HomeMy WebLinkAboutOrd. 0855 1998-06-28 ORDINANCE NO. 855
ORDINANCE AUTHORIZING AND ORDERING THE ISSUANCE OF CITY
OF PEARLAND, TEXAS CERTIFICATES OF OBLIGATION, SERIES 1998,
PRESCRIBING THE TERMS AND FORM THEREOF, PROVIDING FOR
THE PAYMENT OF THE PRINCIPAL THEREOF AND INTEREST
THEREON, AWARDING THE SALE THEREOF, AUTHORIZING THE
PURCHASE OF BOND INSURANCE, MAKING OTHER PROVISIONS
REGARDING SUCH CERTIFICATES, INCLUDING USE OF' THE
PROCEEDS THEREOF, AND MATTERS INCIDENT THERETO, AND
DECLARING AN EMERGENCY
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PEARLAND
ARTICLE I.
FINDINGS AND DETERMINATIONS
Section 1 1 Findings and Determinations. The City Council hereby officially find• and
determines that:
(a) The City of Pearland, Texas (the "City"), actmg through its City Counc 1, is
authorized pursuant to and in accordance with the provisions of Texas ocal
Government Code, Chapter 271, Subchapter C, as amended (the "Act"), to ssue
certificates of obligation to provide all or part of the funds to pay contra, tual
obligations to be incurred (i)for the planning, acquisition, construction and
improvement of certain sanitary sewer projects in the City including buI not
limited to a gravity sanitary sewer interceptor along Harkey Road, Manvel •oad,
Fite Road and Ravenw4od Drive; gravity sewer lines and a lift station to provide
wastewater treatment along F.M. 518, gravity sanitary sewer lines along' C I len,
and general repair, renovation and rehabilitation of the City's sanitary s wer
system to correct infiltration/inflow problems, (ii) for the planning, acquisi ion,
construction, improvement, materials, supplies and equipment of a new
wastewater treatment plant to be located in the northwest portion of the City, ith
such wastewater treatment plant and sanitary sewer lines to provide serve•a to
newly annexed areas west of S.H. 288, (iii)for renovations, improvements,
modifications and repairs to the Barry Rose wastewater treatment plant, (i for
expansion, renovations, improvements, modification and repairs to the Long 'ood
wastewater treatment plant, and(v) for professional services.
(b) The City Council authorized the publication of a notice of intention to i.sue
Certificates of Obligation, Series 1998 (the "Certificates") to the effect thai the
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City Council was tentatively scheduled to meet at 7.30 p.m. on June 29, 19'8 at
its regular meeting place to adopt an ordinance authorizing the issuance o the
Certificates to be payable from (i) an ad valorem tax levied, within the its
prescribed by law, on the taxable property located within the City, and ( i) a
subordinate pledge of certain revenues to be derived from the City's wate •rks
and sanitary sewer system (the "System")
(c) Such notice was published at the times and in the manner required by the Act.
(d) No petition signed by at!least five percent (5%) of the qualified voters of the ity
has been filed with or presented to any official of the City protesting the issu.. ce
of such Certificates on or before June 29, 1998, or the date of passage of this
Ordinance.
(e) The City has determined that it is in the best interests of the City and that i t is
otherwise desirable to issue the Certificates to provide all or part of the funts to
pay contractual obligations to be incurred for the purposes authorized by the ct.
ARTICLE II.
DEFINITIONS AND INTERPRETATIONS
Section 2.1 Definitions. As used herein, the following terms shall have the me. ngs
specified, unless the context clearly indicates otherwise-
"Act" shall mean Texas Local Government Code, Chapter 271, Subchapter C, as
amended.
"Attorney General" shall mean the Attorney General of the State of Texas.
"Certificate" or "Certificates" shall mean any or all of the City of Pearland, Texas
Certificates of Obligation, Senes 1998,being sold to the TWDB pursuant to this Ordinance.
"Certificate Insurance Policy" shall mean the municipal bond new issue insurance po icy
issued by the Certificate Insurer that guarantees the scheduled payment of principal of d
interest on the Certificates when due.
"Certificate Insurer" shall mean Financial Security Assurance Inc., a New York St•ck
insurance company, or any successor thereto or assignee thereof.
"City" shall mean the City of Pearland, Texas and, where appropriate, its City Council
"City Council" shall mean the governing body of the City
"Code" shall mean the Internal Revenue Code of 1986, as amended.
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"Comptroller" shall mean the Comptroller of Public Accounts of the State of Texas.
"DTC" shall mean The Depository Trust Company, New York, New York, or any
successor securities depository
"DTC Participant" shall mean brokers and dealers, banks, trust companies, cle. 'ng
corporations and certain other organizations on whose behalf DTC was created to hold sec (ties
to facilitate the clearance and settlement of securities transactions among DTC Participants.
"Fiscal Year" shall mean the qity's then designated fiscal year, which currently i- the
twelve-month period beginning on the first day of October of a calendar year and ending o the
last day of September of the next succeeding calendar year and each such period ma be
designated with the number of the calendar year in which such period ends.
"Interest Payment Date," when used in connection with any Certificate, shall mean M: ch
1, 1999, and each March 1 and September 1 thereafter until maturity or earlier redemptio of
such Certificate.
"Issuance Date" shall mean the date on which the Certificates are delivered to and ;l aid
for by the TWDB
"Ordinance" shall mean this Ordinance and all amendments hereof and supplem nts
hereto
"Outstanding", when used with reference to the Certificates, shall mean, as of a partic lar
date, all Certificates theretofore and thereupon delivered pursuant to this Ordinance except: (a)
any Certificates canceled by or on behalf of the City at or before such date; (b) any Certific:tes
defeased pursuant to the defeasance provisions of this Ordinance or otherwise defease• as
permitted by applicable law; and (c) any Certificates in lieu of or in substitution for which a
replacement Certificate shall have been delivered pursuant to this Ordinance.
"Paying Agent/Registrar" shall mean Chase Bank of Texas, National Associat on,
Houston, Texas, and its successors in that capacity
"Record Date" shall mean the close of business on the fifteenth day of the calendar m.nth
immediately preceding the applicable Interest Payment Date.
"Register" shall mean the registration books for the Certificates kept by the Pa ing
Agent/Registrar in which are maintained the names and addresses of, and the principal amo is
registered to, each Registered Owner of Certificates.
"Registered Owner" or "Owner" shall mean the person or entity in whose name : y
Certificate is registered in the Register
"TWDB" shall mean the Texas Water Development Board.
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ORDINANCE NO. 855
Section 2.2. Interpretations. 411 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 have been inserted for convenien(e of
reference only and are not to be considered a part hereof and shall not in any way modi i or
restrict any of the terms or provisions hereof. This Ordinance and all the terms and prove ions
hereof shall be liberally construed to effectuate the purposes set forth herein and to sustai the
validity of the Certificates and the validity of the levy of ad valorem taxes to pay the princip:1 of
and interest on the Certificates.
ARTICLE III.
TERMS 1OF THE CERTIFICATES
Section 3 1 Amount, Purpose and Authorization. (a) The Certificates shall be issu-d in
fully registered form, without coupons,under and pursuant to the authority of the Act in the total
authorized aggregate principal amount of SEVENTEEN MILLION ONE HUND' D
THOUSAND AND NO/100 DOLLARS ($17,100,000) for the purpose of providing all or p. of
the funds to pay contractual obligations to be incurred (i) for the planning, acquisi I;on,
construction and improvement of certain sanitary sewer projects in the City including but not
limited to a gravity sanitary sewer interceptor along Harkey Road, Manvel Road, Fite Road and
Ravenwood Drive; gravity sewer lines'and a lift station to provide wastewater treatment a ong
F.M. 518, gravity sanitary sewer lines along Cullen, and general repair, renovation and
rehabilitation of the City's sanitary sewer system to correct infiltration/inflow problems, (ii for
the planning, acquisition, construction, improvement, materials, supplies and equipment of a ew
wastewater treatment plant and sanitary,sewer lines to be located in the northwest portion o the
City, with such wastewater treatment plant to provide service to newly annexed areas wes of
S.H. 288, (iii) for renovations, improvements, modifications and repairs to the Barry Nose
wastewater treatment plant, (iv) for expansion, renovations, improvements, modification d
repairs to the Longwood wastewater treatment plant, and (v) for professional services.
Section 3.2. Designation, Date and Interest Payment Dates. The Certificates shal be
designated as the "City of Pearland, 'Texas Certificates of Obligation, Series 1998," and shal be
dated July 1, 1998 The Certificates shall bear interest at the rates set forth in Section 3.3 bel•w,
from the later of the Issuance Date or the most recent Interest Payment Date to which interest has
been paid or duly provided for, calculated on the basis of a 360-day year of twelve 30 ay
months, payable on March 1, 1999, and each March 1 and September 1 thereafter until mat ity
or earlier redemption.
If interest on any Certificate is not paid on any Interest Payment Date and conti ues
unpaid for thirty (30) days thereafter, the Paying Agent/Registrar shall establish a new re•ord
date for the payment of such interest, to be known as a Special Record Date. The Pa ing
Agent/Registrar shall establish a Special Record Date when funds to make such interest pa ent
are received from or on behalf of the City Such Special Record Date shall be fifteen (15) slays
prior to the date fixed for payment of such past due interest, and notice of the date of pa ent
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ORDINANCE NO. 855
and the Special Record Date shall be sent by United States mail, first class, postage prepaid, not
later than five (5) days prior to the Special Record Date, to each affected Registered Owner as of
the close of business on the day prior to mailing of such notice.
Section 3.3 Numbers, Denomination, Interest Rates and Maturities. (a) The Certificates
shall be initially issued bearing the numbers, in the principal amounts and bearing interest at the
rates set forth in the following schedule, and may be transferred and exchanged as set out in this
Ordinance. The Certificates shall mature on March 1 in each of the years and in the amounts set
out in such schedule. Certificates delivered in transfer of or in exchange for other Certificates
shall be numbered in order of their authentication by the Paying Agent/Registrar, shall be in the
denomination of$5,000 or integral multiples thereof and shall mature on the same date and bear
interest at the same rate as the Certificate or Certificates in lieu of which they are delivered.
Certificate Year of Principal Interest
Number Maturity Amount Rate
K-1 2000 $ 50,000
R-2 2001 50,000
R-3 2002 75,000
R-4 2003 90,000
R-5 2004 100,000
R-6 2005 855,000
R-7 2006 880,000
R-8 2007 915,000
R-9 2008 945,000
R-10 2009 980,000
R-11 2010 1,015,000
R-12 2011 1,050,000
R-13 2012 1,090,000
R-14 2013 1,125,000
R-15 2014 1,170,000
R-16 2015 1,210,000
R-17 2016 1,250,000
R-18 20117 2,090,000
R-19 20�8 2,160,000
Section 3 4 Redemption Prior to Maturity (a) Optional Redemption. The Certificates
maturing on and alter March 1, 2009 are subject to redemption prior to maturity, at the option of
the City, in whole or in part, and if in part in inverse order of maturity, on September 1, 2008, or
any date thereafter, at par plus accrued interest to the date fixed for redemption.
