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HomeMy WebLinkAboutO-1994-1973 . . ORDINANCE NO. 94-1973 ORDINANCE AMENDING AND RESTATING ORDlNANCE NO, 941971, ORDINANCE AUTHORIZING THE ISSUANCE OF CITY OF LA PORTE, TEXAS, GENERAL OBLIGA nON REFUNDING BONDS, SERIES 1994, AND ALL OTHER MATIERS RELATED THERETO WHEREAS, the City Council of the City of La Porte desires to amend Ordinance No, 941971 and restate completely the ordinance as amended; WHEREAS, there are presently outstanding the following obligations of the City of La Porte (the "Issuer" or the "City"), which are secured by a plcilge by the Issuer to levy ad valorem taxes sufficient to pay principal of and interest on such obligations as they become due (collectively the "Refunded Obligations") which the Issuer now desires to refund: DESCRIPTION College View Municipal Utility District Waterworks and Sewer System Combination Tax and Revenue Bonds, Series 1968, dated September 1, 1968 (Assumed Bonds) REFUNDED AMOUNT MATURITIES CALL $ 120,000 1997-1998 9-1-94 College View Municipal Utility District Waterworks and Sewer System Combination Tax and Revenue Bonds, Series 1970, dated November 1, 1970 (Assumed Bonds) $ 15,000 1995 5-1-94 City of La Porte, Texas, General Obligation Bonds, Series 1986, dated May 15, 1986 ' $2,175,000 1998-2005 2-15-96 City of La Porte, Texas, General Obligation Bonds, Series 1989, dated July 15, 1989 $1,850,000 2003-2010 2-15-00 City of La Porte, Texas, General Obligation Bonds, Series 1990, dated September 15, 1990 $ 600,000 2004-2011 3-15-01 City of La Porte, Texas, General Obligation Refunding Bonds, Series 1991, dated April 15, 1991 $1,900,000 2001-2005 2-15-99 WHEREAS, Article 717k. Vernon's Texas Civil Statutes, as amended (the "Act"), authorizes the Issuer to issue refunding bonds and to deposit the proceeds from the sale thereof together with any other available funds or re- sources, directly with a place of payment (paying agent) for any of the Refunded Obligations, and such deposit, if made before such payment dates, shall constitute the making of finn banking and financial arrangements for the discharge and final payment of the Refunded Obligations; WHEREAS, the City Council of the Issuer (the "Council") deems it advisable to refund the Refunded Obligations in order to lower the annual debt service requirements of the Issuer and to restructure the Issuer's debt service in a manner which will pennit the issuance of additional general obligation bonds without a tax rate increase or with a smaller increase than would otherwise be required; WHEREAS, all the Refunded Obligations mature or are subject to redemption prior to maturity within 20 years of the date of the bonds hereinafter authorized; WHEREAS, it is now deemed necessary and advisable that said bonds be issued at this time, in the amounts, and for the purpose as herein shown; and e e WHEREAS, lhe bonds hereinafter authorized are to be issued and delivered pursuant to the Act and the Charter of the Issuer. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE, TEXAS, THAT: SECTION 1. AMOUNT AND PURPOSE OF THE BONDS. The bonds of City of La Porte (the "Issuer") are hereby authorized to be issued and delivered in lhe aggregate principal amount of $7,445,000, FOR THE PURPOSE OF PROVIDING FUNDS TO REFUND THE ISSUER'S REFUNDED OBLIGATIONS (as described in the preamble hereto). SECTION 2. DESIGNATION, DATE, DENOMINATIONS, NUMBERS. MATURITIES. AND INTEREST RATES OF BONDS. Each bond issued pursuant to lhis Ordinance shall be designated: "CITY OF LA PORTE. TEXAS, GENERAL OBLIGATION REFUNDING BOND, SERIES 1994", and initially there shall be issued, sold, and delivered hereunder fully registered bonds, wilhout interest coupons, dated April 1. 1994, in lhe respective denominations and principal amounts hereinafter stated, payable to the respective initial registered owners thereof (as designated in Section 11 hereof). or to the registered assignee or assignees of said bonds or any portion or portions lhereof (in each case, lhe "Registered Owner", "Owner", or "owner"). The tenn "Bonds" as used in this Ordinance shall mean and include collectively the bonds initially issued and delivered pursuant to this Ordinance and all substitute bonds exchanged lherefor, as well as all other substitute bonds and replacement bonds issued pursuant hereto, and the tenn "Bond" shall mean any of the Bonds, The Initial Bond shall be numbered 1-1 and the definitive Bonds shall be numbered R-l upward and shall be in the denomination of $5.000 each or any integral multiple thereof, shall mature and be payable serially on February 15 in each of the years and in lhe principal amounts, respectively as set forth in the following schedule, and shall bear interest from lhe dates specified in the FORM OF BOND set forth in lhis Ordinance to their respective dates of maturity or redemption prior to maturity at the following rates per annum: INTEREST INTEREST YEARS AMOUNTS RATES YEARS AMOUNTS RATES 1995 $195,000 3,25% 2001 $1,050,000 4.60% 1996 280,000 3.50 2002 960,000 4.70 1997 265,000 3.75 2003 1,090,000 4.85 1998 500,000 4,00 2004 1,065,000 4.95 1999 455,000 4.20 2005 905,000 5.10 2000 680.000 4.30 Said interest shall be payable in lhe manner provided and on the dates stated in the FORM OF BOND set forth in this Ordinance, SECTION 3. CHARACTERISTICS OF THE BONDS. (a) Re~istration. Transfer. and Exchan~e: Authentication. The Issuer shall keep or cause to be kept at the principal corporate trust office of Texas Commerce Bank National Association, Houston, Texas (the "Paying Agent/Registrar") books or records for the registration of the transfer and exchange of the Bonds (the "Registration Books"), and the Issuer hereby appoints the Paying Agent/Registrar as its registrar and transfer agent to keep such books or records and make such registrations of transfers and exchanges under such reasonable regulations as the Issuer and Paying AgentlRegistrar may prescribe: and the Paying Agent/Registrar shall make such registrations, transfers, and exchanges as herein provided. The Mayor and the City Secretary are authorized to enter into a Paying Agent/Registrar Agreement substantially in the fonn of Exhibit A, attached hereto. The Paying Agent/Registrar shall obtain and record in the Registration Books the address of the registered owner of each Bond to which payments with respect to the Bonds shall be mailed, as herein provided; but it shall be the duty of each registered owner to notify the Paying Agent/Registrar in writing of the address to which payments shall be mailed, and such interest payments shall not be mailed unless such notice has been given. To the 2 e - extent possible and under reasonable circumstances, all transfers of Bonds shall be made within three business days after request and presentation thereof, The Issuer shall have the right to inspect the Registration Books during regular business hours of the Paying Agent/Registrar, but otherwise the Paying Agent/Registrar shall keep the Regis- tration Books confidential and, unless otherwise required by law, shall not pennit their inspection by any other entity, The Paying Agent/Registrar's standard or customary fees and charges for making such registration, transfer, exchange and delivery of a substitute Bond or Bonds shall be paid as provided in the FORM OF BOND set forth in this Ordi- nance, Registration of assignments, transfers, and exchanges of Bonds shall be made in the manner provided and with the effect stated in the FORM OF BOND set forth in this Ordinance, Each substitute Bond shall bear a letter and/or number to distinguish it from each other Bond. Except as provided in (c) below, an authorized representative of the Paying Agent/Registrar shall, before the delivery of any such Bond. date and manually sign the Paying Agent/Registrar's Authentication Certificate, and no such Bond shall be deemed to be issued or outstanding unless such Certificate is so executed. The Paying Agent/Registrar promptly shall cancel all paid Bonds and Bonds surrendered for transfer and exchange, No addi- tional ordinances, orders. or resolutions need be passed or adopted by the governing body of the Issuer or any other body or person so as to accomplish the foregoing transfer and exchange of any Bond or portion thereof, and the Paying Agent! Registrar shall provide for the printing, execution, and delivery of the substitute Bonds in the manner prescribed herein, and said Bonds shall be of type composition printed on paper with lithographed or steel engraved borders of customary weight and strength, Pursuant to Vernon's Ann, Tex, Civ. S1. Art, 717k-6, and particularly Section 6 thereof, the duty of lransfer and exchange of Bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar. and, upon the execution of said certificate, the transferred and exchanged Bond shall be valid. incontestable, and enforceable in the same manner and with the same effect as the Bonds which initially were issued and delivered pursuant to this Ordinance. approved by the Attorney General, and registered by the Comptroller of Public Accounts. (b) Payment of Bonds and Interest. The Issuer hereby further appoints the Paying Agent/Registrar to act as the paying agent for paying the principal of and interest on the Bonds. all as provided in this Ordinance, The Paying Agent! Registrar shall keep proper records of all payments made by the Issuer and the Paying Agent/Registrar with respect to the Bonds, (c) In General, The Bonds (i) shall be issued in fully registered fonn, without interest coupons, with the principal of and interest on such Bonds to be payable only to the registered owners thereof. (ii) may be redeemed prior to their scheduled maturities, (iii) may be transferred and assigned, (iv) may be exchanged for other Bonds, (v) shall have the characteristics, (vi) shall be signed, sealed, executed. and authenticated, (vii) shall have the principal of and interest on the Bonds be payable, and (viii) shall be administered and the Paying Agent/Registrar and the Issuer shall have certain ~uties and responsibilities with respect to the Bonds, all as provided. and in the manner and to the effect as required or indicated, in the FORM OF BOND set forth in this Ordinance. The Initial Bond shall be delivered to the initial purchaser and are not required to be, and shall not be, authenticated by the Paying Agent/Registrar, but on each substitute Bond issued in exchange for the Initial Bonds or any Bond or Bonds issued under this Ordinance the Paying Agent/Registrar shall execute the PAYING AGENTIREGISlRAR'S AUTHENTICATION CERTIFICATE, in the fonn set forth in the FORM OF BOND, (d) Substitute Paving AgentlRegistrar, The Issuer covenants with the registered owners of the Bonds that at all times while the Bonds are outstanding the Issuer will provide a competent and legally qualified bank, b1Jst company. financial institution, or other agency to act as and perfonn the services of Paying Agent/Registrar for the Bonds under this Ordinance, and that the Paying Agent/Registrnr will be one entity. The Issuer reserves the right to, and may, at its option, change the Paying Agent/Registrnr upon not less than 120 days written notice to the Paying Agent/Registrar, to be effective not later than 60 days prior to the next principal or interest payment date after such notice. In the event that the entity at any time acting as Paying Agent/Registrar (or its successor by merger, acquisition, or other method) should resign or otherwise cease to act as such, the Issuer covenants that promptly it will appoint a competent and legally qualified bank, trust company, financial institution, or other agency to act as Paying Agent/Registrar under this Ordinance, Upon any change in the Paying Agent/Registrar, the previous Paying 3 e e Agent/Registrar promptly shall transfer and deliver the Registration Books (or a copy thereof), along with all other pertinent books and records relating to the Bonds, to the new Paying Agent/Registrar designated and appointed by the Issuer. Upon any change in the Paying AgentlRegistrar, the Issuer promptly will cause a written notice thereof to be sent by the new Paying Agent/Registrar to each registered owner of the Bonds, by United States mail, first- class postage prepaid, which notice also shall give the address of the new Paying Agent! Registrar, By accepting the position and performing as such, each Paying Agent/Registrar shall be deemed to have agreed to the provisions of this Ordinance, and a certified copy of this Ordinance shall be delivered to each Paying Agent/Registrar. SECTION 4. FORM OF BONDS, The fonn of the Bonds, including the fonn of Paying Agent/Registrar's Authentication Certificate, the fonn of Assign~ent, the fonn of Statement of Insumnce, and the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be attached to the Bonds initially issued and delivered pursuant to this Ordinance, shall be, respectively, substantially as follows, with such appropriate varia- tions, omissions, or insertions as are penniued or required by this Ordinance. [FORM OF BOND] [Fonn of Front Panel of Definitive Bond] NO.R- United States of America State of Texas ctTY OF LA PORTE, TEXAS GENERAL OBLIGATION REFUNDING BOND, SERIES 1994 PRINCIPAL AMOUNT $ INTEREST RATE MATURITY DATE ISSUE DATE April 1, 1994 CUSIP NO. REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS ON THE MATURITY DATE, specified above, TIlE CITY OF LA PORTE, a home rule city and municipal cOJporation of the State of Texas (the "Issuer"), hereby promises to pay to the Registered Owner, specified above, or registered assigns (hereinafter called the "registered owner") the Principal Amount, specified above, and to pay interest thereon from the Issue Date, specified above, on August 15, 1994, and semiannually on each February 15 and August 15 thereafter to the Maturity Date, specified above, or the date of redemption prior to maturity, at the Interest Rate per annum, specified above; except that if this Bond is required to be authenticated and the date of its authentication is later than the first Record Date (hereinafter defined), such principal amount shall bear interest from the interest payment date next preceding the date of authentication, unless such date of authentication is after any Record Date but on or before the next following interest payment date, in which case such principal amount shall bear interest from such next following interest payment date; provided, however, that if on the date of authentication hereof the interest on the Bond or Bonds, if any, for which this Bond is being exchanged is due but has not been paid, then this Bond shall bear interest from the date to which such interest has been paid in full. THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of the United States of America, without exchange or collection charges. The principal of this Bond shall be paid to the registered owner hereof upon presentation and surrender of this Bond at maturity or upon the date fixed for its redemption prior to maturity, at the principal corporate trust office of TEXAS COMMERCE BANK. NATIONAL ASSOCIATION, Houston, Texas, or its successor, which is the "Paying Agent/Registrar" for this Bond. The payment of interest on this Bond shall be made by the Paying Agent/Registrar to the registered owner hereof on each interest payment date by check, dated as of such interest payment date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required by the ordinance authorizing the issuance of this Bond adopted on March 17, 1994 (the 4 e e' "Bond Ordinance") to be on deposit with the Paying AgentlRegistrar for such purpose as hereinafter provided; and such check shall be sent by the Paying Agent/Registrar by United States mail, frrst-class postage prepaid, on each such interest payment date, to the registered owner hereof, at its address as it appeared on the last business day of the month next preceding each such date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described. In addition, interest may be paid by such other method, acceptable to the Paying AgentlRegistIar, requested by, and at the risk and expense of, the registered owner. TillS BOND is one of a Series of Bonds dated as of April 1, 1994, authorized in accordance with the Constitu- tion and laws of the State of Texas in the original principal amount of $7,445,000 FOR THE PURPOSE OF PROVIDING FUNDS TO REFUND CERTAIN OF THE ISSUER'S OUTSTANDING OBLIGATIONS (as described in the preamble to the Bond Ordinance). REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THE BOND SET FORTH ON THE REVERSE HEREOF, WillCH PROVISIONS SHALL HAVE THE SAME FORCE AND EFFECT AS IF SET FORTH IN THIS SPACE. IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual or facsimile signature of the Mayor of the Issuer and countersigned with the manual or facsimile signature of the City Secretary of the Issuer, and has caused the official seal of the Issuer to be duly impressed, or placed in facsimile, on this Bond. CITY OF LA PORTE, TEXAS xxxxxxxxxxxxx City Secretary City of La Porte, Texas xxxxxxxxxxxxx Mayor City of La Porte, Texas [ponn of Back Panel of Bond] THE BONDS are issued pursuant to the Bond Ordinance whereunder the Issuer covenants to levy a continuing direct annual ad valorem tax on taxable property within the Issuer, not to exceed $2.50 per assessed $100 valuation, as provided in Article XI, Section 5 of the Texas Constitution, for each year while any part of the Bonds are considered outstanding under the provisions of the Bond Ordinance, in sufficient amount to pay interest on each Bond as it becomes due, to provide a sinking fund for dIe payment of the principal of the Bonds when due, and to pay the expenses of assessing and collecting such tax, all as more specifically provided in the Bond Ordinance. Reference is hereby made to the Bond Ordinance for provisions with respect to dIe custody and application of the Issuer's funds, remedies in the event of a default hereunder or thereunder, and the other rights of the registered owner. TillS BOND IS TRANSFERABLE OR EXCHANGEABLE only upon presentation and surrender at the principal corporate office of the Paying Agent/Registrar. If this Bond is being transferred, it shall be duly endorsed for transfer or accompanied by an assignment duly executed by the registered owner, or his authorized representative, subject to the tenns and conditions of the Bond Ordinance, ANY ACCRUED INTEREST DUE at maturity or upon the redemption of this Bond prior to maturity as provided herein shall be paid to the registered owner upon presentation and surrender of this Bond for redemption and payment at the principal corporate trust office of the Paying Agent/RegistIar. The Issuer covenants with the registered owner of this Bond that on or before each principal payment date, interest payment date, and accrued interest payment date for this Bond it will make available to the Paying Agent/Registrar, from the "Interest and Sinking Fund" created by the Bond Ordinance, the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on the Bonds, when due. IF THE DATE for the payment of the principal of or interest on this Bond shall be a Saturday, a Sunday, a legal holiday, or a day on which banking institutions in the city where the principal corporate trust office of the 5 e e Paying AgentlRegistrar is located are authorized by law or executive order to close, or the United States Postal Service is not open for business, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close, or the United States Postal Service is not open for business; and payment on such date shall have the same force and effect as if made on the original date payment was due, ON FEBRUARY 15, 2002, or on any date thereafter, the Bonds of this Series may be redeemed prior to their scheduled maturities, at the option of the Issuer, with funds derived from any available and lawful source, as a whole, or in part (provided that a portion of a Bond may be redeemed only in an integral multiple of $5,0(0) at the redemption price of the principal amount of Bonds called for redemption, plus accrued interest thereon to the date fixed for redemption, If less than all of the Bonds are to be redeemed, the Issuer shall detennine the maturity or maturities and the amounts thereof to be redeemed and shall direct the Paying Agent/Registrar to call by lot Bonds, or portions thereof, within such maturity or