authorized Denomination of the same Stated Maturity and in the same aggregate principal amount as the Note that was presented for transfer or exchange. Notes presented for transfer or exchange shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in a form and with guarantee of signature satisfactory to the Note Registrar, duly executed by the Owner thereof or by the Owner's duly authorized agent. In all cases in which the privilege of transferring or exchanging Notes is exercised, the Note Registrar shall authenticate and deliver Notes in accordance with the provisions of this Note Resolution. The Issuer shall pay the fees and expenses of the Note Registrar for the registration, transfer and exchange of Notes provided for by this Note Resolution and the cost of 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, are the responsibility of the Owners of the Notes. 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 10 compliance with Section 3406 of the Code, such amount may be deducted by the Paying Agent from amounts otherwise payable to such Owner hereunder or under the Notes. The Issuer and the Note Registrar shall not be required (a) to register the transfer or exchange of any Note that has been called for redemption after notice of such redemption has been mailed by the 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 Note during a period beginning at the opening of business on the day after receiving written notice from the Issuer of its intent to pay Defaulted Interest and ending at the close of business on the date fixed for the payment of Defaulted Interest pursuant to this Article II. The Issuer and the Paying Agent may deem and treat the Person in whose name any Note is registered on the Note Register as the absolute Owner of such Note, whether such Note 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 Note 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 Note 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 Note Registrar, the Note Register may be inspected and copied by the Owners (or a designated representative thereof) of I 0% or more in principal amount of the Notes then Outstanding or any designated representative of such Owners whose authority is evidenced to the satisfaction of the Note Registrar. Section 207. Execution, Registration, Authentication and Delivery of Notes. Each of the Notes, including any Notes issued in exchange or as substitutions for the Notes initially delivered, shall be executed for and on behalf of the Issuer by the manual or facsimile signature of the Mayor, attested by the manual or facsimile signature of the Clerk and the seal of the Issuer shall be affixed thereto or imprinted thereon. The Mayor and Clerk are hereby authorized and directed to prepare and execute the Notes in the manner herein specified, and to cause the Notes 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 Notes 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. The Notes shall be countersigned by the manual or facsimile signature of the Clerk and the seal of the Issuer shall be affixed or imprinted adjacent thereto following registration of the Notes by the Treasurer of the State of Kansas. In case any officer whose signature appears on any Notes ceases to be such officer before the delivery of such Notes, such signature shall nevertheless be valid and sufficient for all purposes, as if such person had remained in office until delivery. Any Note may be signed by such persons who at the actual time of the execution of such Note are the proper officers to sign such Note although at the date of such Note such persons may not have been such officers. The Mayor and Clerk are hereby authorized and directed to prepare and execute the Notes as herein specified, and when duly executed, to deliver the Notes to the Note Registrar for authentication. The Notes 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 Note Registrar, but it shall not be necessary that the same officer or employee sign the certificate of authentication on all of the Notes that may be issued hereunder at any one time. No Note shall be entitled to any security or benefit under this Note Resolution or be valid or obligatory for any purpose unless and until such certificate of authentication has been duly executed by the Note Registrar. Such 11 executed certificate of authentication upon any Note shall be conclusive evidence that such Note has been duly authenticated and delivered under this Note Resolution. Upon authentication, the Note Registrar shall deliver the Notes to the Purchaser upon instructions of the Issuer or its representative. Section 208. Mutilated, Lost, Stolen or Destroyed Notes. If (a) any mutilated Note is surrendered to the Note Registrar or the Note Registrar receives evidence to its satisfaction of the destruction, loss or theft of any Note, and (b) there is delivered to the Issuer and the Note Registrar such security or indemnity as may be required by each of them, then, in the absence of notice to the Issuer or the Note Registrar that such Note has been acquired by a bona fide purchaser, the Issuer shall execute and, upon the Issuer's request, the Note Registrar shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a new Note of the same Stated Maturity and of like tenor and principal amount. If any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the Issuer, in its discretion, may pay such Note instead of issuing a new Note. Upon the issuance of any new Note under this Section, the Issuer may require the payment by the Owner of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Paying Agent) connected therewith. Every new Note 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 Note Resolution equally and ratably with all other Outstanding Notes. Section 209. Cancellation and Destruction of Notes Upon Payment. All Notes that have been paid or redeemed or that otherwise have been surrendered to the Paying Agent, either at or before Maturity, shall be cancelled by the Paying Agent immediately upon the payment, redemption and surrender thereof to the Paying Agent and subsequently destroyed in accordance with the customary practices of the Paying Agent. The Paying Agent shall execute a certificate in duplicate describing the Notes so cancelled and destroyed and shall file an executed counterpart of such certificate with the Issuer. Section 210. Book-Entry Notes; Securities Depository. The Issuer and Paying Agent have entered into a DTC Representation Letter with DTC. 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 as provided in this Section. 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 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 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 12 (b) if the Note Registrar receives written notice from Participants having interests in not less than 50% of the Notes Outstanding, as shown on the records of the Securities Depository (and certified to such effect by the Securities Depository), that the continuation of a book-entry system to the exclusion of any Notes being issued to any Owner other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Notes, then the Note Registrar shall notify the Owners of such determination or such notice and of the availability of certificates to Owners requesting the same, and the Note Registrar shall register in the name of and authenticate and deliver Replacement Notes to the Beneficial Owners or their nominees in principal amounts representing the interest of each, making such adjustments as it may find necessary or appropriate as to accrued interest and previous calls for redemption; provided, that in the case of a determination under (a)(l) or (a)(2) of this paragraph, the Issuer, with the consent of the Note Registrar, may select a successor securities depository in accordance with the following paragraph to effect book-entry transfers. In such event, all references to the Securities Depository herein shall relate to the period of time when the Securities Depository has possession of at least one Note. Upon the issuance of Replacement Notes, all references herein to obligations imposed upon or to be performed by the Securities Depository shall be deemed to be imposed upon and performed by the Note Registrar, to the extent applicable with respect to such Replacement Notes. If the Securities Depository resigns and the Issuer, the Note Registrar or Owners are unable to locate a qualified successor of the Securities Depository in accordance with the following paragraph, then the Note Registrar shall authenticate and cause delivery of Replacement Notes to Owners, as provided herein. The Note Registrar may rely on information from the Securities Depository and its Participants as to the names of the Beneficial Owners of the Notes. The cost of printing, registration, authentication, and delivery of Replacement Notes shall be paid for by the Issuer. In the event the Securities Depository resigns, is unable to properly discharge its responsibilities, or is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, the Issuer may appoint a successor Securities Depository provided the Note Registrar receives written evidence satisfactory to the Note Registrar with respect to the ability of the successor Securities Depository to discharge its responsibilities. Any such successor Securities Depository shall be a securities depository which is a registered clearing agency under the Securities and Exchange Act of 1934, as amended, or other applicable statute or regulation that operates a securities depository upon reasonable and customary terms. The Note Registrar upon its receipt of a Note or Notes for cancellation shall cause the delivery of Notes to the successor Securities Depository in appropriate denominations and form as provided herein. Section 211. 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 Paying Agent all liability of the Issuer to the Owner thereof for the payment of such Note shall forthwith cease, determine and be completely discharged, and thereupon it shall be the duty of the 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 Paying Agent shall repay, without liability for interest thereon, to the Issuer the funds theretofore held by it for payment of such Note, and such Note shall, subject to the defense of any applicable statute of limitation, thereafter be an unsecured obligation of the Issuer, and the Owner thereof shall be entitled to look only to the Issuer for payment, and then only to the extent of the amount so repaid to it by the Paying Agent, and the Issuer shall not be liable for any interest thereon and shall not be regarded as a trustee of such money. Section 212. Preliminary and Final Official Statement. For the purpose of enabling the Purchaser to comply with the requirements of Section (b)(l) of the SEC Rule, the Issuer hereby deems the 13 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 Section (b )(1) of the SEC Rule, and the appropriate officers of the Issuer are hereby authorized, if requested, to provide the Purchaser a letter or certification to such effect and to take such other actions or execute such other documents as such officers in their reasonable judgment deem necessary to enable the Purchaser to comply with the requirement of the SEC Rule. 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 Director of Finance of the Issuer are hereby authorized to execute the final Official Statement as so supplemented, amended and completed, and the use and public distribution of the final Official Statement by the Purchaser in connection with the reo:ffering of the Notes is hereby authorized. The proper officials of the Issuer are hereby authorized to execute and deliver a certificate pertaining to such Official Statement as prescribed therein, dated as of the Issue Date. The Issuer agrees to provide to the Purchaser within seven business days of the date of the sale of Notes sufficient copies of the final 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 Notes. The sale of the Notes to the Purchaser and the execution of the official bid form is hereby approved and confirmed. The Mayor and/or the Clerk are hereby authorized to execute the official bid form submitted by the Purchaser. Delivery of the Notes shall be made to the Purchaser on the Issue Date (which shall be as soon as practicable after the adoption of this Note Resolution), upon payment of the Purchase Price. ARTICLE III REDEMPTION OF NOTES Section 301. Redemption of Notes. Optional Redemption. At the option of the Issuer, the Notes will be subject to redemption and payment prior to maturity on November 1, 2020, and thereafter, as a whole or in part (selection of the amount of Notes to be redeemed to be determined by the Issuer in such equitable manner as it may determine) at any time, at the redemption price of 100% (expressed as a percentage of the principal amount), plus accrued interest thereon to the Redemption Date. Section 302. Selection of Notes to be Redeemed. Notes shall be redeemed only in an Authorized Denomination. When less than all of the Notes are to be redeemed and paid prior to their Stated Maturity, such Notes shall be redeemed in such manner as the Issuer shall determine. Notes of less than a full Stated Maturity shall be selected by the Note Registrar in a minimum Authorized Denomination of principal amount in such equitable manner as the Note Registrar may determine. In the case of a partial redemption of Notes by lot when Notes 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 Note 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 Note is selected for redemption, then upon notice of intention to redeem a minimum Authorized Denomination, the Owner or the Owner's duly authorized agent shall forthwith present and surrender such Note to the Note Registrar: 14 (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 Note or Notes of the aggregate principal amount of the unredeemed portion of the principal amount of such Note. If the Owner of any such Note fails to present such Note to the Paying Agent for payment and exchange as aforesaid, such Note 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 Notes for redemption prior to maturity, written notice of such intent shall be provided to the· Note Registrar in accordance with K.S.A. 10-129, as amended, not less than 45 days prior to the Redemption Date. The Note Registrar shall call Notes for redemption and payment and shall give notice of such redemption as herein provided upon receipt by the Note 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 Notes to be called for redemption. The Paying Agent may in its discretion waive such notice period so long as the notice requirements set forth in this Section are met. Unless waived by any Owner of Notes to be redeemed, if the Issuer shall call any Notes for redemption and payment prior to the Stated Maturity thereof, the Issuer shall give written notice of its intention to call and pay said Notes to the Note Registrar and the Purchaser. In addition, the Issuer shall cause the Note Registrar to give written notice of redemption to the Owners of said Notes. 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) ifless than all Outstanding Notes are to be redeemed, the identification (and, in the case of partial redemption of any Notes, the respective principal amounts) of the Notes to be redeemed; ( d) a statement that on the Redemption Date the Redemption Price will become due and payable upon each such Note 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 Notes 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 previously 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 Notes or portions of Notes that are to be redeemed on such Redemption Date. For so long as the Securities Depository is effecting book-entry transfers of the Notes, the Note Registrar shall provide the notices specified in this Section to the Securities Depository. It is expected that the Securities Depository shall, in turn, notify its Participants and that the Participants, in tum, will notify or cause to be notified the Beneficial Owners. Any failure on the part of the Securities Depository or a 15 Participant, or failure on the part of a nominee of a Beneficial Owner of a Note (having been mailed notice from the Note Registrar, the Securities Depository, a Participant or otherwise) to notify the Beneficial Owner of the Note so affected, shall not affect the validity of the redemption of such Note. Official notice ofredemption having been given as aforesaid, the Notes or portions of Notes 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 Notes or portion of Notes shall cease to bear interest. Upon surrender of such Notes for redemption in accordance with such notice, the Redemption Price of such Notes 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 Note, there shall be prepared for the Owner a new Note or Notes of the same Stated Maturity in the amount of the unpaid principal as provided herein. All Notes 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 Note 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 (I) the CUSIP numbers of all Notes being redeemed; (2) the date of issue of the Notes as originally issued; (3) the rate of interest borne by each Note being redeemed; (4) the maturity date of each Note being redeemed; and (5) any other descriptive information needed to identify accurately the Notes 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 Note Registrar, to all registered securities depositories then in the business of holding substantial amounts of obligations of types comprising the Notes and to one or more national information services that disseminate notices of redemption of obligations such as the Notes. ( c) Each check or other transfer of funds issued for the payment of the Redemption Price of Notes being redeemed shall bear or have enclosed the CUSIP number of the Notes 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 Note. ARTICLE IV SECURITY FOR NOTES Section 401. Security for the Notes. 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 the Improvements, and, if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial 16 limits of the Issuer. The balance of the principal and interest on the Notes is payable from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the Issuer. The full faith, credit and resources of the Issuer are hereby irrevocably pledged for the prompt payment of the principal of and interest on the Notes as the same become due. Section 402. Levy and Collection of Annual Tax. The governing body of the Issuer shall annually make provision for the payment of principal of, premium, if any, and interest on the Notes as the same become due, if necessary, by levying and collecting the necessary taxes and/or assessments upon all of the taxable tangible property within the Issuer in the manner provided by law. The taxes and/or assessments referred to above shall be extended upon the tax rolls 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 deposited in the Debt Service Account and shall be used solely for the payment of the principal of and interest on the Notes as and when the same become due, and the fees and expenses of the Paying Agent. If at any time said taxes and/or assessments are not collected in time to pay the principal of or interest on the Notes 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 NOTE PROCEEDS Section 501. Creation of Funds and Accounts. Simultaneously with the issuance of the Notes, there shall be created within the Treasury of the Issuer the following funds and accounts: (a) Improvement Fund for General Obligation Temporary Notes, Series 2020-1; (b) Debt Service Account for General Obligation Temporary Notes, Series 2020-1 ; and ( c) Rebate Fund for General Obligation Temporary Notes, Series 2020-1. The Funds and Accounts established herein shall be administered in accordance with the provisions of this Note Resolution so long as the Notes are Outstanding. Section 502. Deposit of Note Proceeds. The net proceeds received from the sale of the Notes shall be deposited simultaneously with the delivery of the Notes as follows: (a) All accrued interest received from the sale of the Notes shall be deposited in the Debt Service Account. (b) The remaining balance of the proceeds derived from the sale of the Notes shall be deposited in the Improvement Fund. 17 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 of the Issuer and on file in the office of the Clerk, including any alterations in or amendments to said plans and specifications deemed advisable and approved by the governing body of the Issuer; (b) paying interest on the Notes during construction of the Improvements; ( c) paying Costs of Issuance; ( d) redeeming the Refunded Notes and (e) transferring any amounts to the Rebate Fund required by this Article V. Upon completion of the Improvements, any surplus remaining 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 Notes provided the following conditions are met: ( 1) the Substitute Improvement and the issuance of general obligation bonds to pay the cost of the Substitute Improvement has been duly authorized by the governing body of the Issuer in accordance with the laws of the State; (2) a resolution or ordinance authorizing the use of the proceeds of the Notes to pay the Financeable Costs of the Substitute Improvement has been duly adopted by the governing body of the Issuer pursuant to this Section, (3) the Attorney General of the State has approved the amendment made by such resolution or ordinance to the transcript of proceedings for the Notes to include the Substitute Improvements; and ( 4) the use of the proceeds of the Notes to pay the Financeable Cost of the Substitute Improvement will not adversely affect the tax-exempt status of the Notes under State or federal law. (b) The Issuer may reallocate expenditure of Note proceeds among all Improvements financed by the Notes; provided the following conditions are met: ( 1) the reallocation is approved by the governing body of the Issuer; (2) the reallocation shall not cause the proceeds of the Notes 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 Notes under State or federal law. Section 505. Application of Moneys in Debt Service Account. All amounts paid and credited to the Debt Service Account shall be expended and used by the Issuer for the sole purpose of paying the principal or Redemption Price of and interest on the Notes as and when the same become due and the usual and customary fees and expenses of the Note Registrar and Paying Agent. The Treasurer is authorized and directed to withdraw from the Debt Service Account sums sufficient to pay both principal or Redemption Price of and interest on the Notes and the fees and expenses of the Note Registrar and Paying Agent as and when the same become due, and to forward such sums to the Paying Agent, if other than the Issuer, 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 Note Registrar and Paying Agent will become due. If, through the lapse of time or otherwise, the Owners of Notes are no longer entitled to enforce payment of the Notes 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 Note Resolution and shall be held by the Paying Agent for the benefit of the Owners of the Notes entitled to payment from such moneys. Any moneys or investments remaining in the Debt Service Account after the retirement of the indebtedness for which the Notes were issued shall be transferred and paid into the Bond and Interest Fund. Section 506. Application of Moneys in the Rebate Fund. 18 (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 Notes 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 § l 48(f) of the Code 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 Notes 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 Note 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 Notes. Section 507. Deposits and Investment of Moneys. Moneys in each of the Funds and Accounts shall be deposited in accordance with laws of the State, in a bank, savings and loan association or savings bank organized under the laws of the State, any other state or the United States: (a) which has a main or branch office located in the Issuer; or (b) if no such entity has a main or branch office located in the Issuer, with such an entity that has a main or branch office located in the county or counties in which the Issuer is located. All such depositaries shall be members of the Federal Deposit Insurance Corporation, or otherwise as permitted by State law. All such deposits shall be invested in Permitted Investments as set forth in this Article or shall be adequately secured as provided by the laws of the State. All moneys held in the Funds and Accounts shall be kept separate and apart from all other funds of the Issuer so that there shall be no commingling with any other funds of the Issuer. Moneys held in any Fund or Account may be invested in accordance with this Note Resolution and the Federal Tax Certificate in Permitted Investments; provided, however, that no such investment shall be made for a period extending longer than to the date when the moneys invested may be needed for the purpose for which such fund was created. All earnings on any investments held in any Fund or Account shall accrue to and become a part of such Fund or Account; provided that, during the period of construction of the Improvements, earnings on the investment of such funds may be credited to the Debt Service Account. ARTICLE VI DEFAULT AND REMEDIES Section 601. Remedies. The provisions of the Note Resolution, including the covenants and agreements herein contained, shall constitute a contract between the Issuer and the Owners of the Notes. If an Event of Default occurs and shall be continuing, the Owner or Owners of not less than 10% in principal amount of the Notes at the time Outstanding shall have the right for the equal benefit and protection of all Owners of Notes 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 19 compel duties and obligations required by the provisions of the Note 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 Notes. Section 602. Limitation on Rights of Owners. The covenants and agreements of the Issuer contained herein and in the Notes shall be for the equal benefit, protection, and security of the Owners of any or all of the Notes, all of which Notes shall be of equal rank and without preference or priority of one Note over any other Note in the application of the funds herein pledged to the payment of the principal of and the interest on the Notes, or otherwise, except as to rate of interest, date of maturity and right of prior redemption as provided in this Note 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 Notes. 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 Note 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 Notes by this Note 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 Notes shall, subject to any determination in such action or proceeding or applicable law of the State, be restored to their former positions and rights hereunder, respectively, and all rights, remedies, powers and duties of the Owners shall continue as if no such suit, action or other proceedings had been brought or taken. ARTICLE VII DEFEASANCE Section 701. Defeasance. When any or all of the Notes, redemption premium, if any, or scheduled interest payments thereon have been paid and discharged, then the requirements contained in this Note Resolution and the pledge of the Issuer's faith and credit hereunder and all other rights granted hereby shall terminate with respect to the Notes or scheduled interest payments thereon so paid and discharged. Notes, redemption premium, if any, or scheduled interest payments thereon shall be deemed to have been paid and discharged within the meaning of this Note Resolution ifthere 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 Notes 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 20 of or Redemption Price of said Notes 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 Notes, no such satisfaction shall occur until (a) the Issuer has elected to redeem such Notes, 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 Note Registrar to give such notice of redemption in compliance with Article Ill. 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 Notes, 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 Notes, 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 Note 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 Notes; 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 Notes will remain excluded from federal gross income, to the extent any such actions can be taken by the Issuer. Section 802. Survival of Covenants. The covenants contained in this Article and in the Federal Tax Certificate shall remain in full force and effect notwithstanding the defeasance of the Notes pursuant to Article VII hereof or any other provision of this Note 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 I 0 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 21 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. 