Ord. 1599 2021-02-22that:
ORDINANCE NO. 1599
An Ordinance of the City Council of the City of Pearland, Texas,
authorizing issuance of City of Pearland, Texas, water and sewer
system revenue bonds, series 2021A; prescribing the terms thereof;
providing for the payment thereof; awarding the sale thereof, making
other provisions regarding such bonds and matters incident thereto.
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS:
ARTICLE I
FINDINGS AND DETERMINATIONS
Section 1.1 Findings and Determinations. It is hereby officially found and
determined
(a) The City is authorized by Chapter 1502, Texas Government Code,
as amended, to issue revenue bonds payable from the revenues of its water and
sewer system for the purpose of constructing repairs, improvements, additions
and extensions to the City's waterworks and sanitary sewer system.
(b) The City Council now deems it to be in the best interest of the City to
issue, sell and deliver the Series 2021A Bonds (hereinafter defined) as
hereinafter authorized, pursuant to the laws of the State of Texas, including
specifically, Chapter 1502, Texas Government Code.
(c) The conditions precedent to the issuance of additional bonds which
are contained in the ordinances authorizing the issuance of the Previously Issued
Bonds and the Series 2021A Bonds have been met, and the City is authorized to
issue the revenue bonds and make the pledges and covenants set forth herein.
(d) The Series 2021A Bonds herein authorized for issuance are to be
delivered to the Texas Water Development Board (the "TWDB" or the
"Purchaser") in evidence of aloan commitment received in the aggregate amount
of the Series 2021A Bonds.
(e) The Series 2021A Bonds are issued in the aggregate principal
amount of
$75,000,000 commitment from the TWDB Clean Water State Revolving Fund.
PASSED and APPROVED on First Reading this the 22" day of February, A. D., 2021.
CR 6 AL R•AN, TRMC, CMC
CITY SECRETARY
2021.
ATTE
J ''` VIN COLE
AYOR
PASSED AND APPROVED on Second and Final Reading on the 1st day of March, A. D.,
CRY /AL ROA , TRM , CMC
CITY SECRETARY
APPROVED AS TO FORM:
DARRIN M. COKER
CITY ATTORNEY
(SEAL)
EVIN COLE
MAYOR
ARTICLE II DEFINITIONS
AND INTERPRETATIONS
Section 2.1 Definitions. In this Ordinance, the following terms shall have the
followingmeanings, unless the context clearly indicates otherwise:
"Act" shall mean, collectively Chapter 1502, Texas Government Code, as
amended. "Additional Bonds" shall mean the additional revenue bonds permitted
to be issued by the
City pursuant to Section 6.1 hereof.
"Average Annual Principal and Interest Requirements" shall mean the average
annual principal and interest requirements for all Bonds. Upon the issuance of the
S eries 2021A Bonds, the Average Annual Principal and Interest Requirements are
hereby determined to be
$ and shall be recomputed upon the issuance of each series of
Additional Bonds and set forth in each ordinance authorizing the issuance of Additional
Bonds. For purposes of calculating the Average Annual Principal and Interest
Requirements with respect to any variable rate Additional Bonds, interest on such
bonds shall be calculated in accordance with Section 6.1 of this Ordinance.
"Bonds" shall mean any or all of the Previously Issued Bonds, the Series 2021A
B onds and any Additional Bonds from time to time hereafter issued, but only to the extent
such Bonds remainOutstanding within the meaning of this Ordinance.
"Business Day" shall mean any day other than (1) a Saturday or a Sunday, (2) a
legal holiday or the equivalent on which banking institutions generally are authorized or
required to close in New York, New York or Houston, Texas or any other city in which is
located the principal corporate trust office of the Paying Agent/Registrar or (3) a day on
which the New York Stock Exchange is closed in whole or in part.
"City" shall mean the City of Pearland, Texas, and, where appropriate, the City
Council thereof and any successor to the City as owner of the System.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Defeasance Securities" means (1) direct, non -callable obligations of the United
States of America, including obligations that are unconditionally guaranteed by the
U nited States ofAmerica, (2) non -callable obligations of an agency or instrumentality of
the United States of America, including obligations that are unconditionally guaranteed
2
or insured by the agency or instrumentality and that on the date of the purchase
thereof are rated as to investment quality bya nationally recognized investment rating
firm not less than "AAA" or its equivalent, and (3) non -
3
callable obligations of a state or an agency or a county, municipality, or other political
subdivision of a state that have been refunded and that, on the date the governing body
of the City adopts or approves the proceedings authorizing the financial arrangements
are rated as to investment quality by a nationally recognized investment rating firm not
less than "AAA" or its equivalent.
"DTC" shall mean The Depository Trust Company of New York, New York, or any
successor securities depository.
"DTC Participant" shall mean brokers and dealers, banks trust companies,
clearing corporations and certain other organizations on whose behalf DTC was created
to hold securities to facilitate the clearance and settlement of securities transactions
among DTC Participants.
"Fiscal Year" shall mean the City's fiscal year, which currently runs from October
1 to September 30, but which may be changed from time to time by the City.
"Gross Revenues" shall mean all revenues, income and receipts of every nature
derived or received by the City from the operation and ownership of the System the
interest income from the investment or deposit of money in the Revenue Fund and the
Reserve Fund (each hereinafter defined in Article V hereof); and any other revenues
hereafter pledged to the payment of all Bonds. Gross Revenues shall not include any of
(i) grants from, or payments by, any federal, state or local governmental agency or
authority or any other entity or person, the use of which is restricted by law or by the
terms of the grant or payment to capital expenditures of the System, (ii) capital assets,
debt service funds or debt service reserve funds of water districts or other public or
private sewersystems annexed, acquired or otherwise assumed by the City or (iii) any
interest earned on items
(i) or (u) above.
"Interest Payment Date," when used in connection with any Series 2021A Bond,
shall mean September 1 or March 1 of each year as applicable commencing September
1, 2021.
"Maintenance and Operation Expenses" shall mean the reasonable and
necessary expensesof operation and maintenance of the System, including all salaries,
labor, materials, repairs and extensions necessary to render efficient service (but only
such repairs and extensions as, in the judgment of the governing body of the City, are
necessary to keep the System in operation and render adequate service to the City and
the inhabitants thereof, or such as might be necessary to meet some physical accident
or conditions which would otherwise impair the Bonds), and all payments (including
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payments of amounts equal to all or a part of the debt service on bonds issued by other
political subdivisions and authorities of the State of Texas) under contracts which are now
or hereafter defined as operating expenses by the Legislature of Texas. Depreciation
shall never be considered as a Maintenance and Operation Expense. Maintenance and
Operation Expenses shall include, without limitation, all payments under contracts for
the impoundment, conveyance
5
o r treatment of water or otherwise which are now or hereafter defined as operating
expenses by the Legislature of Texas and the treatment of such payments as
Maintenance and Operation Expenses shall not be affected in any way if, subsequent to
e ntering into such contracts, the City acquires as a part of the System title to any
properties or facilities used to impound, convey or treatwater under such contracts, or if
the City contracts to acquire title to such properties or facilities as a part of the System
u pon the final payment of debt service on the bonds issued to finance such properties or
facilities.
"MSRB" means the Municipal Securities Rulemaking Board.
"Net Revenues" shall mean all Gross Revenues remaining after deducting the
Maintenanceand Operation Expenses.
"Ordinance' shall mean this Bond Ordinance and all amendments hereof and
supplements
hereto.
"Outstanding" when used with reference to the Bonds shall mean, as of a
particular date, all such bonds theretofore delivered except: (a) any such bond canceled
by or on behalf of the Cityat or before said date; (b) any such bond defeased pursuant to
the defeasance provisions of the ordinance authorizing its issuance, or otherwise
defeased as permitted by applicable law; and (c) any such bond in lieu of or in
substitution for which another bond shall have been delivered pursuant to the ordinance
authorizing the issuance of such bond.
"Owner" or "Registered Owner" when used with respect to any Bond, shall mean
the person or entity in whose name such Bond is registered in the Register. Any
reference to a particular percentage or proportion of the Owners of the Bonds of a
particular class or series of Bonds shall mean the Owners at a particular time of the
specified percentage or proportion in aggregate principal amount of all Bonds or the
Bonds of such class or series then Outstanding.
"Paying Agent/Registrar" shall mean Wells Fargo Bank, N.A., Minneapolis,
Minnesota, and its successors in that capacity.
"Previously Issued Bonds" shall mean the Outstanding City of Pearland, Texas,
Water and Sewer System Adjustable Rate Revenue Bonds, Series 1999, the City of
Pearland, Texas, the City of Pearland, Texas, Water and Sewer System Revenue
Refunding Bonds, Series 2010B, the City of Pearland Texas Water and Sewer System
Revenue and Refunding Bonds, Series 2012, the City of Pearland, Texas Water and
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S ewer System Revenue Bonds, Series 2014, the City of Pearland, Texas Water and
S ewer System Revenue Bonds, Series 2016A, the City of Pearland, Texas Water and
S ewer System Revenue Bonds, Series 2016B, City of Pearland, Texas Water and
S ewer System Revenue Bonds, Series 2016C, City of Pearland, Texas Water and Sewer
S ystem Revenue Bonds, Series 2017A, City of Pearland, Texas Water and Sewer
S ystem Revenue Bonds, Series
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2017B, City of Pearland, Texas Water and Sewer System Revenue and Refunding
B onds, Series 2017C, City of Pearland, Texas Water and Sewer System Revenue
B onds, Series 2018A, City of Pearland, Texas Water and Sewer System Revenue
B onds, Series 20188, City of Pearland, TexasWater and Sewer System Revenue Bonds,
S eries 2019A, City of Pearland, Texas Water and Sewer System Revenue and
Refunding Bonds, Series 2019B, Water and Sewer System Revenue Bonds,
S eries 2020A and Water and Sewer System Revenue Bonds, Series 2020B
"Purchase( shall mean the Texas Water Development Board.
"Record Date" shall mean, with respect to any Interest Payment Date, the
fifteenth day ofthe month, whether or not a Business Day, next preceding each Interest
Payment Date.
"Register" shall mean the books of registration kept by the Paying Agent/Registrar
in which are maintained the names and addresses of and the principal amounts
registered to each Owner ofSeries 2021A Bonds.
"Series 2021A Bonds" shall mean the City of Pearland, Texas, Water and Sewer
S ystem Revenue Bonds, Series 2021A, authorized by this Ordinance.
"Special Project' shall mean, to the extent permitted by law, any water or sewer
system property, improvement or facility declared by the City not to be part of the
S ystem, for which the costs of acquisition construction, and installation are paid from
proceeds of a financing transaction other than the issuance of bonds payable from ad
valorem taxes or revenues of the System and forwhich all maintenance and operation
expenses are payable from sources other than ad valorem taxes or revenues of the
S ystem, but only to the extent that and for so long as all or any part of the revenues or
proceeds of which are or will be pledged to secure the payment or repayment of such
costs of acquisition, construction, and installation under such financing transaction.
"Subordinate Lien Obligations" shall mean the obligations permitted to be issued
by the City pursuant to Section 6.2 hereof.
"Surety Policy" shall mean and include a surety bond, bond insurance policy or
other credit agreement as authorized by Section 1502.064, Texas Government Code,
provided that the issuerof any Surety Policy shall be rated in the highest rating category
at the time of issuance of such Surety Policy by A.M. Best Company, Standard & Poor's
Ratings Group, or Moody's Investors Service. A Surety Policy shall insure all Bonds and
Additional Bonds on a pro rata basis. A Surety Policy may include a letter of credit or
other agreement or instrument, including any related reimbursement or financial
8
guaranty agreement, whereby the issuer is obligated to provide funds up to and
including the maximum amount and under the conditions specified in such agreement or
instrument.