maturities and in such principal amounts, for redemption. AT LEAST 30 days prior to the date for any such redemption, a notice of such redemption shall be sent by the Paying Agent/Regislrar by United States mail, first class, postage prepaid, to the registered owner of each Bond, or portion thereof to be redeemed, at its address as it appeared on the Registration Books on the 45th day prior to such redemption date and to major securities depositories, national bond rating agencies, and bond infonnation services; provided, however, that the failure to send, mail, or receive such notice, or any defect therein or in the sending or mailing thereof, shall not a(fect the validity or effectiveness of the proceedings for the redemption of any Bond. By the date fixed for any such redemption, due provision shall be made by the Issuer with the Paying Agent/Registrar for the payment of the required redemption price for this Bond or the portion hereof which is to be so redeemed, plus accrued interest thereon to the date fixed for redemption, If such notice of redemption is given, and if due provision for such payment is made, all as provided above, this Bond, or the portion thereof which is to be so redeemed, thereby automatically shall be redeemed prior to its scheduled maturity, and shall not bear interest after the date fixed for its redemption, and shall not be regarded as being outstanding except for the right of the registered owner to receive the redemption price plus accrued interest to the date fixed for redemption from the Paying Agent/Registrar out of the funds provided for such payment. The Paying AgentlRcgistrar shall record in the Registration Books all such redemptions of principal of this Bond or any portion hereof. If a portion of any Bond shall be redeemed, a substitute Bond or Bonds having the same maturity dale, bearing interest at the same rate, in any denomination or denominations in any integral multiple of $5,000, at the written request of the registered owner, and in an aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon the surrender thereof for cancellation, at the expense of the Issuer, all as provided in the Bond Ordinance. ALL BONDS OF THIS SERIES are issuable solely as fully registered Bonds, without interest coupons, in the denomination of any integral multiple of $5,000. As provided in the Bond Ordinance. this Bond. or any unredeemed portion hereof, may, at the request of the registered owner or the assignee or assignees hereof, be assigned, transferred, and exchanged for a like aggregate principal amount of fully registered Bonds, without interest coupons, payable to the appropriate registered owner, assignee, or assignees, as the case may be, having the same denomination or denominations in any integral multiple of $5,000 as requested in writing by the appropriate registered owner, assignee, or assignees, as the case may be. upon surrender of this Bond to the Paying Agent/Registrar for cancellation, all in accordance with the fonn and procedures set forth in the Bond Ordinance. Among other requirements for such assignment and transfer, this Bond must be presented and surrendered to the Paying Agent/Registrar, together with proper instruments of assignment, in fonn and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment of this Bond or any portion or portions hereof in any integral multiple of $5,000 to the assignee or assignees in whose name or names this Bond or any such portion or portions hereof is or are to be registered. The fonn of Assignment printed or endorsed on this Bond may be executed by the registered owner to evidence the assignment hereof, but such method is not exclusive, and other instruments of assignment satisfactory to the Paying Agent/Registrar may be used to evidence the assignment of this Bond or any portion or portions hereof from time to time by the registered owner. The person requesting such transfer and exchange shall pay the Paying Agent/Registrar's reasonable standard or customary fees and charges for transferring and exchanging any Bond or portion thereof. In any circumstance, any taxes or governmental charges 6 e e required to be paid with respect thereto shall be paid by the person requesting such assignment, transfer, or exchange, as a condition precedent to the exercise of such privilege, The foregoing notwithstanding, in the case of the exchange of a portion of a Bond which has been redeemed prior to maturity, as provided herein, and in the case of the exchange of an assigned and transferred Bond or Bonds or any portion or portions thereof, such fees and charges of the Paying Agent/Regislrar will be paid by the Issuer. The Paying Agent/Regislrar shall not be required to make any such transfer or exchange (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date or (ii) with respect to any Bond or any portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date. IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Bond Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and cause written notice thereof to be mailed to the registered owners of the Bonds, BY BECOMING the registered owner of this Bond, the registered owner thereby acknowledges all of the tenns and provisions of the Bond Ordinance, agrees to be bound by such tenns and provisions, acknowledges that the Bond Ordinance is duly recorded and available for inspection in the official minutes and records of the governing body of the Issuer, and agrees that the'tenns and provisions of this Bond and the Bond Ordinance constitute a contract between each registered owner hereof and the Issuer. IT IS HEREBY CERTIFIED. RECITED, AND COVENANTED THAT this Bond has been duly and validly authorized, issued, and delivered; all acts, conditions, and things required or proper to be perfonned, exist, and be done precedent to or in the authorization, issuance, and delivery of this Bond have been perfonned, existed, and been done in accordance with law; and ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Bond, as such interest comes due, and as such principal matures, have been levied and ordered to be levied against all taxable property in the Issuer, and have been pledged for such payment, within the limit prescribed by law. FORM OF INITIAL BOND The Initial Bond shall be in the fonn set forth above for the Definitive Bonds. except the followin~ shall replace the headin~ and the first oara~raph and the Bond will be a continuous document: NO. 1-1 $7,445,000 United States of America State of Texas CITY OF LA PORTE. TEXAS GENERAL OBLIGATION REFUNDING BOND. SERIES 1994 Issue Date: APRil.. 1, 1994 Registered Owner: Principal Amount: SEVEN Mll..LION FOUR HUNDRED FORTY FIVE THOUSAND DOLLARS ($7,445,000) THE CITY OF LA PORTE, TEXAS (the "Issuer"), for value received, acknowledges itself indebted to and hereby promises to pay to the order of the Registered Owner, specified above, or the registered assigns thereof (the "Registered Owner"), the Principal Amount. specified above, wilh principal installments payable on August 15 in each of the years, and bearing interest at per annum rates in accordance with the following schedule: 7 e e YEARS OF STATED MA TURlTIES PRINCIPAL INSTALLMENTS $ INfEREST RATE % (Infonnation to be inserted from schedule in Section 2 hereof.) INTEREST on the unpaid Principal Amount hereof from the Issue Date, specified 'above, or from the most recent interest payment date to which interest has been paid or duly provided for until the Principal Amount has become due and payment thereof has been made or duly provided for shall be paid computed on the basis of a 360- day year of twelve 30-day months; such interest being payable on February 15 and August 15 of each year, commencing August 15, 1994, THE PRINCIPAL OF AND INfEREST ON this Bond are payable in lawful money of the United States of America, without exchange or collection charges, The final payment of principal of this Bond shall be paid to the Registered Owner hereof upon presentation and surrender of this Bond at final maturity, at the principal corporate bUst office of TEXAS COMMERCE BANK NATIONAL ASSOCIATION, Houston, Texas, which is the "Paying Agent/Registrar" for this Bond. The payment of principal installments and interest on this Bond shaU be made by the Paying Agent/Registrar to the Registered Owner hereof as shown by the Registration Books kept by the Paying Agent/Registrar at the close of business on the Record Date by check drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided; and such check shall ~e sent by the Paying Agent/Registrar by United States mail, postage prepaid, on each such payment date, to the registered owner hereof at its address as it appears on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described, The record date ("Record Date") for payments hereon means the last business day of the month preceding a scheduled payment. In the event of a non-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment thereof have been received from the Issuer. Notice of the Special Record Date and of the scheduled payment date of the past due payment (the "Special Payment Date", which shall be 15 calendar days after the Special Record Date) shaU be sent at least five business days prior to the Special Record Date by United States mail, first class, postage prepaid, to the address of the Registered Owner appearing on the books of the Paying Agenl/Registrar at the close of business on the last business day next preceding the date of mailing of such notice, The Issuer covenants with the Registered Owner that no later than each principal installment payment date and interest payment date for this Bond it will make available to the Paying Agenl/Regislrar the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on the Bond, when due, in the manner set forth in the Ordinance defined below. [FORM OF PAYING AGENT/REGlSlRAR'S AUTHENTICATION CERTIFICATE]. * Not required on Initial Bond PAYING AGENTIREGISTRAR'S AUTHENTICATION CERTIFICATE It is hereby certified that this Bond has been issued under the provisions of the Bond Ordinance described in the text of this Bond; and that this Bond has been issued in exchange for, a bond, bonds, or a portion of a bond or bonds of a Series which originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas, Dated: TEXAS COMMERCE BANK NATIONAL ASSOCIATION, HOUSTON, TEXAS Paying Agenl/Registrar By Authorized Signature 8 e e [FORM OF STATEMENT OF INSURANCE] STATEMENT OF INSURANCE Municipal Bond Guaranty Insurance Policy No. (the "Policy") with respect to payments due for principal of and interest on this Bond has been issued by AMBAC Indemnity Corporation ("AMBAC Indemnity"). The Policy has been delivered to the United States Trust Company of New York, New York, New York, as the Insurance Trustee under said Policy and will be held by such Insurance Trustee or any successor insurance trustee. The Policy is on file and available for inspection at the principal office of the Insurance Trustee and a copy thereof may be secured from AMBAC Indemnity or the Insurance Trustee, All payments required to be made under the Policy shall be made in accordance with the provisions thereof, The owner of this Bond acknowledges and consents to the subrogation rights of AMBAC Indemnity as more fully set forth in the Policy. [FORM OF ASSIGNMENT] ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto I I (please insert Social Security Number or (please print name and address. including zip code. of Transferee) Taxpayer Identification of Transferee) the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to register the transfer of the within Bond on the books kept for registration thereof, with full power of substitution in the premises, Dated: Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by a member fmn of the New York Stock Exchange or a commercial bank or trust company. NOTICE: The signature above must correspond with the name of the Registered Owner as it appears upon the front of this Bond in every particular. without alteration or enlargement or any change whatsoever, The following abbreviations. when used in the Assignment above or on the face of the within Bond, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common TEN ENT - as tenants by the entireties IT TEN - as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT - Custodian (Cust) (Minor) under Uniform Gifts to Minors Act (State) Additional abbreviations may also be used though not in the list above, 9 e e [FORM OF REGISTRATION CERTIFICATE OF THE COMPTROLLER OF PUBLIC ACCOUNTS]'" "'To be printed or attached to Initial Bond only COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this Bond has been examined. certified as to validity, and approved by the Attorney General of the State of Texas, and that this Bond has been registered by the Comptroller of Public Accounts of the State of Texas. Witness my signature and seal this COMPTROLLER'S SEAL Comptroller of Public Accounts of the State of Texas [END OF FORMS] SECTION 5. TAX LEVY, A special Interest and Sinking Fund (the "Interest and Sinking Fund") is hereby created solely for the benefit of the Bonds, and the Interest and Sinking Fund shall be established and maintained by the Issuer at an official depository bank of the Issuer. The Interest and Sinking Fund shall be kept separate and apart from all other funds and accounts of the Issuer, and shall be used only for paying the interest on and principal of the Bonds. All ad valorem taxes levied and collected for and on account of the Bonds shall be deposited, as collected, to the credit of the Interest and Sinking Fund. During each year while any of the Bonds or interest thereon are outstanding and unpaid, the Council shall compute and ascertain a rate and amount of ad valorem tax which will be sufficient to raise and produce the money required to .pay the interest on the Bonds as such interest comes due, and to provide and maintain a sinking fund adequate to pay the principal of its Bonds as such principal matures (but never less than 2% of the original principal amount of said Bonds as a sinking fund each year); and said tax shall be based on the latest approved tax rolls of the Issuer, with full allowance being made for tax delinquencies and the cost of tax collection. Said rate and amount of ad valorem tax is hereby levied, and is hereby ordered to be levied, against all taxable property in the Issuer for each year while any of the Bonds or interest thereon are outstanding and unpaid; and said tax shall be assessed and collected each such year and deposited to the credit of the aforesaid Interest and Sinking Fund. Said ad valorem taxes sufficient to provide for the payment of the interest on and principal of the Bonds, as such interest comes due and such principal matures, are hereby pledged for such payment, within the limit prescribed by law. SECTION 6, DISPOSITION OF BOND PROCEEDS, The proceeds of the Bonds shall be placed into the Interest and Sinking Fund and the Escrow Fund of the Issuer as follows: (a) Interest and SinkiDJ~ Fund, An amount equal to the accrued interest on the Bonds from the date of the Bonds to the date of delivery to the Initial Purchaser shall be deposited in the Interest and Sinking Fund. (b) Escrow Fund. The proceeds of the Bonds remaining after the above described deposit into the Interest and Sinking Fund shall be placed in the Escrow Fund (after created) to be used by the Issuer for the purposes described in the Escrow Agreement hereafter authorized. SECTION 7. REMEDIES OF OWNERS. In addition to all rights and remedies of any Owner of the Bonds provided by the laws of the State of Texas, the Issuer and the Council covenant and agree that in the event the Issuer defaults in the payment of the principal of or interest on any of the Bonds when due, fails to make the payments required by this Ordinance to be made into the Interest and Sinking Fund. or defaults in the observance or performance of any of the covenants, conditions, or obligations set forth in this Ordinance, the owner of any of the Bonds shall be entitled to a writ of mandamus issued by a court of proper jurisdiction compelling and requiring the Council and other officers of the Issuer to observe and perform any covenant, obligation, or condition prescribed in this Ordinance, No delay or omission by any owner to exercise any right or power accruing to such owner upon default shall impair any such right or power, or shall be construed to be a waiver of any such default or acquiescence 10 e e therein, and every such right or power may be exercised from time to time and as often as may be deemed expedient. The specific remedies mentioned in this Ordinance shall be available to any owner of any of the Bonds and shall be cumulative of all other existing remedies, SECTION 8, DEFEASANCE OF BONDS, (a) Any Bond and the interest thereon shall be deemed to be paid, retired, and no longer outstanding (a "Defeased Bond") within the meaning of this Ordinance, except to the extent provided in subsection (d) of this Section, when payment of the principal of such Bond, plus interest thereon to the due date (whether such due date be by reason of maturity, upon redemption, or otherwise) either (i) shall have been made or caused to be made in accordance with the tenns thereof (including the giving of any required notice of redemption) or (ii) shall have been provided for on or before such due date by irrevocably depositing with or making available to the Paying Agent/Registrar for such payment (A) lawful money of the United States of America sufficient to make such payment or (B) Government Obligations (hereinafter defined) which mature as to principal and interest in such amounts and at such times as will insure the availability, without reinveSbnent, of sufficient money to provide for such payment, and when proper arrangements have been made by the Issuer with the Paying Agent/Registrar for the payment of its services until all Defeased Bonds shall have become due and payable. At such time as a Bond shall be deemed to be a Defeased Bond hereunder, as aforesaid, such Bond and the interest thereon shall no longer be secured by, payable from, or entitled to the benefits of, the ad valorem taxes herein levied and pledged as provided in this Ordinance, and such principal and interest shall be payable solely from such money or Government Obligations. (b) Any money so deposited with lhe Paying AgentIRegistrar may at the written direction of the Issuer also be invested in Government Obligations, maturing in the amounts and times as hereinbefore set forth, and all income from such Government Obligations received'by the Paying Agent/Regislrar which is not required for the payment of the Bonds and interest thereon, with respect to which such money has been so deposited, shall be turned over to the Issuer, or deposited as directed in writing by the Issuer, (c) The tenn "Government Obligations" as used in this Section, shall mean direct obligations of the United States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America. which may be United States Treasury obligations such as its State and Local Government Series, which may be in book-entry fonn. (d) Until all Defeased Bonds shall have become due and payable, the Paying Agent/Registrar shall perfonn the services of Paying Agent/Registrar for such Defeased Bonds the same as if they had not been defeased, and the Issuer shall make proper arrangements to provide and pay for such services as required by this Ordinance. (e) In the event that the principal and/or interest due on the Bonds shaU be paid by AMBAC Indemnity Corporation, a Wisconsin domiciled stock insurance company ("AMBAC Indemnity") pursuant to the municipal bond guaranty insurance policy issued by AMBAC Indemnity insuring the payment when due of the principal of and interest on the Bonds as provided therein (the "Municipal Bond Guaranty Insurance Policy"), the Bonds shall remain outstanding for all purposes, not be defeased or otherwise satisfied, and not be considered paid by the City, and the assignment and pledge of the proceeds of taxes and all covenants, agreements, and other obligations of the City to the registered owners shall continue to exist and shall run to the benefit of AMBAC Indemnity, and AMBAC Indemnity shall be subrogated to the rights of such registered owners. SECTION 9, DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS. (a) Replacement