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 Notes, or by anyone acting for or on behalf of such taxpayer or Owner. Upon payment of the reasonable cost of preparing and mailing the same, a copy of any annual audit will, upon request, be sent to any Owner or prospective Owner. As soon as possible after the completion of the annual audit, the governing body of the Issuer shall review such audit, and if the audit discloses that proper provision has not been made for all of the requirements of this Note 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 Notes or of this Note Resolution, may be amended or modified at any time in any respect by resolution or ordinance of the Issuer with the written consent of the Owners of not less than a majority in principal amount of the Notes then Outstanding, such consent to be evidenced by an instrument or instruments executed by such Owners and duly acknowledged or proved in the manner of a deed to be recorded, and such instrument or instruments shall be filed with the Clerk, but no such modification or alteration shall: (a) extend the maturity of any payment of principal or interest due upon any Note; (b) effect a reduction in the amount which the Issuer is required to pay as principal of or interest on any Note; ( c) permit preference or priority of any Note over any other Note; or (d) reduce the percentage in principal amount of Notes required for the written consent to any modification or alteration of the provisions of this Note Resolution. Any provision of the Notes or of this Note Resolution may, however, be amended or modified by resolution or ordinance duly adopted by the governing body of the Issuer at any time in any legal respect with the written consent of the Owners of all of the Notes at the time Outstanding. Without notice to or the consent of any Owners, the Issuer may amend or supplement this Note 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 Notes among Improvements, to provide for Substitute Improvements, to conform this Note 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 Notes or of this Note Resolution, to which the written consent of the Owners is given, as above provided, shall be expressed in a resolution or 22 ordinance adopted by the governing body of the Issuer amending or supplementing the provisions of this Note Resolution and shall be deemed to be a part of this Note Resolution. A certified copy of every such amendatory or supplemental resolution or ordinance, if any, and a certified copy of this Note 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 Note or a prospective purchaser or owner of any Note authorized by this Note Resolution, and upon payment of the reasonable cost of preparing the same, a certified copy of any such amendatory or supplemental resolution or ordinance or of this Note Resolution will be sent by the Clerk to any such Owner or prospective Owner. Any and all modifications made in the manner hereinabove provided shall not become effective until there has been filed with the Clerk a copy of the resolution or ordinance of the Issuer hereinabove provided for, duly certified, as well as proof of any required consent to such modification by the Owners of the Notes then Outstanding. It shall not be necessary to note on any of the Outstanding Notes any reference to such amendment or modification. The Issuer shall furnish to the Paying Agent a copy of any amendment to the Notes or this Note Resolution which affects the duties or obligations of the Paying Agent under this Note 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 Notes, ifmade in the following manner, shall be sufficient for any of the purposes of this Note Resolution, and shall be conclusive in favor of the Issuer and the Paying Agent with regard to any action taken, suffered or omitted under any such instrument, namely: (a) The fact and date of the execution by any person of any such instrument may be proved by a certificate of any officer in any jurisdiction who by law has power to take acknowledgments within such jurisdiction that the person signing such instrument acknowledged before such officer the execution thereof, or by affidavit of any witness to such execution. (b) The fact of ownership of Notes, the amount or amounts, numbers and other identification of Notes, and the date of holding the same shall be proved by the Note Register. In determining whether the Owners of the requisite principal amount of Notes Outstanding have given any request, demand, authorization, direction, notice, consent or waiver under this Note Resolution, Notes owned by the Issuer shall be disregarded and deemed not to be Outstanding under this Note 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 Notes which the Owners know to be so owned shall be so disregarded. Notwithstanding the foregoing, Notes 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 Notes 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 Note 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. 23 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 Notes and the transactions related thereto and described herein may be conducted and documents may be stored by electronic means. All closing documents, certificates, and related instruments may be executed by electronic transmission. Copies, telecopies, facsimiles, electronic files and other reproductions of original executed documents (or documents executed by electronic transmission) shall be deemed to be authentic and valid counterparts of such documents for all purposes, including the filing of any claim, action or suit in the appropriate court of law. 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 Note 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 Note 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 Note Resolution. Section 1008. Governing Law. This Note Resolution shall be governed exclusively by and construed in accordance with the applicable laws of the State. Section 1009. Effective Date. This Note Resolution shall take effect and be in full force from and after its adoption by the governing body of the Issuer. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 24 Shandi Wicks, CMC, City Clerk (Signature Page to Resolution -2020-1 Notes) REGISTERED NUMBERR-1 EXHIBIT A (FORM OF NOTES) REGISTERED $7,050,000 Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York Corporation ("DTC"), to the Issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. Interest Rate: ---% UNITED STATES OF AMERICA STATE OF KANSAS COUNTY OF SALINE CITY OF SALINA GENERAL OBLIGATION TEMPORARY NOTE SERIES 2020-1 Maturity Dated Date: May 1, 2021 Date: April 29, 2020 REGISTERED OWNER: CEDE&CO. PRINCIPAL AMOUNT: CU SIP: 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 at maturity or earlier redemption (the "Interest Payment Dates"), until the Principal Amount has been paid. Method and Place of Payment The principal or redemption price and interest thereon of this Note shall be paid at maturity or upon earlier redemption to the person in whose name this Note is registered at the maturity or redemption date thereof, upon presentation and surrender of this Note at the principal office of the Treasurer of the State of Kansas, Topeka, Kansas (the "Paying Agent" and "Note Registrar"). Such amounts shall be payable (a) by check or draft mailed by the Paying Agent to the address of such Registered Owner shown on the Note Register or at such other address as is furnished to the Paying Agent A-1 in writing by such Registered Owner; or (b) in the case of a payment to Cede & Co. by electronic transfer to such Owner upon written notice given to the Note 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 Notes 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 Note Resolution. Definitions. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the hereinafter defined Note Resolution. Authorization of Notes. This Note is one of an authorized series of Notes of the Issuer designated "General Obligation Temporary Notes, Series 2020-1," aggregating the principal amount of $7,050,000 (the "Notes") issued for the purposes set forth in the Resolution of the Issuer authorizing the issuance of the Notes (the ''Note Resolution"). The Notes 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. 10-101to10-125, inclusive, specifically including K.S.A. 10-123, K.S.A. 10-620 et seq., K.S.A. 12-6a01 et seq., and K.S.A. 12-1736 et seq., all as amended and supplemented from time to time, and all other provisions of the laws of the State of Kansas applicable thereto. General Obligations. The Notes constitute general obligations of the Issuer payable as to both principal and interest in part from special assessments levied upon the property benefited by the construction of certain Improvements (as said term is described in the Note Resolution), and if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the Issuer. The balance of the principal and interest on the Notes is payable from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the Issuer. The full faith, credit and resources of the Issuer are hereby pledged for the payment of the principal of and interest on this Note and the issue of which it is a part as the same respectively become due. Redemption Prior to Maturity. The Notes are subject to redemption prior to maturity as set forth in the Note Resolution. Book-Entry System. The Notes are being issued by means of a book-entry system with no physical distribution of note certificates to be made except as provided in the Note Resolution. One Note certificate with respect to each date on which the Notes are stated to mature or with respect to each form of Notes, 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 Notes by the Securities Depository's participants, beneficial ownership of the Notes 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 Note Registrar will recognize the Securities Depository nominee, while the Registered Owner of this Note, as the owner of this Note for all purposes, including (i) payments of principal of, and redemption premium, if any, and interest on, this Note, (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 Notes by participants of the Securities Depository will be the responsibility of such participants and other nominees of such beneficial owners. The Issuer and the Note 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 A-2 Depository nominee, its participants or persons acting through such participants. While the Securities Depository nominee is the owner of this Note, notwithstanding the provision hereinabove contained, payments of principal of, redemption premium, if any, and interest on this Note shall be made in accordance with existing arrangements among the Issuer, the Note Registrar and the Securities Depository. Transfer and E:J:change. EXCEPT AS OTHERWISE PROVIDED IN THE NOTE RESOLUTION, THIS GLOBAL NOTE 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 Note may be transferred or exchanged, as provided in the Note Resolution, only on the Note Register kept for that purpose at the principal office of the Note Registrar, upon surrender of this Note together with a written instrument of transfer or authorization for exchange satisfactory to the Note Registrar duly executed by the Registered Owner or the Registered Owner's duly authorized agent, and thereupon a new Note or Notes 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 Note 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 Notes and the cost of a reasonable supply of note blanks. The Issuer and the Paying Agent may deem and treat the person in whose name this Note is registered on the Note 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 Notes are issued in fully registered form in Authorized Denominations. Authentication. This Note shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the hereinafter defined Note Resolution until the Certificate of Authentication and Registration hereon shall have been lawfully executed by the Note 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 Note 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 notes, does not exceed any constitutional or statutory limitation. A-3 IN WITNESS WHEREOF, the Issuer has caused this Note to be executed by the manual or facsimile signature of its Mayor and attested by the manual or facsimile signature of its Clerk, and its seal to be affixed hereto or imprinted hereon. (Facsimile Seal) ATTEST: By: (facsimile) Clerk CITY OF SALINA, KANSAS By: ~~<fi=a~cs~i=m=il~e~)~~~~~~~~~~ Mayor This General Obligation Temporary Note shall not be negotiable unless and until countersigned below following registration by the Treasurer of the State of Kansas. (Facsimile Seal) (facsimile) Clerk A-4 CERTIFICATE OF AUTHENTICATION AND REGISTRATION This Note is one of a series of General Obligation Temporary Notes, Series 2020-1, of the City of Salina, Kansas, described in the within-mentioned Note Resolution. Registration Date---------- Registration Number:--------- Office of the State Treasurer, Topeka, Kansas, as Note 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 Note has been duly registered in my office according to law as of April 29, 2020. WITNESS my hand and official seal. (Facsimile Seal) (facsimile) Clerk CERTIFICATE OF STATE TREASURER OFFICE OF THE TREASURER, STATE OF KANSAS JAKE LATURNER, Treasurer of the State of Kansas, does hereby certify that a transcript of the proceedings leading up to the issuance of this Note has been filed in the office of the State Treasurer, and that this Note was registered in such office according to law on------------ WITNESS my hand and official seal. (Seal) By: -------------Treasurer of the State of Kansas A-5 NOTE ASSIGNMENT FOR VALUE RECEIVED, the undersigned do( es) hereby sell, assign and transfer to (Name and Address) (Social Security or Taxpayer Identification No.) the Note to which this assignment is affixed in the outstanding principal amount of$ , standing in the name of the undersigned on the books of the Note Registrar. The undersigned do( es) hereby irrevocably constitute and appoint as agent to transfer said Note on the books of said Note 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 Notes: GILMORE & BELL, P.C. Attorneys at Law 2405 Grand Boulevard Suite 1100 Kansas City, Missouri 64108 (PRINTED LEGAL OPINION) A-6 April 3, 2020 [Via Certified Mail and Email to bond.calls@reasurer.ks.gov) Treasurer of the State of Kansas Landon State Office Bldg. 900 Southwest Jackson, Suite 20 I Topeka, Kansas 66612-1235 (Via Regular US Mail and Email to rcommerford@bsbks.com) The Bennington State Bank 2130 South Ohio Street Salina, Kansas 6740 I RE: CONDITIONAL CALL FOR REDEMPTION CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES SERIES 2019-2, DATED OCTOBER 15, 2019 (THE "NOTES") Notice is hereby given pursuant to K.S.A. I 0-I 29, as amended, and pursuant to the provisions of Resolution No. I 9-774 I (the "Note Resolution") by the governing body of the City of Salina, Kansas (the "Issuer"), that a portion of the above-mentioned Notes described in the attached Notice of Conditional Call for Redemption (the "Called Notes") have been called for redemption and payment on May 4, 2020, subject to the availability of funds therefor from the proceeds of general obligation bonds to be issued by the Issuer. The Paying Agent is hereby requested to disseminate the attached Notice of Conditional Call for Redemption in accordance with K.S.A. I 0-129 and the Note Resolution. CITY OF SALINA, KANSAS Debbie Pack Director of Finance and Administration NOTICE OF CONDITIONAL CALL FOR REDEMPTION TO THE REGISTERED OWNERS OF CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES SERIES 2019-2, DATED OCTOBER 15, 2019 (THE "NOTES") Notice is hereby given that pursuant to the provisions of Resolution No. 19-7741 (the ''Note Resolution") of the City of Salina, Kansas (the "Issuer"), that the following described Notes (the "Called Notes") have been called for redemption and payment on May 4, 2020 (the "Redemption Date") at the principal office of the Treasurer of the State of Kansas, Topeka, Kansas (the "Paying Agent"), subject to the availability of funds therefor from the proceeds of general obligation bonds to be issued by the Issuer. Maturity Date July 1, 2020 Principal Amount $5,085,000 Interest Rate 2.070% On such Redemption Date there shall become due and payable, upon the presentation and surrender of the Called Notes, the redemption price thereof equal to 100% of the principal amount of the Called Notes, together with interest accrued to the Redemption Date. Interest shall cease to accrue on the Called Notes from and after the Redemption Date, provided such funds for redemption are on deposit with the Paying Agent. Under the provisions of Section 3406(a)(l) of the Internal Revenue Code of 1986, as amended, paying agents making payments of principal on municipal securities may be obligated to withhold a 28% tax on the payment of principal to registered owners who have failed to provide the paying agent with a valid taxpayer identification number. Registered Owners of the Called Notes who wish to avoid the imposition of the tax should provide a certified taxpayer identification number to the Paying Agent when presenting the Called Notes for payment. CITY OF SALINA, KANSAS By: -~~~~....::........:IAJ-=-.::Clh~ Treasurer of the State of Kansas, Topeka, Kansas As Paying Agent TRANSCRIPT CERTIFICATE $7,050,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES SERIES 2020-1 DATED APRIL 29, 2020 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 notes (the "Notes"); and do hereby certify as of April 13, 2020, 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 Note Resolution authorizing the Notes. 2. Organi7.ation. 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 Notes 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 Mike Hoppock Trent Davis Karl Ryan Kaye Crawford Melissa Rose Hodges Mike Hoppock Trent Davis Karl Ryan Karl Ryan Title Mayor Mayor Mayor Mayor Vice-Mayor Vice-Mayor Vice-Mayor Vice-Mayor Commissioner Term of Office January 13, 2020 to Present January 14, 2019 to January 13, 2020 January 8, 2018 to January 14, 2019 April 18, 2016 to January 8, 2018 January 13, 2020 to Present January 14, 2019 to January 13, 2020 January 8, 2018 to January 14, 2019 April 18, 2016 to January 8, 2018 April 20, 2015 to Present Melissa Rose Hodges Commissioner January 9, 2017 to Present Mike Hoppock Commissioner January 8, 2018 to Present Trent Davis Commissioner September 8, 2014 to Present Rod Franz Commissioner January 13, 2020 to Present Kaye Crawford Commissioner April 18, 2011 to January 8, 2018 Jon Blanchard Commissioner April 15, 2013 to January 8, 2018 Joe Hay, Jr. Commissioner January 8, 2018 to January 13, 2020 Shandi Wicks Clerk March 10, 2014 to Present Allison Hamm Deputy City Clerk September 7, 2017 to Present 7. Execution of Notes. The Notes have been executed with manual or facsimile signatures; and the manual or facsimile signatures appearing on the face of the Notes are manual or facsimiles of the true and genuine signatures of the Mayor and Clerk of the Issuer. Each signature has either been duly filed in the office of the Secretary of State of Kansas pursuant to K.S.A. 75-4001 et seq. or executed in accordance with K.S.A. 16-1601 et seq. A facsimile of the seal of the Issuer is affixed to or imprinted on each of the Notes and on the reverse side of each of the Notes at the place where the Clerk has executed by facsimile signature the Certificate of Registration; and each Note 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 note included in the Transcript is in the form adopted by the governing body of the Issuer for the Notes. 8. Authorization and Purpose of the Notes. The Notes are being issued pursuant to Resolution 20-7817 of the Issuer duly adopted by the governing body of the Issuer on April 13, 2020 (the "Note Resolution") pursuant to K.S.A. 10-123 for the purpose of: (a) paying a portion of the costs of certain public improvements (the "Improvements") authorized by the governing body of the Issuer pursuant to K.S.A. 10-101to10-125, inclusive, specifically including K.S.A. 10-123, K.S.A. 10-620 et seq., K.S.A. 12-6a01 et seq., and K.S.A. 12-1736 et seq., all as amended, and all other applicable provisions of the laws of the State of Kansas; and (b) retiring the following temporary notes of the Issuer, issued to temporarily finance the Improvements (the "Refunded Notes"): Description Series Dated Date Maturitv or Amount Redemption Date General Obligation Temporary Notes 2019-1 April 24, 2019 May 1, 2020 $533,658.81 General Obligation Temporary Notes 2019-2 October 15, 2019 May 4, 2020 $5,085,000.00 The total principal amount of the Notes does not exceed the cost of the Improvements for which the Notes are issued. The interest rates on the Notes on the date of the sale of the Notes were within the maximum legal limit for interest rates under K.S.A. 10-1009, as amended. 9. Indebtedness. The currently outstanding applicable indebtedness of the Issuer, including the Notes, does not exceed any applicable constitutional or statutory limitations. A schedule that sets forth 2 all currently outstanding general obligation indebtedness of the Issuer is attached hereto as Exhibit A and made a part hereof by reference as though fully set out herein. 10. Valuation. The total assessed valuation of the taxable tangible property within the Issuer for the year 2019 was $509,082,680. 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 Notes shown to be authorized in the Transcript; ( e) the validity of the Notes, or any of the proceedings had in relation to the authorization, issuance or sale thereof; or (f) the levy and collection of a tax to pay the principal of and interest on the Notes. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 3 WITNESS our true and genuine manual signatures and the seal of the Issuer. (S Shandi Wicks, CMC, City Clerk (Signature page to Transcript Certificate -Notes) EXHIBIT A CITY OF SALINA, KANSAS SCHEDULE OF OUTSTANDING GENERAL OBLIGATION INDEBTEDNESS (as of April 29, 2020) General Obligation Bonds: Date Amount Final Amount Issued Series Purpose of Issue Maturity Outstanding 12-15-08 2008-B Internal Improvements $3,525,000 07-01-24 $390,000 07-15-09 2009-A Internal Improvements 23,695,000 10-01-20 595,000 05-01-10 2010-A Refunding & Improvement 6,875,000 10-01-20 330,000 10-15-10 2010-B Refunding 7,860,000 10-01-23 1,170,000 07-15-11 2011-A Internal Improvements 6,565,000 10-01-21 740,000 07-15-12 2012-A Internal Improvements 2,365,000 10-01-27 1,340,000 07-15-12 2012-B Refunding 3,785,000 10-01-20 180,000 02-15-13 2013-A Taxable Improvements 1,360,000 10-01-28 905,000 07-15-13 2013-B Improvements 4,330,000 10-01-33 2,920,000 07-30-14 2014-A Improvements 7,570,000 10-01-34 4,600,000 07-29-15 2015-A Revenue and Internal Imp. 6,825,000 10-01-35 5,515,000 07-27-16 2016-A Internal Improvements 6,570,000 10-01-36 5,785,000 07-27-16 2016-B Refunding 13,750,000 10-01-31 12,430,000 07-27-17 2017-A Improvements 9,310,000 10-01-37 8,745,000 11-27-18 2018-A Improvements 2,090,000 10-01-33 1,975,000 04-24-19 2019-A Improvements 11,090,000 10-01-39 11,090,000 04-29-20 2020-A Improvements 5,210,000 10-01-40 5,210,000 Total $63,920,000 Temporary Notes: Final Original Date Maturity Note Amount Series Issued Date Amount Outstanding 2019-1 04-24-19 05-01-20 $6,085,000 $0(1) 2019-2 10-15-19 07-01-20(2) 5,085,000 O(l) 2020-1 04-29-20 05-01-21 7,050,000 7,050,000 $7,050,000 (ll To be redeemed with proceeds from the Series 2020-1 Notes and Series 2020-A Bonds and other available funds. (2l Conditionally called for redemption on May 4, 2020. REGISTERED NUMBERR-1 REGISTERED $7 ,050,000.00 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., has an interest herein. Interest Rate: 1.000% REGISTERED OWNER: PRINCIPAL AMOUNT: SE CU SIP: 794744 DBS KNOW ALL PER~ PRESENTS: That the City of Salina, in the County of Saline, State of Kansas (the u , for alue received, hereby acknowledges itself to be indebted and promises to pay to the · te Owner shown above, or registered assigns, but solely from the source and in the manner h in · l the Principal Amount shown above on the Maturity Date shown above, unless called fo mp n prior to said Maturity Date, and to pay interest thereon at the Interest Rate per annum shown ab omputed 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 at maturity or earlier redemption (the "Interest Payment Dates"), until the Principal Amount has been paid. Method and Place of Payment. The principal or redemption price and interest thereon of this Note shall be paid at maturity or upon earlier redemption to the person in whose name this Note is registered at the maturity or redemption date thereof, upon presentation and surrender of this Note at the principal office of the Treasurer of the State of Kansas, Topeka, Kansas (the "Paying Agent" and "Note Registrar"). Such amounts shall be payable (a) by check or draft mailed by the Paying Agent to the address of such Registered Owner shown on the Note Register or at such other address as is furnished to the Paying Agent in writing by such Registered Owner; or (b) in the case of a payment to Cede & Co. by electronic transfer to such Owner upon written notice given to the Note 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 Notes 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 Note Resolution. Definitions. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the hereinafter defined Note Resolution. Authorization of Notes. This Note is one of an authorized series of Notes of the Issuer designated "General Obligation Temporary Notes, Series 2020-1 ," aggregating the principal amount of $7,050,000 (the "Notes") issued for the purposes set forth in the Resolution of the Issuer authorizing the issuance of the Notes (the "Note Resolution"). The Notes 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 to 10-125, inclusive, specifically including K.S.A. 10-123, K.S.A. 10- 620 et seq., K.S .A. 12-6a01 et seq., and K.S.A. 12-1736 et seq., all as amended and supplemented from time to time, and all other provisions of the laws of the State of Kansas appl" able thereto. General Obligations. The Notes constitute general obligatio'•~l!l!!ili..! uer payable as to both principal and interest in part from special assessments levied on e p rty benefited by the construction of certain Improvements (as said term is describ n t Resolution), and if not so paid, from ad valorem taxes which may be levied without i t rate or amount upon all the taxable tangible property, real and personal, within the tern 1 the Issuer. The balance of the principal and interest on the Notes is payable from ad va limitation as to rate or amount upon all the taxabl ·b territorial limits of the Issuer. The full faith, credit r respectively become due. s which may be levied without p erty, real and personal, within the of the Issuer are hereby pledged for the e issue of which it is a part as the same payment of the principal of and interest ont:j,· o n Redemption Prior to Matur· . T ot are subject to redemption prior to maturity as set forth in the Note Resolution. Book-Entry System. o being issued by means of a book-entry system with no certificate with respec~h e on which the Notes are stated to mature or with respect to each form of Notes, registered i e · e ame of the Securities Depository, is being issued and required to be deposited with the Se s pository and immobilized in its custody. The book-entry system will evidence positions held i otes by the Securities Depository 's participants, beneficial ownership of the Notes 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 Note Registrar will recognize the Securities Depository nominee, while the Registered Owner of this Note, as the owner of this Note for all purposes, including (i) payments of principal of, and redemption premium, if any, and interest on, this Note, (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 Notes by participants of the Securities Depository will be the responsibility of such participants and other nominees of such beneficial owners. The Jssuer and the Note 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 Note, notwithstanding the provision hereinabove contained, payments of principal of, redemption premium, if any, and interest on this Note shall be made 2 in accordance with existing arrangements among the Issuer, the Note Registrar and the Securities Depository. Transfer and Exchange. EXCEPT AS OTHERWISE PROVIDED IN THE NOTE RESOLUTION, THIS GLOBAL NOTE 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 Note may be transferred or exchanged, as provided in the Note Resolution, only on the Note Register kept for that purpose at the principal office of the Note Registrar, upon surrender of this Note together with a written instrument of transfer or authorization for exchange satisfactory to the Note Registrar duly executed by the Registered Owner or the Registered Owner's duly authorized agent, and thereupon a new Note or Notes 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 Note Resolution and upon payment of the charges therein prescribed. The Issuer shall pay all costs incurred in connection with the issuance, payment and initia egistration of the Notes and the cost of a reasonable supply of note blanks. The Issuer and the Paying A. t may deem and treat the person in whose name this Note is registered on the Note Register a e owner hereof for the purpose of receiving payment of, or on account of, the principal a hon ce hereof and interest due hereon and for all other purposes. The Notes are issue ·stered form in Authorized Denominations. Authentication. to any security or benefit under the hereinafter Authentication and Registration hereon shall have ory for any purpose or be entitled esolution until the Certificate of xecuted by the Note Registrar. that all acts, conditions, and things required nee of this Note have been properly done and n anner as required by the Constitution and laws of edness of the Issuer, including this series of notes, does not 3 IN WITNESS WHEREOF, the Issuer has caused this Note to be executed by the manual or facsimile signature of its Mayor and attested by the manual or facsimile signature of its Clerk, and its seal to be affixed hereto or imprinted hereon. CITY OF SALINA, KANSAS /./~ / '/." By '- By: _25\ 1DJA{1i .u )(OU Shandi Wicks, CMC, City Clerk This General Obligation Temporary Note shall not below following registration by the Treasurer of the State of 4 Michael L. Hoppock, CERTIFICATE OF AUTHENTICATION AND REGISTRATION This Note is one of a series of General Obligation Temporary Notes, Series 2020-1 , of the City of Salina, Kansas, described in the within-mentioned Note Resolution. Registration Date: April 15, 2020 Registration Number: 0322-085-042920-899 STATE OF KANSAS ) ) SS. COUNTY OF SALINE ) Office of the State Treasurer, Topeka, Kansas, as Note Registrar and Paying Agent By: ?9t lLlM.i ,u )lOU Shandi Wicks, CMC, City Clerk RTIFICATE OF STATE TREASURER OFFICE OF THE TREASURER, STATE OF KANSAS JAKE LATURNER, Treasurer of the State of Kansas, does hereby certify that a transcript of the proceedings leading up to the issuance of this Note has been filed in the office of the State Treasurer, and that this Note was registered in such office according to law on ___________ _ .TNESS my hand and offidal seal. Treasurer of the State of Kansas 5 NOTE ASSIGNMENT FOR VALUE RECEIVED, the undersigned do( es) hereby sell, assign and transfer to (Name and Address) (Social Security or Taxpayer Identification No.) the Note to which this assignment is affixed in the outstanding principal amount of $ ____ ~ standing in the name of the undersigned on the books of the Note Regi The undersigned do( es) hereby irrevocably constitute and appoint as agent ransfer said Note on the books of said Note Registrar with full power of substitution in the pre Dated ________ _ Name By _______________ _ 6 LEGAL OPINION The following is a true and correct copy of the approving legal opinion of Gilmore & Bell, P.C., Bond Counsel, which was dated and issued as of the date of original issuance and delivery of such Notes: Governing Body City of Salina, Kansas UMB Bank, N.A. Kansas City, Missouri GILMORE & BELL, P.C. Attorneys at Law 2405 Grand Boulevard Suite 1100 Kansas City, Missouri 64108 April 29, 2020 Re: $7,050,000 General Obliga Salina, Kansas, Dated A ii of the City of he City of Salina, Kansas (the "Issuer"), in connection with (the otes"). In this capacity, we have examined the law and ns other documents that we deem necessary to render this wise etined herein shall have the meanings ascribed thereto in the ·ng body of the Issuer authorizing the issuance and prescribing the Based upon the foregoing, we are of the opinion, under existing law, as follows: I. The Notes have been duly authorized, executed and delivered by the Issuer and are valid and legally binding general obligations of the Issuer. 