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"System" shall mean all properties, facilities, improvements, equipment, interests,
rights and powers constituting the water and sewer system of the City, and all future
extensions, replacements, betterments, additions, improvements, enlargements,
acquisitions, purchases and repairs to the System, including without limitation, all those
heretofore or hereafter acquired as a result of the annexation and dissolution of water
districts or the acquisition of the properties or assets of any other public, private or non-
profit entities. The System shall not include any SpecialProject.
S ection 2.2 Interpretations. All terms defined herein and all pronouns used in this
Ordinance shall be deemed to apply equally to singular and plural and to all genders.
The titles and headings of the articles and sections of this Ordinance and the Table of
Contents of this Ordinance have been inserted for convenience of reference only and are
not to be considered a parthereof and shall not in any way modify or restrict any of the
terms or provisions hereof. This Ordinance and all the terms and provisions hereof shall
be liberally construed to effectuate the purposes set forth herein and to sustain the
validity of the Series 2021A Bonds and the validity ofthe lien on and pledge of the Net
Revenues to secure the payment of the Series 2021A Bonds.
ARTICLE III
TERMS OF THE SERIES 2021A BONDS
S ection 3.1 Name, Amount, Purpose, Authorization. The City of Pearland, Texas
Water and Sewer System Revenue Bonds, Series 2021A shall be issued in fully
registered form, withoutcoupons, in the aggregate principal amount of SEVENTY FIVE
MILLION DOLLARS ($75,000,000) for the purposes of (i) constructing certain repairs,
improvements, additions and extensions to the System, and (ii) payment of expenses of
issuance of the Series 2021A Bonds, all under and pursuant to the authority of the Act
and all other applicable law.
S ection 3.2 Numbers, Date and Denomination. The Series 2021A Bonds shall
be initially issued bearing the numbers, in the principal amounts and bearing interest at
the rates set forth in Section 3.3 hereof. The Series 2021A Bonds shall be dated as of
March 15, 2021 and shall be issued in denominations of $5,000 of principal amount or
any integral multiple thereof.
S ection 3.3 Interest Payment Dates, Interest Rates and Maturities. The Series
2021A Bonds shall bear interest from the later of the date of delivery of the Series
2021A Bonds to the Purchaser, or the most recent Interest Payment Date to which
interest has been paid or duly provided for, at the rate or rates per annum set forth
below, calculated on the basis of a 360 -day
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year composed of twelve 30 -day months and payable semiannually on March 1 and
September 1 of each year, commencing September 1, 2021 until maturity or prior
redemption.
The Series 2021A Bonds shall mature and become payable on the dates and in
the respective principal amounts set forth below, subject to prior redemption as set forth
in this Ordinance:
Bond
Numbe
r
R-1
R-2
R-3
R-4
R-5
R-6
R-7
R-8
R-9
R-10
R-11
R-12
R-13
R-14
R-15
R-16
R-17
R-18
R-19
R-20
R-21
R-22
R-23
R-24
R-25
R-26
R-27
R-28
R-29
R-30
Maturity
(09/01)
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
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Principa
I
Amount
$2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
Interest
Rate
S ection 3.4 Redemption Prior to Maturity.
(a) Optional Redemption — The City reserves the right, at its option, to
redeem prior to maturity Series 2021A Bonds maturing on or after September 1,
2032 in inverse order of maturity, in whole or in part, in principal installments of
$5,000 or any integral multiple thereof, on September 1, 2031, or any date.
thereafter, at a price equal to the principal amount of the Series 2021A Bonds or
portions thereof called for redemption plus accrued interest to the date of
redemption.
(b) Series 2021A Bonds may be redeemed only in integral multiples of
$5,000 of principal amount. If a Series 2021A Bond subject to redemption is in a
denomination larger than $5,000, a portion of such Series 2021A Bond may be
redeemed but only in integral multiples of $5 000. In selecting portions of Series
2021A Bonds for redemption, the Registrar shall treat each Series 2021A Bond
as representing that number of Series 2021A Bonds of $5,000 denomination
which is obtained by dividing the principal amountof such Series 2021A Bond by
$5,000. Upon surrender of any Series 2021A Bond for redemption in part, the
Registrar, in accordance with Section 3.13 hereof, shall authenticateand deliver in
exchange therefor a Series 2021A Bond or Bonds of like maturity and interest
rate in an aggregate principal amount equal to the unredeemed portion of the
S eries2021A Bond so surrendered.
(c) Not less than thirty (30) days prior to a redemption date for the Series
2021ABonds, a notice of redemption will be sent by U.S. mail, first class postage
prepaid, in the name of the City to each Owner of a Series 2021A Bond to be
redeemed in whole or in part at the address of such Owner appearing on the
Register at the close of business on theBusiness Day next preceding the date of
mailing. Such notices shall state the redemption date, the redemption price, the
place at which Series 2021A Bonds are to be surrendered for payment and, if
less than all Series 2021A Bonds outstanding are to be redeemed, the numbers
of Series 2021A Bonds or portions thereof to be redeemed. Any notice of
redemption so mailed as provided in this Section will be conclusively presumed
to have been duly given, whether or not the Owner receives such notice. By the
date fixed for redemption, due provision shall be made with the Registrar for
payment of the redemption price of the Series 2021A Bonds or portions thereof to
be redeemed. When Series 2021A Bonds have been called for redemption in
whole or in part and notice of redemption has been given as herein provided, the
S eries 2021A Bonds or portions thereof so redeemed shall no longer be regarded
to be outstanding, except for the purpose of receiving payment solely from the
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funds so provided for redemption, and interest which would otherwise accrue or
compound after the redemption date on any Series 2021A Bond or portion thereof
called for redemption shall terminate on the date fixed for redemption.
S ection 3.5 Manner of Payment, Characteristics, Execution and Authentication.
The Paying Agent/Registrar shall be the paying agent for the Series 2021A Bonds. The
S eries 2021A Bonds shall be payable, shall have the characteristics, shall be signed and
executed, shall be sealed, and shall be authenticated, all as provided Form of Bond
included as Exhibit A to this Ordinance The Series 2021A Bonds initially delivered shall
also have attached or affixed to each such Series2021A Bond the registration certificate
of the Comptroller of Public Accounts of the State of Texas.
The Series 2021A Bonds shall be signed on behalf of the City by the Mayor and
countersigned by the City Secretary or Deputy City Secretary by their manual,
lithographed, or facsimile signatures thereon. Such facsimile signature on the Series
2021A Bonds shall have the same effect as if each of the Series 2021A Bonds had been
signed manually and in person by each of said officials. If any officer of the City whose
manual or facsimile signature shall appear on the Series 2021A Bonds, as provided in
the Form of Bond included as Exhibit A hereto, shall cease to be such officer before the
authentication of the Series 2021A Bonds or before the delivery of the Series 2021A
B onds, such .manual or facsimile signature shall nevertheless be valid and sufficientfor
all purposes as if such officer had remained in such office.
The approving legal opinion of Orrick, Hernngton & Sutcliffe LLP, Houston Texas,
B ond Counsel, may be printed on the Series 2021A Bonds over the certification of the
City Secretary, which may be executed in facsimile. CUSIP numbers also may be
printed on the Series 2021A Bonds, but errors or omissions in the printing of either the
opinion or the numbers shall have no effect on the validity of the Series 2021A Bonds.
S ection 3.6 Approval by Attorney General; Registration by Comptroller. The
Initial Series 2021A Bond shall be delivered to the Attorney General of the State of Texas
for examination and approval and shall be registered by the Comptroller of Public
Accounts of the State of Texas. The manually executed registration certificate of such
Comptroller substantially in the form provided in Exhibit A of this Ordinance shall be.
affixed or attached to the Initial Series 2021A Bonds.
S ection 3.7 Authentication. Except for the Series 2021A Bonds to be initially
issued, which need not be authenticated, only such Series 2021A Bonds as shall bear
thereon a certificate of authentication substantially in the form provided in Exhibit A of
this Ordinance, manually executed by an authorized representative of the Paying
Agent/Registrar, shall be entitled to the benefits of this Ordinance or shall be valid or
obligatory for any purpose. Such duly executed
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certificate of authentication shall be conclusive evidence that the Series 2021A Bond so
authenticated was delivered by the Paying Agent/Registrar hereunder.
S ection 3.8 Special Record Date. If interest on any Series 2021A Bond is not
paid on any Interest Payment Date and continues unpaid for 30 days thereafter, the
P aying Agent/Registrarshall establish a new record date for the payment of such interest,
to be known as a "Special Record Date." The Paying Agent/Registrar shall establish a
S pecial Record Date when funds to make such interest payment are received from or on
behalf of the City. Such Special Record Date shall be fifteen (15) days prior to the date
fixed for payment of such past due interest, and notice of the date of payment and the
S pecial Record Date shall be sent by United States mail first class, postage prepaid,
n ot later than five (5) days prior to the Special Record Date, to each Registered Owner
of an affected Series 2021A Bond as of the close of business on the day prior to the
mailing of such notice.
S ection 3 9 Ownership Subject to the further provisions of this Section, the City,
the Paying Agent/Registrar, and any other person may treat the person in whose name
any Series 2021A Bond is registered on the Register as the absolute Owner of such
S eries 2021A Bond for the purpose of making and receiving payment of the principal of
or interest on such Series 2021ABond, and for all other purposes, whether or not such
S eries 2021A Bond is overdue, and neither the City nor the Paying Agent/Registrar shall
be bound by any notice or knowledge to the contrary. All payments made to the person
deemed to be the Owner of any Series 2021A Bond in accordance with this Section 3.9
shall be valid and effectual and shall discharge the liability of the City and the Paying
Agent/Registrar upon such Series 2021A Bond to the extent of the sums paid.
S ection 3.10 Book -Entry Only System. The definitive Series 2021A Bonds shall
be initially issued in the form of a separate single fully registered Series 2021A Bond for
e ach of the maturities thereof. Upon initial issuance, the ownership of each such Series
2021A Bond shall be registered in the name of Cede & Co., as nominee of DTC, and
except as provided in Section 3.12 hereof, all of the Outstanding Bonds shall be
registered in the name of Cede & Co., as nominee ofDTC Upon delivery by DTC to the
P aying Agent/Registrar of written notice to the effect that DTC has determined to
substitute a new nominee in place of Cede & Co., and subject to the provisions in this
Ordinance with respect to interest checks being mailed to the Owner at the close of
business on the Record Date, the word "Cede & Co." in this Ordinance shall refer to
such new nominee of DTC.
With respect to Series 2021A Bonds registered in the name of Cede & Co., as
n ominee ofDTC, the City and the Paying Agent/Registrar shall have no responsibility or
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obligation to any DTC Participant or to any person on behalf of whom such a DTC
Participant holds an interest in the Series 2021A Bonds. Without limiting the
immediately preceding sentence, the City and the Paying Agent/Registrar shall have no
responsibility or obligation with respect to (a) the accuracy
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of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership
interest in the Series 2021A Bonds, (b) the delivery to any DTC Participant or any other
person, other than a Registered Owner of a Series 2021A Bond, as shown on the
Register, of any notice with respectto the Series 2021A Bonds, including any notice of
redemption or (c) the payment to any DTC Participant or any other person, other than a
Registered Owner of a Series 2021A Bond as shownin the Register, of any amount with
respect to principal of Series 2021A Bonds, premium, if any, or interest on the Series
2021A Bonds.
Except as provided in Section 3.11 of this Ordinance, the City and the Paying
Agent/Registrar shall be entitled to treat and consider the person in whose name each
Series 2021ABond is registered in the Register as the absolute owner of such Series
2021A Bond for the purpose of payment of principal of, premium, if any, and interest on
S eries 2021A Bonds, for the purpose of giving notices of redemption and other matters
with respect to such Series 2021A Bond, for the purpose of registering transfer with
respect to such Series 2021A Bond and for all other purposeswhatsoever. The Paying
Agent/Registrar shall pay all principal of Series 2021A Bonds, premium, if any, and
interest on the Series 2021A Bonds only to or upon the order of the respective owners,
as shown in the Register as provided in this Ordinance, or their respective attorneys duly
authorized in writing, and all such payments shall be valid and effective to fully satisfy
and discharge the City's obligations with respect to payment of principal of, premium, if
any, and interest on the Series 2021A Bonds to the extent of the sum or sums so paid.