Bonds, In the event any outstanding Bond is damaged, mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new bond of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement for such Bond in the manner hereinafter provided. (b) Application for Replacement Bonds, Application for replacement of damaged, mutilated, lost, stolen, orldeSlroyed Bonds shall be made by the regislered owner thereof to the Paying Agent/Regislrar. In every case of loss, theft, or destruction of a Bond, the registered owner applying for a replacement bond shall furnish to the Issuer and to the Paying Agent/Registrar such security or indemnity as may be required by them to snve each of them hannless 11 e e from any loss or damage with respect thereto, Also, in every case of loss, theft, or destruction of a Bond, the registered owner shall furnish to the Issuer and to the Paying Agenl/Registrar evidence to their satisfaction of the loss, theft, or destruction of such Bond, as the case may be, In every case of damage or mutilation of a Bond, the registered owner shall surrender to the Paying Agent/Registrar for cancellation the Bond so damaged or mutilated. (c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event any such Bond shall have matured, and no default has occurred which is then continuing in the payment of the principal of, redemp- tion premium, if any, or interest on the Bond, the Issuer may authorize the payment of the same (without surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a replacement Bond, provided security or indemnity is furnished as above provided in this Section, (d) CbarRe for IssuinR Replacement Bonds, Prior to the issuance of any replacement bond, the Paying Agent/Registrar shall charge the registered owner of such Bond with all legal, printing, and other expenses in connection therewith. Every replacement bond issued pursuant to the provisions of this Section by virtue of the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the Issuer whether or not the lost, stolen, or destroyed Bond shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Ordinance equally and proportionately with any and all other Bonds duly issued under this Ordinance, . (e) Authority for IssuinR Replacement Bonds, In accordance with Section 6 of Vernon's Ann. Tex. Civ. St. Art, 717k-6, this Section of this Ordinance shall constitute authority for the issuance of any such replacement bond without necessity of further action by the governing body of the Issuer or any other body or person, and the duty of the replacement of such bonds is hereby authorized and imposed upon the Paying Agent! Registrar, and the Paying Agent/Registrar shall authenticate and deliver such Bonds in the fonn and manner and with the effect, as provided in Section 4(a) of this Ordinance for Bonds issued in exchange for other Bonds. SECTION 10, CUSTODY, APPROVAL, AND REGISTRATION OF BONDS: BOND COUNSEL'S OPINION, AND CUSIP NUMBERS. The Mayor of the Issuer is hereby authorized to have control of the Bonds initially issued and delivered hereunder and all necessary records and proceedings pertaining to the Bonds pending their delivery and their investigation, examination, and approval by the Attorney General of the State of Texas, and their registration by the Comptroller of Public Accounts of the State of Texas. Upon registration of the Bonds said Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate attached to such Bonds, and the seal of said Comptroller shall be impressed, or placed in facsimile, on such Certificate. The approving legal opinion of McGinnis, Lochridge & Kilgore, L.L.P., Bond Counsel and the assigned CUSIP numbers may, at the option of the Issuer, be printed on the Bonds issued and delivered under this Ordinance, but neither shall have any legal effect, and shall be solely for the convenience and infonnation of t~e registered owners of the Bonds, SECTION 11. COVENANTS OF THE ISSUER. (a) General Covenants, The Issuer covenants and represents that: (i) The Issuer is a duly incorporated Home Rule City, having more than 5000 inhabitants, operating and existing under the Constitution and laws of the State of Texas, and is duly authorized under the laws of the State of Texas to create and issue the Bonds; all action on its part for the creation and issuance of the Bonds has been duly and effectively taken: and the Bonds in the hands of the Owners thereof are and will be valid and enforceable obligations of the Issuer in accordance with their tenns: and (ii) The Bonds shall be ratably secured in such manner that no one Bond shall have preference over other Bonds, (b) Specific Covenants. The Issuer covenants and represents that, while the Bonds are outstanding and unpaid, it will: 12 e e (i) Levy an ad valorem tax that will be sufficient to provide funds to pay the current interest on the Bonds and to provide the necessary sinking fund, all as described in this Ordinance: and (ii) Keep proper books of record and account in which full, true. and correct entries will be made of all dealings, activities, and transactions relating to the Funds crented pursuant to this Ordinance. and all books, documents, and vouchers relating thereto shall at all reasonable times be made available for inspection upon request from any Owner. (c) Covenants Re~ardiDJ~ Tax Exemption of Interest on the Bonds, The Issuer covenants to take any action to maintain, or reCrain from any action which would adversely affect, the treatment of the Bonds as obligations described in section 103 of the Code, the interest on which is not includable in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the Issuer specifically covenants as follows: (i) To take any action to assure that no more than 10% of the proceeds of the Bonds Oess amounts deposited to a reserve fund, if ,any) are used for any "private business use," as defined in section 141(b)(6) of the Code or, if more than 10% of the proceeds are so used, that amounts, whether or not received by the Issuer with respect to such private business use, do not under the tenns of this Ordinance or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10% of the debt service on the Bonds, in contravention of section 141(b)(2) of the Code; (ii) To take any action to assure that in the event that the "private business use" described in subsection (i) hereof exceeds 5% of the proceeds of the Bonds (less amounts deposited into a reserve fund, if any), then the amount in excess of 5% is used for a "private business use" which is "related" and not "disproportionate," within the meaning of section 141(b)(3) of the Code, to the governmental use; (iii) To take any action to assure that no amount which is greater than the lesser of $5,000,000 or 5% of the proceeds of the Bonds (less amounts deposited into a reserve fund. if any) is directly or indirectly used to fmance loans to persons, other than state or local governmental units. in contravention of section 141(c) of the Code; (iv) To reCrain from taking any action which would otherwise result in the Bonds being treated as "private activity bonds" within the meaning of section 141(b) of the Code; (v) To reCrain from taking any action that would result in the Bonds being "federally guaranteed" within the meaning of section 149(b) of the Code; (vi) To refrain from using any portion of the proceeds of the Bonds. directly or indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire investment property (as defined in section 148(b)(2) of the Code) which would produce a materially higher yield over the tenn of the Bonds, other than invesbnent property acquired with -- (A) proceeds of the Bonds invested for a reasonable temporary period of three years or less, or in the case of a reCunding a period of 30 days or less, until such proceeds are needed for the purpose for which the Bonds are issued, (B) amounts invested in a bona fide debt service Cund, within the menning of section 1.103- 13(b)(12) of the Treasury Regulations, and (C) amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10% of the proceeds of the Bonds; (vii) To otherwise restrict the use of the proceeds of the Bonds or amounts treated as proceeds of the Bonds, as may be necessary. so that the Bonds do not otherwise contravene the requirements of section 148 13 . . of the Code (relating to arbitrage) and, to the extent applicable, section 149(d) of the Code (relating to advance refundings); (viii) To pay to the United States of America at least once during each five year period (beginning on the date of delivery of the Bonds) an amount that is at least equal to 90% of the "Excess Earnings," within the meaning of section 148(f) of the Code, and to pay to the United States of America, not later than 60 days after the Bonds have been paid in full, 100% of the amount then required to be paid as a result of Excess Earnings under section 148(f) of the Code; and (ix) To maintain such records as will enable the Issuer to fulfill its responsibilities under this Section and section 148 of the Code and to retain such records for at least six years following the final payment of principal and interest on the Bonds. It is the understanding of the Issuer that the covenants contained herein are intended to assure compliance with the Code and any regulations or rulings promulgated by the U.S, Department of Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated which modify or expand provisions of the Code, as applicable to the Bonds, the Issuer will not be required to comply with any covenant contained herein to the extent that such modification or expansion, in the opinion of nationally-recognized bond counsel, will not adversely affect the exemption of interest on the Bonds under section 103 of the Code. In the event that regulations or rulings are here- after promulgated which impose additional requirements which are applicable to the Bonds, the Issuer agrees to comply with the additional requirements to the extent necessary, in the opinion of nationally recognized bond counsel, to preserve the exemption from federal income taxation of interest on the Bonds under section 103 of the Code. In order to facilitate compliance with the above covenants (vii), (viii), and (ix), a "Rebate Fund" is hereby established by the Issuer for the sole benefit of the United States of America, and such Fund shall not be subject to the claim of any other person, including without limitation the Bondholders. The Rebate Fund is established for the additional pwpose of compliance with section 148 of the Code. SECTION 12. DESIGNATION AS QUALIFIED TAX-EXEMPT BONDS. The City hereby designates the Bonds as "qualified tax-exempt bonds" as defined in section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"). In furtherance of such designation, the City represents, covenants, and warrants the following: (a) during the calendar year in which the Bonds are issued, the City (including any subordinate entities) has not designated nor will designate bonds, which when aggregated with the Bonds, will result in more than $10,000,000 of "qualified tax-exempt bonds" being issued; (b) the City reasonably anticipates that the amount of tax- exempt obligations issued during the calendar year in which the Bonds are issued by the City (or any subordinate entities) will not exceed $10,000,000; and (c) the City will take such action or refrain from such action as necessary in order rhat rhe Bonds will not be considered "private activity bonds" within the meaning of section 141 of the Code. SECTION 13. SALE OF BONDS. The Bonds are hereby sold and shall be delivered to Masterson Moreland Sauer Whisman, Inc, and Rauscher Pierce Refsnes, Inc (the "Underwriters"), pursuant to the terms and provisions of the Purchase Contract attached hereto as Exhibit B and the Mayor is hereby authorized to execute and deliver such Purchase Contract. The Initial Bond shall be registered in the name of Masterson Moreland Sauer Whisman, Inc. The officers of the Issuer are hereby authorized and directed to execute and deliver such certificates, instructions, or other instruments as are required or necessary to accomplish the purposes of this Ordinance, SECTION 14. APPROVAL OF OFFICIAL STATEMENT, The Issuer hereby approves the form and content of the Official Statement relating to the Bonds, and any addenda, supplement, or amendment thereto and approves the distribution of such Official Statement in the reoffering of the Bonds by the Initial Purchasers in final form, with such changes therein or additions thereto as the officer executing the same may deem advisable, such determination to be conclusively evidenced by his execution thereof. It is further officially found determined and declared that the statements and representations contained in said Official Statement are true and correct in all material respects to the best knowledge and belief of the Council. 14 e e SECTION 15. CONSIDERATIONS OF REFUNDING. The Council hereby finds that by refunding the Refunded Obligations the Issuer will (i) lower the annual debt service requirements with respect to its general tax obligations and (ii) restructure its debt service in a manner which will allow the issuance of additional bond issues without a tax rate increase or with a smaller increase than would otherwise be required. SECTION 16. NOTICE OF REDEMPTION TO PAYING AGENT AND REGISTERED OWNERS AND PUBLICA TlON. The principal of and accrued interest on the Refunded Obligations shall be paid on the earliest redemption date with proceeds of the Bonds. and the Refunded Obligations are hereby called for redemption on said dates. Texas Commerce Bank National Association. Houston, Texas is hereby directed to make appropriate arrange- ments so that the principal of and accrued interest on such Refunded Obligations may be redeemed at said bank on such redemption dates, Unless notice is waived by the owners thereof, a copy of the Notices of Prior Redemption, substantially in the fonn attached hereto as Exhibit A, shall be delivered to the paying agent bank for the Refunded Obligations and a copy of such Notices of Prior Redemption shall be mailed to the registered owner thereof, or otherwise given as provided in the appropriate order, resolution, or ordinance authorizing the Refunded Obligations. SECTION 17. ESCROW AGREEMENT, The discharge of the Refunded Obligations shall be effectuated pursuant to the tenns and provisions of the Escrow Agreement, the tenns and provisions of which are hereby approved, subject to such insertions, additions, and modifications as shall be necessary (a) to carry out the program designed for the City by Masterson Moreland Sauer Whisman, Inc, and which shall be certified as to mathematical accuracy by Deloitte & Touche, Certified Public Accountants, whose Report shall be delivered with the Escrow Agreement, (b) to maximize the City's present value savings and/or minimize the City costs of refunding, (c) to comply with all applicable laws and regulations relating to the refunding of the Refunded Obligations, and (d) to carry out the other intents and purposes of this Ordinance, and the Mayor is hereby authorized to execute and deliver the Escrow Agreement on behalf of the City in 'multiple counterparts and the City Secretaiy is hereby authorized to attest thereto and affix the City's seal. SECTION 18. PURCHASE OF UNITED STATES TREASURY OBLIGATIONS. To assure the purchase of the Escrowed Securities referred to in the Escrow Agreement, the May~r, the City's Chief Financial Officer, and the Escrow Agent are hereby authorized to subscribe for, agree to purchase, and purchase non-callable obligations of the United States of America. in such amounts and maturities and bearing interest at such rates as may be provided for in the Report, and to execute any and all subscriptions. purchase agreements, commitments, letters of authorization, and other documents necessary to effectuate the foregoing, and any actions heretofore taken for such purpose are hereby ratified and approved, SECTION 19, MA'ITERS RELATED TO REFUNDING, In order that the Issuer shall satisfy in a timely manner all of its obligations under this Ordinance, the Mayor and all other appropriate officers and agents of the Issuer are hereby authorized and directed to take all other actions that are reasonably necessary to provide for the refunding of the Refunded Obligations, including without limitation. executing and delivering on behalf of the Issuer all certificates, consents. receipts, requests, notices, and other documents as may be reasonably necessary to satisfy the Issuer's obligations under this Ordinance and to direct the transfer and application of funds of the Issuer consistent with the provisions of this Ordinance, SECTION 20. ORDINANCE A CONTRACT; AMENDMENTS, This Ordinance shall constitute a contract with the Owners, from time to time, of the Bonds, binding on t~e Issuer and its successors and assigns, and shall not be amended or repealed by the Issuer as long as any Bond remains outstanding except as pennitted in this Section, The Issuer may. without the consent of or notice to any owners. amend. change. or modify this Ordinance as may be required (i) by the provisions hereof, (ii) in connection with the issuance of any additional bonds, (iii) for the purpose of curing any ambiguity, inconsistency, or fonnal defect or omission herein, or (iv) in connection with any other change which is not to the prejudice of the Owners. The Issuer may, with the written consent of the Owners of a majority in aggregate principal amount of Bonds then outstanding affected thereby, and the insurer of any Bonds amend, change. modify, or rescind any provisions of this Ordinance; provided that without the consent of all of the Owners affected, no such amendment, change, modification, or rescission shall (i) extend the time or times of payment of the principal of and interest on the Bonds, reduce the principal amount thereof to the rate of interest thereon, or in any other way modify the tenns of payment of the principal of or interest on additional bonds 15 e e on a parity with the lien of the Bonds, (ii) give any preference of any Bond over any other Bond, (iii) extend any waiver of default to subsequent defaults, or (iv) reduce the aggregate principal ronount of Bonds required for consent to any such amendment, change, modification, or rescission. Whenever the Issuer shall desire to make any amendment or addition to or rescission of this Ordinance requiring consent of the Owners, the Issuer shall cause notice of the amendment, addition, or rescission to be given as described above for a notice of redemption. Whenever at any time within one year after the date of the giving of such notice, the Issuer shall receive an instrument or instruments in writing executed by the Owners of a majority in aggregate principal amount of the Bonds then outstanding affected by any such amendment, addition, or rescission requiring the consent of Owners of Bonds, which instrument or instruments shall refer to the proposed amendment, addition, or rescission described in such notice and shall specifically cons<?nt to and approve the adoption thereof in substantially the form of the copy thereof referred to in such notice, thereupon, but not otherwise, the Issuer may adopt such amendment, addition, or rescission in substantially such fonn, except as herein provided, No Owner may thereafter object to the adoption of such amendment, addition, or rescission, or to any of the provisions thereof, and such amendment, addition, or rescission shall be fully effective for all purposes, SECTION 21, PAYMENT PROCEDURE PURSUANT TO MUNICIPAL BOND GUARANTY INSURANCE POLICY, As long as the bond guaranty insurance shall be in full force and effect, the City and the Paying Agent/Registrar agree to comply with the following provisions: (a) If payment of principal or interest due on the Bonds has not been made to the Paying Agent/Registrar in time to pay the registered owners of the Bonds, the Paying Agent/Registrar or any registered owner to whom such payment is due shall so notify AMBAC Indemnity Corporation, by telephonic or telegraphic notice, subsequently confirmed in writing, or written notice by registered or certified mail. Such notice shall specify the amount of the anticipated deficiency, the Bonds to which such deficiency is applicable, and whether such Bonds will be deficient as to principal or interest, or both, AMBAC Indemnity, on