2. The Notes are payable as to both principal and interest in part from special assessments levied upon the property benefited by the construction of certain improvements and, if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the Issuer. The balance of the principal and interest on the Notes is payable from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the Issuer. The Issuer is required by law to include in its annual tax levy the principal and interest coming 7 due on the Notes to the extent that necessary funds are not provided from other sources. 3. The interest on the Notes (including any original issue discount properly allocable to an owner thereof) 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. 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 Notes 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 Notes to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Notes. The Notes 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 Notes. 4. The interest on the Notes is exempt from income taxation b We express no opinion regarding the accuracy, completen Statement or other offering material relating to the Notes ( exce to Official Statement). Further, we express no opinion regarding the Notes other than as expressly set forth in this opinion. iency of the Official ex , if any, stated in the ces arising with respect to The rights of the owners of the Notes and the ce ity thereof may be limited by bankruptcy, insolvency, reorganization, moratorium h s ilar laws affecting creditors' rights r in equity. generally and by equitable principles, whether cons This opinion is given as of its date opinion to reflect any facts or circumsta may occur after the date of this opinio s e no obligation to revise or supplement this come to our attention or any changes in law that ILMORE & BELL, P.C. 8 AGREEMENT BETWEEN ISSUER AND AGENT $7,050,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES SERIES 2020-1 DATED APRIL 29, 2020 THIS AGREEMENT, dated as of April 29, 2020, 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 notes (the "Securities"), and the Issuer wishes the Agent to act as its Paying Agent, Note Registrar, and Transfer Agent for the Securities: Now, therefore, it is hereby agreed as follows: I. APPOINTMENT Issuer hereby appoints or has previously appointed the State Treasurer of Kansas to act as Paying Agent, Note Registrar and Transfer Agent for the Securities. The State Treasurer of Kansas hereby accepts its appointment as the Paying Agent, Note 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 oflssuer. 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 $250, which is based on "Book- entry Only" Securities. This amount will be due at the time of registration unless such fee is to be paid from the proceeds of the note issue in which case Issuer agrees to pay such fee within two (2) business days of the closing of the note issue. In addition to the aforementioned fee, Issuer covenants and agrees to pay to Agent the fee as stated and required by K.S.A. 10-505 for performing the duties of paying the principal of the Securities. Iv. STANDARD OF PERFORMANCE Issuer shall provide, or shall cause to be provided to Agent, a designation of whether its Securities are to be issued in certificated or uncertificated form, or both. A. STATEMENTS OF OWNERSHIP Agent agrees to provide Statements of Ownership to the owner of uncertificated Securities. Such Statements shall be in accordance with the standards set forth by the Attorney General. All Statements shall be issued in the denominations of $1,000 or $5,000 or integral multiples thereof except for one additional Security in another denomination, which additional Security shall mature in the initial maturity year of the series of the Securities. Interest is computed on the basis of $1,000 or $5,000 units and in all transactions involving the payment of interest, fractions of a cent 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), if any, 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 or $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 2 place is equal to or greater than five the sixth decimal place is increased by one. The final per unit calculation is subsequently rounded to two decimal positions. (See Attachment "A" for sample calculation.) D. SURRENDER Securities surrendered for payment, cancellation or partial redemption shall be cancelled by Agent and returned to Issuer in accordance with K.S.A. 10-111. E. TRANSFERS AND EXCHANGES 1. When Securities are presented to Agent for transfer or exchange, Agent shall so transfer or exchange such Securities ifthe requirements of Section 8-401(1) of the Uniform Commercial Code are met. 2. In accordance with the authorizing Resolution of the Issuer (the "Note 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 Note 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 ifthe Security is replaced. Issuer may charge the Security owner for its expenses in the replacement of a Security. 3 H. REDEMPTIONS Optional Redemption. If any Securities are to be redeemed pursuant to an optional redemption in accordance with their terms, Issuer agrees to give Agent at least fifteen (15) days written notice thereof prior to the notice to be given the Security owners. If there is no provision for notice to the Security owners, Issuer agrees to give at least thirty (30) days written notice to Agent. 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 Note 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 Note Resolution. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 4 By: .2' 1!JJA{fl ,U )lOU Shandi Wicks, CMC, City Clerk CITY OF SALINA, KANSAS OFFICE OF THE TREASURER OF THE STATE OF KANSAS By: ____;~~~-'--=-=-=--::.....;:k)=..::....::a..k..L=-=----- Director of Fiscal Services (Signature page to Agreement Between Issuer and Agent -Notes) 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) 11 ....,...thfa~D J utrant-Da11*7 De Dlf a# ) 'Biiii Cl I n91 s-.rsn..;•,._ .... Hr lGDQ.oclO r..a..ac.it .... tilellcrlllS~ aar.-.1s Ii 1wldaftll*tto • ..._(de-.. MtfJ dilt'8=' mn....-•.-fJJ&Gale~lefO'lthJ•:De!~n..rtn.taa.,..,nm:i. 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'Dlelnllmad•fn611atkllemtv"llqMCID4MC'1...._,.,._1m._. -...Shal .... 6111Jaaer ..... to'8n:Ua1tk.lllltr... .... ........-, ..... l'tm I' dill9D£ UNDERWRITING SAFEKEEPING AGREEMENT BY AND BETWEEN DEPOSITORY TRUST COMPANY AND CITY OF SALINA, KANSAS AND THE OFFICE OF THE KANSAS STATE TREASURER $7,050,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES SERIES 2020-1 DATED APRIL 29, 2020 In order to induce the Depository Trust Company (the "OTC") to accept delivery of the above captioned notes (the "Notes") for safekeeping prior to the delivery of the Notes on April 29, 2020 (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 Notes, in the custody, control and possession ofDTC 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 Notes (the "Underwriter") in distributing the Notes. DTC will safekeep and hold in escrow the Notes until it shall have received notification from one of the following authorized representatives of the Issuer to release or return the Notes: 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 OTC; 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 Notes, OTC will distribute the Notes pursuant to written instructions provided by the Underwriter; however, in the event a demand for the return of the Notes is received, DTC shall return the Notes 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: April 13, 2020 By: ?9i 1DJA{j1 ,U )lOU Shandi Wicks, CMC, City Clerk (Signature page to Underwriting Safekeeping Agreement -Notes) Moony's INVESTORS SERVICE April 16, 2020 Mr. David Arteberry Stifel Nicolaus & Company, Inc. 4801 Main Street Suite 530 Kansas City, MO 64112 Dear Mr. Arteberry : 600 North Pearl Street Suite 2165 Dallas, TX 75201 www.moodys.com We wish to inform you that on April 7, 2020, Moody's Investors Service reviewed and assigned a rating of • MIG 1 to Salina (CITY OF) KS, General Obligation Temporary Notes, Series 2020-1 Credit ratings issued by Moody's Investors Service, Inc. and its affiliates ("Moody's") are Moody's current opinions of the relative future credit risk of entities, credit commitments, or debt or debt-like securities and are not statements of current or historical fact. Moody's credit ratings address credit risk only and do not address any other risk, including but not limited to: liquidity risk, market value risk, or price volatility. This letter uses capitalized terms and rating symbols that are defined or referenced either in Moody's Definitions and Symbols Guide or MIS Code of Professional Conduct as of the date of this letter, both published on www.moodys.com. The Credit Ratings will be publicly disseminated by Moody's through normal print and electronic media as well as in response to verbal requests to Moody's Rating Desk. Moody's related research and analyses will also be published on www.moodys.com and may be further distributed as otherwise agreed in writing with us. Moody's Credit Ratings or any corresponding outlook, if assigned, will be subject to revision, suspension or withdrawal, or may be placed on review, by Moody's at any time, without notice, in the sole discretion of Moody's. For the most current Credit Rating, please visit www.moodys.com. Moody's has not consented and will not consent to being named as an expert under applicable securities laws, such as section 7 of the Securities Act of 1933. The assignment of a rating does not create a fiduciary relationship between Moody's and you or between Moody's and other recipients of a Credit Rating. Moody's Credit Ratings are not and do not provide investment advice or recommendations to purchase, sell or hold particular securities. Moody's issues Credit Ratings with the expectation and understanding that each investor will make its own evaluation of each security that is under consideration for purchase, sale or holding. Moody's adopts all necessary measures so that the information it uses in assigning a Credit Rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently validate or verify information received in the rating process. Moody's expects and is relying upon you possessing all legal rights and required consents to disclose the information to Moody's, and that such information is not subject to any restrictions that would prevent use by Moody's for its ratings process. In assigning the Credit Ratings, Moody's has relied upon the truth, accuracy, and completeness of the information supplied by you or on your behalf to Moody's. Moody's expects that you will, and is relying upon you to, on an ongoing basis, promptly provide Moody's with all information necessary in order for Moody's to accurately and timely monitor the Credit Ratings, including current financial and statistical information. 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Sincerely, Moody's Investors Service Inc CREDIT OPINION 9 April 2020 ¥' ··iftate this Research : : Contacts Ryan Mills + 1.214.979.6852 A VP-Analyst ryan mills@moodys com Adebola Kushimo + 1.214.979.6847 VP-Senior Analyst adebola kushimo@moodys com CLIENT SERVICES Americas Asia Pacific japan EMEA 1-212-553-1653 852-3551-3077 81-3-5408-4100 44-20-m2-s4s4 Salina (City of) KS Update to credit analysis Summary U.S. PUBLIC FINANCE The City of Salina, KS' (Aa3) credit profile is supported by a moderately sized tax base that serves as and the commercial and retail hub for Salina County and below average resident income indices, offset by affordable housing prices Add1t1onally, the profile considers the city's below median operating reserves that are bolstered by additional liquidity outside of the operating fund These strengths are tempered by the city's elevated debt burden that 1s partially mitigated by self supporting ut1l1ty funds and a manageable pension burden We regard the coronavirus outbreak as a social risk under our ESG framework, given the substantial impl1cat1ons for public health and safety. We do not see any material immediate credit risks for the City of Salina. However, the s1tuat1on surrounding Coronav1rus 1s rapidly evolving and the longer term impact will depend on both the severity and duration of the crisis If our view of the credit quality of the City of Salina changes, we will update our opinion at that time. Credit strengths » Regional commercial and retail center » Significant additional liquidity outside of the operating fund Credit challenges » Dependence on economically sens1t1ve revenue » Above average debt burden Rating outlook Moody's does not generally assign outlooks to local government credits with this amount of debt outstanding. Factors that could lead to an upgrade » Substantial growth in the tax base » Material growth in financial reserves » Notable decline in the debt burden Factors that could lead to a downgrade » Contraction in the tax base ........................................................................................ ······ ............... . . ...... ..... .. .. ....... . . . . .. . . . ······· . ... ... . ............... ······· . . .. ... . . . .............. . .... .... ... ... .. . ... ... ... ... .. ....... ...... . . ....... . ····· .................................... . MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE » Material decline 1n financial reserves » Further leveraging of the tax base absent corresponding valuation increases » Inability to access the capital markets for takeout financing or inability to redeem with available l1quid1ty if necessary (notes) Key indicators Exhibit 1 Salina (City of) KS 2014 2015 2016 2017 2018 Economy/Tax Base Total Full Value ($000) $2,917,268 $2,968,008 $3,046,949 $3,097,885 $3,150,409 Population 47,894 47,840 47,676 47,513 47,230 Full Value Per Capita $60,911 $62,040 $63,909 $65,201 $66,704 Median Family Income(% of US Median) 84.6% 86.2% 86.8% 88.3% 86.7% Finances Operating Revenue ($000) $43,600 $45,716 $47,136 $48,320 $47,819 Fund Balance ($000) $5,248 $5,350 $4,901 $9,260 $9,076 Cash Balance ($000) $4,695 $5,736 $5,787 $8,354 $7,647 Fund Balance as a % of Revenues 12.0% 11.7% 10.4% 19.2% 19.0% Cash Balance as a % of Revenues 10.8% 12.5% 12.3% 17.3% 16.0% Debt/Pensions Net Direct Debt ($000) $57,415 $59,190 $77,320 $76,290 $82,277 3-Year Average of Moody's ANPL ($000) $96,885 $87,854 $79,470 $79,178 $83,509 Net Direct Debt I Full Value (%) 2.0% 2.0% 2.5% 2.5% 2.6% Net Direct Debt I Operating Revenues (x) 1.3x 1.3x 1.6x 1.6x 1.7x Moody's -adjusted Net Pension Liability (3-yr average) to Full Value (%) 3.3% 3.0% 2.6% 2.6% 2.7% Moody's -adjusted Net Pension Liability (3-yr average) to Revenues (x) 2.2x 1.9x 1.7x 1.6x 1.7x Source Moody's Investors Service, City of Sa/ma audited annual fmanc1a/ statements Profile The City of Salina 1s in north central Kansas (Aa2 stable), approximately 95 miles north of W1ch1ta (Aa1 stable) near the geographic center of the contiguous United States. It is the seventh largest city in Kansas, with a 2018 estimated population of 47,200. Detailed credit considerations Economy and tax base: moderately sized tax base serves as regional economic center The city's tax base 1s projected to remain stable over the near term due to the city's commercial, retail and medical importance to north central Kansas. The city's tax base grew to $3.3 b1ll1on in fiscal 2019, which is twice the national median 1n the same peer group. Valuations averaged a modest 2.5% annual increase over the past five years, including a 4.6% increase 1n fiscal 2019. The city's tax base exhibits a mild degree of concentration, with the 10 largest taxpayers accounting for 10% of the 2019 assessed valuation. The top taxpayer, Westar Energy, Inc (Baa1 stable), accounts for 3% of AV, and provides electricity to the city. The second largest taxpayer and employer, SFC (Schwan's) Global Supply Chain 1s a national supplier of frozen goods, with Tony's Pizza as one of the business' largest brands The oty 1s currently in the process of developing between 120-150 homes 1n two developments. As part of the development process for new homes, a special assessment district is created to assist 1n paying off a portion of the city's debt relating to the creation of ut1l1t1es for the development City management reports that there is also commercial development 1n progress that will bring in four big box retail stores and ongoing redevelopment in the city's downtown core that includes the initiation of a $150 million redevelopment project This publ1cat1on does not announce a credit rating action For any credit ratings refe1enced rn this pubhcat1on, please see the ratings tab on the rssuer/entrty page on www moodys com for the most updated oed1t rating action information and rating history 9 April 2020 Salina (City of) KS Update to credit analym 'i" ... , .. · -.. ' ·-·-. '""Nf.q;.~·:~~,-~•;:•'.;)iiiC'Y.·.'r,:;:. " . ' · ' -. · .. t.lfVlooov S4NVEsToRs SERVICE ,..f. ..;,~,~,,~·-v:. L ql!'<.ijgi/ ~"~ ,.,~·,. ·. •• . :. . ·-• ~· u.s. PUBLIC flNANCE"' Resident income indices are below national average, with the 2018 median family income at 86.7% of the nation. Favorably, the cost of living is well below the nation with median home levels at 59.3% of the nation. As of January 2020, the County of Saline's 3% unemployment rate was near the state's rate of 2.9% and below the national rate of 3.4% during the same period Financial operations and reserves: below average reserves bolstered by outside liquidity The city's financia l position is expected to remain stable due to its status as a regional center for commerce and formal fund balance policies. Although the city's financial reserves are below peers, reserves are bolstered by liquidity outside of the operating fund that can be used if needed. In fiscal 2018 (fiscal year end December 31), the general fund posted a $140,000 deficit due to the city's under budgeting of specific line items. The operating fund, which is composed of the general and debt service funds, posted an $897,000 · deficit, closing the fiscal year with $9.1 million, or 19% of operating revenues. Annually, funds are transferred to the general and debt service fund from the city's utility fund for administrative support and debt service. These funds can as well be accessed in the event of an emergency to provide additional liquidity to the general fund, which strengthens the profile. The city's utility funds are very healthy with the water and sewer fund holding $24.2 million in cash and the solid waste disposal fund holding $6.4 million in cash at the close of fiscal 2018. The city also has $1.5 million in the sales tax capital fund that can be utilized if needed. At the close of fiscal 2019, the city is reporting a general fund balance of $7.1 million, which is an approximately $400,000 increase over the prior year. Typical of Kansas cities, sales tax receipts represent the city's primary operating revenue source, comprising 32% of fiscal 2018 general fund revenues, followed by property taxes at approximately 20% and charges for services at 15%. The city's sales taxes include the city's portion of a 1 % countywide sales tax and a local 0.5% sales tax. The city also has a 0.75% special sales tax that was approved in 2016 (sunsetting in 2035) specifically for economic development, capital projects and tax stabil ization that are not housed in the general fund,but could help transfers from the general fund for capital projects. The city has a formal fund balance policies of maintaining between 15% and 20% of total annual revenues . The general fund had consistently adhered to the $5 million fund balance before it was elevated to $8.5 million in 2018. As the general fund is $1.4 million short of the new general fund balance policy, the city expects to reach that goal in the next 3-5 years. LIQUIDITY The city closed fiscal 2018 with $7.6 million in cash and current investments, which equates to 16% of operating fund revenue. Debt, pensions and OPEBs: elevated debt burden partially supported by utility system 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 $97.2 million in total debt outstanding comprised of $64.1 million in debt secured by the city's ad valorem tax pledge, $20.3 million in temporary notes and $1 2.8 million in Kansas Water Supply 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 city's direct debt burden of 3% of fiscal 2019 full value is slightly above average, but when accounting for the self-supporting nature of the enterprise debt, the burden falls to 2.8%. The city typically issues general obligation bonds and short-term notes each spring for general capital improvements. 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 average with 70.4% of principal retired in 10 years. Inclusive of the current sale, the city will have $20.3 million of GO Temporary Notes outstanding, comprising approximately 20.9% of total GO debt outstanding. While operating liquidity represents just 38% of the city's outstanding temporary financing, the city has ample liquidity in its utility funds, along with experience accessing the market and a practice of issuing long term financing or renewing notes. DEBT-RELATED DERIVATIVES The city is not party to any interest rate swaps or other derivative agree ments. 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 9 April 2020 Salina (City of) KS: Update to credit analysis 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 requi rements. Moody's adjusted net pension liability (ANPL) reflects certain adjustments we make to improve comparability of reported pension liabilities. 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 NPL interest plus pay down some principal, making them stronger from a credit perspective than contributions below this level. In fiscal 2018, the city's required contribution was at 101.7% of tread water. The city has historically made contributions above tread water. Moody's three year average adjusted ANPL for the city is $83.5 million, or 1.75 times fiscal 2018 operating revenues and 2.7% of full valuation Contributions to the plan were approximately $3 million, or a manageable 6.4% of operating revenues. Fiscal 2018 fixed costs were approximately $11.2 million, representing a manageable 23% of operating revenues. ESG Considerations Environmental Environmental considerations are not currently a material credit factor for the city's ratings. The city's exposure to long term environmental trends is consistent with that of the US local government sector as a whole which is low. Extreme weather events are also typically accompanied by state and federal assistance, which further mitigates environmental risk. Social Social factors are not material to the rating. The city's wealth indicators are slightly below the nation, but the median home value is considerably below the national average, making the district affordable to live in. Governance 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. Governing Body is responsible for the policy determination, and the City Manager is responsible for the administration of the municipal government. The city is a full service city that provides general government alo ng with police, fire, utilities and arts and humanities. The city demonstrates good governance by establishing formal fund balance policies and periodically reviewing the policies to ensure they continue to provide flexibility and stability. Kansas Cities have an Institutional Framework score of Aaa, which is very high. 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 fluctuat ions 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. 9 April 2020 Salina (City of) KS: Update to credit analysis MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE Rating methodology and scorecard factors The US Local Government General Obl1gat1on Debt methodology includes a scorecard, a tool providing a composite score of a local government's credit profile based on the weighted factors we consider most important, universal and measurable, as well as possible notching factors dependent on 1nd1vidual credit strengths and weaknesses Its purpose 1s not to determine the final rating, but rather to provide a standard platform from which to analyze and compare local government credits Exhibit 2 Salina (City of) KS Rating Factors Economy/Tax Base (30%) 111 Tax Base Size: Full Value (in OOOs) Full Value Per Capita Median Family Income (% of US Median) Finances (30%) Fund Balance as a % of Revenues 5-Year Dollar Change in Fund Balance as% of Revenues Cash Balance as a % of Revenues 5-Year Dollar Change in Cash Balance as% of Revenues Management (20%) Institutional Framework Operating History: 5-Year Average of Operating Revenues I Operating Expenditures Debt and Pensions (20%) Net Direct Debt I Full Value (%) Net Direct Debt I Operating Revenues (x) 3-Year Average of Moody's Adjusted Net Pension Liability I Full Value(%) 3-Year Average of Moody's Adjusted Net Pension Liability I Operating Revenues (x) [1] Economy measures are based on data from the most recent year available [2] Notching Factors are specifically defined in the US Local Government General Obligation Debt methodology [3) Standardized adjustments are outlined in the GO Methodology Scorecard Inputs publication Source. US Census Bureau, Moody's Investors SerV1ce 9 April 2020 Measure Score $3,294,116 Aa $69,746 Aa 86.7% A 19.0% Aa 8.5% A 16.0% Aa 7.3% A Aaa Aaa 1.0x Baa 2.8% A 1.9x A 2.5% A 1.7x A Scorecard-Indicated Outcome A1 Assigned Rating Aa3 Salina (City of) KS Update to credit analysis 6 MOODY'S INVESTORS SERVICE U.S. PUBLIC fl NANCE © 2020 Moody's Corporation, Moody's Investors Service, Inc, Moody's Analytics, Inc andfor their l1censors and aff1l1ates (collectively, "MOODY'S") All rights reserved CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC ANDfOR ITS CREDIT RATINGS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY'S (COLLECTIVELY, "PUBLICATIONS") MAY INCLUDE SUCH CURRENT OPINIONS MOODY'S INVESTORS SERVICE DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT Of DEFAULT OR IMPAIRMENT SEE MOODY'S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY'S INVESTORS SERVICE CREDIT RATINGS CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO LIQUIDITY RISK, MARKET VALUE RISK, OF. 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REPORT NUMBER 1218228 9 April 2020 Salina (City of) KS Update to credit analysis MOODY'S fNVESTORS SERVICE U.S. PUBLIC FINANCE Contacts Ryan Mills A VP-Analyst ryan m1lls@moodys com Moonv's INVESTORS SERVICE 9 April ZOZO +1.214.979.6652 Adebola Kush1mo +1.214.979.6847 VP-Senior Analyst adebola kush1mo@moodys com CLIENT SERVICES Americas Asia Pacific Japan EMEA 1-212-553-1653 852-3551-3077 81-3-5408-4100 44-20-7772-5454 Salina (City of) KS Updat• to credit analysis CLOSING CERTIFICATE $7,050,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES SERIES 2020-1 DATED APRIL 29, 2020 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 notes (the "Notes"); and certify as of April 29, 2020 (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 Note Resolution (defined below) authorizing the Notes. 2. Transcript of Proceedings. The transcript of proceedings relating to the authorization and issuance of the Notes (the "Transcript"), furnished to the Purchaser of the Notes, is to the best of our knowledge, information and belief full and complete; none of such proceedings have been modified, amended or repealed, except as might be shown in the Transcript; and the facts stated in the Transcript still exist. In each instance where copies appear in the Transcript, such copies are true and correct duplicates of the original instruments now on file with the Clerk. All certifications made by the Issuer in the Transcript Certificate dated April 13, 2020 are true and correct as of this date and are incorporated in this Certificate by reference. 3. The Note Resolution. The Issuer is issuing and delivering the Notes simultaneously with the delivery of this Certificate, pursuant to and in full compliance with the Constitution and statutes of the State, K.S.A. 10-101 to 10-125, inclusive, specifically including K.S.A. 10-123, K.S.A. 10-620 et seq., K.S.A. 12-6a01 et seq., and K.S.A. 12-1736 et seq., all as amended and supplemented from time to time, and Resolution No. 20-7817 of the Issuer duly adopted by the governing body of the Issuer on April 13, 2020 (the ''Note Resolution"). 4. Purpose of the Notes. The Notes are being issued pursuant to the Note Resolution for the purpose of: (a) paying a portion of the costs of certain public improvements (the "Improvements"); and (b) retiring the following temporary notes of the Issuer, issued to temporarily finance the Improvements (the "Refunded Notes"): Description Series Dated Date Maturity or Amount Redemption Date General Obligation Temporary Notes 2019-1 April 24, 2019 May 1, 2020 $533,658.81 General Obligation Temporary Notes 2019-2 October 15, 2019 May 4, 2020 $5,085,000.00 5. Security for the Notes. The Notes are general obligations of the Issuer, payable as to both principal and interest in part from special assessments levied upon the property benefitted by the construction of certain public improvements, and if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the Issuer. The balance of the principal and interest on the Notes is payable from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the Issuer. The full faith, credit and resources of the Issuer are pledged under the Note Resolution to the payment of the principal of and interest on the Notes. 