(b) Certificates may be redeemed in part only in integral multiples of $5,000 If a
Certificate subject to redemption is in a denomination larger than $5,000, a portion of such
Certificate may be redeemed, but only in integral multiples of$5,000 In selecting portions of
Certificates for redemption, each Certificate shall be treated as representing that number of
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Certificates of$5,000 denomination which is obtained by dividing the principal amount of such
Certificate by$5,000 Upon presentation and surrender of any Certificate for redemption in part,
the Paying Agent/Registrar, in accordance with the provisions of this Ordinance, shall
authenticate and deliver in exchange therefor a Certificate or Certificates of like maturity and
interest rate in an aggregate principal amount equal to the unredeemed portion of the Certificate
so surrendered.
(c) Notice of any redemption, identifying the Certificates or portions thereof to be
redeemed, shall be sent by United States mail, first class, postage prepaid, to the Registered
Owners thereof at their addresses as shown on the Register, not less than thirty (30) days before
the date fixed for such redemption. By the date fixed for redemption, due provision shall be
made with the Paying Agent/Registrar for the payment of the redemption price of the Certificates
called for redemption. If such notice, of redemption is given, and if due provision for such
payment is made, all as provided above, the Certificates which are to be so redeemed thereby
automatically shall be redeemed prior to their scheduled maturities, they shall not bear interest
after the date fixed for redemption, and they shall not be regarded as being Outstanding except
for the purpose of being paid with the funds so provided for such payment.
Section 3.5 Manner of Paymnt, Characteristics, Execution and Authentication. The
Paying Agent/Registrar is hereby appointed the paying agent for the Certificates. The
Certificates shall be payable, shall have the characteristics and shall be executed, sealed,
registered and authenticated, all as provided and in the manner indicated in the FORM OF
CERTIFICATES set forth in Article IV of this Ordinance. If any officer of the City whose
manual or facsimile signature shall appear on the Certificates shall cease to be such officer
before the authentication of the Certificates or before the delivery of the Certificates, such
manual or facsimile signature shall nevertheless be valid and sufficient for all purposes as if such
officer had remained in such office.
The approving legal opinion of Mayor, Day, Caldwell & Keeton, L.L.P , Houston, Texas,
Bond Counsel, may be printed on the back of the Certificates over the certification of the City
Secretary, which may be executed in facsimile. CUSIP numbers also may be printed on the
Certificates, but errors or omissions the printing of either the opinion or the numbers shall
have no effect on the validity of the Certificates.
Section 3 6 Authentication. Except for the Certificates to be initially issued, which
need not be authenticated by the Registrar, only such Certificates as shall bear thereon a
certificate of authentication, substantially in the form provided m Article IV 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 certificate of authentication shall be conclusive evidence that the Certificate so
authenticated was delivered by the Paying Agent/Registrar hereunder
Section 3 7 Ownership. The City, the Paying Agent/Registrar and any other person
may treat the person in whose name any Certificate is registered as the absolute owner of such
Certificate for the purpose of making and receiving payment of the principal thereof and interest
thereon and for all other purposes, whether or not such Certificate is overdue, and neither the
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ORDINANCE NO. 855
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 Registered Owner of any Certificate in
accordance with this Section shall be valid and effective and shall discharge the liability of the
City and the Paying Agent/Registrar upon such Certificate to the extent of the sums paid.
Section 3 8 Registration, Transfer and Exchange. The Paying Agent/Registrar is
hereby appointed the registrar for the Certificates. So long as any Certificate remains
Outstanding, the Paying Agent/Registrar shall keep the Register at the City Administrator's
office in which, subject to such reasonable regulations as it may prescribe, the Paying
Agent/Registrar shall provide for the registration and transfer of the Certificates in accordance
with the terms of this Ordinance.
Each Certificate shall be transferable only upon the presentation and surrender thereof at
the principal corporate trust office of the Paying Agent/Registrar, 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 Certificate for transfer, the Paying
Agent/Registrar shall authenticate andl deliver in exchange therefor, within seventy-two (72)
hours after such presentation, a new Certificate or Certificates, registered in the name of the
transferee or transferees, in authorized denominations and of the same maturity and aggregate
principal amount and bearing interest at the same rate as the Certificate or Certificates so
presented and surrendered.
All Certificates shall be exchangeable upon the presentation and surrender thereof at the
principal corporate trust office of the Paying Agent/Registrar for a Certificate or Certificates of
the same maturity and interest rate and in any authorized denomination, in an aggregate principal
amount equal to the unpaid principal 'amount of the Certificate or Certificates presented for
exchange The Paying Agent/Registrar shall be and is hereby authorized to authenticate and
deliver exchange Certificates in accordance with the provisions of this Section. Each Certificate
delivered by the Paying Agent/Registrar in accordance with this Section shall be entitled to the
benefits and security of this Ordinance to the same extent as the Certificate or Certificates in lieu
of which such Certificate is delivered.
All Certificates issued in transfer or exchange shall be delivered to the Registered
Owners thereof at the principal corporate trust office of the Paying Agent/Registrar or sent by
United States mail, first class,postage prepaid.
The City or the Paying Agent/Registrar may require the Registered Owner of any
Certificate 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 Certificate. Any fee or charge of
the Paying Agent/Registrar for such transfer or exchange shall be paid by the City
The Paying Agent/Registrar shall not be required to transfer or exchange any Certificate
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 the
transfer or exchange by the Registered Owner of the unredeemed portion of a Certificate called
for redemption in part.
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Section 3.9. Book-Entry Only System. The definitive Certificates shall be initially
issued in the form of a separate single fully registered Certificate for each of the maturities
thereof. Upon initial issuance, the ownership of each such Certificate shall be registered in the
name of Cede & Co., as nominee of DTC, and except as provided in Section 3 10 hereof, all of
the Outstanding Certificates shall be registered in the name of Cede & Co., as nominee of DTC.
Upon delivery by DTC to the Paying 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 Certificates registered in the name of Cede & Co., as nominee of DTC,
the City and the Paying Agent/Registrar shall have no responsibility or obligation to any DTC
Participant or to any person on behalf of whom such a DTC Participant holds an interest in the
Certificates. 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 of the
records of DTC, Cede & Co or any DTC Participant with respect to any ownership interest in
the Certificates, (b) the delivery to any DTC Participant or any other person, other than a
Certificateholder, as shown on the Register, of any notice with respect to the Certificates,
including any notice of redemption or (c) the payment to any DTC Participant or any other
person, other than a Certificateholder as shown in the Register, of any amount with respect to
principal of Certificates, premium, if any, or interest on the Certificates.
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 Certificate
is registered in the Register as the absolute owner of such Certificate for the purpose of payment
of principal of, premium, if any, and interest on Certificates, for the purpose of giving notices of
redemption and other matters with respect to such Certificate, for the purpose of registering
transfer with respect to such Certificate, and for all other purposes whatsoever The Paying
Agent/Registrar shall pay all principal of Certificates, premium, if any, and interest on the
Certificates 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 Certificates to the extent
of the sum or sums so paid. No person other than an owner shall receive a Certificate evidencing
the obligation of the City to make payments of amounts due pursuant to this Ordinance.
Section 3.10. Payments and Notices to Cede & Co Notwithstanding any other
provision of this Ordinance to the contrary, as long as any Certificates are registered in the name
of Cede & Co , as nominee of DTC, all payments with respect to principal of, premium, if any,
and interest on the Certificates, and all notices with respect to such Certificates shall be made
and given, respectively, in the manner provided in the representation letter of the City to DTC.
Section 3.11. Successor Securities Depository; Transfer Outside Book-Entry Only
System. In the event that the City or the Paying Agent/Registrar determines that DTC is
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ORDINANCE NO. 855
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 Certificates that
they be able to obtain certificated Certificates, 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 depository and transfer one or more separate Certificates to such successor
securities depository or (b) notify DTC of the availability through DTC of Certificates and
transfer one or more separate Certificates to DTC Participants having Certificates credited to
their DTC accounts. In such event, the Certificates 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
Certificateholders transferring or exchanging Certificates shall designate, in accordance with the
provisions of this Ordinance.
Section 3 12. Replacement Certificates. Upon the presentation and surrender to the
Paying Agent/Registrar of a damaged or mutilated Certificate, the Paying Agent/Registrar shall
authenticate and deliver in exchange therefor a replacement Certificate, of the same maturity,
interest rate and principal amount, bearing a number not contemporaneously outstanding. The
City or the Paying Agent/Registrar may, require the Registered Owner of such Certificate 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 and the City
If any Certificate is lost, apparently destroyed or wrongfully taken, the City, pursuant to
the applicable laws of the State of Texas and ordinances of the City, and in the absence of notice
or knowledge that such Certificate has Been acquired by a bona fide purchaser, shall execute, and
the Paying Agent/Registrar shall authenticate and deliver, a replacement Certificate of the same
maturity, interest rate and principal' amount, bearing a number not contemporaneously
outstanding, provided that the Registered 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
Certificate;
(b) furnished such security or indemnity as may be required by the Paying
Agent/Registrar and the City to save and hold 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
Agent/Registrar
If, after the delivery of such replacement Certificate, a bona fide purchaser of the original
Certificate m lieu of which such replacement Certificate was issued presents for payment such
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ORDINANCE NO. 855
original Certificate, the City and the Paying Agent/Registrar shall be entitled to recover such
replacement Certificate 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 the
City or the Paying Agent/Registrar in connection therewith.
If any such mutilated, lost, apparently destroyed or wrongfully taken Certificate has
become or is about to become due and payable,the City in its discretion may, instead of issuing a
replacement Certificate, authorize the Paying Agent/Registrar to pay such Certificate.
Each replacement Certificate delivered in accordance with this Section shall be entitled to
the benefits and security of this Ordinance to the same extent as the Certificate or Certificates in
lieu of which such replacement Certificate is delivered.
Section 3 13 Cancellation. All Certificates paid or redeemed in accordance with this
Ordinance, and all Certificates in lieu of which exchange Certificates or replacement Certificates
are authenticated and delivered in accordance herewith, shall be canceled and destroyed upon the
making of proper records regarding such payment or redemption. The Paying Agent/Registrar
shall periodically furmsh the City with certificates of destruction of such Certificates.
ARTICLE IV
FORM OF CERTIFICATES
The Certificates, including the Form of Comptroller's Registration Certificate, Form of
Paying Agent/Registrar Authentication Certificate and Form of Assignment, shall be in
substantially the following forms, with such omissions, insertions and variations as may be
necessary or desirable, and not prohibited by this Ordinance
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UNITED STATES OF AMERICA
STATE OF TEXAS
CITY OF PEARLAND, TEXAS
NUMBER DENOMINATION
R- $
REGISTERED CERTIFICATE OF OBLIGATION REGISTERED
SERIES 1998
INTEREST RATE. ISSUANCE DATE. MATURITY DATE CUSIP
July 30, 1998 March 1,
REGISTERED OWNER.