the later of the date due for payment or within one business day after receipt of notice of nonpayment, will deposit sufficient money with the United States Trust Company of New York, as insurance trustee for AMBAC Indemnity or any successor insurance trustee (the "Insurance Trustee"). (b) The Paying Agent/Registrar shall, after giving notice to AMBAC Indemnity as provided in (a) above, make available to AMBAC Indemnity and, at AMBAC Indemnity's direction, to the Insurance Trustee, the registration books of the City maintained by the Paying Agent/Registrar, and all records relating to the Funds and Accounts maintained under this Ordinance, (c) The Paying Agent/Registrar shall provide AMBAC Indemnity and the Insurance Trustee with a list of registered owners of Bonds entitled to receive principal or interest payments from AMBAC Indemnity under the terms of the municipal bond guaranty insurance policy issued by AMBAC Indemnity insuring the payment when due of the principal of and interest on the Bonds as provided therein (the "Municipal Bond Guaranty Insurance Policy"), and shall make arrangements with the Insurance Trustee (i) to mail checks or drafts to the registered owners of Bonds entitled to receive full or partial interest payments from AMBAC Indemnity and (ii) to pay principal upon Bonds surrendered to the Insurance Trustee by the registered owners of Bonds entitled to receive full or partial principal payments from AMBAC Indemnity. (d) The Paying Agent/RegiSlrar shall, at the time it provides notice to AMBAC Indemnity pursuant to (a) above, notify registered owners of Bonds entitled to receive the payment of principal or interest thereon from AMBAC Indemnity (i) as to the fact of such entitlement; (ii) that AMBAC Indemnity will remit to them all or a part of the interest payments next coming due; (iii) that should they be entitled to receive full payment of principal from AMBAC Indemnity, they must present and surrender their Bonds together with any appropriate instrument of assignment for payment to the Insurance Trustee, and not the Paying Agent/Registrar, and (iv) that should they be entitled to receive partial payment of principal from AMBAC Indemnity, they must present and surrender their Bonds for payment thereon fIrst to the Paying Agent/Registrar, who shall note on such Bonds the portion of the principal paid by the Paying Agent/Registrar, and then, along with an appropriate instrument of assignment, to the Insurance 16 e e Trustee, which will then pay the unpaid portion of principal, The Insurance Trustee shall disburse to registered owners of Bonds, or the Paying Agent/Registrar, the payment due less any amount held by the Paying Agent/Registrar for payment of principal of or interest on Bonds and legally available therefor. (e) In the event that the Paying Agent/Registrar has notice that any payment of principal of or interest on a Bond which has become due for payment and which is made to a registered owner by or on behalf of the City has been deemed a preferential transfer and theretofore recovered from its registered owner pursuant to the United States Bankruptcy Code by a trustee in bankruptcy in accordance with the final, nonappealable order of a court having competent jurisdiction, the Paying Agent/Registrar shall, at the time AMBAC Indemnity is notified pursuant to (a) above, notify all registered owners that in the event that any registered owner's payment is so recovered, such registered owner will be entitled to payment from AMBAC Indemnity to the extent of such recovery if sufficient funds are not otherwise available, and the Paying Agent/Registrar shall furnish to AMBAC Indemnity its records evidencing the payments of principal of and interest on the Bonds which have been made by the Paying Agent/Registrar and subsequently recovered from registered owners and the dates on which such payments were made, (f) In addition to those rights granted AMBAC Indemnity under this Ordinance, AMBAC Indemnity shall, upon remittance and transfer of Bonds or appropriate instruments of assignment, become the owner thereof, and to evidence such ownership (i) in the case of claims for past due interest, the Paying Agent/Registrar shall note AMBAC Indemnity right's as owner on the Registration Books upon receipt from AMBAC Indemnity of proof of the payment of interest thereon to the registered owners of the Bonds and (il) in the case of claims for past due principal, the Paying Agent/Registrar shall note AMBAC Indemnity's rights as owner on the Registration Books upon surrender of the Bonds by the registered owners thereof together with proof of the payment of principal thereof. SECTION 22, NOTICES TO BE GIVEN TO AMBAC INDEMNITY. While the Municipal Bond Guamnty Insurance Policy is in effect, the City shall furnish to AMBAC Indemnity: (a) as soon as practicable after the filing thereof, a copy of any financial statement of the City and a copy of any audit and annual report of the City: (b) a copy of any notice to be given to the registered owners of the Bonds, including, without limitation, notice of any redemption of or defeasance of Bonds, and any certificate rendered pursuant to this Ordinance relating to the security for the Bonds; and (c) such additional infonnation it may reasonably request. The City will pennit AMBAC Indemnity to discuss the affairs, finances, and accounts of the City or any infor- mation AMBAC Indemnity may reasonably request regarding the security for the Bonds with appropriate officers of the City, The City will pennit AMBAC Indemnity to have access to and to make copies of all books and records relating to the Bonds at any reasonable time, Notwithstanding any other provision of this Ordinance the Paying Agent/Registrar shall immediately notify AMBAC Indemnity if at any time there is insufficient money to make any payments of principal and/or interest as required hereunder. SECTION 23, MISCELLANEOUS. (a) Titles Not Restrictive, The titles assigned to the various sections of this Ordinance are for convenience only and shall not be considered restrictive of the subject matter of any section or of any part of this Ordinance. (b) Inconsistent Provisions, All ordinances, orders, and resolutions, or parts thereof, which are in conflict or inconsistent with any provision of this Ordinance are hereby repealed and declared to be inapplicable, and the provisions of this Ordinance shall be and remain controlling as to the matters prescribed herein, 17 e e (c) Severability, If any word, phrase, clause, paragraph, sentence. part, portion, or provision of this Ordinance or the application thereof to any person or circumstances shall be held to be invalid, the remainder of this Ordinance shall nevertheless be valid and the Council hereby declares that this Ordinance would have been enacted without such invalid word, phrase, clause, paragraph, sentence, part, portion, or provisions. (d) Governinlt Law, This Ordinance shall be construed and enforced in accordance with the laws of the State of Texas. (e) Effective Date, This Ordinance shall take effect and be in full force and effect from and after the date of its passage, and it is so ordained, PASSED AND APPROVED this March 17,1994. A TIEST: ~ Lo_ ~ City Secretary, City of La Porte, Texas 18 e e EXHIBIT A PA YING AGENTIREGISTRAR AGREEMENT THE PAYING AGENT/REGISTRAR AGREEMENT IS OMITIED AT TillS POINT AS IT APPEARS IN EXECUTED FORM ELSEWHERE IN THIS TRANSCRIPT. A-I e e EXHIBIT B PURCHASE CONTRACT THE PURCHASE CONTRACT IS OMITIED AT TillS POINT AS IT APPEARS IN EXECUTED FORM ELSEWHERE IN THlS TRANSCRIPT. B-1 . . EXHIBIT C ESCROW AGREEMENT THE ESCROW AGREEMENT IS OMITTED AT THIS POINT AS IT APPEARS IN EXECUTED FORM ELSEWHERE IN THIS TRANSCRIPT. C-l . EXHIBIT D NOTrCES OF PRIOR REDEMPTION [To Come] D-1 . . CITY OF LA PORTE G. O. REFUNDING BONDS SERIES 1994 SAVINGS REPORT DATE - - - - - - - - PROPOSED DEBT SERVICE - - PRINCIPAL COUPON INTEREST TOTAL PRIOR D/S 8/15/94 2/15/95 195,000.00 3.250000 8/15/95 2/15/96 280,000.00 3.500000 8/15/96 2/15/97 265,000.00 3.750000 8/15/97 2/15/98 500,000.00 4.000000 8/15/98 2/15/99 455,000.00 4.200000 8/15/99 2/15/ 0 680,000.00 4.300000 8/15/ 0 2/15/ 1 1,050,000.00 4,600000 8/15/ 1 2/15/ 2 960,000.00 4,700000 8/15/ 2 2/15/ 3 1,090,000.00 4.850000 8/15/ 3 2/15/ 4 1,065,000,00 4.950000 8/15/ 4 2/15/ 5 905,000,00 5.100000 8/15/ 5 2/15/ 6 8/15/ 6 2/15/ 7 8/15/ 7 2/15/ 8 8/15/ 8 2/15/ 9 8/15/ 9 2/15/10 8/15/10 2/15/11 8/15/11 7,445,000.00 ACCRUED 7,445,000,00 DATED 4/ 1/94 BOND YEARS AVERAGE COUPON AVERAGE LIFE N I C % TIC % 126,400.15 126,400.15 224,426.25 169,791.25 166,622.50 531,413.75 448,852.50 166,622.50 161,722,50 608,345.00 463,327.50 161,722.50 156,753.75 583,476.25 506,002.50 156,753.75 146,753.75 803,507.50 743,527.50 146,753.75 137,198.75 738,952.50 663,915.00 137,198.75 122,578.75 939,777.50 670,077.50 122,578.75 98,428.75 1,271,007.50 1,076,060.00 98,428.75 75,868.75 1,134,297,50 1,013,023.75 75,868.75 49,436.25 1,215,305.00 1,173,130.00 49,436.25 23,077.50 1,137,513.75 1,170,080.00 23,077.50 928,077.50 956,002.50 398,968.75 378,906.25 358,843.75 362,968.75 341,281.25 77,718.75 2,573,073.90 10,018,073.90 11,027,112.50 12,262.70 12,262.70 2,560,811.20 10,005,811,20 11,027,112.50 WITH DELIVERY OF 4/14/94 54,398.694 4.730 7.307 4.730029 % USING 100.0000000 4.715064 % USING 100,0000000 BOND INSURANCE: 0.330000 % OF (TOTAL DEBT SERVICE - ACCRUED - CAP. INT.) = NET PRESENT VALUE SAVINGS AT : PREPARED BY MORONEY, BEISSNER & CO., INC. RONDATE: 03-16-1994 @ 14:27:39 33,019,18 4.8857% EQUALS 269,115,14 OR 3,6147% OF PAR FILENAME: LP KEY: 94REFJL . SAVINGS 98,026.10 -82,561.25 -145,017.50 -77,473.75 -59,980,00 -75,037.50 -269,700.00 -194,947.50 -121,273.75 -42,175.00 32,566.25 27,925.00 398,968.75 CUMULATIVE SAVINGS 98,026.10 15,464,85 -129,552.65 -207,026.40 -267,006.40 -342,043.90 -611,743.90 -806,691.40 -927,965.15 -970,140.15 -937,573.90 -909,648.90 -510,680.15 378,906.25 -131,773,90 358,843,75 227,069,85 362,968.75 590,038.60 341,281,25 931,319.85 77,718.75 1,009,038.60 1,009,038,60 12,262.70 1,021,301.30 WMINARY OFFICIAL STATEMENT DATED MARCH.4 RATINGS: e . C'" ",0 CDC ~8 'it! c:ii OD I UCD -... I Co , CD_ E... j .s.g . Sa. , CI.l- , _::s .!!!'i , U!!! .. !E c i o::s ~CD ",.a C"CI · 'e"S =e e~ D..CD r :2~ , ....0 1. ~g en ... . l'Il . en_ '(DOu , ~= J!~ en . Eli) ::s:a:: ~o '0 or: OU c~ ...or: CDU / '10,- cor: j :;) ~ . 'C -,- C CDC E8 I "CIu : ~~ ~'g '10';: Cc "'", " Cc I 0._ I ~cn _CD CL+= E';:: 0::S UU CD oen -CD -en UCD ~ ::s_ eno CD CD ~~ ,5 >- CDC li)'" or: CD "CI.a CD CD ..5~ Sor: c- o- . f umc c 1ii :fi Optional Provisions , ~ ~:e; I ~ c,~ All Bonds maturing on or after February IS, 2003 are optional for redemption in whole or in part on February IS, 2002 or any date thereafter at par and accrued y l5 ~a. interest to the date fixed for redemption, Ifless than al' of the Bonds are redeemed at any time, the particular Bonds to be redeemed shall be selected by the City in :5 .a '5 integral multiples of $5,000 within anyone maturity, The registered owner of any Bond, all or a portion of which has been called for redemption, shall be ~ S ~ required to present same to the Registrar for payment of the redemption price on the portion of the Bond so called for redemption and a new Bond in the principal ;; :! 'l5 amount equal to the portion of such Bond not redeemed will be issued to such registered owner, lio; 1: li!!! Deliverv CDO UI ~ c:@ The Bonds are offered when, as and if issued, subject to approval by the Attorney General of the State of Texas and McGinnis Lochridge & Kilgore, L,LP,. Bond s8 B Counsel, San Antonio, Texas, Definitive Bonds are expected to be available for delivery on Dr about April 14, 1994, CI.lj!CD -'0 en '~'6 ~ This Official Statement was prepared under the direction of Moroney. Beissner & Co,. Inc" Financial Advisors to the City, Moroney. Beissner & Co, ~ :::: Inc, is not a member of the Underwriting Group, or: CD ~_"C1 l! l5 5 MASTERSON MORELAND SAUER WmSMAN, INC. '--c ~'i8 RAUSCHER PIERCE REFSNES, INC. &:SrJ en li) ~ · Subject to change, ~:a! .. The initial yields will be established by and are the sole responsibility of the Underwriters, and may subsequently be changed, Insured G.O, Revenue Bonds B!m!! In the opinion of Bond Counsel, interest on the Bonds is excludable from gross income for federal income tax purposes under existing law, and the Bonds are not private activity bonds, See "TAX /dATTERS" herein for a description of Bond Counsel's opinion, including alternative minimum tax consequences for corporations, The City designated the Bonds as qualified tax.exempt obligations, See "Qllalif~d Tax-Exempt Obligations", Moody's - S&P's - ISSUE NEW Series 1994 April 1, The General Obligation Bonds constitute obligations of the City of La Porte, Harris County, Texas (the "Cityj, payable as to principal and interest from the proceeds ofa continuing, direct 8IUlual ad valorem tax, within the limits prescribed by law, levied upon all taxab'e poperty located within the City, The Bonds are being issued pursuant to Articles 717k and 823, Vernon's Texas Civil Statutes, as amended, and an ordaninance adopted by the City Council of the City authorizing the issuance and sale of the Bonds (the "Bond Ordinance"), as shown below 15, February Due: CITY OF LA PORTE, (Harris County) 57,505,000* General Obligatio~,Refunding Bonds, Series 1994 and 52,490,000* Water and Sewer System Revenue Refunding Bonds, TEXAS GENERAL OBLIGATION 1I0NDS 1994 Initial Date: Interest on the Bonds will be due on August IS, 1994, and each February IS and August 15 thereafter until maturity, The Bonds will be issued in fully registered fonn in integral multiples of$5,000, and principal and semi8IUlual interest will be payable by Texas Commerce Bank, National Association, Houston, Texas, the paying agent/registrar (the "Registrar"), Principal of the Bonds will be payable to the registered owner at maturity or redemption upon presentation of such Bonds to the Registrar, Interest on the Bonds will be payable by check, dated as of the interest payment date, and mailed by the Registrar to registered owners as shown on the records of the Registrar as of the fifteenth day of the month nell.1 preceding each interest payment date, % % % % % Yield or Price" Maturitv 2001 2002 2003 2004 2005 % % % % % Rate Amount. ,055,000 965,000 1,100,000 ,075,000 915,000 February 15 Maturity Schedule $ % % % % % % Yield or Price" Maturitv 1995 1996 1997 1998 1999 2000 % % % % % % Rate Amount. $195,000 280,000 270,000 505,000 460,000 685,000 * ** 2 Subject to change, The initial yields will be established by and are the sole responsibility of the Underwriters, and may subsequently be changed, The City has not defaulted on General Obligation Bonds in more than 54 years, The City has never defaulted on revenue Bonds, PAYMENT RECORD The City is a political subdivision of the State of Texas and a municipal corporation organized and existing under the laws of the State of Texas, including its duly adopted Home Rule Charter (the "Charter"), The Bonds are issued pursuant to the Charter and the general laws of the State of Texas, particularly article 717k, Vernon's Annotated Texas Civil Statutes ("V.A.T.C,S,") and additionally pursuant to ordinances authorizing the issuance and sale of the Bonds (the "Bond Ordinances") passed by the city Council on the date of sale of the Bonds, ~, AUTHORIZATION The Bonds are olTered when, as and if issued, subject to approval by the Attorney General of the State of Texas and McGiIU1is Lochridge & Kilgore, L.L.P" Bond Cowlsel, San Antonio, Texas, Definitive Bonds arc expected to be available for delivery on or about April 14, 1994, ~ Deliverv All Bonds maturing on or after March 15,2003 are optional for redemption in whole or in part on March 15,2002 or any date thereafter at par and accrued interest to the date fixed for redemption, If less than all of the Bonds are redeemed at any time, the particular Bonds to be redeemed shall be selected by the City in integral multiples of $5,000 within anyone maturity, The registered owner of any Bond, all or a portion of which has been called for redemption, shall be required to present same to the Registrar for payment of the redemption price on the portion of the Bond so called for redemption and a new Bond in the principal amount equal to the portion of such Bond not redeemed will be issued to such registered owner, o tional Provisions $65,000 105,000 80,000 85,000 90,000 95,000 % % % % % % 995 996 997 1998 1999 2000 % % % % % % $100,000 405,000 405,000 460,000 445,000 55,000 % % % % % % 2001 2002 2003 2004 2005 2006 % % % % % % Amount. Rate Maturitv Yield or Price" AmOWlt* Rate Maturitv Yield or Price" March 15 Maturi Schedule Interest on the Bonds will be due on September 15, 1994, and each March 15 and September 15 thereafter until maturity, The Bonds will be issued in fully registered form in integral multiples of $5,000, and principal and semiannual interest will be payable by Texas Commerce Bank, National Association, Houston, Texas, the paying agent/registrar (the "Registrar"), Principal of the Bonds will be payable to the registered owner at maturity or redemption upon presentation of such Bonds to the Registrar, Interest on the Bonds will be payable by check, dated as of the interest payment date, and mailed by the Registrar to registered owners as shown on the records of the Registrar as of the fifteenth day of the month next preceding each interest payment date, t ~ . The Revenue Bonds constitute special obligations of the City of La Porte, Harris County, Texas (the "City"), payable as to principal and interest from the revenues derived from the operation of the City's Waterworks and Sewer System after deduction of the necessary and reasonable expenses of maintenance and operation of said system, The Bonds are being issued pursuant to Articles 717k and 823, Vernon's Texas Civil Statutes, as amended, and an ordinance adopted by the City Council of the City authorizing the issuance and sale of the Bonds (the "Bond Ordinance"), Initial Date: April 1, 1994 . REYENUEBONDS e Due: Match 15, as shown below e e e The proceeds from the sale of the Bonds which were used to (I) current refund two series of outstanding Waterwork and Sewer System Combination Tax and Revenue Bonds assumed by the City through annexation and (2) advance refund four series of outstanding Gen~i'al Obligation Bonds and two series of Waterworks and Sewer System Revenue Bonds prior to their stated maturities. The bonds to be refunded (hereinafter collectively referred to as the "Refunded Bonds") constitute the following issues: PLAN OF DN~CING e Pu rDose Option Dates 09/01194 02/15/96 02/15/00 03/15/01 02/15/99 03/15/01 03/15/99 05/01194 Maturities To Be Refunded 1997-1998 1995 1998-2005 2003-2010 2004-2011 2001-2005 2004-2011 2002-2005 ArnOunl To Be Refunded $ 120,000 5,000 $2,175,000 $1,850,000 $ 600,000 $1,900,000 $ 900,000 $1.260.000 $8,820,000 $ Style College View MUD WW&SS Comb. Tax & Rev Bonds, Ser 1968 (Assumed Bonds) College View MUD WW&SS Comb. Tax & Rev Bonds, Ser 1970 (Assumed Bonds) G.O.Bonds,SerI986 G.O. Bonds, Ser 1989 G.O. Bonds, Ser 1990 G.O. Refunding Bonds, Ser 1991 WW &SS Rev Bonds, Ser 1990 WW &SS Rev Refunding Bonds, Ser 1991 Original Amount Issued $1,150,000 $ 600,000 $4,250,000 $4,500,000 $1,500,000 $6,430,000 $2,100,000 $3,425,000 Total r I . e e [This page is intentionally left blank.] Option Dates at a price of par plus accrued interest to the date for redemption on their respective called The Refunded Bonds will be fixed for redemption. in a debt service savings to the City. The interest payments on the Refunded Bonds scheduled to become due and payable prior to the Option Dates and the principal amount of the Refunded Bonds scheduled to mature subsequent to the Option Dates are to be paid on the dates each comes due, and on the Option Dates respectively, from funds to be deposited with Texas Commerce Bank, National Association, Houston, Texas (the "Escrow Agent"). result wil issuance of the Bonds With respect to the Refunded Bonds, the The Ordinances authorizing the issuance and sale of the Bonds (the "Bond Ordinances") provide that from the proceeds of the sale of the Bonds to the Underwriters the City will deposit with the Escrow Agent the amount necessary to accomplish the discharge and final payment of the Refunded Bonds. Such funds will be held by the Escrow Agent in an