N o person other than an owner shall receive a Series 2021A Bond evidencing the
obligation of the City to make payments of amountsdue pursuant to this Ordinance.
Section 3.11 Payments and Notices to Cede & Co.. Notwithstanding any other
provision of this Ordinance to the contrary, as long as any Series 2021A Bonds are
registered in the name ofCede & Co , as nominee of DTC, all payments with respect to
principal of, premium, if any, and interest on the Series 2021A Bonds, and all notices
with respect to such Series 2021A Bonds shall be made and given, respectively, in the
manner provided in the representation letter of the City toDTC.
Section 3.12 Successor Securities Depository; Transfer Outside Book -Entry
Only System. In the event that the City or the Paying Agent/Registrar determines that
D TC is incapable of discharging its responsibilities described herein and in the
representation letter of the City to DTC and that it is in the best interest of the beneficial
owners of the Series 2021A Bonds that they be able to obtain certificated Series 2021A
Bonds, the City or the Paying Agent/Registrar shall (a) appoint a successor securities
depository, qualified to act as such under Section 17(a) of the Securities and Exchange
Act of 1934, as amended, notify DTC of the appointment of such successor securities
17
depository and transfer one or more separate Series 2021A Bonds to such successor
securities depository or (b) notify DTC of the availability through DTC of Series 2021A
Bonds and transfer one or more separate Series 2021A Bonds to DTC Participants
having Senes
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2021A Bonds credited to their DTC accounts. In such event, the Series 2021A Bonds
shall no longer be restricted to being registered in the Register in the name of Cede &
Co., as nominee of DTC, but may be registered in the name of the successor securities
depository, or its nominee, or in whatever name or names a Registered Owner of a Series
2021A Bond transferring or exchanging Series 2021A Bonds shall designate, in
accordance with the provisions of this Ordinance.
Section 3.13 Registration, Transfer, and Exchange. The Paying Agent/Registrar
shall keep the Register at its principal corporate trust office and, subject to such
reasonable regulations as it may prescribe, the Paying Agent/Registrar shall provide for
the registration and transfer of Series 2021A Bonds in accordance with the terms of this
Ordinance.
Each Series 2021A Bond shall be transferable only upon the presentation and
surrender thereof at the principal corporate trust office of the Paying Agent/Registrar,
duly endorsed for transfer, or accompanied by an assignment duly executed by the
Registered Owner or his authorized representative in form satisfactory to the Paying
Agent/Registrar. Upon due presentation of any Series 2021A Bond in proper form for
transfer, the Paying Agent/Registrar shall authenticate and deliver in exchange therefor,
within three (3) Business Days after such presentation, a new Series 2021A Bond or
S eries 2021A Bonds, registered in the name of the transferee ortransferees, in the
same maturity and aggregate principal amount and bearing interest at the same rate as
the Series 2021A Bond or Series 2021A Bonds so presented.
All Series 2021A Bonds shall be exchangeable upon presentation and surrender
thereof at the principal corporate trust office of the Paying Agent/Registrar for a Series
2021A Bond or Series 2021A Bonds of the same maturity in any authorized
denomination and interest rate, in an aggregate amount equal to the unpaid principal
amount of the Series 2021A Bond or Series 2021ABonds presented for exchange. The
Paying Agent/Registrar shall be and is hereby authorized to authenticate and deliver
exchange Series 2021A Bonds in accordance with the provisions of this Section 3.11.
E ach Series 2021A Bond delivered in accordance with this Section 3.11 shall be entitled
to the benefits and security of this Ordinance to the same extent as the Series 2021A
B ondor Series 2021A Bonds in lieu of which such Series 2021A Bond is delivered.
The City or the Paying Agent/Registrar may require the Owner of any Series
2021A Bond to pay a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with the transfer or exchange of such Series 2021A
B ond Any fee or charge of the Paying Agent/Registrar for such transfer or exchange
shall be paid by the City.
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The Paying Agent/Registrar shall not be required to transfer or exchange any
Series 2021ABond called for redemption in whole or in part during the forty-five (45) day
period immediately prior to the date fixed for redemption; provided, however, that this
restriction shall not apply to
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the transfer or exchange by the Registered Owner of the unredeemed portion of a
Series 2021ABond called for redemption in part.
S ection 3.14 Cancellation of Series 2021A Bonds. All Series 2021A Bonds paid
o r redeemed in accordance with this Ordinance and all Series 2021A Bonds in lieu of
which exchange Series 2021A Bonds or replacement Series 2021A Bonds are
authenticated and delivered in accordance herewith, shall be canceled and destroyed
u pon the making of proper records regarding such payment or redemption. The Paying
Agent/Registrar shall furnish the City with appropriate certificates of destruction of such
Series 2021A Bonds.
S ection 3.15 Mutilated, Lost, or Stolen Series 2021A Bonds. Upon the
presentation and surrender to the Paying Agent/Registrar of a mutilated Series 2021A
Bond, the Paying Agent/Registrar shall authenticate and deliver in exchange therefor a
replacement Bond of like maturity, interest rate, and principal amount, bearing a number
n ot contemporaneously outstanding The City or the Paying Agent/Registrar may require
the Owner of such Series 2021ABond to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith and any other
expenses connected therewith, including the fees and expenses of the Paying
Agent/Registrar.
If any Series 2021A Bond is lost, apparently destroyed or wrongfully taken, the
City, pursuant to the applicable laws of the State of Texas, and in the absence of notice
or knowledge that such Series 2021A Bond has been acquired by a bona fide
purchaser, shall execute and the Paying Agent/Registrar shall authenticate and deliver,
a replacement Series 2021A Bond of like maturity, interest rate, and principal amount,
bearing a number not contemporaneously outstanding, provided that the Owner thereof
shall have:
(a) furnished to the City and the Paying Agent/Registrar satisfactory
evidence of the ownership of and the circumstances of the loss, destruction or
theft of such Series 2021A Bond;
(b) furnished such security or indemnity as may be required by the
P aying Agent/Registrar and the City to save them harmless;
(c) paid all expenses and charges in connection therewith including,
but not limited to, printing costs, legal fees, fees of the Paying Agent/Registrar,
and any tax or other governmental charge that may be imposed; and
(d) met any other reasonable requirements of the City and the Paying
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Agent/Registrar.
22
If, after the delivery of such replacement Series 2021A Bond, a bona fide
purchaser of the original Bond in lieu of which such replacement Bond was issued
presents for payment such original Series 2021A Bond, the City and the Paying
Agent/Registrar shall be entitled to recover such replacement Series 2021A Bond from
the person to whom it was delivered or any person taking therefrom, except a bona fide
purchaser, and shall be entitled to recover upon the security or indemnity provided
therefor to the extent of any loss, damage, cost, or expense incurred by theCity or the
Paying Agent/Registrar in connection therewith.
If any such mutilated, lost, apparently destroyed, or wrongfully taken Series
2021A Bond has become or is about to become due and payable, the City in its discretion
may, instead of issuing a replacement Series 2021A Bond, authorize the Paying
Agent/Registrar to pay such Series 2021 ABond.
E ach replacement Series 2021A Bond delivered in accordance with this Section
3.13 shallbe entitled to the benefits and security of this Ordinance to the same extent as
the Series 2021A Bond or Series 2021A Bonds in lieu of which such replacement Series
2021A Bond is delivered.
ARTICLE IV
FORM OF SERIES 2021A BONDS AND
CERTIFICATES
S ection 4.1 Forms. The form of the Series 2021A Bonds, including the form of
the Paying Agent/Registrars Authentication Certificate, the form of Assignment, the
form of the Comptrollers Registration Certificate and the form of the Statement of
Insurance, if any, which shall be attached or affixed to the Initial Series 2021A Bonds,
shall be, respectively, as described in Exhibit A to this Ordinance, with such additions,
deletions, and variations as may be necessary or desirable and not prohibited by this
Ordinance.
S ection 4.2 CUSIP Numbers. CUSIP numbers also may be printed on the Series
2021ABonds, but errors or omissions in the printing of either the opinion or the numbers
shall have no effect on the validity of the Series 2021A Bonds.
ARTICLE V
SECURITY AND SOURCE OF
PAYMENT FOR THE BONDS
S ection 5.1 Pledge and Source of Payment. The City hereby covenants and
agrees thatGross Revenues of the System shall, as collected and received by the City,
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be deposited and paid into the special funds hereinafter established, and shall be
applied in the manner hereinafter set forth, in order to provide for the payment of all
Maintenance and Operation Expenses and to provide for the payment of principal of,
interest on and any redemption premiums on the Bonds and all expenses of paying
same; and to provide for the disposition of the remaining Net Revenues.
•
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The Bonds shall constitute special obligations of the City that shall be payable solely
from and shall be equally and ratably secured by a first lien on and pledge of the Net
Revenues as collectedand received by the City from the operation and ownership of the
System, which Net Revenues shall, in the manner herein provided, be set aside for and
are hereby pledged to the payment of the Bonds in the Interest and Sinking Fund and
the Reserve Fund as hereinafter provided, and the Bonds shall be, in all respects, on a
parity with and of equal dignity with one another. The Owners of the Bonds shall never
have the right to demand payment of either the principal of, interest on orany redemption
premium on the Bonds out of any funds raised or to be raised by taxation.
Section 5.2 Rates and Charges. So long as any Bonds remain Outstanding, the
City shallfix, charge and collect rates and charges for the use and services of the System
which are calculatedto be fully sufficient to produce Net Revenues in each Fiscal Year at
least equal to 115% of the principal and interest requirements scheduled to occur in
such Fiscal Year on all Bonds then Outstanding, plus an amount equal to the sum of all
deposits required to be made to the Reserve Fund in such Fiscal Year (but in no event
shall Net Revenues ever be less than the amount required to establish and maintain the
Interest and Sinking Fund and the Reserve Fund as hereinafter provided) and, to the
extent that funds for such purpose are not otherwise available, to pay all otheroutstanding
obligations payable from the Net Revenues of the System, including all amounts owed by
the City to a provider of a Surety Policy, if any, as and when the same become due. For
the purpose of complying with its obligation to fix, charge and collect rates and charges,
as herein provided, the City shall be entitled to rely on the certificate described in
Section 6A of this Ordinance, as therein provided, in determining the amount of interest
anticipated to be paid in respect of Bonds bearing interest at a variable rate.
The City will not grant or permit any free service from the System, except for
public buildings and institutions operated by the City In addition, the City will not grant
or permit any free service from the System permitted by the previous sentence if to do
so would violate any condition or covenant to which the City is bound in connection with
any federal grant agreement or otherwise.
Section 5.3 Special Funds. The following "Special Funds" shall be established,
maintained and accounted for as hereinafter provided so long as any of the Bonds
remain Outstanding:
(a) Revenue Fund;
(b) Interest and Sinking Fund; and
(c) Reserve Fund.
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All of such Funds shall be maintained as separate accounts on the books of the
City. The Interest and Sinking. Fund and the Reserve Fund shall constitute trust funds
which shall be held intrust for the Owners of the Bonds and the proceeds of which shall
be pledged to the payment of the Bonds. All of the Funds named above shall be used
solely as herein provided so long as any Bonds remain Outstanding.