PRINCIPAL AMOUNT I DOLLARS
THE CITY OF PEARLAND, TEXAS, a municipal corporation of the State of Texas (the
"City"), for value received, hereby promises to pay to the Registered Owner identified above or
its registered assigns, on the maturity date specified above (or on earlier redemption as herein
provided), upon presentation and surrender of this Certificate at the principal corporate trust
office of Chase Bank of Texas, National Association, Houston, Texas, or its successor (the
"Paying Agent/Registrar"),the principal amount identified above (or so much thereof as shall not
have been paid or deemed to have been paid upon prior redemption) payable in any coin or
currency of the Umted States of Amenja which on the date of payment of such principal is legal
tender for the payment of debts due to the United States of America, and to pay interest thereon
at the rate shown above, calculated onl a basis of a 360-day year composed of twelve 30-day
months, from the later of the Issuance Date identified above or the most recent interest payment
date to which interest has been paid or duly provided for Interest on this Certificate is payable
on March 1, 1999, and each March 1 and September 1 thereafter until maturity or earlier
redemption of this Certificate, by check sent by United States mail, first class, postage prepaid,
by the Paying Agent/Registrar to the Registered Owner of record as of the close of business on
the fifteenth day of the calendar month immediately preceding the applicable interest payment
date, as shown on the registration books kept by the Paying Agent/Registrar Any accrued
interest payable at maturity or earlier redemption shall be paid upon presentation and surrender
of this Certificate at the principal corporate trust office of the Paying Agent/Registrar So long
as the Texas Water Development Board (herein the "TWDB") is the holder of this Certificate,
payment of the principal and interest on this Certificate shall be made to the TWDB by wire
transfer at no cost to the TWDB
THIS CERTIFICATE IS ONE OF A DULY AUTHORIZED SERIES OF
CERTIFICATES OF OBLIGATION (the "Certificates") in the aggregate principal amount of
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ORDINANCE NO. 855
$17,100,000 issued pursuant to an ordinance adopted by the City Council of the City on June 29,
1998 (the "Ordinance") for the purpospe of providing all or part of the funds to pay contractual
obligations to be incurred (i) for the planning, acquisition, construction and improvement of
certain sanitary sewer projects in the City including but not limited to a gravity sanitary sewer
interceptor along Harkey Road, Manve1 Road, Fite Road and Ravenwood Drive; gravity sewer
lines and a lift station to provide wastewater treatment along F.M. 518, gravity sanitary sewer
lines along Cullen, and general repair, renovation and rehabilitation of the City's sanitary sewer
system to correct infiltration/inflow problems, (ii)for the planning, acquisition, construction,
improvement, materials, supplies and equipment of a new wastewater treatment plant and
sanitary sewer lines to be located in the northwest portion of the City, with such wastewater
treatment plant to provide service to newly annexed areas west of S.H. 288, (iii) for renovations,
improvements, modifications and repairs to the Barry Rose wastewater treatment plant, (iv) for
expansion, renovations, improvements modification and repairs to the Longwood wastewater
treatment plant, and(v) for professional)services.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
CERTIFICATE SET FORTH ON THE REVERSE HEREOF, WHICH PROVISIONS SHALL
HAVE THE SAME FORCE AND EFFECT AS IF SET FORTH AT THIS PLACE.
THIS CERTIFICATE shall not be valid or obligatory for any purpose or be entitled to
any benefit under the Ordinance unless this Certificate either (i) is registered by the Comptroller
of Public Accounts of the State of Texas by due execution of the registration certificate endorsed
hereon or (ii) is authenticated by the Paying Agent/Registrar by due execution of the
authentication certificate endorsed hereon.
IN WITNESS WHEREOF, the City has caused its corporate seal to be impressed or
placed m facsimile hereon and this Certificate to be signed by the Mayor and countersigned by
the City Secretary by their manual, lithographed or printed facsimile signatures.
(AUTHENTICATION OR CITY OF PEARLAND, TEXAS
REGISTRATION CERTIFICATE)
Mayor
(SEAL)
COUNTERSIGNED
City Secretary
* * *
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ORDINANCE NO. 855
[REVERSE OF CERTIFICATE]
THE CITY RESERVES THE RIGHT, at its option, to redeem, prior to their maturity,
Certificates maturing on and after March 1, 2009, in whole or in part, and if in part in inverse
order of maturity on September 1, 2008, or any date thereafter, at par plus accrued interest to the
date fixed for redemption.
CERTIFICATES MAY BE REDEEMED IN PART only in integral multiples of$5,000
If a Certificate subject to redemption is in a denomination larger than $5,000, a portion of such
Certificate may be redeemed, but only in integral multiples of$5,000 In selecting portions of
Certificates for redemption, each Certificate shall be treated as representing that number of
Certificates of$5,000 denomination which is obtained by dividing the principal amount of such
Certificate by $5,000 Upon surrender of any Certificate for redemption in part, the Paying
Agent/Registrar, in accordance with the provisions of the Ordinance, shall authenticate and
deliver in exchange therefor a Certificate or Certificates of like maturity and interest rate in an
aggregate principal amount equal to the unredeemed portion of the Certificate so surrendered.
NOTICE OF ANY SUCH REDEMPTION, identifying the Certificates or portions
thereof to be redeemed, shall be sent by United States mail, first class, postage prepaid, to the
Registered Owners thereof at their addresses as shown on the books of registration kept by the
Paying Agent/Registrar, not less than thirty (30) days before the date fixed for such redemption.
By the date fixed for redemption, due provision shall be made with the Paying Agent/Registrar
for the payment of the redemption pnce of the Certificates called for redemption. If such notice
of redemption is given, and if due provision for such payment is made, all as provided above, the
Certificates which are to be so redeemed thereby automatically shall be redeemed prior to their
scheduled maturities, they shall not bear interest after the date fixed for redemption, and they
shall not be regarded as being outstanding except for the purpose of being paid with the funds so
provided for such payment.
THIS CERTIFICATE IS TRANSFERABLE only upon presentation and surrender at the
principal corporate trust office of the Paying Agent/Registrar, accompanied by an assignment
duly executed by the Registered Owner or its authorized representative, subject to the terms and
conditions of the Ordinance.
THIS CERTIFICATE IS EXCHANGEABLE at the principal corporate trust office of the
Paying Agent/Registrar for a Certificate or Certificates of the same maturity and interest rate and
in the principal amount of $5,000 or any integral multiple thereof, subject to the terms and
conditions of the Ordinance.
THE PAYING AGENT/REGISTRAR is not required to accept for transfer or exchange
any Certificate 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 such limitation shall
not apply to the transfer or exchange by the Registered Owner of an unredeemed portion of a
Certificate called for redemption in part.
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ORDINANCE NO. 855
THE CITY OR PAYING AGENT/REGISTRAR may require the Registered Owner of
any Certificate to pay a sum sufficient too cover any tax or other governmental charge that may be
imposed in connection with the transfer or exchange of a Certificate. Any fee or charge of the
Paying Agent/Registrar for a transfer or exchange shall be paid by the City
THE REGISTERED OWNER of this Certificate by acceptance hereof, acknowledges
and agrees to be bound by all the terms;and conditions of the Ordinance.
IT IS HEREBY DECLARED AND REPRESENTED that this Certificate has been duly
and validly issued and delivered, that all acts, conditions and things required or proper to be
performed, exist and to be done precedent to or in the issuance and delivery of this Certificate
have been performed, exist and have been done in accordance with law; that the Certificates do
not exceed any constitutional or statutory limitation, and that annual ad valorem taxes sufficient
to provide for the payment of the interest on and principal of this Certificate, as such interest
comes due and such principal matures, have been levied and ordered to be levied, within the
limits prescribed by law, against all taxable property in the City and have been irrevocably
pledged for such payment.
IT IS FURTHER DECLARED AND REPRESENTED that the revenues to be derived
from the City's waterworks and sanitary sewer system, after the payment of all operation and
maintenance expenses thereof (the "Net Revenues"), in an amount not to exceed $10,000, are
pledged to the payment of the principal of and interest on the Certificates to the extent that ad
valorem taxes may ever be insufficient or unavailable for such purpose, provided that the pledge
of Net Revenues is and shall be junior and subordinate in all respects to the pledge of Net
Revenues to the payment of any obligation of the City, whether authorized heretofore or
hereafter, which the City designates as having a pledge senior to the pledge of the Net Revenues
to the payment of the Certificates. The City also reserves the right to issue, for any lawful
purpose at any time, in one or more installments, bonds, certificates of obligation and other
obligations of any kind, secured in whole or in part by a pledge of Net Revenues, that may be
pnor and superior in right to, on a parity with, or junior and subordinate to the pledge of Net
Revenues securing the Certificates.
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REFERENCE IS HEREBY MADE TO THE ORDINANCE, a copy of which is filed
with the Paying Agent/Registrar, for the full provisions thereof, to all of which the Registered
Owners of the Certificates assent by acceptance of the Certificates.
* * *
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ORDINANCE NO. 855
FORM OF COMPTROLLER'S REGISTRATION CERTIFICATE
The following form of Comptroller's Registration Certificate shall be attached or affixed
to each of the Certificates initially delivered.
THE STATE OF TEXAS
REGISTER NO
OFFICE OF THE COMPTROLLER OF PUBLIC ACCOUNTS
I hereby certify that this certificate has been examined, certified as to validity and
approved by the Attorney General of the State of Texas, and that this certificate has been
registered by the Comptroller of Public Accounts of the State of Texas.
WITNESS MY SIGNATURE AND SEAL OF OFFICE this
Comptroller of Public Accounts
[SEAL] of the State of Texas
* * *
FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
The following form of authentication certificate shall be printed on the face of each of the
Certificates other than those initially delivered.
AUTHENTICATION CERTIFICATE
This Certificate is one of the Certificates described in and delivered pursuant to the
within-mentioned Ordinance; and, except for the Certificates initially delivered, this Certificate
has been issued in exchange for or replacement of a Certificate, Certificates, or a portion of a
Certificate or Certificates of an issue which originally was approved by the Attorney General of
the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas.
CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION
By
Authorized Signature
Date of Authentication.
* * *
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ORDINANCE NO. 855
FORM OF ASSIGNMENT
The following form of assignment shalt be printed on the back of each of the Certificates
ASSIGNMENT
For value received,the undersigned hereby sells, assigns and transfers unto
(Please print or type name, address, and zip code of Transferee)
(Please insert Social Security or Taxpayer Identification Number of Transferee)
the within certificate and all rights thereunder, and hereby irrevocably constitutes and appoints
attorney to transfer such certificate on the books kept
for registration thereof, with full power of substitution in the premises.
DATED
Signature Guaranteed.