escrow account (the "Escrow Fund") and used to purchase direct obligations of the United States of America (the "Federal Securities"). At the time of delivery of the Bonds to the Underwriters, Deloitte & Touche, Certified Public Accountants, will verify the mathematical adequacy of the Escrowed Securities, maturing at such time and yielding interest in amounts such that together with uninvested funds in the Escrow Fund they will be sufficient to pay, when due, the principal of and interest on the Refunded Bonds including all costs related thereto. Such maturing principal and interest on the Federal Securities will not be available to pay debt service on the Bonds. Under a certain Escrow Deposit Agreement (the "Escrow Agreement") to be dated as of between the City and the Escrow Agent, the Escrow Fund is irrevocably pledged to the payment of principal of and interest on the Refunded Bonds. . , I ~ By the deposit of the Federal Securities and cash with the Escrow Agent pursuant to the Escrow Agreement, the City will have effected the defeasance of the Refunded Bonds pursuant to the terms of the ordinances authorizing their issuance. In the opinion of Bond Counsel, as a result of such defeasance, the General Obligation Refunded Bonds will no longer be payable from ad valorem taxes, and the Revenue Refunded Bonds will no longer be paid from the net revenues of the City's Water and Sewer System, but will be payable solely from the principal of and interest on the Federal Securities and cash held for such purpose by the Escrow Agent, and the pledge of ad valorem taxes and net revenues of the City's Water and Sewer System for the payment of the principal and interest on the Refunded Bonds will be discharged. J . e Estimated Sources and Uses of Funds The proceeds from the sale of the Bonds will be applied as follows: General Obli~ation Revenue Bonds Bonds Sources of Funds: Principal amount of the Bonds .............. $ $ AccruedInterest ............................. Total Available Funds ....................... Uses of Funds: Deposit in Escrow Funds (Federal Securities and Cash) $ $ Costs of Issuance ..................................... Accrued Interest ...................................... Total Uses of Funds .................................. THE BONDS General The Bonds are dated April 1, 1994, and interest on the Bonds will be calculated on the basis of a 360-day year composed of twelve 30-day months and will accrue from April 1, 1994. Interest is payable semiannually on February 15 and August 15 of each year ("Interest Payment Date") commencing August 15, 1994 for the General Obligation Bonds and March 15 and September 15 of each year commencing March 15, for the Revenue Bonds. Interest on the Bonds is payable by check, mailed on or before each Interest Payment Date by the Registrar to the Registered owner thereof as shown on the Registrats books on the Record Date (as dermed herein). The record date (the "Record Date") for the interest payable on any Interest Payment Date is the last business day of the month next preceding such Interest Payment Date. The Bonds are issued only as fully registered bonds in the denomination of $5,000 or any integral multiple thereof. Securitv The General Obligation Bonds will constitute valid and legally binding obligations of the City, payable from and secured by a continuing levy of ad valorem taxes against all taxable property on the tax rolls of the City, within the limits prescribed by law. The Revenue Bonds will constitute valid and legally binding special obligations of the City, payable from and secured by a first lien on and pledge of the revenues derived from the operation of the City's Waterworks and Sewer System, after deduction of the necessary and reasonable expenses of maintenance and operation of said system. The owner (owners) of the Revenue Bonds shall never have the right to demand payment of the principal and interest on the Revenue Bonds out of any funds raised or to be raised by taxation. Ootional Provisions All General Obligation Bonds maturing on or after February 15,2003 are optional for redemption in whole or in part on February 15, 2002 or any date thereafter at par and accrued interest to the date fixed for redemption. All Revenue Bonds maturing on or after March 15,2003 are optional for redemption in whole or in part on March 15,2002 or any date thereafter at par and accrued interest to the date fixed fro redemption. If less than all of the Bonds are redeemed at any time, the particular Bonds to be redeemed shall be selected by the City in integral multiples of $5,000 within anyone maturity. 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U s:: c ....c.c.c ., ... .. .. ..... ... ~ ~ ~~ ~ ..... .... U .. lID .. s:: ., ., .. .. .. u .. .. u.... u.... 0.... > u ... .c ., II II .c r:1o r:1o u .c .. .. II .. s:: u .c .. s:: s:: .c .c .. U U U .... "00 .... II ..""11I:"""".... .... .. IllPoIM..... .... .... .. .. .. .. II .. .. .. ., .. .. II .. U :z: U :z: u :z: U :z: :z: U U 37 e e deliver in exchange for the Initial Bonds, Bonds registered in accordance with such instructions in an aggregate principal amount equal to the aggregate principal amount of the Initial Bonds submitted for transfer or exchange. Pavine Al!entJRee:istrar The Bonds will be issued in fully registered form in integral multiples of $5,000, and principal and semiannual interest will be payable by Texas Commerce Bank, N.A., Houston, Texas, the Paying Agent/Registrar (the "Registrar"). Principal of the Bonds will be payable to the registered owner at maturity or redemption upon presentation to the Registrar. Interest on the Bonds will be payable by check, dated as of the interest payment date, and mailed by the Registrar to registered owners as shown on the records of the Registrar as of the fifteenth day of the month next preceding each interest payment date. Successor Pavinl! Al!entJRee:istrar Provision is made in the ordinance authorizing the issuance of the Bonds for replacement of the Registrar. If the Registrar is replaced by the City, the new Registrar shall accept the previous Registrar's records and act in the same capacity as the previous Registrar. Any Registrar selected by the City shall be either a national or state banking institution and shall be a corporation organized and doing business under the laws of the United States of America or of any State, authorized under such laws to exercise trust powers, and subject to supervision or examination by Federal or State authority. Successor Registrars, if any, shall be determined by the City. Future Ree:istration The Bonds may be transferred, registered and assigned only on the registration books of the Registrar, and such registration and transfer shall be without expense or service charge to the owner, except for any tax or other govemmental charges required to be paid with respect to such registration and transfer. A Bond may be assigned by the execution of an assignment form on the Bonds or by other instrument of transfer and assignment acceptable to the Registrar. A new Bond or Bonds will be deliVl.'J'ed by the Registrar in lieu of the Bond being transferred or exchanged at the principal office of the Registrar. To the extent possible, new Bonds issued in an exchange or transfer of Bonds will be delivered to the registered owner or assignee of the owner in not more than three business days after the receipt of the Bonds to be cancelled in the exchange or transfer and the written instrument of transfer or request for exchange duly executed by the owner or his duly authorized agent, in form satisfactory to the Registrar. New Bonds registered and delivered in an exchange or transfer shall be in denominations of $5,000 or any integral multiple thereof for anyone maturity and for a like aggregate principal amount as the Bond or Bonds surrendered for exchange or transfer. Limitation on Transfer or Exchanee of Bonds Neither the City nor the Paying Agent/Registrar shall be required to transfer or exchange any Bond during the period of 15 days next preceding any interest payment date. Record Date The record date ("Record Date") for the interest payable on any interest payment date is dermed as the last business day of the month next preceding such interest payment date. USE OF INFORMATION IN OFFICIAL STATEMENT This Official Statement has been prepared by Moroney, Beissner & Co., Inc., a firm employed by the City to perform professional services in the capacity of Financial Advisors, including the preparation of this Official Statement. Information with respect to interest rates, discounts, and other matters relating to the resale of the Bonds, including changes in the affairs of the City subsequent to the date hereof, is the responsibility of the Underwriters and such information is not provided herein. The information set forth herein has been obtained from the City and other sources which are believed to be reliable, but no guarantee is made as to the accuracy or completeness of such information, and its inclusion herein is not to be construed as a representation on the part of the City nor Moroney, Beissner & Co., Inc. to such effect. No person has been authorized to give any information or to make any representations 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 City or Moroney, Beissner & Co., Inc. This Official Statement does not constitute an offer to sell or solicitation of an offer to buy in any state in which such offer or solicitation is not authorized, or in which the person making such offer or solicitation is not qualified to do so, or any person to whom it is unlawful to make such offer or solicitation. Any information and expressions of opinions 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 City since the date hereof. 5 / 0- j j \' . , 1./ e e *HN1 ... .... C"l C"l .......~IlD... '" 10' "', C"l o~ .... CD' ID ~ III CD CD 00"""01"'" ." C"l' ,.... 01....... ,." ... o CD '" ClI, .... 0 ~ on onl mOP'lIlDCD '" CD, I'IOP4G1 "" C"l OCll Ia C"l, '" III . ~J ~J ClI' .; on CD' "l] ~ ~] on....o.... ~] .,,' CD' E] ..; ~ ... 0.... 0 CD........onID IDCOon ClI ....ClI '" ... 104 ON...... ."Ola ID CD ... ID -- .... ...... ... -- .... ~ ~ OCDClIOO :j ~ "'000 ; ClI o~ ClI , 0 ~ i1 . 41lD4'm .... on 0 CD 110 . IDIIl....... '" ClI ... ... .:: ow.'" O..........;N.. 0' ,,; ClI' .... ... .-4"1: e 8:1 :I om."..,. ." ... 0 0 0110 '" ... ... ... ... .... . 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CD Z -< P: P: 36 Steve Gillett Knox Askins Moroney, Beissner & Co.. Inc. Robert T. Herrera John Joerns Jeff Litchfield Sue Lenes Linda Stubbs Name .Mayor Malone previously served All powers of the City are vested in the City Council which enacts local legislation, adopts budgets, determines policies, and employs the City Manager. The City Manager is the Chief Executive Officer and head of the Administrative Branch of the city government. The City Council determines the goals of the city and operates as a policy making body. The City Manager executes the policies of the Council concerning matters of policy, personnel and budgeting. Norman L. Malone Jerry Clarke Alton Porter Bob McLaughlin Guy Sutherland Mike Cooper Bob Thrower Deotis Gay Jack Maxwell Official 6 McGinnis, Lochridge & Kilgore, L.L.P. San Antonio, Texas five years as Councilman. ELECTED OFFICIALS Mayor Mayor Pro- Tem Councilman Councilman Councilman Councilman Councilman Councilman Councilman Title APPOINTED OFFICIALS City Manager Assistant City Manager Director of Finance City Secretary Finance Officer Director of Public Works City Attorney financial Advisors BOND COUNSEL 9 Years" 7 Years 8 Years 5 Years 4 Years 6 Years 3 Years 14 Years 2 Years Years of Service Title Term Exnires 5/94 5/96 5/96 5/95 5/96 5/94 5/94 5/95 5/95 7 Years 13 Years 6 Years 16 Years 5 years 14 Years 29 Years 45 Years Len2.tlt of Service Retire, Pasadena I.S.D. C & S Boat Repair Specialty Gas Concepty Retired, E.I. Du Pont De Nemours Retired, Tenneco Instrument Technician, Lubrizol Retired, NASA Operator, Rohm & Haas, Inc. Retired, City of La Porte Occuoation Cor .;j ,} .. The City Council is composed of a Mayor and eight Council members. The Mayor and two Council members are elected at large and six Council members are elected from single member districts within the City. The Mayor and eight council members are elected for three year terms on a 3-3-3 sequence. The City of La Porte was incorporated on August 10, 1892, and adopted operates under a Council-Manager form of government. a Home Rule Charter CITY.OFLA_PQRTE. TEXAS e e on March 22, 1949. The City . e .~"~1 ... 0"'''' CIO 0... ... '" .....,-r CIO 11'I ... '" -r 0 ".ON ... 0'" '" .., o -r -r 01 "''''11'I CIO '" CIO 0 01 01 ~ N..,O'" ... 001'" 11'I o -r -r 0 ..."'.., ... ... -r '" ... CIO .. ~] ",' N' :1 ~1 O'i] ;1 ;1 or' .... ~l ~1 .... ;1 ~ ~1 ;1 .. 4'1Il1llu) a (DID,........ CIO"'Cl ... -r CIONCIO .., ... -r "'NN CION .., -r 11'I -r -r -r ... ... ... ..NeQ ;j 000 0 ", ;j 1 "'00 ~j 0 :j :j ~j 1 ...'" 0 -r . 01 11'I '" 0 CIJ! .....'I:l . ... .. I:: 0.., ... ~! a ::s ::s N '" CIa", ... U ..,' -r . ..... 0000 0 000 0 00 0 0 N 0'0 ~ 0 ~ ~ ij ij .. .. CIO ... .. N u3:'I:l N' .. I:: . 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I > u ... ...1>: ::> ...l .. u u ::s... " .. ::s u ::s 1IO .. U 'I:l 0 .. ,,< < co .. .. u < u I::l>:< SU l>: ::s ::s a U U ...l '" 35 e e FINANCIAL STATEMENT (As Of 1/31/94) $1,066,420,530(1) 1993 Assessed Valuation (100% of Actual) $ 6,201,041 2,618,959 460,000 7.505.000 $16,785,000 (2) General Purpose G.O. Bonds Water & Sewer G.O. Bonds . Assumed Water District Bonds The Series 1994 Bonds (3) Gross Debt 1.12% square miles The above General Obligation Debt Statement does not include Waterworks and Sewer System Revenue Bonds outstanding and proposed for sale simultaneously with the General Obligation Bonds. See "UTD..ITY DEPARTMENT". COMPUTATION OF SELF-SUPPORTING DEBT Waterworks and Sewer System net revenues available for Debt Service for Fiscal Year ended 9/30/93 . $1,955,518 785.679 $1.169,839 5801,702 Percentage of Waterworks and Sewer System General Obligation Bonds and assumed Water District Bonds self-supporting 100% Tax bills are sent out October 1, each year, and taxes are delinquent after January 31. No split payments are allowed and no discounts are given on early tax payments. Penalty and interest on delinquent payments are rigidly enforced. 7 General Obligation Debt Outstanding: 29,300 $36,397 Note: Less: Debt Service Requirements for Waterworks and Sewer System Revenue Bonds for Fiscal Year End 9/30/94 Debt Service Requirements on General Obligation Bonds issued for water and sewer purposes and assumed Water District Bonds for Fiscal year end 9/30/94 (maximum year) . TAX COLLECTION PERIOD e e O~ ~.~ m N Q N~ 4 4~~N~~~N~1 ~ 0 N~ ~ON ~ ml O~. 0 ~~~m~N~~ ml Q ~ ~: ~~: :1 :,' ~ ~~!. :,' ~~~~~:~: ~II :~ o 4~ o.~ ~ m ~N 0 .C"CNW~~ ~ ~ ~I 4~ 0 ~ ~ G N. ~ ~~n~~QGN ~ ~ ~ " ~ ~ N N~N~ ~~ ~ 4 .. .".... C') .. ..... ~~ .~o 0 ~~ Q 00 0 ~~oo~o~~~ 41 m~ ~~ M4 ~ C~ ~~. ~ m · 04 N~ ~ m~ m GC'3 C') m .... ""0.. .. .. .... ~~c ~C'). ~ O~ m mC') n 0 O~~ O~ ~ mo C') Nc .. C') ~o~ N. ~ ~~ ~ C~ " m U _. _ ....N ......" II ~~ ~~ ~~o 0 4~ Q 00 0 00000000 0 4t .... mm ~o ~ ~ ~G N~ mG 0 0 u:J;'a ~ C ~4 ~N ~ C 1I'a~ ~~ m ~ ~ S~~....N ~ .. UCf.I ~~ 000 0 ~~ Q 00 0 o~oo~o~~ Nl m1 ....n C') m ~ ~....C') m ~ C~ m"" ~ N . ~ C').... .... ~ "u'a _ _. >GC~"" ~ N C') eN ." ~ ~.~ ~m.... C') N ,,",0 ." ~ e ~ ~~~ .... C') C').... N C') II Cf.I II .c~ ....wrt.lm 'a m ~3~~ u~ ~o ~oo 0 N~ 0 ON~ N~ OONOOON~~ 4~ ~~ ~~C.. ..~ mo....C') ~ 4" m m~ N Q ~ GO ~~~ 00 C'3N ~ ~." 0 O~ C') ~ II~~ """'a . . .. oxoc ....o~." M ."." n .,,~ c ~ ~~~ ~ ~~ ....o~.... ~ N N .... ....m.... c j~. G~~ ~.... m ."." CD m~...... ~ ~ i ~ ~ ~ ........ m'" m" CD..... ~ lID.... II < ..... 0"'='" ~ Ji i ! I ~ 0 ~ 0 4 0 ~~ Q 0 0 0 0 0 0 N 0 ~~m;;::; ~~ O~ M 0 ~ N 4 N m w ~4~ ~ ~ u u w ~ m ~ ~ ~ ~~N ~ ~ o ." .. ...... oot ~~ C ~ ~ ~ 0 Q~~ 4 ~ w~ N "~ Q 0 ~~~ 0 Q ~~I M 4 ~ ~CQ = NI N N.-4.... N ~ ~m ~NO m~ ~~ Q No N~ mm~om4~NO~ Nj O~ ~ .~ Mm M ~ Q m m o~m ~~~~ . m ~ ~~ ON ~ ~ 0 n ~ on~ M~C~ ~ 4 ....t "CI ...... .... ... .. :: 51 ~ ~ :;:; ~ 4' ~ ~ g ~ :g ~ ~ ~ ~ ~:: ~ ~ ~~I .-4 ~ 0 m N .-4 N m ~M~~ M n ::> - - - N M "N ~N.... n C') "'.... N N <I) _ <I) 'a " . II II +J. ,6J ,.J CD at U U ell.... .... .....oIJ p..f W Jot ..... +J -,.Q 0 ... .... = ... +J II 110 C CD :C:~GI ; ::~ II +J ~ 8- ...-411> CD "'0 ~ r:: VI ,.J ..... . >~~~c wue ~ CD GI ~ IS ~ ~ ....~ac~ . ~~~.. wee VI ~ ~ s:: IDO>_ .6J C>CID.c UlI p. at VI U CD at uu.....en II .........,J CI ..... E +Jill S ..... _=IIC. all ...........~O ::s at c....... 'tS II ...::Su........ II GII....... -a tJ' > CDClO c.. ; ~ ....:~~ IS ~+J~=~ ~ CD ~ &2 ~ ~ "'0 OA. ... ::I,.Q~"'''' u .., A. "'A. .. tl' =......eo~ = ..tl''"tl'~ ... ~ e ~ "eo II CD ::s III II . 10."'. -cs ... CI.... ~c II = +J "I 0 at CD ... ... -4J .....,6oJ ... ~ .... CD .."J .. ..c u u 1.1 .. 'tS s... ..s::: ,IJ ..c: III +J II VI "'O.IJ II 'tS II ill 11I11 UCCD"cC :I alleGEu CD eo CC "Oc ....4 ..... II ltJ ..,JGalllloiJ4Ja u ....0-4 ... s:: CIa co _ .... a ~ :u~.~~o~+J ~ .O~U~~ ..... ~ .~ .~ ! ] ..... .'tSlD...... e...... IS 'tS"O::s~::s. IS ~ ~ nu U II ..=e...~'aCl..O ... "'=U=UII ... ... =>-...'"~ U . ... G~~.CD"'''''U 0 ".JIS IS ... 0 ~ .....+J~........ IS 'tS 0 ~ VI.. =~... ~ U Jot ~ ~ ~ "O....Ou+J C ~ C.cCD.-4~u ~~ ......s:::o..c:o.c ~.-4""'~~. e a ~:~jO~;~G ~:~=~: ~;~j~is: ~ "U~::> ~Q~ IIU U U =~~::><>u ~ ... :s CD If CD U Ill; ~ :2; 34 19 4.853.806 $11,931,194 Area of City $3,078,959 1.774.847 $407 Net of exemptions in the amount 0[$103,029,190 Excludes the Refunded Bonds. Subject to change. Less: Self Supporting Debt .. Applicable Debt Service Fund Net Debt. 1993 Assessed Valuation Assessed Valuation per Capita 1994 Estimated Population Ratio of Net Debt to Debt Per Capita Net (1) (2) (3) ". , i i ~. Balance available for other purposes .. I I I ~/ e e Tax Assessed Tax Percent Uections Year ~ Valuation Rate ~ I2ml ~ 1986 $837,080,490 0.7100 95.73 99.71 9/30/87 1987 956,389,820 0.6600 97.10 99.12 9/30/88 1988 988,287,240 0.6800 96.71 98.45 9/30/89 1989 1,016,690,590* 0.7100 97.15 99.16 9/30/90 1990 1,009,015,980 0.7100 98.33 99.26 9/30/91 1991 1,018,953,486 0.7100 96.30 98.69 9/30/92 1992 1,017,182,960 0.7100 97.69 102.00 9/30/93 1993 1,066,420,530 0.7100 In the Process of Collection 9/30/94 Delinquent taxes outstanding for all prior years as of 1/31/94 ...................... $940,097. * Annexation of Bayshore MUD on 12/31/88. TAX RATE DISTRIBUTION Tax Year - 1993 1992 1991 1990 1989 General Fund $0.5300 $0.500 $0.5050 $0.5048 $0.5175 Debt Service Fund 0.1800 0.2100 0.2050 0.2052 0.1925 Total $0.7100 $0.7100 $0.7100 $0.7100 $0.7100 TAX RATE LIMITATIONS The City is a Home Rule Charter City with a maximum authorized rate for all purposes of$2.50 per $100 Assessed Valuation. This maximum tax rate is imposed both by the Constitution of the State of Texas and the City Charter. Within this $2.50 maximum there is no legal limit upon the amount of taxes which can be levied for Debt Service. DEBT SERVICE FUND MANAGEMENT INDEX Debt Service Fund Balance as of 9/30/93 ................................................ $ 539,795 Debt Service Fund Tax Levy of $0.180 per $100 of Assessed Valuation on total 1993 Assessed Valuation of$I,066,420,530 at 97% collection produces ................... 1,861,970 Budgeted transfer from Utility Fund for G.O. Bonds issued for water and sewer purposes 399.376 Available for 1994 Debt Service...................................... $2,801,141 Less: Estimated 1994 Debt Service requirements including the Bonds 2.451.579 Estimated Balance at 9/30/94 $349,562 8 ,~ . . u A . ~ . III 'U A :s 104 A ... . . 00 A . 0.:; .m 'U ~... ~lii....; l.1.'U1'> ... . A .. :s .. " :s 104 . ~::~11 Dl'U.. o A"'''' III . A IJo 1Jo. . :i~~rn "'U 104 ". . O.>'U . 0 A :>t :s l!l . ... A ..... ..-4 14 U > ~ . . ~ . Dl :>t ... o ... A . E . ... . ... In 'U . r:: ... 11 o u ~ . .... ... u ... . 1Jo'""ll . 0 u .. . 11oo . 'U A . :s ... u 104.a... ~ c!: ~ . . ... In A ~ . > o .... l!l .. .. . r:: . l!l 33 . . 00 .. . .c . u r::... . o e.... . .. III "'" II" ... ~ ~G~ ~ I~ ~ ; e~~~ DC: ~~ ~ ca: ~ &::::~ ~ ~.. ~ ~'a>'; _M CI ....GI lie ..,J.!III .........c.c. x. 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O~1D ."NO,... 100....0 "" ~ "'01 CD m ",,...1')'" ... 0000000 o 0 1D~1D ... ... ... ... .. 00 ... ... ... ... - ; ."....~ ." 00 0 00 0 " ~ 1'>0 I'> "'N ." 