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Ord. 0613 04-09-91ORDINANCE NO. 613 ORDINANCE AUTHORIZING THE ISSUANCE OF $2,125,000 CITY OF PEARLAND, TEXAS, COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 1991; AND DECLARING THAT AN IMMEDIATE PUBLIC EMERGENCY EXISTS BECAUSE THE PROCEEDS OF SUCH CERTIFICATES ARE NEEDED AS SOON AS POSSIBLE FOR THE PROTECTION OF LIFE, HEALTH, PROPERTY AND THE PUBLIC PEACE THE STATE OF TEXAS § COUNTIES OF BRAZORIA AND HARRIS § CITY OF PEARLAND § WHEREAS, the City Council of the City of Pearland, Texas (the "City"), authorized the publication of a notice of intention to issue certificates of obligation to the effect that the City Council would meet on April 8, 1991, to adopt an ordinance and take such other action as may be deemed necessary to authorize the issuance of certificates of obligation payable from City ad valorem taxes and a pledge of revenues of the City's water and sewer system, for the purpose of evidencing the indebtedness of the City for park improvements, construction of a Senior Citizens Building, and the acquisition of right of way for roads and drainage, and the cost of professional services incurred in connection therewith; and WHEREAS, such notice was published at the times and in the manner required by the Constitution and laws of the State of Texas and of the United States of America, respectively, particularly Sections 271.041, gl sea, Texas Local Government Code as amended; and WHEREAS, the City Council met on April 8 to consider authorizing the issuance of such certificates of obligation, but deferred action until April 9 to allow a sale of certificates under better market conditions; and WHEREAS, no petition or other request has been filed with or presented to any official of the City requesting that any of the proceedings authorizing such certificates of obligation be submitted to a referendum or other election; THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PEARLAND: 1. Definitions. Throughout this ordinance the following terms and expressions as used herein shall have the meanings set forth below: The term "Business Day" shall mean any day which is not a Saturday, Sunday, or a day on which the Registrar is authorized by law or executive order to close, or a legal holiday. The term "Certificates" or "Series 1991 Certificates" shall mean the Series 1991 Certificates authorized in this Ordinance, unless the context clearly indicates otherwise. The term "City" shall mean the City of Pearland, Texas. The term "Code" shall mean the Internal Revenue Code of 1986, as amended. The term "Comptroller" shall mean the Comptroller of Public Accounts of the State of Texas. The term "Interest and Sinking Fund" shall mean the interest and sinking fund established by the City pursuant to Section 18 of this Ordinance. The term "Interest Payment Date", when used in connection with any Certificate, shall mean March 1, 1992, and each September 1 and March 1 thereafter until maturity or earlier redemption. The term "Ordinance" as used herein and in the Certificates shall mean this ordinance authorizing the Certificates. The term "Owner" shall mean any person who shall be the registered owner of any outstanding Certificate. The term "Paying Agent" shall mean the Registrar. The term "Record Date" shall mean, for any Interest Payment Date, the fifteenth (15th) calendar day of the month next preceding such Interest Payment Date. The term "Register" shall mean the books of registration kept by the Registrar in which are maintained the names and addresses of and the principal amounts registered to each Owner. The term "Registrar" shall mean First City, Texas -Houston, N.A., Houston, Texas, and its successors in that capacity. 2. Authorization. The Certificates shall be issued in fully registered form, without coupons, in the total authorized aggregate amount of Two Million One Hundred Twenty -Five Thousand Dollars ($2,125,000) for the purpose of evidencing the indebtedness of the City for park improvements, construction of a Senior Citizens Building, and the acquisition of right of way for roads and drainage, and the cost of professional services incurred in connection therewith. 3. Designation. Date. and Interest Payment Dates. The Certificates shall be designated as the "CITY OF PEARLAND, TEXAS, -2- COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 1991", and shall be dated May 1, 1991. The Certificates shall bear interest from the later of May 1, 1991, 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 day months, interest payable on March 1, 1992, and semiannually thereafter on September 1 and March 1 of each year until maturity or prior redemption. 4. Initial Certificates; Numbers and Denominations. The Certificates shall be 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, subject to prior redemption in accordance with this Ordinance, on March 1 in each of the years and in the amounts set out in such schedule. Certificates delivered on transfer of or in exchange for other Certificates shall be numbered in order of their authentication by the 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 Principal Interest Number Year Amount Rate R- 1 1992 $ 50,000 7.80 % R- 2 1993 90,000 7.80 % R- 3 1994 90,000 7.80 % R- 4 1995 110,000 7.80-% R- 5 1996 115,000 7.$0 % R- 6 1997 100,000 7.80 % R- 7 1998 135,000 7.80 % R- 8 1999 140,000 7.375-$ R- 9 2000 150,000 6•30 % R-10 2001 165,000 6.40 % R-11 2002 170,000 6.50 % R-12 2003 180,000 6.50 % R-13 2004 200,000 6.50 % R-14 2005 210,000 6.5-% R-15 2006 220,000 6.5-% 5. Execution of Certificates: Seal. The Certificates shall be signed by the Mayor of the City and countersigned by the City Secretary of the City, by their manual, lithographed, or facsimile signatures, and the official seal of the City shall be impressed or placed in facsimile thereon. Such facsimile signatures on the Certificates shall have the same effect as if each of the Certificates had been signed manually and in person by each of said officers, and such facsimile seal on the Certificates shall have -3- the same effect as if the official seal of the City had been manually impressed upon each of the Certificates. 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 such Certificates or before the delivery of such Certificates, such manual or facsimile signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in such office. 6. Approval by Attorney General: Reaistration by Comptroller. The Certificates to be initially issued shall be delivered to the Attorney General of Texas for approval and shall be registered by the Comptroller. The manually executed registration certificate of the Comptroller substantially in the form provided in Section 16 of this Order shall be attached or affixed to the Certificates to be initially issued. 7. Authentication. Except for the Certificates to be initially issued, which need not be authenticated by the Registrar, only Certificates which bear thereon a certificate of authentication, substantially in the form provided in Section 16 of this Ordinance, manually executed by an authorized representative of the 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 Certificates so authenticated were delivered by the Registrar hereunder. 8. Payment of Principal and Interest. The Registrar is hereby appointed as the paying agent for the Certificates. The principal of the Certificates shall be payable, without exchange or collection charges, in any coin or currency of the United States of America which, on the date of payment, is legal tender for the payment of debts due the United States of America, upon their presentation and surrender as they become due and payable, whether at maturity or by prior redemption, at the principal corporate trust office of the Registrar. The interest on each Certificate shall be payable by check payable on the Interest Payment Date, mailed by the Registrar on or before each Interest Payment Date to the Owner of record as of the Record Date, to the address of such Owner as shown on the Register. If the date for payment of the principal of or interest on any Certificate is not a Business Day, then the date for such payment shall be the next succeeding Business Day, with the same force and effect as if made on the original date payment was due. 9. Successor Registrars. The City covenants that at all times while any Certificates are outstanding it will provide a national or state banking corporation organized and doing business -4- under the laws of the United States or any State, with trust powers and subject to supervision or examination by federal or state autohrity to serve as and perform the duties and services of the Registrar and Paying Agent for the Certificates. The City reserves the right to change the Registrar on not less than 60 days written notice to the Registrar, so 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 Registrar, the previous Registrar shall deliver the Register or copies thereof to the new Registrar, and the new Registrar shall notify each Owner, by United States mail, first class postage prepaid, of such change and of the address of the new Registrar. Each Registrar hereunder, by acting in that capacity, shall be deemed to have agreed to the provisions of this Section. 10. Special Record Date. If interest on any Certificate is not paid on any Interest Payment Date and continues unpaid for thirty (30) days thereafter, the Registrar shall establish a new record date for the payment of such interest, to be known as a Special Record Date. The Registrar shall establish a Special Record Date when funds to make such interest payment are received from or on behalf of the City. Such Special Record Date shall be fifteen (15) days prior to the date fixed for payment of such past due interest, and notice of the date of payment and the 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 Owner of record as of the close of business on the day prior to the mailing of such notice. 11. Ownership: Unclaimed Principal and Interest. The City, the 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 payment of principal or interest on such Certificate, and for all other purposes, whether or not such Certificate is overdue, and neither the City nor the Registrar shall be bound by any notice or knowledge to the contrary. All payments made to the person deemed to be the Owner of any Certificate in accordance with this Section 11 shall be valid and effectual and shall discharge the liability of the City and the Registrar upon such Certificate to the extent of the sums paid. Amounts held by the Registrar which represent principal of and interest on the Certificates remaining unclaimed by the Owner after the expiration of three years from the date such amounts have become due and payable shall be reported and disposed of by the Registrar in accordance with the applicable provisions of Texas law including, to the extent applicable, Title 6 of the Texas Property Code, as amended. -5- 12. Registration. Transfer. and Exchanae. So long as any Certificates remain outstanding, the Registrar shall keep the Register at its principal corporate trust office and, subject to such reasonable regulations as it may prescribe, the Registrar shall provide for the registration and transfer of 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 Registrar, duly endorsed for transfer, or accompanied by an assignment duly executed by the registered Owner or his authorized representative in form satisfactory to the Registrar. Upon due presentation of any Certificate for transfer, the Registrar shall authenticate and deliver in exchange therefor, within three (3) Business Days 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. All Certificates shall be exchangeable upon presentation and surrender thereof at the principal corporate trust office of the 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 Registrar shall be and is hereby authorized to authenticate and deliver exchange Certificates in accordance with the provisions of this Section 12. Each Certificate delivered in accordance with this Section 12 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. The City or the Registrar may require the 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 Registrar for such transfer or exchange shall be paid by the City. 13. jutilated. Lost. or Stolen Certificates. Upon the presentation and surrender to the Registrar of a mutilated Certificate, the Registrar shall authenticate and deliver in exchange therefor a replacement Certificate of like maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding. If any Certificate is lost, apparently destroyed, or wrongfully taken, the City,pursuant to the applicable laws of the State of Texas and in the absence of notice or knowledge that such Certificate has been acquired by a bona fide purchaser, shall authorize and the Registrar shall -6- authenticate and deliver a replacement Certificate of like maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding. The City or the Registrar may require the Owner of a mutilated 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 Registrar. The City or the Registrar may require the Owner of a lost, apparently destroyed or wrongfully taken Certificate, before any replacement Certificate is issued, to: (1) furnish to the City and the Registrar satisfactory evidence of the ownership of and the circumstances of the loss, destruction or theft of such Certificate; (2) furnish such security or indemnity as may be required by the Registrar and the City to save them harmless; (3) pay all expenses and charges in connection therewith, including, but not limited to, printing costs, legal fees, fees of the Registrar and any tax or other governmental charge that may be imposed; and (4) meet any other reasonable requirements of the City and the Registrar. If, after the delivery of such replacement Certificate, a bona fide purchaser of the original Certificate in lieu of which such replacement Certificate was issued presents for payment such original Certificate, the City and the 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 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 Registrar to pay such Certificate. Each replacement Certificate delivered in accordance with this Section 13 shall be entitled to the benefits and security of this. -7- Ordinance to the same extent as the Certificate or Certificates in lieu of which such replacement Certificate is delivered. 14. Cancellation of Certificates. All Certificates paid 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 cancelled and destroyed upon the making of proper records regarding such payment. The Registrar shall furnish the City with appropriate certificates of destruction of such Certificates. 15. Optional Redemption. The City reserves the right, at its option, to redeem the Certificates prior to maturity, on March 1, 2001, or any date thereafter, at par plus accrued interest on the amounts called for redemption to the date fixed for redemption. If less than all of the Certificates are to be redeemed, the City shall determine the Certificates to be redeemed. Principal amounts may be redeemed 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. Upon surrender of any Certificate for redemption in part, the Registrar, in accordance with Section 12 hereof, 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 redemption identifying the Certificates to be redeemed in whole or in part shall be given by the Registrar at least thirty days prior to the date fixed for redemption by sending written notice by first class mail, postage prepaid, to the Owner of each Certificate to be redeemed in whole or in part at the address shown on the Register. Such notices shall state the redemption date, the redemption price, the place at which Certificates are to be surrendered for payment and, if less than all Certificates Outstanding are to be redeemed, the numbers of the Certificates or portions thereof to be redeemed. Any notice given as provided in this Section 15 shall be conclusively presumed to have been duly given, whether or not the Owner receives such notice. By the date fixed for redemption, due provision shall be made with the Registrar for payment of the redemption price of the Certificates or portions thereof to be redeemed, plus accrued interest to the date fixed for redemption. When Certificates have been called for redemption in whole or in part and due provision has been made to redeem the same as herein provided, the Certificates or portions thereof so redeemed shall no longer be regarded as outstanding except for the purpose of receiving payment solely from the funds so provided for redemption, and the rights of the Owners to collect interest which would otherwise accrue -8- after the redemption date on any Certificate or portion thereof called for redemption shall terminate on the date fixed for redemption. 16. Forms. The form of the Certificates, including the form of the Registrar's Authentication Certificate, the form of Assignment, and the form of Registration Certificate of the Comptroller which shall be attached or affixed to the Certificates initially issued shall be, respectively, substantially as follows, with such additions, deletions and variations as may be necessary or desirable and not prohibited by this Ordinance, including any legend regarding bond insurance if such insurance is obtained by the purchaser: (Face of Certificate) UNITED STATES OF AMERICA STATE OF TEXAS COUNTIES OF BRAZORIA AND HARRIS NUMBER DENOMINATION R- $ REGISTERED REGISTERED INTEREST RATE: REGISTERED OWNER: PRINCIPAL AMOUNT: CITY OF PEARLAND, TEXAS COMBINATION TAX AND REVENUE CERTIFICATE OF OBLIGATION SERIES 1991 MATURITY DATE: ISSUE DATE: CUSIP: May 1, 1991 DOLLARS THE CITY OF PEARLAND, TEXAS (the "City") promises to pay to the registered owner identified above, or registered assigns, on the date specified above, upon presentation and surrender of this Certificate at the principal corporate trust office of First City, Texas -Houston, N.A., Houston, Texas, (the "Registrar"), the principal amount identified above, payable in any coin or currency of the United States of America which on the date of payment of such principal is legal tender for the payment of debts due the United States of America, and to pay interest thereon at the rate shown above, calculated on the basis of a 360 day year of twelve 30 day months, from the later of May 1, 1991, or the most recent interest payment date to which interest has been paid or duly -9- provided for. Interest on this Certificate is payable by check on March 1, 1992, and semiannually thereafter on each September 1 and March 1, mailed to the registered owner as shown on the books of registration kept by the Registrar on the fifteenth (15th) calendar day of the month next preceding each interest payment date. 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. IN WITNESS WHEREOF, this Certificate has been signed with the manual or facsimile signature of the Mayor of the City and countersigned with the manual or facsimile signature of the City Secretary of the City, and the official seal of the City has been duly impressed, or placed in facsimile, on this Certificate. (AUTHENTICATION CERTIFICATE) (SEAL) CITY OF PEARLAND, TEXAS Mayor City Secretary (Back Panel of Certificate) THIS CERTIFICATE is one of a duly authorized issue of Certificates of Obligation, aggregating $2,125,000 (the "Certificates"), issued in accordance with the Constitution and laws of the State of Texas, particularly Sections 271.041, gl sea, Texas Local Government Code, as amended, for the purpose of evidencing the indebtedness of the City for park improvements, construction of a Senior Citizens Building, and the acquisition of right of way for roads and drainage, and the cost of professional services incurred in connection therewith, and pursuant to an ordinance duly adopted by the City Council of the City (the "Ordinance"), which Ordinance is of record in the official minutes of the City Council. THE CITY RESERVES THE RIGHT to redeem Certificates prior to maturity, in integral multiples of $5,000, on March 1, 2001, or any date thereafter at par plus accrued interest on the principal amounts called for redemption to the date fixed for redemption. Reference is made to the Ordinance for complete details concerning the manner of redeeming the Certificates. NOTICE OF ANY REDEMPTION shall be given at least thirty (30) days prior to the date fixed for redemption by first class mail, addressed to the registered owners of each Certificate to be redeemed in whole or in part at the address shown on the books of -10- registration kept by the Registrar. When Certificates or portions thereof have been called for redemption, and due provision has been made to redeem the same, the principal amounts so redeemed shall be payable solely from the funds provided for redemption, and interest which would otherwise accrue on the amounts called for redemption shall terminate on the date fixed for redemption. THIS CERTIFICATE is transferable only upon presentation and surrender at the principal corporate trust office of the Registrar, duly endorsed for transfer or accompanied by an assignment duly executed by the registered owner or his authorized representative, subject to the terms and conditions of the Ordinance. THE CERTIFICATES are exchangeable at the principal corporate trust office of the Registrar for Certificates in the principal amount of $5,000 or any integral multiple thereof, subject to the terms and conditions of the Ordinance. THIS CERTIFICATE shall not be valid or obligatory for any purpose or be entitled to any benefit under the Ordinance unless this Certificate is either (i) registered by the Comptroller of Public Accounts of the State of Texas by registration certificate attached or affixed hereto or (ii) authenticated by the Registrar by due execution of the authentication certificate endorsed hereon. THE REGISTERED OWNER of this Certificate, by acceptance hereof, acknowledges and agrees to be bound by all the terms and conditions of the Ordinance. THE CITY has covenanted in the Ordinance that it will at all times provide a legally qualified registrar for the Certificates and will cause notice of any change of registrar to be mailed to each registered owner. IT IS HEREBY certified, recited and covenanted that this Certificate has been duly and validly issued and delivered; that all acts, conditions and things required or proper to be performed, to 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; and that annual ad valorem taxes, within the limits prescribed by law, 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 against all taxable property in the City. IT IS FURTHER certified, recited and represented that the Net Revenues, in an amount not to exceed $10,000, to be derived from the operation of the City's water and sewer system, after the payment of all operation and maintenance expenses thereof, are -11- pledged to the payment of the principal of and interest on this Certificate and the series of Certificates of which it is a part to the extent that taxes may ever be insufficient or unavailable for said purpose; provided, however, that such pledge of Net Revenues is and shall be junior and subordinate in all respects to the pledge of such 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 such Net Revenues to the payment of this Certificate and the series of Certificates of which it is a part, and 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 payable in whole or in part from the Net Revenues of its water and sewer system, secured by a pledge of the Net Revenues of such system that may be prior and superior in right to, on a parity with, or junior and subordinate to the pledge of Net Revenues securing this Certificate and the series of Certificates of which it is a part. Form of Registration Certificate of Comptroller of Public Accounts COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. 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 this (SEAL) xxxxxxxxxx Comptroller of Public Accounts of the State of Texas Form of Registrar's Authentication Certificate AUTHENTICATION CERTIFICATE It is hereby certified that this Certificate has been delivered pursuant to the Ordinance described in the text of this Certificate. First City, Texas -Houston, N.A. By Authorized Signature Date of Authentication -12- Form of Assignment 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 said certificate on the books kept for registration thereof, with full power of substitution in the premises. DATED: Signature Guaranteed: NOTICE: Signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. Registered Owner NOTICE: The signature above must correspond to the name of the registered owner as shown on the face of this Certifi- cate in every particular, without any alteration, enlargement or change whatsoever. 17. Legal Opinion: Cusip: Bond Insurance. The approving opinion of Vinson & Elkins, Houston, Texas, and CUSIP Numbers may be printed on the Certificates, but errors or omissions in the printing of such opinion or such numbers shall have no effect on the validity of the Certificates. If bond insurance is obtained by the purchaser, the Certificates may bear an appropriate legend as provided by the insurer. 18. Interest and Sinking Fund; Tax Levy. The proceeds from all taxes levied, assessed and collected for and on account of the Certificates authorized by this Ordinance shall be deposited, as collected, in a special fund to be designated "City of Pearland, Texas, Combination Tax and Revenue Certificates of Obligation, Series 1991 Interest and Sinking Fund". While the Certificates or any part of the principal thereof or interest thereon remain outstanding and unpaid, there is hereby levied and there shall be annually levied, assessed and collected in due time, form and manner, and at the same time other City taxes are levied, assessed and collected, in each year, beginning with the current year, a continuing direct annual ad valorem tax, within the limits -13- prescribed by law, upon all taxable property in the City sufficient to pay the current interest on the Certificates as the same becomes due, and to provide and maintain a sinking fund adequate to pay the principal of the Certificates as such principal matures, but never less than two percent (2%) of the original principal amount of the Certificates each year, full allowance being made for delinquencies and costs of collection, and such taxes when collected shall be applied to the payment of the interest on and principal of the Certificates and to no other purpose. 19. Pledge of Revenues. The revenues to be derived from the operation of the City's water and sewer system, after the payment of all operation and maintenance expenses thereof (the "Net Revenues"), in an amount not to exceed $10,000, are hereby pledged to the payment of the principal of and interest on the Certificates as the same come due, to the extent that the taxes mentioned in Section 18 of this Ordinance may ever be insufficient or unavailable for said purpose; provided, however, that such pledge of the Net Revenues is and shall be junior and subordinate in all respects to the pledge of the 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, and 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 payable in whole or in part from the Net Revenues, secured by a pledge of the 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 this series of Certificates. 20. Further Proceedings. After the Certificates to be initially issued shall have been executed, it shall be the duty of the Mayor of the City to deliver the Certificates to be initially issued and all pertinent records and proceedings to the Attorney General of Texas, for examination and approval. After 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 writing 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. 