Registered Owner
NOTICE The signature above must
correspond to the name of the registered owner
as shown on the face of this certificate in every
NOTICE Signature must be guaranteed by a particular, without any alteration, enlargement
member firm of the New York Stock Exchange or change whatsoever
or a commercial bank or trust company
ARTICLE V
SECURITY FOR THE CERTIFICATES
Section 5 1 Pledge and Levy of Taxes and Revenues. (a) To provide for the payment
of principal of and interest on the Certificates, there is hereby levied, within the limits prescribed
by law, for the current year and each succeeding year thereafter, while the Certificates or any
part of the principal thereof and the interest thereon remain outstanding and unpaid, an ad
valorem tax upon all taxable property within the City sufficient to pay the interest on the
Certificates and to create and provide a sinking fund of not less than 2% of the principal amount
of the Certificates or not less than the principal payable out of such tax, whichever is greater,
with full allowance being made for tax delinquencies and the costs of tax collection, and such
taxes, when collected, shall be applied to the payment of principal of and interest on the
Certificates by deposit to the Certificates of Obligation, Series 1998 Debt Service Fund and to no
other purpose.
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ORDINANCE NO. 855
(b) The City hereby declares its purpose and intent to provide and levy a tax legally
sufficient to pay the principal of and interest on the Certificates, it having been determined that
the existing and available taxing authority of the City for such purpose is adequate to permit a
legally sufficient tax. As long as any Certificates remain outstanding, all moneys on deposit in,
or credited to, the Certificates of Obligation, Series 1998 Debt Service Fund shall be secured by
a pledge of security, as provided by law for cities in the State of Texas.
(c) In addition, pursuant to the authority of Articles 1111-1118, Vernon's Texas Civil
Statutes, as amended, the City also hereby pledges the revenues to be derived from the City's
waterworks and sanitary sewer system, after the payment of all operation and maintenance
expenses thereof(the "Net Revenues")J in an amount not to exceed $10,000, to the payment of
the principal of and interest on the Certificates to the extent that the ad valorem taxes referred to
in Section 5 1(a) of this Ordinance are ever insufficient or unavailable for such purpose, provided
that the pledge of Net Revenues is and shall be jumor and subordinate in all respects to the
pledge of Net Revenues to the payment of any obligation of the City, whether authorized
heretofore or hereafter, which the City designates as having a pledge senior to the pledge of the
Net Revenues to the payment of the Certificates. The City also reserves the right to issue, for
any lawful purpose at any time, in one or more installments, bonds, certificates of obligation and
other obligations of any kind, secured in whole or in part by a pledge of Net Revenues, that may
be prior and superior in right to, on a parity with, or junior and subordinate to the pledge of Net
Revenues securing the Certificates.
Section 5.2. Debt Service Fund. The "Certificates of Obligation, Series 1998 Debt
Service Fund" is hereby created as a special fund solely for the benefit of the Certificates. The
City shall establish and maintain such fund at an official City depository and shall keep such
fund separate and apart from all other funds and accounts of the City Any amount on deposit in
the Certificates of Obligation, Series 1998� Debt Service Fund shall be maintained by the City in
trust for the Registered Owners of the Certificates. Such amount, plus any other amounts
deposited by the City into such fund and any and all investment earnings on amounts on deposit
in such fund, shall be used only to pay the principal of, premium, if any, and interest on the
Certificates.
Section 5.3 Investment of Funds. Money in the Debt Service Fund and the
Construction Fund (hereinafter defined) 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 m 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,
including the Public Funds Investment Act; provided that all such deposits and investments shall
be made in such manner that the money required to be expended from any Fund will be available
at the proper time or times. If necessary, such investments shall be promptly sold to prevent any
default.
Section 5 4 Further Proceedings. After the Certificates to be initially issued have been
executed, it shall be the duty of the Mayor to deliver the Certificates to be initially issued and all
pertinent records and proceedings to the Attorney General for examination and approval. After
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ORDINANCE NO. 855
the Certificates to be initially issued shall have been approved by the Attorney General, they
shall be delivered to the Comptroller for registration. Upon registration of the Certificates to be
initially issued, the Comptroller (or a deputy lawfully designated in wnting to act for the
Comptroller) shall manually sign the Comptroller's registration certificate prescribed herein to be
affixed or attached to the Certificates to be initially issued, and the seal of said Comptroller shall
be impressed, or placed in facsimile,thereon.
ARTICLE VI.
CONCERNING THE PAYING AGENT/REGISTRAR
Section 6 1 Acceptance. Chase Bank of Texas, National Association, Houston, Texas,
is hereby appointed as the initial Paying Agent/Registrar for the Certificates pursuant to the
terms and provisions of the Paying Agnt/Registrar Agreement by and between the City and the
Paying Agent/Registrar The Paying Agent/Registrar Agreement shall be substantially in the
form attached hereto as Exhibit A, the terms and provisions of which are hereby approved, and
the Mayor is hereby authorized to execute and deliver such Paying Agent/Registrar Agreement
on behalf of the City in multiple countei1parts and the City Secretary is hereby authorized to attest
thereto and affix the City's seal. Such initial Paying Agent/Registrar and any successor Paying
Agent/Registrar, by undertaking the performance of the duties of the Paying Agent/Registrar
hereunder, and in consideration of the payment of any fees pursuant to the terms of any contract
between the Paying Agent/Registrar and the City and/or the deposits of money pursuant to this
Ordinance, shall be deemed to accept and agree to abide by the terms of this Ordinance.
Section 6.2. Trust Funds. All money transferred to the Paying Agent/Registrar in its
capacity as Paying Agent/Registrar for the Certificates under this Ordinance (except any sums
representing Paying Agent/Registrar's fees) shall be held in trust for the benefit of the City, shall
be the property of the City and shall be disbursed in accordance with this Ordinance.
Section 6.3 Certificates Presented. Subject to the provisions of Section 6 4, all matured
Certificates presented to the Paying Agent/Registrar for payment shall be paid without the
necessity of further instructions from the City Such Certificates shall be canceled as provided
herein.
Section 6 4 Unclaimed Funds Held by the Paying Agent/Registrar Funds held by the
Paying Agent/Registrar that represent principal of and interest on the Certificates remaining
unclaimed by the Registered Owner thereof 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 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
The Paying Agent/Registrar shall have no liability to the Registered Owners of the
Certificates by virtue of actions taken in compliance with this Section.
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ORDINANCE NO. 855
Section 6.5 Paying Agent/Registrar May Own Certificates. The Paying
Agent/Registrar in its individual or any other capacity, may become the owner or pledgee of
Certificates with the same rights it would have if it were not the Paying Agent/Registrar
Section 6 6 Successor Paying Agents/Registrars. The City covenants that at all times
while any Certificates are Outstanding it will provide a legally qualified bank, trust company,
financial institution or other agency to act as Paying Agent/Registrar for the Certificates. The
City reserves the right to change the Paying Agent/Registrar for the Certificates on not less than
sixty (60) days' written notice to the Paying Agent/Registrar, as long as any such notice is
effective not less than 60 days prior to the next succeeding principal or interest payment date on
the Certificates. 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
United States mail, first class, postage prepaid, of such change and of the address of the new
Paying Agent/Registrar Each Paymg Agent/Registrar hereunder, by acting in that capacity,
shall be deemed to have agreed to the provisions of this Ordinance.
ARTICLE VII.
PROVISIONS CONCERNING SALE AND
APPLICATION OF PROCEEDS OF CERTIFICATES
Section 7 1 Sale,of Certificates. The sale of the Certificates is hereby awarded to the
TWDB at a price of the par value thereof. It is hereby officially found, determined and declared
that the above price and terms of sale of the Certificates are the most advantageous reasonably
obtainable by the City
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Section 7.2. Approval, Registration and Delivery The Mayor is hereby authorized to
have control and custody of the Certificates and all necessary records and proceedings pertaining
thereto pending their delivery, and the Mayor and other officers and employees of the City are
hereby authorized and directed to make such certifications and to execute such instruments as
may be necessary to accomplish the delivery of the Certificates and to assure the investigation,
examination and approval thereof by the Attorney General and the registration of the initial
Certificates by the Comptroller Upon registration of the Certificates, the Comptroller (or the
Comptroller's certificates clerk or an assistant certificates clerk lawfully designated in writing to
act for the Comptroller) shall manually sign the Comptroller's Registration Certificates
prescribed herein to be attached or affixed to each Certificates initially delivered and the seal of
the Comptroller shall be impressed or printed or lithographed thereon.
Section 7.3 Application of Proceeds of the Certificates. The proceeds from the sale of
the Certificates shall be deposited to the Construction Fund established pursuant to Section
10.2(b) of this Ordinance and used only for the purposes set forth in Section 3 1 of this
Ordinance and to pay all expenses arising in connection with the issuance of the Certificates.
Any proceeds of the Certificates remaining after making all such deposits and payments shall be
deposited into the Interest and Sinking Fund and, to the extent applicable, applied to pay or
redeem Certificates as provided in Section 10.2(c) of this Ordinance.
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ORDINANCE NO. 855
Notwithstanding the above and foregoing, immediately following the delivery of the
Certificates and prior to the deposit of the proceeds from the sale of such Certificates in the
"Special City of Pearland Loan Construction Fund" established at an official depository of the
City pursuant to Section 10.2 hereof, such proceeds shall be held in trust and in escrow pursuant
to the written escrow agreement described below at an official depository of the City pending
written authorization to release said proceeds. A "Special Escrow Deposit Agreement" by and
between the City and the official depository, attached hereto as Exhibit B 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 same form and content herein approved.
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Section 7 4 Tax Exemption. The City intends that the interest on the Certificates shall
be excludable from gross income of the owners thereof for federal income tax purposes pursuant
to Sections 103 and 141 through 150 of the Internal Revenue Code of 1986, as amended, (the
"Code") and all applicable temporary, proposed and final regulations (the "Regulations") and
procedures promulgated thereunder and applicable to the Certificates. For this purpose, the City
covenants that it will monitor and control the receipt, investment, expenditure and use of all
gross proceeds of the Certificates (including all property the acquisition, construction or
improvement of which is to be financed directly or indirectly with the proceeds of the
Certificates) and take or omit to take such other and further actions as may be required by
Sections 103 and 141 through 150 of the Code and the Regulations to cause interest on the
Certificates to be and remain excludable from the gross income, as defined in Section 61 of the
Code, of the owners of the Certificates for federal income tax purposes. Without limiting the
generality of the foregoing,the City shall comply with each of the following covenants.
(a) The City will use all of the proceeds of the Certificates to (i)provide funds to pay
contractual obligations to be incurred for the purposes set forth in Section 3 1
hereof and (ii) to pay the costs of issuing the Certificates. The City will not use
any portion of the proceeds of the Certificates to pay the principal of or interest or
redemption premium on, any other obligation of the City or a related person.
(b) The City will not directly or indirectly take any action or omit to take any action,
which action or omission would cause the Certificates to constitute "private
activity bonds" within the meaning of Section 141(a) of the Code.
(c) Principal of and interest on the Certificates will be paid solely from ad valorem
taxes and pledged revenues collected by the City, investment earnings on such
collections, and as available,proceeds of the Certificates.
(d) Based upon all facts and estimates now known or reasonably expected to be in
existence on the date the Certificates are delivered, the City reasonably expects
that the proceeds of the Certificates will not be used in a manner that would cause
the Certificates or any portion thereof to be an "arbitrage bond" within the
meaning of Section 148 of the Code.
