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e UTILITY DEPARTMENT (As ofl/31194) e $3,375,000 2.490.000 $5,865,000 $1,303,553 1.923.097 $3,226,650 (excluding the Waterworks and Sewer System Revenue Bonds Currently Outstanding, Refunded Bonds) ...................... Revenue Refunding Bonds, Series 1994 Total .... SDecial Fund Balances. Debt Service Fund and Reserve Fund Operating Fund Total. WATERWORKS AND SEWER SYSTEM REVENUE BONDS AUTHORIZED BUT UNISSUED Authorized But Unissued Previously Issued Arnount Authorized Date of Aulhorization I . I '" ~. $ 225,000 1.025.000 $1,250,000 $ 575,000 7.525.000 $8,100,000 $ 800,000 8.550.000 $9,350,000 ~ Waterworks System Sewer System WATERWORKS AND SEWER SYSTEM OPERATING STATEMENTS Fiscal Year Ended September 30 Audited, from City's Annual Financial Report 1992 1991 1990 1989 $5,127,075 2.296.129 $2,830,946 3.32X 4.42X 8,314 8,105 6/15/85 6/15/85 $5,824,028 3.178.884 $2,645,144 $5,591,204 3.353.873 $2,237,331 $5,553,988 3.764.735 $1,789,253 1993 $5,781,497 3.825.979 $1,955,518 1989 3.10X 4.13X CUSTOMER COUNT Fiscal Year Ended September 30 Audited, from City's annual Financial Report 1992 1991 1990 15 Debt Service Revenues Expenses Available for 8,396 8,215 2.62X 3.49X 8,304 8,480 8,493 2.10X 2.79X 8,732 2.29X 3.05X 8,839 8,602 1993 Coverage of Estimated Annual Debt Service Requirement (1996) including the Bonds, Series 1994 Maximum Coverage of Estimated average Annual Debt Service Requirement (1994-2006) including the Bonds, Series 1994 Water Sewer . ~. e e TAX MATTERS ODin ion On the date of initial delivery of the refunding Bonds, McGinnis, Lochridge & Kilgore, L.L.P., San Antonio, Texas, Bond Counsel, will render their opinion that, in accordance with statutes, regulations, published rulings and court decisions existing on the date thereof, (1) interest on the refunding Bonds for federal income tax purposes will excludable from the "gross income" of the holders thereof and (2) the Refunding Bonds will not be treated as "private activity bonds" the interest on which would be included as an alternative minimum tax preference item under section 57(aX5) of the Internal Revenue Code of 1986, as amended (the "Code"). Except as stated above, Bond Counsel will express no opinion as to any other federal, state or local tax consequences of the purchase, ownership or disposition of the refunding Bonds. In rendering their opinion, Bond Counsel will rely upon (a) the City's no-arbitrage certificate and the verification report prepared by Deloitte & Touche, and (b) covenants of the City with respect to arbitrage, the application of the proceeds to be received from the issuance and sale of the Refunding Bonds and certain other matters. Failure of the City to comply with these representations or covenants could cause the interest on the Refunding Bonds to become includable in gross income retroactively to the date of issuance of the Refunding Bonds. The law upon which Bond Counsel has based their opinion is subject to change by the Congress and to subsequent judicial and administrative interpretation by the courts and the Department of the Treasury. There can be no assurance that such law or the interpretation thereof will not be changed in a manner which would adversely affect the tax treatment of this purchase, ownership or disposition of the Bonds. Federal Income Tax Accountine Treatment of Orieinal Issue Discount The Underwriters have represented that the initial public offering price to be paid for the Refunding Bonds, as stated on the cover of the Official Statement, (the "Original Issue Discount Bonds") is less than the principal amount thereof. The difference between (i) the amount payable at the maturity of each Original Issue Discount Bonds, and (ii) the initial offering price to the public of such Original Issue Discount Bond constitutes original issue discount with respect to such Original Issue Discount Bond in the hands of any owner who has purchased such Original Issue Discount Bonds in the initial public offering of the Refunding Bonds. Under existing law, such initial owner is entitled to exclude from gross income (as dermed in section 61 of the Code) an amount of income with respect to such Original Issue Discount Bond equal to that portion of the amount of such original issue discount allocable to the period that such Original Issue Discount Bond continues to be owned by such owner. For a discussion of certain collateral federal tax consequences, see discussion set forth below. In the event of redemption, sale or other taxable disposition of such Original Issue Discount Bond prior to stated maturity, however, the amount realized by such owner in excess of the basis of such Original Issue Discount Bond in the hands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for which such Original Issue Discount Bond was held by such initial owner) is includable in gross income. Under existing law, the original issue discount on each Original Issue Discount Bond is accrued daily to the stated maturity thereof (in amounts calculated as described below for each six-month period ending on the date before the semiannual anniversary dates of the date of the Refunding Bonds and ratably within each such six-month period) and the accrued amount is added to an initial owner's basis for such Original Issue Discount Bond for purposes of determining the amount of gain or loss recognized by such owner upon the redemption, sale or other disposition thereof. The amount to be added to basis for each accrual period is equal to (a) the sum of the issue price and the amount of original issue discount accrued in prior periods multiplied by the yield to stated maturity (determined on the basis of compounding at the close of each accrual period and property adjusted for the length of the accrual period) less (b) the amounts payable as current interest during such accrual period on such Original Issue Discount Bond. The federal income tax consequences of the purchase, ownership, redemption, sale or other disposition of Original Issue Discount Bonds which are not purchased in the initial offering at the initial offering price may be determined according to rules which differ from those described above. All owners of Original Issue Discount Bonds should consult their own tax advisors with respect to the determination for federal, state and local income tax purposes of the treatment of interest accrued upon redemption, sale or other disposition of such Original Issue Discount Bonds and with respect to the federal, state, local and foreign tax consequences of the purchase, ownership, redemption, sale or other disposition of such Original Issue Discount Bonds. 26