01 01 ." 10 I'> ... m I'> CD m I'> co o ... ... o I'> 10 ... 5] ... i . 9 . 'U .... ~Iii~ ... .. A 000 ... & . ! ." ..... N co ... to ..... ..... C') .... CD~N ....ID......N..............O...." .,NID..,....,...NIII.,,1D N'" .,"i N N" m'" rD ",,'" .,; 0 ..... .. "J ~<4r."U)OCDCOOO..IG" ."...OIG.......NV1NII1 N .. ... . ... ... ,........... ... ,... ... e 0000000 ."'0" m... ca N.......CD co CD"" 0.... OCD CD 111 ID . ... ... .. .. ... . N.......Nco... N ."Oe>>.......CDU) CDCOCDNmlDCD . .. . .... ... ...C"........N ... o ... CD~N 0......... 0..,..... ,... 0" co" 0 co~ m<4rrtQ ............" ...... ... ... ~ e .... ~ ~I :"~"'I . I'> coo ... ... ... 01 o ~ 10 o III ... o o ." ... ." N co ... ... .... co on o o 10 ., .. co o N ., N I'> ~] 10 e e TAX ADEQUACY The following calculations do not take into consideration the estimated balance in the Debt Service Fund as of 9/30/94 or future transfers from the Utility Fund to pay debt service on G.O. Bonds issued for water and sewer purposes. Maximum Year (995) $1,804,945 $0.17 Net tax. 1 % city slaes CITY SALES TAX which authorizes the collection of a Total Collected Authorized But Unissued $ 100,000 500,000 2,000,000 1,500,000 500.000 $4,600,000 $ -0- 2,000,000 1,000,000 2,500,000 2.000.000 $7,500,000 $ 100,000 2,500,000 3,000,000 4,000,000 2.500.000 $12,100,000 9 ~ Fire Station Street Improvements Drainage Improvements Sanitary Land Fill Park Improvements Average Annual 0994-2005) $2,504,601 $0.24 The City adopted the provisions of Article 1066c, vrcs, Section 9, collections for the past several years are as follows: Calendar Year Total Collected 938,303 1,019,692 1,229,551 1,228,599 1,214,420 $ Previously Issued C~lendar Year GENERAL OBLIGATION BONDS AUmORIZED BUT UNISSUED Arnount Authorized 5/15nl 6/15/85 6/15/85 6/15/85 6/15/85 Total 1, e e 3 lI'll')", 0 <ON "oo,oOT lI'110 lI'l CD coo "T 0 OI01N 0 ....<0 NQ)QOIl10CC'4' lO... "l0> 010 ::~1 ... u, COll'l'" 0 O>lI'l C")NOOCW10U)Ort' "'10 ...... 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U ::I ::I CD -t COat ::s "'<<au CClIll:<CCC 6-.... U Ill: 1>0 ... oJ Iol 32 Estimated Debt Service Requirements including the Bonds Debt Service Fund tax levy required per $100 Assessed Valuation on total 1993 Assessed Valuation 0[$1,066,420,530 @ 97% collection. I , ... , t 1989 1990 1991 1992 1993 $505,970 504,847 696,656 674,867 808,365 1984 1985 1986 1987 1988 Date of Authorization 10 Principal Taxpayers as percent of City's 1993 Assessed Valuation 37.43% Total Assessed Valuation of Principal Taxpayers Petrolite Corp. Big Three Industries, Aristech Chemical Corporation Rohm & Haas Company Southwestern Bell Telephone Co. Solvey Interox Air Porducts & Chemicals LubrizolCorporation Akzo Arnerica Inc. Akzo Chemical Inc. Praxair Inc. E.I. Du pont de Nemours Quantum Chemical PPG Industries Inc. Soltex Polymer Corp. Occidental Electrochemical HL&P Geon Company Dow Chemical Co. Fina Oil & Chemical Co. TaxDaver TWENTY MAJOR TAXPAYERS *Includes $25,000,000 Ser 92-B Bonds, dated December Harris County (Incld. Toll Bonds) . Harris County Flood Control District* La Porte I.S.D. Port of Houston Authority San Jacinto Jr. College District Total Overlapping Net Debt .. CITY OF LAPORTE ...... Total Direct and Overlapping Net Debt . Ratio of Total Direct and Overlapping Net Debt to Total Direct and Overlapping Net Debt per Capita Assessed Valuation per Capita . Rd. ion ESTlMATEDDIRECT_& e Inc. Utility. Chemical Plant Chemical Plant Chemical Plant Chemical Plant Chemical Plant Chemical Plant Chemical Plant Chemical Plant Chemical Plant Chemical Plant Chemical Plant Chemical Plant Chemical Plant Utility Chemical Plant Chemical Plant Chemical Plant Chemical Plant Chemical Plant 993 Assessed Valuation 289,768,731 23,586,531 97,338,585 20,690,180 1992 993 Assessed Valuation 02/29/92 08/31/92 12/31/92 11/01/92 $935,689,416 Arnount 'VERLAPPING DEBT~TATEMENT Net Debt Percent . As Of Overlapping e $399,165,160 $50,879,530 50,570,830 38,747,980 37,068,510 36,937,690 29,836,880 20,408,900 20,320,350 20,211,350 14,535,770 11,611,100 10,650,070 9,746,250 9,004,520 8,398,070 7,611,800 7,077,770 6,870,920 5,555,030 3.121.840 .95 37..48 .95 6.03 $1,145 $36,397 $33,538,958 3.15% $22,654,418 .0.884.540 2,752,803 8,840,232 924,717 .247.617 02/29/92 95 $8,889,049 Amount Overlapping 1 e e ~g ~~ g:~~ g~ ~ ~ g ~ ~ ~ g ~ ~ ~~~ ~~ ~~~~ O~ ~ ~ Q ~ ~ . ~ ~ Q <01: .... . . . ~co~ m~ ~~~m ~~ ~ ~ ~ 0 ~ 0 ~ ~~ ~~ ew~ Nm ~OQm ~~ 0 m m ~ ~. ~ N ~oo w~ OO~~ ~ ~ ~ N ~ . ~ o. I '" 0 ""'" t""4 t""I" '4' '" 1""4 e ~ 10 ~ Q ~ ~ ~ ~ 00 0000 0 0 0 0 0 0 0 0 ~~ ~~ ca .c 0 11'\ 11'\ &.I I CD U) t"""lI.... .. eo c ... I: I: ~ ~ 0 ut~.3e ::; ~ ~ :l ., o .... ..... ,... w ~ ~ l.:l ~ II C ~ 00 oeoo 0 0 0 0 0 0 11'\ 0 0 II'\~ _ P"'4CD U) U) o II I) ""'. u "1.4 ID .. U CD < N N < I: ~ ~ GJ '"0 0 Q ~ a . l< ~ ~ ... N N 100 ~~ ~ 00 0000 0 0 0 0 0 ~ 0 0 0 ~1 II U CD ID ~ ~ C ... 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""+3............0 C'" ""'" ","I CI ~ 6. ~&OIIJ : ~~ g.~ &~ &~ s.... IS~ CD ~~e VI _ CD CD CD CD L4 1I2 . "CJ CD CD 0 UJ 00 ....I L4 0 CD ...,J o c ~)( CD ... ... ... IN:lO .a s:&.....I...,J CD .c .eCl,.J :1m "'Ow .c...,J..em _ C"'C G I III "C III ..,,".., C ..::.c CCD VI 1IC we OIJ"'D -.CII ..... CD~DO VI s:: CI III III o6J UJ ... ..,J,.J <<I.... .J <<I CD co 0 II CD "'C...,J .. .... .a .. c CI CD u""' CDU>'CD 00 L4 CD u'" U..,J U..,J ....... wlS "'0 C ...-teD,&.J...."'O wO UJ L.I VI u........ oiJ> OlD......... III "CJCD .a~...,IoJCD 56....1..,J III "C:I "0:1 "'C.... :1:1...... 06JC <<I ~ ;~ ~~~~e~ 22 ~; .. ;u ;U ;~ ~9~"" +3~~ ~ :II VI ,,"UO"-1U..c ....."-4 ...>... ... ... en ..u "'Os:: ~.c E-4 ~I ~ -;: ~ s :: ~ ~ 0 CD CD ~ -= ] .; c2 .; ~ -; = ] ~ ... 6 g '(; C) :~~ ~ 66 ~ ~ ~ ~ ~ ~ ~~ ~ Ul ~ < 0 31 e e GENERAL FUND REVENUES. EXPENDITURES AND_BALANCES - FIVE YEAR mSTORY e e Fund the General The following summary of Revenues, Expenses and Balances of Cash and Temporary Investments for operation were taken from the City's annual audit reports. Fiscal Year Ended September 30 1992 1991 1989 $4,920,586 796,602 907,528 2394,531 1990 $5,302,772 923,628 1,006,642 2,713,538 $5,125,057 1,014,182 1,129,896 2,844,201 $5,187,266 1,449,351 1,143,762 3,434,734 1993 $5,414,592 1,145,267 1,052,642 4,662,448 Revenues: Property Taxes Franchise Taxes Sales Taxes 151,332 163,843 843,465 453,375 492.330 184,364 287,713 951,109 485,220 241.339 137,480 248,161 1,051,203 394,841 208.455 239,754 228,413 ,115,069 297,817 234.653 306,297 264,577 1,504,317 411,123 194.677 Industrial Payments Licenses, Permits & Other Taxes Fines & Forfeits Charges for Services Interest Miscellaneous I I . I I I " -. $11.123,592 $1,538,579 2,850,437 184,760 689,893 2,972,970 606,251 1.206.165 $12,096,325 $1,599,433 2,995,466 1,738,345 723,411 2,693,907 632,778 1.373.112 $12,253,476 $1,738,944 3,119,828 1,846,517 570,958 2,732,332 629,509 1.515.891 $13,330,819 $1,969,602 3,567,678 1,798,315 892,187 2,954,235 652,455 1.680.782 $14,955,940 $1,952,024 3,601,471 1,894,040 1,242,884 2,918,889 687,591 1.862.816 Total Revenues Expenditures: Fire Department Police Department Administration Finance Public Works Community Development Parks & Recreation AUDIT REPORT The information contained on the following pages are excerpts from the rmancial section of the City's Audit Report for the fiscal year ended September 30, 1993 as prepared by: Null & Associates Certified Public Accounts Houston, Texas $11,711,055 $11,756,452 $12,153,979 $13,515,254 $14,159,715 Expenditures Excess of Revenue Over Expenditures Total This information is not intended to be a complete statement of the City's rmancial condition. A complete Audit Report is available upon request to: $(587.463) $339 873 $22.m $(184435) $~ Balance of Cash and Investments Moroney, Beissner & Co., Inc. Financial Advisors to the City $3,913,421 $4,134,651 $4,614,907 $4,370,400 11 $5,056,307 , I ~' 30 . Excludes the Refunded Bonds; 994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 $2,333,455 1,995,130 1,815,867 1,628,802 1,257,913 1,171,634 820,472 335,063 315,188 77 ,626 subject to change. $ 95,000 280,000 270,000 505,000 460,000 685,000 ,055,000 965,000 1,100,000 1,075,000 915,000 12 $118,124 314,471 306,905 297,355 283,026 264,588 241,918 206,063 163,160 117,663 68,188 21,731 118,124 509,471 586,905 567,355 788,026 724,588 926,918 1,261,063 1,128,160 1,217,663 1,143,188 936,731 $2,451,579 2,504,601 2,402,772 2,196,157 2,045,939 1,896,222 1,747,390 1,596,126 1,443,348 1,295,289 1,143,188 936,731 $801,702 679,657 629,873 502,473 444,950 413,212 242,392 J . Fiscal Year Endine. 9/30 Present Total $7,505,000 Bonds, Series Principal Interest $ 1994 Total ESTIMATED DEBT SERVICE RE IUlREMENT ScHEDULE* Water & Sewer Included in Total 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Average Maturity on Outstanding Debt. $1,525,000 1,505,000 1,455,000 1,345,000 1,055,000 1,040,000 750,000 300,000 300,000 75,000 Fiscal Year Endine. 9/30 Present Total $7,505,000 Bonds, Series 1994 New Total Outstanding Debt ESTlMA'IEltPRINClPAL REPAYME.Nr~CREDULE* e GENERAL OBLIGATION BONDS e New Total $195,000 280,000 270,000 505,000 460,000 685,000 ,055,000 965,000 ,100,000 ,075,000 915,000 .5.862 Years $1,525,000 1,700,000 1,735,000 1,615,000 1,560,000 1,500,000 1,435,000 1,355,000 1,265,000 1,175,000 1,075,000 915,000 e e purchased. The Bonds may be offered and sold to certain dealers and others at prices lower than the public offering prices shown on the first page hereof, and such public prices may be changed, from time to time, by the Underwriters. FINANCIAL ADVISORS Moroney, Beissner & Co., Inc. serves as Financial Advisors to the City and in this capacity supervised the preparation of this Official Statement and represented the City in the negotiations pertaining to the sale of the Bonds to the Underwriters. Under the tenns of the contract between Moroney, Beissner & Co., Inc. and the City, it is agreed and understood that Moroney, Beissner & Co., Inc. shall not be permitted to purchase any Bonds from the City nor have any interest, directly or indirectly, in the original purchase and sale of the Bonds, except as Agent for the City. As Financial Advisors to the City, Moroney, Beissner & Co., Inc. will be paid a fee based upon a percentage of the principal amount of Bonds actually sold and delivered, which fee is contingent upon such sale and delivery. OTHER MATTERS All infonnation contained in this Official Statement is subject, in all respects, to the complete body of information contained in the original sources thereof and no guaranty, warranty, or other representation is made concerning the accuracy or completeness of the infonnation herein. In particular, no opinion or representation is rendered as.to whether any projection will approximate actual results, and all opinions, estimates and assumptions, whether or not expressly identified as such, should not be considered as statements of fact. nITS OFFICIAL STATEMENT was approved, and the execution and delivery of this Official Statement authorized, by the City Council of the City of La Porte, Texas on CITY OF LA PORTE, TEXAS Is! Nonnan Malone Mayor ArrEST: Is! Cherie Black City Secretary 29 $15,330,000 13,630,000 11,895,000 10,280,000 8,720,000 7,220,000 5,785,000 4,430,000 3,165,000 1,990,000 915,000 . e e e e TAX PROCEDURES - _GENERAL OBLlGATIOl"iBj).M)S designate more than $10,000,000 of tax-exempt obligations as qualified designated is issued. In any event an issuer may not tax-exempt obligations during anyone calendar year. raisatDistrict The Texas Property Tax Code (the "Code") establishes among other matters, county-wide appraisal and equalization of taxable property values and establishes in each county of the State an appraisal district and an appraisal review board. The Harris County Central Appraisal District (the "Appraisal District") has the responsibility of appraising property for all taxing units within Harris County, including the City. Such appraisal values will be subject to review and change by the Harris County Appraisal Review Board (the "Appraisal Review Board"). Such appraisal roll, as approved by the Appraisal Review Board, will be used by the City in establishing its tax rolls and tax rate. Tax Code and Coun er Pro The City has designated the Bonds as qualified tax-exempt obligations in the Bond Ordinances authorizing the issuance and sale of the Bonds and agrees that it will take such action as is necessary for the Bonds to constitute qualified tax-exempt obligations. Therefore, it is anticipated that financial institutions purchasing the Bonds will not be subject to the 100% disallowance of interest expense under section 265 of the Code. However, such purchasers would be subject to the 20% interest disallowance rule applicable under prior law. the District Except for certain exemptions provided by Texas law, all real and tangible personal property in the City is subject to taxation by the City; however, no effort is made by the City to collect taxes on personal property, other than on personal property devoted to commercial or industrial use. Principal categories of exempt property include: property owned by the State of Texas or its political subdivisions, if the property is used for public purposes; property exempt from ad valorem taxation by federal law; certain household goods, family supplies and personal effects; farm products owned by the producer, certain implements of farming and ranching; non-profit cemeteries; certain property of charitable organizations, youth development associations, religious organizations and qualified schools; designated historical sites; solar and wind-powered energy devices; and most individually-owned automobiles. In addition, the City may by its own action exempt residential homesteads of persons 65 years or older and certain disabled persons, to the extent deemed advisable by the City Council of the City, or by petition and referendum by the City's voters. Furthermore, the City must grant exemptions to disabled veterans, if requested, but only to the maximum extent of$3,OOO of taxable valuation. The City may also exempt up to 20% of the value of residential homesteads from ad valorem taxation. However, where ad valorem taxes have previously been pledged for the payment of debt, the City Council may continue to levy and collect taxes against the value of the exempted homesteads until the debt is discharged, if the cessation of the levy would impair the obligations of the contract by which the debt was created. Valuation of ProDe for Taxation Generally, property in the City must be appraised by the Appraisal District at market value as of January 1 of each year. Once an appraisal roll is prepared and finally approvcd by the Appraisal Review Board, it is used by the City in establishing its tax rolls and tax rate. Except for qualifying agricultural and timberland, assessments under the Code are to be based on one hundred percent (100%) of market value. The Code permits land designated for agricultural use, open-space agricultural use, or timberland to be appraised at its value based on the land's capacity to produce agricultural or timber products rather than at its fair market value. The Code requires the Appraisal District to implement a plan for periodic reappraisal of property to update appraisal values. The plan must provide for reappraisal of all real property in the Appraisal District at least once every three years. It is not known what frequency of reappraisal will be utilized by the Appraisal District or whether reappraisals will be conducted on a zone or cowlty-wide basis. Subiect to Taxation b e Pro r L LEGAL MATTERS Legal matters incident to the authorization, issuance and sale of the Bonds are subject to the approval of the Attorney GenCTal of the State of Texas and of McGinnis, Lochridge & Kilgore, L.L.P., Bond Counsel, whose opinion will be printed on the Bonds. McGinnis, Lochridge & Kilgore, L.L.P. was not requested to participate, and did not take part in, the preparation of the Official Statement except as hereinafter noted, and such fmn has not assumed any responsibility with respect thereto or undertaken independently to verifY any of the information contained herein, except that, in its capacity as Bond Counsel, such firm has reviewed the information under the captions "DESCRIPTION OF BONDS", "TAX MATTERS" and "LEGAL MATTERS" in the Official Statement to determine whether such information presents a fair and accurate summary of the provisions of the law and the instruments described under such captions. The legal fees to be paid to McGinnis, Lochridge & Kilgore, L.L.P. in connection with the issuance of the Bonds are contingent on the sale and delivery of the Bonds. Certain legal matters will be passed upon by Mayor, Day, Caldwell & Keeton, L.L.P. Houston, Texas, Counsel to the Underwriters. The City will furnish to the Underwriters a certificate, dated as of the date of delivery of the Bonds, executed by an authorized officer of the City, to the effect that no litigation of any nature has been filed or is then pending or threatened, either in state or federal courts, contesting or attacking the Bonds; restraining or enjoining the issuance, execution or delivery of the Bonds; affecting the provisions made for the payment of or security for tile Bonds; in any manner questioning the authority or proceedings for the issuance, execution, or delivery of the Bonds; or affecting the validity of the Bonds. No Material Adverse Chane:e The obligations of the Underwriters to take and pay for the Bonds, and of the City to deliver the Bonds, are subject to the condition that, up to the time of delivery of and receipt of payment for the Bonds, there shall have been no material adverse change in the condition (rmancial or otherwise) of the City subsequent to the date of sale from that set forth or contemplated in the Preliminary Official Statement, as it may have been supplemented or amended through the date of sale. ation Certificate No-Lit aver Remedies Under certain circunlstances, taxpayers and taxing units, including the City, may appeal orders of the Appraisal Review Board by filing a petition for review in district court within forty-five (45) days after notice is received that a fmal order has been entered. In such event, the property value in question may be determined by the court, or by a jury, if requested by any party. Additionally, taxing units may bring suit against the Appraisal District to compel compliance with the Code. Ci Ii ,( VERIFICATION OF MATHEMATICAL COMPUT A nONS The accuracy of (i) the mathematical computations of the adequacy of the maturing principal amounts of the Fedcral Securities together with the interest income earned and uninvested cash, if any, to pay, when due, the principal of and interest on the Refunded Bonds and (ii) the mathematical computation of yield supporting Bond Counsel's conclusion that the Bonds are not "Arbitrage Bonds" under Section 148 of the Internal Revenue Code of 1986 will be verified by the finn of Deloitte & Touche, independent Certified Public Accountants, whose opinion with respect thereto \vill be available at delivery. Such computations were based solely upon assumptions and information supplied by the Underwriters. Deloitte & Touche has restricted its procedures to the examination of the arithmetic accuracy of certain computations and has not made any study or evaluation of assumptions and information upon which the computations are based and, accordingly, has not expressed an opinion on the data used, the reasonableness of the assumptions, or the achievability of the forecasted outcome. The Code sets forth notice and hearing procedures for certain tax rate increases by the City and provides for taxpayer referenda which could result in the repeal of certain tax increases. The Code also establishes a procedure for notice to property owners of reappraisals reflecting increased property values, appraisals that are higher than renditions and appraisals of property not previously on an appraisal roll. and Collection of Taxes The City is responsible for the collection of its taxes, unless it elects to transfer such functions to another governmental entity. By September 1 of each year, or as soon thereafter as practicable, the rate of taxation is set by the city Council of the City based upon the valuation of property within the District as of the preceding January 1. Taxes are due October 1, or when billed, whichever comes later, and become delinquent after January 31 of the following year. A delinquent tax incurs an initial 13 Le UNDERWRITING The Underwriters, Masterson Moreland Sauer Whisman, Inc. and Rauscher Pierce Refsnes, Inc. agree, subject to certain conditions, to purchase the Bonds from the City at a price of plus accrued interest. The City agrees to pay the Underwriters a fee of $ or % of the par value of the issue. The Underwriters' obligations are subject to certain conditions precedent, and they will be obligated to purchase all of the Bonds if any of the Bonds are 28 e e penalty of up to twelve percent (12%) of the amount of the tax and accrues interest at the rate of one percent (1%) per month. If the tax is not paid by the following July 1, an additional penalty of up to 15% may under certain circumstances be imposed by the City. The Code also makes provision for the split payment of taxes, discounts for early payment and the postponement of the delinquency date of taxes under certain circumstances. City's Ril!hts in the Event of Tax Delinquencies Taxes levied by the City are a personal obligation of the owner of the property. On January 1 of each year, a tax lien attaches to property to secure the payment of all taxes, penalties and interest ultimately imposed for the year on the property. The lien exists in favor of the State and each taxing unit, including the City, having the power to tax the property. The City's tax lien is on a parity with the tax liens of other such taxing units. A tax lien on real property taxes priority over the claims of most creditors and other holders of liens on the property encumbered by the tax lien, whether or not the debt or lien existed before the attachment of the tax lien. Personal property, under certain circumstances, is subject to seizure and sale for the payment of delinquent taxes, penalty and interest. At any time after taxes on property become delinquent, the city may file suit to foreclose the lien securing payment of the tax, to enforce personal liability for the tax, or both. In filing a suit to foreclose a tax lien on real property, the City must join other taxing units that have claims for delinquent taxes against all or part of the same property. Collection of delinquent taxes may be adversely affected by the amount of taxes owned to other taxing units, by the effects of market conditions on the foreclosure sale price, by taxpayer redemption rights or by bankruptcy proceedings which restrict the collection of taxpayer debts. 