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ORDINANCE NO. 855
(e) At all times while the Certificates are outstanding, the City will identify and
properly account for all amounts constituting gross proceeds of the Certificates in
accordance with the Regulations. The City will monitor the yield on the
investments of the proceeds of the Certificates and, to the extent required by the
Code and the Regulations, will restrict the yield on such investments to a yield
which is not materially lhigher than the yield on the Certificates. To the extent
necessary to prevent the Certificates from constituting "arbitrage bonds," the City
will make such payments as are necessary to cause the yield on all yield restricted
nonpurpose investments allocable to the Certificates to be less than the yield that
is materially higher than the yield on the Certificates.
(f) The City will not take any action or knowingly omit to take any action, if taken or
omitted, would cause the Certificates to be treated as "federally guaranteed"
obligations for purposes of Section 149(b) of the Code.
(g) The City represents that,not more than fifty percent (50%) of the proceeds of the
Certificates will be invested in nonpurpose investments (as defined in Section
148(f)(6)(A) of the Code)having a substantially guaranteed yield for four years or
more within the meaning of Section 149(g)(3)(A)(ii) of the Code, and the City
reasonably expects that at least eighty-five percent (85%) of the spendable
proceeds of the Certificates will be used to carry out the governmental purpose of
the Certificates within the three-year period beginning on the date of issue of the
Certificates.
(h) The City will take all necessary steps to comply with the requirement that certain
amounts earned by the City on the investment of the gross proceeds of the
Certificates, if any, be rebated to the federal government. Specifically, the City
will (i) maintain records iregarding the receipt, investment, and expenditure of the
gross proceeds of the Certificates as may be required to calculate such excess
arbitrage profits separately from records of amounts on deposit in the funds and
accounts of the City allocable to other obligations of the City or moneys which do
not represent gross proceeds of any obligations of the City and retain such records
for at least six years after the day on which the last outstanding Certificate is
discharged, (ii) account for all gross proceeds under a reasonable, consistently
applied method of accounting, not employed as an artifice or device to avoid in
whole or in part, the requirements of Section 148 of the Code, including any
specified method of accounting required by applicable Regulations to be used for
all or a portion of any gross proceeds, (iii) calculate, at such times as are required
by applicable Regulations, the amount of excess arbitrage profits, if any, earned
from the investment of the gross proceeds of the Certificates and (iv) timely pay,
as required by applicable Regulations, all amounts required to be rebated to the
federal government. In addition, the City will exercise reasonable diligence to
assure that no errors are made in the calculations required by the preceding
sentence and, if such an error is made, to discover and promptly correct such error
within a reasonable amount of time thereafter, including payment to the federal
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ORDINANCE NO. 855
i
government of any delinquent amounts owed to it, interest thereon and any
penalty
(i) The City will not directly or indirectly pay any amount otherwise payable to the
federal government pursuant to the foregoing requirements to any person other
than the federal government by entering into any investment arrangement with
respect to the gross proceeds of the Certificates that might result in a reduction in
the amount required to be paid to the federal government because such
arrangement results in a smaller profit or a larger loss than would have resulted if
such arrangement had been at arm's length and had the yield on the Certificates
not been relevant to either party
(j) The City will timely file or cause to be filed with the Secretary of the Treasury of
the United States the information required by Section 149(e) of the Code with
respect to the Certificates on such form and in such place as the Secretary may
prescribe.
(k) The City will not issue or use the Certificates as part of an "abusive arbitrage
device" (as defined in Section 1 148-10(a) of the Regulations) Without limiting
the foregoing, the Certif cates are not and will not be a part of a transaction or
series of transactions that attempts to circumvent the provisions of Section 148 of
the Code and the Regulations by (i) enabling the City to exploit the difference
between tax-exempt arid taxable interest rates to gain a material financial
advantage or(ii) increasing the burden on the market for tax-exempt obligations.
(1) Proper officers of the City charged with the responsibility for issuing the
Certificates are hereby directed to make, execute and deliver certifications as to
facts, estimates or circumstances in existence as of the date of issuance of the
Certificates and stating whether there are facts, estimates or circumstances that
would materially change the City's expectations. On or after the date of issuance
of the Certificates,the City will take such actions as are necessary and appropriate
to assure the continuous accuracy of the representations contained in such
certificates.
(m) The covenants and representations made or required by this Section are for the
benefit of the Certificateholders and any subsequent Certificateholder, and may be
relied upon by the Certificateholders and any subsequent Certificateholder and
bond counsel to the City
In complying with the foregoing covenants, the City may rely upon an unqualified
opinion issued to the City by nationally recognized bond counsel that any action by the City or
reliance upon any interpretation of the Code or Regulations contained in such opinion will not
cause interest on the Certificates to be includable in gross income for federal income tax
purposes under existing law
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ORDINANCE NO. 855
Notwithstanding any other prof ision of this Ordinance, the City's representations and
obligations under the covenants and provisions of this Section 7 4 shall survive the defeasance
and discharge of the Certificates for as long as such matters are relevant to the exclusion of
interest on the Certificates from the gross income of the owners for federal income tax purposes.
Section 7.5 Related Matters. In order that the City shall satisfy in a timely manner all
of its obligations under this Ordinance, the Mayor, the Mayor, City Secretary 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 the Certificates, including, without limitation, executing and delivering on behalf of
the City all 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.
Section 7 6 Bond Insurance. In order to obtain the lowest attainable interest rates on
the Certificates, the City shall purchase a Certificate Insurance Policy issued by the Certificate
Insurer for the Certificates. The Mayor is authorized to execute and the City Secretary is
authorized to attest and affix the City's seal to any documents required in connection with the
purchase of such policy
ARTICLE VIII.
CONTINUING DISCLOSURE UNDERTAKING
Section 8 1 Annual Reports. The City shall provide annually to each NRMSIR and any
SID, 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 C hereto Any financial
statements so to be provided shall be (1) prepared in accordance with the accounting principles
described in Exhibit C 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 soi provided, then the City shall provide audited financial
statements for the applicable fiscal year to each NRMSIR and any SID, when and if audited
financial statements become available.
If the City changes its fiscal year, it will notify each NRMSIR and any SID 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 to provide 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 any
document (including an official statement or other offering document, if it is available from the
MSRB)that theretofore has been provided to each NRMSIR and any SID or filed with the SEC
Section 8.2. Material Event Notices. The City shall notify any SID and either each
NRMSIR or the MSRB, in a timely manner, of any of the following events with respect to the
Certificates, if such event is material within the meaning of the federal securities laws.
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ORDINANCE NO. 855 I
(a) Principal and interest payment delinquencies,
(b) Non-payment related defaults,
(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 or events affecting the tax-exempt status of the
Certificates,
(g) Modifications to rights of holders of the Certificates;
(h) Certificate calls,
(i) Defeasances, j
(j) Release, substitution, or sale of property securing repayment of the
Certificates, and
(k) Rating changes.
The City shall notify any SID and either each NRMSIR or the MSRB, in a timely
manner, of any failure by the City to provide financial information or operating data in
accordance with Section 8 1 of this Ordinance by the time required by such Section.
Section 8.3 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 Certificates within the meaning of the
Rule, except that the City in any event will give the notice required by Section 8.2 of any
Certificate 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 holders and beneficial owners
of the Certificates, and the beneficial owners of the TWDB's bonds if the City is an obligated
person with respect to the TWDB's bonds under the Rule, 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 provide any 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,
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ORDINANCE NO. 855
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 Certificates at any
future date.
UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER
OR BENEFICIAL OWNER OF ANY CERTIFICATE 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
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 OR
SPECIFIC PERFORMANCE.
No default by the City in observing or performing its obligations under this Article shall
constitute a breach of or default under the Ordinance for purposes of any other provision of this
Ordinance.
Nothing 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 the
changed circumstances that arise from a change in legal requirements, a change in law, or a
change in 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 the Certificates in the primary offering of the Certificates 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 holders 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 Certificates consent to such
amendment or (b) a person that is unaffiliated with the City (such as nationally recognized bond
counsel) determines that such amendment will not materially impair the interests of the holder
and beneficial owners of the Certificates. 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 8.1 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 its discretion in any other manner or circumstance, but in either case only if and to the
extent that the provisions of this sentence would not have prevented an underwriter from
lawfully purchasing or selling Certificates in the primary offering of the Certificates, giving
effect to (a) such provisions as so amended and (b) any amendments or interpretations of the
Rule.
Section 8 4 Definitions. As used in this Article, the following terms have the meanings
ascribed to such terms below.
25
ORDINANCE NO. 855
"MSRB" means the Municipal Securities Rulemaking Board.
"NRMSIR" means each person whom the SEC or its staff has determined to be a
nationally recognized municipal securities information repository within the meaning of the Rule
from time to time.
I
"Rule" means SEC Rule 15c2-12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission.
"SID" means any person designated by the State of Texas or an authorized department,
officer, or agency thereof as, and determined by the SEC or its staff to be, a state information
depository within the meaning of the Rule from time to time.
ARTICLE IX.
PROVISIONS RELATING TO BOND INSURANCE
Section 9 1 Provisions Relating to Bond Insurance. Notwithstanding anything in this
Ordinance to the contrary and in consideration of the issuance of the Certificate Insurance
Policy,the City agrees and covenants with the Certificate Insurer as follows.
(a) The Certificate Insurer shall be deemed to be the sole holder of the Bonds Insured
by it for the purpose of exercising any voting right or privilege or giving any
consent or direction or taking any other action that the holders of the Bonds
insured by it are entitled to take pursuant to the Ordinance. The maturity of
Bonds insured by the Certificate Insurer shall not be accelerated without the
consent of the Certificate Insurer
(b) No waiver, modification, amendment or supplement to the Ordinance may
become effective except upon obtaining the prior written consent of the
Certificate Insurer
(c) Copies of any modification or amendment to the Ordinance shall be sent to
Standard & Poor's Ratings Services and Moody's Investors Service, Inc. at least
10 days pnor to the effective date thereof.