6. Sale of Notes. The Notes have been sold at rates not in excess of the limitations set forth in K.S.A. 10-1009. The Notice of Sale dated April 7, 2020, and included in the Transcript, constitutes a full true and correct copy thereof. A copy of such Notice of Sale and Preliminary Official Statement was sent to prospective purchasers of the Notes, and to all other persons and firms requesting copies of sch Notice of 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 Notes. To the best of our knowledge, the Official Statement, other than the sections entitled "The Notes," "The Bonds," "Legal Matters," "Tax Matters," and Appendices B, C and D, about which the Issuer expresses no opinion, is true in all material respects, and does not contain any untrue statement of a material fact or does not omit to state a material fact, necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. As of this date there has been no material adverse change in the financial condition or the financial affairs of the Issuer since the date of the Official Statement. No other event has occurred which is necessary to be disclosed in the Official Statement in order to make the statements therein not misleading in any material respect as of the date of this Certificate. The Issuer has previously caused to be delivered to the Purchaser copies of the Official Statement. 8. Continuing Disclosure Undertaking. The Issuer, in the Note Resolution, has covenanted to disseminate such information as is required in accordance with the provisions of the SEC Rule and the Continuing Disclosure Undertaking, which are included in the Transcript and incorporated in this Certificate by reference. 9. Non-Litigation. There is no controversy, action, suit, proceeding, or to the best of our knowledge, any inquiry or investigation at law or in equity or before or by any public board or body pending or, to the best or our knowledge, threatened against or affecting the Issuer, its officers or its property, or, to the best of our knowledge, any basis therefor questioning, disputing or affecting in any way: (a) the legal organization of the Issuer or its boundaries; (b) the right or title of any of its officers to their respective offices; ( c) the legality of any official act shown to have been done in the Transcript; ( d) the constitutionality or validity of the indebtedness represented by the Notes shown to be authorized in the Transcript; ( e) the validity of the Notes, 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 Notes; or (g) the federal or state tax-exempt status of the interest on the Notes; wherein any unfavorable decision, ruling or finding would adversely affect the Issuer, the transactions contemplated by the Note Resolution, or the Official Statement, or the validity or enforceability of the Notes, which are not disclosed in the final Official Statement. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 2 WITNESS our hands and the seal of the Issuer. Signature Official Title Mayor Clerk Shandi Wicks, CMC, City Clerk (Signature Page to Closing Certificate -Notes) FEDERAL TAX CERTIFICATE Dated as of April 29, 2020 OF CITY OF SALINA, KANSAS $7,050,000 GENERAL OBLIGATION TEMPORARY NOTES SERIES 2020-1 Section 1.1. Section 2.1. Section 2.2. Section 3.1. Section 3.2. Section 3.3. Section 3.4. Section 3.5. Section 3.6. Section 3.7. Section 3.8. Section 3.9. Section 3.10. Section 3.11. Section 3.12. Section 3.13. Section 3.14. FEDERAL TAX CERTIFICATE TABLE OF CONTENTS PARTIES AND RECITALS ............................................................................................ 1 ARTICLE I DEFINITIONS Definitions of Words and Terms ...................................................................................... 1 ARTICLE II GENERAL REPRESENT A TIO NS AND COVENANTS Representations and Covenants of the Issuer ................................................................... 6 Survival of Representations and Covenants ..................................................................... 9 ARTICLE III ARBITRAGE CERTIFICATIONS AND COVENANTS General ............................................................................................................................. 9 Reasonable Expectations .................................................................................................. 9 Purposes of the Financing ............................................................................................... 10 Funds and Accounts ....................................................................................................... 10 Amount and Use of Note Proceeds ................................................................................. 10 Multipurpose Issue ......................................................................................................... 10 No Current Refunding .................................................................................................... 10 Project Completion ......................................................................................................... 11 Sinking Funds ................................................................................................................. 11 Reserve, Replacement and Pledged Funds ..................................................................... 11 Purpose Investment Yield ............................................................................................... 11 Issue Price and Yield on Notes ....................................................................................... 11 Miscellaneous Arbitrage Matters .................................................................................... 12 Conclusion ...................................................................................................................... 12 ARTICLE IV POST-ISSUANCE TAX REQUIREMENTS, POLICIES AND PROCEDURES Section 4.1. Section 4.2. Section 4.3. Section 4.4. Section 4.5. Section 4.6. Section 4.7. Section 4.8. General ........................................................................................................................... 12 Record Keeping, Use ofNote Proceeds and Use of Financed Facility .......................... 13 Temporary PeriodsNield Restriction ............................................................................. 13 Fair Market Value ........................................................................................................... 14 Certain Gross Proceeds Exempt from the Rebate Requirement ..................................... 16 Computation and Payment of Arbitrage Rebate and Yield Reduction Amounts ...................................................................................................................... 18 Successor Rebate Analyst. .............................................................................................. 19 Filing Requirements ....................................................................................................... 19 (i) Section 4.9. Section 5.1. Section 5.2. Section 5.3 . Section 5.4. Section 5.5. Section 5.6. Section 5.7. Section 5.8. Section 5.9. Section 5. I 0. Survival after Defeasance ............................................................................................... I 9 ARTICLE V MISCELLANEOUS PROVISIONS Term of Tax Certificate .................................................................................................. I 9 Atnendments ................................................................................................................... 20 Opinion of Bond Counsel ............................................................................................... 20 Reliance .......................................................................................................................... 20 Severability ..................................................................................................................... 20 Benefit of Agreement ..................................................................................................... 20 Default, Breach and Enforcement .................................................................................. 20 Execution in Counterparts .............................................................................................. 20 Governing Law ............................................................................................................... 20 Electronic Transactions .................................................................................................. 21 Signatures ....................................................................................................................... S-1 Exhibit A -Debt Service Schedule and Proof of Note Yield Exhibit B -IRS Form 8038-G Exhibit C-1 -Purchaser's Receipt and Issue Price Certificate Exhibit C-2 -Municipal Advisor's Certificate Regarding the Competitive Sale Exhibit D -Description of Property Comprising the Financed Facility Exhibit E -Sample Annual Compliance Checklist * * * (ii) FEDERAL TAX CERTIFICATE THIS FEDERAL TAX CERTIFICATE (the "Tax Certificate"), is executed as of April 29, 2020, by the City of Salina, Kansas, a political subdivision organized and existing under the laws of the State of Kansas (the "Issuer"). RECITALS 1. This Tax Certificate is being executed and delivered in connection with the issuance by the Issuer of $7,050,000 principal amount of General Obligation Temporary Notes, Series 2020-1 (the "Notes"), under Resolution No. 20-7817 adopted by the governing body of the Issuer, for the purposes described in this Tax Certificate and in the Resolution. 2. The Internal Revenue Code of 1986, as amended (the "Code"), and the applicable Regulations and rulings issued by the U.S. Treasury Department (the "Regulations"), impose certain limitations on the uses and investment of the Note proceeds and of certain other money relating to the Notes and set forth the conditions under which the interest on the Notes will be excluded from gross income for federal income tax purposes. 3. The Issuer is executing this Tax Certificate in order to set forth certain facts, covenants, representations, and expectations relating to the use of Note proceeds and the property financed or refinanced with those proceeds and the investment of the Note proceeds and of certain other related money, in order to establish and maintain the exclusion of the interest on the Notes from gross income for federal income tax purposes, and to provide guidance for complying with the arbitrage rebate and yield reduction amounts provisions of Code § 148( f). 4. The Issuer has adopted a Tax Compliance Procedure (as defined below) for the purpose of setting out general procedures for the Issuer to continuously monitor and comply with the federal income tax requirements set out in the Code and the Regulations. This Tax Certificate is entered into as required by the Tax Compliance Procedure to set out specific tax compliance procedures applicable to the Notes. NOW, THEREFORE, the Issuer represents, covenants and agrees as follows: ARTICLE I DEFINITIONS Section 1.1. Definitions of Words and Terms. Except as otherwise provided in this Tax Certificate or unless the context otherwise requires, capitalized words and terms used in this Tax Certificate have the same meanings as set forth in the Resolution, and certain other words and phrases have the meanings assigned in Code§§ 103, 141-150 and the Regulations. The following words and terms used in this Tax Certificate have the following meanings: "Adjusted Gross Proceeds" means the Gross Proceeds of the New Money Portion or the Refunding Portion, as applicable, reduced by amounts (a) in a Bona Fide Debt Service Fund or a reasonably required reserve or replacement fund, (b) that as of the Issue Date are not expected to be Gross Proceeds, but which arise after the end of the applicable spending period, and (c) representing grant repayments or sale or Investment proceeds of any purpose Investment. "Annual Compliance Checklist" means a checklist for each project or improvement comprising the Financed Facility designed to measure compliance with the requirements of this Tax Certificate and the Tax Compliance Procedure after the Issue Date as further described in Section 4.2 and substantially in the form attached as Exhibit E. "Available Construction Proceeds" means the sale proceeds of the New Money Portion, increased by (a) Investment earnings on the sale proceeds, (b) earnings on amounts in a reasonably required reserve or replacement fund allocable to the Notes but not funded from the Notes, and (c) earnings on such earnings, reduced by sale proceeds (1) in any reasonably required reserve fund or (2) used to pay issuance costs of the Notes. But Available Construction Proceeds do not include Investment earnings on amounts in a reasonably required reserve or replacement fund after the earlier of (i) the second anniversary of the Issue Date or (ii) the date the Financed Facility is substantially completed. "Bona Fide Debt Service Fund" means a fund, which may include Note proceeds, that (a) is used primarily to achieve a proper matching of revenues with principal and interest payments within each Note Year; and (b) is depleted at least once each Note Year, except for a reasonable carryover amount not to exceed the greater of (1) the earnings on the fund for the immediately preceding Note Year, or (2) one- twelfth of the principal and interest payments on the Notes for the immediately preceding Note Year. "Bond Compliance Officer" means the Issuer's Finance Director or other person named in the Tax Compliance Procedure. "Bond Counsel" means Gilmore & Bell, P.C., or other firm of nationally recognized bond counsel acceptable to the Issuer. "Code" means the Internal Revenue Code of 1986, as amended. "Computation Date" means May 1, 2021, the final maturity date of the Notes, but the Issuer reserves the right to select a different date consistent with the Regulations. "Final Written Allocation" means the Final Written Allocation of expenditures prepared by the Bond Compliance Officer in accordance with the Tax Compliance Procedure and Section 4.2(b) of this Tax Certificate. "Financed Facility" means the portion of the Project being financed or refinanced with the proceeds of the Notes as described in the Resolution, all as described on Exhibit D. "Gross Proceeds" means (a) sale proceeds (any amounts actually or constructively received by the Issuer from the sale of the Notes, including amounts used to pay underwriting discount or fees, but excluding pre-issuance accrued interest), (b) Investment proceeds (any amounts received from investing sale proceeds, or other Investment proceeds), (c) any amounts held in a sinking fund for the Notes, (d) any amounts held in a pledged fund or reserve fund for the Notes, (e) any other replacement proceeds, and (f) any transferred proceeds (unspent sale proceeds or investment proceeds of the Refunded Notes). Specifically, Gross Proceeds includes (but is not limited to) amounts held in the following funds and accounts: (1) Improvement Fund. 2 (2) Debt Service Account. (3) Rebate Fund (to the extent funded with sale proceeds or Investment proceeds of the Notes). "Guaranteed Investment Contract" is any Investment with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate, including any agreement to supply Investments on 2 or more future dates (e.g., a forward supply contract). "Investment" means any security, obligation, annuity contract or other investment-type property that is purchased directly with, or otherwise allocated to, Gross Proceeds. This term does not include a tax- exempt bond, except for "specified private activity bonds" as defined in Code § 57(a)(5)(C), but it does include the investment element of most interest rate caps. "IRS" means the United States Internal Revenue Service. "Issue Date" means April 29, 2020. "Issuer" means City of Salina, Kansas and its successors and assigns, or any body, agency or instrumentality of the State of Kansas succeeding to or charged with the powers, duties and functions of the Issuer. "Management or Service Agreement" means a legal agreement defined in Regulations § l .141- 3(b) as a management, service, or incentive payment contract with an entity that provides services involving all or a portion of any function of the Financed Facility, such as a contract to manage the entire Financed Facility or a portion of the Financed Facility. Contracts for services that are solely incidental to the primary governmental function of the Financed Facility (for example, contracts for janitorial, office equipment repair, billing or similar services); however, are not treated as Management or Service Agreements. "Measurement Period" means, with respect to each item of property financed as part of the Financed Facility with proceeds of the New Money Portion, the period beginning on the later of (a) the Issue Date or (b) the date the property is placed in service and ending on the earlier of (I) the final maturity date of the Bonds or (2) the end of the expected economic useful life of the property, and, with respect to each item of property financed as part of the Financed Facility with proceeds of the Original Obligations, the period beginning on the later of(a) the issue date of the Original Obligations or (b) the date the property was or will be placed in service, and ending on the earlier of ( 1) the final maturity date of the Bonds or (2) the end of the expected economic useful life of the property. "Minor Portion" means the lesser of$100,000 or 5% of the sale proceeds of the Notes. "Municipal Advisor" means Stifel, Nicolaus & Company, Incorporated, municipal advisor to the Issuer. "Net Proceeds" means when used in reference to the Notes or the New Money Portion, the sale proceeds (excluding pre-issuance accrued interest), less an allocable share of any proceeds deposited in a reasonably required reserve or replacement fund, plus an allocable share of all Investment earnings on such sale proceeds. "New Money Portion" means the portion of the Notes described in Section 3.06 together with the remaining Gross Proceeds of the Bonds properly allocable to financing the Improvements, rather than refinancing the Refunded Notes. 3 "Non-Qualified Use" means use of Note proceeds or the Financed Facility in a trade or business carried on by any Non-Qualified User. The rules set out in Regulations § 1.141-3 determine whether Note proceeds or the Financed Facility are "used" in a trade or business. Generally, ownership, a lease, or any other use that grants a Non-Qualified User a special legal right or entitlement with respect to the Financed Facility, will constitute use under Regulations§ 1.141-3. "Non-Qualified User" means any person or entity other than a Qualified User. "Note" or "Notes" means any Note or Notes described in the recitals, authenticated and delivered under the Resolution. "Note Year" means each one-year period (or shorter period for the first Note Year) ending May 1, or another one-year period selected by the Issuer. "Official Intent Date" means each date that the Issuer adopted a resolution or ordinance declaring the intent of the Issuer to finance any of the Financed Facility with tax-exempt obligations and to reimburse the Issuer for expenditures made for the Financed Facility prior to the issuance of those obligations. "Opinion of Bond Counsel" means the written opinion of Bond Counsel to the effect that the proposed action or the failure to act will not adversely affect the exclusion of the interest on the Notes from gross income for federal income tax purposes. "Original Obligations" means the Issuer's temporary note obligations directly or indirectly refinanced by the Bonds, which were the initial issues of tax-exempt governmental obligations that financed or refinanced a portion of the Financed Improvements. "Post-Issuance Tax Requirements" means those requirements related to the use of proceeds of the Notes, the use of the Financed Facility and the investment of Gross Proceeds after the Issue Date of the Notes. "Project" means all of the property being acquired, developed, constructed, renovated, and equipped by the Issuer using Note proceeds and Qualified Equity, all as described on Exhibit D. "Purchaser" means UMB Bank N.A., Kansas City, Missouri, the original purchaser of the Notes, and any successor and assigns. "Qualified Equity" means funds that are not derived from proceeds of a tax-exempt financing that are spent on the Project at any time during the period beginning not earlier than the later of (a) 60 days prior to the Official Intent Date or (b) three years prior to the Issue Date, and ending not later than the date the Project is capable of and actually used at substantially its designed level. Qualified Equity excludes an ownership interest in real property or tangible personal property. "Qualified Use Agreement" means any of the following: (a) A lease or other short-term use by members of the general public who occupy the Financed Facility on a short-term basis as in the ordinary course of the Issuer's governmental purposes. (b) Agreements with Qualified Users or Non-Qualified Users to use all or a portion of the Financed Facility for a period up to 200 days in length pursuant to an arrangement whereby (1) 4 the use of the Financed Facility under the same or similar arrangements is predominantly by natural persons who are not engaged in a trade or business and (2) the compensation for the use is determined based on generally applicable, fair market value rates that are in effect at the time the agreement is entered into or renewed. Any Qualified User or Non-Qualified User using all or any portion of the Financed Facility under this type of arrangement may have a right of first refusal to renew the agreement at rates generally in effect at the time of the renewal. (c) Agreements with Qualified Users or Non-Qualified Users to use all or a portion of the Financed Facility for a period up to 100 days in length pursuant to arrangements whereby (1) the use of the property by the person would be general public use but for the fact that generally applicable and uniformly applied rates are not reasonably available to natural persons not engaged in a trade or business, (2) the compensation for the use under the arrangement is determined based on applicable, fair market value rates that are in effect at the time the agreement is entered into or renewed, and (3) the Financed Facility was not constructed for a principal purpose of providing the property for use by that Qualified User or Non-Qualified User. Any Qualified User or Non- Qualified User using all or any portion of the Financed Facility under this type of arrangement may have a right of first refusal to renew the agreement at rates generally in effect at the time of the renewal. (d) Agreements with Qualified Users or Non-Qualified Users to use all or a portion of the Financed Facility for a period up to 50 days in length pursuant to a negotiated arm's-length arrangement at fair market value so long as the Financed Facility was not constructed for a principal purpose of providing the property for use by that person. "Qualified User" means a State, territory, possession of the United States, the District of Columbia, or any political subdivision thereof, or any instrumentality of such entity, but it does not include the United States or any agency or instrumentality of the United States. "Reasonable Retainage" means Gross Proceeds retained by the Issuer for reasonable business purposes, such as to ensure or promote compliance with a construction contract; provided that such amount may not exceed (a) for purposes of the 18-month spending test, 5% of net sale proceeds of the New Money Portion on the date 18 months after the Issue Date, or (b) for purposes of the 2-year spending test, 5% of the Available Construction Proceeds as of the end of the 2-year spending period. "Rebate Analyst" means Gilmore & Bell, P.C. or any successor Rebate Analyst selected pursuant to this Tax Certificate. "Refunded Notes" means that portion of the Series 2019-1 Notes and Series 2019-2 Notes refunded by the Notes. "Refunding Portion" means the sale proceeds of the Bonds identified in Section 3.06, together with the remaining Gross Proceeds of the Bonds properly allocable to the refunding of the Refunded Notes. "Regulations" means all Regulations issued by the U.S. Treasury Department to implement the provisions of Code§§ 103 and 141through150 and applicable to the Notes. "Resolution" means the Resolution as originally executed by the Issuer as amended and supplemented in accordance with the provisions of the Resolution. 5 "Series 2019-1 Notes" means the Issuer's General Obligation Temporary Notes, Series 2019-1, dated April 24, 2019. "Series 2019-2 Notes" means the Issuer's General Obligation Temporary Notes, Series 2019-2, dated October 15, 2019. "State" means the State of Kansas. "Tax Certificate" means this Federal Tax Certificate as it may from time to time be amended and supplemented in accordance with its terms. "Tax Compliance Procedure" means the Issuer's Tax and Securities Compliance Policy and Procedure, dated June 11, 2012, as amended and supplemented in accordance with the terms of the Tax Compliance Procedure. "Tax-Exempt Bond File" means documents and records for the Notes, maintained by the Bond Compliance Officer pursuant to the Tax Compliance Procedure. "Transcript" means the Transcript of Proceedings relating to the authorization and issuance of the Notes. "Yield" means yield on the Notes, computed under Regulations § 1.148-4, and yield on an Investment, computed under Regulations § 1. I 48-5. Section 2.1. covenants as follows: ARTICLE II GENERAL REPRESENTATIONS AND COVENANTS Representations and Covenants of the Issuer. The Issuer represents and (a) Organization and Authority. The Issuer (1) is a political subdivision organized and existing under the laws of the State of Kansas, and (2) has lawful power and authority to issue the Notes for the purposes set forth in the Resolution, to enter into, execute and deliver the Resolution, the Notes, and this Tax Certificate and to carry out its obligations under this Tax Certificate and under such documents, and (3) by all necessary action has been duly authorized to execute and deliver the Resolution, the Notes, and this Tax Certificate, acting by and through its duly authorized officials. (b) Tax-Exempt Status of Notes-General Covenant and Allocation of Proceeds to Project. (I) The Issuer (to the extent within its power or direction) will not use any money on deposit in any fund or account maintained in connection with the Notes, whether or not such money was derived from the proceeds of the sale of the Notes or from any other source, in a manner that would cause the Notes to be "arbitrage bonds," within the meaning of Code§ 148, and will not (to the extent within its power or direction) otherwise use or permit the use of any Note proceeds or any other funds of the Issuer, directly or indirectly, in any manner, or take or permit to be taken any other action or actions, that would cause interest on the Notes to be included in gross income for federal income tax purposes. 