Section 5.4 Flow of Funds. Gross Revenues of the System shall be deposited
ascollected into the Revenue Fund. Moneys from time to time on deposit to the credit of
the Revenue Fund shall be applied in the following manner and in the following order of
priority:
(a) First, to pay Maintenance and Operation Expenses and to provide
by encumbrance for the payment of all obligations incurred by the City for
Maintenance and Operation Expenses and to establish and maintain an operating
reserve equal to one month'sestimated Maintenance and Operation Expenses;
(b) Second, to make all deposits into the Interest and Sinking Fund
required byany ordinance authorizing the issuance of Bonds;
(c) Third, to reimburse the provider of a Surety Bond any amounts
advanced under such Surety Bond
(d) Fourth, to pay interest to any provider of a Surety Bond any
amounts advanced under such Surety Bond;
(e) Fifth, to make all deposits into the Reserve Fund required by any
ordinanceauthorizing the issuance of Bonds;
(f) Sixth, to make all deposits, as may be required by any ordinance of
the City authorizing the issuance of certain Subordinate Lien Obligations
described in Section 6.2 hereof, in order to provide for the payment of and
security for such Subordinate Lien Obligations; and
(g)
Seventh, for any lawful purpose.
Section 5.5 Interest and Sinking Fund. On or before the last Business Day of each
month so long as any Bonds remain Outstanding, after making all required payments
and provision for payment of Maintenance and Operation Expenses, there shall be
transferred into the Interest and Sinking Fund from the Revenue Fund the following
amounts:
(a) Such amounts, in approximately equal monthly installments, as will
26
be sufficient to accumulate the amount required to pay the interest scheduled to
become due on the Bonds on the next Interest Payment Date; and
(b) Such amounts, in approximately equal monthly installments, as will
be sufficient to accumulate the amount required to pay the next maturing
principal of the Bonds (i.e., the principal amount payable on the next September
1), including the principal amounts of, and any redemption premiums on, any
Bonds payable as a result of the operation or exercise of any mandatory or
optional redemption provision contained in any ordinance authorizing the
issuance of Bonds.
Whenever the total amounts on deposit to the credit of the Interest and Sinking
Fund and the Reserve Fund shall be equivalent to the sum of the aggregate principal
amount of all Outstanding Bonds plus the aggregate amount of all interest accrued and
to accrue thereon, no further payments need be made into the Interest and Sinking
Fund or the Reserve Fund, and such Bonds shall not be regarded as being Outstanding
except for the purpose of being paid with the moneys on deposit in such Funds.
Moneys deposited to the credit of the Interest and Sinking Fund shall be used
solely for the purpose of paying principal (at maturity, prior redemption or tender or to
purchase Bonds in the open market to be credited against mandatory redemption
requirements), interest and redemption premiums on the Bonds, plus all bank charges
and other costs and expenses relating to such payment.
On or before each date principal becomes due and/or each Interest Payment
D ate on the Bonds, the City shall transfer from the Interest and Sinking Fund to the
P aying Agent for the Bonds an amount equal to the principal of, interest on and any
redemption premiums payable on the Bonds on such date together with an amount
equal to all bank charges and other costs and expenses relating to such payment. The
P aying Agent shall destroy all paid Bonds and shall provide the Citywith an appropriate
certificate of destruction.
Section 5.6 Reserve Fund. On or before the last Business Day of each month so
long as any Bonds remain Outstanding, after making all required payments and
provision for payment of Maintenance and Operation Expenses and after making all
required transfers into the Interest and Sinking Fund, there shall be transferred into the
Reserve Fund from the Revenue Fund amounts equal to one -sixtieth (1/60th) of the
Average Annual Principal and Interest Requirements on the Bonds unless or until there
has been accumulated in the Reserve Fund money and investments in an aggregate
amount at least equal to the Average Annual Principal and Interest Requirements onthe
B onds, provided that additional deposits into the Reserve Fund sufficient to provide for
the increased reserve requirements resulting from the issuance of any Additional Bonds
shall be made by not later than 60 months from the date of issuance of such Additional
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Bonds as required by Section 6.1(d) hereof. Such additional deposits into the Reserve
Fund in connection with the issuance of any Additional Bonds shall be made each
month in amounts equal to one-sixtieth (1/60th) of the Average Annual Principal and
Interest Requirements on the Bonds and such
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Additional Bonds. After such amount has accumulated in the Reserve Fund and so long
thereafteras such fund contains such amount, no further deposits shall be required to be
made into the Reserve Fund, and any excess amounts in the Fund may be transferred
to the Revenue Fund; but if and whenever the balance in the Reserve Fund is reduced
below such amount, monthly depositsinto such Fund shall be resumed and continued in
amounts at least equal to one -twelfth (1/12th) of the Average Annual Principal and
Interest Requirements on the Bonds until the Reserve Fund has been restored to such
amount. The Reserve Fund shall be used to pay the principal of and interest on the
B onds at any time when there is not sufficient money available in the Interest and
S inking Fund for such purpose and it may be used finally to pay and retire the last Bonds
to matureor be redeemed. With regard to funds released from the Reserve Fund, if any,
any such funds that constitute bond proceeds may be used only for the purposes
authorized herein or to retire the bonds.
The requirements of the immediately preceding paragraph of this Section
n otwithstanding, the City may provide a Surety Policy or Policies issued in amounts
equal to all or part of the Average Annual Principal and Interest Requirements on the
B onds in lieu of depositing cash intothe Reserve Fund; provided, however, that no such
S urety Policy may be so substituted unless (i)the ordinance authorizing the substitution
of the Surety Policy for all or part of the Average Annual Principal and Interest
Requirements on the Bonds contains a finding that such substitution is costeffective and
(ii) the City obtains an opinion of nationally recognized bond counsel that such
substitution is permitted by applicable Texas law then in effect. If a Surety Policy or
Policies are issued in accordance with the preceding sentence, such Surety Policy or
P olicies shall be drawn upon and reimbursed on a pro rata basis.
In the event a Surety Policy issued to satisfy all or a part of the City's obligation with
respectto the Reserve Fund causes the amount then on deposit in the Reserve Fund to
exceed the Average Annual Principal and Interest Requirements on all Bonds, the City
may transfer such excess amount to any fund or funds established for the payment of or
security for Bonds or any Subordinate Lien Obligations (including any escrow
e stablished for the final payment of any such obligations pursuant to Chapter 1207,
Texas Government Code); provided however, that no funds constituting bond proceeds
shall be transferred for the benefit of the Subordinate Lien Obligations.
Section 5.7 Deficiencies in Funds. If in any month there shall not be deposited
into any fund maintained pursuant to this Article the full amounts required hereinabove,
amounts equivalentto such deficiency shall be set apart and paid into such Special Fund
o r Funds from the first available and unallocated moneys in the Revenue Fund, and
such payment shall be in addition to the amounts otherwise required to be paid into such
30
Funds during any succeeding month or months.
31
To the extent necessary, the rates and charges for the System shall be increased to make
up for anysuch deficiencies.
Section 5.8 Investment of Funds; Transfer of Investment Income.
(a) Money in the Revenue Fund, the Interest and Sinking Fund and the
Reserve Fund may, at the option of the City, be invested in time deposits or
certificates of deposit secured in the manner required by law for public funds, or
be invested in direct obligations of, or obligations the principal of and interest on
which are unconditionally guaranteed by, the United States of America, in
obligations of any agencies or instrumentalities of the United States of America or
as otherwise permitted by state law; provided that all such deposits and
investments shall be made in such manner (which may include repurchase
agreements for such investments with any national bank) that the money
required to be expended from any Special Fund will be available at the proper time
or times, and provided further that in no event shall such deposits or investments
of moneys in the Reserve Fund mature later than the final maturity date of the
Bonds. All such investments shall be valued in terms of current market value no
less frequently than the last Business Day of the City's Fiscal Year, except that
any direct obligations of the United States of America - State and Local
Government Series shall be continuously valued at their par value or principal
face amount. Any obligation in which money is so invested shall be kept and held
in an official depository of the City, except as hereinafter provided. For purposes
of maximizinginvestment returns, money in such funds may be invested, together
with money in other funds or with other money of the City, in common investments
of the kind described above, or in a common pool of such investments which shall
be kept and held at an official depository of the City, which shall not be deemed
to be or constitute a commingling of such money or funds provided that
safekeeping receipts or certificates of participation clearly evidencing the
investment or investment pool in which such money is invested and the share
thereof purchased with such money or owned by such fund are held by or on
behalf of each such fund. If necessary, such investments shall be promptly sold
to preventany default.
(b) All interest and income derived from such deposits and investments
shall be credited monthly to the Special Fund from which such investment was
made.
Section 5.9 Security for Uninvested Funds. So long as any Bonds remain
Outstanding,all uninvested moneys on deposit in, or credited to, the Revenue Fund,
32
the Interest and Sinking
33
Fund and the Reserve Fund shall be secured by the pledge of security as provided by
law for citiesin the State of Texas.
ARTICLE VI
ADDITIONAL BONDS
Section 6.1 Additional Bonds. The City reserves the right to issue, for any lawful
purpose, including the refunding of any previously issued Bonds or any other bonds or
obligations of the City issued in connection with the System or payable from Net
Revenues, one or more series of Additional Bonds on a parity with the Outstanding
Bonds and any Additional Bonds then Outstanding, payable from, and secured by a first
lien on, the Net Revenues of the System; provided, however, that no Additional Bonds
may be issued unless:
(a) All Additional Bonds shall mature only on September 1 and interest
thereonshall be payable only on March 1 and September 1;
(b) The Interest and Sinking Fund and the Reserve Fund each
contains the amount of money then required to be on deposit therein;
(c) For either the preceding Fiscal Year or any consecutive 12 -month
period out of the 15 -month period immediately preceding the month in which the
bond ordinance authorizing such Additional Bonds is adopted (the 'Base Period")
either:
(i) Net Revenues are certified by the Director of Finance or
Interim Director of Finance of the City or the City Manager or Deputy City
Manager of the City to have been equal to at least one hundred and forty
percent (140%) of the Average Annual Principal and Interest
Requirements on all Bonds, after giving effect to the issuance of the
Additional Bonds to be issued; or
(ii) Net Revenues, adjusted to give effect to any rate increase or
annexation of territory placed into effect or consummated prior to the
adoption of the ordinance authorizing the Additional Bonds to the same
extent as if such rate increase or annexation had been placed into effect
or consummated prior to the commencement of the Base Period, would
have been equal to at least the amount required in paragraph (1) above,
as certified by an independent consulting engineer or independent firm of
consulting engineers;
34
Provided, however, that this requirement shall not apply to the issuance of any
series of Additional Bonds for refunding purposes that will not have the result of
increasing the average annual principal and interest requirements on the Bonds; and
35
(d) Provision is made in the bond ordinance authorizing the Additional
B onds then proposed to be issued for (1) additional payments into the Interest
and Sinking Fund sufficient to provide for the payment of the increased principal of
and interest on the Bonds resulting from the issuance of such Additional Bonds,
and (2) additional payments into the Reserve Fund sufficient to provide for the
accumulation therein of the increased reserve requirement resulting from the
issuance of such Additional Bonds, by not later than sixty
(60) months from the date of issuance of such Additional Bonds.
The provisions of this Section 6.1(a) notwithstanding, the City may issue Additional
Bonds that bear interest at a variable rate. Such variable rate bonds may mature on
dates other than September 1 and interest thereon may be payable on dates other than
March 1 or September 1; provided that the issuance of Additional Bonds as variable
rate bonds may not cause the total amount of Outstanding Bonds that are variable rate
bonds to exceed 50% (20% as long as the Series 1999 Bonds shall remain outstanding)
of the aggregate principal amount of all Outstanding Bonds and Subordinate Lien
Obligations at the time of such issuance. For purposes of calculating the funding
requirements for the Reserve Fund and for the purposes of calculating compliance with
the conditions precedent to the issuance of Additional Bonds pursuant to Section 6.1(c)
and the rate covenant set forth in Section 5.2, any Bonds that are variable rate bonds
shall be assumedto bear interest at a rate which shall be estimated and certified by the
financial advisor to the Cityas the rate that would be borne by such variable rate bonds
if they were at the date of such certification issued as Bonds bearing a fixed rate of
interest to their scheduled maturity or maturities.