(d) Amounts paid by the Certificate Insurer under the Certificate Insurance Policy
shall not be deemed paid for purposes of the Ordinance and shall remain
Outstanding and continue to be due and owing until paid by the Issuer in
accordance with the Ordinance. The Certificate Insurer shall, to the extent it
makes any payment of principal of or interest on the Bonds,become subrogated to
the rights of the recipients of such payments in accordance with the terms of the
Certificate Insurance Policy The Ordinance shall not be discharged unless all
26
ORDINANCE NO. 855
amounts due or to become due to the Certificate Insurer have been paid in full or
duly provided for
Section 9.2. Claims Upon the Certificate Insurance Policy and Payments by and to the
Certificate Insurer (a) If, on the business day prior to the related scheduled interest payment
date or principal payment date ("Payment Date") there is not on deposit with the Paying Agent,
after making all transfers and deposits Irequired under the Ordinance, moneys sufficient to pay
the principal of and interest on the Bonds due on such Payment Date, the Paying Agent shall
make a claim under the Certificate Insurance Policy and give notice to the Certificate Insurer and
to its designated agent(if any) (the "Certificate Insurer's Fiscal Agent") by telephone or telecopy
of the amount of such deficiency, and the allocation of such deficiency between the amount
required to pay interest on the Bonds and the amount required to pay principal of the Bonds,
confirmed in writing to the Certificate Insurer and the Certificate Insurer's Fiscal Agent by 12.00
noon, New York City time, on such Business Day by filling in the form of Notice of Claim and
Certificate delivered with the Certificate Insurance Policy
(b) In the event the claim to be made is for a mandatory sinking fund redemption
installment, upon receipt of the money due, the Paying Agent shall authenticate and deliver to
affected Bondholders who surrender their Bonds a new Bond or Bonds in an aggregate principal
amount equal to the unredeemed portion of the Bond surrendered. The Paying Agent shall
designate any portion of payment of principal on Bonds paid by the Certificate Insurer, whether
by virtue of mandatory sinking fund redemption, maturity or other advancement of maturity, on
its books as a reduction in the principal amount of Bonds registered to the then current
Bondholder, whether DTC or its nominee or otherwise, and shall issue a replacement Bond to the
Certificate Insurer, registered in the name of Financial Security Assurance Inc., in a principal
amount equal to the amount of principal so paid (without regard to authorized denominations),
provided that the Paying Agent's failure to so designate any payment or issue any replacement
Bond shall have no effect on the amount of principal or interest payable by the Issuer on any
Bond or the subrogation rights of the Certificate Insurer
(c) The Paying Agent shall keep a complete and accurate record of all funds
deposited by the Certificate Insurer into the Policy Payments Account and the allocation of such
funds to payment of interest on and principal paid in respect of any Bond. The Certificate
Insurer shall have the right to inspect such records at reasonable times upon reasonable notice to
the Paying Agent.
(d) Upon payment of a claim under the Certificate Insurance Policy the Paying Agent
shall establish a separate special purpose trust account for the benefit of Bondholders referred to
herein as the "Policy Payments Account" and over which the Paying Agent shall have exclusive
control and sole right of withdrawal. The Paying Agent shall receive any amount paid under the
Certificate Insurance Policy in trust on behalf of Bondholders and shall deposit any such amount
in the Policy Payments Account and distribute such amount only for purposes of making the
payments for which a claim was made. Such amounts shall be disbursed by the Paying Agent to
Bondholders m the same manner as principal and interest payments are to be made with respect
to the bonds under the sections hereof regarding payment of Bonds. It shall not be necessary for
27
ORDINANCE NO. 855
such payments to be made by checks or wire transfers separate from the check or wire transfer
used to pay debt service with other funds available to make such payments.
(e) Funds held in the Policy Payments Account shall not be invested by the Paying
Agent and may not be applied to satisfy any costs, expenses or liabilities of the Paying Agent.
(f) Any funds remaining in the Policy Payments Account following a Payment Date
shall promptly be remitted to the Certificate Insurer
Section 9.3 Notices and Reports, Third Party Beneficiary (a) The Certificate Insurer
shall be provided with all reports, notices and correspondence to be delivered under the terms of
the Ordinance.
(b) The notice address of the Certificate Insurer is Financial Security Assurance
Inc., 350 Park Avenue, New York, Nev York 100022-6022, Attention. Managing Director —
Surveillance; Re Policy No Telephone: (212) 826-0100, Telecopier (212) 339-
3529 In each case in which notice or other communication refers to an Event of Default, then a
copy of such notice or other communication shall also be sent to the attention of General Counsel
and shall be marked to indicate"URGENT MATERIAL ENCLOSED "
(c) The Certificate Insurer shall be deemed to be a third party beneficiary to the
Ordinance.
ARTICLE X.
MISCELLANEOUS
Section 10 1 Defeasance. The City may defease the provisions of this Ordinance and
discharge its obligations to the Registered Owners of any or all of the Certificates to pay the
principal of and interest thereon in any, manner permitted by law, including by depositing with
the Paying Agent/Registrar or with the State Treasurer of the State of Texas either (a) cash in an
amount equal to the principal amount of such Certificates plus interest thereon to the date of
maturity or redemption, or (b) pursuant to an escrow or trust agreement, cash and/or direct
obligations of, or obligations the principal of and interest on which are guaranteed by the United
States of America, in principal amounts and maturities and bearing interest at rates sufficient to
provide for the timely payment of the principal amount of the Certificates plus interest thereon to
the date of maturity or redemption, provided, however, that if any of the Certificates are to be
redeemed prior to their respective dates of maturity, provision shall have been made for giving
notice of redemption as provided in this Ordinance. Upon such deposit, such Certificates 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
Section 10.2. Compliance with TWDB Rules and Regulations. In compliance with the
rules and regulations of the TWDB,the City agrees and covenants
28
ORDINANCE NO. 855
(a) to keep and maintain full and complete records and accounts pertaining to
the construction of the project financed with the proceeds of sale of the Certificates,
including the construction fund,account created below, in accordance with the standards
set forth by the Government Accounting Standard Board,
(b) to create and establish at an official depository of the City a "Special City
of Pearland Loan Construction Fund (the "Construction Fund") for the receipt and
disbursement of the proceeds from the sale of the Certificates (less amounts to pay costs
of issuance) and all other funds acquired by the City in connection with the planning and
construction of the projects financed, in whole or in part, by the TWDB pursuant to a
loan evidenced by the Certificates and all funds deposited to the credit of the
Construction Fund shall be disbursed only for the payment of costs and expenses incurred
in connection with the planning and building of such projects as approved by the TWDB
and as otherwise allowed by the rules,
(c) upon completion,of the construction of the projects financed, in whole or
in part, by the loan evidenced by the Certificates, to provide (i)to the Development Fund
Manager of the TWDB a complete set of as-built drawings and (ii)to the TWDB a final
accounting of the total costs of the projects. If the projects as finally completed were
built at a total cost less than the;amount of available funds for building the projects, or if
the Development Fund Manager'of the TWDB disapproves construction of any portion of
such projects as not being in accordance with the plans and specifications,the City agrees
to immediately, with filing of the final accounting, return to the TWDB the amount of
any such excess and/or the cost determined by the Development Fund Manager of the
TWDB relating to the parts of such projects not built in accordance with the plans and
specifications,to the nearest multiple of the authorized denominations for the Certificates
held by the TWDB in inverse order of their Stated Maturities. In determining the amount
of available funds for building'the project, the City agrees to account for all amounts
deposited to the credit of the Construction Fund, including all loan funds extended by the
TWDB, all other funds available from the projects as described in the project engineer's
or fiscal representative's sufficiency of funds statement and all interest earned by the City
on money in the Construction Fund,
(d) to maintain adequate insurance coverage on the projects financed with the
proceeds of the Certificates in amounts adequate to protect the TWDB's interest;
(e) to maintain current, accurate and complete records and accounts necessary
to demonstrate compliance with financial assistance related legal and contractual
provisions,
(f) to implement any water conservation program required by the TWDB
until all financial obligations to the State of Texas have been discharged,
(g) to comply with any special conditions specified by the TWDB's
environmental determination until all financial obligations to the State of Texas have
been discharged,
29
ORDINANCE NO. 855
(h) to abide by the TWDB's rules and relevant state statutes, including the
Texas Water Code, Chapters 15; 16 and 17, and
(i) so long as any Certificates are held by the TWDB, to provide to the
TWDB's Development Fund Manager a copy of each of its annual audited financial
statements,to be submitted without charge.
Section 10.3 Legal Holidays. In any case where the date interest accrues and becomes
payable on the Certificates or principal of the Certificates matures or the date fixed for
redemption of any Certificates or a Record Date shall be in the City a Saturday, Sunday, legal
holiday or a day on which banking institutions are authorized by law to close, then payment of
interest or principal need not be made on such date, or the Record Date shall not occur on such
date, but payment may be made or the Record Date shall occur on the next succeeding day which
is not in the City a Saturday, Sunday, legal holiday or a day on which banking institutions are
authonzed by law to close with the same force and effect as if(i) 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 or (ii) the Record Date had occurred on the fifteenth
day of that calendar month.
Section 10 4 No Recourse Against City Officials. No recourse shall be had for the
payment of principal of or interest on any Certificates or for any claim based thereon or on this
Ordinance against any official of the City or any person executing any Certificates.
Section 10 5 Further Proceedings. The Mayor, Mayor Pro-Tem, City Secretary and
other appropriate officials of the City are hereby authorized and directed to do any and all things
necessary and/or convenient to carry out the terms of this Ordinance.
Section 10 6 Severability If any Section, paragraph, clause or provision of this
Ordinance shall for any reason be field 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.
Section 10 7 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 the general public at City Hall for the time required by law preceding this meeting, as
required by the Open Meetings Law, Chapter 551, Texas Government Code, and that this
meeting has been open to the public as required by law at all times during which this Ordinance
and the subject matter thereof has been discussed, considered and formally acted upon. The City
Council further ratifies, approves and confirms such written notice and the contents and posting
thereof.
Section 10 8 Repealer All orders, resolutions and ordinances, or parts thereof,
inconsistent herewith are hereby repealed to the extent of such inconsistency
30
ORDINANCE NO. 855
Section 10.9 Emergency It is hereby officially found and determined that this
Ordinance relates to an immediate public emergency affecting life, health, property, and public
peace, and that such emergency exists, the specific emergency being that the proceeds from the
sale of the Certificates are required as soon as possible for necessary and urgently needed
improvements, and that this Ordinance be passed and approved on the date of its introduction.
Section 10.10 Effective Date This Ordinance shall be in force and effect from and after
its passage on the date shown below
PASSED and APPROVED on First and Only Reading this the day of
, AD , 1998
TOM REID
MAYOR
ATTEST
YOUNG LORFING
CITY SECRETARY
APPROVED AS TO FORM
DARRIN M COKER
INTERIM CITY ATTORNEY
31
EXHIBIT A
PAYING AGENT/REGISTRAR AGREEMENT
THIS PAYING ,AGENT/REGISTRAR AGREEMENT dated as of June 29, 199R
(together with any amendments or supplements hereto, the "Agreement") is entered into by and
between the CITY OF PEARLAND, TEXAS (the. "Issuer"), and CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION, HOUSTON,TEXAS,as paying agent/registrar(together with any
successor in such capacity,the "Bank"),
WITNESSETII:
WHEREAS, the Issuer has duly authorized and provided for the issuance of its City of
Pearland, Texas Certificates of Obligation, Series 1998 (the "Certificates") in the aggregate
principal amount of$17,100,000 to be iissued as fully registered certifiaates:
WHEREAS, all things necessary to mate me Certificates thc valid obligations of the
Issuer, in accordance with their terms,will be done upon the issuance and delivery thereof
WHEREAS,thc Issuer and the Bank wish to provide the terms under which the Bank will
act as Paying Agent to pay the principal of, redemption premium, if any, and interest on the
Certificates,in accordance with the terms thereof,and under which the Bank will act as Registrar
for the Certificates:and
WHEREAS, the Issuer and the Bank have duly authorized the execution and delivery of
this Agreement; and all things necessary to make this Agreement the valid agreement of the
parties,in accordance with its terms,have been.done.