6 (2) The Issuer will account for the expenditure of the Note proceeds and Qualified Equity for the Project as described in Section 4.2. For purposes of the following covenants related to the use of the Financed Facility, any Non-Qualified Use shall be treated as first allocated entirely to the portion of the Project financed with Qualified Equity, and then only to the extent of any excess, to the portion of the Project financed with Bond proceeds (that is, the Financed Facility). (c) Governmental Obligations-Use of Proceeds. Throughout the Measurement Period all of the Financed Facility has been and is expected to be owned by the Issuer or another Qualified User. Throughout the Measurement Period no portion of the Financed Facility is expected to be used in a Non- Qualified Use. Throughout the Measurement Period the Issuer will not permit any Non-Qualified Use of the Financed Facility without first consulting with Bond Counsel. (d) Governmental Obligations-Private Security or Payment. As of the Issue Date the Issuer expects that none of the principal of and interest on the Notes will be (under the terms of the Notes or any underlying arrangement) directly or indirectly: (1) secured by (i) any interest in property used or to be used for a Non-Qualified Use, or (ii) any interest in payments in respect of such property; or (2) derived from payments (whether or not such payments are made to the Issuer) in respect of property, or borrowed money, used or to be used for a Non-Qualified Use. For purposes of the foregoing, taxes of general application, including payments in lieu of taxes, are not treated as private payments or as private security. The Issuer will not permit any private security or payment with respect to the Notes without first consulting with Bond Counsel. (e) No Private Loan-Special Assessments. Not more than 5% of the net proceeds of the Notes will be loaned directly or indirectly to any Non-Qualified User. The payment of principal and interest on the Notes will be funded in whole or in part from a mandatory special assessment against the property benefiting from the improvements financed or refinanced by the Notes. The use of the proceeds of the Notes is not treated as a loan of the Note proceeds because (1) the special assessment is an enforced contribution for the purpose of raising revenue for a specific capital improvement; (2) the assessment does not include any fee for services; (3) the assessment and collection of the tax is not dependent upon, and does not vary depending on, whether the taxpayer engaged, or the property is used, in a trade or business; and (4) the tax is imposed to pay for an essential governmental function. (f) Management or Service Agreements. As of the Issue Date the Issuer has not entered into any Management or Service Agreements with Non-Qualified Users. During the Measurement Period the Issuer will not enter into or renew any Management or Service Agreement with any Non-Qualified User without first consulting with Bond Counsel. (g) Leases. As of the Issue Date the Issuer has not entered into any leases of any portion of the Financed Facility. During the Measurement Period the Issuer will not enter into or renew any lease or similar agreement or arrangement other than a Qualified Use Agreement without first consulting with Bond Counsel. (h) Limit on Maturity of Notes. A list of the assets included in the Project and a computation of the "average reasonably expected economic life" is attached to this Tax Certificate as Exhibit D. Based 7 on this computation, the "average maturity" of the Notes as computed by Bond Counsel, does not exceed the average reasonably expected economic life of the Financed Facility. (i) Expenditure of Note proceeds. (1) Accounting for Expenditures. The Issuer will evidence each allocation of the proceeds of the Notes and Qualified Equity for the Project to an expenditure in writing. No allocation will be made more than 18 months following the later of (i) the date of the expenditure or (ii) the date the Financed Facility was placed in service. (2) Reimbursement of Expenditures; Official Intent. On each Official Intent Date, the governing body of the Issuer adopted a resolution declaring the intent of the Issuer to finance the Financed Facility with tax-exempt obligations and to reimburse the Issuer for expenditures made for the Financed Facility prior to the issuance of those obligations. Copies of these resolutions are included in Tabs l to 3 of the Transcript. The Issuer does not expect that any proceeds of the Notes will be allocated to expenditures paid by the Issuer prior to the Issue Date, but the Issuer reserves the ability to make such a reimbursement allocation, provided that, except as otherwise permitted under Regulations§ l.150-2(f) (for example, issuance costs, de minimis amounts, and preliminary expenditures), (A) no portion of the Net Proceeds of the Notes will be used to reimburse an expenditure paid by the Issuer more than 60 days prior to the date the respective resolution was adopted, (B) no reimbursement allocation will be made more than 18 months following the later of (i) the date of the expenditure or (ii) the date the Financed Facility was placed in service, or (C) no reimbursement allocation will be made more than 3 years following the date of the expenditure. G) Registered Notes. The Resolution requires that all of the Notes will be issued and held in registered form within the meaning of Code § 149( a). (k) Notes Not Federally Guaranteed. The Issuer will not take any action or permit any action to be taken which would cause any Note to be "federally guaranteed" within the meaning of Code§ 149(b). (I) IRS Form 8038-G. Bond Counsel will prepare IRS Form 8038-G (Information Return for Tax-Exempt Governmental Obligations) based on the representations and covenants of the Issuer contained in this Tax Certificate or otherwise provided by the Issuer. Bond Counsel will sign the return as a paid preparer following completion and will then deliver copies to the Issuer for execution and for the Issuer's records. The Issuer agrees to timely execute and return to Bond Counsel the execution copy of Form 8038- G for filing with the IRS. A copy of the "as-filed" copy along with proof of filing will be included as Exhibit B. (m) Hedge Bonds. At least 85% of the net sale proceeds (the sale proceeds of the New Money Portion less any sale proceeds invested in a reserve fund) of the New Money Portion will be used to carry out the governmental purpose of the New Money Portion within three years after the Issue Date, and not more than 50% of the proceeds of the New Money Portion will be invested in Investments having a substantially guaranteed Yield for four years or more. At least 85% of the net sale proceeds (the sale proceeds of the Original Obligations less any sale proceeds invested in a reserve fund) of each issue comprising the Original Obligations were or will be used to carry out the governmental purpose of the Original Obligations within three years after the respective issue date of the Original Obligations, and not more than 50% of the proceeds of the Original Obligations were or will be invested in Investments having a substantially guaranteed Yield for four years or more. 8 (n) Compliance with Future Tax Requirements. The Issuer understands that the Code and the Regulations may impose new or different restrictions and requirements on the Issuer in the future. The Issuer will comply with such future restrictions that are necessary to maintain the exclusion of the interest on the Notes from gross income for federal income tax purposes. (o) Single Issue; No Other Issues. The Notes 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 Notes, (2) are being sold under the same plan of financing as the Notes, and (3) are expected to be paid from substantially the same source of funds as the Notes (disregarding guarantees from unrelated parties, such as bond insurance). For purposes of the foregoing, simultaneously with the Notes, the Issuer sold its General Obligation Internal Improvement Bonds, Series 2020-A, which are not part of the same plan of financing as the Notes and are not expected to be paid from substantially the same sources of funds as the Notes, and therefore are not part of the same "issue" as the Notes under Regulations§ 1.150-1 ( c ). A separate Federal Tax Certificate and IRS Form 8038-G are being executed in connection with the issuance of these bonds. (p) Interest Rate Swap. As of the Issue Date the Issuer has not entered into an interest rate swap agreement or any other similar arrangement designed to modify its interest rate risk with respect to the Notes. The Issuer will not enter into any such arrangement in the future without first consulting with Bond Counsel. (q) Guaranteed Investment Contract. As of the Issue Date, the Issuer does not expect to enter into a Guaranteed Investment Contract for any Gross Proceeds of the Notes. The Issuer will be responsible for complying with Section 4.4( d) if it decides to enter into a Guaranteed Investment Contract at a later date. (r) Bank Qualified Tax-Exempt Obligations. The Notes are not "qualified tax-exempt obligations" under Code§ 265(b)(3). Section 2.2. Survival of Representations and Covenants. All representations, covenants and certifications contained in this Tax Certificate or in any certificate or other instrument delivered by the Issuer under this Tax Certificate, will survive the execution and delivery of such documents and the issuance of the Notes, as representations of facts existing as of the date of execution and delivery of the instruments containing such representations. The foregoing covenants of this Section will remain in full force and effect notwithstanding the defeasance of the Notes. ARTICLE III ARBITRAGE CERTIFICATIONS AND COVENANTS Section 3.1. General. The purpose of this Article III is to certify, under Regulations § l. l 48- 2(b ), the Issuer's expectations as to the sources, uses and investment of Note proceeds and other money, in order to support the Issuer's conclusion that the Notes are not arbitrage bonds. The person executing this Tax Certificate on behalf of the Issuer is an officer of the Issuer responsible for issuing the Notes. Section 3.2. Reasonable Expectations. The facts, estimates and expectations set forth in this Article III are based upon and in reliance upon the Issuer's understanding of the documents and certificates that comprise the Transcript, and the representations, covenants and certifications of the parties contained 9 therein. To the Issuer's knowledge, the facts and estimates set forth in this Tax Certificate are accurate, and the expectations of the Issuer set forth in this Tax Certificate are reasonable. The Issuer has no knowledge that would cause it to believe that the representations, warranties and certifications described in this Tax Certificate are unreasonable or inaccurate or may not be relied upon. Section 3.3. Purposes of the Financing. The Notes are being issued for the purpose of providing funds to (a) finance a portion of the costs of the Project; and (b) refinance the Refunded Notes. Section 3.4. under the Resolution: Funds and Accounts. The following funds and accounts have been established Improvement Fund; Debt Service Account; and Rebate Fund. Section 3.5. Amount and Use of Note Proceeds. (a) Amount of Note Proceeds. The total proceeds to be received by the Issuer from the sale of the Notes will be as follows: follows: Principal Amount Less Underwriting Discount Total Proceeds Received by Issuer $7,050,000.00 (15,510.00) $7,034,490.00 (b) Use of Note Proceeds. The Note proceeds are expected to be allocated to expenditures as (1) All accrued interest, if any, will be deposited in the Debt Service Account and used to pay interest on the Notes. (2) The sum of$5,685,440.93 of Note proceeds will be transferred to the paying agent for the Refunded Notes, with irrevocable instructions to apply such amount to the payment of the Refunded Notes. (3) The sum of $44,049.07 of Note proceeds will be used to pay the costs of issuance of the Notes. ( 4) The balance of $1,305,000.00 of Note proceeds, plus investment earnings thereon, will be used to pay or reimburse the Issuer for costs of the Financed Facility. Section 3.6. Multipurpose Issue. Pursuant to Regulations § l. l 48-9(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 two separate issues (a New Money Portion and a Refunding Portion) for purposes of applying certain of the arbitrage restrictions under Code§ 148. Section 3.7. Current Refunding. IO (a) Proceeds Used for Current Refunding. Proceeds of the Bonds will be used to pay principal of and interest on the Refunded Notes. All such proceeds shall be spent not later than 90 days after the Issue Date. (b) Transferred Proceeds. As of the Issue Date, unspent proceeds (sale proceeds, Investment proceeds or transferred proceeds) of the Refunded Notes remain in the improvement funds therefor. The unspent proceeds of the Series 2019-I Notes will be used, along with Note proceeds, to pay the principal of and interest on the Refunded Notes that are Series 2019-1 Notes, and the unspent proceeds of the Series 2019-11 Notes will be used to pay costs of the Project. Upon discharge of any principal amount of the Refunded Notes with proceeds of the Bonds, a ratable portion of the remaining unspent proceeds of the Refunded Notes will become "transferred proceeds" of the Bonds (determined in accordance Regulations § l.148-9(b)). Section 3.8. Project Completion. The Issuer has incurred, or will incur within 6 months after the Issue Date, a substantial binding obligation to a third party to spend at least 5% of the Net Proceeds of the New Money Portion on the Financed Facility. The completion of the Financed Facility and the allocation of the Net Proceeds of the New Money Portion to expenditures will proceed with due diligence. At least 85% of the Net Proceeds of the New Money Portion will be allocated to expenditures on the Financed Facility within 3 years after the Issue Date. Section 3.9. Sinking Funds. The Issuer is required to make periodic payments in amounts sufficient to pay the principal of and interest on the Notes. Such payments will be deposited into the Debt Service Account. Except for the Debt Service Account, no sinking fund or other similar fund that is expected to be used to pay principal of or interest on the Notes has been established or is expected to be established. The Debt Service Account is used primarily to achieve a proper matching of revenues with principal and interest payments on the Notes within each Note Year, and the Issuer expects that the Debt Service Account will qualify as a Bona Fide Debt Service Fund. Section 3.10. Reserve, Replacement and Pledged Funds. (a) Debt Service Reserve Fund. No reserve or replacement fund has been established for the Notes. (b) No Replacement or Pledged Funds. None of the Note proceeds will be used as a substitute for other funds that were intended or earmarked to pay costs of the Financed Facility, and that instead has been or will be used to acquire higher yielding Investments. Except for the Debt Service Account, there are no other funds pledged or committed in a manner that provides a reasonable assurance that such funds would be available for payment of the principal of or interest on the Notes if the Issuer encounters financial difficulty. Section 3.11. Purpose Investment Yield. The proceeds of the Notes will not be used to purchase an Investment for the purpose of carrying out the governmental purpose of the financing. Section 3.12. Issue Price and Yield on Notes. (a) Issue Price. Based on the Purchaser's certifications in the Purchaser's Receipt for Notes and Issue Price Certificate in Exhibit C-1 and the Municipal Advisor's Certificate Regarding the Competitive Sale in Exhibit C-2, the Issuer hereby elects to establish the issue prices of the Notes pursuant to Regulations § l.148-l(f)(2)(iii) (relating to the so-called "competitive sale rule"). Therefore, the aggregate issue price of the Notes for such purpose is $7,050,000.00. 11 (b) Note l'ield. Based on the issue price, the Yield on the Notes is 0.9975%, as computed by Bond Counsel as shown on Exhibit A. Section 3.13. Miscellaneous Arbitrage Matters. (a) No Abusive Arbitrage Device. The Notes are not and will not be part of a transaction or series of transactions that has the effect of (1) enabling the Issuer to exploit the difference between tax- exempt and taxable interest rates to gain a material financial advantage, and (2) overburdening the tax- exempt bond market. (b) No Over-Issuance. The sale proceeds of the Notes, together with expected Investment earnings thereon and other money contributed by the Issuer, do not exceed the cost of the governmental purpose of the Notes as described above. Section 3.14. Conclusion. On the basis of the facts, estimates and circumstances set forth in this Tax Certificate, the Issuer does not expect that the Note proceeds will be used in a manner that would cause any Note to be an "arbitrage bond" within the meaning of Code§ 148 and the Regulations. ARTICLE IV POST-ISSUANCE TAX REQUIREMENTS, POLICIES AND PROCEDURES Section 4.1. General. (a) Purpose of Article. The purpose of this Article is to supplement the Tax Compliance Procedure and to set out specific policies and procedures governing compliance with the federal income tax requirements that apply after the Notes are issued. The Issuer recognizes that interest on the Notes will remain excludable from gross income only if the Post-Issuance Tax Requirements are followed after the Issue Date. The Issuer further acknowledges that written evidence substantiating compliance with the Post- Issuance Tax Requirements must be retained in order to permit the Notes to be refinanced with tax-exempt obligations and substantiate the position that interest on the Notes is exempt from gross income in the event of an audit of the Notes by the IRS. (b) Written Policies and Procedures of the Issuer. The Issuer intends for the Tax Compliance Procedure, as supplemented by this Tax Certificate, to be its primary written policies and procedures for monitoring compliance with the Post-Issuance Tax Requirements for the Notes and to supplement any other formal policies and procedures related to tax compliance that the Issuer has established. The provisions of this Tax Certificate are intended to be consistent with the Tax Compliance Procedure. In the event of any inconsistency between the Tax Compliance Procedure and this Tax Certificate, the terms of this Tax Certificate will govern. (c) Bond Compliance Officer. The Issuer when necessary to fulfill its Post-Issuance Tax Requirements will, through its Bond Compliance Officer, sign Form 8038-T in connection with the payment of arbitrage rebate or yield reduction amounts, participate in any federal income tax audit of the Notes or related proceedings under a voluntary compliance agreement procedures (VCAP) or undertake a remedial action procedure pursuant to Regulations § 1.141-12. In each case, all costs and expenses incurred by the Issuer shall be treated as a reasonable cost of administering the Notes, and the Issuer shall be entitled to reimbursement and recovery of its costs to the same extent as provided in the Resolution or State law. 12 Section 4.2. Record Keeping; Use of Note Proceeds and Use of Financed Facility. (a) Record Keeping. The Bond Compliance Officer will maintain the Tax-Exempt Bond File for the Notes in accordance with the Tax Compliance Procedure. Unless otherwise specifically instructed in advice or a written Opinion of Bond Counsel or to the extent otherwise provided in this Tax Certificate, the Bond Compliance Officer shall retain records related to the Post-Issuance Tax Requirements until 3 years following the final maturity of (1) the Notes or (2) any obligation issued to refund the Notes. Any records maintained electronically must comply with Section 4.01 of Revenue Procedure 97-22, which generally provides that an electronic storage system must (i) ensure an accurate and complete transfer of the hardcopy records which indexes, stores, preserves, retrieves and reproduces the electronic records, (ii) include reasonable controls to ensure integrity, accuracy and reliability of the electronic storage system and to prevent unauthorized alteration or deterioration of electronic records, (iii) exhibit a high degree of legibility and readability both electronically and in hardcopy, (iv) provide support for other books and records of the Issuer and (v) not be subject to any agreement that would limit the ability of the IRS to access and use the electronic storage system on the Issuer's premises. (b) Accounting and Allocation of Note Proceeds and Qualified Equity to Expenditures. The Bond Compliance Officer will account for the investment and expenditure of Note proceeds in the level of detail required by the Tax Compliance Procedure. The expected allocation of the proceeds of the Notes and Qualified Equity to expenditures for the Financed Facility is set forth on Exhibit D. Upon completion of the Financed Facility and in connection with any long-term financing for the Financed Facility, the Bond Compliance Officer will supplement this expected allocation with a Final Written Allocation, as required by the Tax Compliance Procedure. (c) Annual Compliance Checklist. After completion of the Financed Facility and in connection with any long-term financing for the Financed Facility, the Bond Compliance Officer will prepare and complete an Annual Compliance Checklist at least annually, in accordance with the Tax Compliance Procedure. Attached as Exhibit E is a sample Annual Compliance Checklist for the Notes. ( d) Opinions of Bond Counsel. The Bond Compliance Officer is responsible for obtaining and delivering to the Issuer any advice or Opinion of Bond Counsel required under the provisions of this Tax Certificate, including any advice or Opinion of Bond Counsel required by this Tax Certificate or the Annual Compliance Checklist. Section 4.3. Temporary Periods/Yield Restriction. Except as described below, the Issuer will not invest Gross Proceeds at a Yield greater than the Yield on the Notes: (a) Improvement Fund-New Money Portion. Note proceeds deposited in the Improvement Fund allocable to the New Money Portion and investment earnings on those proceeds may be invested without Yield restriction for up to 3 years following the Issue Date. If any unspent proceeds remain in the Improvement Fund after 3 years, those amounts may continue to be invested without Yield restriction so long as the Issuer pays to the IRS all Yield reduction payments in accordance with Regulations § 1.148- S(c). These payments are required whether or not the Notes are exempt from the arbitrage rebate and yield reduction amounts requirements of Code§ 148. (b) Improvement Fund -Refunding Portion. Note proceeds deposited in the Improvement Fund allocable to the Refunding Portion may be invested without Yield restriction for up to 90 days after the Issue Date. 13 ( c) Debt Service Account. To the extent that the Debt Service Account qualifies as a Bona Fide Debt Service Fund, money in such account may be invested without Yield restriction for 13 months after the date of deposit. Earnings on such amounts may be invested without Yield restriction for one year after the date of receipt of such earnings. (d) Rebate Fund. Money, other than sale proceeds or Investment proceeds of the Notes, on deposit in the Rebate Fund may be invested without Yield restriction. (e) Minor Portion. In addition to the amounts described above, Gross Proceeds not exceeding the Minor Portion may be invested without Yield restriction. (f) Unexpended Proceeds of the Original Obligations. Unexpended proceeds from the Refunded Notes not utilized to retire the Refunded Notes may continue to be invested in accordance with the federal tax certificate for the Refunded Notes. Section 4.4. Fair Market Value. (a) General. No Investment may be acquired with Gross Proceeds for an amount (including transaction costs) in excess of the fair market value of such Investment, or sold or otherwise disposed of for an amount (including transaction costs) less than the fair market value of the Investment. The fair market value of any Investment is the price a willing buyer would pay to a willing seller to acquire the Investment in a bona fide, arm's-length transaction. Fair market value will be determined in accordance with Regulations § 1.148-5. (b) Established Securities Market. Except for Investments purchased for a Yield-restricted defeasance escrow, if an Investment is purchased or sold in an arm's-length transaction on an established securities market (within the meaning of Code§ 1273), the purchase or sale price constitutes the fair market value. Where there is no established securities market for an Investment, market value must be established using I of the paragraphs below. The fair market value of Investments purchased for a Yield-restricted defeasance escrow must be determined in a bona fide solicitation for bids that complies with Regulations § 1.148-5. (c) Certificates of Deposit. The purchase price of a certificate of deposit (a "CD") is treated as its fair market value on the purchase date if (I) the CD has a fixed interest rate, a fixed payment schedule, and a substantial penalty for early withdrawal, (2) the Yield on the CD is not less than the Yield on reasonably comparable direct obligations of the United States, and (3) the Yield is not less than the highest Yield published or posted by the CD issuer to be currently available on reasonably comparable CDs offered to the public. (d) Guaranteed Investment Contracts. The purchase price of a Guaranteed Investment Contract is treated as its fair market value on the purchase date if all of the following requirements are met: (I) Bona Fide Solicitation for Bids. The Issuer makes a bona fide solicitation for the Guaranteed Investment Contract, using the following procedures: (i) The bid specifications are in writing and are timely forwarded to potential providers, or are made available on an internet website or other similar electronic media that is regularly used to post bid specifications to potential bidders. A writing includes a hard copy, a fax, or an electronic e-mail copy. 14 (ii) The bid specifications include all "material" terms of the bid. A term is material if it may directly or indirectly affect the Yield or the cost of the Guaranteed Investment Contract. (iii) The bid specifications include a statement notifying potential providers that submission of a bid is a representation (A) that the potential provider did not consult with any other potential provider about its bid, (B) that the bid was determined without regard to any other formal or informal agreement that the potential provider has with the Issuer or any other person (whether or not in connection with the note issue), and (C) that the bid is not being submitted solely as a courtesy to the Issuer or any other person, for purposes of satisfying the requirements of the Regulations. (iv) The terms of the bid specifications are "commercially reasonable." A term is commercially reasonable if there is a legitimate business purpose for the term other than to increase the purchase price or reduce the yield of the Guaranteed Investment Contract. (v) The terms of the solicitation take into account the Issuer's reasonably expected deposit and draw-down schedule for the amounts to be invested. (vi) All potential providers have an equal opportunity to bid. If the bidding process affords any opportunity for a potential provider to review other bids before providing a bid, then providers have an equal opportunity to bid only if all potential providers have an equal opportunity to review other bids. Thus, no potential provider may be given an opportunity to review other bids that is not equally given to all potential providers (that is no exclusive "last look"). (vii) At least 3 "reasonably competitive providers" are solicited for bids. A reasonably competitive provider is a provider that has an established industry reputation as a competitive provider of the type of Investments being purchased. (2) Bids Received. The bids received must meet all of the following requirements: (i) At least 3 bids are received from providers that were solicited as described above and that do not have a "material financial interest" in the issue. For this purpose, (A) a lead underwriter in a negotiated underwriting transaction is deemed to have a material financial interest in the issue until 15 days after the Issue Date of the issue, (B) any entity acting as a financial advisor with respect to the purchase of the Guaranteed Investment Contract at the time the bid specifications are forwarded to potential providers has a material financial interest in the issue, and (C) a provider that is a related party to a provider that has a material financial interest in the issue is deemed to have a material financial interest in the issue. (ii) At least 1 of the 3 bids received is from a reasonably competitive provider, as defined above. (iii) If an agent or broker is used to conduct the bidding process, the agent or broker did not bid to provide the Guaranteed Investment Contract. 15 (3) Winning Bid. The winning bid is the highest yielding bona fide bid (determined net of any broker's fees). (4) Fees Paid. The obligor on the Guaranteed Investment Contract certifies the administrative costs that it pays (or expects to pay, if any) to third parties in connection with supplying the Guaranteed Investment Contract. (5) Records. The Issuer retains the following records with the Note documents until 3 years after the last outstanding Note is redeemed: (i) A copy of the Guaranteed Investment Contract. (ii) The receipt or other record of the amount actually paid for the Guaranteed Investment Contract, including a record of any administrative costs paid by the Issuer, and the certification as to fees paid, described in paragraph (d)(4) above. (iii) For each bid that is submitted, the name of the person and entity submitting the bid, the time and date of the bid, and the bid results. (iv) The bid solicitation form and, if the terms of Guaranteed Investment Contract deviated from the bid solicitation form or a submitted bid is modified, a brief statement explaining the deviation and stating the purpose for the deviation. (e) Other Investments. Ifan Investment is not described above, the fair market value may be established through a competitive bidding process, as follows: (I) at least 3 bids on the Investment must be received from persons with no financial interest in the Notes (e.g., as underwriters or brokers); and (2) the Yield on the Investment must be equal to or greater than the Yield offered under the highest bid. Section 4.5. Certain Gross Proceeds Exempt from the Rebate Requirement. (a) General. A portion of the Gross Proceeds of the Notes may be exempt from rebate pursuant to one or more of the following exceptions. The exceptions typically will not apply with respect to all Gross Proceeds of the Notes and will not otherwise affect the application of the Investment limitations described in Section 4.3. Unless specifically noted, the obligation to compute, and if necessary, to pay rebate as set forth in Section 4.6 applies even if a portion of the Gross Proceeds of the Notes is exempt from the rebate requirement. To the extent all or a portion of the Notes is exempt from rebate the Rebate Analyst may account for such fact in connection with its preparation of a rebate report described in Section 4.6. The Issuer may defer the final rebate Computation Date and the payment of rebate for the Notes to the extent permitted by Regulations§§ l.148-7(b)(l) and l.148-3(e)(2) but only in accordance with specific written instructions provided by the Rebate Analyst. (b) Applicable Spending Exceptions. (I) The Issuer expect that at least 75% of the Available Construction Proceeds will be used for construction or rehabilitation expenditures for property owned by the Issuer. 16 (2) The following optional rebate spending exceptions can apply to the Notes: New Money Portion: (i) 6-month spending exception (Code § 148(f)(4)(B) and Regulations § l.148-7(c)). (ii) (iii) 7(e)). 18-month spending exception (Regulations§ l.148-7(d)). 