S ection 6.2 Subordinate Lien Obligations. The City reserves the right to issue, for
any lawful purpose, bonds, notes or other obligations secured in whole or in part by
liens on the Net Revenues that are junior and subordinate to the lien on Net Revenues
securing payment of the Bonds. Such Subordinate Lien Obligations may be further
secured by any other source of payment lawfully available for such purposes. In the
event that the City should decide to issue such Subordinate Lien Obligations as variable
rate bonds for purposes of calculating the funding requirements for the reserve fund for
such Subordinate Lien Obligations, the variable rate bonds shall be assumed to bear
interest at the rate of 10% per annum, and for purposes of calculating compliance with
any conditions precedent to the issuance of additional Subordinate Lien Obligations and
any rate covenants relating to such Subordinate Lien Obligations, the variable rate bonds
shall be assumed to bear interest at the higher of 9% per annum or the highest variable
rateover the preceding twenty-four (24) months.
D eposits may be made pursuant to Section 5.4(f) of this Ordinance into such
36
funds as maybe created and maintained for the payment of and security for Subordinate
Lien Obligations described in this Section (including a reserve fund not to exceed the
Average Annual Principal and Interest Requirements on such Subordinate Lien
Obligations and any provisions for curing
37
deficiencies in such funds), but only to the extent that the aggregate Outstanding
principal amount of such Subordinate Lien Obligations does not exceed 50% of the
aggregate principal amount of Bonds and Subordinate Lien Obligations Outstanding on
the date of such calculation.
S ection 6.3 Special Project Bonds. The City reserves the right to issue revenue
bonds secured by liens on and pledges of revenues and proceeds derived from Special
Projects.
ARTICLE VII
COVENANTS AND PROVISIONS
RELATING TO BONDS
S ection 7.1 Punctual Payment of Bonds. The City covenants that it will
punctually pay or cause to be paid the interest on and principal of all Bonds according to
the terms thereof and will faithfully do and perform, and at all times fully observe, any
and all covenants, undertakings, stipulations and provisions contained in this Ordinance
and in any other ordinance authorizing theissuance of such Bonds.
S ection 7.2 Power to Own and Operate System, Ratemaking Power. The City
covenantsthat it has all necessary power and authority to own and operate the System
as herein described and provided and that it possesses, and shall exercise, all
n ecessary power and authority to establish, fix, increase, impose and collect rates and
charges for the use and services of the System in the amounts required to comply with
the covenants and provisions contained herein.
S ection 7.3 Maintenance of System. So long as any Bonds remain Outstanding,
the Citycovenants that it will at all times maintain the System, or within the limits of its
authority cause the same to be maintained, in good condition and working order and will
operate the same, or cause the same to be operated, in an efficient and economical
manner at a reasonable cost and in accordance with sound business principles. In
operating and maintaining the System, the City willcomply with all contractual provisions
and agreements entered into by it and with all valid rules, regulations directions or
o rders of any governmental, administrative or judicial body promulgating same,
n oncompliance with which would materially and adversely affect the operation of the
System.
S ection 7.4 Sale or Encumbrance of System. So long as any Bonds remain
Outstanding the City covenants that it will not sell, dispose of or, except as permitted in
Article VI, further encumber the System, provided, however, that this provision shall not
prevent the City from disposing of any portion of the System which is being replaced or
38
is deemed by the City to be obsolete, worn out, surplus or no longer needed for the
proper operation of the System. Net proceeds from any such disposition may be
deposited in the Revenue Fund and, notwithstanding any other provision contained
herein, shall be used only for System purposes. Any agreement
39
pursuant to which the City contracts with a person, corporation, municipal corporation or
political subdivision to operate the System or to lease and/or operate all or part of the
System shall not be considered as an encumbrance of the System.
S ection 7.5 Insurance. The City covenants that it will keep the System insured
with insurers of good standing, against risks, accidents or casualties against which and
to the extent customarily insured against by political subdivisions of the State of Texas
operating similar properties, to the extent that such insurance is available. All net
proceeds of such insurance shall be applied to repair or replace any insured property
that is damaged or destroyed, or shall be deposited in the Revenue Fund, or shall be
used to redeem Outstanding Bonds. The cost of all such insurance, together with any
additional insurance, shall be a part of the Maintenance and OperationExpenses.
S ection 7.6 Accounts, Records and Audits. So long as any Bonds remain
Outstanding, the City covenants that it will maintain a proper and complete system of
records and accounts pertaining to the operation of the System in which full, true and
proper entries will be made of all dealings transactions, business and affairs which in
any way affect or pertain to the System or the Gross Revenues or the Net Revenues
thereof. The City shall, after the close of each Fiscal Year, prepare financial statements
of the System and have those financial statements audited by an independent certified
public accountant or independent firm of certified public accountants. Afterthe audit, the
City shall furnish a copy of these audited financial statements, together with the
independent certified public accountant's report thereon, without cost, to the Municipal
Advisory Council of Texas, the major municipal rating agencies, and any Owners of
Bonds who shall requestthe same. All expenses incurred in preparing such audits shall
be Maintenance and Operation Expenses.
S ection 7.7 Competition. To the extent it legally may, the City covenants that it
will notgrant any franchise or permit for the acquisition, construction or operation of any
competing facilities which might be used as a substitute for the System and will prohibit
the operation of anysuch competing facilities to the extent that such competing facilities
would impair the City's abilityto pay principal of or interest on the Bonds.
S ection 7.8 Pledge and Encumbrance of Net Revenues. The City covenants
that it has the lawful power to create a lien on and to pledge the Net Revenues to
secure the payment of the Bonds, and has lawfully exercised such power under the
Constitution and laws of the State of Texas. The City further covenants that, other than
to the payment of the Bonds, the Net Revenues are not and will not be made subject to
any other lien, pledge or encumbrance to secure the payment
40
of any debt or obligation of the City unless such lien, pledge or encumbrance is
junior andsubordinate to the lien and pledge securing payment of the Bonds.
Section 7.9 Covenants with Respect to Certain Assumed Water District Bonds.
So longas any Bonds remain Outstanding, the City covenants as follows:
(a) To the extent it legally may, the City will impose, and strictly
enforce, the requirement upon all water districts located within the City's
extraterritorial jurisdiction that any bonds issued by such water districts which are
secured in whole or in part by pledges of or liens on water or sewer system
revenues shall provide that all such pledges of and liens on water or sewer
system revenues shall automatically terminate upon the annexation and
dissolution of the district by the City;
(b) The City shall use its best efforts to redeem, refund or defease all
annexed water district bonds assumed by the City which by their own terms are
secured in whole or in part by pledges of or liens on water or sewer system
revenues which do not terminate upon annexation and dissolution by the City of
such water district, or otherwise to provide for the discharge of such pledges or
liens on water or sewer system revenues; and
(c) Pursuant to Section 43.075, Texas Local Government Code
(successor to Article 1182c-1, Vernon's Texas Civil Statutes, as amended), the
City shall, unless it has theretofore made adequate provision for the payment
thereof, annually levy and cause to be collected taxes upon all taxable property
of the City sufficient to pay principal of and interest, as they respectively become
due and payable, on all assumed bonds, warrants and other obligations that were
issued by water districts that have been annexed to, and dissolved by, the City,
and which are by their own terms secured in whole or in part by a lien on or
pledge of water or sewer system revenues which did not terminate upon the
annexation and dissolution by the City of such water district.
Section 7.10 Registered Owners' Rights and Remedies. This Ordinance shall
constitute a contract between the City and the Owners of the Series 2021A Bonds from
time to time Outstanding and this Ordinance shall be and remain irrepealable until the
Series 2021A Bonds and the interest thereon shall be fully paid or discharged or
provision therefor shall have been made as provided herein. In the event of a default in
the payment of the principal of or interest on any of the Series 2021A Bonds or a default
in the performance of any duty or covenant provided by law or in this Ordinance, the
Owner or Owners of any of the Series 2021A Bonds may pursue all legal remedies
41
afforded by the Constitution and laws of the State of Texas to compel the City to remedy
such default and to prevent further default or defaults. Without in any way limiting the
generality of the foregoing, it is expressly provided that any Owner of any of the Series
2021A Bonds may at law or in equity, by suit, action, mandamus, or other
proceedings, enforce and compel
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performance of all duties required to be performed by the City under this Ordinance,
including the making and collection of reasonable and sufficient rates and charges for
the use and services of the System, the deposit of the revenues thereof into the Special
Funds herein provided, and the application of such revenues in the manner required in
this Ordinance.
Section 7.11 Defeasance. The City may defease the provisions of this Ordinance
and discharge its obligations to the Registered Owners of any or all of the Series 2021A
B onds to pay the principal of and interest thereon in any manner now or hereafter
permitted by law, including by depositing with the Paying Agent/Registrar or with the
S tate Treasurer of the State of Texas either:
(a) cash in an amount equal to the principal amount of such Series
2021A Bonds plus interest thereon to the date of maturity or redemption; or
(b) pursuant to an escrow or trust agreement, cash and/or (i) direct
n oncallableobligations of United States of America, including obligations that are
u nconditionally guaranteed by the United States of America; (ii) noncallable
obligations of an agency or instrumentality of the United States, including
obligations that are unconditionally guaranteed or insured by the agency or
instrumentality and that, on the date the governing body of the issuer adopts or
approves the proceedings authorizing the issuance of refunding bonds, are rated
as to investment quality by a nationally recognized investment rating firm not Tess
than AAA or its equivalent; or (iii) noncallable obligations of a state or an agency
o r a county, municipality, or other political subdivision of a state that have been
refunded and that, on the date the governing body of the issuer adopts or
approves the proceedings authorizing the issuance of refunding bonds, are rated
as to investment quality by a nationally recognized investment rating firm not less
than AAA or its equivalent, which, in the case of (i), (ii) or (iii), may be in book -
e ntry form, and the principal of and interest on which will, when due or
redeemable at the option of the holder, without further investment or
reinvestment of either the principal amount thereof or the interest earnings
thereon, provide money in an amount which, together with other moneys, if any,
held in such escrow at the same time and available for such purpose, shall be
sufficient to providefor the timely payment of the principal of and interest thereon
to the date of maturity or earlier redemption;
provided, however, that if any of the Series 2021A Bonds are to be redeemed prior to
their respective dates of maturity, provision shall have been made for giving notice of
redemption asprovided in this Ordinance. Upon such deposit, such Series 2021A Bonds
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shall no longer be regarded to be Outstanding or unpaid. Any surplus amounts not
required to accomplish such defeasance shall be returned to the City.
S ection 7.12 Legal Holidays. In any case where the date of maturity of interest on
or principal of the Series 2021A Bonds or the date fixed for redemption of any Series
2021A Bonds shall be in the City a legal holiday or a day on which the Paying
Agent/Registrar for the Series 2021A Bonds is authorized by law to close, then payment
of interest or principal need not be made on such date but may be made on the next
succeeding day not in the City a legal holiday or a day on which such Paying Agent
Registrar is authorized by law to close with the same force and effectas if made on the
date of maturity or the date fixed for redemption and no interest shall accrue for the
period from the date of maturity or redemption to the date of actual payment.
S ection 7.13 Unavailability of Authorized Publication. If, because of the
temporary or permanent suspension of any newspaper, journal or other publication, or,
for any reason, publication of notice cannot be made meeting any requirements herein
established, any notice required to be published by the provisions of this Ordinance
shall be given in such other manner and at such time or times as in the judgment of the
City or of the Paying Agent/Registrar (or paying agent) for the Series 2021A Bonds shall
most effectively approximate such required publication and the giving of such notice in
such manner shall for all purposes of this Ordinance be deemed tobe in compliance with
the requirements for publication thereof.
S ection 7.14 No Recourse Against City Officials. No recourse shall be had for the
payment of principal of or interest on any Series 2021A Bonds or for any claim based
thereon or on this Ordinance against any official of the City or any person executing any
Series 2021A Bonds.