21. Sale. The Certificates are hereby sold and shall be delivered to NCNB CAPITAL MARKETS. INC. (herein referred to as the "Purchaser"), at a price of par, plus accrued interest to the date of delivery, plus a cash premium of -14- $ -0- , and the City Council hereby finds and determines that such price is the best reasonably obtainable by the City after advertising for and receiving sealed bids. 22. Books and Records. So long as any of the Certificates are outstanding the City covenants and agrees that it will keep proper books of record and account in which full, true and correct entries will be made of all dealings, activities and transactions relating to the Certificates and the funds created pursuant to this Ordinance, and all books, documents and vouchers relating thereto shall at all reasonable times be made available for inspection upon request of any Owner. 23. Tax Exemption. (a) General Tax Covenant. The City intends that the interest on the Certificates shall be excludable from gross income for purposes of federal income taxation pursuant to sections 103 and 141 through 150 of the Code, and applicable regulations. The City covenants and agrees not to take any action, or knowingly omit to take any action within its control that, if taken or omitted, respectively, would cause the interest on the Certificates to be includable in gross income, as defined in section 61 of the Code, of the owners thereof for purposes of federal income taxation. In particular, the City covenants and agrees to comply with each requirement of this Section 23; provided, however, that the City shall not be required to comply with any particular requirement of this Section 23 if the City has received an opinion of nationally recognized bond counsel ("Counsel's Opinion") that such noncompliance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Certificates or if the City has received a Counsel's Opinion to the effect that compliance with some other requirement set forth in this Section 23 will satisfy the applicable requirements of the Code, in which case compliance with such other requirement specified in such Counsel's Opinion shall constitute compliance with the corresponding requirement specified in this Section 23. (b) Use of Proceeds. The City covenants and agrees that its use of the Net Proceeds of the Certificates will at all times satisfy the following requirements: (i) The City will limit the amount of original or investment proceeds of the Certificates to be used (other than use as a member of the general public) in the trade or business of any person other than a governmental unit to an amount aggregating no more than ten percent of the Net Proceeds of the Certificates ("private -use proceeds"). For purposes of this Section, the term "person" includes any individual, corporation, partnership, unincorporated association, or any other -15- entity capable of carrying on a trade or business; and the term "trade or business" means, with respect to any natural person, any activity regularly carried on for profit and, with respect to persons other than natural persons, any activity other than an activity carried on by a governmental unit. Any use of proceeds of the Certificates in any manner contrary to the guidelines set forth in Revenue Procedures 82-14, 1982-1 C.B. 459, and 82-15, 1982-1 C.B. 460, including any revisions or amendments thereto, shall constitute the use of such proceeds in the trade or business of one who is not a governmental unit; (ii) The City will not permit more than five percent of the Net Proceeds of the Certificates to be used in the trade or business of any person other than a governmental unit if such use is unrelated to the governmental purpose of the Certificates. Further, the amount of private -use proceeds of the Certificates in excess of five percent of the Net Proceeds of the Certificates ("excess private -use proceeds") will not exceed the proceeds of the Certificates expended for the governmental purpose of the Certificates to which such excess private -use proceeds relate; (iii) The City will not permit an amount of proceeds of the Certificates exceeding the lesser of (a) $5,000,000 or (b) five percent of the Net Proceeds of the Certificates to be used, directly or indirectly, to finance loans to persons other than governmental units. When used in this Section 23, the term Net Proceeds of the Certificates shall mean the proceeds from the sale of the Certificates, including investment earnings on such proceeds, less accrued interest. (c) No Federal Guaranty. The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that, if taken or omitted, respectively, would cause the Certificates to be "federally guaranteed" within the meaning of section 149(b) of the Code and applicable regulations thereunder, except as permitted by section 149(b)(3) of the Code and such regulations. (d) Certificates are not Hedge Bonds. The City covenants and agrees that not more than 50 percent 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 -16- expects that at least 85 percent 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 the Certificates are issued. (e) No -Arbitrage Covenant. The City shall certify, through an authorized officer, employee or agent, that based upon all facts and estimates known or reasonably expected to be in existence on the date the Certificates are delivered, the City will reasonably expect that the proceeds of the Certificates will not be used in a manner that would cause the Certificates to be "arbitrage bonds" within the meaning of section 148(a) of the Code and applicable regulations thereunder. Moreover, the City covenants and agrees that it will make such use of the proceeds of the Certificates including interest or other investment income derived from Certificate proceeds, regulate investments of proceeds of the Certificates, and take such other and further action as may be required so that the Certificates will not be "arbitrage bonds" within the meaning of section 148(a) of the Code and applicable regulations thereunder. (f) Arbitrage Rebate. The City expects to qualify for an exception to the requirements of the Code relating to rebate to the United States, because the City will use at least 95% of the Net Proceeds of the Certificates for local governmental activities of the City and expects that the total of all tax-exempt obligations (excluding "private activity" bonds) issued by or attributable to the City during calendar year 1991 will not exceed $5,000,000. If the City does not qualify for such exception, 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 (within the meaning of section 148(f)(6)(B) of the Code), be rebated to the federal government. Specifically, the City will (i) maintain records regarding the investment of the gross proceeds of the Certificates as may be required to calculate the amount earned on the investment of the gross proceeds of the Certificates 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, (ii) calculate at such times as are required by applicable regulations, the amount earned from the investment of the gross proceeds of the Certificates which is required to be rebated to the federal government, and (iii) pay, not less often than every fifth anniversary date of the delivery of the Certificates and within sixty days following retirement of the Certificates, all amounts required to be rebated to the federal government. (g) Information Reporting. The City covenants and agrees to file or cause to be filed with the Secretary of the Treasury, not -17- later than the 15th day of the second calendar month after the close of the calendar quarter in which the Certificates are issued, an information statement concerning the Certificates, all under and in accordance with section 149(e) of the Code and applicable regulations thereunder. 24. Oualified Tax -Exempt Obligations. The City hereby designates the Certificates as "qualified tax-exempt obligations" for purposes of section 265(b) of the Code. In connection therewith, the City represents (a) that the aggregate amount of tax-exempt obligations issued by the City during calendar year 1991, including the Certificates, which have been designated as "qualified tax-exempt obligations" under section 265(b)(3) of the Code does not exceed $10,000,000, and (b) that the reasonably anticipated amount of tax-exempt obligations which will be issued by the City during calendar year 1991, including the Certificates, will not exceed $10,000,000. For purposes of this Section 24, the term "tax-exempt obligation" does not include "private activity bonds" within the meaning of section 141 of the Code, other than "qualified 501(c)(3) bonds" within the meaning of section 145 of the Code. In addition, for purposes of this Section 24, the City includes all governmental units which are aggregated with the City under the Code. 25. Use of Proceeds. Accrued interest on the Certificates and any premium will be deposited into the Interest and Sinking Fund. The remaining proceeds of sale of the Certificates, together with investment earnings on such proceeds, shall be used for the purposes set out in Section 2 of this Ordinance, with any remainder being deposited into the Interest and Sinking Fund. 26. Official Statement. The City Council of the City ratifies and confirms its prior approval of the form and content of the Preliminary Official Statement prepared in the initial offering and sale of the Certificates and hereby authorizes the preparation of a final Official Statement reflecting the terms of the Purchaser's bid and other relevant matters. The use of such Official Statement in the reoffering of the Certificates by the Purchaser is hereby approved and authorized. The proper officials of the City are hereby authorized to execute and deliver a certificate pertaining to such Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Certificates. 27. Registrar. The form of agreement setting forth the duties of the Registrar is hereby approved, and the appropriate officials of the City are hereby authorized to execute such agreement for and on behalf of the City. -18- 28. Open Meeting. The meeting at which this Ordinance was adopted was open to the public, and public notice of the time, place and purpose of said meeting, was given, all as required by Article 6252-17, Vernon's Texas Civil Statutes, as amended. 29. Emergency. It is hereby officially found and determined that this Ordinance relates to an immediate public emergency affecting life, health, property and the 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. PASSED AND APPROVED on first reading pursuant to Section 3.10 of the City Charter this 9th day of April, 1991. ATTEST: City Secre CITY OF PEARLAND, TEXAS (SEAL) Mayor CITY OF PEARLAND, TEXAS -19- ee Municipal Bond Investors Assurance Corporation 113 King Street !� Armonk, 10504 914 11,11311A 914 2734545 June 12, 1991 aIglEIMT James 0. DeShazer, City Manager LINr• s City of Pearland City Hall 3519 Liberty Drive CITY MANAGER Pearland, TX 77581 TX0727 (Please write this number on the audit or enclose a copy of this letter with your audit.) RE: City of Pearland, Texas, Combination Tax and Revenue Certificates of Obligation, Series 1991 (LIMITED TAX) Dear Sir or Madam: MBIA Corp. has issued an insurance policy on the municipal issue(s) referenced above. To assist us in reviewing the financial performance of municipalities we insure, we would appreciate receiving your audited 1990 financial statement (audit) . If your 1990 audit will not be available within 4 weeks of the date of this letter, please send your 1989 audit and call our TOLL FREE number 1-800-765-3774 to let us know the approximate date it will be available. Also, please place us on your mailing list for all future audited financial statements. We would also like to receive the following information, if it is not included in the 1990 audit: -current assessed valuation -ratio of assessed value to full value -tax rate per thousand of assessed value -tax collection history (three year period) -current population estimate Please let me know if the above issue has been refunded, and if so, how. If you have any questions or would like to speak with me about a forthcoming issue, please do not hesitate to contact me. Thank you for your cooperation. Sincerely, Adriene D. Smith Administrator, General Surveillance 7778q/1 6_4 VINSON & ELKINS ATTORNEYS AT LAW THE WILLARD OFFICE BUILDING 3300 FIRST CITY TOWER FIRST CITY CENTRE 1455 PENNSYLVANIA AVE. N W. 816 CONGRESS AVENUE WASHINGTON, D.C.20004-1007 1001 FANNIN AUSTIN,TEXAS 78701-2496 TELEPI,ONE(202)639-6500 TELEX 89680 HOUSTON,TEXAS 77002-6760 TELEPHONE(512)495-8400 FAX(202)639-6604 FAX(512)495-8612 TELEPHONE(713)758.2222 TELEX 762146 47 CHARLES ST.,BERKELEY SOUARE FAX(713)758-2346 3700 TRAMMELL CROW CENTER LONDON W1X 7PB,ENGLAND 2001 ROSS AVENUE TELEPHONE 011 44 71 491-7236 DAL LAS.TEXAS 75201-2916 FAX OII 44 71 499-5320 TELEPHONE(214)220-7700 CABLE VINELKINS LONDON WI-TELEX 24140 FAX(214)220-7716 June 7, 1991 pglryq City of Pearland JUN 12 I5y I 3519 Liberty Drive Pearland, Texas 77581 CITY MANAGER ATTN: James O. DeShazer, City Manager RE: $2,125,000 Combination Tax and Revenue Certificates of Obligation, Series 1991 Dear Mr. DeShazer: In connection with the delivery of the captioned Certificates (the "Certificates") on May 9, 1991, the City has made certain covenants and representations regarding tax exemption under the Internal Revenue Code of 1986 for the benefit of persons who may own the Certificates at any time. As we have done previously, we are sending this letter to discuss with you the arbitrage covenants set forth in Sections 23(e) and 23(f) of the ordinance adopted on April 8, 1991, authorizing the issuance of the Certificates (the "Ordinance") in which the City promises to comply with the arbitrage rules of the Internal Revenue Code of 1986. The discussion contained in this letter is supplemental to and explanatory of the matters set out in the No-Arbitrage Certificate delivered at the closing and does not represent a modification of the matters set out in such Certificate. As you know, the City's compliance with the arbitrage covenants will be essential to the ability of the Holders of the Certificates to treat interest on the Certificates as exempt from federal income tax. Our opinion to the Holders of the Certificates explicitly states that we have assumed continuous compliance by the City with the arbitrage covenants. Noncompliance could cause interest on the Certificates to be taxable from the date of original delivery. While this letter is intended to assist the City in monitoring its compliance with the arbitrage covenants with respect to the Certificates, the letter is not a general treatment of Federal arbitrage law and should not be used as a definitive reference on arbitrage matters for any other bonds of the City. It is intended to deal only with these Certificates. Furthermore, the complexity of the arbitrage rules does not permit this letter to anticipate every possible circumstance that may arise with respect to the Certificates; it does, however, address the basic rules as they will apply in most circumstances. As you work with these arbitrage rules, we encourage you to call us with any questions you might have. The arbitrage rules are statutory rules set forth in the Internal Revenue Code of 1986, as interpreted from time to time by Treasury Department regulations and rulings is- sued by the Internal Revenue Service. Generally, the rules fall into two broad categories. The first set of rules (the "investment rules") limits the amount that can be earned by investing bond-related money. The second set of rules (the "rebate rules") is designed to require the local governmental issuer to pay to the United States certain amounts of "arbitrage profit" that may be earned under the investment rules. As set forth below, however, the City should not be subject to the rebate rules with respect to the Certificates. There are other arbitrage rules dealing with how the yield on investments must be calculated, and rules to prevent an issuer from making investments that have the effect of "diverting" arbitrage profit to any person other than the United States. These latter rules are designed to make the investment rules "work" from the federal government's standpoint. THE INVESTMENT RULES A. In General The investment rules are intended to restrict the amount the City can earn on investments of bond-related money in obligations that are not tax-exempt obligations. Therefore, an investment of money in fully tax-exempt investments (i.e., investments which pay interest that is excludable from gross income under the Internal Revenue Code and is not a specific item of tax preference for purposes of the federal alternative minimum tax) will always comply with the investment rules no matter what rate or yield is earned on such investments. The investment rules provide that certain categories of bond-related money may, during certain limited periods of time, be invested in taxable investments without regard to the yield on such investments. On the other hand, the investment rules require that the yield on certain other categories of bond-related money invested in taxable invest- ments must be restricted at all times after issuance of the Certificates. -2- Compliance with the investment rules will require that you be able to identify (i.e., account for, in terms of dates and amounts) the expenditures and investments of par- ticular categories of bond-related money. The categories of money associated with the Certificates for which you must be able to identify expenditures and investments are as follows: 1. Project funds (including amounts used for construction and to pay costs of issuance); and 2. Interest and Sinking Fund money. The process of determining what amounts fall into each of these categories and the investment rules applicable to each category are discussed below, on a category- by-category basis. B. Project Funds "Project funds" include all amounts of money received from the sale of the Certificates, including amounts received to pay costs of issuance, amounts deposited in the City's Construction Fund to fund costs of the project, amounts deposited in the City's Interest and Sinking Fund as accrued interest on the Certificates, and all earnings on the investment of such amounts prior to their being expended by the City. All project funds can be invested without restriction until May 9, 1994. If any project funds remain unexpended after May 9, 1994, the unexpended portion remaining on that date must, with one exception, be invested in either fully tax-exempt investments or investments with a yield which on a blended basis does not exceed 6.71064 percent. The one exception to this yield restriction requirement involves investment earnings, which can be invested at an unrestricted yield for up to one year after the date of receipt of such earnings. C. Interest and Sinking Fund Money Under the terms of the Ordinance, you are required to levy annually an ad valo- rem tax sufficient to pay the principal of, and interest on, the Certificates. These tax revenues will be deposited in the City's Interest and Sinking Fund established under the Ordinance. Significantly, the Interest and Sinking Fund is a fund separate and apart from the City's debt service fund maintained for its other obligations. Thus, amounts deposited -3- and held in the Interest and Sinking Fund are dedicated exclusively to payment of debt service on the Certificates and will not be used to pay debt service on any other obliga- tions. Furthermore, please note that there will need to be established before each year's tax collections are received, an allocation percentage to establish the share to be deposited in this new Interest and Sinking Fund. Note also that the separate legal nature of this fund must be respected such that moneys on deposit in this fund (or any other debt service fund) cannot be transferred to any other fund. The income earned from investment of the Interest and Sinking Fund money will remain in the Interest and Sinking Fund, will be reinvested and will be used (together with reinvestment income therefrom) to make future payments of principal of, and interest on, the Certificates. The general rule is that Interest and Sinking Fund money can be invested at an unrestricted yield. This general rule is not fully applicable to excess money in the Interest and Sinking Fund. Excess money in the Interest and Sinking Fund is money in excess of that amount necessary to pay annual debt service, which generally will be (i) the amount in the Interest and Sinking Fund at the end of the City's preceding fiscal year, plus (ii) the excess of the current year's tax collections over the current year's debt service and plus (iii) all investment earnings during the current year on such amounts. The legislative history of the Tax Reform Act of 1986 provides for the treatment of excess Interest and Sinking Fund money as a "reasonably required reserve fund" which may also be invested at an unrestricted yield, provided such amount does not exceed at any time ten percent of the "original proceeds" of the Certificates, i.e., $212,500. Any amount in excess of this amount which represents excess Interest and Sinking Fund money must be invested at a yield which does not exceed 6.58564 percent, the yield on the Certificates, except that the portion which represents investment earnings may be invested unrestricted for a period equal to one year from the date of receipt. Remember that for purposes of this rule, original proceeds of the Certificates (and investment earnings thereon) deposited in the Interest and Sinking Fund for accrued interest were discussed above as project funds and are not treated as Interest and Sinking Fund money. Based on our understanding of the normal practice of the City, it is not likely that the excess in the Interest and Sinking Fund will ever exceed the ten percent amount. Nevertheless, in order to comply with the arbitrage covenants, you must continue to monitor the amount of the excess Interest and Sinking Fund money and be prepared to restrict the yield on the amount of such excess over the ten percent amount that can be invested unrestricted as a reasonably required reserve fund. -4- If your excess Interest and Sinking Fund money approaches the ten percent amount you may wish to contact us for more detailed instructions about the application of the investment rules to the excess over the ten percent amount. D. Minor Portion Exception The arbitrage rules provide that an amount of money allocable to the Certificates which does not exceed the lesser of five percent of bond proceeds or $100,000 (in the case of the Certificates, $100,000) can be invested without restriction. This "minor portion" amount is available for any category of money that is otherwise yield restricted, but there is only one "minor portion" for all categories on a cumulative basis. YIELD CALCULATIONS As discussed above, the investment rules require that (i) if you have to make a yield-restricted investment of project funds, the yield on such investment cannot exceed 6.71064 percent and (ii) if you have to make a yield-restricted investment of excess Interest and Sinking Fund money, the yield on such investment cannot exceed the yield on the Certificates. As set forth in the No-Arbitrage Certificate, the yield on the Certificates determined in accordance with the arbitrage rules is 6.58564 percent. The yield computation rules require that you compute the yield on restricted investments on an actuarial basis. In other words, the yield on a restricted investment will be that yield which when used as a discount factor in computing the present worth of all payments of principal and interest to be paid on the restricted investment (based on semiannual compounding) produces an amount equal to the lesser of the price actually paid for, or the "market-price" of, the restricted investment (as determined under the market-price rules discussed below). Because the yield on the Certificates was computed on the basis of semiannual compounding, you must also use the same compounding interval for purposes of computing the yield on restricted investments. Yield computations will not have to be made for unrestricted or fully tax-exempt investments (i.e., tax-exempt investments the interest on which is not a specific item of tax preference). THE REBATE RULES You informed us that the aggregate face amount of all tax-exempt bonds issued by the City during the 1991 calendar year was not expected to exceed $5,000,000. For -5- purposes of making that determination, you should have considered the amount of the Certificates, any other bonds issued by the City, any short term borrowings by the City including tax anticipation notes or lines of credit, and any lease agreements pursuant to which the City will make payments a portion of which will be treated as tax-exempt by the recipient. Based on certain representations set forth in paragraph 14 of the No-Arbitrage Certificate and the expectation that the aggregate face amount of the items described above would not exceed $5,000,000 during the 1991 calendar year, the City is not subject to the rebate rules with respect to the Certificates. If subsequent developments indicate that the aggregate amount of such items issued during the 1991 calendar year does ex- ceed $5,000,000, please contact us. Because of the exception to the rebate rules described above which the City can utilize, the covenants set forth in Section 23(f) of the Ordinance and paragraph 14 of the No-Arbitrage Certificate should have been satisfied at closing. THE MARKET PRICE RULES The investment rules are designed to limit permissible arbitrage. The purposes of the investment rules could be defeated if issuers were permitted to pay higher-than-market prices for their investments (perhaps because such investments carry below-market rates) with the intent of using such prices to reduce yields to the permissible limits. The payment of higher-than-market prices for investments would have the effect of diverting impermissible arbitrage (in the form of the excess price) to the persons from whom the issuer purchased the investments. Therefore, included in the arbitrage rules is a set of rules (the "market price rules") which prohibits arbitrage diversion by requiring that all investments of money associated with the Certificates be acquired at arm's length without regard to any yield restriction applicable to such investment. In order to comply with the market price rules, all yield-restricted money associated with the Certificates must be invested in investments (including deposits) which pay a yield for which the City bargains at arm's length--the same as if such money had not been subject to the arbitrage rules discussed in this letter. If the City accepts lower than an arm's length yield, the market price rules will be violated resulting in a violation of the investment rules. There may be instances in which the market price rules permit no readily available investments with a yield that meets your yield limitation for yield-restricted investments. In those instances you will be required to invest the amount in question either in (i) fully -6- tax-exempt investments or (ii) United States Treasury Certificates of Indebtedness, Treasury Notes and Certificates -- State and Local Government Series ("SLGS"). SLGS are investments purchased directly from the Treasury Department, which are specifically tailored to meet the needs of state and local governments that have amounts required to be invested in yield-restricted securities. An investment in SLGS, properly structured, satisfies the market price rules by definition. You should note, however, that SLGS are only allowed for yield-restricted money and that with one exception described below, all yield-restricted money on hand at the time of the investment must be invested in SLGS if any such money is so invested. With respect to a new type of SLGS, known as special zero interest SLGS, less than all yield-restricted money on hand at the time of the investment may be invested in such SLGS