2-year spending exception (Code§ 148(f)(4)(C) and Regulations§ 1.148- Refunding Portion: 6-month spending exception (Code § 148(f)(4)(B) and Regulations§ l.148-7(c)). (c) Special Elections Made with Respect to Spending Exception Elections. No special elections are being made in connection with the application of the spending exceptions. (d) Bona Fide Debt Service Fund. To the extent that the Debt Service Account qualifies as a Bona Fide Debt Service Fund, Investment earnings in the fund cannot be taken into account in computing arbitrage rebate and yield reduction amounts (I) with respect to such portion that meets the 6-month, 18- month or 2-year spending exception, or (2) for a given Note Year, ifthe gross earnings on the Debt Service Account for such Note Year are less than $100,000. If the average annual debt service on the Notes does not exceed $2,500,000, the $100,000 earnings test may be treated as satisfied in every Note Year. (e) Documenting Application of Spending Exception. At any time prior to the first Computation Date, the Issuer may engage the Rebate Analyst to determine whether one or more spending exceptions has been satisfied, and the extent to which the Issuer must continue to comply with Section 4.6 hereof. (f) General Requirements for Spending Exception. The following general requirements apply in determining whether a spending exception is met. (I) Using Adjusted Gross Proceeds or Available Construction Proceeds to pay principal of any Notes is not taken into account as an expenditure for purposes of meeting any of the spending tests. (2) The 6-month spending exception generally is met if all Adjusted Gross Proceeds of the of the New Money Portion or the Refunding Portion, as applicable, are spent within 6 months following the Issue Date. The test may still be satisfied even ifup to 5% of the sale proceeds remain at the end of the initial 6-month period, so long as this amount is spent within 1 year of the Issue Date. (3) The 18-month spending exception generally is met if all Adjusted Gross Proceeds of the New Money Portion are spent in accordance with the following schedule: 17 Time Period After the Issue Date 6 months 12 months 18 months (Final) Minimum Percentage of Adjusted Gross Proceeds Spent 15% 60% 100% (4) The 2-year spending exception generally is met if all Available Construction Proceeds are spent in accordance with the following schedule: Time Period After the Issue Date 6 months 12 months 18 months 24 months (Final) Minimum Percentage of Available Construction Proceeds Spent 10% 45% 75% 100% (5) For purposes of applying the 18-month and 2-year spending exceptions only, the failure to satisfy the final spending requirement is disregarded if the Issuer uses due diligence to complete the Financed Facility and the failure does not exceed the lesser of 3% of the aggregate issue price of the New Money Portion or $250,000. No such exception applies for any other spending period. (6) For purposes of applying the 18-month and 2-year spending exceptions only, the Notes meet the applicable spending test even if, at the end of the final spending period, proceeds not exceeding a Reasonable Retainage remain unspent, so long as such Reasonable Retainage is spent within 30 months after the Issue Date in the case of the 18-month exception or 3 years after the Issue Date in the case of the 2-year spending exception. (7) Spending exceptions may be applied separately to the New Money Portion and the Refunding Portion of the Bonds. Section 4.6. Computation and Payment of Arbitrage Rebate and Yield Reduction Amounts. (a) Rebate Fund. The Issuer will keep the Rebate Fund separate from all other funds and will administer the Rebate Fund under this Tax Certificate. Any Investment earnings derived from the Rebate Fund will be credited to the Rebate Fund, and any Investment loss will be charged to the Rebate Fund. (b) Computation of Rebate Amount. The Issuer will provide the Rebate Analyst Investment reports relating to each fund held by it that contains Gross Proceeds of the Notes together with copies of Investment reports for any funds containing Gross Proceeds that are held by a party other than the Issuer annually as of the end of each Note Year and not later than I 0 days following each Computation Date. Each Investment report provided to the Rebate Analyst will contain a record of each Investment, including (I) purchase date, (2) purchase price, (3) information establishing the fair market value on the date such Investment was allocated to the Notes, (4) any accrued interest paid, (5) face amount, (6) coupon rate, (7) 18 frequency of interest payments, (8) disposition price, (9) any accrued interest received, and (10) disposition date. Such records may be supplied in electronic form. The Rebate Analyst will compute rebate following each Computation Date and deliver a written report to the Issuer together with an opinion or certificate of the Rebate Analyst stating that arbitrage rebate and yield reduction amounts were determined in accordance with the Regulations. Each report and opinion will be provided not later than 45 days following the Computation Date to which it relates. In performing its duties, the Rebate Analyst may rely, in its discretion, on the correctness of financial analysis reports prepared by other professionals. If the sum of the amount on deposit in the Rebate Fund and the value of prior rebate payments is less than the arbitrage rebate and yield reduction amounts due, the Issuer will, within 55 days after such Computation Date, pay the amount of the deficiency for deposit into the Rebate Fund. If the sum of the amount on deposit in the Rebate Fund and the value of prior rebate payments is greater than the Rebate Amount the Issuer will transfer such surplus in the Rebate Fund to the Debt Service Fund. After the final Computation Date or at any other time if the Rebate Analyst has advised the Issuer, any money left in the Rebate Fund will be paid to the Issuer and may be used for any purpose not prohibited by law. (c) Rebate Payments. Within 60 days after each Computation Date, the Issuer will pay to the United States the rebate and yield reduction amount then due, determined in accordance with the Regulations. Each payment must be ( 1) accompanied by IRS Form 8038-T and such other forms, documents or certificates as may be required by the Regulations, and (2) mailed or delivered to the IRS at the address shown below, or to such other location as the IRS may direct: Internal Revenue Service Center Ogden, UT 84201 Section 4.7. Successor Rebate Analyst. If the firm acting as the Rebate Analyst resigns or becomes incapable of acting for any reason, or if the Issuer desires that a different firm act as the Rebate Analyst, then the Issuer by an instrument or concurrent instruments in writing delivered to the firm then serving as the Rebate Analyst and any other party to this Tax Certificate, will name a successor Rebate Analyst. In each case the successor Rebate Analyst must be a firm of nationally recognized bond counsel or a firm of independent certified public accountants and such firm must expressly agree to undertake the responsibilities assigned to the Rebate Analyst hereunder. Section 4.8. Filing Requirements. The Issuer will file or cause to be filed with the IRS such reports or other documents as are required by the Code in accordance with advice of Bond Counsel. Section 4.9. Survival after Defeasance. Notwithstanding anything in the Resolution to the contrary, the obligation to pay arbitrage rebate and yield reduction amounts to the United States will survive the payment or defeasance of the Notes. ARTICLEV MISCELLANEOUS PROVISIONS Section 5.1. Term of Tax Certificate. This Tax Certificate will be effective concurrently with the issuance and delivery of the Notes and will continue in force and effect until the principal of, redemption premium, if any, and interest on all Notes have been fully paid and all such Notes are cancelled; provided that, the provisions of Article IV of this Tax Certificate regarding payment of arbitrage rebate and yield reduction amounts and all related penalties and interest will remain in effect until all such amounts are paid 19 to the United States and the provisions of Section 4.2 relating to record keeping shall continue in force for the period described therein for records to be retained. Section 5.2. Amendments. This Tax Certificate may be amended from time to time by the parties to this Tax Certificate without notice to or the consent of any of the Noteowners, but only if such amendment is in writing and is accompanied by an Opinion of Bond Counsel to the effect that, under then existing law, assuming compliance with this Tax Certificate as so amended such amendment will not cause interest on any Note to be included in gross income for federal income tax purposes. No such amendment will become effective until the Issuer receives this Opinion of Bond Counsel. Section 5.3. Opinion of Bond Counsel. The Issuer may deviate from the provisions of this Tax Certificate iffumished with an Opinion of Bond Counsel to the effect that the proposed deviation will not adversely affect the exclusion of interest on the Notes from gross income for federal income tax purposes. The Issuer will comply with any further or different instructions provided in an Opinion of Bond Counsel to the effect that the further or different instructions need to be complied with in order to maintain the validity of the Notes or the exclusion from gross income of interest on the Notes. Section 5.4. Reliance. In delivering this Tax Certificate the Issuer is making only those certifications, representations and agreements as are specifically attributed to them in this Tax Certificate. The Issuer is not aware of any facts or circumstances which would cause it to question the accuracy of the facts, circumstances, estimates or expectations of any other party providing certifications as part of this Tax Certificate and, to the best of its knowledge, those facts, circumstances, estimates and expectations are reasonable. The Issuer understands that its certifications will be relied upon by the law firm of Gilmore & Bell, P.C., in rendering its opinion as to the validity of the Notes and the exclusion from federal gross income of the interest on the Notes. Section 5.5. Severability. If any provision in this Tax Certificate or in the Notes is determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not be affected or impaired. Section 5.6. Benefit of Agreement. This Tax Certificate is binding upon the Issuer its respective successors and assigns, and inures to the benefit of the parties to this Tax Certificate and the owners of the Notes. Nothing in this Tax Certificate or in the Resolution or the Notes, express or implied, gives to any person, other than the parties to this Tax Certificate, their successors and assigns, and the owners of the Notes, any benefit or any legal or equitable right, remedy or claim under this Tax Certificate. Section 5.7. Default, Breach and Enforcement. Any misrepresentation of a party contained herein or any breach of a covenant or agreement contained in this Tax Certificate may be pursued by the Noteowners pursuant to the terms of the Resolution or any other document which references this Tax Certificate and gives remedies for a misrepresentation or breach thereof. Section 5.8. Execution in Counterparts. This Tax Certificate may be executed in any number of counterparts, each of which so executed will be deemed to be an original, but all such counterparts will together constitute the same instrument. Section 5.9. Governing Law. This Tax Certificate will be governed by and construed in accordance with the laws of the State of Kansas. 20 Section 5.10. Electronic Transactions. The transactions described in this Tax Certificate may be conducted, and related documents may be stored, by electronic means. All closing documents, certificates, and related instruments may be executed by electronic transmission. Copies, telecopies, facsimiles, electronic files and other reproductions of original executed documents (or documents executed by electronic transmission) shall be deemed to be authentic and valid counterparts of such documents for all purposes, including the filing of any claim, action or suit in the appropriate court of law. [Remainder of this page intentionally left blank.] 21 THE UNDERSIGNED, Mayor, Clerk and Finance Director of the Issuer, by their execution of this Tax Certificate hereby make the foregoing certifications, representations, and agreements contained in this Tax Certificate on behalf of the Issuer, as of the Issue Date. CITY OF SALINA, KANSAS ·~~ / :--' By: ....... Michael L. Hoppock, By: 251 Jf1JJlj1 .u ')( Q fJ Shandi Wicks, CMC, City Clerk By:~~ DelCPac Fiiiailce ~r (Signature Page to Federal Tax Certificate -2020-1 Notes) EXHIBIT A DEBT SERVICE SCHEDULE AND PROOF OF NOTE YIELD A-1 Apr 15, 2020 3:49 pm Prepared by Gilmore & Bell. P.C. SOURCES AND USES OF FUNDS City of Salina, Kansas General Obligation Temporary Notes, Series 2020-1 Sources: Bond Proceeds: Dated Date Delivery Date Par Amount Uses: Project Fund Deposits: New Project Costs Refunding Escrow Deposits: Cash Deposit Delivery Date Expenses: Cost of Issuance Undern1·iter's Discount 04/29/2020 04/29/2020 7,050,000.00 7,050,000.00 1,305,000.00 5,685,440.93 44.049.07 15,510.00 59.559.07 7,050,000.00 (Finance 8.500) Page I This information is provided based on the facn1al inforurntion and assumpt.ions provided to Gilmore & Bell. P .C. by a party to or a repre-se.nrntive of a party 10 the proposed transnction. This infonnation is intended to provide facn1al infonna1ion only and is provided in conjunction wi1h our legal representation. It is not intended as financial advice or a financial recommendation to any party. Gilmore & BeU, P.C. is not A financial advisor or a .. municipal advisor'' as defined in the Securities Exchan~e Act of 1934, as amended. Apr 15, 2020 3:49 pm Prepared by Gilmore & Bell, P.C. (Finance 8.500) Page 2 BOND DEBT SERVICE City of Salina, Kansas General Obligation Temporary Notes, Series 2020-1 Period Annual Bond Total Ending Principal Coupon Interest Debt Service Debt Service Balance Bond Value 04/29/2020 7,050,000 7,050.000 05/01 /2021 7,050,000 1.000% 70,891.67 7,120,891.67 7,120,891.67 7,050,000 70.891.67 7, 120,891 .67 7' 120,891.67 This information is provided based on tbe facruaJ infonnation and assumptions provided to Gilmore & Bell. P.C. by a party to or a representative of a party to the proposed transaction. This infonnation is intended to provide facnial infonnation only and is provided in conjunction with our legal representation. II is not intended as financial advice or a financial recommendation to any party, Gilmore & Bell, P.C. is not a financial advisor or a "municipal advisor'' as defined in the Securities ExchanJl,:e Acl of 1934. as amended. Apr 15, 2020 3:49 pm Prepared by Gilmore & Bell. P.C. BOND PRJCING City of Salina, Kansas General Obligation Temporary Notes, Series 2020-1 Bond Component Maturity Date Serial Bonds: 05/01 /2021 Dated Date Delivery Date First Coupon Par Amount Original Issue Discount Production Underwriter's Discount Purchase Price Accrued Interest Net Proceeds Amount 7,050,000 7,050,000 Rate Yield 1.000% 1.000% 04/29/2020 04/29/2020 05101/2021 7,050,000.00 7.050,000.00 I 00.000000% ( 15,510.00) (0.220000%) 7.034,490.00 99.780000% 7,034,490.00 (Finance 8.500) Page 3 Price I 00.000 This infortn."\tion is provided based on tbe facrual infonnation and assumptions provided to Gilmore & Bell. P.C. by R party to or a represeotative of a parry to U1e proposed transaction. This infonnation is intended to provide factm\l infonnation only and is provided in conjunction witb our legal representation. II is not intended as financial advice or a financial recommendation to any party. Gilmore & Bell, P.C. is not n financial advisor or a "municipal advisor'' as defined in the Securities Exc.hanjte Act of 1934. as amended. Apr 15 , 2020 3:49 pm Prepared by Gilmore & Bell. P.C. BOND SUMMARY STATISTICS City of Salina, Kansas General Obligation Temporary Notes, Series 2020-1 Dated Date Delivery Date Last Maturity Arbitrage Yield True Interest Cost (TIC) Net Interest Cost (NJC) All-In TIC Average Coupon Average Life (years) Weighted Average Maturity (years) Duration oflssue (years) Par Amount Bond Proceeds Total Interest Net Interest Bond Years from Dated Date Bond Years from Delivery Date Total Debt Service Maximum Annual Debt Service Average Annual Debt Service Underwriter's Fees (per $1000) Average Takedov.'11 Other Fee Total Underwriter's Discount Bid Price Bond Component Serial Bonds Par Value + Accrued Interest + Premium (Discount) -Underwriter's Discount -Cost of! ssuance Expense -Other Amounts Target Value Target Date Yield Par Value 7,050,000.00 7,050,000.00 TIC 7,050,000.00 (15,510.00) 7,034,490.00 04/29/2020 1.2 17723% Price 100.000 04/29/2020 04/2912020 05/01/2021 0.997485% 1.217723% 1.218785% 1.847195% 1.000000% 1.006 1.006 1.006 7,050.000.00 7,050,000.00 70,891.67 86,401.67 7,089, 166.67 7,089, 166.67 7,120,891.67 7,120,891.67 7,081 ,549.73 2.200000 2.200000 99.780000 Average Coupon 1.000% All-In TIC 7,050,000.00 ( 15,510.00) (44,049.07) 6,990,440.93 04/29/2020 1.847195% Average Life 1.006 1.006 Arbitrage Yield 7,050,000.00 7,050,000.00 04/29/2020 0.997485% (Finance 8.500) Page 4 This infonuation is provided based on tbe factual infonnation and assumptions provided ro Gilmore & Bell, P .C. by e party to or a representative of a party to the proposed transaction. This infonnation is intended to provide facn1al infonnation only and is provided in conjunction with our legal representation. It is not intended a.s financial advice or a financial recommendalion to any party. Gilmore & Bell, P.C. is not fl financial advisor or a "municipal adviso1·" as defined in the Securities Exchange Act of 1934. as amended. Apr 15, 2020 3:49 pm Prepared by Gilmore & Bell. P.C. PROOF OF ARBITRAGE YIELD City of Salina, Kansas General Obligation Temporary Notes, Series 2020-1 Date 05/01 /2021 Delivery date Par Value Debt Service 7,120,891.67 7,120,891.67 PY Factor 0.990044552 Proceeds Summary Target for yield calculation Present Value to 0412912020 @ 0.9974849220% 7,050,000.00 7,050.000.00 0412912020 7,050,000.00 7,050,000.00 (Finance 8.500) Page 5 This infonuation is provided based on the facrual infonuation and assumptions provided to Gilmore & Bell. P .C. by a parry to or a representati\'e of 8 pany to the proposed transaction. This infonnation is intended to provide facnial infonnation only and is provided in conjunction witb our lega.I representation. It is not intended as financial advice or a financial recommendalion lo any party. Gilmore & Bell. P.C. is not a financial advisor or a •·municipal advisor" as defined in the Securities Exchange Act of 1934. as amended. Apr 15, 2020 3:49 pm Prepared by Gilmore & Bell. P.C. FORM 8038 STATISTICS City of Salina, Kansas General Obligation Temporary Notes, Series 2020-1 Dated Date Delivery Date 04/29/2020 04/29/2020 Bond Component Serial Bonds: Final Maturity Entire Issue Date 05101 12021 Maturity Date 05/01 /2021 Proceeds used for accrued interest Principal Coupon 7,050,000.00 1.000% 7,050,000.00 Interest Issue Rate Price 1.000% 7.050,000.00 7,050,000.00 Proceeds used for bond issuance costs (including underwriters' discount) Proceeds used for credit enhancement Proceeds allocated to reasonably required reserve or replacement fund Proceeds used to refund prior tax-exempt bonds Proceeds used to refund prior taxable bonds Remaining WAM of prior tax-exempt bonds (years) Remaining WAM of prior taxable bonds (years) Last call date of refunded tax-exempt bonds 20 11 Form 8038 Statistics Proceeds used to currently refund prior issues Proceeds used to advance refund prior issues Remaining weighted average maturity of the bonds to be currently refunded Remaining weighted average maturity of the bonds to be advance refunded Price 100.000 Stated Redemption at Maturity 7,050,000.00 7,050,000.00 Issue Price 7,050,000.00 7,050,000.00 Weighted Average Maturity 1.0056 (Finance 8.500) Page 6 Redemption at Maturity 7,050.000.00 7.050,000.00 Yield 0.9975% 0.00 59,559.07 0.00 0.00 5.685,440.93 0.00 0. 1564 0.0000 05/04/2020 5,685.440.93 0.00 0. 1564 0.0000 This information is provided based on the factual infonuation and assumptions provided to Gilmore & Bell. P.C. bye party to or a representative ofa pany to the proposed transaction. This infonnatioo is intended to provide factual information only and is provided in conjunction with our legal representation. It is not intended as financial advice or a financial recommendation to any party, Gilmore & Bell, P.C. is not R financial advisor or a .. municipal advisor'' as defined in the Secudties E.xchanp;e Act of 1934. as amended. Apr 15, 2020 3:49 pm Prepared by Gilmore & BelL P.C. FORM 8038 STATISTICS City of Salina, Kansas General Obligation Temporary Notes, Series 2020-1 Refunded Bonds Bond Component Date Principal General Obligation Temporary Notes. Series 2019-1: TERM 05/01 /2020 53 3,658.81 General Obligation Temporary Notes, Series 2019-2: NOTE 07/01 /2020 5,085,000.00 5,618.658.81 General Obligation Temporary Notes, Series 2019-1 General Obligation Temporary Notes, Series 2019-2 All Refunded Issues Coupon 1.580% 2.070% Last Call Date 05/04/2020 05/04/2020 Price 100.000 100.000 Issue Date 04/24/2019 10/15/2019 (Finance 8.500) Page 7 Issue Price 533,658.81 5,085,000.00 5,618.658.8 I Remaining Weighted Average Maturity 0.0056 0.1722 0.1564 This infonuation is provided based on the facruaJ information and assumptions provided to Gilmore & Bell, P.C. by a party to or a representative of a party to the proposed transaction. This infonnation is intended to provide factual infonnation only and is provided in conjunction \Vith our legal representation. It is not intended as financial advice or a financial recommendation to any party. Gilmore & Bell, P.C. is not a financial advisor or a "municipal advisor" as defined in the Secu1;ties Exc.hanp;e Act of 1934. as amended. Apr 15, 2020 3:49 pm Prepared by Gilmore & Bell, P.C. SUMMARY OF REFUNDING RESULTS City of Salina, Kansas General Obligation Temporary Notes, Series 2020-1 Dated Date Delivery Date Arbitrage yield Escrow yield Value of Negative Arbitrage Bond Par Amount True 1 nterest Cost Net Interest Cost All-Jn TIC Average Coupon Average Life Weighted Average Maturity Par amount of refunded bonds Average coupon of refunded bonds Average life of refunded bonds Remaining weighted average maturity of refunded bonds PY of prior debt to 04/29/2020 @ 0.997485% Net PY Savings Percentage savings of refunded bonds Percentage savings of refunding bonds 04/29/2020 04/29/2020 0.997485% 0.000009% 7,050,000.00 1.2 17723% 1.218785% 1.847195% 1.000000% 1.006 1.006 5,6 I 8,658.8 I 2.068347% 0.156 0.156 5,693,24 1.35 (5 I, 758.65) (0.9211 92%) (0.734 165%) (Finance 8.500) Page 8 Tb.is information is provided based on the facrual infom1ation and assumptions provided to Gilmore & Bell. P.C. by a parry to or a representative of a party to the proposed transaction. Tb.is infonnation is intended to provide facnrnl information only and is provided in conjunction \Vitb our legaJ representation. It is not intended as financial advice or a financial recommendation to any party. Gilmore & Bell, P.C. is not n financial advisor or a "municipal advisor" as defined in the Secui-ities Exchange Act of 1934. as amended. Apr 15, 2020 3:49 pm Prepared by Gilmore & Bell. P.C. SUMMARY OF BONDS REFUNDED City of Salina, Kansas General Obligation Temporary Notes, Series 2020-1 Bond Maturity Date Interest Rate Par Amount General Obligation Temporary Notes, Series 2019-1, 2019_1, TERM: 0510 I /2020 1.580% 533,658.81 General Obligation Temporary Notes. Series 2019-2, 2019_2, NOTE: 07/01/2020 2.070% 5,085,000.00 5,618,658.81 Call Date 05/04/2020 Call Price 100.000 (Finance 8.500) Page 9 This information is provided based on tbe facrual information and assumptions provided to Gilmore & Bell. P.C. by a party to or a representative of a party to U1e proposed trnnsaction. This infonnation is inlended to provide facn1al infonna1ion only and is provided in conjunction with our legal representation. lt is not intended as financial advice or a financi;'I) recolD1Dendalion to any party. Gilmore & BeU. P.C. is not H financial advisor or a "municipal advisor" as defined in the Securities Excban~e Act of 1934, as amended. Apr 15, 2020 3:49 pm Prepared by Gilmore & Bell. P.C. (Finance 8.500) Page I 0 PRJOR BOND DEBT SERVICE City of Salina, Kansas General Obligation Temporary Notes, Series 2020-I Period Annual Bond Total Ending Principal Coupon Interest Debt Service Debt Service Balance Bond Value 04/29/2020 5.618,658.81 5,618,658.81 05/01 /2020 533,658.81 1.580% 8,595.77 542,254.58 542,254.58 5,085,000.00 5,085,000.00 07/01/2020 5.085,000.00 2.070% 74.851.20 5.159,851.20 05/01 /2021 5, 159,851 .20 5,618,658.81 83.446.97 5.702,105.78 5,702,105.78 This information is provided based on tbe facrual infonuation and assumptions provided ro Gilmore & Bell. P.C. by a pany to or a representative of R pany to the proposed tnmsection. This infonnatioo is intended to provide facn1al infonnation only and is provided in conjunction witb our legal representation. It is not intended as financial advice or a finam;ii.t recommendation to any party. Gilmore & Bell. P.C. is not a financial advisor or a "municipal advisor" as defined in tbe Securities Exchan,Re Act of 1934, as amended. Apr 15, 2020 3:49 pm Prepared by Gilmore & BelL P.C. (Finance 8.500) Page 11 ESCROW REQUIREMENTS City of Salina, Kansas General Obligation Temporary Notes, Series 2020-1 Period Principal Ending Principal Interest Redeemed Total 05/01 /2020 533,658.81 8.595.77 542,254.58 05/0412020 58,185.12 5,085,000.00 5,143,185.12 533,658.81 66,780.89 5,085,000.00 5,685,439.70 This information is provided based on tlle facruaJ infon11ation and assumptions provided to Gilmore & Bell. P.C. by a party to or a representative of a pany to the proposed trnnsection. This infonnatio.n is intended to provide factual infonna1ion only and is provided in conjunction with our legal representation. It is not intended as financial advice or a financial recommendation to any party. Gilmore & Bell, P.C. is not n financial advisor or a "municipal advisor'' as defined in the Securities Exchan~e Act of 1934. as amended. Apr 15, 2020 3:49 pm Prepared by Gilmore & Bell. P.C. ESCROW COST City of Salina, Kansas General Obligation Temporary Notes, Series 2020-1 Purchase Date 04/29/2020 Cost of Securities 0 Cash Deposit 5,685,440.93 5.685,440.93 Total Escrow Cost 5,685.440.93 5,685,440.93 (Finance 8.500) Page 12 This information is provided based on the facrual infonnation and assumptions provided to Gilmore & Bell. P.C. by A party to or a representntive of e party to the proposed trnnsecrion. This infonnation is inlended to provide factl1al infonnation only and is provided in conjunction wi1b our leg<tl representation. It is not intended as financial advice or a financial recommendalion to any party. Gilmore & Bell, P.C. is not R financial advisor or a "municipal advisor" as defined in the Securities Excbanjite Act of 1934. as amended. Apr 15, 2020 3:49 pm Prepared by Gilmore & BelL P.C. ESCROW SUFFICIENCY City of Salina, Kansas General Obligation Temporary Notes, Series 2020-1 Date 04/29/2020 05/01/2020 05/0412020 Escrow Requirement 542,254.58 5,143,185.12 5,685,439.70 Net Escrow Receipts 5.685.440.93 5,685,440.93 Excess Receipts 5.685,440.93 (542,254.58) (5,143,185.12) 1.23 (Finance 8.500) Page 13 Excess Balance 5,685.440.93 5, 143, I 86.35 1.23 Tbis information is provided based on tbe facrual infomuuion and assumptions provided to Gilmore & Bell. P.C. by a party to or a representative of e party to the proposed 1ransnction. Tbis infonnation is intended to provide factual infonnation only and is provided in conjunction witb our legal representation. II is not inlended as financial advice or a financial recouunendation to any party. Gilmore & Bell. P.C. is not n financial advisor or a "municipal advisor" as defined in the Securities Exchanjl;e Act of 1934. as amended. Apr 15, 2020 3:49 pm Prepared by Gilmore & Bell. P.C. Total Escrow Cost Global Proceeds Escrow: 5,685,440.93 5,685,440.93 Modified Duration (years) ESCROW STATISTICS City of Salina, Kansas General Obligation Temporary Notes, Series 2020-1 Yield to Receipt Date Yield to Disbursement Date Delivery date Arbitrage yield Perfect Escrow Cost 5,684, 700.24 5,684, 700.24 0412912020 0.997485% Value of Negative Arbitrage 0.00 (Finance 8.500) Page 14 Cost of Dead Time 740.69 740.69 This information is provided based on tbe facmel infonnation and assumptioos provided to Gilmore & Bell. P.C. by a party to or a representative of a party to the proposed 1ransoction. This infonuation is intended to provide fac111al infonnalion only and is provided in conjunction wilh our legal representation. It is not intended as financial advice or a financial recommendation to any party. Gilmore & Bell, P.C. is not a financial advisor or a "municipal advisor" as defined in the Securities ExcbanJZ;e Act of 1934. as amended. EXHIBITB IRS FORM 8038-G /J GILMOR_EBELL 2405 Grand Boulevard, Suite 1100 Kansas City, Missouri 64108-2521 (816) 221-1000 / (816) 221-1018 FAX I gilmorebell.com VIA FEDERAL EXPRESS Internal Revenue Service Center Ogden, Utah 84201 May 13, 2020 Re: $7,050,000 General Obligation Temporary Notes, Series 2020-1, of the City of Salina, Kansas, dated April 29, 2020 Ladies and Gentlemen: Enclosed for filing pursuant to Section 149( e) of the Internal Revenue Code of 1986 Form 8038- G, Information Return for Tax-Exempt Governmental Obligations, being filed with respect to the above- captioned transaction. If you have any questions, please do not hesitate to contact me. GMR:jac Enclosure 600596.20209 Ref · 600596 20209 Dep: Very truly yours, Gina M. Riekhof Date· 13May20 Ws I : 1 . 00 LBS DV . SHIPPING . SPECIAL : HANDLING : 0 00 TOTAL : Svcs: ** 2DAY ** TRCK : 1355 7484 6062 14 49 0 .29 0 00 14 78 Dear Customer, The following is the proof-of-delivery for tracking number: 135574846062 Delivery lnfonnation: Status: Delivered Signed for by: S. SNOW Service type: FedEx 2Day Special Handling: Deliver Weekday Shipping lnfonnation: Tracking number: 135574846062 Recipient: INTERNAL REVENUE SERVICE CENTER, 1973 N. RULON WHITE BLVD. OGDEN, UT, US, 84201 Reference 600596.20209 May 18, 2020 Delivered To: Mail room Delivery Location: 1973 N RULON WHITE BLVD OGDEN, UT, 84201 Delivery date: May 15, 2020 10:10 Ship Date: May 13, 2020 Weight: 0.5 LB/0.23 KG Shipper: FRONT DESK, Gilmore Bell. P.C. 2405 Grand Blvd STE 1100 Kansas City, MO, US, 641082521 Fonn8038•G Information Return for Tax-Exempt Governmental Bonds OMB No. 1545-0720 ... Under Internal Revenue Code section 149(e) .,. See separate instructions. (Rev. September 2018) Department of the Treasury Caution: If the issue price is under $100,000, use Form 8038-GC. Internal Revenue Service ... Go to www.irs.gov/F8038G for instructions and the latest information. Reporting Authority If Amended Return, check here .,.. D 1 Issuer's name 2 Issuer's employer identification number (EIN) Cit of Salina Kansas 48-6017288 3a Name of person (other than issuer) with whom the IRS may communicate about this return (see instructions) Gina M. Riekhof, Gilmore & Bell, P.C , Bond Counsel 3b Telephone number of other person shown on 3a 816-221-1000 4 Number and street (or P .0. box if mail is not delivered to street address) Room/suite 5 Report number (For IRS Use Only) 2405 Grand Boulevard 1100 6 City, town, or post office, state, and ZIP code Kansas Cit , Missouri 64108 8 Name of issue General Obligation Temporary Notes, Series 2020-1 10a Name and title of officer or other employee of the issuer whom the IRS may call for more infonnation (see Instructions) Debbie Pack Director of f."inance and Adrnir-lstratlon 3 7 Date of issue 04/29/2020 9 CUSIP number 794744 DB5 10b Telephone number of officer or other employee shown on 1 Oa _ _,__ ______ 7_,8'-"5-"-30Q-5 735 Type of Issue (enter the issue price). See the instructions and attach schedule. 11 Education . 11 12 Health and hospital 12 13 Transportation 13 14 Public safety . 14 15 Environment (including sewage bonds) 15 16 Housing 16 17 Utilities 17 18 Other. Describe .... Various Public Improvements (police department, streets, sewer, water, etc) 18 7,050,000 19a If bonds are TANs or RANs, check only box 19a .,.. D ('~ .