NOW,THEREFORE, it is mutually agreed as follows.
ARTICLE ONE
APPOINTMENT OF BANK AS
PAYING AGENT AND REGISTRAR
Section 1.01. Appointment.
The Issuer hereby appoints the Bank to act as Paying Agent with respect to the
Certificates, to pay to the Registered Owners of the Certificates, in accordance with the terms
and provisions of this Agreemennt and the ordinance authorizing the issuance of the Certificates
(the"Ordinance"),the principal of, redemption premium, if auiy, and interest on all or any of the
Certificates.
The Issuer hereby appoints the Bank as Registrar with respect to the Certificates.
The Bank hereby accepts its appointment, and agrees to act es Paying Agent and
Registrar with respect to the Certificates.
Section 1.02. Compensation.
As compensation for the Bank's Services as Paying Agent and Registrar. the Issuer
hereby agrees to pay the Bank the fees set forth in the Bank's fee schedule attached as Exhibit A
hereto. The Bank reserves the right to amend the fee schedule at any time, provided the Bank
shall have furnished the Issuer with a written copy of such amended fee schedule at least 60 days
prior to the date that the new fees are to become effective.
ARTICLE TWO
DEFINITIONS
Section 2.01. Definitions.
For all purposes of this Agreement, except as others.ice expressly provided or unless the
context otherwise requires:
"Bank" means Chace Bank of Texas, National Association, Houston, Texas, a
commercial bank which is a national bank duly organized and existing under the laws of the
United States of America.
"Certificate" or "Certificates" means any one or all of the "City of Pearland, Texas
Certificates of Obligation,Series 1998" authorized by the Ordinance.
"Issuer"moans the City of Pearland,Texas.
"Ordinance" means the ordinance of the Issuer approved by its City Council on June 29.
1998,pursuant to which the Certificates are issued.
"Paying Agent"means the Bank when it is perfotnning the function of paying agent.
"Person" means any individual;corporation,partnership,joint venture, associations,joint
stock company, trust, unincorporated' organization or government or any agency or political
subdivision of a government or any entity whatsoever.
"Registrar"means the Bank when it is performing the function of registrar.
"Registered Owner" means the Person in whose name any Certificate is registered in the
books of registration maintained by the Bank under this Agreement.
All other capitalized terms shall have the meanings assigned to them in the Ordinance.
J
ARTICLE THREE
DUTIES OF THE BANK
Section 3.01 Initial Delivery of lithe Certificates.
The Certificates will be initially registered and delivered by the Bank to the purchaser
designated by the Issuer as set forth in the Ordinance. If such purchaser delivers a written
request to the Bank not later than five business days prior to the date of initial delivery,the Bank
will, on the date of initial delivery, exchange the Certificates initially delivered for Certificates of
authorized denominations, registered in accordance with the instructions in such request and the
Ordinance.
Section 3.02. Duties of Paying Agent.
As Paying Agent, the Bank shall, provided adequate funds have been provided to it for '
such purpose by or on behalf of the Issuer, timely pay on behalf of the Issuer the principal of and
interest on each Certificate in accordance with the provisions of the Ordinance.
If the issue is to be Depository Trust Company (DTC) eligible, the Paying Agent will
comply with all eligibility requirements as outlined and agreed upon in the eligibility
questionnaire.
Section 3.03. Duties of Registrar
The Bank shall provide for the proper registration of the Certificates and the timely
exchange,, replacement and registration of transfer of the Certificates in accordance with the
provisions of the Ordinance. Any changes to Registered Owners for such exchange,replacement
and registration shall be made by the Bank only in accordance with the Ordinance. The Bank
will maintain the books of registration in accordance with the Bank's general practices and
procedures in effect from time to time; provided, however, that the Bank agrees to comply with
the terms of Tex. Rev Civ Stat. Ann. art. 715b, § 4, as amended, and more specifically agrees
also to maintain books of registration for the Certificates at the City Secretary's office in City of
PearIand, Texas, which books of registration may be a copy of the register which shall be kept
current by the Bank.
Section 3.04. Unauthenticated Certificates.
The Issuer shall provide an adequate inventory of unauthenticated Certificates to
facilitate transfers. The Bank covenants that it will maintain such unauthenticated Certificates in
safekeeping and will use reasonable care in maintaining such Certificates in safekeeping, which
shall be not less than the care it maintains for debt securities of other government entities or
corporations for which it serves as registrar,or which it maintains for its own bonds.
Section 3.05. Reports.
Upon request of the Issuer,the Bank will provide the Issuer reports which will describe in
reasonable detail all transactions pertaining to the Certificates and the books of registration for '
the period of time specified by the Issuer The Issuer may also inspect and make copies of the
information in the books of registration and such other documents related to the Certificates and.
in the Bank's possession at any time the Bank is customarily open for business, provided that
reasonable time is allowed the Bank to provide an up-to-date listing or to convert the information
into written form.
The Bank will not release or disclose the content of the books of registration to any
person other than to, or at the written request of, an authorized officer or employee of the Issuer,
except upon receipt of a subpoena, court order or as otherwise required by law Upon receipt of
a subpoena, court order or other lawful;request, the Bank will notify the Issuer immediately so
that the Issuer may contest the subpoena, court order or other request if it so chooses.
Section 3.06 Canceled Certificates.
All Certificates surrendered for payment, redemption, transfer, exchange or replacement,
if surrendered to the Bank, shall be promptly canceled by it and, if surrendered to the Issuer,
shall be delivered to the Bank and, if not already canceled, shall be promptly canceled by the
Bank. The Issuer may at any time deliver to the Bank for cancellation any Certificates
previously authenticated and delivered which the Issuer may have acquired in any manner
whatsoever, and all Certificates so delivered shall be promptly canceled by the Bank. All
canceled Certificates held by the Bank shall be destroyed and evidence of such destruction shall
be furnished to the Issuer.
Section 3.07 Reliance on Documents,Etc.
(a) The Bank may conclusively rely, as to the truth of the statements and correctness
of the opinions expressed therein,on certificates or opinions furnished to the Bank by the Issuer.
(b) The Bank than not be liable to the Issuer for actions taken under this Agreement
as long as it acts in good faith and exercises due diligence,reasonableness and care,as prescribed
by law,with regard to its duties hereunder
(c) This Agreement is not intended to require the Bank to expend its own funds for
performance of any of its duties hereunder.
(d) The Bank may exercise any of the powers hereunder and perform any duties
hereunder either directly or by or through agents or attorneys.
Section 3.08. Money Held by Bank.
Money held by the Bank hereunder shall be held in trust for the benefit of the Registered
Owners of the Certificates.
The Bank shall be under no obligation to pay interest on any money received by it
hereunder
All money deposited with the Bank hereunder shall be secured in the manner and to the
fullest extent required by law for the security of funds of the Issuer
Any money deposited with the Bank for the payment of the principal of or interest on any
Certificates and remaining unclaimed byj the Registered Owner after the expiration of three years
from the date such funds have become due and payable shall be reported and disposed of by the
, Bank in accordance with the provisions of Texas law including, to the extent applicable, Title 6
of the Texas Property Code, as amended. To the extent such provisions of the Property Code do -
not apply to the funds, such funds shall be paid by the Bank to the Issuer upon receipt of a
written request therefor from the Issuer The Bank shall have no liability to the Registered
Owners of the Certificates by virtue of actions taken in compliance with the foregoing provision.
ARTICLE FOUR
MISCELLANEOUS PROVISIONS
Section 4 01. May Own Certificates.
The Bank, in its individual or any other capacity, may become the owner or pledgee of
Certificates with the same rights it would have if it were not the Paying Agent and Registrar for
the Certificates.
Section 4.02. Amendment. ,
This Agreement may be amended only by an agreement in writing signed by,both of the
parties hereof.
Section 4.03. Assignment.
This Agreement may not be assigned by either party without the prior written consent of
the other.
Section 4.04. Notices.
Any request, demand, authorization, direction, notice, consent, waiver or other document
provided or permitted hereby to be given or furnished to the Issuer or the Bank shall be mailed or
delivered to the Issuer or the Bank, respectively, at the addresses shown herein, or such other
address as may have been given by one party to the other by 15 days'written notice.
Section 4 05 Effect of Headings.
The Article and Section headings herein are for convenience only and shall not affect the
construction hereof.
Section 4.06, Successors and Assigns.
All covenants and agreements herein by the Issuer and the Bank shall bind their
successors and assigns, whether so expressed or not. This Agreement shall not be assigned by
the Bank without the prior written consent of the Issuer.
Seetian 4.07. Severability
If any provision of this Agreement shall be invalid or unenforceable, the validity and
enforceability of the remaining provisions hereof shall not in any way be affected or impaired.
Section 4.08. Benefits of Agreement.
Nothing herein,express or implied,shall give to any Person, other than the parties hereto
and their successors hereunder, any benefit or any legal or equitable right, remedy or claim
hereunder.
Section 4.09. Ordinance Governs Conflicts.
This Agreement and the Ordinance constitute the entire agreement between the parties
hereto relative to the Bank acting as Paying Agent and Registrar and if any conflict exists
between this Agreement and the Ordinance, the Ordinance shall govern. The Bank agrees to be
bound by the terms of the Ordinance with respect to the Certificates.
Section 410. Term andTermination.
This Agreement shall be effective from and after its date and may be terminated for any
reason by the Issuer or the Bank at any time upon 60 days' written notice; provided, however,
that no such termination shall be effective until a successor has been appointed and has accepted
the duties of the Bank hereunder. In the event of early termination,regardless of circumstances,
the Bank shall deliver to the Issuer or its designee all funds, Certificates and all books and
records pertaining to the Banks rote as Paying Agent and Registrar with respect to the
Certificates,including,but not limited to,the hooks of registration.
Section 4.11 Counterparts.
This Agreement may be executed in any number of counterparts, each of which shall be
deemed an original and all of which shall constitute one and the same Agreement.
Section 4.12 Governing Law.
This Agreement shall be construed in accordance with and shall be governed by the laws
of the State of Texas.
IN WITNESS WHEREOF,the parties hereto have executed this Agreement as of the day
and year tint above written.
CITY OF PEAPLAND, TEXAS
By __
Mayor
ADDRESS. 3519 Liberty Drive
Pearland,Texas 775R i
ATTEST-
City Secretary
(SEAL)
CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION
BTitle:
ADDRESS 600 Travis, 11th Floor
Houston,Texas 77002
ATTEST
By-
Title:
(SEAL)
EXHIBIT B
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION
Annual Financial Statements and Operating Data
The financial information and operating data with respect to the City to be provided
annually in accordance with Article VIII of this Ordinance are as specified below
i
1 The City's audited financial statements for the most recently concluded fiscal year
and, to the extent that such statements are not completed and available, unaudited
financial statements for such fiscal year
2. The financial information and operating data set out in Appendix C, Appendix D
and Appendix E and paragraphs (5), (6), (7), (8), (9) and (10) of the section
entitled "FISCAL INFORMATION" of the City's Application to the Texas Water
Development Board.