if certain other requirements are met. There are a number of other limitations and technical requirements attendant to the acquisition of SLGS. In the event the City is required to utilize SLGS as a yield- restricted investment vehicle, we will be glad to discuss the SLGS program with you in detail. EFFECT OF NONCOMPLIANCE WITH THE ARBITRAGE RULES Prior to enactment of the Tax Reform Act of 1986, the consequences of post-issuance noncompliance with the arbitrage rules were considered by many to fall short of the loss of tax-exempt status for interest on the bonds in question. Prior-law statutory language and other authorities could be read, in effect, to permit issuers of bonds to establish their compliance with the rules by stating, on the date bonds were issued, their "reasonable expectations" that the proceeds would be invested in compliance with the rules. As a result of the Tax Reform Act of 1986, existing law is much more strict in terms of its compliance requirements than prior law. The City's reasonable expectations are still important, and can be relied upon, for purposes of establishing that the Certificates satisfy the sizing requirements of the arbitrage rules. These expectations are set forth in the No-Arbitrage Certificate executed on behalf of the City in connection with the sale of the Certificates. However, existing-law statutory language and legislative history indicates that compliance with the investment rules (and the market-price rules and yield computation rules which implement those rules) will be viewed as a matter wholly within the control of the City, regardless of its expectations at the time of issue. Thus, even if the City does not expect to have money on hand which will be required to be invested in yield-restricted investments or fully tax-exempt investments, if ultimately such money in fact exists, the City will be required to comply with the investment rules. -7- Noncompliance can cause interest on the Certificates to be considered taxable from the date of issue. Finally, inadvertent, insubstantial errors (e.g., in arithmetic) in connection with attempts to comply with the rules will not result in the loss of tax-exempt status of interest on bonds. CONCLUSIONS In closing, two observations are important. First, it must be emphasized that good recordkeeping is essential. Recordkeeping must be on a category-by-category basis. As discussed above, "good faith" is an important factor in determining the consequences of noncompliance with these complicated rules. Good recordkeeping goes a long way toward establishing good faith. In that regard, the City should review its accounting system, and may want to consult with accountants, to determine the adequacy of its system in light of the investment rules. Second, when in doubt with no time to consult, remember that an investment in fully tax-exempt investments will always satisfy the investment rules. Finally, you should keep in mind that the arbitrage rules do change from time to time as a result of Treasury Department and Internal Revenue Service interpretations. Therefore, you should consult with us, or other nationally recognized bond counsel, for an update on developments in that area. If you have any questions, please do not hesitate to call me (758-4516) or Cliff Youngblood (758-2468). Very truly yours, tkjlea, - teven H. Gerdes cc: Frank J. Ildebrando Rauscher Pierce Refsnes, Inc. Clifford W. Youngblood 0503:4093:6-4-91 c:\wp50`sbg\pea270\taxltr91.ist -8- ES, OR LEASES § 271.049 Title 8 r • PURCHASING & CONTRACTING Ch. 271 lent for competi claims and accounts represent an undivided interest in the certificates simul- I in building or taneously authorized. The governing body may also provide for the funding fr`: or exchange of the claims and accounts for a like total principal amount of the certificates, with any amount in excess of the principal amount of the certificates delivered at one time to be paid in cash or carried forward to a subsequent exchange of claims and accounts for certificates. at the section (b) The authorization of certificates and the indebtedness they evidence lear from the may occur before the execution of a contract under this subchapter. •elevant to the subchapter is (c) This section does not create any exception to the competitive bidding requirements of this subchapter. Acts 1987, 70th Leg., ch. 149, § 1, eff. Sept. 1, 1987. 5727, ch. 1094, § 1. Historical Note 2368a.1, § 7A. Prior Law: Acts 1971, 62nd Leg., p. 2824, ch. 923. Vernon's Ann.Civ.St. art. 2368a.1, § 4. r Order; Other by the govern- § 271.049. Notice of Intention to Issue Certificates; Petition and Elec- rning body of a tion ibed by Section (a) Regardless of the sources of payment of certificates, certificates may not be issued unless the issuer publishes notice of its intention to issue the certificates. The notice must be published once a week for two consecutive .rmined by the weeks in a newspaper, as defined by Chapter 84, Acts of the 43rd Legislature, 1st Called Session, 1933 (Article 28a, Vernon's Texas Civil Statutes), that is of [nations, either general circulation in the area of the issuer, with the date of the first - both; publication to be before the 14th day before the date tentatively set for the before sched- passage of the order or ordinance authorizing the issuance of the certificates. overping body (b) The notice must state: (1) the time and place tentatively set for the passage of the order or 40 years from ordinance authorizing the issuance of the certificates; rater than that (2) the maximum amount and purpose of the certificates to be autho- Session, 1969 rized; and (3) the manner in which the certificates will be paid for, whether by taxes, revenues, or a combination of the two. (c) If before the date tentatively set for the authorization of the issuance of { the certificates or if before the authorization, the municipal secretary or clerk if the issuer is a municipality, or the county clerk if the issuer is a county, receives a petition signed by at least five percent of the qualified voters of the issuer protesting the issuance of the certificates, the issuer may not authorize the issuance of the certificates unless the issuance is approved at an election is may, after ordered, held, and conducted in the manner provided for bond elections and that the under Chapter 1, Title 22, Revised Statutes) 711 • • ES BAUGH v. WILLIAMS Tex. 627 r. Cite as 762 S.W.2d 627 (Tex.App.—Tyler 1988) ion is shown, we, • - 1s shown. Jackson 575 S.W.2d at 570 and We find from the record that it would not i. �'.2d 639, 643 (Tr E Werner 711 S.W.2d at 643. have. Therefore, appellant's fourth point L testimony is clearly " [71 Appellant contends that he is enti- of error is overruled. of identity. Ti.x R. ; :' I''''tied to information in the States possession [10] Cruz's fifth point of error states relevant evidence as ' endency to make �},e �-F' concerning an alleged previous cocaine de- that the trial court erred in submitting the - '.• livery between appellant Cruz and Officer portion of the charge concerning actual at is of consecluer,,e ' .4.� .� ;. Foxworth. TEx.CODE CRtat.PROC.ANN. art transfer of cocaine. Appellant has also to action more pert. , �, 89914, We find that the trial court did not waived this point of error. Appellant's an it would be wiih. ,, abuse its discretion in allowing this testi- brief contains no authority supporting this icer Foxworth's tes- _ L4.• mony into evidence even though Cruz was proposition and thus, the appellant's brief r the purpose of the .a : �� � � x not given information that he previously contains six vague and unsupportable sen- ppellant. Prior to - r",:, uested in a discovery motion. tences that preserves nothing for appeal. ig all contacts w ;} i See TEx.R.APP.P. 74(f)(2). Brooks v. State, was held out to i,e ` `` [8] First, the defendant does not have a 642 S.W.2d 791, 799 (Tex.Crim.App.1982). Fry, and was eb,.c eneral of discovery right , in that the deci Thus, we do not need to discuss the merits <'- ?.. S xworh's testimi,r•,- x; sgion as to what is discoverable is committed of this point of error. However, again, to the discretion of the trial court. Whit- trial, however. t►.r s assuming arguendo that the appellant has seared dressed b, a . i z - church v. State, 650 S.W.2d 422, 425 (Tex. properly reserved and raised this issue, we Kworth's testimony = = Crim.App.1983). In the present case, the find that the record clearly supports Raul or unfairly pre_,. `'. record confirms that appellant's discovery Cruz's involvement in the crime he was finder an ex ,lava- r r '.. motion was never ruled upon by the trial 4 found guilty. The trial court properly in- n.' being descnbed r: court. Without this ruling, the appellant structed the jury with regard to both the r by Officer F+a• ': f: has no grounds to complain that the State law of parties and the submission of this Cruz appearing .n '`` is in violation of his discovery request, and issue. Conaway v. State, 738 S.W.2d 692 did not abuse its ` } that he is entitled to the information. See (Tex.Crim.App.1987); Whaley v. State, 717 le testimony. As eg. TEx.R.APP.P. 52(a). S.W.2d 26 (Tex.Crim.App.1986). See e.g. error is overnrieq_ ` [9] In addition, appellant has waived Medellin v. State, 617 S.W.2d 229 (Tex. error the appeil:,rt "t - r any error claiming he was surprised of the Crim.App.1981). The appellant's fifth point in erred in ad:-.r.- .+;State's evidence. The record is devoid of of error is overruled. The judgment of the •ged prior cocain• .sny request by the appellant to postpone or trial court is affirmed. Cruz and Officer •,continue the trial due to this purported new he appellant corn- ` evidence. The appellant failed to follow w y from Houct� R E KEY NUMBER SYSTEM the prerequisites needed to preserve error o T st Clifton Hy p,!. •• {''when appellant claims surprise Thus the 6'e disagree. Tex •?-- error is waived. Lindley v. State, 635 his argument an.: - 'lr- -S.W.2d 541, 543 (Tex.Crim.App.1982); Rod- on does not Ind: . - " "riguez v. State, 597 S.W.2d 917, 919 (Tex. igs between Cruz - •Crim.App.1980). See e.g. Helton v. State, _'� Garvin BAUGH, Relator, e an extranr.,us , : T -- .. `.— , . 738 S.W.2d 734, 736 (Tex.App.—Beaumont ie appellant c•-11- 1987 pet ref d.). v. this informs;:os Finally, if a discovery order had been Mary Clem WILLIAMS, Secretary, City ;vin. 404. 7?a _ '- obtained by the appellant, failure by the of Alto, Texas, Respondent. snt's complaint a �.. .• State to comply with the request does not No. 12-88-00256-CV. hat this evsdencv .-:, =* result in reversible error unless it can be r the trial court. ;f •� shown that the evidence withheld would Court of Appeals of Texas, ,d with the ,r.`-e - have affected the outcome of the trial in Tyler. liscovery not- * "s`'• the defendants favor. Carmona a State, 4-4 ' Oct. 20, 1988. eviously c.'.^' 6:;- 698 S.W.2d 100, 105 (Tex.Crim.App.1985). the trial Jr' ' .6,= See e. �� :�_ g. TEx.R.APP-P. 81(bx2). Appellant lit; of e's''r"-• does not explain in his brief how the pur- Petitioner sought to enjoin issuance of ion and %,a '" :, r ; Portedly withheld evidence would have af- certificates of obligations by municipality. use of dii,er G'" '•---' ''- fected the outcome of the trial in his favor. In an original proceeding, the Court of 628 Tex. 762 SOUTH WESTERN REPORTER, 2d SERIES e .�, Appeals held that petition to impose duty The City of Alto, seeking to comply with ' :. Tex.1.oc.Gov't.0 upon issuer of obligations to obtain approv- edicts of the Texas Water Commission,is in --;. . non 198812 al of its electorate had to meet require- the planning phase of rehabilitation of its - r. ''- 121 The sole ments of Election Code regarding certain sanitary sewer system. On the agenda for < .''i ' ',lit' petition file, information that must be included on peti- its September 12, 1988, meeting, the City : :•*,- ;afftcient to ir. tions about petition's signers in addition to Council listed consideration of issuance of %�4:; r;rnt of sectio: their signatures, and failure to provide certificates of obligation for the sanitary ` -':)-1‘.X �- • requires that t} -.- such information on petition rendered sig- sewer plant rehabilitation. Also listed was •4.�:�'''> =.. signed by at lea natures on petition invalid. consideration of a petition requesting a ref- t'• ` gird voters of ti erendum. That petition, filed prior to the '`4 t"' ``` Petition dismissed. e = ' Respondent doe Council meeting, states: •i ` ` that the numbe. SECOND PETITION FOR REFER. q .e :; • tion does not m< ENDUM CONCERNING ISSUANCE OF ,':`" ,; „': : 1. Municipal Corporations e=867(1) mcnt. However CERTIFICATES OF OBLIGATION IN `-'.s'"Y 4 " Local Government Act imposes duty - � that the petitio upon issuer of obligations to obtain approv- THE AMOUNT OF $525,000 * � because the pet al of its electorate if petition containing -„ -y' the information signatures of five percent of voters is time- We, the undersigned, being qualified 0022ta1(1) of the ly presented. V.T.C.A., Local Government voters of Alto, Cherokee County, TPA•, u° ,, The Election Code 271.049 c). whose names appear as qualified voters,.-';'�-•. ' •" j § ( , -.41 =�, • lion in connectic on the most recently approved tax rolls i•' 'r ';--. 2. Municipal Corporations a867(3) of the of Alto request that a refer • 0. . certain informat City ,:ii' ) dition to their Petition pursuant to Local Government endum be ordered on the question of ':i: '";1. 7-.' signature is not Code to impose duty on issuer of obli- whether certificates of obligation for up also includes: gations to obtain approval of its electorate to $525,000.00 should be issued for the ?'ix'''', I i the si er must abide by provisions of Election Code purpose of paying contractual obligations '` yt_f: �' requiring that certain information appear to be incurred for: .; } _; ,:; (RI the signer on petition about petition's signers. V.T. 1.) the construction of improvements ber; C.A., Local Government Code § 271.049(c); and extensions to the City's combined ":,., F: �'-._ (C) the signer V.T.C.A., Election Code §§ 1.001 et seq., (Di the date c waterworks and sanitary system, incltidr`�:�.:°;F_ 277.002(a)(1). Mg sewer treatment facilities; and . , 1" • Tex.Elec.Code A 2.) professional services rendered �iit"' '".•%'-r = Supp.1988). connection therewith. ¢' : Relator concE Craig D. Caldwell, Rusk, for relator. The petition contains seventy-eight ai *1 ra volved here does Steven R. Guy, Rusk, for respondent. tures. No other information accompa '-. ,':; .. '�s: information. H< the signatures. . t - ; - the Election Coc PER CURIAM. [1] It is well settled that a writ of matte • in this case. Hi. Relator seeks to enjoin issuance of certif- damus will issue onlyto correct an abne .r .r _:x_ : bon Code provis icates of obligation by the City of Alto, of discretion or the violation of a mandats'r , '. 2. Tex.Loc.Gov't.0 Texas. He contends that, upon his filing of ry ministerial duty imposed by law. Joh s .. •... 1488) provides: a petition containing the signatures of son v. Fourth Court of Appeals, .: if before the dat �`' iron of the issu some seventy-eight people, section 271.- S.W.2d 916, 917 (Tex.1985); Burks 11,, before authorizat 049(c)of the Texas Local Government Code Hutcheson, 537 S.W.2d 312, 313-314 { cork if the issuer required the city to hold an election on Civ.App.—Eastland 1976, writ ref n.r ' . a Petition signed approval of the proposed indebtedness. (orig. proceeding) (and cases cited " ' ' ti••+lified voters t ►i•anie of the ce We granted Relator's motion for leave to The Local Government Code imp00•-. authorize the issu. file' and granted his request for tempo- duty upon the issuer of obligations CO .-:,4 ll'it issuance is ar raryrelief toprevent further action bythe tain the approval of its electorate d a l"Id•and conduct PP 6,nd elections u: City. We conclude Relator is not entitled lion containing the signatures of fire ' ; 'ised statutes. to the relief which he seeks. cent of the voters is timely p -" ? ,- 1 3• Petitions for th `? ''e sh excepted f 1. This court is authorized to "issue a writ of holdingof an election." Tex.Elee•C°� .. .,.,_ ::� .;_s ".. i�xal option elect: mandamus to compel the performance of any § 273.061 (Vernon 1986). • - ate C duty imposed by law in connection with the =+ Code; (2)an tip T . x: BAUGH v. WILLIAMS Tex. 629 Clte as 762 S.W.2d 627 (Tes.App.—Tyler 198S) g to comply with :.%resjoc.Gov't.Code Ann. § 271.049(c) (Ver- ment Code provision irreconcilably conflict %ommission• is to 1'`..i 1988).'- and that the Local Government Code provi- abilitation of as �Z) The sole issue before us is whether sion, a special or local provision, therefore n the agenda r� controls. We do not agree. ieetin �. . � petition filed with the City of Alto was g' �e ..,ty sufficient to invoke the election require- Section 271.049(c) of the Local Govern - n of issuance ,,f ' - ,�, ment of section 271.049(c). That section ment Code requires only that a petition For the sanitary quires that the petition must have been protesting issuance of municipal certifi- Also listed v..is { signed byat least fivepercent of the uali- cates of obligation be "signed byat least requestin '�?._ :�' ;= Q g � g a r'•f- voters of the City of Alto, Texas. Id five percent of the qualified voters of the iled prior to •he •• 'Respondent does not suggest to this court issuer...." No attempt is made in that r- : ,, : .: that the number of signatures on the peti- statute to define what constitutes a valid FOR REFER- _, --/ion does not meet the five percent require- signature on such a petition. The Election ISSUANCE l;p 4 ynent. However, Respondent does contend Code, however, does enumerate the re- 1LIGATIO\ IN ' `' quirements for validpetition signatures, r; 4° - that the petitions signatures are invalid g 5'000 ,:;;' because the petition does not also include and those requirements expressly apply to 11' the information required by section 277.- petitions "authorized or required to be filed being qua;:f.d '_., P. 002(a)(1) of the Texas Election Code. under a law outside this code in connec- Coun Tex.• 4: tion with an election ..." Tex.Elec.Code County, _ • : '., The Election Code requires that a peti- qualified vot.rs Ann. § 277.001 (Vernon Supp.1988).3 A pe- ` ' lion in connection with an election include iroved tax rods _' tition pursuant to Tex.Loc.Gov't.Code certain information about its signers in ad § 271.049(c) falls squarely within the slat Est that a refer- > `,_ ; dition to their signatures. Specifically, a he question of ed scope of chapter 277 of the Election g,- signature is not valid unless the petition a bligation for ip Code. `` also includes: issued for :r,e Traditional notions of statutory construe •tual obligati• -,s s ;-. ' (A) the signer's printed name; tion S direct us to construe the statutes in 1 w ,j5 (B) the signer's voter registration num- ., -5:� ber, such a manner as to give effect to each if improveme:.J �: :" at all possible. See La Sara Grain Co. v. �ity's combined V .I..--• (C) the signer's residence address; and First National Bank of Mercedes, 673 system, incl.i x $$s# .: :. (D) the date of signing. S.W.2d 558, 565 (Tex.1984); Driscoll v. t =s lilies; and : ,-: j'ex.Elee Code Ann. § 2<7.002(a,)(1)(Vernon Harris County Commissioner's Court, )s render.d _ ' e't,-;: .CSupp.1988). 688 S.W.2d 569, 581 (Tex.App.—Houston o " k 'p. Relator concedes that the petition in- [14th District] 1984, writ refd n.r.e.). That Ity-eight s:At.a• N . volved here does not contain that additional task presents no difficulty here. Local )n accompar.:es ;+ `q.f...:'' information. However, he does assert that Government Code § 271.049(c) is fully ef- _, 1- ;, the Election Code provision does not apply fective to outline the procedure for authori- . this case. His position is that the Elec- zation of issuance of certificates of authori- :awrit of man- ,, ;:;-:--:1,-..,, trrect an abt..e ' lion Code provision and the Local Govern- zation, including the percentage of quali- 1 of a menda'' t?• 2. Tex.Loc.Gov't.Code Ann.§ 271.049(c)(Vernon § 26.07 (to repeal a tax increase); and (3) an by law. John' - 1988) provides: election under Tex. Tax Code § 26.08 (to limit Appeals. 710 ▪ IC 1'"- If before the date tentatively set for,authoriza- school taxes); none of which applies here. It is -x- don of the issuance of the certificates or if instructive to note however, that in each of 5); Buree r. . 4; -' - .' before authorization,the municipal secretaryor these cases the election statute itself addresses 313-3Ia �T.x" I_. s- P '� � :1 .%• , clerk if the issuer is a municipality ... receives the validity requirements for petitions thereun- rit refd n.r.e l a petition signed by at least five percent of the der. > cited thert'.t:1. ?. qualified voters of the issuer protesting the is- xlea � ..,` . nuance of the certificates, the issuer may not 4. The petition here expressly calls for an elec- ligons i ^ t ;.� authorize the issuance of the certificates unless lion, rather than simply protesting the issuance, ligations t'' "'` ;:�> <. the issuance is approved at an election ordered, " , held,and conducted in the mannerprovided for there cane be no doubt it is "in connection Curate if a lh u• _•. '.; -. with an election." -es of five {x'r- -it-, . bond elections under Chapter 1, Title 22, Re- v{sed Statutes. ely presented. V, z. � S. Tex.Gov't.Code § 311.026(a) (Vernon 1988) � rl 3. Petitions for three types of elections are ex- was cited by Relator at oral argument. Al- xElecCodc ,r❑ ,:, -,'1 - press!),excepted from these requirements: (I)a though the statute applies to conflicts between '-`•.1 r local option election under the Alcoholic Bever- general and special provisions, it reflects the '! $ age Code; (2) an election under Tex. Tax Code traditional rule. : x.. 630 Tex. 762 SOUTH WESTERN REPORTER, 2d SERIES -4;4`?.'.'?-, fied voters who must protest in order to considerations to be given the leng of S+ Dwight P. mandate an election. Section 277.002 of time an alleged victim waits before telling , - pc the Election Code can also be given full anyone of the assault; and (4) defendant ::! - effect when the petition for an election was not denied effective assistance of '° - Charles C. I involved arises under the Local Govern- sel. K: ant. for appe ment Code procedure. It is simply applied Affirmed. 7.1 Ali .. ' GRANT, Jc to determine the validity of the signatures `5 of such a petition. There is no conflict ve I; • Claude Gold between the statutes. 1. Assault and Battery °:=fi3 +s. `'<> -"'i assaulting his In this case the petition filed with Re- For purposes of defendant's trial fEX '"'� "' and the jury a sexual assault on his 15- t years of imp spondent, calling for an election under Tex. year-old t �< z�` '� Loc.Gov't.Code § 271.049, contains only daughter, evidence that victim had � r`' a'" Ann. § 22.011 bees - , :: signatures. Relator has admitted that it previously "raped" by one of her brothers �-:•i ":%+° At the time does not satisfy the requirements of Tex. did not render child "promiscuous" for J lined in Pittsb Pam' :.- - ;. Elec.Code § 277.002, and it does not. The poses of statute which provides wife, Betty Gc signatures on theprosecutions for engaging n z ` the victim. A g petition are not valid. g !fig in sexual ."•a' the child, on The City of Alto was not required to put duct with child between ages of 14 veil; • . approval of the proposed certificates of ob- it is defense if child had previously prooyr i. ¢ was sleeping is ligation to a vote. cuously engaged in sexual conduct. V.? • got in bed wit cloThe motion for leave to file was im rovi C.A., Penal Code § 22.011(ax2), (d). .1 f Betty off, a P •. Betty Golden t dentlygranted. Our order '••-4 granting that 2. Assault and Battery a85 ',' •:• ,_.. • top of the gir; motion and the temporary relief is hereby In defendant's trial for sexual s n ,15; ' anything. vacated and the petition is dismissed. of his 15-year-old stepdaughter, defendati Betty Golder w was not entitled to present evidence •-i. daughter on Se. o SKEY NUMBER SYSTEM victim's alleged prior promiscuity, as d♦ r ' did not tell her fendant did not previously inform court,a '•; #c outside ofpresence of ' October 1986, luny, of his intentiio� •t; asked her abc to introduce anyevidence or propound P Poa3s " _a twenty times. Claude GOLDEN, Appellant, question concerning victim's past sexual.-° - i''x' : not commit the behavior. Rules of Crim.Evid., Rules 4 w_ k sexually assau v. 412(b), (b)(1). . The STATE of Texas, Appellee. •. Ill In his No. 6-88-006-CR 3. Criminal Law �785(8) , -, I- 't`- ``' asserts that tl Defendant was not entitled to instrvf:•:. ,' - versible error Court of Appeals of Texas, tion on limiting considerations to be jib ,:-. ,: t present evident ` Texarkana. length of time alleged victim waits b� � ::' r _'� sexual conduct Nov. 1,•1988. telling anyone of sexual assault, as - tion under instruction applies only to situations , K : :.r § 22.011(a)(2) t Discretionary Review Refused State is seeking conviction based- • `�' years of age c March 22, 1989. upon uncorroborated testimony of;--� ,`z';= f offense and ha and victim's testimony concerning;, F. engaged in s- assault by defendant was corroborated:., - -. Code Ann. § 2: Defendant was convicted of sexually her mother. Vernon's Ann.Tex,i '4 - The record doe assaulting his 15-year-old stepdaughter, in art 38 07 c ti, ` sual sexual act the 276th Judicial District Court, Camp County, William Porter, J., and defendant 4. Criminal Law €641.13(2)'. , Golden that 1' attempted to e or. appealed. The Court of Appeals, Grant,J., For purposes of conviction for '.': • f.- had previously held that: (1)defendant was not entitled to assault, defendant was not denied, ' • present evidence of child's alleged prior assistance of counsel due to counsel' + such prior actso g ..�' d _ _ upon a child do t sexual conduct; (2)defendant was not enti- ure to obtain ruling on his motion iscuous for pu- tied to use such evidence in order to attack court reporter transcribe all of -_ , %.. k mplated byS child's credibility; (3) defendant was not ings, including proceedings held outsa - 7 .. State, I "tan V. entitled to an instruction on the limitingjury'spresence. U.S.C.A. Const.Aa=a .;` ; •� " `2d ] t'Y b.: 598 (1939) E ..:;ice ' • i.. 77TLE 4. TIME l.Flu 41, Election Dates and HD PLACE OF ELECTIONS £' ours for Voting Mower 42. Election Precincts i- 43. Polling Places IIY R 41. ELECTION DATES AND HOURS FOR VOTING SUBCHAPTER A. ELECTION DATES 411 41.001. Uniform election dates 11.002. General election for state and 41.003• Authorized Novembercounty officers "�G 11.004. S elections in even-numbered election within particular numbered year +1 11.005. General election of Period ` X;. i41..05. General political subdivision election in other than county 41,006 Adjusting election certain coastal cities *C 41. Prima schedule 007. C- ry elections 3 8 elect 41.00g• Effect of holdin "° ion on improper date 41.031. Votin SUBCHAPTER B. HOURS k Sec 41. 8 hours FOR VOTING 032. :^ Voting after polls close SUBCHAPTER A. ELECTION DATES .41.001. Uniform election dates �'this subchapter, • held Pter, each general ors • is Except as otherwise on one of the following special election in provided (1) the g dates: this state shall be third Saturday in January;(2) the fir. first Saturday in May; (3) the second Saturday ' '- in August; or (4) the first Tuesda (b) Sub Y after the first Monday in November. (I) a runofY'election; apply to: - (2) alocal option election . held under =,rT {_;�Y the Alcoholic Bever .., .. F , .. ., ` _age Code• `the (2k ordel4 gr o�inance Orr' . t Pc- rer- n a uniform—e ndS"ghat ho din e` Itd�s; g Is conclusive `and date.is in the g e echo (4) an election to resolveontestable; PubLc tnfer�st, w -• `�^ hlcti (5) an election a tie vote; held under an order of a court or other tribunal. 113 is• r -�•T '�a - :ti . 4 ! , { z e'ti' a>.w is x+,:,i. ss :n a j 7� � .+ al,f • t " ,' i41t. c ., ,� .. ,�>: t..r�. a t';Y• s'' �`t 11rr4w >(+1R rt.