~:,..,-...::·-. '~ "·-. ,· ... r.~: .. ~~~·~~ .. ~~ b If bonds are BANs, check only box 19b .,.. 0 -t \. 20 If bonds are in the form of a lease or installment sale, check box .,.. D !l .· •~ill• 11 Description of Bonds. Complete for the entire issue for which this form is being filed. (a) Final maturity date (b) Issue price (c) Stated redemption price at maturity (d) Weighted average maturity 21 0510112021 $ 7,050000$ 7,050,000 1.006 vears lm:LTJ Uses of Proceeds of Bond Issue (including underwriters' discount) 22 Proceeds used for accrued interest 22 . ' .~· ... ·....,~ ,.,, ';:• ' ,'• f (e) Yield 0.9975 % l---+-------+--- 23 Issue price of entire issue (enter amount from line 21, column (b)) 1--2_3-+-__ 6=...•..:;.08""5'-'-,o""o""'o+-- 24 Proceeds used for bond issuance costs Oncluding underwriters' discount) 24 59,559 "'() 25 Proceeds used for credit enhancement 1--2_5-1------1-----11!, ·; ~ 26 Proceeds allocated to reasonably required reserve or replacement fund 26 ~-·_:'.t 27 Proceeds used to refund prior tax-P.xempt bol"'ds CoMple+e Part \I . 27 5,685,44~ ,, ... 28 Proceeds used to refund prior taxable bonds. Complete Part V 28 t~:~ 29 Total (add lines 24 through 28) . 29 5.745,000 30 Nonrefunding proceeds of the issue (subtract line 29 from line 23 and enter amount here) 30 1,305,000 -· • Description of Refunded Bonds. Complete this part only for refunding bonds. 31 Enter the remaining weighted average maturity of the tax-exempt bonds to be refunded . .,.. o.006&0172 years 32 Enter the remaining weighted average maturity of the taxable bonds to be refunded . .,.. NIA years 33 Enter the last date on which the refunded tax-exempt bonds will be called (MM/DDIYYYY) ... 05/04/2020 34 Enter the date(s) the refunded bonds were issued ... (MM/DD/YYYY) 04/24/2019 & 10/15/2019 For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 63773S Form 8038-G (Rev. 9-2018) Form 8038-G (Rev. 9-2018) Page2 l::.t:fii•'JI Miscellaneous 35 Enter the amount of the state volume cap allocated to the issue under section 141 (b)(5) 35 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (GIC). See instructions 36a b Enter the final maturity date of the GIC.,.. (MM/DD/YYYY) 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 4 to other governmental units . 37 38a If this issue is a loan made from the proceeds of another tax-exempt issue, check box.,.. D and enter the following information: b Enter the date of the master pool bond.,.. (MM/DD/YYYY) ---------------- c Enter the EIN of the issuer of the master pool bond .,.. ------------------ d Enter the name of the issuer of the master pool bond .,.. ------------------ 39 If the issuer has designated the issue under section 265(b)(3)(B)(i)(lll) (small issuer exception), check box 40 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box . 41a If the issuer has identified a hedge, check here.,.. D and enter the following information: b Name of hedge provider.,.. c Type of hedge.,.. ------------------- d Term of hedge.,..------------------ 42 If the issuer has superintegrated the hedge, check box . 43 If the issuer has established written procedures to ensure that all nonqualified bonds of this issue are remediated according to the requirements under the Code and Regulations (see instructions), check box . .,.. 44 If the issuer has established written procedures to monitor the requirements of section 148, check box . .,.. 45a If some portion of the proceeds was used to reimburse expenditures, check here.,.. D and enter the amount of reimbursement . . .,.. --------------- b Enter the date the official intent was ado ted .,.. MM/DD D D D 0 0 Signature and Consent Under penalties of pe~ury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. I further declare that I consent to the IRS's disclosure of the issuer's return information, as necessary to Paid Preparer Use Only process this return, he person that ~#Xe. ~ Signature of issuer's authorized representative Date Print/Type preparer's name Preparer's signature James Dummitt Firm's name .,. Gilmore & Bell, P.C. Firm's address .,. 2405 Grand Boulevard Suite 1100 Kansas Cit MO 64108 ~ Debbie Pack, Finance Director r Type or print name and title Date Check D if PTIN 04/28/2020 self-employed P01062537 Firm's EIN ... 43-1611738 Phone no. 816-221-1000 Form 8038-G (Rev. 9-2018) EXHIBITC-1 PURCHASER'S RECEIPT AND ISSUE PRICE CERTIFICATE $7,050,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES SERIES 2020-1 The undersigned, on behalf of UMB Bank N.A. (the "Original Purchaser"), as the Original Purchaser, and Underwriter of the above-described notes (the "Notes"), being issued on the date of this Certificate by the City of Salina, Kansas (the "Issuer"), certifies and represents as follows: 1. Receipt for Notes. The Original Purchaser acknowledges receipt on the date hereof of all of the Notes, consisting of fully registered Notes in authorized denominations in a form acceptable to the Original Purchaser. 2. Issue Price. (a) Public Offering. The Original Purchaser offered all of the Notes to the Public (as defined below) in a bona fide initial offering. (b) Reasonably Expected Initial Offering Price. As of the sale date of the Notes (April 13, 2020), the reasonably expected initial offering prices of the Notes to the Public by the Original Purchaser are the prices listed in Attachment A (the "Expected Offering Prices"). The Expected Offering Prices are the prices for the Maturities of the Notes used by the Original Purchaser in formulating its bid to purchase the Notes. (c) Defined Terms. (i) The term "Maturity" means Notes with the same credit and payment terms. Notes with different maturity dates, or Notes 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 Notes 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 Notes to the Public (including a member of a selling group or a party to a third-party distribution agreement participating in the initial sale of the Notes to the Public). The representations set forth in this certificate are limited to factual matters only. Nothing in this Certificate represents the Original Purchaser's interpretation of any laws, including specifically Sections C-1-1 I 03 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the certifications contained herein will be relied upon by the Issuer in executing and delivering the Federal Tax Certificate and with respect to compliance with the federal income tax rules affecting the Notes, by Stifel, Nicolaus & Company, Incorporated, Municipal Advisor to the Issuer in executing the Municipal Advisor's Certificate Regarding the Competitive Sale, and by Gilmore & Bell, P.C., Bond Counsel to the Issuer, in rendering its opinion relating to the exclusion from federal gross income of the interest on the Notes and other federal income tax advice that it may give to the Issuer from time to time relating to the Notes. Dated: April 29, 2020. UMB BANK N.A. KANSAS CITY, MISSOURI ~~.Q_ By: _____________ _ Title: __ s_r._V_ic_e _Pr_es_id_en_t _________ _ C-1-2 Attachment A Expected Offering Prices City of Salina, Kansas General Obligation Temporary Notes Series 2020-1 Pricing Summary Maturity 05/01 021 Total Type of Bond Serial Coupon Coupon 1.000% Yield 1.000°1. C-2-3 Maturity Value 7,050,000.00 $7,050,000.00 Price Dollar Plice 100.000"!. 7,050,000.00 s ,050,000.00 EXHIBITC-2 MUNICIPAL ADVISOR'S CERTIFICATE REGARDING COMPETITIVE SALE $7,050,000 CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES SERIES 2020-1 The undersigned, on behalf of Stifel, Nicolaus & Company, Incorporated, Kansas City, Missouri (the "Municipal Advisor"), as the Municipal Advisor to the City of Salina, Kansas (the "Issuer") in connection with the issuance of the above-described notes (the "Notes"), has assisted the Issuer in soliciting and receiving bids from potential underwriters in connection with the sale of the Notes in a competitive bidding process in which bids were requested for the purchase of the Notes at specified written terms, and hereby certifies as set forth below with respect to the bidding process and award of the Notes: l. The Notes were offered for sale at specified written terms more particularly described in the Notice of Sale, which was distributed to potential bidders, a copy of which is attached to this Certificate as Attachment 1. 2. The Notice of Sale was disseminated electronically through Parity® and MuniOS. The methods of distribution of the Notice of Sale are regularly used for purposes of disseminating notices of sale of new issuances of municipal bonds, and notices disseminated in such manner are widely available to potential bidders. 3. To the knowledge of the Municipal Advisor, all bidders were offered an equal opportunity to bid to purchase the Notes, and the bidding process did not afford any opportunity for bidders to review other bids before providing a bid (that is, no "last-look"). 4. The Issuer received bids from at least three bidders who represented that each has an established industry reputation for underwriting new issuances of municipal bonds. Based upon the Municipal Advisor's knowledge and experience in acting as the municipal advisor for other municipal issues, the Municipal Advisor believes those representations to be accurate. Copies of the bids received are attached to this Certificate as Attachment 2. 5. The winning bidder was UMB Bank N.A. (the "Original Purchaser"), whose bid was determined to be the best conforming bid in accordance with the terms set forth in the Notice of Sale, as shown in the bid comparison attached as Attachment 3 to this Certificate. The Issuer awarded the Notes to the Original Purchaser. The representations set forth in this certificate are limited to factual matters only. Nothing in this Certificate represents the Municipal Advisor's interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the certifications contained herein will be relied upon by the Issuer in executing and delivering the Federal Tax Certificate and with respect to compliance with the federal income tax rules affecting the Notes, and by Gilmore & Bell, P.C., Bond Counsel to the Issuer, in rendering its opinion relating to the exclusion from federal gross income of the interest on the Notes and other federal income tax advice that it may give to the Issuer from time to time relating to the Notes. C-2-1 Dated: April 29, 2020 STIFEL, NICOLAUS & COMPANY, IN CORPORA TED KANSAS CITY, MISSOURI By:™~ Title: Dil'eetor C-2-2 Attachment 1 Notice of Sale C-2-3 NOTICE OF SALE CITY OF SALINA, KANSAS $7 ,080,000* GENERAL OBLIGATION TEMPORARY NOTES SERIES 2020-1 $5,250,000* GENERAL OBLIGATION INTERNAL IMPROVEMENT BONDS SERIES 2020-A (GENERAL OBLIGATION NOTES AND BONDS PAYABLE FROM UNLIMITED AD VALOREM TAXES) Bids. Email and electronic (as explained below) bids for the purchase of the General Obligation Temporary Notes, Series 2020-1 (the "Notes") and General Obligation Internal Improvement Bonds, Series 2020-A (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 Issuer by the Issuer's Financial Advisor on APRIL 13, 2020 (the "Sale Date") until the following times (the "Submittal Hour"): SERIES Series 2020-1 Notes Series 2020-A Bonds SUBMITTAL HOUR (Central Time) 1:00 p.m. 1:00 p.m. Bids may only be submitted via PARITY®, or via email to the Municipal Advisor at arteberryd@stifel.com. Fax bids and hand-delivered written bids will not be accepted. All bids will be publicly evaluated at said time and place and the award of the Obligations to the successful bidder(s) (the "Successful Bidder(s)") 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. Any qualified bidder may bid on one or both series of the Obligations. 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 April 29, 2020 (the "Dated Date"), and will become due on May 1, 2021. 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. Adjustment of Issue Size. The Issuer reserves the right to increase or decrease the total principal amount of the Notes, depending on the purchase price bid, by the Successful Bidder. The Successful Bidder may not withdraw its bid or change the purchase price or interest rate bid as a result of any changes made to the principal amount of the Notes as described herein. If there is an increase or decrease in the final aggregate principal amount of the Notes as described above, the Issuer will notify the Successful Bidder by means of telephone or email, subsequently confirmed in writing, no later than 2:00 p.m. applicable Central Time, on the Sale Date. The actual purchase price for the Notes shall be calculated by applying the percentage of par value bid by the Successful Bidder against the final aggregate principal amount of the Notes, as adjusted, plus accrued interest from the Dated Date to the Closing Date (as hereinafter defined). 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 and interest on each Note will be payable at maturity or earlier redemption to the owner thereof whose name is 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. Such amounts will be payable to the Registered Owner of such Note as of the fifteenth day (whether or not a business day) of the calendar month next preceding each Interest Payment Date (the "Record Date") (a) mailed by the Paying Agent to the address of such Registered Owner as shown on the Note Register or at such other address as is furnished to the Paying Agent in writing by such Registered Owner; or (b) in the case of an interest payment to Cede & Co. or any Registered Owner of $500,000 or more in aggregate principal amount ofNotes, by wire transfer to such Registered Owner upon written notice given to the Paying Agent by such Registered Owner, not less than 15 days prior to the Record Date for such interest, containing the wire transfer address to which such Registered Owner wishes to have such wire directed. Note Registration. The Notes will be registered pursuant to a plan of registration approved by the Issuer and the Attorney General of the State of Kansas (the "State"). 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 ofregistered 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. Redemption of Notes Prior to Maturity. General. Whenever the Issuer is to select Notes for the purpose of redemption, it will, in the case of Notes in denominations greater than the minimum Authorized Denomination, if less than all of the Notes then outstanding are to be called for redemption, treat each minimum Authorized Denomination of face value of each such fully registered Note as though it were a separate Note in the minimum Authorized Denomination. Optional Redemption. At the option of the Issuer, the Notes will be subject to redemption and payment prior to maturity on November 1, 2020, and thereafter, as a whole at any time or in part (selection of the amount of Notes to be redeemed to be determined by the Issuer in such equitable manner as it may determine) at any time, at the redemption price of 100% (expressed as a percentage of the principal amount), plus accrued interest to the date of redemption. Notice and Effect of Call/or Redemption. Unless waived by any owner of Notes to be redeemed, ifthe Issuer shall call any Notes for redemption and payment prior to the maturity thereof, the Issuer shall give written notice of its intention to call and pay said Notes to the Note Registrar. In addition, the Issuer shall cause the Note Registrar to give written notice of redemption to the registered owners of said Notes. 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 Notes to be redeemed, the place of surrender of Notes 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 State law or regulation of the Securities and Exchange Commission in effect as of the date of such notice. If any Note be called for redemption and payment as aforesaid, all interest on such Note shall cease from and after the Redemption Date, provided funds are available for its payment at the price hereinbefore specified. Authority, Purpose and Security for the Notes. The Notes are being issued pursuant to K.S.A. 10-101 to 10-125, inclusive, specifically including K.S.A. 10-123, K.S.A. 10-620 et seq., K.S.A. 12-6a01 et seq., K.S.A. 12-1736 et seq., and Article 12, Section 5 of the Constitution of the State of Kansas, all as amended and supplemented, and a resolution adopted by the Governing Body (the "Note Resolution") for the purpose of paying a portion of the cost of certain public improvement projects and to pay costs associated with issuance of the Notes. 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 benefitted by the construction of certain public improvements, and if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the Issuer. The balance of the principal and interest on the Notes is payable from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the Issuer. The full faith, credit and resources of the Issuer are irrevocably pledged for the prompt payment of the principal of 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 April 29, 2020 (the "Dated Date"), and will become due in principal installments on October 1 in the years as follows: Principal Principal Year Amount* Year Amount* 2021 $520,000 2029 $230,000 2022 600,000 2030 235,000 2023 615,000 2031 210,000 2024 630,000 2032 220,000 2025 645,000 2033 225,000 2026 205,000 2034 235,000 2027 215,000 2035 240,000 2028 225,000 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, 2021 (the "Interest Payment Dates"). Adjustment of Issue Size. The Issuer reserves the right to increase or decrease the total principal amount of the Bonds or the schedule of principal payments described above, depending on the purchase price and interest rates bid by the Successful Bidder. The Successful Bidder may not withdraw its bid or change the purchase price or interest rates bid as a result of any changes made to the principal amount of the Bonds or the schedule of principal payments as described herein. If there is an increase or decrease in the final aggregate principal amount of the Bonds or the schedule of principal payments as described above, the Issuer will notify the Successful Bidder by means of telephone or email, subsequently confirmed in writing, no later than 2:00 p.m. applicable Central Time, on the Sale Date. The net production as a percentage of the principal amount of the Bonds generated from the bid of the Successful Bidder will not be decreased as a result of any change to the total principal amount of the Bonds or the schedule of principal payments described herein. Notwithstanding the requirements of the section entitled "Establishment of *Preliminary; subject to change as provided in "Adjustment of Issue Size, " herein. Issue Price," ifrequested by the Financial Advisor, the Successful Bidder shall within 20 minutes of such request provide the Financial Advisor with the initial offering prices of the Bonds to the public so as to allow for proper resizing of the Bonds. 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 Registered 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 Registered Owners. Redemption of Bonds Prior to Maturity. General. Whenever the Issuer is to select Bonds for the purpose of redemption, it will, in the case of Bonds in denominations greater than the minimum Authorized Denomination, if less than all of the Bonds then outstanding are to be called for redemption, treat each minimum Authorized Denomination of face value of each such fully registered Bond as though it were a separate Bond in the minimum Authorized Denomination. Optional Redemption. At the option of the Issuer, Bonds maturing on October 1 in the years 2028, and thereafter, will be subject to redemption and payment prior to maturity on October 1, 2027, and thereafter, as a whole or in part (selection of maturities and the amount of Bonds of each maturity to be redeemed to be determined by the Issuer in such equitable manner as it may determine) at any time, at the redemption price of 100% (expressed as a percentage of the principal amount), plus accrued interest to the date of redemption. Mandatory Redemption. A bidder may elect to have all or a portion of the Bonds scheduled to mature in consecutive years issued as term bonds (the "Term Bonds") scheduled to mature in the latest of said consecutive years and subject to mandatory redemption requirements consistent with the schedule of serial maturities set forth above, subject to the following conditions: (a) not less than all 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/or Redemption. Unless waived by any owner of Bonds to be redeemed, if the Issuer shall call any Bonds for redemption and payment prior to the maturity thereof, the Issuer shall give written notice of its intention to call and pay said Bonds to the Bond Registrar. In addition, the Issuer shall cause the Bond Registrar to give written notice of redemption to the registered owners of said Bonds. Each of said written notices shall be deposited in United States first class mail not Jess 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 State 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 for the Bonds. The Bonds are being issued pursuant to KS.A. 10-101 to 10-125, inclusive, KS.A. 10-620 et seq., K.S.A. 12-685 et seq., KS.A.12-1736 et seq, KS.A. 12-2101 et seq., Charter Ordinance No. 39 of the Issuer, Article 12 Section 5 of the Constitution of the State of Kansas, all as amended and supplemented, and an ordinance and a resolution adopted by the Governing Body (collectively the "Bond Resolution") for the purpose of paying a portion of the cost of certain public improvement projects (the "Improvements"), to pay the costs associated with the issuance of the Bonds and retire a portion of the Issuer's outstanding general obligation temporary notes. 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 irrevocably pledged for the prompt payment of the principal and interest on the Bonds as the same become due. THE OBLIGATIONS Book-Entry-Only System. The Depository Trust Company, New York, New York ("OTC"), will act as securities depository for the Obligations. The Obligations will initially be issued exclusively in "book entry" form and 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 Obligations. During the term of the Obligations, 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 Obligations to OTC or its nominee as the Registered Owner of the Obligations, 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 Obligations to its participants who shall be responsible for transmitting payments to beneficial owners of the Obligations 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 Obligations, or (b) the Issuer determines that continuation of the book-entry-only form of evidence and transfer of ownership of the Obligations would adversely affect the interests of the beneficial owners of the Obligations, 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 Bonds 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 Obligations and OTC. Submission of Bids. Email bids shall be addressed to the undersigned, and marked "Proposal for General Obligation Temporary Notes, Series 2020-1" or "Proposal for General Obligation Internal Improvement Bonds, Series 2020-A," as applicable. Electronic bids via PARITY® must be submitted in accordance with its Rules of Participation, as well as the provisions of this Notice of Sale. Any bid submitted shall include the initial offering prices to the public for each maturity of the Bonds. 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. The Issuer shall not be responsible for failure of transmission of any bid. Any bidder desiring to have the Financial Advisor assist in the delivery of suc/1 bidder's bid should provide pertinent bidding information to the Financial Advisor not later than 30 minutes prior to the Submittal Hour on the Sale Date. PARITY®. Information about the electronic bidding services of PARITY® may be obtained from i-Deal LLC at I 359 Broadway, 2nd Floor, New York, New York I 0018, Phone No. (2 I 2) 849-5023 and from the following website: www.newissuehome.i-deal.com. 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) the interest rate may not exceed 3.60%; (c) no supplemental interest payments will be considered; (d) the interest rate specified shall be a multiple of 1/100 or I /8 of I%; and ( e) the interest rate shall not be zero (0%) percent. 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 and the net interest cost (expressed in dollars) on the basis of such bid. 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, it will provide the certification as to initial offering price described under the caption "Establishment of Issue Price" in this Notice. 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 3 .60%; ( c) no supplemental interest payments will be considered; (d) each interest rate specified shall be a multiple of 1/20 or 1/8 of I%; (e) no zero (0%) percent interest rates will be permitted; and (f) the maximum difference between the high and low interest rates shall not exceed four percent (3.00%). No bid for less than 100.00% 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. 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 Bonds, it will provide the certification as to initial offering prices described under the caption "Establishment oflssue Price" in this Notice. Good Faith Deposit. All Obligations: The Successful Bidder(s) must supply a good faith deposit (the "Deposit") in the amount of2.00% of the principal amount of the of each respective Obligation as indicated on the first page of this Notice payable to the order of the Issuer to secure the Issuer from any loss resulting from the failure of the Successful Bidder(s) to comply with the terms of its bid . The Deposit must be received by the Issuer by 3:00 p.m. Central Time on the Sale Date. The Deposit shall be submitted by wire transfer in Federal Reserve funds, immediately available for use by the Issuer. No interest on the Deposit will be paid by the Issuer. The Deposit will be held by the Issuer until the Successful Bidder(s) have 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(s) or deducted from the purchase price at the option of the Issuer. If a bid is accepted, but the Issuer fails to deliver the Obligations to the Successful Bidder(s) in accordance with the terms and conditions of this Notice, said Deposit, or the proceeds thereof, will be returned to the Successful Bidder(s). If the Successful Bidder(s) default in the perfonnance of any of the tenns and conditions of this Notice, the proceeds of such Deposit will be retained by the Issuer as and for liquidated damages. Basis of Award. The Notes: Subject to the timely receipt of the Deposit as set forth above, the award of the Notes will be made on the basis of the lowest net interest cost (''NIC") (expressed in dollars), which will be detennined 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 detennine 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 detennined as follows: the TIC is the discount rate (expressed as a per annum percentage rate) which, when used in computing the present value of all payments of principal and interest to be paid on the Bonds, from the payment dates to 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 supply an estimate of the TIC for the Obligations on the Official Bid Fonn, computed as specified herein on the basis of their respective bids, which shall be considered as infonnative 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 determine which bid, if any, will be accepted, and its detennination 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 not be considered. 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 the State with regard to such dispute. The Issuer's acceptance of the Successful Bidders' proposal for the purchase of the Obligations in accordance with this Notice of Sale shall constitute a purchase agreement between the Issuer and the Successful Bidder(s) for purposes of the laws of the State and a contract between the Issuer and the Successful Bidder(s) 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 detennined solely by the Governing Body. Ratings. The outstanding general obligation bonds of the Issuer are rated "Aa3" by Moody's Investors Service. The Issuer has applied to Moody's Investors Service for ratings on the Obligations herein offered for sale. Such application and ratings are further described in the Preliminary Official Statement, hereinafter described. Optional Bond Insurance. The Issuer has not applied for any policy of municipal bond insurance with respect to the Obligations, and will not pay the premium in connection with any policy of municipal bond insurance desired by the Successful Bidder(s). In the event a bidder desires to purchase and pay all costs associated with the issuance of a policy of municipal bond insurance in connection with the Obligations, a commitment from the selected insurer must be attached to such bidder's Official Bid Form, and shall specify all terms and conditions to which the Issuer will be required to agree in connection with the issuance of such insurance policy. The Issuer specifically reserves the right to reject any bid specifying municipal bond insurance, even though such bid may result in the lowest TIC to the Issuer. If the Successful Bidder(s) elect to purchase the Obligations with municipal bond insurance, certain rating agencies will assign their ratings to the Obligations with the understanding that upon delivery of the Obligations, 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(s). Failure of the municipal bond insurer to issue the policy after the award of the Obligations shall not constitute cause for failure or refusal by the Successful Bidder( s) to accept delivery of the Obligations. CUSIP Numbers. CUSIP identification numbers will be assigned and printed on the Obligations, but neither the failure to print such number on any Obligation nor any error with respect thereto shall constitute cause for failure or refusal by the purchaser thereof to accept delivery of and pay for the Obligations in accordance with the terms of this Notice. The Financial Advisor will apply for CUSIP numbers pursuant to Rule G-34 implemented by the Municipal Securities Rulemaking Board. All expenses in relation to the assignment and printing of CUSIP numbers on the Obligations will be paid by the Issuer. Delivery and Payment. The Issuer will pay for preparation of the Obligations and will deliver the Obligations properly prepared, executed and registered without cost on or about APRIL 29, 2020 (the "Closing Date"), to DTC for the account of the Successful Bidder(s). The Successful Bidder(s) will be furnished with a certified transcript of the proceedings evidencing the authorization and issuance of the 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 ofDTC. Establishment of Issue Price. In order to provide the Issuer with information 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 Obligations 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 the Notes or for each maturity of the Bonds: (l) 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(f) (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 Obligations for its own account in a capacity other than as an underwriter or wholesaler, and currently has no intent to reoffer the Obligations for sale to the public. 