S ection 7.15 Amendment to Ordinance. The City may, with the consent of
Owners holding a majority in aggregate principal amount of the Bonds then Outstanding
affected thereby, amend, add to, or rescind any of the provisions of this Ordinance;
provided that, without the consent of all Owners of Outstanding Bonds, no such
amendment, addition, or rescission shall (1) extend the time or times of payment of the
principal of, premium, if any, and interest on the Bonds, reduce the principal amount
thereof, the redemption price therefor, or the rate of interest thereon, or in any other way
modify the terms of payment of the principal of, premium, if any or interest on the
Bonds, (2) give any preference to any Bond over any other Bond, or (3) reduce the
aggregate principal amount of Bonds required to be held by Owners for consent to any
such amendment, addition, or rescission.
ARTICLE VIII
CONCERNING THE PAYING AGENT/REGISTRAR
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Section 8.1 Acceptance. Wells Fargo Bank, N.A., Minneapolis, Minnesota, is
hereby appointed as the initial Paying Agent/Registrar for the Series 2021A Bonds.
Such initial Paying Agent/Registrar and any successor Paying Agent/Registrar, by
undertaking the performance of theduties of the Paying Agent/Registrar hereunder, and
in consideration of the payment of fees and/or
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deposits of money pursuant to this Ordinance, shall be deemed to accept and agree to
abide by theterms of this Ordinance. The registration of and payment of the principal of,
premium, if any, and interest on the Series 2021A Bonds when due shall be effectuated
pursuant to the terms of a Paying Agent/Registrar Agreement to be entered into by and
between the City and the Paying Agent/Registrar, which shall be substantially in the
form attached hereto as Exhibit B, the terms and provisions of which are hereby
approved, and the Mayor and/or the Mayor Pro Tem are hereby authorized to execute
and deliver such Paying Agent/Registrar Agreement on behalf of the City in multiple
counterparts and the City Secretary is hereby authorized to attest and affix the City's
sealthereto.
S ection 8.2 Fiduciary Account. All money transferred to the Paying
Agent/Registrar under this Ordinance (except sums representing Paying
Agent/Registrar's fees) shall be held in a fiduciary account for the benefit of the City, shall
be the property of the City, and shall be disbursed in accordance with this Ordinance.
S ection 8.3 Bonds Presented. Subject to the provisions of Section 8 4, all matured
S eries 2021A Bonds properly and timely presented to the Paying Agent/Registrar for
payment shall be paid without the necessity of further instructions from the City. Such
S eries 2021A Bonds shall becanceled as provided herein.
S ection 8.4 Series 2021A Bonds Not Timely Presented. The Paying
Agent/Registrar shall remit to the City, upon receipt of the certificate provided for herein,
a sum equal to the aggregate face amount of all Series 2021A Bonds which have not
been presented for payment priorto the date specified in such certificate. Such certificate
shall:
(a) Specify the Series 2021A Bonds or portions thereof to which it
applies andthe amount of each;
(b) Specify the date on which the City believes itself to be no longer
obligated to pay such Series 2021A Bonds or portions thereof by virtue of the
expiration of the applicable statute of limitations under the laws of the State of
Texas and
(c)
Be signed by the Mayor and attested by the City Secretary.
Funds held by the Paying Agent/Registrar that represent principal of and interest
on the Series 2021A Bonds remaining unclaimed by any Registered Owner after the
expiration of three years from the date such funds have become due and payable (a)
shall be reported and disposed of by the Paying Agent/Registrar in accordance with the
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provisions of Title 6 of the Texas Property Code, as amended, to the extent such
provisions are applicable to such funds, or (b) to the extent such provisions do not apply
to the funds, such funds shall be paid by the Paying Agent/Registrar to the City upon
receipt by the Paying Agent/Registrar of a written request therefor from the City.
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The Paying Agent/Registrar shall have no liability to the Owners of the Series
2021A Bonds by virtue of actions taken in compliance with this Section.
Section 8.5 Paying Agent/Registrar May Own Series 2021A Bonds. The Paying
Agent/Registrar in its individual or any other capacity, may become the Owner or pledgee
of Series 2021A Bonds with the same rights it would have if it were not the Paying
Agent/Registrar.
Section 8.6 Successor Paying Agents/Registrars. The City covenants that at all
times while any Series 2021A Bonds are Outstanding it will provide a legally qualified
bank, trust company, financial institution, or other agency to act as Paying
Agent/Registrar for the Series 2021A Bonds. If the Paying Agent/Registrar or its
successor for any reason no longer acts as Paying Agent/Registrar hereunder, the City
covenants that it will appoint a bank in the same city as the Paying Agent/Registrar
initially appointed to perform the duties of Paying Agent/Registrar hereunder. Any
successor Paying Agent/Registrar shall be either a national or state banking institution,
and a corporation organized and doing business under the laws of the United States of
America or any state, which is authorized under such laws to exercise trust powers and
is subject to supervision or examination by federal or state authority.
The City reserves the right to change the Paying Agent/Registrar for the Series
2021A Bonds on not less than sixty (60) days written notice to the Paying
Agent/Registrar, as long as anysuch notice is effective not less than sixty (60) days prior
to the next succeeding principal or interest payment date on the Series 2021A Bonds.
Promptly upon the appointment of any successor Paying Agent/Registrar, the previous
Paying Agent/Registrar shall deliver the Register or a copy thereof to the new Paying
Agent/Registrar and the new Paying Agent/Registrar shall notify each Registered
Owner, by first-class mail, postage prepaid, of such change and of the address of the
new Paying Agent/Registrar Each Paying Agent/Registrar hereunder, by acting in that
capacity, shall be deemed to have agreed to the provisions of this Ordinance.
ARTICLE IX
TAX EXEMPTION
Section 9.1 Covenants to Maintain Tax Exempt Status.
(a) Definitions. When used in this Section, the following terms have
thefollowing meanings
"Code" means the Internal Revenue Code of 1986, as amended by all legislation,
if any,enacted on or before the Issue Date.
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'Computation Date" has the meaning stated in Section 1.148-1(b) of the
Regulations.
"Gross Proceeds" has the meaning stated in Section 1.148-1(b) of the
Regulations."Investment" has the meaning stated in Section 1.148 1(b) of
the Regulations.
"Issue Date" for each series or sub -series of the Series 2021A Bonds or other
obligations of the City is the respective date on which such series or sub -series of the
Series 2021A Bonds or other obligations of the City is delivered against payment
therefor.
"Net Sale Proceeds" has the meaning stated in Section 1.148-1(b) of the
Regulations. "Nonpurpose Investment" has the meaning stated in Section 1.148-
1(b) of the Regulations."Proceeds" has the meaning stated in Section 1.148-
1(b) of the Regulations. "Rebate
Amount' has the meaning stated in Section 1.148-3 of the Regulations.
"Regulations" means the temporary or final Income Tax Regulations applicable to
the Bonds issued pursuant to Sections 141 through 150 of the Code. Any reference to a
section of the Regulations shall also refer to any successor provision to such section
hereafter promulgated by the Internal Revenue Service pursuant to Sections 141
through 150 of the Code and applicable tothe Series 2021A Bonds.
"Yield of
any Investment shall be computed in accordance with Section 1A48-5
of theRegulations, and
the Series 2021A Bonds shall be computed in accordance in
accordance withSection 1.148-4 of the Regulations.
(b) Not to Cause Interest to Become Taxable. The City shall not use,
permit the use of or omit to use Gross Proceeds or any other amounts (or any
property the acquisition, construction or improvement of which is to be financed
directly or indirectly with Gross Proceeds) in a manner which, if made or omitted,
respectively, would cause the interest on such Series 2021A Bond to become
includable in the gross income, as defined in Section 61 of the Code, of the
owner thereof for federal income tax purposes. Without limiting the generality of
the foregoing, unless and until the City shall have received a written opinion of
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counsel nationally recognized in the field of municipal bond law to the effect that
failure to comply with such covenant will not adversely affect the exemption from
federal income tax of the interest on any Series 2021A Bond, the City shall
comply with each of the specific covenants in this Section.
(c) No Private Use or Private Payments. Except as permitted by
Section 141 of the Code and the regulations and rulings thereunder, the City
shall, at all times after the Issue Date of any Series 2021A Bond and prior to the
last stated maturity of the Series 2021A Bonds
(i) exclusively own, operate, and possess all property the
acquisition, construction, or .improvement of which is to be financed
directly or indirectly with Gross Proceeds of such Series 2021A Bond and
not use or permit the use of such Gross Proceeds or any property
acquired, constructed, or improved with such Gross Proceeds in any activity
carried on by any person or entity other than a state or localgovernment,
(ii) not directly or indirectly impose or accept any charge or
other payment for use of Gross Proceeds of such Series 2021A Bond or
any property theacquisition, construction or improvement of which is to be
financed directly or indirectly with such Gross Proceeds other than taxes
of general application and interest earned oninvestments acquired with
such Gross Proceeds pending application for their intended purposes.
(d) No Private Loan. Except to the extent permitted by Section 141 of
the Codeand the regulations and rulings thereunder, the City shall not use Gross
Proceeds of such Series 2021A Bond to make or finance loans to any person or
entity other than a state or local government. For purposes of the foregoing
covenant, Gross Proceeds are considered to be "loaned" to a person or entity if
(1) property acquired, constructed or improved with Gross Proceeds is sold or
leased to such person or entity in a transaction which creates a debt for federal
income tax purposes, (2) capacity in or service from such property is committed
to such person or entity under a take -or -pay, output, or similar contract or
arrangement, or (3) indirect benefits, or burdens and benefits of ownership, of
such Gross Proceeds or such property are otherwise transferred in a transaction
which is the economicequivalent of a loan.
(e) Not to Invest at Higher Yield. Except to the extent permitted by
Section 148of the Code and the regulations and rulings thereunder, the City shall
not, at any time priorto the earlier of the final stated maturity or final payment of
such Series 2021A Bond, directly or indirectly invest Gross Proceeds of such
Series 2021A Bond in any Investment (or use such Gross Proceeds to replace
money so invested), if as a result of such investment the Yield of all Investments
allocated to such Gross Proceeds whether then held or previously disposed of,
exceeds the Yield on the Series 2021A Bonds,
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(f) Not Federally Guaranteed. Except to the extent permitted by Section
149(b)of the Code and the regulations and rulings thereunder, the City shall not
take or omit to take any action which would cause the Series 2021A Bonds to be
federally guaranteed within the meaning of Section 149(b) of the Code and the
regulations and rulings thereunder.
(g) Information Report. The City shall timely file with the Secretary of
the Treasury the information required by Section 149(e) of the Code with respect
to each converted series of the Series 2021A Bonds on such forms and in such
place as such Secretary may prescribe.
(h) Payment of Rebate Amount. Except to the extent otherwise
provided in Section 148(f) of the Code and the regulations and rulings
thereunder, the City shall:
(i) account for all Gross Proceeds (including all receipts,
expenditures and investments thereof) on its books of account separately
and apart from all otherfunds (and receipts, expenditures and investments
thereof) and shall retain all records of such accounting for at least six
years after the final Computation Date. The City may however, to the
extent permitted by law, commingle Gross Proceeds of the Series 2021A
Bonds with other money of the City, provided that the City separately
accounts for each receipt and expenditure of such Gross Proceeds and
the obligations acquired therewith,
(ii) calculate the Rebate Amount with respect to such Series
2021A Bond not less frequently than each Computation Date, in
accordance with rules set forth in Section 148(f) of the Code, Section
1.148 3 of the Regulations, and the rulings thereunder The City shall
maintain a copy of such calculations for at least six years after the final
Computation Date,
(iii) as additional consideration for the purchase of the Series
2021A Bonds by the initial purchasers thereof and the loan of the money
represented thereby, and in order to induce such purchase by measures
designed to ensure the excludability of the interest thereon from the gross
income of the owners thereof for federal income tax purposes, pay to the
United States the amount described in paragraph (2) above at the times in
the installments, to the place, in the manner and accompanied by such
forms or other information as is or may be required by Section 148(f) of
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the Code and the regulations and rulings thereunder, and
(iv) exercise reasonable diligence to assure that no errors are
made in the calculations required by paragraph (2) and, if such error is
made, to discover and
promptly to correct such error within a reasonable amount of time
thereafter, including payment to the United States of any interest and any
penaltyrequired bythe Regulations.