14 .~~ I ~. t . e e Collatcral Fcderal Income Tax ConseQucnces The following discussion is a summary of certain collateral federal income tax consequences resulting from the purchase, ownership or disposition of the Refunding Bonds. This discussion is based on existing statutes, regulations, published rulings and court decisions, all of which are subject to change or modification, retroactively. The following discussion is applicable to investors, other than those who are subject to special provisions of the Code, such as rmancial institutions, property and casualty insurance companies, life insurance companies, individual recipients of Social Security or Railroad Retirement benefits, certain S corporations with Subchapter C earnings and profits and taxpayers who may be deemed to have incurred or continued indebtedness to purchase tax-exempt obligations. INVESTORS, INCLUDING THOSE WHO ARE SUBJECT TO SPECIAL PROVISIONS OF THE CODE, SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX TREATMENT WHICH MAYBE ANTICIPATED TO RESULT FROM TIlE PURCHASE, OWNERSHIP AND DISPosmON OF TAX-EXEMPT OBLIGATIONS BEFORE DETERM1NING WHETHER TO PURCHASE THE REFUNDING BONDS. Interest on the Reflmding Bonds will be includable as an adjustment for "adjusted ~ings and profits" to calculate the alternative minimum tax imposed on corporations by section 55 of the Code. Section 55 of the Code imposes a tax equal to 20% for corporations, or 26% for noncorporate taxpayers (28% for taxable income exceeding $175,000), of the taxpayer's "alternative minimum taxable income", if the amount of such alternative minimum tax is greater than the taxpayer's regular income tax for the taxable year. Interest on the Refunding Bonds is includable in the "alternative minimum taxable income" of a corporation (other than a regulated investment company or a real estate investment trust) for purposes of determining the environmental tax imposed by section 59A of the Code. Section 59A of the Code imposes on a corporation an environmental tax, in addition to any other income tax imposed by the Code, equal to 0.12% of the excess of the modified alternative minimum taxable income of such corporation for the taxable year over $2 million. Interest on the Reflmding Bonds may be subject to the "branch profits tax" imposed by section 884 of the Code on the effectively-connected earnings and profits of a foreign corporation doing business in the United States. Under section 6012 of the Code, holders of tax-exempt obligation, such as the Refunding Bonds, may be required to disclose interest received or accrued during each taxable year on their returns of federal income taxation. Section 1276 of the Code provides for ordinary income tax treatment of gain recognized upon the disposition of a tax-exempt obligation, such as the Refunding Bonds, if such obligation was acquired at a "market discount" and if the fixed maturity of such obligation is equal to, or exceeds, one year from the date of issue. Such treatment applies to "market discount bonds" to the extent such gain does not exceed the accrued market discount of such bonds; although for this purpose, a de minimis amount of market discount is ignored. A "market discount bond" is one which is acquired by the holder at a purchase price which is less than the stated redemption price at maturity or, in the case of a bond issued at an original issue discount, the "revised issue price" (i.e., the issue price plus accrued original issue discount). The "accrued market discount" is the amount which bears the same ratio to the market discount as the number of days during which the holder holds the obligation bears to the number of days between the acquisition date and the final maturity date. Statc. Local and Foreil!n Taxes Investors should consult their own tax advisors concerning the tax implications of the purchase, ownership or disposition of the Refunding Bonds under applicable state or local laws. Foreign investors should also consult their own tax advisors regarding the tax consequences unique to investors who are not United States persons. Oualified Tax Exempt Oblil!ations Section 265 of the Code provides, in general, that interest expense incurred to acquire or carry tax-exempt bonds is not deductible for federal income tax purposes. For "Financial Institutions" (as used in such section), complete disallowance of such expense would apply to taxable years beginning after December 31, 1986, with respect to tax-exempt bonds acquired after August 7, 1986. Section 265(b) of the Code provides an exception to this rule for interest expense incurred by financial institutions to carry tax-exempt obligations (other than private activity bonds) which are designated by an issuer as qualified tax-exempt obligations. An issuer may only designate an issue as an issue of "qualified tax-exempt obligations" where the issuer expects to issue less than $10,000,000 of tax-exempt obligations during the calendar year in which the issue so 27 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 16 The City currently owns and operates one waste disposal treatment plant. The plant can treat 4.2 mgd and is sufficient to serve a population of approximately 42,000. 25 There are five universities located in nearby Houston: the University of Houston, Rice University, Texas Southern University, St. Thomas University, and Houston Baptist University, all of which offer full four-year as well as postgraduate programs. The City currently receives 90% (up to 4.2 million gallons per day (mgd) of their water from the La Porte Area Water Authority. (See "LA PORTE AREA WATER AUmORITY".) The remaining 10% of water is derived from seven water wells the City owns and operates that have a total capacity of8.7 mgd. The City's water storage facilities include seven ground storage tanks and three elevated storage tanks having a total combined capacity of 3.2 million gallons. The City water supply facilities are adequate to serve a population of 60,000. The San Jacinto Junior College District encompasses approximately 289 square miles in southeast Harris County, including the City of La Porte, providing the residents of the City with higher educational facilities. The College District has three campuses~ the Main Campus adjacent to the City of La Porte on its west side; the North Campus north of the Houston Ship Channel, and the South Campus just southwest of Pasadena within the city limits of the City of Houston. San Jacinto college offers two-year educational pro~ams leading to Associate of Arts and Associate of Science Degrees. Hi her Educational Facilities WATERWORKS AND SEWAGE TREATMENT FACaITffiS .. if As of January 1994 the school district had a student enrollment of 7,430 and a 1993 assessed valuation of $3.0 billion. district's bonds are rated "A-I" by Moody's Investors Service, Inc. and "M" by Standard & Poor's Corporation Multifamily, Mobile Home Park and Commercial Industrial ~ The The La Porte Independent School District provides the residents of the City with excellent school facilities. The school district operates six elementary schools, three junior high schools, one senior high school and one alternative school. The district is fully accredited by the Texas Education Agency and the Southern Association of Colleges and Schools. All of the school facilities are fully air-conditioned and centrally heated and are furnished with modern educational equipment. and Volume of sewage treated is based on percentage of water purchased as follows: Single Family residential 85% of water volume each month with monthly cap 0[$37.50 85% of water volume billed each month Educational Facilities Residential subdivisions within the City are well planned, providing complete utility services and hard surface streets ~urbs and gutters. Homes are currently priced from $60,000 to $200,000 with construction progressing at a moderate rate. Over 2,000 gallons $2.48 per ,000 gallons with Usage Charge: First 2,000 gallons Minimum $21.15 to $408.55, depending on size of meter utilized to measure service charge as above Residential The residential and commercial areas of the City form the core of the City, with the Industrial Districts flanking the City on the north and south. The central business district lies east of Highway 146, which crosses the City from north to south, and contains restaurants, shopping facilities and automobile dealerships. In addition, there are several attractive shopping centers within the City. Dun & Bradstreet rates over 310 business establishments in the City. DevcloDment Commercial and Industrial Multifamily and Mobile Home park $7.95 per iving unit Commercial Develo ment Minimuni. Charges: Single Family residential $11.95 Sewer Service: Bayshore National Bank of La Porte La Porte State Bank Total Combined Deposits $143,685,000 30.256.958 $173,941,958 Over 25,000 gallons $2.65 per ,000 gallons Next 15,000 gallons $2.30 per 1,000 gallons "TIle following banking facilities are located within the City: Deposits as of Jan 31. 1994 Next 8,000 gallons Usage Charge: First 2,000 gallons $2.08 per Minimum charge as above $9.35 to $512.80, depending on size of meter utilized to measure service 1,000 gallons .r .. Financial The City's residents arc provided electricity, gas and telephone service by Houston Lighting and Power Company, Entex, Inc. and Southwestern Bell Telephone, respectively, all as part of the City of Houston system. Water and sewer facilities are provided by the City-owned system. Institutions Commercial Multifamily and Mobile Home Parks and Indu!ltrial $5.35 per living unit Utilities 'The majority of the employers in the Industrial Districts are chemical and petrochemical related industries. . These companies collectively have in excess of 4,500 employees with an annual payroll of approximately $175 million, and contribute largely to the Port of Houston's position as the third largest port in the United States. Minimum Charges: Single Family Residential $6.95 Water Service: e WATER AND SEWER RATES (All customers are billed monthly) e Under the City Charter and State Statutes, the City of La Porte has the authority simply by ordinance of the City C01Ulcil to annex additional areas. In the past the City, in order to encourage industrial development in the area, has annexed a strip surrounding the industries identified herein and executed contracts with each separate industry- as described above. The contracts contain a construction incentive clause that allows new construction in the industrial area to be assessed in lieu of taxes at a 30% rate, instead of a 50% rate. e e e e e e WATERWORKS & SEWER SYSTEM REVENUE REFUNDING BONDS Outstanding Debt ESTIMATED PRINCIPAL REPA YMENTSCHEDJJLE* $2,490,000 Bonds, Series 1994 $5,810,000 5,325,000 4,755,000 4,215,000 3,675,000 3,140,000 2,605,000 2,070,000 1,565,000 1,060,000 600,000 155,000 New Total $415,000 485,000 570,000 540,000 540,000 535,000 535,000 535,000 505,000 505,000 460,000 445,000 155,000 .5.714 Years Average Maturity on Outstanding Debt. $ 65,000 105,000 80,000 85,000 90,000 95,000 100,000 405,000 405,000 460,000 445,000 155,000 Present Total $415,000 420,000 465,000 460,000 455,000 445,000 440,000 435,000 100,000 100,000 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 On January 1, 1994 the City and the industries renewed the contracts for an additional seven year period through December 31, 2000. Under the terms of the new contracts the industries will continue to pay full City taxes each year on the previously annexed value of each industry and an in lieu payment on the remaining total value which constitutes the protected Industrial Districts. These annual in lieu payments, when added to the full City taxes on the annexed portion, are an amount equal to the sum of a) for the tax years 1994 through 1996, 50% of the amount of ad valorem taxes which would be payable to the City if all of the industry's' land and improvements were in the City and b) for the tax years 1997 through 2000,53% of the amount of ad valorem taxes which would be payable to the City if all of the industry's land and improvements were in the City. Listed below is a schedule of the payments received in 1992 and 1993. Fiscal Year Endin2 9/30 992 In Lieu PaYments City Taxes 993 Cllts I ~~ I ,} , I ESTIMATED DEBT SERVICE REOUIREMENT SCHEDULE* $2,490,000 Bonds, Series 1994 Interest New Total $785,679 804,581 853,483 790,171 756,968 718,466 685,274 652,545 593,891 568,768 500,143 463,541 Fiscal Year Endin2 9/30 Total $ 50,349 174,548 211,788 183,543 185,468 187,075 188,374 189,325 483,391 465,268 500,143 463,541 $ 50,349 109,548 106,788 103,543 100,468 97,075 93,374 89,325 78,391 60,268 40,143 18,541 17 PrinciDal $ 65,000 105,000 80,000 85,000 90,000 95,000 100,000 405,000 405,000 460,000 445,000 Excludes the Refunded Bonds; subject to change. Present Total $735,330 630,033 64 1,695 606,628 571,500 531,391 496,900 463,220 110,500 103,500 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 . , i (:" i $359,052.89 361,244.66 262,257.60 332,384.80 211,841.85 144,274.49 12,399.23 143,500.59 104,295.95 103,203.97 82,438.81 0.00 59,657.18 11,765.55 63,932.09 1,031.99 2,623.45 22,165.06 39,440.71 11,234.97 16,052.46 14,226.42 940.18 6,527.46 144,903.19 4,041.18 3,646.35 327.8 0.00 2,461.22 2,046.93 2,624.16 991.09 758.78 1,167.10 0.00 683.09 1,480.42 692.61 0.00 668.25 1,583.44 4,191.91 190.71 $2,538,950.60 $1,499,631.89 437,334.88 258,529.03 539,360.54 260,822.63 275,322.20 11,790.72 208,625.92 241,540.64 83,102.98 100,611.62 11,182.50 79,730.35 64,777.80 59,644.83 831. 99 2,695.93 17,613.65 43,509.70 11,947.84 39,378.02 29,992.76 15,802.76 6,653.03 157,669.32 4,751.44 7,574.94 2,975.66 0.00 3,746.80 5,913.33 77 ,381.52 12,644.83 3,726.74 1,179.74 0.00 2,368.90 24,595.11 0.00 6,123.04 678.22 30,575.23 3,387.49 72.98 $4,645,599.50 City Taxes $359,052.89 361,244.66 262,257.60 332,384.80 211,841.85 144,274.49 12,399.23 143,500.59 104,295.95 103,203.97 82,438.81 0.00 59,626.30 11,765.55 63,932.09 1,031.99 2,623.45 22,165.06 39,440.71 11,234.97 16,052.46 14,226.42 940.18 6,527.46 144,903.19 4,041.18 3,646.35 327.81 4,191.91 2,461.22 2,046.93 48,783.53 991.09 758.78 1,167.10 190.71 683.09 1,480.42 692.61 0.00 668.25 1,583.44 0.00 0.00 $2,585,079.09 24 $1,533,582.23 422,850.69 239,926.04 483,745.64 280,339.59 256,405.18 15,306.29 206,502.57 231,334.77 69,405.20 00,032.05 21,356.21 84,077.57 58,709.86 45,264.15 884.26 2,744.33 18,384.78 42,783.86 10,006.92 37,222.14 31,157.17 15,954.43 7,326.41 186,819.48 4,808.12 7,117.48 2,861.06 0.00 3,738.39 6,053.89 19,522.48 11,198.41 3,904.17 1,333.74 83.63 4,070.62 23,918.27 0.00 6,444.67 678.22 30,575.23 0.00 0.00 $4,528,430.40 In Lieu Pa Quantum Chemical Corp. E.I. du Pont de Nemours Occidental Electrochemical Solvay Interox Corp. Houston Lighting & Power Dow Chemical USA Alphagaz Division of Liquid Air Fina Oil & Chemical Co. Akzo Chemical, Inc. Aristech Chemical Corp. Rohm & Haas Corp. Chusei (U.S.A.), Inc. Lubrizol Corp. Ethyl Corp. (USI-Emery) Air Products & Chemicals Texas Electric Equipment Co. Union Carbide Corporation Big Three Industries Petro-lite Corporation Hercules, Inc. Goodyear Tire & Rubber Co. Tri-Gas, Inc. (formerly Airco) Nippon Pigment USA, Inc. Grief Brothers Geon Company Ohmstede Machine Works, Inc. Eurecat, U.S.,lnc. Laidlaw Enrivonmental Services Nocs Gulf West, Inc. Witco Corporation Drago Supply Co., Inc. Praxair, Inc. (Union Carbide) Prime Equip. Co. (Grace Eq.) Fairmont Supply Dunn Equipment, Inc. Tom M.R., Inc. Revak Enterprises, Inc. ARCO Southwest Chemical Company PMC Corporation Battleground Water Co. REXENE Products Company EX-1M Freezers, Inc. Ragsdale Development Corp. Totals Industrv 18 23 The City and the industries listed below, many of which have come to the Industrial Zones since the original contracts, were under contracts which extended to December 31, 1993. Under the terms of the contracts, the City annexed 25% of the value of each industry on which the industry paid full City tax each year. The remaining 75% of the total value constitutes the protected Industrial Districts on which the industries make "in lieu of tax" payments to the City each year. These annual in lieu payments were in an amount which, when added to the full City taxes on the annexed portion, equaled 50% of what the City's taxes on the industry would be if 100% of the industry were in the City. , ~ In 1958 the City of La Porte created an Industrial Zone adjacent to thc City which presently encompasses approximately 5,500 acres of land north of Highway 225 and bordering the Houston Ship Channel. The City annexed sufficient land to completely encircle this Industrial Zone, protecting it from annexation by any other municipality. The City entered into contracts with all of the Industries located in the Zone whereby the City annexed a portion of the total value of each industry with the remainder constituting protected Industrial Districts. In addition to the Industrial Zone north of Highway 225, which is referred to as the "Battleground Industrial District", the City contains an Industrial Zone on its south side referred to as the "Bayport Industrial District". The Bayport District was created in 1970 and covers a 2,500 acre area. The Industrial District contracts are authorized by Texas State Statutes. .