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 Obligations 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 Obligations from at least three bidders that have established industry reputations for underwriting municipal securities such as the Obligations; and (4) the Issuer anticipates awarding the sale of the Obligations, as applicable, to the bidder that provides a bid with the lowest TIC in accordance with the section hereof entitled "Basis of Award." Any bid submitted pursuant to this Notice shall be considered a firm offer for the purchase of the Obligations as specified therein. The Successful Bidder(s) shall constitute an "underwriter" as said term is defined in the Regulation. By submitting its bid, each bidder confirms ( 1) 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 Obligations, to include provisions requiring compliance with provisions of the Code and the Regulation regarding the initial sale of the Obligations and (2) that it has an established industry reputation for underwriting municipal securities such as the Obligations. 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 20 minutes of a request by the Issuer, the Successful Bidder(s) shall advise the Issuer if a "substantial amount" (as defined in the Regulation (10%)) of any maturity of the Bonds and the Notes 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(s) may elect such option. If the Successful Bidder(s) exercise such option, the Issuer will apply the initial offering price to the public provided in the bid as the issue price for the Obligations. If the Successful Bidder(s) do 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(s). After the Closing Time, the Successful Bidder(s) agree to provide to the Issuer all reasonably requested information related to establishing the issue price of the Obligations if: (a) the Issuer requests the information in connection with an audit or inquiry by the Internal Revenue Service (the "IRS") or the Securities and Exchange Commission (the "SEC") or (b) the information is required to be retained by the Issuer pursuant to future regulation or similar guidance from the IRS, the SEC or other federal or state regulatory authority. Preliminary Official Statement and Official Statement. The Issuer has prepared a Preliminary Official Statement dated April 7, 2020, "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(s), without cost, within seven business days of the acceptance of the Successful Bidder(s)' proposal, with a sufficient number of copies thereof, which may be in electronic format, in order for the Successful Bidder to comply with the requirements of the Rule and Rule G-32 (collectively, the "Rules"). Additional copies may be ordered by the Successful Bidder(s) 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 TO: Shandi Wicks, Clerk City of Salina, Kansas OFFICIAL BID FORM PROPOSAL FOR THE PURCHASE OF CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES SERIES 2020-1 April 13, 2020 For $7,080,000' principal amount of General Obhgation Temporary Notes. Series 2020-1, of the City of Salina. Kansas. to be dated April 29, 2020, as described in the Notice of Sale (the "Notice") dated April 7, 2020, said Notes to bear interest as follows: Maturity Mayl 2021 Principal Amount' $7,080,000 Interest Rate ____ % *Sub;ect to change; see the Notice. the undersigned will pay the total principal amount of the Notes. plus a premium or less a discount as set forth below, plus accrued interest to the date of delivery. Principal Amount ....................................................................................................................................................... $7,080.000.00' Less Discount (not to exceed 0.50%) .................................................................................................... ~--------~ Plus Premium (if any) ........................................................................ ····················································---------- Total Purchase Price ................................................................................................................................ $ ________ _ Total interest cost to maturit) at the rates specified ................................................................................ $ ________ _ Net interest cost ...................................................................................................................................... $ ________ _ D The Bidder elects to purchase Municipal Bond Insurance from: [Assured] [AGM] [BAM] ~l----~]. Circle one or complete blank. This proposal is subject to all tenns and conditions contained in the Notice, and ifthe undersigned is the Successful Bidder. the undersigned will comply with all of the provisions contained in the Notice. The transactions described herein may be conducted and related documents may be sent, received and stored by electronic means. All bid documents. closing documents. certificates. ordinances, resolutions and related instruments may be executed by electronic transmission. Copies, telecopies, electronic files and other reproductions of original executed documents (or documents executed by electronic transmission) shall be deemed to be authentic and valid counterparts of such documents for all purposes, including the filing of any claim, action or suit in the appropriate court of law. The acceptance of this proposal by the Issuer shall constitute a contract between the Issuer and the Successful Bidder for purposes of complying with Rule 15c2-12 of the Securities and Exchange Commission and a bond purchase agreement for purposes of the laws of the State of Kansas. Submitted by: (LIST ACCOUNT MEMBERS ON REVERSE) By: -------------Telephone No. ACCEPTANCE Pursuant to action duly taken by the Govemmg Body of the City of Salina, Kansas, the above proposal is hereby accepted on April 13, 2020. 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. Email bids may be sent to the Financial Advisor at arteberryd@stifel com or electronic bids may be submitted via PARITY", at or prior to I :00 p.m., Central Time. on April 13. 2020. Any bid received after such time will not be considered. 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 SERIES 2020-A April 13, 2020 For $5,250,000* principal amount of General Obligation Internal Improvement Bonds, Series 2020-A, of the City of Salina, Kansas, to be dated April 29, 2020, as described in the Notice of Sale (the ··Notice") dated April 7, 2020, said Bonds to bear interest as follows: Maturity Principal Maturity Principal October 1 Amount' Interest Rate October 1 Amount' Interest Rate 2021 $520,000 % 2029 $230,000 % 2022 600,000 % 2030 235,000 % 2023 615,000 % 2031 210,000 % 2024 630.000 % 2032 220,000 % 2025 645,000 % 2033 225,000 % 2026 205.000 % 2034 235,000 % 2027 215.000 % 2035 240,000 % 2028 225.000 % *Sub1ect to change, see the Notice. the undersigned will pay the total principal amount of the Bonds. plus a premium as set forth below, plus accrued interest to the date of delivery. D D Principal Amount ......................................................................................................................................................... $5,250.000.00' Plus Premium (if any) ........................................................................................................................... _________ _ Total Purchase Price .............................................................................................................................. $ _________ _ Total interest cost to maturity at the rates specified .............................................................................. $ _________ _ Net interest cost (adjusted for Premium) ............................................................................................... S _________ _ True Interest Cost ...................................................................................................................................................... _____ % The Bidder elects to purchase Municipal Bond Insurance from: [Assured] [AGM] [BAM]._[ ____ __.]. Circle one or complete blank. The Bidder elects to have the following Term Bonds: Maturity Date October I, __ October I, Years _ ___ to ___ _ ____ to ___ _ Amount* $ ____ _ $ ____ _ *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 ifthe undersigned is the Successful Bidder, the undersigned will comply with all of the provisions contained in the Notice. The transactions described herein may be conducted and related documents may be sent, received and stored by electronic means. All bid documents. closing documents, certificates. ordinances, resolutions and related instruments may be executed by electronic transmission. Copies, telecopies. electronic files and other reproductions of original executed documents (or documents executed by electronic transmission) shall be deemed to be authentic and valid counterparts of such documents for all purposes, including the filing of any claim, action or suit in the appropriate court of law. The acceptance of this proposal by the Issuer by execution below shall constitute a contract between the Issuer and the Successful Bidder for purposes of complying with Rule 15c2-12 of the Securities and Exchange Commission and a bond purchase agreement for purposes of the laws of the State of Kansas. Submitted by:---------------- (LIST ACCOUNT MEMBERS ON REVERSE) By: ------------~ Telephone No. ACCEPTANCE Pursuant to act10n duly taken by the Governing Body of the City of Salina, Kansas, the above proposal is hereby accepted on April 13, 2020. 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. Email bids may be sent to the Financial Advisor at arteberryd@stifel.com or electronic bids may be submitted via PARITY", at or prior to I :00 p.m., Central Time, on April 13, 2020. Any bid received after such time will not be considered. Attachment 2 Bids Received C-2-4 \ PARITY Bid Form Upcoming Calendar Overview I _Result J Excel UMB Bank N.A. -Kansas City , MO's Bid ·-o~·Rr·rv:·· :~:r ~•!:a • E:· Salina $7 ,080,000 General Obligation Temporary Notes, Series 2020-1 For the aggregate principal amount of $7,080,000.00, we will pay you $7 ,064,424 .00 , plus accrued interest from the date of issue to the date of delivery. The Bonds are to bear interest at the following rate: Maturity Date Amount$ Coupon% 05/01/2021 7,080M 1.0000 Bid: Discount: Net Interest Cost: NIC: Yield% 1.0000 Dollar Price 100.000 99.780000 $15 ,576 .00 $86 ,769.33 1.218785 Time Last Bid Received On :04/13/2020 12:34:49 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: UMB Bank N.A., Kansas City , MO Contact: Kristin Koziol Title: VP Telephone: 816-860-7223 Fax: 816-843-4325 Issuer Name: City of Salina Accepted By : Date: Company Name: Accepted By: Date: 1981-2002 1-Deal LLC Ali' ~hts '8Se'\e~ Tra8ernaCKS TO: Shandi Wicks, Clerk City of Salina, Kansas OFFICIAL BID FORM PROPOSAL FOR THE PURCHASE OF CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES SERIES 2020-1 April 13, 2020 For $7,080.000' principal amount of General Obligation Temporary Notes. Series 2020-1, of the City of Salina, Kansas. to be dated April 29, 2020, as described in the Notice of Sale (the "Notice") dated April 7, 2020, said Notes to bear interest as follows: Maturity Mayl 2021 Principal Amount' $7,080,000 Interest Rate 2.00 % *Sub1ect to change; see the Notice. the undersigned will pay the total principal amount of the Notes, plus a premium or less a discount as set forth below, plus accrued interest to the date of delivery. Principal Amount ....................................................................................................................................................... $7,080,000.00' Less Discount (not to exceed 0.50%) .................................................................................................... ( 22.302.00 ) Plus Premium (if any) ............................................................................................................................. 30,231.60 Total Purchase Price ................................................................................................................................ $ 7,087,929.60 Total interest cost to maturity at the rates specified ................................................................................ $ _____ 1_4_2_,3_8_6_.6_6_ Net interest cost ...................................................................................................................................... $ _____ 1_34~,4_5_7_.0_6_ 0 The Bidder elects to purchase Municipal Bond Insurance from: [Assured] [AGM] [BAM] f._ ____ _.J. Circle one or complete blank. 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 the Notice. The transactions described herein may be conducted and related documents may be sent, received and stored by electronic means. All bid documents. closing documents. certificates. ordinances, resolutions and related instruments may be executed by electronic transmission. Copies, telecopies, electronic files and other reproductions of original executed documents (or documents executed by electronic transmission) shall be deemed to be authentic and valid counterparts of such documents for all purposes, including the filing of any claim, action or suit in the appropriate court of law. The acceptance of this proposal by the Issuer shall constitute a contract between the Issuer and the Successful Bidder for purposes of complying with Rule 15c2-12 of the Securities and Exchange Commission and a bond purchase agreement for purposes of the laws of the State of Kansas. (LIST ACCOUNT MEMBERS ON REVERSE) ACCEPTANCE Pursuant to action duly taken by the Governing Body of the City of Salina, Kansas, the above proposal is hereby accepted on April 13, 2020. 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. Email bids may be sent to the Financial Advisor at arteberryd@stifel.com or electronic bids may be submitted via PAR/Tr, at or prior to 1 :00 p.m., Central Time. on April 13, 2020. Any bid received after such time will not be considered. TO: Shandi Wicks, Clerk City of Salina, Kansas OFFICIAL BID FORM PROPOSAL FOR THE PURCHASE OF CITY OF SALINA, KANSAS GENERAL OBLIGATION TEMPORARY NOTES SERIES 2020-1 April 13, 2020 For $7,080,000' principal amount of General Obligation Temporary Notes, Series 2020-1, of the City of Salina, Kansas, to be dated April 29, 2020, as described in the Notice of Sale (the "Notice") dated April 7, 2020, said Notes to bear interest as follows: ? /. '~7·'36 0 Maturity Principal Interest Ml!.!...! Amount' Rate *Subject to change; see the Notice. 2021 s1.080.ooo -2 dT6 the undersigned will pay the total principal amount of the Notes, plus a premium or less a discount as set forth below, plus accrued interest to the date of delivery. Principal Amount ....................................................................................................................................................... $7,080,000.00' Less Discount (not to exceed 0.50%) .................................................................................................... ( C> ) Plus Premium (if any) ............................................................................................................................. LJ; lJiD{), QJ Total Purchase Price ................................................................................................................................ $ :Z.,08<f. ll"12 - Total interest cost to maturity at the rates specified ................................................................................ S l ~i_. OJtJ. f 1 ~ Net interest cost ...................................................................................................................................... $ l(q9 ft"}J ,f:J;:_ ic The Bidder elects to purchase Municipal Bond Insurance from: [Assured] [AGM] [BAM] ._[ ____ __.]. Cir~ lo~ or ?o~~elli1. O D 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 the Notice. The transactions described herein may be conducted and related documents may be sent, received and stored by electronic means. All bid documents, closing documents, certificates, ordinances, resolutions and related instruments may be executed by electronic transmission. Copies, telecopies, electronic files and other reproductions of original executed documents (or documents executed by electronic transmission) shall be deemed to be authentic and valid counterparts of such documents for all purposes, including the filing of any claim, action or suit in the appropriate court of law. 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 I 5c2-12 of the Securities and Exchange Commission and a bond purchase agreement for purposeso(theh\.W!i.Ofthe~ansas ....... ..,. j!~ ~ 'Jllll•,...,.• ..... _. .~ .. tW!l t\f\~ h L;. tDClllllrn _.. ........ ...._ ..._,,. · . ~ \ft 'tW\.. \ llCtlDfl al .. FINI°"'*' 11111 uu• •a oordllon al II bid Sub~d by. .· on lhll lilllance d llU*=lpll ....-111 dlt9rn*-lhll 1. • " .. , ~ .. .._ '-.._ nal CIUl9d Mr palt lrllll!ICll al a .. ·By; ·· · . · INtlftll tdurt to~ Wiii 11 abllglllloi• ~ID.., . Telephone No. ( >o,,. ....... r a Co. ~contlN*lt..,...... or,_ OlhalMll fllld ID 130 Bellevue Awnue. SUiia 21i "'1 'I\ ................. flllln M.. Newpafl, RI 02840 A1111 M 401"'41-MaO ACCEPTANCE al.llelluOapco.cam Pursuant to action duly taken by the Governing Body of the City of Salina, Kansas, the above proposal is hereby accepted on April 13, 2020. 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. Email bids may be sent to the Financial Advisor at arteberryd@stifel.com or electronic bids may be submitted via PARJTyl>, at or prior to 1 :00 p.m., Central Time, on April 13, 2020. Any bid received after such time will not be considered. Attachment 3 Bid Comparison C-2-5 BID RESULTS CITY OF SALINA, KANSAS $7,050,000 GENERAL OBLIGATION TEMPO RA TY NOTES SERIES 2020-1 Bidder Name NIC UMBBank I .218785 Commerce Bank 1.877943 Oppenheimer 2.3123 EXHIBITD DESCRIPTION OF PROPERTY COMPRISING THE FINANCED FACILITY AND LIST OF REIMBURSEMENT EXPENDITURES C-2-1 City of Salina, Kansas EXHIBIT D TO FEDERAL TAX CERTIFICATE Description of Property Comprising the Financed Facility City of Salina, Kansas General Obligation Temporary Notes Series 2020-1 Notes Original Economic Asset Description Life Police Training Center 20 Pheasant Ridge Addition No. 3 20 Stone Lake 2 20 Less land costs Net costs, excluding land Average, Reasonably Expected Economic Life. 120% of Original Economic Life 120% Estimated Elapsed Estimated Placed in Time Remaining Service from Economic Date Issue Date Life Apnl-21 1.00 21.00 Apnl-20 0.00 20.00 April-21 1.00 21.00 20.92 years 25.11 years * Improvement Fund Deposit excludes Costs oflssuance and Underwnter's Discount. 2020-1 Note Proceeds Allocated to Project Costs** Other Money Allocated to Project Costs*** Total Project Costs Asset Type Building Other Other Total Estimated Project Costs 6,050,000 550,000 450,000 7,050,000 7,050,000 6,990,441 59,559 s 7,050,000 Costs Paid Economic from Life x Series 2020-1 Financed Notes Proceeds* Cost 6,043,186 126,906,914 542,255 10,845,091 405,000 8,505,000 6,990,441 146,257,005 6,990,441 ** Includes $5,685,440.93 of Note Proceeds used to refinance the Series 2019-1 Notes and the Series 2019-2 Notes, and $1,305,000.00 used to finance new projects. *** Other Money may include prior or future tax-exempt financings. General Obligation Temporary Notes, Series 2020-I April 29, 2020 EXHIBITE SAMPLE ANNUAL COMPLIANCE CHECKLIST Name of tax-exempt notes ("Notes") financing General Obligation Temporary Notes, Financed Asset: Series 2020-1 Issue Date of Notes: April 29, 2020 Placed in service date of Financed Facility: Name of Bond Compliance Officer: Period covered by request ("Annual Period"): Item Question Response 1 Was the entire Financed Facility owned by the Issuer during 0Yes Ownership the entire Annual Period? 0No If answer above was "No," was advice of Bond Counsel 0Yes obtained prior to the transfer? 0No If Yes, include a description of the advice in the Tax-Exempt Bond File. If No, contact Bond Counsel and include description of resolution in the Tax-Exempt Bond File. Item Question Response 2 During the Annual Period, was any part of the Financed 0Yes Leases & Facility leased at any time pursuant to a lease or similar 0No Other Rights agreement for more than 50 days? to Possession If answer above was "Yes," was advice of Bond Counsel DYes obtained prior to entering into the lease or other arrangement? 0No If Yes, include a description of the advice in the Tax-Exempt Bond File. If No, contact Bond Counsel and include description of resolution in the Tax-Exempt Bond File. Item Question Response 3 During the Annual Period, has the management of all or any 0Yes Management part of the operations of the Financed Facility (e.g., cafeteria, 0No or Service system operations, etc.) been assumed by or transferred to Agreements another entity? If answer above was "Yes," was advice of Bond Counsel 0Yes obtained prior to entering into the Management or Service 0No Agreement? If Yes, include a description of the advice in the Tax-Exempt Bond File. If No, contact Bond Counsel and include description of resolution in the Tax-Exempt Bond File. Item Question Response 4 Was any other agreement entered into with an individual or 0Yes Other Use entity that grants special legal rights to the Financed Facility? 0No If answer above was "Yes," was advice of Bond Counsel 0Yes obtained prior to entering into the agreement? 0No If Yes, include a description of the advice in the Tax-Exempt Bond File. If No, contact Bond Counsel and include description of resolution in the Tax-Exempt Bond File. Item Question Response 5 Have all rebate and yield reduction calculations mandated in DYes Arbitrage the Federal Tax Certificate been prepared for the current year? 0No & Rebate IfNo, contact Rebate Analyst and incorporate report or include description ofresolution in the Tax-Exempt Bond File. Bond Compliance Officer: Date Completed: -2- Governing Body City of Salina, Kansas UMB Bank, N.A. Kansas City, Missouri & GILMOl\._EBELL 2405 Grand Boulevard, Suite 1100 Kansas City, Missouri 64108-2521 (816) 221-1000 / (816) 221-1018 FAX I gilmorebell.com April 29, 2020 Re: $7,050,000 General Obligation Temporary Notes, Series 2020-1 of the City of Salina, Kansas, Dated April 29, 2020 We have acted as Bond Counsel to the City of Salina, Kansas (the "Issuer"), in connection with its issuance of the above-captioned notes (the "Notes"). 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 authorizing the issuance and prescribing the details of the Notes. 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 Notes have been duly authorized, executed and delivered by the Issuer and are valid and legally binding general obligations of the Issuer. 2. The Notes are payable as to both principal and interest in part from special assessments levied upon the property benefited by the construction of certain improvements and, if not so paid, from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the Issuer. The balance of the principal and interest on the Notes is payable from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the Issuer. The Issuer is required by law to include in its annual tax levy the principal and interest coming due on the Notes to the extent that necessary funds are not provided from other sources. 3. The interest on the Notes (including any original issue discount properly allocable to an owner thereof) 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. 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 Notes 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 Notes to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Notes. The Notes 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 Notes. 4. The interest on the Notes 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 Notes (except to the extent, if any, stated in the Official Statement). Further, we express no opinion regarding tax consequences arising with respect to the Notes other than as expressly set forth in this opinion. The rights of the owners of the Notes 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 ~TIORNEY GENEPAL The Honorable Jake LaTurner State Treasurer April 29, 2020 Landon State Office Building, Room 201 N Topeka, KS 66612 Dear Mr. LaTurner: MEMORIAL HALL 120 SW 10-:-H AVl.. 2NO FLOOR TOPEKA, KS 66612· 1 ~97 1785 l 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 Temporary Note Series: 2020-1 Numbered: Registered Dated: April 29, 2020 Aggregate Amount: $7,050,000.00 Date of First Payment: May 1, 2021 Fiscal Agent: Kansas State Treasurer RDS:sb cc: Shandi Wicks, City Clerk Gilmore & Bell-Kansas City Sincerely, OFFICE OF THE ATTORNEY GENERAL DEREK SCHMIDT Richard D. Smith Assistant Attorney General STIFEL April 24, 2020 CLOSING MEMORANDUM TO: SEE DISTRIBUTION LIST FROM: DAVID ARTEBERRY RE: NOTE ISSUE CLOSING ARRANGEMENTS NAME OF ISSUER: AMOUNT, NAME AND DATE OF ISSUE: TIME AND DATE OF CLOSING: SETTLEMENT NUMBERS: City of Salina, Kansas $7,050,000.00 City of Salina, Kansas General Obligation Temporary Notes Series 2020-1 Dated April 29, 2020 10:00 a.m. Wednesday, April 29, 2020 Via telephone Par Amount of Notes Less: Underwriter's Discount Less: Good Faith Deposit Net Amount Due at Closing METHOD OF FUNDS TRANSFER: Wire Transfer of Federal Funds 4801 Main Street, Suite 530 I Kansas City, Missouri 64112 I (816) 203-8728 main Stifel, Nicolaus & Company, Incorporated I Member SIPC & NYSE I www.stifel.com $7,050,000.00 {15,510.00) (141.600.00) $6,892,890.00 Page 2 TRANSFER INSTRUCTIONS: (UMB Bank N.A. Wire #1) (UMB Bank N.A. Wire #2) DISPOSITION OF FUNDS: (Kansas State Treasurer) (City of Salina) DELIVERY OF TRANSCRIPT AND LEGAL OPINION: On Wednesday, April 29, 2020, UMB Bank, N.A. Inc. will wire transfer an amount of $5,685,440.93 to: U.S. Bank N.A. ABA #1010-0018-7 For credit to State Treasurer Operating Account Account#145592399581 For further credit to City of Salina Attn: Shauna Wake. On Wednesday, April 29, 2020, UMB Bank, N.A. Inc. will wire transfer an amount of $1,207,449.07 to: Sunflower Bank ABA #1011-0062-1 For credit to City of Salina Account# 102187275 Attn: Debbie Pack The Kansas State Treasurer shall use the $5,685,440.93 received from UMB Bank N.A. along with $5,306,671.85 received from Robert W. Baird & Co., Inc. and $334,086.03 received from the City, as further detailed in the Closing Memorandum for the City's General Obligation Internal Improvement Bonds, Series 2020-A, (total $11,326,198.81) to redeem the following outstanding temporary notes of the City: General Obligation Temporary Notes: Amount Due: Series 2019-1 (matures 5/1/20) $6,183,012.45 Series 2019-2 (redeemed early on 5/4/20) 5,143,186.36 $11,326,198.81 The City shall deposit the $1,207,449.07 received from UMB Bank N.A. along with the $141,600.00 good faith deposit for the Notes previously received from UMB Bank N.A. (total $1,349,049.07) into the Improvement Fund for General Obligation Temporary Notes, Series 2020-1, and apply the funds as follows: For Issuance Costs For Police Facility and Stone Lake $ 44,049.07 1.305.000.00 $1,349,049.07 Upon receiving confirmation of receipt of funds, Gilmore & Bell will email a signed legal opinion to the City, UMB Bank N.A. and Stifel, Nicolaus & Company. Original signed legal opinions and transcripts will be mailed when completed. 4801 Main Street, Suite 530 I Kansas City, Missouri 641121(816)203-8728 main Sttfel, Nicolaus & Company, Incorporated I Member SIPC & NYSE I www.stifel.com Page 3 NOTE DELIVERY INSTRUCTIONS: PAYMENT OF COSTS OF ISSUANCE: PDF copies of the Notes will be delivered to the UMB Bank N.A. in advance of closing, and UMB Bank N.A. will arrange for closing of the transaction with DTC using an Emergency Rider to the Letter of Possession. The Paying Agent will hold the original Notes and deliver the physical certificates to the offices of the Depository Trust Company as soon as possible following DTC's announcement that it has resumed acceptance of physical certificates. All reimbursable costs associated with the issuance of the Notes will be paid after closing by the City from the Series 2020-1 Improvement Fund upon presentation of the proper invoices. 4801 Main Street, Suite 530 I Kansas City, Missouri 641121(816)203-8728 main Stifel, Nicolaus & Company, Incorporated I Member SIPC & NYSE I www.stifel.com Cassmeyer, Julie (G&B) From: Sent: To: bondreg@treasurer.ks.gov Wednesday, April 15, 2020 3:29 PM Colborne, Amy (G&B) Subject: Bondreg: Updated Bond Registration April 15, 2020, 15:29:20 This bond issue has been updated in the KST Bond Registration System. Below is the updated information: Registration#: 0322-085-042920-899 Municipality: Salina Bond Counsel: Gilmore Bell: Amy Colborne Paying Agent: State Purpose & Series: General Obligation Temporary Notes, Series 2020-1 Book Entry: Yes Principal: $7,050,000.00 Closing Date: April 29, 2020 The issue was updated by Gina Clement. 1 Office of the Kansas State Treasurer Bond Registration System 900 SW Jackson St., Ste 201 ... Topeka, KS 66612-1235 ... 785-296-3171 April 15,2020 AmyColbome Gilmore & Bell Pc 2405 Grand Boulevard, Suite 1100 Kansas City, MO 64108 RE: $7,050,000.00, City of Salina, Kansas General Obligation Temporary Notes, Series 2020-1 Dated April 29, 2020, Registration #0322-085-042920-899 Dear Ms. Colbome, This office has been requested to authorize the printing of the State Treasurer's facsimile signature and seal on the above referenced issue. The registration number has been confirmed as correct. Authorization hereby granted April 15, 2020. Sincerely, Office of the State Treasurer Jake LaTumer Shauna Wake, M.B.A. Director of Fiscal Services cc Amy Colbome Gilmore & Bell Pc G.C. 2405 Grand Boulevard, Suite 1100 Kansas City, Mo 64108