Accounting Principles
The accounting principles referred to in such section are the accounting principles
described in the notes to the financial statements referred to in paragraph 1 above.
EXHIBIT C
SPECIAL ESCROW DEPOSIT AGREEMENT
THIS SPECIAL ESCROW DEPOSI'1 AGREEMENT, dated as of June 29, 1998, made
by and between the City of Pearland, Texas, a home rule city of the State of Texas in Brazoria
and Harris Counties, Texas (the "City"), acting by and through the Mayor and City Secretary of
the City and Pearland State Bank,Pearland,Texas(the"Bank"),a banking association organized
and existing under the laws of the State Of Texas.
WITNESSETH
WHEREAS,pursuant to an ordinance finally adopted on June 29, 1998, the City Council
of the City authorized the issuance of $17,100,000 City of Pearland, Texas Certificates of
Obligation,Series 1998,dated July 1, 1998(the"Certificates")for the purpose of providing all or
part of the funds to pay contractual obligations to be incurred (i)for the planning, acquisition,
construction and improvement of certain sanitary sewer projects in the City including but not
limited to. a gravity sanitary sewer interceptor along Harkey Road, Ivxanvel Road,Fite Road and
Ravenwood Drive; gravity sewer lines and a lift station to provide wastewater treatment along
F.M. 518; gravity sanitary sewer lines along Cullen, and general repair, renovation and
rehabilitation of the City's sanitary sewer system to correct infiltration/inflow problems, (ii)for
the planning, acquisition,construction,improvement, Anatcrials,supplies and equipment of a new
wastewater treatment plant and sanitary sewer lines to be located in the northwest portion of the
City, with such wastewater treatment plant to provide service to newly annexed areas wcst of
S.H.288, (iii)for renovations, improvements, modifications and repairs to the Barry Rose
wastewater treatment plant, (iv)for expansion, renovations, improvements, modification and
repairs to the Longwood wastewater treatment plant,and(v)for professional services.
WHEREAS, such ordinance also confirmed the sale of the Certificates to the Texas
W atcr Development Board (the "Board"); and
WHEREAS, a condition to the purchase of the Certificates by the Board is the deposit of
the proceeds of sale(less amounts to pay costs of issuance)in escrow subject to being withdrawn
only with the approval of the Development Fund IvlanaCer of the Board or an authorized
representative;provided,however,that such funds may be transferred to different investments if
the City and the Bank consent to such transfer;
NOW,THEREFORE,the City and the Bank hereby mutually agree as follows:
SECTION, 1. Upon the delivery of the Certificates described above, proceeds of sale
(less amoimfs to pay costs of issuance) shall be deposited to the credit of the Construction Fund
(as defined in the ordinance authorizing the issuance of the Certificates) to be maintained by the
Bank on behalf of the City and the Board, and such amount shall be held in escrow by the Bank
in accordance with the terms of this Agreement.
SECTION 2. 1'he Bank shall not honor any disbursement from the Construction Fund
unless and until it has been supplied with the written approval and consent of the Development
Fund Manager of the Board (or an authorized representative thereof) to the release from escrow
7 t a
of such funds, or portion thereof, as the Board shall indicate in such release;provided, however,
that no written approval and consent by the Development.Fund Manager shall be required if the
disbursement only involves transferringfunds from one investment to another. Notice reflecting
the type of investments purchased for the Construction Fund shall be sent to the Development
Fund Manager
SECTION 3 Upon (i) completion of construction of the Project, (ii) full and final
paymenTior the lrroject, and (iii) acceptance of the Project by the City and the Board, the City
and the Board shall conduct a final accounting to determine whether any funds remain in the
Construction Fund. 'If funds remain in the Construction Fund, the City and the Board shall
determine whether such funds-shall be deposited in the Interest and Sinking Fund for the
redemption of Certificates on the nex{ optional redemption date or for additional authorized
Projects.
SECTION 4 The Bank shall be authorized to accept and rely upon the certifications and
documents tunu—sh-Ed to the Bank by the City and shall not be liable for the payznent of any funds
in reliance in good faith upon such certificates or other evidence or approval as herein recited.
SECTION 5: The Bank shall have no'liability except as expressly set forth herein and, if
a controversy arises, either party hereto may introduce the dispute into a court of proper
jurisdiction for adjudication thereof and the Bank shall not be liable for any costs and expenses
in connection therewith,including reasonable attomey's fees.
SECTION 6: All cash deposited to the credit of the Construction Fund in excess of the
amount insurWbThe Federal Deposit Insurance Corporation and remaining uninvested under
the terms of this Agreement shall be continuously secured by a valid pledge of direct obligations
of the United States of America having an aggregate market value, exclusive of accrued interest,
at all times,at least equal to such excess and uninvested cash on deposit in said Fund.
SECTION 7 While funds are held in the Construction Fund,the sank, at the direction of
the City,is autforized to invest such f Jnds in direct obligations of the United States of America
or any other authorized investments for political subdivisions of the State of Texas.
SECTION 8 An account statement of the Construction Fund will be provided by the
City to the 15eveiopment Fund Manager on a monthly basis.
SECTION 9: This Agreement may be amended from time to time,as necessary,with the
consent o3 the city Council and the Board, but no amendment shall increase the liabilities or
responsibilities or diminish the rights of the Bank without its prior written consent.
IN WITNESS WHEREOF,the parties hereto htave each caused
this Agreement to be executed by their duly authorized officers and their corporate seals to be
hereunto affixed and attested as of the date first above written.
EXECUTED as of the date first written above.
CITY OF PEARLAND,TEXAS
By
Mayor
A I'1'EST.
By-
ity ecretary 1
(CITY SEAL)
PEARLAND STATE BANK
Pearland, Texas
By
Title:
Ari EST .—
By I
Title:
(SEAL)
;OUMAIPCDOCSIHOUSTOMS70366\1
** TOTAL PAGE 13 **
204
MINUTES OF A SPECIAL MEETING OF THE CITY COUNCIL OF THE CITY OF
PEARLAND, TEXAS, HELD ON JUNE 29, 1998, AT 7:00 P.M., IN THE COUNCIL
CHAMBERS, CITY HALL, 3519 LIBERTY DRIVE, PEARLAND, TEXAS.
The meeting was called to order with the following present:
Mayor Tom Reid
Mayor Pro-Tern Larry Wilkins
Councilmember Helen Beckman
Councilmember Richard Tetens
Councilmember William Berger
Councilmember Klaus Seeger
City Manager Paul Grohman
Interim City Attorney Darrin Coker
City Secretary Young Lolling
Others in attendance: Project Coordinator Alan Mueller; City Engineer John Hargrove;
Director of Finance David Castillo; and Project Specialist Ruby Perez.
CALL TO ORDER
NEW BUSINESS.
FIRST AND ONLY READING OF ORDINANCE NO. 855 - AN ORDINANCE
AUTHORIZING AND ORDERING THE ISSUANCE OF CITY OF PEARLAND, TEXAS
CERTIFICATES OF OBLIGATION, SERIES 1998, PRESCRIBING THE TERMS AND
FORM THEREOF; PROVIDING FOR THE PAYMENT OF THE PRINCIPAL THEREOF
AND INTEREST THEREON; AWARDING THE SALE THEREOF, AUTHORIZING THE
PURCHASE OF BOND INSURANCE, MAKING OTHER PROVISIONS REGARDING
SUCH CERTIFICATES, INCLUDING USE OF THE PROCEEDS THEREOF, AND
MATTERS INCIDENT THERETO; AND DECLARING AN EMERGENCY.
Councilmember Beckman made the motion, seconded by Councilmember Tetens, to
approve Ordinance No. 855 on its first and only reading.
City Manager Paul Grohman stated that this has been a long process, and this is the next
step to sell the certificates of obligation for$17 plus million dollars. Mr Grohman further
stated that council has been briefed on this matter previously, and Council has taken in
November, 1997 and in February of this year.
Financial Advisor with Dain Rauscher Frank Ildebrando addressed Council and stated
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0 5 ,s4�
that in May of this year the Texas Water Development Board considered the application
that the City submitted in and approved the sale of$17 1 million worth of certificates of
obligations which are a combination of tax and revenue obligations. The funds are
referred to as cross-cutter funds. Part of the money came from the federal government
in the form of contributions to the State of Texas, and then, the State of Texas combined
that with bond proceeds of their own. They averaged the interest rate on both, which
provided us the opportunity to receive an extremely low interest rate on our bonds. The
average interest rate that we officially received from the State last week on $17.1 is 3.586
%. He further stated that is at least one and one half percent lower than the going market
rate in todays municipal market. Mr Ildebrando stated that the process that we are
proceeding with this evening is the passage of a Bond Order authorizing the issuance of
certificate of obligations which is part of the legal process of actually issuing the debt to
the State.
Rick Witte, Bond Council, with Mayor, Day and Caldwell outlined Ordinance No. 855.
Councilmember Berger stated that he had concerns about the tax rate being increased
to pay the debt on these bonds.
Mr. Ildebrando further explained the advantage of a combination tax and revenue
obligation over a revenue obligation.
City Manager Paul Grohman addressed Council regarding projected bond indebtedness.
Mayor Reid stated that this is a hard interest rate to beat.
There was further discussion between the Council and Mr Grohman regarding revenue
bonds and certificates of obligation.
Project Coordinator Alan Mueller outlined some of the projects that would be funded with
the proceeds of the certificates of obligation.
Mr. Ildebrando stated that the City should receive the funding in approximately thirty days.
After lengthy discussion regarding the sale of the certificates of obligation, Mayor Reid
called for a vote on the motion.
Voting "Aye" Councilmembers Beckman, Tetens, Wilkins, and Seeger.
Voting "No" Councilmember Berger.
Motion Passed 4 to 1.
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;206
COUNCIL ACTION - APPOINTMENT OF PEARLAND INDEPENDENT SCHOOL
DISTRICT TAX ASSESSOR (JO KNIGHT) TO CALCULATE AND PUBLISH THE
EFFECTIVE TAX RATE AND ROLLBACK TAX RATE FOR 1998.
Councilmember Tetens made the motion, seconded by Councilmember Beckman, to
appoint Jo Knight Pearland Independent School District Tax Assessor to calculate and
publish the effective tax rate and rollback tax rate for 1998.
City Manager Paul Grohman stated that six years ago the City consolidated our tax
collection effort with the school district which saves the City approximately $120,000 a
year Jo Knight handles that function and recommends the approval of this action.
Voting "Aye" Councilmembers Seeger, Berger, Wilkins, Tetens, and Beckman.
Voting "No" None.
Motion Passed 5 to 0.
OTHER BUSINESS:
ADJOURNMENT
Meeting was adjourned at 9:05 p.m.
Minutes approved as submitted and/or corrected this the 27th day of talk, A.D , 1998
I
oyrt
Tom Reid
Mayor
ATTEST:
Y g Lo g
Sec ary
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