(i) Not to Divert Arbitrage Profits Except to the extent permitted by
S ection 148 of the Code and the regulations and rulings thereunder, the City
shall not, at any timeafter the Issue Date of the Series 2021A Bonds and prior to
the earlier of the final stated maturity or final payment of the Series 2021A
B onds, enter into any transaction that reduces the amount required to be paid to
the United States pursuant to Subsection (h) of this Section because such
transaction results in a smaller profit or a larger loss than would have resulted if
the transaction had been at arm's length and had the Yield of the Series 2021A
B onds, not been relevant to either party.
ARTICLE X
CONTINUING DISCLOSURE UNDERTAKING
S ection 10.1 Annual Reports. The City shall provide annually to the Municipal
Securities Rulemaking Board (the "MSRB"), in an electronic format as prescribed by the
MSRB, within six months after the end of each fiscal year, financial information and
operating data with respect to the City of the general type described in Exhibit E hereto.
Any financial statements so to be provided shall be (1) prepared in accordance with the
accounting principles described in Exhibit E hereto and (2) audited, if the City
commissions an audit of such statements and the audit is completed within the period
during which they must be provided. If audited financial statements are not so provided,
then the City shall provide unaudited financial statements for the applicable fiscal year
by the required time, and audited financial statements when and if audited financial
statements become available.
If the City changes its fiscal year, it will notify the MSRB of the change (and of the
date of the new fiscal year end) prior to the next date by which the City otherwise would
be required toprovide financial information and operating data pursuant to this Section.
The financial information and operating data to be provided pursuant to this
Section may be set forth in full in one or more documents or may be included by specific
reference to documents
(i) available to the public on the MSRB's Internet web site or (ii) filed with the SEC
S ection 10.2 Event Notices. The City shall notify the MSRB in a electronic format
prescribed by the MSRB, in a timely manner (not in excess of ten (10) days after the
occurrence of the event), of any of the following events with respect to the Series 2021A
56
Bonds:
(a) Principal and interest payment delinquencies;
(b) Non-payment related defaults, if material;
(c)
Unscheduled draws on debt service reserves reflecting financial
difficulties;
(d) Unscheduled draws on credit enhancements reflecting financial
difficulties;
(e) Substitution of credit or liquidity providers, or their failure to perform;
•
(f) Adverse tax opinions, the issuance by the Internal Revenue Service
of proposed or final determinations of taxability, Notices of Proposed Issue (IRS
Form 5701-TEB) or other material notices or determinations with respect to the
tax status of the Series 2021A Bonds, or other material events affecting the tax
status of the Series 2021A Bonds;
(g)
Modifications to rights of holders of the Series 2021A Bonds, if
material;
(h) Bond calls, if material, and tender offers,
(i) Defeasances;
(j) Release, substitution, or sale of property securing repayment of the
Series 2021A Bonds, if material;
(k) Rating changes;
(1) Bankruptcy, insolvency, receivership or similar event of the City;
(m) The consummation of a merger, consolidation, or acquisition
involving theCity or the sale of all or substantially all of the assets of the City other
than in the ordinary course of business, the entry into a definitive agreement to
undertake such an action or thetermination of a definitive agreement relating to
any such actions, other than pursuant to its terms, if material;
(n) Appointment of a successor or additional Paying Agent/Registrar or
the change of name of Paying Agent/Registrar, if material;
(o) Incurrence of a Financial Obligation of the City, if material or
agreement to covenants, events of default, remedies, priority rights, or other
similar terms of a Financial Obligation of the City, any of which affect security
holders, if material; and
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(p) Default, event of acceleration, termination event, modification of
terms orother similar events under the terms of a Financial Obligation of the City,
any of which reflect financial difficulties.
For these purposes (a) any event described in the immediately preceding
paragraph (1) is considered to occur when any of the following occur: the appointment
of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under
the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which
a court or governmental authority has assumed jurisdiction over substantially all of the
assets or business of the obligated person, or if such jurisdiction has been assumed by
leaving the existing governing body and officials or officers in possession but subject to
the supervision and orders of a court or governmental authority, or the entry of an order
confirming a plan of reorganization, arrangement or liquidation by a court or
governmental authority having supervision or jurisdiction over substantially all of the
assets or business of the obligated person, and (b) the City intends the words used in
the immediately preceding paragraphs (o) and (p) and the definition of Financial
Obligation in this Section to havethe same meanings as when they are used in the Rule,
as evidenced by SEC Release No. 34-83885,dated August 20, 2018.
The City shall notify the MSRB in an electronic format prescribed by the MSRB,
in a timely manner, of any failure by the City to provide financial information or operating
data in accordance with Section 10.1 of this Ordinance by the time required by such
Section.
Section 10.3 Limitations Disclaimers, and Amendments. The City shall be
obligated to observe and perform the covenants specified in this Article for so long as,
but only for so long as,the City remains an "obligated person" with respect to the Series
2021A Bonds within the meaning of the Rule, except that the City in any event will give
the notice required by Section 10.2 of any Series 2021A Bond calls and defeasance that
cause the City to be no longer such an ' obligated person."
The provisions of this Article are for the sole benefit of the Owners and beneficial
owners of the Series 2021A Bonds, and nothing in this Article, express or implied, shall
give any benefit or any legal or equitable right remedy, or claim hereunder to any other
person. The City undertakes to provide only the financial information, operating data,
financial statements, and notices which it has expressly agreed to provide pursuant to
this Article and does not hereby undertake to provideany other information that may be
relevant or material to a complete presentation of the City's financial results, condition,
or prospects or hereby undertake to update any information provided in accordance with
this Article or otherwise, except as expressly provided herein. The City does not make
any representation or warranty concerning such information or its usefulness to a
decision to invest in or sell Series 2021A Bonds at any future date.
UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE OWNER
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OR BENEFICIAL OWNER OF ANY SERIES 2021A BOND OR ANY OTHER PERSON,
IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART
FROM ANY BREACH BY THE CITY, WHETHER NEGLIGENT OR WITHOUT
FAULT ON ITS
61
PART, OF ANY COVENANT SPECIFIED IN THIS ARTICLE, BUT EVERY RIGHT AND
REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON
ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR
MANDAMUS ORSPECIFIC PERFORMANCE
N o default by the City in observing or performing its obligations under this Article
shall constitute a breach of or default under this Ordinance for purposes of any other
provision of this Ordinance.
N othing in this Article is intended or shall act to disclaim, waive or otherwise limit
the duties of the City under federal and state securities laws.
The provisions of this Article may be amended by the City from time to time to
adapt to changed circumstances that arise from a change in legal requirements, a
change in law, or a changein the identity, nature, status or type of operations of the City,
but only if (1) the provisions of this Article, as so amended, would have permitted an
underwriter to purchase or sell Series 2021A Bonds in the primary offering of the Series
2021A Bonds in compliance with the Rule, taking into account any amendments or
interpretations of the Rule to the date of such amendment, as well as such changed
circumstances, and (2) either (a) the Owners of a majority in aggregate principal amount
(or any greater amount required by any other provision of this Ordinance that authorizes
such an amendment) of the Outstanding Series 2021A Bonds consent to such
amendment or (b) a person or entity that is unaffiliated with the City (such as nationally
recognized bond counsel) determines that such amendment will not materially impair
the interests of the Owners and beneficial owners of the Series 2021A Bonds. If the City
so amends the provisions of this Article, it shall include with any amended financial
information or operating data next provided in accordance with Section 10.1 an
explanation, in narrative form, of the reasons for the amendment and of the impact of
any change in the type of financial information or operating data so provided. The City
may also amend or repeal the provisions of this Article if the SEC amends or repeals the
applicable provisions of the Rule or a court of final jurisdiction enters judgment that such
provisions of the Rule are invalid, and the City also may amend the provisions of this
Article in itsdiscretion in any other manner or circumstance, but in either case only if and
to the extent that the provisions of this sentence would not prevent an underwriter from
lawfully purchasing or selling Series 2021A Bonds in the primary offering of the Series
2021A Bonds.
S ection 10.4 Definitions. As used in this Article, the following terms have the
meaningsascribed to such terms below:
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"MSRB " means the Municipal Securities Rulemaking
Board. "Rule" means SEC Rule 15c2-12, as amended
from time to time.
"SEC" means the United States Securities and Exchange Commission.
ARTICLE XI
SALE AND DELIVERY OF BONDS; DEPOSIT OF PROCEEDS
S ection 11.1 Sale of Series 2021A Bonds. The sale of the Series 2021A Bonds
to the Purchaser at a price of par, which price and terms are hereby found and
determined to be the mostadvantageous reasonably obtainable by the City. The Mayor,
Mayor Pro -Tem and all other officials, agents and representatives of the City are hereby
authorized to do any and all things necessary or desirable to provide for the issuance
and delivery of the Bonds.
S ection 11.2 Approval, Registration and Delivery. The Mayor and the City
S ecretary are hereby authorized to have control and .custody of the Series 2021A Bonds
and all necessary recordsand proceedings pertaining thereto pending their delivery, and
the Mayor of the City, the City Secretary of the City, the City Manager of the City the
D eputy City Manager of the City and otherofficers and employees of the City are hereby
authorized, directed and instructed to make such certifications and to execute such
instruments (including by printed facsimile signature, the Series 2021A Bonds) as may
be necessary to accomplish the delivery of the Series 2021A Bonds and to assure the
investigation, examination, and approval thereof by the Attorney General of Texas and
the registration of the initial Series 2021A Bonds by the Comptroller of Public Accounts
of the State of Texas. Upon registration of the Series 2021A Bonds, the Comptroller of
P ublic Accounts of the State of Texas (or a deputy designated in writing to act for him)
shall be requested to sign manually the registration certificate prescribed herein to be
attached or affixed to each Series 2021A Bond initially delivered and the seal of the
Comptroller of Public Accounts of the State of Texas shall be impressed or printed or
lithographed thereon. Delivery of the Series 2021A Bonds is subject to the unqualified
approving opinion as to the legality of the Series 2021A Bonds of theAttorney General of
Texas and of Orrick, Herrington & Sutcliffe, Houston, Texas, Bond Counsel.
S ection 11.3 Offering Documents. The City Council hereby approves the form
and content of the Private Placement Memorandum prepared in connection with the
sale of the Series2021 A Bonds and presented to the City Council with this Ordinance and
attached hereto as Exhibit D, and authorizes the distribution and delivery of the Private
P lacement Memorandum to the TWDB, as the purchaser of the Series 2021A Bonds.
S ection 11.4 Application of Proceeds of Series 2021A Bonds. Immediately
following thedelivery of the Series 2021A Bonds and prior to the deposit of the proceeds
from the sale of such Series 2021A Bonds in the Construction Fund established
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pursuant to Section 12.6 of this Ordinance, such proceeds (less any amounts used to
pay costs of issuance) shall be held in trust
65
and in escrow pursuant to the written escrow agreement described below pending written
authorization to release said proceeds.
•
A "Special Escrow Deposit Agreement' by and between the City and Wells Fargo
B ank,
N.A. attached hereto as Exhibit C and incorporated herein by reference as a part of this
Ordinance for all purposes, is hereby approved as to form and content, and the Mayor
and the City Secretary of the City are hereby authorized and directed to execute such
agreement in substantially the sameform and content herein approved.