•s- `, t i ♦�t. d ',pill.'li' . �� vyf ••"...sl,.,iv,- K <• ' ES z BAUGH v. WILLIAMS Tex. 627 ate as 762 S.W.2d 627(Tex.App.—Tyler 1988) ion is shown. ken is shown. Jackson 575 S.W.2d at 570 and We find from the record that it would not N.2d 639, 643 (Tex Werner 711 S.W.2d at 643. have. Therefore, appellant's fourth point testimony is clearof error is overruled. fy [7] Appellant contends that he is enti- of identity. TEl R. Q40 tied to information in the State's possession [10] Cruz's fifth point of error states relevant evidence concerning an alleged previous cocaine de- that the trial court erred in submitting the endency to make the 44 livery between appellant Cruz and Officer portion of the charge concerning actual iat is of consequence 1 ,; ' FOXWOrth. TEX.CODE CRIM.Pxoc.ANN. art. transfer of cocaine. Appellant has also he action more pr th. w" 39.14. We find that the trial court did not waived this point of error. Appellant's ran it would be with. abuse its discretion in allowing this testi- brief contains no authority supporting this leer Foxworth's tom. mony into evidence even though Cruz was proposition and thus, the appellant's brief r the purpose of the not given information that he previously contains six vague and unsupportable sen- ippellant Prior to requested in a discovery motion. tences that preserves nothing for appeal. rig all contacts well See TEx.R.APP.P. 74(f)(2). Brooks v. State, was held out to be [8] First, the defendant does not have a 642 S.W.2d 791, 799 (Tex.Crim.App.1982). Fry, and was ev,.n general right of discovery, in that the deci- Thus, we do not need to discuss the merits >x worth's testimony sion as to what is discoverable is committed of this point of error. However, again, trial, however. the --- _ to the discretion of the trial court. Whit- ' assuming arguendo that the appellant has seared dressed as: i.,. church v. State, 650 S.W.2d 422, 425 (Tex. properly reserved and raised this issue, we xworth's testimony Crim.App.1983). In the present case, the find that the record clearly supports Raul or unfairly pre,u_ record confirms that appellants discovery Cruz's involvement in the crime he was finder an explana• motion was never ruled upon by the trial found guilty. The trial court properly in- on being described court. Without this ruling, the appellant strutted the ' with regard to both the y by Officer Fox- '" has no grounds to complain that the State jury g law of parties and the submission of this Cruz appearing in .mac is in violation of his discovery request, and issue. Conaway v. State, 738 S.W.2d 692' that he is entitled to the information. See did not abuse its (Tex.Crim.App.1987); Whaley v. State, 717 he testimony. A;. F' e.g. TEx.R.APP.P. 52(a). S.W.2d 26 arror is overrult�ES 4':, (Tex.Crim.App.1986). See e.g. [9] In addition, appellant has waived Medellin v. State, 617 S.W.2d 229 (Tex. xror the appellant Yy any error claiming he was surprised of the Crim.App.1981). The appellant's fifth point urt erred in admit- '`rye. State's evidence. The record is devoid of of error is overruled. The judgment of the Ted prior cocaine any request by the appellant to postpone or trial court is affirmed. Cruz and Officers continue the trial due to this purported new ,.' . he appellant corn- , „. evidence. The appellant failed to follow e -y from Houst n :.v . the prerequisites needed to preserve error 0 7 KEY NUMBER SYSTEM ist Clifton Hypsh- %y when appellant claims surprize. Thus the Ve disagree. The ; error is waived. Lindley v. State, 635 ; his argument and S.W.2d 541, 543 (Tex.Crim.App.1982); Rod- ion does not rods , riguez v. State, 597 S.W.2d 917, 919 (Tex. rigs between Cruz Crim.App.1980). See e.g. Helton v. State, Garwin BAUGH, Relator, -e an extraneous 738 S.W.2d 734, 736 (Tex.App.—Beaumont he appellant cans i 1987, pet. ref d.). v. this information 4 Finally, if a discovery order had been Mary Clem WILLIAMS, Secretary, City Even. 404. This ? obtained by the appellant, failure by the of Alto, Texas, Respondent. ant's complaints _ State to comply with the request does not No. 12-88-00256—CV. that this evidence "' ` result in reversible error unless it can be y the trial curt shown that the evidence withheld would Court of Appeals of Texas, ed with the ;rrf'' have affected the outcome of the trial in , Tyler. liscovery n`°t 4 the defendant's favor. Carmona v. State, Oct. 20, 1988. eviously cl''-'! n '''z*e 698 S.W.2d 100, 105 (Tex.Crim.App.1985). the trial 0 ..ir ' ,' < See e.g. TEx.R.APP.P. 81(b)(2). Appellant lay of evrd*ncy k - does not explain in his brief how the pur- Petitioner sought to enjoin issuance of ion and Nell ." z, Portedly withheld evidence would have af- certificates of obligations by municipality. ruse of discr't``" _' fected the outcome of the trial in his favor. In an original proceeding, the Court of .G 4 � L S T ,. 5 - ..spy`, a.s f r`-C,- S' -' ' .::';:.- .:'_ _'' •,•:_;;,`-.,;,-,, .%.le..: '3., , - ,..- '',.- .. --'41 , .-,'.‘• -'' -.', ,. 'V./I•-:'-}..4. _,..',-;, ;.J t t f 628 Tex. 762 SOUTH WESTERN REPORTER, 2d SERIES 's f', x` Appeals held that petition to impose duty The City of Alto, seeking to comply with 4 .' T,•x.Loc.Gov't.Ct upon issuer of obligations to obtain approv- edicts of the Texas Water Commission is in °` " n„❑ 1988).2 P g PP r r, al of its electorate had to meet require- the planning phase of rehabilitation of •its ,c 11 The sole ments of Election Code regarding certain sanitary sewer system. On the agenda for rr .: tile petition filed information that must be included on peti- its September 12, 1988, meeting, the City ,1." ; � :,efficient to in tions about petition's signers in addition to Council listed consideration of issuance of ,• ' . r,c.nt of section their signatures, and failure to provide certificates of obligation for the sanitary requires that th such information on petition rendered sig- sewer plant rehabilitation. Also listed was r signed by at lea: natures on petition invalid. consideration of a petition requesting a ref- " fled voters of th erendum. That petition, filed prior to the f "� " Petition dismissed. Respondent does Council meeting, states: a" k-• - that the number SECOND PETITION FOR REFER.. ` , J: tion does not me 1. Municipal Corporations €=867(1) ENDUM CONCERNING ISSUANCE OF .0 x.°` ment. However Local Government Act imposes dutyCERTIFICATES OF OBLIGATION IN P THE AMOUNT OF $525,000 that the petitioi upon issuer of obligations to obtain approv- '" because the pet; al of its electorate if petition containing _; T= the information signatures of five percent of voters is time- We, the undersigned, being qualified , cc Oo2(a)(1) of the ly presented. V.T.C.A., Local Government voters of Alto, Cherokee County, Texas, r The Election whose names appear as Code § 271.049(c). pp qualified voters , , tion in connectic on the most recently approved tax tops t�f '. certain informal 2. Municipal Corporations c�867(3) of the City of Alto, request that a refer- --t- �' dition to their s Petition pursuant to Local Government endum be ordered on the question of , .#3 t . sCode to impose duty on issuer of obli- whether certificates of obligation for up •- - includes: is not gations to obtain approval of its electorate also includes: PP to $525,000.00 should be issued for the �? � i a) the signer must abide by provisions of Election Code purpose of paying contractual obligations O3) the signer requiring that certain information appear to be incurred for: `: =, on petition about petition's signers. V.T. 1.) the construction of improvements • bet; C.A. Local Government Code 271.049(c); and extensions to the City's combined : (C) the signer V.T.C.A., Election Code §§ 1.001 et seq., waterworks and sanitary system, includ• A* y 3 (1)) the date c 277.002(a)(1). ing sewer treatment facilities; and - �, Tex.Elec.Code A 2.) professional services rendered ill - Supp.1988). connection therewith. ' Relator conce Craig D. Caldwell, Rusk, for relator. volved here does The petition contains seventy-eight signs :F. `Steven R. Guy, Rusk, for respondent. tures. No other information accomp*cues • • ;r information. He the signatures. = the Election Coc PER CURIAM. [1] It is well settled that a writ of msD• "_4 in this case. Hi Relator seeks to enjoin issuance of certif- damus will issue only to correct an *bus! lion Code proves icates of obligation by the City of Alto, of discretion or the violation of a mand*te' . 2. Tex.Loc.Gov t.c Texas. He contends that, upon his filing of ry ministerial duty imposed by law. Joh*' ` u. 1988) provides: a petition containing the signatures of son v. Fourth Court of Appeal, I . if before the dal • some seventy-eight people, section 271.- S.W.2d 916, 917 (Tex.1985); Burks t tbefore authorizai 049(c)of the Texas Local Government Code Hutcheson, 537 S.W.2d 312, 313-314 (T� • 2 clerk if the issue • required the city to hold an election on Civ.App.—Eastland 1976, writ ref d n.r. . .1- ''Y a Petition signed approval of the proposed indebtedness. (orig. proceeding) (and cases cited there>+AV► • `= 4,.dlified voters We granted Relator's motion for leave to The Local Government Code imposm authorize of the c t a„tht,rize the iss file and granted his request for tempo- duty upon the issuer of obligations t !tit Issuance is a rary relief to prevent further action by the tain the approval of its electorate if a p t3:. ,x;;• , kid.and condut Irons City. We conclude Relator is not entitled tion containingthe signatures of five Pam. =`� 7 bond elections , g resen t s ‘led Statutes. to the relief which he seeks. cent of the voters is timely p ?: 1. Petitions for t s I. This court is authorized to "issue a writ of holdingof an election." Tex.Elec.Co� ej��excepted mandamus to compel the performance of any § 273.061 (Vernon 1986). t`xal Codopte: it duty imposed by law in connection with the ,� �!e Code: (2) ar l '4 if 3 BAUGH v. WILLIAMS Tex. 629 Cite as 762 S.W.2d 627(Tex.App.—Tyler 1988) to comply with Tex.Loe•Gov't.Code Ann. § 271.049(c) (Ver- ment Code provision irreconcilably conflict %otnmisaion.ism z_ non 1988).3 and that the Local Government Code provi- abilitation of its The sole issue before us is whether . sion, a special or local provision, therefore i the agenda !a i (21the petition filed with the City of Alto was controls. We do not agree. eeting, the City sufficient to invoke the election require - ' of issuance ..if f. ment of section 271.049(c). That section ment Code requires only that a petition for the sanitary inquires that the petition must have been protesting issuance of municipal certifi- Also listed was signed by at least five percent of the quali- cates of obligation be "signed by at least •equesting a ret tied voters of the City of Alto, Texas. Id. five percent of the qualified voters of the iled prior to thi Respondent does not suggest to this court issuer...." No attempt is made in that FOR REFER, that the number of signatures on the peti- statute to define what constitutes a valid ROF Lion does not meet the five percent require- signature on such a petition. The Election ISSUANCE ILIGATION IN ment. However, Respondent does contend Code, however, does enumerate the re- 5,000 that the petition's signatures are invalid quirements for valid petition signatures, because the petition does not also include and those requirements expressly apply to the information required by section 277.- petitions"authorized or required to be filed being qualified 002(aX1) of the Texas Election Code. under a law outside this code in connec- County, Texas, The Election Code requires that a peti Lion with an election ..." Tex.Elec.Code qualified vot4-rs tion in connection with an election include Ann. § 277.001(Vernon Supp.1988).3 A pe- proved tax rolls tition pursuant to Tex.Loc.Gov't.Code `'. certain information about its signers in ad- est that a refer- dition to their signatures. Specifically, a § 271.049(c) falls squarely within the stat- the question of ed scope of chapter 277 of the Election bligation for tip signature is not valid unless the petition Code.4 issued for :he also includes: ctual obligati.ns (A) the signer's printed name; Traditional notions of statutory construc- (B) the signer's voter registration num- construe s direct us to the statutes in such a manner as to give effect to each if ,f improvemer.;a ber, City's combined (C) the signer's residence address; and at all possible. See La Sara Grain Co, v. system, includ (D) the date of si in First National Bank of Mercedes, 673 g' S.W.2d 558, 565 (Tex.1984); Driscoll v. alities; and Tex.Elec.Code Ann. § 277.002(a)(1)(Vernon Harris County Commissioner's Court, :es renaertd :n Supp.1988). 688 S.W.2d 569, 581 (Tex.App.—Houston `'' Relator concedes that the petition in- [14th District] 1984, writ ref d n.r.e.). That nty-eight s:t;na• volved here does not contain that additional task presents no difficulty here. Local ion accompanmrs information. However, he does assert that Government Code § 271.049(c) is fully ef- i the Election Code provision does not apply fective to outline the procedure for authori- it a writ of man in this case. His position is that the Elec- zation of issuance of certificates of authori- .orrect an abuse 1_ tion Code provision and the Local Govern- zation, including the percentage of quali- )n of a manda:- 2. Tex.Loc.Gov't.Code Ann.§ 271.049(c)(Vernon § 26.07 (to repeal a tax increase); and (3) an d by law. Jon"' I1988) provides: election under Tex. Tax Code § 26.08 (to limit f Appeals. 700 U before the date tentatively set for.authoriza- school taxes); none of which applies here. It is tion of the issuance of the certificates or if instructive to note however, that in each of 385); Burke r• before authorization,the municipal secretary or these cases the election statute itself addresses !2, 313-313 +T�'x clerk if the issuer is a municipality ... receives the validity requirements for petitions thereun- ( writ ref d n.r.r•) a petition signed by at least five percent of the der. es cited then'anl. qualified voters of the issuer protesting the is- suance of the certificates, the issuer may not 4. The petition here expressly calls for an elec- pde tmpo�r' it authorize the issuance of the certificates unless don.rather than simply protesting the issuance, issuance is approved at an election ordered, so there can be no doubt it is "in connection ctorate if a pt tJ held,and conducted in the manner provided for with an election." Tres of five Per' bond elections under Chapter 1, Title.22, Re- 'nely presented- t vised Statutes. 5. Tex.Gov't.Code § 311.026(a) (Vernon 1988) 3• Petitions for three types of elections are ex- was cited by Relator at oral argument. Al- ex.Elec.Codc Ann pressly excepted from these requirements: (1)a though the statute applies to conflicts between local option election under the Alcoholic Bever- general and special provisions, it reflects the age Code; (2) an election under Tex. Tax Code traditional rule. ! .M1i i 630 Tex. 762 SOUTH WESTERN REPORTER, 2d SERIES I fied voters who must protest in order to considerations to be given the length of I Dwight P. ' mandate an election. Section 277.002 of time an alleged victim waits before telling pellant. 1 the Election Code can also be given full anyone of the assault; and (4) defendant Charles C. B effect when the petition for an election was not denied effective assistance of an ant, aor appell. involved arises under the Local Govern- sel. ment Code procedure. It is simply applied Affirmed. - " GRANT,T, Jun to determine the validity of the signatures Vc : of such a petition. There is no conflict r, � r k • Claude Golde �n ' assaulting his f between the statutes. 1. Assault and Battery �63 ° ra and the jury as: In this case the petition filed with Re- For purposes of defendant's trial for years of impri spondent, calling for an election under Tex. sexual assault on his 15-year-old step. ` `,' Ann. § 22.011(� Loc.Gov't.Code § 271.049, contains only daughter, evidence that victim had been ' _s' At the time signatures. Relator has admitted that it previously "raped" by one of her brothers }' s` does not satisfy the requirements of Tex. did not render child "promiscuous" for put , "'k.{ `$ lived in Pittsbu Elec.Code 277.002, and it does not. The poses of statute which provides m ,:.A wife, Betty Got signatures thepetition are not valid. prosecutions for engaging in sexual ''r ' Y r' the victim. Ac the child, on The City of Alto was not required to put duct with child between ages of 14 and was sleeping in approval of the proposed certificates of ob- it is defense if child had previously promr. +rlt got in bed witl ligation to a vote. cuously engaged in sexual conduct. 1?a' t , C.A., Penal Code § 22.011(a)(2), (d). ''"s` clothes off, ar The motion for leave to file was improvi ,, = Betty Golden tE dently granted. Our order granting that 2. Assault and Battery G=,85 .5. r- ',ff.' top of the girl, motion and the temporary relief is hereby In defendant's trial for sexual *sank i '7 ':F anything. vacated and the petition is dismissed. of his 15-year-old stepdaughter, defending ; 3; Betty Golder w was not entitled to present evidenct 'r daughter on Se] o 2 KEY NUMBER SYSTEM victim's alleged prior promiscuity, as d♦ na? ; s did not tell her T fendant did not previously inform copal, "F' , ' ,r October 1986, outside of presence of jury, of his intention !" ' `,: asked her abo to introduce anyevidence or propound y `.. p po any ` + h-,- + . twenty times. Claude GOLDEN, Appellant, question concerning victim's past sexed`;# `f not commit the behavior. Rules of Crim.Evid., Rules 41 7: 'irk'' sexually assaul v. 412(b), (b)(1). ¥ . � " [1] In his f The STATE of Texas, Appellee. � .v 3. Criminal Law 0=785(8) ,t1`° asserts that th No. 6-88-006-CR. * Defendant was not entitled to inst l* r } ', '` �'ersible error Court of Appeals of Texas, tion on limiting considerations to be eve* s .'- Texarkana. present evidenc length of time alleged victim waits bsf :`. .. ;' sexual conduct. telling anyone of sexual assault, as lion under Nov. 1, 1988. instruction applies only to situations }, I § 22.011(a)(2) t Discretionary Review Refused State is seeking conviction based ` .. ,'•, )'ears of age March 22, 1989. upon uncorroborated testimony of 4. , offense and ha and victim's testimony concerning-s engaged in s assault by defendant was corroboraboli b7 Code Ann. § 2; s Defendant was convicted of sexually her mother. Vernon's Ann.Texas C:CP' The record doe 2 assaulting his 15-year-old stepdaughter, in s sual sexual aci art 38.07. -•k attempted to E the 276th Judicial District Court, Camp g County, William Porter, J., and defendant 4. Criminal Law 0=641.13(2) Golden that o1 appealed. The Court of Appeals, Grant,J., For purposes of conviction for se had previously held that: (1) defendant was not entitled to assault, defendant was not denied etfecl: such prior act present evidence of child's alleged prior assistance of counsel due to monad's a upon a child do sexual conduct; (2) defendant was not enti- ure to obtain ruling on his motion tO ,4 • !' iscuous for pc tied to use such evidence in order to attack court reporter transcribe all of prO`' templated by child's credibility; (3) defendant was not ings, including proceedings held outs" is "tan V. State, entitled to an instruction on the limiting jury's presence. U.S.C.A. Coen 2d 598 (1939) i r Municipal Bond Investors Assurance Corporation 113 King Street Armonk,NY 10504 914 273 4545 pgsaVID VIA COURIER April 15, 1991 APR 16 1991 AMBIA CITY MANAGER Leslie F. Parrish, Vice President NCNB Capital Markets Inc. 901 Main Street Dallas, TX 75202 RE: $2,125,000 City of Pearland, Texas, Combination Tax and Revenue Certificates of Obligation, Series 1991 Dear Mr. Parrish: Enclosed please find the following Municipal Bond Investors Assurance Corporation documents for the captioned issue: 1. Two original executed Commitments, each of which should be executed and one original returned to our offices in the enclosed self-addressed stamped envelope. The second Commitment should be retained for your files; 2. Disclosure language for the Official Statement; 3. A form of our Statement of Insurance for printing on the Bonds. In addition, under no circumstances should any changes be made to Items 2 and 3, nor should any other versions of these materials be used on any financing unless you have direct confirmation from Municipal Bond Investors Assurance Corporation as to the acceptability of such changes. Confirmation regarding items 2 and 3 may come only from our Documentation and Closing Department or our Legal Department and may be written or verbal. Since the responsibility for this information remains with us, please send us drafts prior to the printing of any of these documents for our approval. April 15, 1991 Leslie F. Parrish NCNB Capital Markets Inc. Page Two The premium payment in the amount of $19,800, due at the closing of the issue, should be wired to our account with Citibank, N.A. , New York, New York on the day of closing. Municipal Bond Investors Assurance Corporation's account number is 30261594. The Bank's number is ABA# 021000089. Moody's Investors Service rating agency fees will be billed directly by Moody's Investors Service, in an amount based on the final par and other factors as determined by Moody's Investors Service. Standard & Poor's Corporation rating agency fees will be billed directly by Standard & Poor's Corporation, in an amount based on the final par and other factors as determined by Standard & Poor's Corporation. We would like to request a copy of the final debt service schedule for this issue. We would also appreciate receiving three copies of the final official statement and three executed unbound copies of the closing transcripts when they are available. Thank you for your cooperation concerning these matters. If you have any questions, please contact our offices. Sincerely, / $, • Jamie J. Shillin• Direct Dial: 914 765-3939 Enclosures DISTRIBUTION LIST 91-03-2206 AIBIA Underwriter Name : NCNB Texas National Bank Address : 901 Main Street : Dallas, TX 75202 • Attention : Leslie F. Parrish, Vice President Phone: (214) 508-2812 Bond Counsel Name : Vinson & Elkins Address : 1001 Fannin Street : Houston, TX 77002-6760 Attention : Clifford W. Youngblood, Esquire Phone: (713) 758-2222 Financial Consultant Name : Rauscher Pierce Refsnes, Inc. Address : First City Tower : 1001 Fannin Street, Suite 700 : Houston, TX 77002 Attention : Frank Ildebrando, Senior Vice President Phone: (713) 651-3370 Issuer Name : City of Pearland Address : City Hall : 3519 Liberty Drive : Pearland, TX 77581 Attention : James 0. DeShazer, City Manager Phone: ( ) Revised April 15, 1991 MENA COMMITMENT TO ISSUE A FINANCIAL GUARANTY INSURANCE POLICY Application No. : 91-03-2206 Sale Date: April 9, 1991 Program Type: Competitive OBP RE: $2,125,000 City of Pearland, Texas, Combination Tax and Revenue Certificates of Obligation, Series 1991 (the "Obligations") This commitment to issue a financial guaranty insurance policy (the "Commitment") dated April 15, 1991, constitutes an agreement between NCNB CAPITAL MARKETS INC. (the "Applicant"), and MUNICIPAL BOND INVESTORS ASSURANCE CORPORATION (the "Insurer"), a stock insurance company incorporated under the laws of the State of New York. Based on an approved application dated April 5, 1991, the Insurer agrees, upon satisfaction of the conditions herein, to issue on the earlier of (i) 120 days of said approval date or (ii) on the date of delivery of and payment for the Obligations, a financial guaranty insurance policy (the "Bond Insurance Policy"), for the Obligations, insuring the payment of principal of and interest on the Obligations when due. The issuance of the Bond Insurance Policy shall be subject to the following terms and conditions: 1. Payment by the Applicant, or by the Trustee on behalf of the Applicant, on the date of delivery of and payment for the Obligations, the following payments: a. a nonrefundable premium in the amount of $19,800. The premium set out in this paragraph shall be the total premium required to be paid on the Bond Insurance Policy issued pursuant to this Commitment; and b. Standard & Poor's Corporation rating agency fees in an amount to be billed directly by Standard & Poor's Corporation, based on the final par and other factors as determined by Standard & Poor's Corporation; and c. Moody's Investors Service rating agency fees in an amount to be billed directly by Moody's Investors Service, based on the final par and other factors as determined by Moody's Investors Service. 2. The Obligations shall have received the unqualified opinion of bond counsel with respect to the tax-exempt status of interest on the Obligations. 3. There shall have been no material adverse change in the Obligations or the Resolution, Bond Ordinance, Trust Indenture or other official document authorizing the issuance of the Obligations or in the final official statement or other similar document, including the financial statements included therein. 4. There shall have been no material adverse change in any information submitted to the Insurer as a part of the application or subsequently submitted to be a part of the application to the Insurer. -2- AlB1/A 5. No event shall have occurred which would allow any underwriter or any other purchaser of the Obligations not to be required to purchase the Obligations at closing. 6. All documents executed in connection with the issuance of the Obligations shall contain a provision which requires copies of any amendments to such documents consented to by the Insurer to be sent to Standard & Poor's. 7. A Statement of Insurance satisfactory to the Insurer shall be printed on the obligations. 8. Prior to the delivery of and payment for the Obligations, none of the information or documents submitted as a part of the application to the Insurer shall be determined to contain any untrue or misleading statement of a material fact or fail to state a material fact required to be stated therein or necessary in order to make the statements contained therein not misleading. 9. No material adverse change affecting any security for the Obligations shall have occurred prior to the delivery of and payment for the Obligations. 10. This Commitment may be signed in counterpart by the parties hereto. Dated this 15th day of April, 1991. MUNICIPAL BOND INVESTORS ASSURANCE CORPORATION By ssistant Secretary NCNB CAPITAL MARKETS INC. By Title: THE MUNICIPAL BOND INVESTORS ASSURANCE CORPORATION INSURANCE POLICY The following information has been furnished by Municipal Bond Investors Assurance Corporation (the "Insurer") for use in this Official Statement. Reference is made to Appendix for a specimen of the Insurer's policy. The Insurer's policy unconditionally and irrevocably guarantees the full and complete payment required to be made by or on behalf of the Issuer to the Paying Agent or its successor of an amount equal to (i) the principal of (either at the stated maturity or by an advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Bonds as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed by the Insurer's policy shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner of the Bonds pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law (a "Preference") . The Insurer's policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Bond. The Insurer's policy does not, under any circumstance, insure against loss relating to: (i) optional or mandatory redemptions (other than mandatory sinking fund redemptions); (ii) any payments to be made on an accelerated basis; (iii) payments of the purchase price of Bonds upon tender by an owner thereof; or (iv) any Preference relating to (i) through (iii) above. The Insurer's policy also does not insure against nonpayment of principal of or interest on the Bonds resulting from the insolvency, negligence or any other act or omission of the Paying Agent or any other paying agent for the Bonds. Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by the Insurer from the Paying Agent or any owner of a Bond the payment of an insured amount for which is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with Citibank, N.A. , in New York, New York, or its successor, sufficient for the payment of any such insured amounts which are then due. Upon presentment and surrender of such Bonds or presentment of such other proof of ownership of the Bonds, together with any appropriate instruments of assignment to evidence the assignment of the insured amounts due on the Bonds as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Bonds in any legal proceeding related to payment of insured amounts on the Bonds, such instruments being in a form satisfactory to Citibank, N.A. , Citibank, N.A. shall disburse to such owners or the Paying Agent payment of the insured amounts due on such Bonds, less any amount held by the Paying Agent for the payment of such insured amounts and legally available therefor. -2- The Insurer is the principal operating subsidiary of MBIA Inc. The principal shareholders of MBIA Inc. are The AEtna Casualty and Surety Company, The Fund American Companies, Inc. , subsidiaries of CIGNA Corporation, and Credit Local de France, CAECL S.A. , and they own approximately 67% of the outstanding common stock of MBIA Inc. Neither MBIA Inc. nor its shareholders are obligated to pay the debts of or claims against the Insurer. The Insurer is a limited liability corporation rather than a several liability association. The Insurer is domiciled in the State of New York and licensed to do business in all 50 states, the District of Columbia and the Commonwealth of Puerto Rico. On April 4, 1991, MBIA Inc. filed a registration statement, which is not yet effective, with the Securities and Exchange Commission for a secondary offering of 11.5 million shares of common stock. The offering consists of shares offered by present MBIA Inc. owners, The Fund American Companies, Inc. , CIGNA Guaranty Holdings, Inc. (a subsidiary of CIGNA Corporation) and The AEtna Casualty and Surety Company. As a result of the offering, 24.1 million shares or 62.9 percent of MBIA Inc. would be publicly-held. Effective December 31, 1989, MBIA Inc. acquired Bond Investors Group, Inc. On January 5, 1990, the Insurer acquired all of the outstanding stock of Bond Investors Group, Inc. , the parent of Bond Investors Guaranty Insurance Company ("BIG"), now known as MBIA Insurance Corp. of Illinois. Through a reinsurance agreement, BIG has ceded all of its net insured risks, as well as its unearned premium and contingency reserves, to the Insurer and the Insurer has reinsured BIG's net outstanding exposure. As of December 31, 1989 the Insurer had admitted assets of $1.299 billion (audited) , total liabilities of $907 million (audited), and total capital and surplus of $392 million (audited) prepared in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. As of December 31, 1990, after giving effect to the acquisition of BIG, the Insurer had admitted assets of $1.806 billion (unaudited), total liabilities of $1.227 billion (unaudited), and total capital and surplus of $579 million (unaudited) determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. Copies of the Insurer's year end financial statements prepared in accordance with statutory accounting practices are available from the Insurer. The address of the Insurer is 113 Ring Street, Armonk, New York 10504. Moody's Investors Service rates all bond issues insured by the Insurer and BIG "Aaa" and short term loans "MIG 1," both designated to be of the highest quality. Standard & Poor's Corporation rates all new issues insured by the Insurer and BIG "AAA" Prime Grade. The Moody's Investors Service rating of the Insurer should be evaluated independently of the Standard & Poor's Corporation rating of the Insurer. No application has been made to any other rating agency in order to obtain additional ratings on the Bonds. The ratings reflect the respective rating agency's current assessment of the creditworthiness of the Insurer and its ability to pay claims on its policies of insurance. Any further explanation as to the significance of the above ratings may be obtained only from the applicable rating agency. -3- The above ratings are not recommendations to buy, sell or hold the Bonds, and such ratings may be subject to revision or withdrawal at any time by the rating agencies. Any downward revision or withdrawal of either or both ratings may have an adverse effect on the market price of the Bonds. DISCLOSURE OF GUARANTY FUND NONPARTICIPATION: In the event the Insurer is unable to fulfill its contractual obligation under this policy or contract or application or certificate or evidence of coverage, the policyholder or certificateholder is not protected by an insurance guaranty fund or other solvency protection arrangement. TX FINANCIAL GUARANTY INSURANCE POLICY Municipal Bond Investors Assurance Corporation Aimonk, New York 10504 Policy No.xxxxx Municipal Bond Investors Assurance Corporation(the"Insurer"),in consideration of the payment of the premium and subject to the terms of this policy,hereby unconditionally and irrevocably guarantees to any owner,as hereinafter defined,of the following described obligations,the full and complete payment required to be made by or on behalf of the Issuer to or its successor(the "Paying Agent")of an amount equal to(i)the principal of(either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment)and interest on,the Obligations(as that term is defined below)as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment,the payments guaranteed hereby shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration); and(ii)the reimbursement of any such payment which is subsequently recovered from any owner pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law. The amounts referred to in clauses(i) and(ii)of the preceding sentence shall be referred to herein collectively as the"Insured Amounts." "Obligations"shall mean: Upon receipt of telephonic or telegraphic notice,such notice subsequently confirmed in writing by registered or certified mail,or upon receipt of written notice by registered or certified mail, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an Insured Amount for which is then due,that such required payment has not been made,the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment,whichever is later,will make a deposit of funds,in an account with Citibank,N.A.,in New York, New York,or its successor,sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or presentment of such other proof of ownership of the Obligations, together with any appropnate Instruments of assignment to evidence the assignment of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to Citibank,N.A., Citibank,N.A.shall disburse to such owners, or the Paying Agent payment of the Insured Amounts due on such Obligations,less any amount held by the Paying Agent for the payment of such Insured Amounts and legally available therefor. This policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Obligation. As used herein,the term"owner"shall mean the registered owner of any Obligation as indicated in the books maintained by the Paying Agent,the issuer,or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or any party whose agreement with the Issuer constitutes the underlying security for the Obligations. Any service of prtxess on the Insurer may be made to the Insurer at its offices located at 113 King Street, Armonk,New York 10504 and such service of prrrrss shall be valid and binding. This policy is non-cancellable for any reason. The premium on this policy is not refundable for any reason including the payment prior to maturity of the Obligations. IN WITNESS WHEREOF,the Insurer has caused this policy to be executed in facsimile on its behalf by its duly authorized officers,this MUNICIPAL BOND INVESTORS AS SURANCE CORPORA' ON;.. COUNTERSIGNED: 4_.: t`'- Resident Licensed Agent President _ City,State `' Attest .. Date Assistant ecretary r. DISCLOSURE OF GUARANTY FUND NONPARTICIPATION In the event the Insurer is unable to fulfill its contractual obligation under this policy or contract or application or certificate or evidence of coverage, the policyholder or certificateholder is not protected by an insurance guaranty fund or other solvency protection arrangement. STD-RCS/TX-4 STATEMENT OF INSURANCE The Municipal Bond Investors Assurance Corporation (the "Insurer") has issued a policy containing the following provisions, such policy being on file at The Insurer, in consideration of the payment of the premium and subject to the terms of this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete payment required to be made by or on behalf of the Issuer to or its successor (the "Paying Agent") of an amount equal to (i) the principal of (either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Obligations (as that term is defined below) as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed hereby shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding sentence shall be referred to herein collectively as the,"Insured Amounts." "Obligations" shall mean: Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an Insured Amount for which is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with Citibank, N.A., in New York, New York, or its successor, sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or presentment of such other proof of ownership of the Obligations, together with any appropriate instruments of assignment to evidence the assignment of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to Citibank, N.A., Citibank, N.A. shall disburse to such owners or the Paying Agent payment of the Insured Amounts due on such Obligations, less any amount held by the Paying Agent for the payment of such Insured Amounts and legally available therefor. This policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Obligation. As used herein, the term "owner" shall mean the registered owner of any Obligation as indicated in the books maintained by the Paying Agent, the Issuer, or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or any party whose agreement with the Issuer constitutes the underlying security for the Obligations. Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Street, Armonk, New York 10504. This policy is non-cancellable for any reason. The premium on this policy is not refundable for any reason including the payment prior to maturity of the Obligations. DISCLOSURE OF GUARANTY FUND NONPARTICIPATION: In the event the Insurer is unable to fulfill its contractual obligation under this policy or contract or application or certificate or evidence of coverage, the policyholder or certificateholder is not protected by an insurance guaranty fund or other solvency protection arrangement. MUNICIPAL BOND INVESTORS ASSURANCE CORPORATION • STD-RCS/TX-1 *Insert Name of Trustee or Paying Agent. " a r; _*L �/ Municipal Bond Investors Assurance Corporation 113 King Street Armonk,NY 10504 914 273 4545 VIA COURIER EsgIam April 11, 1991 APR 12 Icy! /HQIA CITY MANAGER Leslie F. Parrish, Vice President NCNB Texas National Bank 901 Main Street Dallas, TX 75202 RE: $2,125,000 City of Pearland, Texas, Combination Tax and Revenue Certificates of Obligation, Series 1991 Dear Mr. Parrish: Enclosed please find the following Municipal Bond Investors Assurance Corporation documents for the captioned issue: 1. Two original executed Commitments, each of which should be executed and one original returned to our offices in the enclosed self-addressed stamped envelope. The second Commitment should be retained for your files; 2. Disclosure language for the Official Statement; 3. A form of our Statement of Insurance for printing on the Bonds. In addition, under no circumstances should any changes be made to Items 2 and 3, nor should any other versions of these materials be used on any financing unless you have direct confirmation from Municipal Bond Investors Assurance Corporation as to the acceptability of such changes. Confirmation regarding items 2 and 3 may come only from our Documentation and Closing Department or our Legal Department and may be written or verbal. Since the responsibility for this information remains with us, please send us drafts prior to the printing of any of these documents for our approval. .s April 11, 1991 Leslie F. Parrish NCNB Texas National Bank Page Two The premium payment in the amount of $19,800, due at the closing of the issue, should be wired to our account with Citibank, N.A. , New York, New York on the day of closing. Municipal Bond Investors Assurance Corporation's account number is 30261594. The Bank's number is ABA# 021000089. Moody's Investors Service rating agency fees will be billed directly by Moody's Investors Service, in an amount based on the final par and other factors as determined by Moody's Investors Service. Standard & Poor's Corporation rating agency fees will be billed directly by Standard & Poor's Corporation, in an amount based on the final par and other factors as determined by Standard & Poor's Corporation. We would like to request a copy of the final debt service schedule for this issue. We would also appreciate receiving three copies of the final official statement and three executed unbound copies of the closing transcripts when they are available. Thank you for your cooperation concerning these matters. If you have any questions, please contact our offices. Sincerely, (FA-, Jamie J. Shilling Direct Dial: 914 765-3939 Enclosures DISTRIBUTION LIST 91-03-2206 AIBIA Underwriter Name : NCNB Texas National Bank Address : 901 Main Street : Dallas, TX 75202 • Attention : Leslie F. Parrish, Vice President Phone: (214) 508-2812 Bond Counsel Name : Vinson & Elkins Address : 1001 Fannin Street : Houston, TX 77002-6760 • Attention : Clifford W. Youngblood, Esquire Phone: (713) 758-2222 • Financial Consultant Name : Rauscher Pierce Refsnes, Inc. Address : First City Tower : 1001 Fannin Street, Suite 700 : Houston, TX 77002 Attention : Frank Ildebrando, Senior Vice President Phone: (713) 651-3370 Issuer Name : City of Pearland Address : City Hall : 3519 Liberty Drive : Pearland, TX 77581 Attention : James O. DeShazer, City Manager Phone: ( ) COMMITMENT TO ISSUE A AlB I1 FINANCIAL GUARANTY INSURANCE POLICY Application No. : 91-03-2206 Sale Date: April 9, 1991 Program Type: Competitive OBP RE: $2,125,000 City of Pearland, Texas, Combination Tax and Revenue Certificates of Obligation, Series 1991 (the "Obligations") This commitment to issue a financial guaranty insurance policy (the "Commitment") dated April 11, 1991, constitutes an agreement between NCNB TEXAS NATIONAL BANK (the "Applicant"), and MUNICIPAL BOND INVESTORS ASSURANCE CORPORATION (the "Insurer"), a stock insurance company incorporated under the laws of the State of New York. Based on an approved application dated April 5, 1991, the Insurer agrees, upon satisfaction of the conditions herein, to issue on the earlier of (i) 120 days of said approval date or (ii) on the date of delivery of and payment for the Obligations, a financial guaranty insurance policy (the "Bond Insurance Policy"), for the Obligations, insuring the payment of principal of and interest on the Obligations when due. The issuance of the Bond Insurance Policy shall be subject to the following terms and conditions: 1. Payment by the Applicant, or by the Trustee on behalf of the Applicant, on the date of delivery of and payment for the Obligations, the following payments: a. a nonrefundable premium in the amount of $19,800. The premium set out in this paragraph shall be the total premium required to be paid on the Bond Insurance Policy issued pursuant to this Commitment; and b. Standard & Poor's Corporation rating agency fees in an amount to be billed directly by Standard & Poor's Corporation, based on the final par and other factors as determined by Standard & Poor's Corporation; and c. Moody's Investors Service rating agency fees in an amount to be billed directly by Moody's Investors Service, based on the final par and other factors as determined by Moody's Investors Service. 2. The Obligations shall have received the unqualified opinion of bond counsel with respect to the tax-exempt status of interest on the Obligations. 3. There shall have been no material adverse change in the Obligations or the Resolution, Bond Ordinance, Trust Indenture or other official document authorizing the issuance of the Obligations or in the final official statement or other similar document, including the financial statements included therein. 4. There shall have been no material adverse change in any information submitted to the Insurer as a part of the application or subsequently submitted to be a part of the application to the Insurer. Ink Aft, -2- 5. No event shall have occurred which would allow any underwriter or any other purchaser of the Obligations not to be required to purchase the Obligations at closing. 6. All documents executed in connection with the issuance of the Obligations shall contain a provision which requires copies of any amendments to such documents consented to by the Insurer to be sent to Standard & Poor's. 7. A Statement of Insurance satisfactory to the Insurer shall be printed on the obligations. 8. Prior to the delivery of and payment for the Obligations, none of the information or documents submitted as a part of the application to the Insurer shall be determined to contain any untrue or misleading statement of a material fact or fail to state a material fact required to be stated therein or necessary in order to make the statements contained therein not misleading. 9. No material adverse change affecting any security for the Obligations shall have occurred prior to the delivery of and payment for the Obligations. 10. This Commitment may be signed in counterpart by the parties hereto. Dated this 11th day of April, 1991. MUNICIPAL BOND INVESTORS ASSURANCE CORPORATION By /� a.E�! Assistant Secretary NCNB TEXAS NATIONAL BANK By Title: THE MUNICIPAL BOND IESTORS ASSURANCE CORPORATION JRANCE POLICY The following information has been furnished by Municipal Bond Investors Assurance Corporation (the "Insurer") for use in this Official Statement. Reference is made to Appendix for a specimen of the Insurer's policy. The Insurer's policy unconditionally and irrevocably guarantees the full and complete payment required to be made by or on behalf of the Issuer to the Paying Agent or its successor of an amount equal to (i) the principal of (either at the stated maturity or by an advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Bonds as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed by the Insurer's policy shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner of the Bonds pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law (a "Preference") . The Insurer's policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Bond. The Insurer's policy does not, under any circumstance, insure against loss relating to: (i) optional or mandatory redemptions (other than mandatory sinking fund redemptions); (ii) any payments to be made on an accelerated basis; (iii) payments of the purchase price of Bonds upon tender by an owner thereof; or (iv) any Preference relating to (i) through (iii) above. The Insurer's policy also does not insure against nonpayment of principal of or interest on the Bonds resulting from the insolvency, negligence or any other act or omission of the Paying Agent or any other paying agent for the Bonds. Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by the Insurer from the Paying Agent or any owner of a Bond the payment of an insured amount for which is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with Citibank, N.A. , in New York, New York, or its successor, sufficient for the payment of any such insured amounts which are then due. Upon presentment and surrender of such Bonds or presentment of such other proof of ownership of the Bonds, together with any appropriate instruments of assignment to evidence the assignment of the insured amounts due on the Bonds as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Bonds in any legal proceeding related to payment of insured amounts on the Bonds, such instruments being in a form satisfactory to Citibank, N.A. , Citibank, N.A. shall disburse to such owners or the Paying Agent payment of the insured amounts due on such Bonds, less any amount held by the Paying Agent for the payment of such insured amounts and legally available therefor. -2- The Insurer is the principal operating subsidiary of MBIA Inc. The principal shareholders of MBIA Inc. are The AEtna Casualty and Surety Company, The Fund American Companies, Inc. , subsidiaries of CIGNA Corporation, and Credit Local de France, CAECL S.A. , and they own approximately 67% of the outstanding common stock of MBIA Inc. Neither MBIA Inc. nor its shareholders are obligated to pay the debts of or claims against the Insurer. The Insurer is a limited liability corporation rather than a several liability association. The Insurer is domiciled in the State of New York and licensed to do business in all 50 states, the District of Columbia and the Commonwealth of Puerto Rico. On April 4, 1991, MBIA Inc. filed a registration statement, which is not yet effective, with the Securities and Exchange Commission for a secondary offering of 11.5 million shares of common stock. The offering consists of shares offered by present MBIA Inc. owners, The Fund American Companies, Inc., CIGNA Guaranty Holdings, Inc. (a subsidiary of CIGNA Corporation) and The AEtna Casualty and Surety Company. As a result of the offering, 24.1 million shares or 62.9 percent of MBIA Inc. would be publicly-held. Effective December 31, 1989, MBIA Inc. acquired Bond Investors Group, Inc. On January 5, 1990, the Insurer acquired all of the outstanding stock of Bond Investors Group, Inc. , the parent of Bond Investors Guaranty Insurance Company ("BIG"), now known as MBIA Insurance Corp. of Illinois. Through a reinsurance agreement, BIG has ceded all of its net insured risks, as well, as its unearned premium and contingency reserves, to the Insurer and the Insurer has reinsured BIG's net outstanding exposure. As of December 31, 1989 the Insurer had admitted assets of $1.299 billion (audited), total liabilities of $907 million (audited), and total capital and surplus of $392 million (audited) prepared in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. As of December 31, 1990, after giving effect to the acquisition of BIG, the Insurer had admitted assets of $1.806 billion (unaudited) , total liabilities of $1.227 billion (unaudited), and total capital and surplus of $579 million (unaudited) determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. Copies of the Insurer's year end financial statements prepared in accordance with statutory accounting practices are available from the Insurer. The address of the Insurer is 113 King Street, Armonk, New York 10504. Moody's Investors Service rates all bond issues insured by the Insurer and BIG "Aaa" and short term loans "MIG 1," both designated to be of the highest quality. Standard & Poor's Corporation rates all new issues insured by the Insurer and BIG "AAA" Prime Grade. The Moody's Investors Service rating of the Insurer should be evaluated independently of the Standard & Poor's Corporation rating of the Insurer. No application has been made to any other rating agency in order to obtain additional ratings on the Bonds. The ratings reflect the respective rating agency's current assessment of the creditworthiness of the Insurer and its ability to pay claims on its policies of insurance. Any further explanation as to the significance of the above ratings may be obtained only from the applicable rating agency. -3- The above ratings are not recommendations to buy, sell or hold the Bonds, and such ratings may be subject to revision or withdrawal at any time by the rating agencies. Any downward revision or withdrawal of either or both ratings may have an adverse effect on the market price of the Bonds. DISCLOSURE OF GUARANTY FUND NONPARTICIPATION: In the event the Insurer is unable to fulfill its contractual obligation under this policy or contract or application or certificate or evidence of coverage, the policyholder or certificateholder is not protected by an insurance guaranty fund or other solvency protection arrangement. TX 3 . 3 3 3 s m m s s 141 . , . ,, , , , r.,kl 3 . 10 ali m ID 3 • ... r4 LIC O O.a kl M • 3 3 * icii t . I ., m C O _4 U 7 91111 Oat OM O CA fa.0 Omt aam S i S 3 3 ' i ii o m tU C L .00 C O O 10 1O K C O ,410+4 O 14 .0 40 40 U q O -+ m 4 C > L 7 C O ..V FINANCIAL GUARANTY INSURANCE POLICY Municipal Bond Investors Assurance Corporation Armonk, New York 10504 Policy No.xxxix Municipal Bond Investors Assurance Corporation(the"Insurer"),in consideration of the payment of the premium and subject to the terms of this policy,hereby unconditionally and irrevocably guarantees to any owner,as hereinafter defined,of the following described obligations,the full and complete payment required to be made by or on behalf of the Issuer to or its sueMcsor(the 'Paying Agent")of an amount equal to(i)the principal of(either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment)and interest on,the Obligations(as that term is defined below)as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment,the payments guaranteed hereby shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration); and(ii)the reimbursement of any such payment which is subsequently recovered from any owner pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law. The amounts referred to in clauses(i)and(ii)of the preceding sentence shall be referred to herein collectively as the"Insured Amounts." "Obligations"shall mean: Upon receipt of telephonic or telegraphic notice,such notice subsequently confirmed in writing by registered or certified mail,or upon receipt of written notice by registered or certified mail, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an Insured Amount for which is then due,that such required payment has not been made,the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment,whichever is later,will make a deposit of funds,in an account with Gtibank,N.A.,in New York, New York,or its successor,sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or presentment of such other proof of ownership of the Obligations, together with any appropriate Instruments of assignment to evidence the assignment of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to Citibank,N.A., Citibank,N.A.shall disburse to such owners, or the Paying Agent payment of the Insured Amounts due on such Obligations, less any amount held by the Paying Agent for the payment of such Insured Amounts and legally available therefor. This policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Obligation. As used herein,the term"owner"shall mean the registered owner of any Obligation as indicated in the books maintained by the Paying Agent,the Issuer,or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or any party whose agreement with the Issuer constitutes the underlying security for the Obligations. Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Street, Armonk, New York 10504 and such service of process shall be valid and binding. This policy is non-cancellable for any reason. The premium on this policy is not refundable for any reason including the payment prior to maturity of the Obligations. LN WITNESS WHEREOF,the Insurer has caused this policy to be executed in facsimile on its behalf by its duly authorized officers,this MUNICIPAL BOND INVESTORS ASSURANCE CORPORA_ 'ION. COUNTERS IGNED c Resident Licensed Agent President City,State -' Attest- Date Assistant Secietary DISCLOSURE OF GUARANTY FUND NONPARTICIPATION In the event the Insurer is unable to fulfill its contractual obligation under this policy or contract or application or certificate or evidence of coverage, the policyholder or certificateholder is not protected by an insurance guaranty fund or other solvency protection arrangement. STD-RCSITX-4 STATEMENT OF INSURANCE The Municipal Bond Investors Assurance Corporation (the "Insurer") has issued a policy containing the following provisions, such policy being on file at The Insurer, in consideration of the payment of the premium and subject to the terms of this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete payment required to be made by or on behalf of the Issuer to or its successor (the "Paying Agent") of an amount equal to (i) the principal of (either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Obligations (as that term is defined below) as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed hereby shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding sentence shall be referred to herein collectively as thet"Insured Amounts." "Obligations" shall mean: ^ 1 41111. AMA Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an Insured Amount for which is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with Citibank, N.A., in New York, New York, or its successor, sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or presentment of such other proof of ownership of the Obligations, together with any appropriate instruments of assignment to evidence the assignment of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to Citibank, N.A., Citibank, N.A. shall disburse to such owners or the Paying Agent payment of the Insured Amounts due on such Obligations, less any amount held by the Paying Agent for the payment of such Insured Amounts and legally available therefor. This policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Obligation. As used herein, the term "owner" shall mean the registered owner 'of any Obligation as indicated in the books maintained by the Paying Agent, the Issuer, or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or any party whose agreement with the Issuer constitutes the underlying security for the Obligations. Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Street, Armonk, New York 10504. This policy is non-cancellable for any reason. The premium on this policy is not refundable for any reason including the payment prior to maturity of the Obligations. DISCLOSURE OF GUARANTY FUND NONPARTICIPATION: In the event the Insurer is unable to fulfill its contractual obligation under this policy or contract or application or certificate or evidence of coverage, the policyholder or certificateholder is not protected by an insurance guaranty fund or other solvency protection arrangement. MUNICIPAL BOND INVESTORS ASSURANCE CORPORATION STD-RCS/TX-1 *Insert Name of Trustee or Paying Agent. ORDINANCE NO. 613bit):1"i4;1- ORDINANCE AUTHORIZING THE ISSUANCE OF $2 , 125, 000 CITY OF PEARLAND, TEXAS, COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 1991; AND DECLARING THAT AN IMMEDIATE PUBLIC EMERGENCY EXISTS BECAUSE THE PROCEEDS OF SUCH CERTIFICATES ARE NEEDED AS SOON AS POSSIBLE FOR THE PROTECTION OF LIFE, HEALTH, PROPERTY AND THE PUBLIC PEACE THE STATE OF TEXAS § COUNTIES OF BRAZORIA AND HARRIS § CITY OF PEARLAND § WHEREAS, the City Council of the City of Pearland, Texas (the "City") , authorized the publication of a notice of intention to issue certificates of obligation to the effect that the City Council would meet on April 8, 1991, to adopt an ordinance and take such other action as may be deemed necessary to authorize the issuance of certificates of obligation payable from City ad valorem taxes and a pledge of revenues of the City' s water and sewer system, for the purpose of evidencing the indebtedness of the City for park improvements, construction of a Senior Citizens Building, and the acquisition of right of way for roads and drainage, and the cost of professional services incurred in connection therewith; and WHEREAS, such notice was published at the times and in the manner required by the Constitution and laws of the State of Texas and of the United States of America, respectively, particularly Sections 271. 041, et seq, Texas Local Government Code as amended; and WHEREAS, the City Council met on April 8 to consider authorizing the issuance of such certificates of obligation, but deferred action until April 9 to allow a sale of certificates under better market conditions; and WHEREAS, no petition or other request has been filed with or presented to any official of the City requesting that any of the proceedings authorizing such certificates of obligation be submitted to a referendum or other election; THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PEARLAND: 1. Definitions. Throughout this ordinance the following terms and expressions as used herein shall have the meanings set forth below: The term "Business Day" shall mean any day which is not a Saturday, Sunday, or a day on which the Registrar is authorized by law or executive order to close, or a legal holiday. The term "Certificates" or "Series 1991 Certificates" shall mean the Series 1991 Certificates authorized in this Ordinance, unless the context clearly indicates otherwise. The term "City" shall mean the City of Pearland, Texas. The term "Code" shall mean the Internal Revenue Code of 1986, as amended. The term "Comptroller" shall mean the Comptroller of Public Accounts of the State of Texas. The term "Interest and Sinking Fund" shall mean the interest and sinking fund established by the City pursuant to Section 18 of this Ordinance. The term "Interest Payment Date", when used in connection with any Certificate, shall mean March 1, 1992, and each September 1 and March 1 thereafter until maturity or earlier redemption. The term "Ordinance" as used herein and in the Certificates shall mean this ordinance authorizing the Certificates. The term "Owner" shall mean any person who shall be the registered owner of any outstanding Certificate. The term "Paying Agent" shall mean the Registrar. The term "Record Date" shall mean, for any Interest Payment Date, the fifteenth (15th) calendar day of the month next preceding such Interest Payment Date. The term "Register" shall mean the books of registration kept by the Registrar in which are maintained the names and addresses of and the principal amounts registered to each Owner. The term "Registrar" shall mean First City, Texas-Houston, N.A. , Houston, Texas, and its successors in that capacity. 2 . Authorization. The Certificates shall be issued in fully registered form, without coupons, in the total authorized aggregate amount of Two Million One Hundred Twenty-Five Thousand Dollars ($2 , 125, 000) for the purpose of evidencing the indebtedness of the City for park improvements, construction of a Senior Citizens Building, and the acquisition of right of way for roads and drainage, and the cost of professional services incurred in connection therewith. 3 . Designation, Date, and Interest Payment Dates. The Certificates shall be designated as the "CITY OF PEARLAND, TEXAS, -2- COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 1991", and shall be dated May 1, 1991. The Certificates shall bear interest from the later of May 1, 1991, 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 day months, interest payable on March 1, 1992, and semiannually thereafter on September 1 and March 1 of each year until maturity or prior redemption. 4 . Initial Certificates; Numbers and Denominations. The Certificates shall be 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, subject to prior redemption in accordance with this Ordinance, on March 1 in each of the years and in the amounts set out in such schedule. Certificates delivered on transfer of or in exchange for other Certificates shall be numbered in order of their authentication by the 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 Principal Interest Number Year Amount Rate R- 1 1992 $ 50, 000 % R- 2 1993 90, 000 % R- 3 1994 90, 000 % R- 4 1995 110, 000 % R- 5 1996 115, 000 % R- 6 1997 100, 000 % R- 7 1998 135, 000 % R- 8 1999 140, 000 % R- 9 2000 150, 000 % R-10 2001 165,000 % R-11 2002 170,000 % R-12 2003 180,000 % R-13 2004 200,000 % R-14 2005 210,000 % R-15 2006 220, 000 % 5. Execution of Certificates; Seal. The Certificates shall be signed by the Mayor of the City and countersigned by the City Secretary of the City, by their manual, lithographed, or facsimile signatures, and the official seal of the City shall be impressed or placed in facsimile thereon. Such facsimile signatures on the Certificates shall have the same effect as if each of the Certificates had been signed manually and in person by each of said officers, and such facsimile seal on the Certificates shall have -3- the same effect as if the official seal of the City had been manually impressed upon each of the Certificates. 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 such Certificates or before the delivery of such Certificates, such manual or facsimile signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in such office. 6. Approval by Attorney General; Registration by Comptroller. The Certificates to be initially issued shall be delivered to the Attorney General of Texas for approval and shall be registered by the Comptroller. The manually executed registration certificate of the Comptroller substantially in the form provided in Section 16 of this Order shall be attached or affixed to the Certificates to be initially issued. 7. Authentication. Except for the Certificates to be initially issued, which need not be authenticated by the Registrar, only Certificates which bear thereon a certificate of authentication, substantially in the form provided in Section 16 of this Ordinance, manually executed by an authorized representative of the 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 Certificates so authenticated were delivered by the Registrar hereunder. 8. Payment of Principal and Interest. The Registrar is hereby appointed as the paying agent for the Certificates. The principal of the Certificates shall be payable, without exchange or collection charges, in any coin or currency of the United States of America which, on the date of payment, is legal tender for the payment of debts due the United States of America, upon their presentation and surrender as they become due and payable, whether at maturity or by prior redemption, at the principal corporate trust office of the Registrar. The interest on each Certificate shall be payable by check payable on the Interest Payment Date, mailed by the Registrar on or before each Interest Payment Date to the Owner of record as of the Record Date, to the address of such Owner as shown on the Register. If the date for payment of the principal of or interest on any Certificate is not a Business Day, then the date for such payment shall be the next succeeding Business Day, with the same force and effect as if made on the original date payment was due. 9. Successor Registrars. The City covenants that at all times while any Certificates are outstanding it will provide a national or state banking corporation organized and doing business -4- under the laws of the United States or any State, with trust powers and subject to supervision or examination by federal or state autohrity to serve as and perform the duties and services of the Registrar and Paying Agent for the Certificates. The City reserves the right to change the Registrar on not less than 60 days written notice to the Registrar, so 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 Registrar, the previous Registrar shall deliver the Register or copies thereof to the new Registrar, and the new Registrar shall notify each Owner, by United States mail, first class postage prepaid, of such change and of the address of the new Registrar. Each Registrar hereunder, by acting in that capacity, shall be deemed to have agreed to the provisions of this Section. 10. Special Record Date. If interest on any Certificate is not paid on any Interest Payment Date and continues unpaid for thirty (30) days thereafter, the Registrar shall establish a new record date for the payment of such interest, to be known as a Special Record Date. The Registrar shall establish a Special Record Date when funds to make such interest payment are received from or on behalf of the City. Such Special Record Date shall be fifteen (15) days prior to the date fixed for payment of such past due interest, and notice of the date of payment and the 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 Owner of record as of the close of business on the day prior to the mailing of such notice. 11. Ownership; Unclaimed Principal and Interest. The City, the 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 payment of principal or interest on such Certificate, and for all other purposes, whether or not such Certificate is overdue, and neither the City nor the Registrar shall be bound by any notice or knowledge to the contrary. All payments made to the person deemed to be the Owner of any Certificate in accordance with this Section 11 shall be valid and effectual and shall discharge the liability of the City and the Registrar upon such Certificate to the extent of the sums paid. Amounts held by the Registrar which represent principal of and interest on the Certificates remaining unclaimed by the Owner after the expiration of three years from the date such amounts have become due and payable shall be reported and disposed of by the Registrar in accordance with the applicable provisions of Texas law including, to the extent applicable, Title 6 of the Texas Property Code, as amended. -5- 12. Registration. Transfer, and Exchange. So long as any Certificates remain outstanding, the Registrar shall keep the Register at its principal corporate trust office and, subject to such reasonable regulations as it may prescribe, the Registrar shall provide for the registration and transfer of 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 Registrar, duly endorsed for transfer, or accompanied by an assignment duly executed by the registered Owner or his authorized representative in form satisfactory to the Registrar. Upon due presentation of any Certificate for transfer, the Registrar shall authenticate and deliver in exchange therefor, within three (3) Business Days 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. All Certificates shall be exchangeable upon presentation and surrender thereof at the principal corporate trust office of the 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 Registrar shall be and is hereby authorized to authenticate and deliver exchange Certificates in accordance with the provisions of this Section 12. Each Certificate delivered in accordance with this Section 12 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. The City or the Registrar may require the 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 Registrar for such transfer or exchange shall be paid by the City. 13 . Mutilated. Lost, or Stolen Certificates. Upon the presentation and surrender to the Registrar of a mutilated Certificate, the Registrar shall authenticate and deliver in exchange therefor a replacement Certificate of like maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding. If any Certificate is lost, apparently destroyed, or wrongfully taken, the City, pursuant to the applicable laws of the State of Texas and in the absence of notice or knowledge that such Certificate has been acquired by a bona fide purchaser, shall authorize and the Registrar shall -6- authenticate and deliver a replacement Certificate of like maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding. The City or the Registrar may require the Owner of a mutilated 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 Registrar. The City or the Registrar may require the Owner of a lost, apparently destroyed or wrongfully taken Certificate, before any replacement Certificate is issued, to: (1) furnish to the City and the Registrar satisfactory evidence of the ownership of and the circumstances of the loss, destruction or theft of such Certificate; (2) furnish such security or indemnity as may be required by the Registrar and the City to save them harmless; (3) pay all expenses and charges in connection therewith, including, but not limited to, printing costs, legal fees, fees of the Registrar and any tax or other governmental charge that may be imposed; and (4) meet any other reasonable requirements of the City and the Registrar. If, after the delivery of such replacement Certificate, a bona fide purchaser of the original Certificate in lieu of which such replacement Certificate was issued presents for payment such original Certificate, the City and the 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 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 Registrar to pay such Certificate. Each replacement Certificate delivered in accordance with this Section 13 shall be entitled to the benefits and security of this -7- Ordinance to the same extent as the Certificate or Certificates in lieu of which such replacement Certificate is delivered. 14 . Cancellation of Certificates. All Certificates paid 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 cancelled and destroyed upon the making of proper records regarding such payment. The Registrar shall furnish the City with appropriate certificates of destruction of such Certificates. 15. Optional Redemption. The City reserves the right, at its option, to redeem the Certificates prior to maturity, on March 1, 2001, or any date thereafter, at par plus accrued interest on the amounts called for redemption to the date fixed for redemption. If less than all of the Certificates are to be redeemed, the City shall determine the Certificates to be redeemed. Principal amounts may be redeemed 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. Upon surrender of any Certificate for redemption in part, the Registrar, in accordance with Section 12 hereof, 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 redemption identifying the Certificates to be redeemed in whole or in part shall be given by the Registrar at least thirty days prior to the date fixed for redemption by sending written notice by first class mail, postage prepaid, to the Owner of each Certificate to be redeemed in whole or in part at the address shown on the Register. Such notices shall state the redemption date, the redemption price, the place at which Certificates are to be surrendered for payment and, if less than all Certificates Outstanding are to be redeemed, the numbers of the Certificates or portions thereof to be redeemed. Any notice given as provided in this Section 15 shall be conclusively presumed to have been duly given, whether or not the Owner receives such notice. By the date fixed for redemption, due provision shall be made with the Registrar for payment of the redemption price of the Certificates or portions thereof to be redeemed, plus accrued interest to the date fixed for redemption. When Certificates have been called for redemption in whole or in part and due provision has been made to redeem the same as herein provided, the Certificates or portions thereof so redeemed shall no longer be regarded as outstanding except for the purpose of receiving payment solely from the funds so provided for redemption, and the rights of the Owners to collect interest which would otherwise accrue -8- after the redemption date on any Certificate or portion thereof called for redemption shall terminate on the date fixed for redemption. 16. Forms. The form of the Certificates, including the form of the Registrar' s Authentication Certificate, the form of Assignment, and the form of Registration Certificate of the Comptroller which shall be attached or affixed to the Certificates initially issued shall be, respectively, substantially as follows, with such additions, deletions and variations as may be necessary or desirable and not prohibited by this Ordinance, including any legend regarding bond insurance if such insurance is obtained by the purchaser: (Face of Certificate) UNITED STATES OF AMERICA STATE OF TEXAS COUNTIES OF BRAZORIA AND HARRIS NUMBER DENOMINATION R- $ REGISTERED REGISTERED CITY OF PEARLAND, TEXAS COMBINATION TAX AND REVENUE CERTIFICATE OF OBLIGATION SERIES 1991 INTEREST RATE: MATURITY DATE: ISSUE DATE: CUSIP: May 1, 1991 REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS THE CITY OF PEARLAND, TEXAS (the "City") promises to pay to the registered owner identified above, or registered assigns, on the date specified above, upon presentation and surrender of this Certificate at the principal corporate trust office of First City, Texas-Houston, N.A. , Houston, Texas, (the "Registrar") , the principal amount identified above, payable in any coin or currency of the United States of America which on the date of payment of such principal is legal tender for the payment of debts due the United States of America, and to pay interest thereon at the rate shown above, calculated on the basis of a 360 day year of twelve 30 day months, from the later of May 1, 1991, or the most recent interest payment date to which interest has been paid or duly -9- provided for. Interest on this Certificate is payable by check on March 1, 1992 , and semiannually thereafter on each September 1 and March 1, mailed to the registered owner as shown on the books of registration kept by the Registrar on the fifteenth (15th) calendar day of the month next preceding each interest payment date. 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. IN WITNESS WHEREOF, this Certificate has been signed with the manual or facsimile signature of the Mayor of the City and countersigned with the manual or facsimile signature of the City Secretary of the City, and the official seal of the City has been duly impressed, or placed in facsimile, on this Certificate. (AUTHENTICATION CERTIFICATE) (SEAL) CITY OF PEARLAND, TEXAS Mayor City Secretary (Back Panel of Certificate) THIS CERTIFICATE is one of a duly authorized issue of Certificates of Obligation, aggregating $2 , 125, 000 (the "Certificates") , issued in accordance with the Constitution and laws of the State of Texas, particularly Sections 271. 041, It seq, Texas Local Government Code, as amended, for the purpose of evidencing the indebtedness of the City for park improvements, construction of a Senior Citizens Building, and the acquisition of right of way for roads and drainage, and the cost of professional services incurred in connection therewith, and pursuant to an ordinance duly adopted by the City Council of the City (the "Ordinance") , which Ordinance is of record in the official minutes of the City Council. THE CITY RESERVES THE RIGHT to redeem Certificates prior to maturity, in integral multiples of $5, 000, on March 1, 2001, or any date thereafter at par plus accrued interest on the principal amounts called for redemption to the date fixed for redemption. Reference is made to the Ordinance for complete details concerning the manner of redeeming the Certificates. NOTICE OF ANY REDEMPTION shall be given at least thirty (30) days prior to the date fixed for redemption by first class mail, addressed to the registered owners of each Certificate to be redeemed in whole or in part at the address shown on the books of -10- registration kept by the Registrar. When Certificates or portions thereof have been called for redemption, and due provision has been made to redeem the same, the principal amounts so redeemed shall be payable solely from the funds provided for redemption, and interest which would otherwise accrue on the amounts called for redemption shall terminate on the date fixed for redemption. THIS CERTIFICATE is transferable only upon presentation and surrender at the principal corporate trust office of the Registrar, duly endorsed for transfer or accompanied by an assignment duly executed by the registered owner or his authorized representative, subject to the terms and conditions of the Ordinance. THE CERTIFICATES are exchangeable at the principal corporate trust office of the Registrar for Certificates in the principal amount of $5, 000 or any integral multiple thereof, subject to the terms and conditions of the Ordinance. THIS CERTIFICATE shall not be valid or obligatory for any purpose or be entitled to any benefit under the Ordinance unless this Certificate is either (i) registered by the Comptroller of Public Accounts of the State of Texas by registration certificate attached or affixed hereto or (ii) authenticated by the Registrar by due execution of the authentication certificate endorsed hereon. THE REGISTERED OWNER of this Certificate, by acceptance hereof, acknowledges and agrees to be bound by all the terms and conditions of the Ordinance. THE CITY has covenanted in the Ordinance that it will at all times provide a legally qualified registrar for the Certificates and will cause notice of any change of registrar to be mailed to each registered owner. IT IS HEREBY certified, recited and covenanted that this Certificate has been duly and validly issued and delivered; that all acts, conditions and things required or proper to be performed, to 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; and that annual ad valorem taxes, within the limits prescribed by law, 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 against all taxable property in the City. IT IS FURTHER certified, recited and represented that the Net Revenues, in an amount not to exceed $10, 000, to be derived from the operation of the City's water and sewer system, after the payment of all operation and maintenance expenses thereof, are -11- pledged to the payment of the principal of and interest on this Certificate and the series of Certificates of which it is a part to the extent that taxes may ever be insufficient or unavailable for said purpose; provided, however, that such pledge of Net Revenues is and shall be junior and subordinate in all respects to the pledge of such 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 such Net Revenues to the payment of this Certificate and the series of Certificates of which it is a part, and 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 payable in whole or in part from the Net Revenues of its water and sewer system, secured by a pledge of the Net Revenues of such system that may be prior and superior in right to, on a parity with, or junior and subordinate to the pledge of Net Revenues securing this Certificate and the series of Certificates of which it is a part. Form of Registration Certificate of Comptroller of Public Accounts COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. 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 this xxxxxxxxxx Comptroller of Public Accounts (SEAL) of the State of Texas Form of Registrar' s Authentication Certificate AUTHENTICATION CERTIFICATE It is hereby certified that this Certificate has been delivered pursuant to the Ordinance described in the text of this Certificate. First City, Texas-Houston, N.A. By Authorized Signature Date of Authentication -12- Form of Assignment 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 said 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 NOTICE: Signature must be on the face of this Certifi- guaranteed by a member firm cate in every particular, of the New York Stock without any alteration, Exchange or a commercial enlargement or change bank or trust company. whatsoever. 17 . Legal Opinion; Cusip; Bond Insurance. The approving opinion of Vinson & Elkins, Houston, Texas, and CUSIP Numbers may be printed on the Certificates, but errors or omissions in the printing of such opinion or such numbers shall have no effect on the validity of the Certificates. If bond insurance is obtained by the purchaser, the Certificates may bear an appropriate legend as provided by the insurer. 