~ The Industrial State Highway 225 provides access to the City on its north side and connects on the west with Interstate 610, a multi-lane limited access freeway which encircles the City of Houston. State Highway 146, which extends into Northeast Texas, allows access from the south through thc City. Air transportation is accessible through Houston Intercontinental and Hobby Airports. The City-owned La Porte Mwlicipal Airport provides private and chartered air transportation through a fully approved F M facility. Railway transportation is supplied by six railroads,including the Southern Pacific Lines. There are several motor freight lines which adequately fill the need for truck transportation. The Houston Ship Channel, which runs along the northern portion of the District, provides deep water ocean-going transportation from the Intracoastal Canal to the Port of Houston. The Port of Houston's Barbour's Cut Terminal, located adjacent to the City, handles in excess of three million tons of cargo annually. Zones TransDortation Harris County's General Corporation. The contracts between the Authority and its contracting parties provide for establishment of rates and charges sufficient to meet the authority's obligation with respect to operation and maintenance of the project, debt service and reserve fund requirements on its Bonds, billing and payment procedures and minimum monthly charges. The City has budgeted $1,375,000 for payment to the Authority for the fiscal year ending September 30, 1994. The payments made to the authority constitute operating expenses of the contracting parties' water and sewer systems. The term of the contracts is forty years commencing 1988. Obligation Bonds are rated "Aa" by Moody's Investors Service, Inc. and "AA+" by Standard & Poor's The Texas Medical Center, located in Harris County, is one of the nation's largest, providing medical care and educational opportunities. Harris County's 64 hospitals have approximately 17,000 beds, of which 4,600 are in the Texas Medical Center. Each contracting party is responsible for its share of the authority's portion of the cost of construction and maintenance and operation of the plant in the percentages shown above. City of La Porte City of Shoreacres City of Morgan's Point 90.97% 4.74% 4.29% This 1,723 square mile county is a leading oil, gas and petrochemical area, having over $275 million average annual production of petroleum, natural gas and natural gas liquids. It has more than 32,000 manufacturing plants; the nation's largest concentration of petrochcmical plants, the third largest United States seaport, and is a corporate management center. A significant part of the County's major employers, manufacturers, education and financial institutions are located in Houston, the County seat. With the proceeds of its outstanding $9,800,000 Revenue Bonds, the Authority acquired an undivided interest in the Southeast Water Purification Plant (the "Plant") constructed by the City of Houston. The Authority constructed a major water transmission system to serve its contracting parties, which presently include the City and the Cities of Shoreacres and Morgan's Point. The Plant has surface water treatment facilities capable of producing 80 million gallons per day (gpd) and treated water storage facilities and pumping facilities capable of storing approximately 25 million gallons of potable water and pumping approximately 156,000 gallon per minute (gpm) of treated potable water. The Authority is entitled to an initial demand factor of 5.25% (4.2 mgd) and an initial pumping allocation factor of 2.33% (3,650 gpm). Each contracting party's share of such capacities are as follows: ,1' Harris County Though much of the image of this area is industrial, the La Porte-Bayshore area is still characterized by an expanse of resort homes. Because of this, and the metropolitan advantages of Houston, La Porte is one of the few communities in the Gulf Coast area that offers this favorable combination. If Located some 20 miles southeast of Houston on Galveston Bay in Harris County are the three communities that make up the La Porte Bayshore Area: La Porte, Morgan's Point and Shoreacres. The area has a combined population of approximately 41,000, of which 29,200 are located in the City of La Porte. The City has entered into a contract with the La Porte Area Water Authority (the "Authority") for the purchase of treated surface water. The Authority was created in 1981 by the 67th Legislature, Regular Session of the State of Texas as a conservation and reclamation district for the purpose of acquiring, treating and delivering water municipalities, water districts and industries within a 30-mile radius in southeast Harris County, including the City of La Porte and its extraterritorial jurisdiction. The creation of the authority was confirmed at an election held within the City on January 16, 1982 by a majority of the votes cast. La Porte Ba The City of La Porte covers an area of nineteen square miles located in the southeast quadrant of Harris County approximately 25 miles from downtown Houston. La Porte is bounded on the North by the Houston Ship Channel, and on the east by Galveston Bay. The nation's largest concentration of petrochemical plants border the City on its north and south sides. shore Area Profile LA PORTE_AREA WATER AUTBj)RlTY e e Lo'ltion e GENERAL INFORMATION e e e SELECTED PROVISIONS OF THE REVENUE BOND ORDINANCE The Revenue Bond Ordinance (the "Ordinance") authorizes the issuance and sale of the Bonds and prescribes terms, conditions and provisions for the payment of the principal of and interest on the Bonds by the City. Set forth below is a summary of certain provisions of the Ordinance. Paragraph headings are supplied for ease of reference and are not contained in the Ordinance. Such summary is not a complete description of the entire Bond Ordinance and is qualified by reference to the Ordinance, copies of which are available from Moroney, Beissner & Co., Inc., the City's Financial Advisor, upon request. Plede:e The Waterworks and Sewer and System Revenue Refunding Bonds, Series 1994, (the "Series 1994 Bonds") are being issued on a parity with the City's outstanding Waterworks and sewer System Revenue Bonds (hereinafter called the "Outstanding Bonds") and are secured by an irrevocable fIrst lien on and pledge of the net revenues of the system after deduction of the reasonable expenses of maintenance and operation of the system and said net revenues are further pledged irrevocably to the establishment and maintenance of the funds hereinafter created. Definitions The term "System" shall mean the City's entire Waterworks and Sewer System, together with all future improvements, extensions, enlargements, and additions thereto and replacements thereof. The term "Net Revenues" shall mean all gross revenues of the system, after deducting the expenses of operation and maintenance of the System, including all salaries, labor, materials, repairs and extensions necessary to render efficient service. Depreciation and payments into and out of the Interest and Sinking Fund and the Reserve Fund, hereinafter described, shall never be considered as expenses of operation and maintenance. The term "Outstanding Bonds" shall mean the City's Waterworks and Sewer System Revenue Bonds, Series 1985 and Series 1990, and Waterworks and Sewer System Revenue Refunding Bonds, Series 1991. Rate Covenant The City covenants and agrees that it will: (a) Fix and maintain rates and collect charges for the facilities and services afforded by the System which will provide revenues sufficient at all times: ( 1 ) To pay all operation, maintenance, depreciation, replacement and betterment charges of the System; (2) To establish and maintain the Interest and Sinking Fund and Reserve Fund; (3) To generate in each year Net Revenues equal to one and twenty-five hundredths (1-251100) times the maximum annual requirement for the payment of thc principal of and interest on the Outstanding Bonds, the Series 1994 Bonds and any additional bonds hereafter issued on a parity with the Outstanding Bonds and the Series 1994 Bonds (hereinafter called the "Additional Bonds") at the time outstanding and payable from the revenues of the System (although amounts shall be paid into the Interest And Sinking Fund only in accordance with this Ordinance); and (4) To pay all indebtedness outstanding against the System other than such Bonds, as and when the same become due; and (b) Deposit as collected all revenues derived from the operation of the System into the System Fund which shall be kept separate and apart from all other funds of the City. 19 I I I I I I , , i I I I J I .~ , e (a) "That it has the lawful power to pledge the revenues supporting the Bonds and has lawfully exercised said power under the Constitution and laws of the State of Taxes, including said power existing under Articles 1111 to 1118, both inclusive, Revised Civil Statutes of the State of Texas, as amended; that the Bonds issued hereunder shall be ratably secured by said pledge of income, in such manner that one Bond shall have no preference over any other Bonds. e The City hereby covenants as follows: Additional Covenant (b) that, other than for the payment of the Bonds herein authorized, the rents, revenues and income of the System have not in any manner been pledged to the payment of any debt or obligations of the City or of the System. (c) That, so long as any of the Bonds or Additional Bonds remain unpaid, the city will not sell or encumber the System or any substantial part thereof, and that it will not encumber the revenues thereof unless such encumbrance is made pursuant to this Ordinance or is junior and subordinate to all of the provisions of this Ordinance. (d) That no free service of the System shall be allowed, and should the City or any of its agencies or instrumentalities make use of the services and facilities of the System, payment of the reasonable value thereof shall be made by the City out of funds from sources other than the revenues and income of the System. (e) To the extent that it legally may, the City further covenants and agrees that, so long as any of the Bonds or any interest thereon is outstanding, no franchise shall be granted for the installation or operation of any competing system, that the City \vill prohibit the operation of any such system other than those owned by the City and the operation of any such system by anyone other than the City is hcreby prohibited. . t I never The Bonds are special obligations of the City payable from the pledged revenues and the registered owner thereof shall have the right to demand payment thereof out of funds raised or to be raised by taxation. 22 20 (i) At least one and one-half (I 112) times the average annual requirements for the payment of the principal of and interest on the then Outstanding Bonds, and the Additional Bonds then proposed, when issued, sold, and delivered; and 21 The City shall keep proper books of records and accounts, separate from all other records and accounts, in which complete and correct entries shall be made of all transactions relating to the System. Upon written request made not more than 60 days following the close of the fiscal year, the City shall furnish to any registered owner of any of the Bonds, complete rmancial statement s of the System in reasonable detail covering such fiscal year, certified by the City's Auditor. Any registered owner or owners of 25% of the Bonds at the time outstanding shall have the right at all reasonable times to inspect the System and all records, accolmts and data of the City relating thereto. (c) After all of the Series 1985 Bonds are no longer outstanding, the net earnings of the System for Ule fiscal year, or for any twelve consecutive calendar month period ending not more than 90 days prior to the adoption of the ordinance authorizing such Additional Bonds, were equal to each of the provisions in items (i) and (ii) below determined independently and certified by an independent firm of certified public accountants, based upon an audit of the books of the System; (b) As long as any of the Series 1985 Bonds are outstanding, Ule net eamings of tlle System for Ule fiscal year next preceding the month in which the ordinance authorizing such Additional Bonds is adopted, were equal to each of the provisions in items (i) and (ii) below, determined independently and certified by an independent firm of certified public accountants, based upon an annual audit ofUle books of the System. l~ . \ tl Records and Accounts The City shall maintain the System in good condition and operate the same in an efficient manner and at a reasonable cost. So long as any of the Bonds are outstanding, the City agrees to maintain insurance on the System, for the benefit of the registered owner or owners of the Bonds, of a kind and in an amount which usually would be carried by private companies engaged in a similar type of business in the same area. This Ordinance shall not be construed as requiring the City to expend any funds which are derived from sources otller tllan the operation of the System, but nothing herein shall be construed as preventing Ule City from doing so. (a) The Interest And Sinking Fund, the Reserve Fund and any sinular fund or fWlds created by tlle ordinance authorizing any Additional Bonds at the time outstanding shall each contain the amount then required to be on deposit therein, and a certificate to such effect shall be executed and delivered by the Mayor and City Secretary. In addition to Ule inferior lien bonds authorized by Article lilla, Vernon's Texas Civil Statutes, as amended, tlle city expressly reserves the right hereafter to issue additional parity bonds and other evidences of indebtedness now or hereafter authorized by the Legislature of Texas (collectively, the "Additional Bonds"), and the Additional Bonds, when issued, may be secured by and payable from a first lien on and pledgc of the Net Revenues of the System in the same manner and to the same extent as are the Outstanding Bonds and the Series 1994 Bonds and the Additional Bonds may in all respects be of equal dignity. It is provided, however, that no Additional Bonds shall be issued unless: Additional Pari The ordinances authorizing the issuance of the Outstanding Bonds provided that the aggregate amount to be accwnulated and maintained in the Reserve Fund shall equal the maximum annual principal and interest requirements for the Outstanding Bonds. The ordinance authorizing the Series 1994 Bonds shall provide that the aggregate amount to be accmllulated and maintained in the Reserve Fund shall be increased by an additional amOlmt equal to the maximum annual principal and interest requirements for the Series 1994 Bonds, and that such additional amOlmt shall be so accumulated within sixty-one (61) months from the date of the Series 1994 Bonds by the deposit in the Reserve Fund of equal monthly installments beginning on June 15, 1994. The aggregate amount to be accumulated in the Reserve Fund, however, shall never be required to exceed the maximum annual principal and interest requirements for all Outstanding Bonds, the Series 1994 bonds and Additional Bonds. The Reserve Fund shall be used to pay the principal of and interest on the Outstanding Bonds, the Series 1994 Bonds and any Additional Bonds at any time when there is not sufficient money available in the Interest And Sinking Fund for such purpose. Bonds Maintenance and 0 (e) The City shall establish a reserve fund for such Additional Bonds by providing a cash reserve fund therefor, a surety bond in lieu thereof or a combination of such cash reserve fund and surety bond, all as the city council deems reasonable and appropriate provided that (i) the amount of any such cash reserve fund or the coverage of any surety bond in lieu thereof or thc amount of such cash reserve fund and the coverage of such surety bond when added together shall at least equal UlC maximmll alIDual debt service requirements of such Additional Bonds, not to exceed the maximum permitted by applicable regulations, procedures or published rulings of the Internal Revenue Service (tlle "Reserve Minimum"); (ii) if any cash reserve fund is funded-by making transfers of Net Revenues in the System Fund, such transfers shall be made each monUl in an amount reasonably sufficient to reach the Reserve Minimum (or the portion thereof which is to be provided by such cash reserve fund) within a period of not more than five years after such Additional Bonds are sold and delivers; (iii) any such cash reserve fund may be combined with the Reserve Fund herein provided for the Bonds and with the cash reserve fund provided for any Additional Bonds then outstanding in order ratably to secure all such Bonds then outstanding; (iv) any such surety bond provided in lieu of a cash reserve fund shall be issued by an insurance company or association of companies whose insured obligations are rated either by Moody's Investors Service, Inc. ("Moody's") or by Standard & Poor's Corporation ("S&P") in its highest rating category; and (v) any such surety bond may be written (or amended) to provide coverage not only for such Additional Bonds but also pro rata for the Bonds and any Additional Bonds then outstanding, provided any existing cash reserve fund or surety bond in lieu thereof which secures any such outstanding Bonds, is extended ratably to secure Ule Additional Bonds then being issued. It is Ule City's intention hereby to provide maximum flexibility with respect to the reserve fund to be provided for any Additional "Bonds which may be issued hereafter and the foregoing provisions shall be liberally construed in order to achieve that objective WiUlout materially prejudicing the rights and interests of the owners of any Bonds and Additional Bonds at the time outstanding. eration-Insurance The necessary and reasonable expenses of operation and maintenance of the System shall first be paid from Ule System Fund upon approval of the City Council and, from the Net Revenues available in the System Fund, the City shall then make substantially equal monthly payments into a separate fund (the "Interest And Sinking Fund") during each year in which any of the Outstanding Bonds, the Series 1994 Bonds and Additional Bonds, if any, are outstanding, commencing with the date of delivery of the Series 1994 Bonds (or Additional Bonds, as the case may be) to the initial purchasers thereof, in an aggregate amount equal to one hundred percent (100%) of the amounts required to meet the interest and principal payments falling due on or before the next maturity date of the Outstanding Bonds, the Series 1994 and Additional Bonds, if any. the City shall, at least five days prior to September 15, 1994, and each March and September 15 thereafter, deposit into the Interest And Sinking Fund any additional Net Revenues available in the System Fund which may be necessary to pay in full the interest on and principal, ifany, coming due on such March 15 or September 15. In no event shall any amount in excess of the amounts stated above be placed in the Interest And Sinking Fund for the payment of the interest on or principal of the Outstanding Bonds, the Series 1994 Bonds and Additional Bond, if any, and any amount so placed may be withdrawn by the City and replaced in the System Fund. Reserve Fund '~. ;' mature. The tenll "net earnings" as sued in this Section shall mean all of the net revenues of the System, exclusive of income received specifically for capital items, after deduction of the necessary and reasonable expenses of operation and maintenance of the System excluding expenditures which under standard accounting practice should be charged to capital expenditures or depreciation. (d) Such Additional Bonds are made to mature on March 15th in each of the years in which they re scheduled to provided, however, should the certificate of the accountant ccrtify that the net earnings of the System for the period covered thereby were, in either case, less than required above, and a change in the rates and charges for services afforded by the System became effective at least sixty (60) days prior to the scheduled date of adoption of the ordinance authorizing such Additional Bonds, then such Additional Bonds may nevertheless be issued if an independent engineer or engineering firm having a favorable reputation with respect to such matters certified that, had such change in rates and charges been effective for the entire period covered by the accountant's certificate, the net earnings for the System for the period covered by the accountant's certificate would have met Ule tests specified in (i) and (ii) above. Inter~5tllnd Sinkin Flow Qf Funds: Fund e e (ii) At least one and twenty-five hundredths (1-251100) times Ule maximum annual requirement for the payment of the principal of and interest on the then outstanding Bonds, and the Additional Bonds then proposed, then issued, sold and delivered. e e