S ection 11.5 Related Matters. In order that the City shall satisfy in a timely
manner all of its obligations under this Ordinance, the Mayor, the City Manager, the
Deputy City Manager, the City Secretary, the Interim Director of Finance, Director of
Finance and all other appropriate officers, agents, representatives and employees of the
City are hereby authorized and directed to take, all other actions that are reasonably
necessary to provide for the issuance and delivery of theSeries 2021A Bonds, including,
without limitation, executing and delivering on behalf of the Cityall certificates, consents,
receipts, requests, notices, and other documents as may be reasonably necessary to
satisfy the City's obligations under this Ordinance and to direct the transfer and
application of funds of the City consistent with the provisions of this Ordinance.
S ection 11.6 Control and Delivery of Series 2021A Bonds.
(a) The City Manager or Deputy City Manager of the City is hereby
authorized to have control of the Series 2021A Bonds and all necessary records
and proceedings pertaining hereto pending investigation, examination and
approval of the Attorney General of the State of Texas, registration by the
Comptroller of Public Accounts of the State and registration with initial exchange
or transfer by, the Paying Agent/Registrar.
(b) The Initial Series 2021A Bond(s) shall be the Series 2021A Bonds
submitted to the Office of the Attorney General of the State of Texas for approval,
certified and registered by the Office of the Comptroller of Public Accounts of the
S tate of Texas and delivered to the Purchaser. After registration by the
Comptroller of Public Accounts, delivery of the Series 2021A Bonds shall be
made to the Purchaser under and subject to the general supervision and
direction of the Mayor, against receipt by the City of all amounts due to the City
under the terms of sale.
(c) The Mayor, the City Manager, the Deputy City Manager, the Interim
D irector of Finance of the City, the Director of Finance of the City and all other
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officers, employees, and agents of the City, and each of them, shall be and they
are expressly authorized, empowered, and directed from time to time and at any
time to do and perform all such acts and things and to execute, acknowledge,
and deliver in the name and under
the corporate seal and on behalf of the City all such agreements, certificates, and
instruments, whether herein mentioned, as may be necessary or desirable to
carry out the terms and provisions of this Ordinance, the bonds, the sale and
delivery of the Series 2021ABonds, the DTC Blanket Letter of Representations
and the Official Statement. The City Council hereby authorizes the payment of
the fee of the Office of the Attorney General of the State of Texas for the
examination of the proceedings relating to the issuance of the Series 2021A
Bonds in the amount determined in accordance with the provisions of Section
1202 004, Texas Government Code.
ARTICLE XII
SPECIAL PROVISIONS RELATING TO
THE TEXAS WATER DEVELOPMENT BOARD
S ection 12.1 Compliance with the Texas Water Development Board's Rules and
Regulations. The City will comply with all of the requirements contained in the resolution
or resolutions adopted by the TWDB with respect to the issuance of the Series 2021A
Bonds in the TWDB's rules, regulations and relevant statutes.
S ection 12.2 Construction Fund; Timely Use of Proceeds. The proceeds of the
Series 2021A Bonds shall be applied to establish at an official depository of the City a
construction fund (the "Construction Fund"), which shall be kept separate from all other
accounts and funds of the City. Monies on deposit in the Construction Fund shall be
applied in accordance with the applicable requirements of the Texas Water Code and
the rules and regulations of the TWDB. All funds deposited to the credit of the
Construction Fund will be used in a timely and expeditious manner, as required by
federal statute and EPA regulations, and the City will adhere to the project schedule
approved by the Executive Administrator.
S ection 12.3 Records; Final Accounting. The City will keep and maintain full
and complete records and accounts pertaining to the construction of the projects
financed with the proceeds of sale of the Series 2021A Bonds, including the
Construction Fund in accordance with the standards set forth by the Government
Accounting Standard Board. Within 60 days of completion, the City will submit to the
TWDB a final accounting of the total costs of the projectsfinanced with the Series 2021A
Bonds.
S ection 12.4 Annual Audit. So long as any Series 2021A Bonds are held by the
TWDB the City will annually submit to the TWDB's Executive Administrator, within 180
days of the end
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of the City's fiscal year, a copy of its annual audited financial statements prepared in
accordancewith generally acceptable auditing standards by a certified public
accountant.
S ection 12.5 Unused Funds. Any unused funds (those funds unspent after the
original approved project is completed) shall be used for enhancements to the original
project that are explicitly approved by the Executive Administrator or if no
enhancements are authorized by the Executive Administrator, the City shall submit a
final accounting and disposition of any unused funds
S ection 12.6 Investment of Proceeds. Proceeds from the sale of the Series
2021A Bonds shall be held at a designated state depository institution or other properly
chartered and authorized institution in accordance with the Public Funds Investment Act,
Government Code, Chapter 2256, and the Public Funds Collateral Act, Government
Code, Chapter 2257.
S ection 12.7 Surplus Proceeds. Any proceeds of the Series 2021A Bonds
determined tobe surplus funds remaining after completion of one or more of the
projects described in Section
3.1 hereof shall be used for the following purposes as approved by the Executive
Administrator ofthe TWDB (1) to redeem, in inverse annual order, the Series 2021A
Bonds owned by the TWDB,
(2) deposit into the Interest and Sinking Fund for the payment of interest or principal on
the Series2021A Bonds owned by the TWDB, or (3) deposit into a reserve fund.
S ection 12.8 Insurance. The City will maintain insurance on the projects
financed withthe proceeds of the Series 2021A Bonds in amounts adequate to protect
the TWDB's interest.
S ection 12.9 Water Conservation Program. The City has implemented or will
implementan approved water conservation program required by the TWDB for so long
as the Series 2021A Bonds are outstanding.
S ection 12 10 TWDB Remedies. The TWDB may exercise all remedies available
to it in law or equity and any provision of the Series 2021A Bonds that restricts or limits
the TWDB's full exercise of these remedies shall be of no force and effect.
S ection 12.11 Environmental Determination. The City will comply with any
specialconditions specified by the TWDB's environmental determination until all financial
obligations tothe TWDB have been discharged.
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Section 12.12 Environmental Indemnification. The City shall indemnify, hold
harmless and protect the TWDB from any and all claims, causes of action or damages
to the person or property of third parties arising from the sampling, analysis, transport
storage, treatment and disposition of any contaminated sewage sludge, contaminated
sediments and/or contaminated
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media that may be generated by the City, its contractors, consultants, agents,
officials andemployees as a result of activities relating to the project, to the extent
permitted by law.
S ection 12.13 Compliance with Davis -Bacon. All laborers and mechanics
employed by contractors and subcontractors for projects be paid wages at rates not Tess
than those prevailing on projects of a similar character in the City in accordance with the
Davis -Bacon Act, and the U.S. Department of Labor's implementing regulations and all
project contracts shall mandate compliance with the Davis -Bacon Act. All contracts and
subcontracts for the construction of the project carried out in whole or in part with
proceeds of the Series 2021A Bonds shall insert in full in any contract in excess of
$2,000 the contracts clauses as provided by the TWDB.
S ection 12.14 Federal Funding Accountability and Transparency Act. The
City shall provide the TWDB with all information required to be reported in accordance
with the Federal Funding Accountability and Transparency Act of 2006 Pub. L. 109-
282. The City shall obtain a Data Universal Numbering System Number and shall
register with the System for Award Management, and maintain such registration while
the Series 2021A Bonds are outstanding.
S ection 12.15 American Iron and Steel Requirement. The City will abide by all
applicable construction contract requirements related to the use of iron and steel
products produced in the United States, as required by the 2014 Federal Appropriations
Act and related State Revolving Fund Policy Guidelines.
S ection 12.16 Additional Covenants Related to Tax -Exempt Status.
(a) The City will not use any portion of the proceeds of the Series 2021A
Bondsin a manner that would cause the Series 2021A Bonds to become "private
activity bonds" within the meaning of Section 141 of the Code, and the
Regulations.
(b) No portion of the proceeds of the Series 2021A Bonds will be used,
directlyor indirectly, in a manner that would cause the Series 2021A Bonds to be
"arbitrage bonds' within the meaning of Section 148(a) of the Code and
Regulations, including to acquire orto replace funds which were used, directly or
indirectly to acquire Nonpurpose Investments (as defined in the Code and
Regulations) which produce a yield materially higher than theyield on the TWDB's
bonds that are issued to provide financing for the Series 2021A Bonds(the ' Source
S eries Bonds"), other than Nonpurpose Investments acquired with:
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(i) proceeds of the TWDB's Source Series Bonds invested for a
reasonable temporary period of up to three (3) years after the issue date
of the Source Series Bonds until such proceeds are needed for the facilities
to be financed;
(ii) amounts invested in a bona fide debt service fund, within the
meaning of Section 1.148-1(b) of the Regulations; and
(iii) amounts deposited in any reasonably required reserve or
replacement fund to the extent such amounts do not exceed the
least of the maximum annual debt service on the Series 2021A Bonds,
125% of the average annual debt service on the Series 2021A Bonds, or
10% of the stated principal amount (or, in the case of a discount, the issue
price) of the Series 2021A Bonds.
(c) Neither the City nor a related party thereto will acquire any of the
TWDB's Source Series Bonds in an amount related to the amount of the Series
2021A Bonds.
ARTICLE XIII
MISCELLANEOUS
S ection 13.1 Related Matters. In order that the City shall satisfy, in a timely
manner, all of its obligations under the Ordinance, the Mayor the City Secretary and
other appropriate officers and agents of the City are hereby authorized and directed to
take all other actions that are reasonably necessary to provide for issuance and delivery
of the Series 2021A Bonds, including executing by manual or facsimile signature and
delivering on behalf of the City all certificates, consents, receipts, requests, notices,
investment agreements and other documents as may be reasonably necessary to
satisfy the City's obligations under the Ordinance and to direct the transferand application
of funds of the City consistent with the provisions of such Ordinance. If requested by the
Attorney General of Texas or his representatives, the Mayor may authorize such
ministerial changes in the written text of this Ordinance as are necessary to obtain the
Attorney General's approval and as he determines are consistent with the intent and
purposes of this Ordinance, whichdetermination shall be final.
S ection 13.2 Severability. If any Section, paragraph, clause or provision of this
Ordinance shall for any reason be held to be invalid or unenforceable the invalidity or
unenforceability of such Section, paragraph, clause or provision shall not affect any of
the remaining provisions of this Ordinance.
S ection 13.3 Open Meeting. It is hereby found, determined and declared that a
sufficient written notice of the date, hour, place and subject of the meeting of the City
Council at which this Ordinance was adopted was posted at a place convenient and
readily accessible at all times to thegeneral public at the City Hall of the City for the time
required by law preceding this meeting, as required by the Open Meetings Act, Chapter
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551 Texas Government Code, as amended, and thatthis meeting has been open to the
public as required by law and in compliance with the advisory issued by the Office of
the Governor at all times during which this Ordinance and the subject
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matter thereof has been discussed, considered and formally acted upon. The City
Council furtherratifies, approves and confirms such written notice and the contents and
posting thereof.
S ection 13.4 Legal Opinion. The approving legal opinion of Orrick, Herrington &
Sutcliffe LLP, Houston, Texas, Bond Counsel, may be printed on the Series 2021A
Bonds over the certification of the City Secretary, which may be executed in facsimile.
S ection 13.5 Advanced Refundinqs. The City will not use any proceeds of the
Bonds to advance refund another bond in violation of the prohibition against advance
refundings set forth in section 149(d) of the Internal Revenue Code of 1986, as
amended.
S ection 13.6 Governing Law. This Ordinance shall be construed in accordance
with and governed by the laws of the State of Texas.
S ection 13.7 Repealer. All ordinances, or parts thereof inconsistent herewith, are
hereby repealed to the extent of such inconsistency.
S ection 13.8 Ratification and Approval of Financing Agreement. The Financing
Agreement between the City and the Texas Water Development Board is hereby ratified
and approved and the Mayor, Mayor Pro Tem, City Manager, Deputy City Manager,
Interim Director of Finance, or Director of Finance are hereby authorized to sign and
execute such Financing Agreement.
S ection 13.9 Effective Date. This Ordinance shall be in force and effect from
and after its passage on the date shown below.
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