18 . Interest and Sinking Fund; Tax Levy. The proceeds from all taxes levied, assessed and collected for and on account of the Certificates authorized by this Ordinance shall be deposited, as collected, in a special fund to be designated "City of Pearland, Texas, Combination Tax and Revenue Certificates of Obligation, Series 1991 Interest and Sinking Fund" . While the Certificates or any part of the principal thereof or interest thereon remain outstanding and unpaid, there is hereby levied and there shall be annually levied, assessed and collected in due time, form and manner, and at the same time other City taxes are levied, assessed and collected, in each year, beginning with the current year, a continuing direct annual ad valorem tax, within the limits -13- prescribed by law, upon all taxable property in the City sufficient to pay the current interest on the Certificates as the same becomes due, and to provide and maintain a sinking fund adequate to pay the principal of the Certificates as such principal matures, but never less than two percent (2%) of the original principal amount of the Certificates each year, full allowance being made for delinquencies and costs of collection, and such taxes when collected shall be applied to the payment of the interest on and principal of the Certificates and to no other purpose. 19. Pledge of Revenues. The revenues to be derived from the operation of the City's water and sewer system, after the payment of all operation and maintenance expenses thereof (the "Net Revenues") , in an amount not to exceed $10,000, are hereby pledged to the payment of the principal of and interest on the Certificates as the same come due, to the extent that the taxes mentioned in Section 18 of this Ordinance may ever be insufficient or unavailable for said purpose; provided, however, that such pledge of the Net Revenues is and shall be junior and subordinate in all respects to the pledge of the 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, and 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 payable in whole or in part from the Net Revenues, secured by a pledge of the 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 this series of Certificates. 20. Further Proceedings. After the Certificates to be initially issued shall have been executed, it shall be the duty of the Mayor of the City to deliver the Certificates to be initially issued and all pertinent records and proceedings to the Attorney General of Texas, for examination and approval. After 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 writing 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. 21. Sale. The Certificates are hereby sold and shall be delivered to (herein referred to as the "Purchaser") , at a price of par, plus accrued interest to the date of delivery, plus a cash premium of -14- $ , and the City Council hereby finds and determines that such price is the best reasonably obtainable by the City after advertising for and receiving sealed bids. 22 . Books and Records. So long as any of the Certificates are outstanding the City covenants and agrees that it will keep proper books of record and account in which full, true and correct entries will be made of all dealings, activities and transactions relating to the Certificates and the funds created pursuant to this Ordinance, and all books, documents and vouchers relating thereto shall at all reasonable times be made available for inspection upon request of any Owner. 23 . Tax Exemption. (a) General Tax Covenant. The City intends that the interest on the Certificates shall be excludable from gross income for purposes of federal income taxation pursuant to sections 103 and 141 through 150 of the Code, and applicable regulations. The City covenants and agrees not to take any action, or knowingly omit to take any action within its control that, if taken or omitted, respectively, would cause the interest on the Certificates to be includable in gross income, as defined in section 61 of the Code, of the owners thereof for purposes of federal income taxation. In particular, the City covenants and agrees to comply with each requirement of this Section 23 ; provided, however, that the City shall not be required to comply with any particular requirement of this Section 23 if the City has received an opinion of nationally recognized bond counsel ("Counsel ' s Opinion") that such noncompliance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Certificates or if the City has received a Counsel 's Opinion to the effect that compliance with some other requirement set forth in this Section 23 will satisfy the applicable requirements of the Code, in which case compliance with such other requirement specified in such Counsel ' s Opinion shall constitute compliance with the corresponding requirement specified in this Section 23 . (b) Use of Proceeds. The City covenants and agrees that its use of the Net Proceeds of the Certificates will at all times satisfy the following requirements: (i) The City will limit the amount of original or investment proceeds of the Certificates to be used (other than use as a member of the general public) in the trade or business of any person other than a governmental unit to an amount aggregating no more than ten percent of the Net Proceeds of the Certificates ("private-use proceeds") . For purposes of this Section, the term "person" includes any individual, corporation, partnership, unincorporated association, or any other -15- entity capable of carrying on a trade or business; and the term "trade or business" means, with respect to any natural person, any activity regularly carried on for profit and, with respect to persons other than natural persons, any activity other than an activity carried on by a governmental unit. Any use of proceeds of the Certificates in any manner contrary to the guidelines set forth in Revenue Procedures 82-14, 1982-1 C.B. 459, and 82-15, 1982-1 C.B. 460, including any revisions or amendments thereto, shall constitute the use of such proceeds in the trade or business of one who is not a governmental unit; (ii) The City will not permit more than five percent of the Net Proceeds of the Certificates to be used in the trade or business of any person other than a governmental unit if such use is unrelated to the governmental purpose of the Certificates. Further, the amount of private-use proceeds of the Certificates in excess of five percent of the Net Proceeds of the Certificates ("excess private-use proceeds") will not exceed the proceeds of the Certificates expended for the governmental purpose of the Certificates to which such excess private-use proceeds relate; (iii) The City will not permit an amount of proceeds of the Certificates exceeding the lesser of (a) $5, 000, 000 or (b) five percent of the Net Proceeds of the Certificates to be used, directly or indirectly, to finance loans to persons other than governmental units. When used in this Section 23, the term Net Proceeds of the Certificates shall mean the proceeds from the sale of the Certificates, including investment earnings on such proceeds, less accrued interest. (c) No Federal Guaranty. The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that, if taken or omitted, respectively, would cause the Certificates to be "federally guaranteed" within the meaning of section 149 (b) of the Code and applicable regulations thereunder, except as permitted by section 149 (b) (3) of the Code and such regulations. (d) Certificates are not Hedge Bonds. The City covenants and agrees that not more than 50 percent 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 -16- expects that at least 85 percent 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 the Certificates are issued. (e) No-Arbitrage Covenant. The City shall certify, through an authorized officer, employee or agent, that based upon all facts and estimates known or reasonably expected to be in existence on the date the Certificates are delivered, the City will reasonably expect that the proceeds of the Certificates will not be used in a manner that would cause the Certificates to be "arbitrage bonds" within the meaning of section 148 (a) of the Code and applicable regulations thereunder. Moreover, the City covenants and agrees that it will make such use of the proceeds of the Certificates including interest or other investment income derived from Certificate proceeds, regulate investments of proceeds of the Certificates, and take such other and further action as may be required so that the Certificates will not be "arbitrage bonds" within the meaning of section 148 (a) of the Code and applicable regulations thereunder. (f) Arbitrage Rebate. The City expects to qualify for an exception to the requirements of the Code relating to rebate to the United States, because the City will use at least 95% of the Net Proceeds of the Certificates for local governmental activities of the City and expects that the total of all tax-exempt obligations (excluding "private activity" bonds) issued by or attributable to the City during calendar year 1991 will not exceed $5, 000, 000. If the City does not qualify for such exception, 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 (within the meaning of section 148 (f) (6) (B) of the Code) , be rebated to the federal government. Specifically, the City will (i) maintain records regarding the investment of the gross proceeds of the Certificates as may be required to calculate the amount earned on the investment of the gross proceeds of the Certificates 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, (ii) calculate at such times as are required by applicable regulations, the amount earned from the investment of the gross proceeds of the Certificates which is required to be rebated to the federal government, and (iii) pay, not less often than every fifth anniversary date of the delivery of the Certificates and within sixty days following retirement of the Certificates, all amounts required to be rebated to the federal government. (g) Information Reporting. The City covenants and agrees to file or cause to be filed with the Secretary of the Treasury, not -17- later than the 15th day of the second calendar month after the close of the calendar quarter in which the Certificates are issued, an information statement concerning the Certificates, all under and in accordance with section 149 (e) of the Code and applicable regulations thereunder. 24 . Qualified Tax-Exempt Obligations. The City hereby designates the Certificates as "qualified tax-exempt obligations" for purposes of section 265(b) of the Code. In connection therewith, the City represents (a) that the aggregate amount of tax-exempt obligations issued by the City during calendar year 1991, including the Certificates, which have been designated as "qualified tax-exempt obligations" under section 265 (b) (3) of the Code does not exceed $10, 000,000, and (b) that the reasonably anticipated amount of tax-exempt obligations which will be issued by the City during calendar year 1991, including the Certificates, will not exceed $10, 000, 000. For purposes of this Section 24, the term "tax-exempt obligation" does not include "private activity bonds" within the meaning of section 141 of the Code, other than "qualified 501 (c) (3) bonds" within the meaning of section 145 of the Code. In addition, for purposes of this Section 24, the City includes all governmental units which are aggregated with the City under the Code. 25. Use of Proceeds. Accrued interest on the Certificates and any premium will be deposited into the Interest and Sinking Fund. The remaining proceeds of sale of the Certificates, together with investment earnings on such proceeds, shall be used for the purposes set out in Section 2 of this Ordinance, with any remainder being deposited into the Interest and Sinking Fund. 26. Official Statement. The City Council of the City ratifies and confirms its prior approval of the form and content of the Preliminary Official Statement prepared in the initial offering and sale of the Certificates and hereby authorizes the preparation of a final Official Statement reflecting the terms of the Purchaser's bid and other relevant matters. The use of such Official Statement in the reoffering of the Certificates by the Purchaser is hereby approved and authorized. The proper officials of the City are hereby authorized to execute and deliver a certificate pertaining to such Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Certificates. 27. Registrar. The form of agreement setting forth the duties of the Registrar is hereby approved, and the appropriate officials of the City are hereby authorized to execute such agreement for and on behalf of the City. -18- 28 . Open Meeting. The meeting at which this Ordinance was adopted was open to the public, and public notice of the time, place and purpose of said meeting, was given, all as required by Article 6252-17 , Vernon' s Texas Civil Statutes, as amended. 29 . Emergency. It is hereby officially found and determined that this Ordinance relates to an immediate public emergency affecting life, health, property and the 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. PASSED AND APPROVED on first reading pursuant to Section 3 . 10 of the City Charter this 9th day of April, 1991. Mayor CITY OF PEARLAND, TEXAS ATTEST: =�7 City Secre CITY OF P LAND, TEXAS (SEAL) -19- April 9, 1991 Attorney General of Texas Attention: Public Finance Division Austin, Texas 78711 Comptroller of Public Accounts of Texas Attention: Bonds and Charitable Trusts Division Austin, Texas 78774 Re: $2 , 125, 000 City of Pearland, Texas, Combination Tax and Revenue Certificates of Obligation, Series 1991 Gentlemen: TO THE ATTORNEY GENERAL The certificates described in the above caption, hereinafter called the "Certificates" , will be sent to you for approval and we enclose one executed but undated SIGNATURE IDENTIFICATION AND NO-LITIGATION CERTIFICATE. Upon approval of the Certificates, you are authorized and respectfully requested to insert the date in such certificate, which date is to be the same as your approval date. If any litigation should develop before you have approved the Certificates, we will notify you at once both by telephone and telegraph. With this assurance you can rely upon the absence of litigation at the time that you approve the Certificates unless we advise you to the contrary. After you have approved the Certificates, please deliver them to the Comptroller of Public Accounts of Texas for registration. TO THE COMPTROLLER Please forward the Certificates by Federal Express to Clifford W. Youngblood, Vinson & Elkins, 2835 First City Tower, 1001 Fannin, Houston, TX 77002-6760. Very truly yours, Mayor CITY OF PEARLAND, TEXAS Encl . to Attorney General CERTIFICATE OF ASSESSED VALUATION THE STATE OF TEXAS COUNTIES OF BRAZORIA AND HARRIS CITY OF PEARLAND I , the undersigned, the duly appointed, qualified, and acting Tax Assessor-Collector of the City of Pearland of Brazoria and Harris Counties, Texas (the "City") , do hereby certify that the following is a true and correct statement of the assessed valuation of taxable property in the City as shown by the duly approved tax rolls for the year 1990, which are the last approved tax rolls for the City on file in my office, to wit: $ WITNESS MY HAND AND THE OFFICIAL SEAL OF THE CITY, this 91 day of April, 1991. ,401) ,0147 Tax Assessor-Collector CITY OF PEARLAND, TEXAS (SEAL) TABULATION OF BIDS PREPARED BY RAUSCHER PIERCE REFSNES, INC. FOR $2,125,000 CITY OF PEARLAND Combination Tax and Revenue Certificates of Obligation Series 1991 Dated Date: May 1, 1991 Sale Date: April 9, 1991 Selling Group NCNB Capital Markets, Inc. Total Interest Cost $ 1,323,837.50 N.C. National Bank Net Effective Interest Rate 6.7214 % Dallas Office Selling Group Bank One Texas, N.A. Total Interest Cost $ 1,328,498.33 Net Effective Interest Rate 6.74487 oJo Selling Group Merrill Lynch, Pierce, Fenner & Smith Inc.Total Interest Cost $ 1,351 ,182.50 Net Effective Interest Rate 6.860245 % Selling Group Coastal Securities Corporation Total Interest Cost $ 1,365 .274,17 Net Effective Interest Rate 6.931792 % Selling Group Clayton Brown & Associates Total Interest Cost: $ 1 ,152,310.02 Chicago Net Effective Interest Rate 6.8637 % Selling Group Texas Commerce Bank Total Interest Cost; $ 1,347,892.05 Houston Net Effective Interest Rate 6.8424 % � r Selling Group Prudential Bache Securities Total Interest Cost $ 1,328,845.83 Net Effective Interest Rate 6.7468 % Selling Group Rauscher Pierce Refsner, Inc. Total Interest Cost $ 1,330,340.00 Net Effective Interest Rate 6.7529 Selling Group Total Interest Cost $ Net Effective Interest Rate % WINNING BID March 1 Interest Interest Selling Group Maturity Rate Maturity Rate 1992 1999 1993 2000 1994 2001 1995 2002 1996 2003 1997 2004 1998 2005 2006 Total Interest Cost $ Less: Cash Premium $ Net Interest Cost $ Net Effective Interest Rate % 67 OFFICIAL BID FORM April 9, 1991 Mayor and City Council City of Pearland 3519 Liberty Drive Pearland, Texas 77581 Gentlemen: Subject to the terms of your Official Notice of Sale and Official Statement, dated March 25, 1991, which are incorporated herein by reference, we hereby submit the following bid for $2,125,000 CITY OF PEARLAND, TEXAS COMBINATION TAX AND REVENUE,CERTIFICATES OF OBLIGATION,SERIES 1991,dated May 1, 1991. This offer is being made for all of the Certificates and for not less than all. For said legally issued Certificates of Obligation,we will pay you the par value thereof,plus accrued interest from their date to the date of delivery to us, plus a cash premium of$ -- o - for Certificates of Obligation maturing and bearing interest per annum as follows: Maturity Date Principal Amount Interest Rate March 1, 1992 $ 50,000 7 ?o % March 1, 1993 90,000 7..o % March 1, 1994 90,000 ?. en % March 1, 1995 110,000 7. fa % March 1, 1996 115,000 7.Y e> % March 1, 1997 100,000 ?.f2 % March 1, 1998 135,000 7.A=> % March 1, 1999 140,000 ._7.3 5-% March 1, 2000 150,000 ' .3a % March 1, 2001 165,000 G.Va % March 1, 2002 170,000 G .sa % March 1, 2003 180,000 G.So % March 1, 2004 200,000 G •St) % March 1, 2005 210,000 G.S o % March 1, 2006 220,000 r -.Cc' % Interest cost, in accordance with the above bid, is: Gross Interest Cost $ l 32-3_C37.. Less: Premium $ —o— NET INTEREST COST $ / 32-3 rt'37-s v EFFECTIVE INTEREST RATE (.-72.,ct o % The Initial Certificates shall be registered in the name of • (syndicate manager). We will advise First City, Texas - Houston NA., ouston, exas the Paying Agent/Registrar, on forms to be provided by the Paying Agent/Registrar and on registration instructions at least five business days prior to the date set for Initial Delivery. Cashier's Check of the firs C' y Texas Bank Auatin, Tex�Q , Texas, in the amount of $42,500,which represents our Good Faith Deposit (i ,i,S v.4'' , ,i; ' or(has been made available to you prior to the opening of this Bid), and is submitted in accor'ante wit t tie terms as set forth in the"Official Notice of Sale" and"Official Statement." Upon delivery of the Certificates, said check shall be returned to us if our bid is accepted and the Certificates are awarded to us. We agree to accept delivery of and make payment for the Initial Certificates in immediately available funds at the Corporate Trust Office, First City, Texas - Houston NA., Houston, Texas not later than 10:00 A.M., on May 9, 1991, or thereafter on the date the Certificates are tendered for delivery, pursuant to the terms set forth in the Official Notice of Sale. Amok The undersigned agrees to complete, execute and deliver to the City,by the date of delivery of the Certificates, a certificate relating to the "issue price" of the Certificates in the form and to the effect attached to or accompanying the Official Notice of Sale, with such changes thereto as may be acceptable to the City. Respectfully submitted, NCNB Capital Markets, Inc. ) Jt. Crews & Associates. Inc. Team Bank ) Harris Trust & Savings Bank ) Mgrs. - 111.11 /°r11MA;WM Auth. ized Re4' ve Leslie F. Parrish, Vice President ACCEPTED this 9th day of April, 1991, by the City Council, City of Pearland, Texas. Mayor / _ City Secret Return of Good Faith Check is hereby acknowledged: Firm: By: (For your information you will fmd attached a list of the group of underwriters associated with us in this proposal) /1114. OFFICIAL BID FORM April 9, 1991 Mayor and City Council City of Pearland 3519 Liberty Drive Pearland, Texas 77581 Gentlemen: Subject to the terms of your Official Notice of Sale and Official Statement, dated March 25, 1991, which are incorporated herein by reference, we hereby submit the following bid for $2,125,000 CITY OF PEARLAND, TEXAS COMBINATION TAX AND REVENUE,CERTIFICATES OF OBLIGATION,SERIES 1991,dated May 1, 1991. This offer is being made for all of the Certificates and for not less than all. For said legally issued Certificates of Obligation,we will pay you the par valvqe thereof,plus accrued interest from their date to the date of delivery to us, plus a cash premium of$ 311 Yv for Certificates of Obligation maturing and bearing interest per annum as follows: Maturity Date Principal Amount Interest Rate March 1, 1992 $ 50,000 ? % March 1, 1993 90,000 7. Po % March 1, 1994 90,000 7. Po % March 1, 1995 110,000 7. Fo % March 1, 1996 115,000 7.Vo % March 1, 1997 100,000 7-Po % March 1, 1998 135,000 7. Sb % March 1, 1999 140,000 7,J % March 1, 2000 150,000 C.3o % March 1, 2001 165,000 G.s{. % March 1, 2002 170,000 March 1, 2003 180,000 G.s"o % March 1, 2004 200,000 G.11) % March 1, 2005 210,000 L.so % March 1, 2006 220,000 C % Interest cost, in accordance with the above bid, is: Gross Interest Cost $ ' 3 z! cf Fr. 3 3 Less: Premium $ 3�vo NET INTEREST COST $ /, 3 2-P, `<3 . F 3 EFFECTIVE INTEREST RATE G.7 Yc'F 7 % The Initial Certificates shall be registered in the name of MERCANSAFE CO (syndicate manager). We will advise First City, Texas - Houston NA., Houston, Texas the Paying Agent/Registrar, on forms to be provided by the Paying Agent/Registrar and on registration instructions at least five business days prior to the date set for Initial Delivery. Cashier's Check of the Fi r s t Ci ty Bank, Austin , Texas, in the amount of $42,500,which represents our Good Faith Deposit(Cgliltii 4i Est c or(has been made available to you prior to the opening of this Bid), and is submitted in accordance with the terms as set forth in the"Official Notice of Sale" and "Official Statement." Upon delivery of the Certificates, said check shall be returned to us if our bid is accepted and the Certificates are awarded to us. We agree to accept delivery of and make payment for the Initial Certificates in immediately available funds at the Corporate Trust Office, First City, Texas - Houston NA., Houston, Texas not later than 10:00 A.M., on May 9, 1991, or thereafter on the date the Certificates are tendered for delivery, pursuant to the terms set forth in the Official Notice of Sale. r` The undersigned agrees to complete, execute and deliver to the City,by the date of delivery of the Certificates, a certificate relating to the "issue price" of the Certificates in the form and to the effect attached to or accompanying the Official Notice of Sale, with such changes thereto as may be acceptable to the City. Respectfully submitted, Bank One Texas. N.A. Westcap Securities First City Texas Cowen & Company ///4/e:(46 By t/Led,..,,//://(/6(42<ng,-- Authorized Representative War en M. Newman, Sr. V.P. ACCEPTED this 9th day of April, 1991, by the City Council, City of rPearland, 'I�exas. Mayor ATTEST: City Secretary Return of Good Faith Check is hereby acknowledged: Firm: By: (For your information you will find attached a list of the group of underwriters associated with us in this proposal) OFFICIAL BID FORM April 9, 1991 Mayor and City Council City of Pearland 3519 Liberty Drive Pearland, Texas 77581 Gentlemen: Subject to the terms of your Official Notice of Sale and Official Statement, dated March 25, 1991, which arc incorporated herein by reference, we hereby submit the following bid for $2,125,000 CITY OF PEARLAND, TEXAS COMBINATION TAX AND REVENUE,CERTIFICATES OF OBLIGATION,SERIES 1991,dated May 1, 1991. This offer is being made for all of the Certificates and for not less than all. For said legally issued Certificates of Obligation,we will pay you the par value thereof,plus accrued interest from their date to the date of delivery to us, plus a cash premium of$ -- -' - for Certificates of Obligation maturing and bearing interest per annum as follows: Maturity Date Principal Amount Intrest Rate March 1, 1992 $ 50,000 7fro % March 1, 1993 90,000 7 cfo % March 1, 1994 90,000 7. ao % March 1, 1995 110,000 -, % March 1, 1996 115,000 2 Jo % March 1, 1997 100,000 7, £ % March 1, 1998 135,000 7, fo % March 1, 1999 140,000 % March 1, 2000 150,000 •30 % March 1, 2001 165,000 c /o % March 1, 2002 170,000 6. CO % March 1, 2003 180,000 'Go % March 1, 2004 200,000 G. 70 % March 1, 2005 210,000 C7f % March 1, 2006 220,000 I. % Interest cost, in accordance with the above bid, is: Gross Interest Cost $ // s,r/, /cPZ. . 'D Less: Premium $ --a - NET INTEREST COST $ , 3 s7 i fZ. ,f EFFECTIVE INTEREST RATE 6,.,& a z u(j % The Initial Certificates shall be registered in the name of Merrill Lynch, Pierce, Fenner� h Inc . manager). We will advise First City, Texas - Houston NA., Houston, Texas the Paying Agent/Registrar, on forms to be provided by the Paying Agent/Registrar and cm registrationinstructions at leest five buzaness days prior to the date set for Initial Delivery. Cashier's Check of the First City Texas Bank. Austin, _ , Texas, in the amount of $42,500,which represents our Good Faith Deposit (is attached hereto) or (has been made available to you prior to the opening of this Bid), and is submitted in accordance with the terms as set forth in the "Official Notice of Sale" and "Official Statement." Upon delivery of the Certificates, said check shall be returned to us if our bid is accepted and the Certificates are awarded to us. We agree to accept delivery of and make payment for the Initial Certificates in immediately available hm4, at the Corporate Trust Office, First City, Texas - Houston N.A., Houston, Texas not later than 10:00 A.M., on May 9, 1991, or thereafter on the date the Certificates are tendered for delivery, pursuant to the terms set forth in the Official Notice of Sale. The undersigned agrees to -amplete, execute and deliver to the City,by t. 'late of delivery of the Certificates, a certificate relating to tl. issue price" of the Certificates in the for.., and to the effect attached to or accompanying the Official Notice of Sale, with such changes thereto as may be acceptable to the City. Respectfully submitted, Me ri] 1 Lznr� & Co. First Southwest Company A 1 B Authorize. Representative ACCEPTED this 9th day of April, 1991, by the City Council, City o I-carland, Texas. Mayor ATTEST: City Secretary Return of Good Faith Check is hereby acknowledged: Firm: By; (For your information you will find attached a list of the group of underwriters associated with us in this proposal) OFFICIAL BID FORM April 9, 1991 Mayor and City Council City of Pearland 3519 Liberty Drive Pearland, Texas 77581 Gentlemen: Subject to the terms of your Official Notice of Sale and Official Statement, dated March 25, 1991, which are incorporated herein by reference, we hereby submit the following bid for $2,125,000 CITY OF PEARLAND, TEXAS COMBINATION TAX AND REVENUE,CERTIFICATES OF OBLIGATION,SERIES 1991,dated May 1, 1991. This offer is being made for all of the Certificates and for not less than all. For said legally issued Certificates of Obligation,we will pay you the par value thereof,plus accrued interest from their date to the date of delivery to us, plus a cash premium of$ —v - for Certificates of Obligation maturing and bearing interest per annum as follows: Maturity Date Principal Amount Interest Rate March 1, 1992 $ 50,000 ?. ro % March 1, 1993 90,000 7.Pa % March 1, 1994 90,000 7.co % March 1, 1995 110,000 7•cri % March 1, 1996 115,000 7. % March 1, 1997 100,000 .-3 0 % March 1, 1998 135,000 G. "to % March 1, 1999 140,000 G.30 % March 1, 2000 150,000 G •too % March 1, 2001 165,000 C•7o % March 1, 2002 170,000 L.€fS' % March 1, 2003 180,000 -7.00 % March 1, 2004 200,000 '•'o % March 1, 2005 210,000 7• % March 1, 2006 220,000 % Interest cost, in accordance with the above bid, is: Gross Interest Cost $ (. 36.3 z 744 i 7 Less: Premium $ — o - NET INTEREST COST $ / 36-r z 7 q• '-7 EFFECTIVE INTEREST RATE G•93/7 9 Z % CSC The Initial Certificates shall be registered in the name of (syndicate manager). We will advise First City, Texas - Houston NA, Houston, Texas the Paying Agent/Registrar, on forms to be provided by the Paying Agent/Registrar and on registration instructions at least five business days prior to the date set for Initial Delivery. Cashier's Check of the First City Bank% Austin , Texas, in the amount of $42,500,which represents our Good Faith Deposit(is attached hereto) or(has been made available to you prior to the opening of this Bid), and is submitted in accordance with the terms as set forth in the"Official Notice of Sale" and "Official Statement." Upon delivery of the Certificates, said check shall be returned to us if our bid is accepted and the Certificates are awarded to us. We agree to accept delivery of and make payment for the Initial Certificates in immediately available funds at the Corporate Trust Office, First City, Texas - Houston NA, Houston, Texas not later than 10:00 A.M., on May 9, 1991,or thereafter on the date the Certificates are tendered for delivery, pursuant to the terms set forth in the Official Notice of Sale. The undersigned agrees to complete, execute and deliver to the City, by the date of delivery of the Certificates, a certificate relating to the "issue price" of the Certificates in the form and to the effect attached to or accompanying the Official Notice of Sale, with such changes thereto as may be acceptable to the City. Respectfully submitted, Coastal Securities Corporation Y Author' d Representati ACCEPTED this 9th day of April, 1991, by the City Council, City of Pearland, Texas. Mayor ATTEST: City Secretary Return of Good Faith Check is hereby acknowledged: Firm: By: (For your information you will find attached a list of the group of underwriters associated with us in this proposal) OFFICIAL BID FORM April 9, 1991 Mayor and City Council City of Pearland 3519 Liberty Drive Pearland, Texas 77581 Gentlemen: Subject to the terms of your Official Notice of Sale and Official Statement, dated March 25, 1991, which are incorporated herein by reference, we hereby submit the following bid for $2,125,000 CITY OF PEARLAND, TEXAS COMBINATION TAX AND REVENUE,CERTIFICATES OF OBLIGATION,SERIES 1991,dated May 1, 1991. This offer is being made for all of the Certificates and for not less than all. For said legally issued Certificates of Obligation,we will pay you the pa�r,✓slue thereof,plus accrued interest from their date to the date of delivery to us, plus a cash premium of$ 5L2- •S-b for Certificates of Obligation maturing and bearing interest per annum as follows: Maturity Date Principal Amount Interest Rate March 1, 1992 $ 50,000 7.75- % March 1, 1993 90,000 7.7t % March 1, 1994 90,000 -'.7. % March 1, 1995 110,000 7.zT % March 1, 1996 115,000 7.7r % March 1, 1997 100,000 �7r % March 1, 1998 135,000 7 % March 1, 1999 140,000 7.7i- % March 1, 2000 150,000 '7.z s % March 1, 2001 165,000 4,56 % March 1, 2002 170,000 C..c.o % March 1, 2003 180,000 o % March 1, 2004 200,000 % March 1, 2005 210,000 C.7r % March 1, 2006 220,000 �. % Interest cost, in accordance with the above bid, is: Gross Interest Cost $ /, 3I-2-,3(a .O Z Less: Premium $ 5<2ri•sa NET INTEREST COST $ 1, 3.r/, Pd.S L EFFECTIVE INTEREST RATE 6..d 3 7 % The Initial Certificates shall be registered in the name of (i 4/9'V t'lv a- ec (syndicate manager). We will advise First City, Texas - Houston NA., Houston, Texas the Paying Agent/Registrar, on forms to be provided by the Paying Agent/Registrar and on registration instructions at least five business days prior to the date set for Initial Delivery.��pp nn Cashier's Check of the 1�12 sr ti illy Bank, /K.l.S�h , Texas, in the amount of $42,500,which represents our Good Faith Deposit (is attached hereto) or(has been made available to you prior to the opening of this Bid), and is submitted in accordance with the terms as set forth in the"Official Notice of Sale" and "Official Statement." Upon delivery of the Certificates, said check shall be returned to us if our bid is accepted and the Certificates are awarded to us. We agree to accept delivery of and make payment for the Initial Certificates in immediately available funds at the Corporate Trust Office, First City, Texas - Houston NA., Houston, Texas not later than 10:00 A.M., on May 9, 1991,or thereafter on the date the Certificates are tendered for delivery, pursuant to the terms set forth in the Official Notice of Sale. Oh- Ask The undersigned agrees to complete, execute and deliver to the City,by the date of delivery of the Certificates, a certificate relating to the "issue price" of the Certificates in the form and to the effect attached to or accompanying the Official Notice of Sale, with such changes thereto as may be acceptable to the City. Respectfully submitted, CLAYTON BROWN &ASSOCIATES, INC. i Guy Murd S.V.P. By Author' epresentative ACCEPTED this 9th day of April, 1991, by the City Council, City of Pearland, Texas. 312-559-1683 Mayor ATTEST: City Secretary Return of Good Faith Check is hereby acknowledged: Firm: By: (For your information you will find attached a list of the group of underwriters associated with us in this proposal) OFFICIAL BID FORM April 9, 1991 Mayor and City Council City of Pearland 3519 Liberty Drive Pearland, Texas 77581 Gentlemen: Subject to the terms of your Official Notice of Sale and Official Statement, dated March 25, 1991, which are incorporated herein by reference, we hereby submit the following bid for $2,125,000 CITY OF PEARLAND, TEXAS COMBINATION TAX AND REVENUE,CERTIFICATES OF OBLIGATION,SERIFS 1991,dated May 1, 1991. This offer is being made for all of the Certificates and for not less than all. For said legally issued Certificates of Obligation,we will pay you the par value thereof,plus accrued interest from their date to the date of delivery to us, plus a cash premium of$ o?/ii. 5/S for Certificates of Obligation maturing and bearing interest per annum as follows: Maturity Date Principal Amount Interest Rate March 1, 1992 $ 50,000 March 1, 1993 90,000 7. % March 1, 1994 90,000 7.(fro % March 1, 1995 110,000 7.,fo % March 1, 1996 115,000 7.k % March 1, 1997 100,000 7./ % March 1, 1998 135,000 7.eo March 1, 1999 140,000 7. c n % March 1, 2000 150,000 6.30 % March 1, 2001 165,000 6,. to % March 1, 2002 170,000 G.st) % March 1, 2003 180,000 G•%o % March 1, 2004 200,000 . . % March 1, 2005 210,000 G,7 J, % March 1, 2006 220,000 G.7f % Interest cost, in accordance with the above bid, is: Gross Interest Cost $ /. 3`<7, cr2. 5d Less: Premium $ d'(F. its-- NET INTEREST COST $ / 3(77 S%2 OS 6 EFFECTIVE INTEREST RATE C.. ci2-' % The Initial Certificates shall be registered in the name of (syndicate manager). We will advise First City, Texas - Houston NA, Houston, Texas the Paying Agent/Registrar, on forms to be provided by the Paying Agent/Registrar and on registration instructions at least five business days prior to the date set for Initial Delivery. Cashier's Check of the First Ci ty Bank, Austin , Texas, in the amount of $42,500,which represents our Good Faith Deposit(is attached hereto) or(has been made available to you prior to the opening of this Bid), and is submitted in accordance with the terms as set forth in the"Official Notice of Sale" and "Official Statement." Upon delivery of the Certificates, said check shall be returned to us if our bid is accepted and the Certificates are awarded to us. We agree to accept delivery of and make payment for the Initial Certificates in immediately available funds at the Corporate Trust Office, First City, Texas - Houston NA, Houston, Texas not later than 10:00 A.M., on May 9, 1991,or thereafter on the date the Certificates are tendered for delivery,pursuant to the terms set forth in the Official Notice of Sale. II Mk The undersigned agrees to complete, execute and deliver to the City,by the date of delivery of the Certificates, a certificate relating to the "issue price" of the Certificates in the form and to the effect attached to or accompanying the Official Notice of Sale, with such changes thereto as may be acceptable to the City. Respectfully submitted, Texas Commerce Bank N. A. Joint Managers Kemper Texas Ruth E. Smith, SVP Epplcr Gucrin $ Turncr Inc. Kidder Peabody & Co. Texas ;gmmerce<Bank N. A. By_�,�Cf Author edresentative ACCEPTED this 9th day of April, 1991, by the City Council, City of Pearland, Texas. Mayor ATTEST: City Secretary Return of Good Faith Check is hereby acknowledged: Firm: By: (For your information you will fmd attached a list of the group of underwriters associated with us in this proposal) t IIlk OFFICIAL BID FORM April 9, 1991 Mayor and City Council City of Pearland 3519 Liberty Drive Pearland, Texas 77581 Gentlemen: Subject to the terms of your Official Notice of Sale and Official Statement, dated March 25, 1991, which are incorporated herein by reference, we hereby submit the following bid for $2,125,000 CITY OF PEARLAND, TEXAS COMBINATION TAX AND REVENUE,CERTIFICATES OF OBLIGATION,SERIES 1991,dated May 1, 1991. This offer is being made for all of the Certificates and for not less than all. For said legally issued Certificates of Obligation,we will pay you the par value thereof,plus accrued interest from their date to the date of delivery to us, plus a cash premium of$ •— B — for Certificates of Obligation maturing and bearing interest per annum as follows: Maturity Date Principal Amount Interest Rate March 1, 1992 $ 50,000 7.7 0 % March 1, 1993 90,000 7.-7o % March 1, 1994 90,000 7.7c) % March 1, 1995 110,000 7,7v % March 1, 1996 115,000 7.7o % March 1, 1997 100,000 7.7 0 % March 1, 1998 135,000 March 1, 1999 140,000 G.20 % March 1, 2000 150,000 _ 6 .3o % March 1, 2001 165,000 G •'o % March 1, 2002 170,000 6.9, % March 1, 2003 180,000 .. .Go % March 1, 2004 200,000 .z o % March 1, 2005 210,000 % March 1, 2006 220,000 6.7,r % Interest cost, in accordance with the above bid, is: Gross Interest Cost $ l 321, ?Vs- F3 Less: Premium $ — o - NET INTEREST COST $ l 3 Z F eser F3 EFFECTIVE INTEREST RATE ' 4.751 G % The Initial Certificates shall be registered in the name of Prudential Securities Incorpor(33 cate manager). We will advise First City, Texas - Houston NA, Houston, Texas the Paying Agent/Registrar, on forms to be provided by the Paying Agent/Registrar and on registration instructions at least five business days prior to the date set for Initial Delivery. Cashier's Check of the First City National Bank, Austin , Texas, in the amount of $42,500,which represents our Good Faith Deposit (is attached hereto) or(has been made available to you prior to the opening of this Bid), and is submitted in accordance with the terms as set forth in the"Official Notice of Sale" and "Official Statement." Upon delivery of the Certificates, said check shall be returned to us if our bid is accepted and the Certificates are awarded to us. We agree to accept delivery of and make payment for the Initial Certificates in immediately available funds at the Corporate Trust Office, First City, Texas - Houston NA, Houston, Texas not later than 10:00 A.M., on May 9, 1991,or thereafter on the date the Certificates are tendered for delivery, pursuant to the terms set forth in the Official Notice of Sale. Am. Aoki The undersigned agrees to complete, execute and deliver to the City,by the date of delivery of the Certificates, a certificate relating to the "issue price" of the Certificates in the form and to the effect attached to or accompanying the Official Notice of Sale, with such changes thereto as may be acceptable to the City. Respectfully submitted, Prudential Securities Incorporated B w J. wed G �� jrnsfv y Authorized Representative ACCEPTED this 9th day of April, 1991, by the City Council, City of Pearland, Texas. Mayor ATTEST: City Secretary Return of Good Faith Check is hereby acknowledged: Firm: By: (For your information you will find attached a list of the group of underwriters associated with us in this proposal) OFFICIAL BID FORM April 9, 1991 Mayor and City Council City of Pearland 3519 Liberty Drive Pearland, Texas 77581 Gentlemen: Subject to the terms of your Official Notice of Sale and Official Statement, dated March 25, 1991, which are incorporated herein by reference, we hereby submit the following bid for $2,125,000 CITY OF PEARLAND, TEXAS COMBINATION TAX AND REVENUE,CERTIFICATES OF OBLIGATION,SERIES 1991,dated May 1, 1991. This offer is being made for all of the Certificates and for not less than all. For said legally issued Certificates of Obligation,we will pay you the par value thereof,plus accrued interest from their date to the date of delivery to us, plus a cash premium of$ 300•oc for Certificates of Obligation maturing and bearing interest per annum as follows: Maturity Datc Principal Amount Interest Rate March 1, 1992 $ 50,000 7.5� % March 1, 1993 90,000 7. so % March 1, 1994 90,000 7 SD % March 1, 1995 110,000 7• S6 % March 1, 1996 115,000 7., b % March 1, 1997 100,000 7.s% % March 1, 1998 135,000 7. so % March 1, 1999 140,000 -7.Sb % March 1, 2000 150,000 7.S-0 % March 1, 2001 165,000 "7.y % March 1, 2002 170,000 C..(-(o % March 1, 2003 180,000 G •Sp % March 1, 2004 200,000 6.. 5a % March 1, 2005 210,000 C..VD % March 1, 2006 220,000 6 % Interest cost, in accordance with the above bid, is: Gross Interest Cost $ /, 3 30, 341.00 Less: Premium $ 3 oo.60 NET INTEREST COST $ / 33o pcio.o0 EFFECTIVE INTEREST RATE .-it Sz'] % The Initial Certificates shall be registered in the name of Rauscher Pierce Refsnes, Inc. (syndicate manager). We will advise First City, Texas - Houston NA., Houston, Texas the Paying Agent/Registrar, on forms to be provided by the Paying Agent/Registrar and on registration instructions at least five business days prior to the date set for Initial Delivery. Cashier's Check of the First City, Texas Bank, Austin , Texas, in the amount of $42,500,which represents our Good Faith Deposit(isattavckodclraar or(has been made available to you prior to the opening of this Bid), and is submitted in accordance with the terms as set forth in the"Official Notice of Sale" and "Official Statement." Upon delivery of the Certificates, said check shall be returned to us if our bid is accepted and the Certificates are awarded to us. We agree to accept delivery of and make payment for the Initial Certificates in immediately available funds at the Corporate Trust Office, First City, Texas - Houston NA., Houston, Texas not later than 10:00 A.M., on May 9, 1991,or thereafter on the date the Certificates are tendered for delivery, pursuant to the terms set forth in the Official Notice of Sale. Aim The undersigned agrees to complete, execute and deliver to the City,by the date of delivery of the Certificates, a certificate relating to the "issue price" of the Certificates in the form and to the effect attached to or accompanying the Official Notice of Sale, with such changes thereto as may be acceptable to the City. Respectfully submitted, RAUSCHER PIERCE REFSNES, INC. SMITH BARNEY, HARRIS UPHAM & CO. , INC. LEGG MASON WOOD WALKER, INC. PAINE WEBBER, INC. By.,4fiefrt-e—i Authorized Representative ACCEPTED this 9th day of April, 1991, by the City Council, City of Pearland, Texas. Mayor ATTEST: City Secretary Return of Good Faith Check is hereby acknowledged: Firm: By: (For your information you will find attached a list of the group of underwriters associated with us in this proposal) vt-cy de,eA-1--tkAp,, Final Draft: 3/20/91 This Official Notice of Sale does not alone constitute an invitation for bids but is merely notice of sale of the obligations described herein. The invitation for bids on such Certificates is being made by means of this Official Notice of Sale, the Official Bid Form and the Official Statement. Prospective purchasers are urged to carefully examine all the documents to determine investment quality of the Certificates. OFFICIAL NOTICE OF SALE $2,125,000 THE CITY GF PEARIAND (Brazoria and Harris Counties,Texas) COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION,SERIES 1991 THE SALE CERTIFICATES OF OBLIGATION OFFERED FOR SALE AT COMPETITIVE BID: The City Council(the "Council") of the City of Pearland (the "City") is offering for sale at competitive bid its $2,125,000 Combination Tax and Revenue Certificates of Obligation, Series 1991 (the "Certificates"). PLACE AND TIME OF SALE: The Council will receive sealed bids at the City Hall, 3519 Liberty Drive, Pearland,Texas 77581 until 7:30 P.M.,C.D.S.T.,Monday,April 8, 1991, and the bids will be opened and publicly read. Sealed bids, which must be submitted in duplicate on the Official Bid Form and plainly marked "Bid for Certificates," are to be addressed to "Mayor and City Council, City of Pearland, Texas." All bids must be delivered at the above address prior to the above-scheduled time. Any bid received after such scheduled time for bid opening will not be accepted and will be returned unopened. AWARD OF THE CERTIFICATES: The Council will take action to award the Certificates (or reject all bids) at a regular meeting of the City Council on the date of the bid opening, and will adopt an ordinance authorizing the Certificates and approving the Official Statement(the"Ordinance"). The City reserves the right to reject any or all bids and to waive any irregularities. THE CERTIFICATES DESCRIPTION: The Certificates will be dated May 1, 1991 and interest will be calculated on the basis of a 360-day year of twelve 30-day months. Interest on the Certificates will be paid on March 1, 1992, and semiannually on September 1 and March 1 of each year thereafter until maturity or prior redemption. The Certificates are subject to redemption prior to their scheduled maturities on March 1, 2001, or any date thereafter,at the option of the City. Upon redemption the Bonds will be payable at a price equal to the principal amount thereof plus accrued interest to the date of redemption. The Certificates will be issued in fully registered form in principal amounts of$5,000 or any integral multiple thereof. Principal and semiannual interest will be paid by First City, Texas - Houston, NA., Houston, Texas the Paying Agent/Registrar. Interest will be paid by check dated as of the interest payment date and mailed on or before each interest payment date by the Paying Agent/Registrar to the registered owner appearing on the Paying Agent/Registrar's books on the Record Date (hereinafter defined). Principal will be paid to the registered owners at maturity upon presentation of the Certificates to the Paying Agent/Registrar. The Certificates will mature in each year as follows: Maturity Date Principal Amount March 1, 1992 $ 50,000 March 1, 1993 90,000 March 1, 1994 90,000 March 1, 1995 110,000 March 1, 1996 115,000 March 1, 1997 100,000 March 1, 1998 135,000 March 1, 1999 140,000 March 1, 2000 150,000 March 1, 2001 165,000 March 1, 2002 170,000 March 1, 2003 180,000 March 1, 2004 200,000 March 1, 2005 210,000 March 1, 2006 220,000 PAYING AGENT/REGISTRAR: The initial Paying Agent/Registrar shall be First City,Texas-Houston N.A., Houston, Texas (see "Paying Agent/Registrar" in Official Statement). SOURCE OF PAYMENT: The Certificates are direct obligations of the City, and the principal thereof and interest thereon are payable from the proceeds of an annual ad valorem tax levied upon all taxable property within the City, within the limits prescribed by law and will be further payable from a junior and subordinate pledge of the net revenues of the City's waterworks and sewer system in an amount not to exceed$10,000 of such net revenues per annum. Further details with reference to the Certificates are set forth in the Official Statement. CONDITIONS OF THE SALE TYPES OF BIDS AND INTEREST RATES: The Certificates will be sold in one block on an "All or None" basis, and at a price of not less than their par value plus accrued interest to the date of delivery of the Certificates. Bidders are invited to name the rate(s) of interest to be borne by the Certificates, provided that each rate bid must be in a multiple of 1/8 of 1% or 1/20 of 1% and the net effective interest rate for the Certificates (calculated in the manner required by Texas Revised Civil Statutes Annotated Article 717k-2, as amended) must not exceed 15%. The highest rate bid may not exceed the lowest rate bid by more than 1 1/2% in rate. No limitation is imposed upon bidders as to the number of rates or changes which may be used. All Certificates of one maturity must bear one and the same rate. No bids involving supplemental interest rates will be considered. Each bidder shall state in his bid the total interest cost in dollars and the net effective interest rate determined hereby, which shall be considered informative only and not as a part of the bid. BASIS OF AWARD: For the purpose of awarding sale of the Certificates, the interest cost of each bid will be computed by determining at the rate(s) specified therein, the total dollar cost of all interest on the Certificates from the date thereof to their respective maturities, using the table of Certificate Years herein, and deducting therefrom the premium bid, if any. Subject to the City's right to reject any or all bids and to waive any irregularities,the Certificates will be awarded to the bidder(the"Purchaser")whose complying bid,based on the above computation, produces the lowest net interest cost to the City. GOOD FAITH DEPOSIT: A Good Faith Deposit, payable to the"City of Pearland"in the amount of$42,500, is required. Such Good Faith Deposit shall be in the form of a Cashier's Check, which is to be retained uncashed by the City pending the Purchaser's compliance with the terms of his bid and the Notice of Sale and Bidding Instructions. The Good Faith Deposit may accompany the Official Bid Form or it may be submitted separately. If submitted separately, it shall be made available to the City prior to the opening of the bids, and shall be accompanied by instructions from the bank on which drawn which authorize its use as a Good Faith Deposit by the Purchaser who shall be named in such instructions. The Good Faith Deposit of the Purchaser will be returned on the date of delivery of the Certificates. No interest will be allowed on the Good Faith Deposit. In the event the Purchaser should fail or refuse to take up and pay for the Certificates in accordance with his bid, then said check shall be cashed and accepted by the City as full and complete liquidated damages. The checks accompanying bids other than the winning bid will be returned immediately after the bids are opened, and an award of the Certificates has been made. DELIVERY OF THE CERTIFICATES AND ACCOMPANYING DOCUMENTS CUSIP NUMBERS: It is anticipated that CUSIP identification numbers will appear on the Certificates, but neither the failure to print or type such number on any Certificates nor any error with respect thereto shall constitute cause for a failure or refusal by the Purchaser to accept delivery of and pay for the Certificates in accordance with the terms of this Notice of Sale and the terms of the Official Bid Form. All expenses in relation to the printing or typing of CUSIP numbers on the Certificates shall be paid by the City; provided,however,that the CUSIP Service Bureau fee for the assignment of the numbers shall be the responsibility of and shall be paid for by the Purchaser. u ... p INITIAL DELIVERY OF INITIAL CERTIFICATES: Initial Delivery will be accomplished by the issuance of registered Certificates in the aggregate principal amount of$2,125,000, payable to the Purchaser, signed by the Mayor and City Clerk of the City,approved by the Attorney General, and registered and manually signed by the Comptroller of Public Accounts. Initial Delivery will be at the corporate trust office of the Paying Agent/Registrar. Payment for the Certificates must be made in immediately available funds for unconditional credit to the City,or as otherwise directed by the City. The Purchaser will be given five(5) business days'notice of the time fixed for delivery of the Certificates. It is anticipated that Initial Delivery of the Initial Certificates can be made on or about May 8, 1991, and it is understood and agreed that the Purchaser will accept delivery and make payment for the Initial Certificates by 10:00 A.M., on May 8, 1991, or thereafter on the date the Certificates are tendered for delivery, up to and including June 10, 1991. If for any reason the City is unable to make delivery on or before June 10, 1991, then the City shall immediately contact the Purchaser and offer to allow the Purchaser to extend his offer for an additional fifteen (15) days. If the Purchaser does not elect to extend his offer within six (6) days thereafter, then his Good Faith Deposit will be returned, and both the City and the Purchaser shall be relieved of any further obligation. In no event shall the City be liable for any damages, whether direct, consequential or otherwise, by reason of its failure to deliver the Certificates. DELIVERY OF DEFINITIVE CERTIFICATES: Upon payment for the Initial Certificates at the time of the Initial Delivery,the Paying Agent/Registrar shall cancel the Initial Certificates,provided registration instructions have been received by the Paying Agent/Registrar, and shall register and deliver the registered definitive Certificates, in any integral multiple of $5,000 for any one maturity, in accordance with written instructions received from the Purchaser and/or members of the Purchaser's syndicate account. It shall be the duty of the Purchaser and/or members of the Purchaser's syndicate account to furnish to the Paying Agent/Registrar, at least five business days prior to the Initial Delivery, fmal written instructions designating the names in which the Certificates are to be registered, the addresses of the registered owners, the maturities, interest rates and denominations. The Paying Agent/Registrar will not be required to accept registration instructions after the fifth business day prior to Initial Delivery. If such instructions are not received within the specified time period, the cancellation of the Initial Certificates and delivery of registered definitive Certificates will be delayed until such instructions are received. CONDITIONS TO DELIVERY: The obligation of the Purchaser to take up and pay for the Certificates is subject to the Purchaser's receipt of(a) the legal opinion of Vinson& Elkins,Houston,Texas, Counsel for the City ("Bond Counsel"), (b) certificate to the effect that no litigation of any nature has been filed or is then pending to restrain the issuance and delivery of the Certificates, and (c) the certification as to the Official Statement, all as further described in the Official Statement. In order to provide the City with information required to enable it to comply with certain conditions of the Internal Revenue Code of 1986 relating to the exclusion of interest on the Certificates from the gross income of their owners,the Purchaser will be required to complete, execute, and deliver to the City a certification as to their"issue price"substantially in the form and to the effect attached hereto or accompanying this Notice of Sale. In the event the Purchaser will not reoffer the Certificates for sale or is unable to sell a substantial amount of the Certificates of any maturity by the date of delivery, such certificate may be modified in a manner approved by the City. In no event will the City fail to deliver the Certificates as a result of the Purchacr's inability to sell a substantial amount of Certificates at a particular price prior to delivery. Each bidder, by submitting its bid, agrees to complete, execute, and deliver such a certificate, if its bid is accepted by the City. It will be the responsibility of the Purchaser to institute such syndicate reporting requirements,to make such investigation,or otherwise to ascertain the facts necessary to enable it to make such certification with reasonable certainty. Any questions concerning such certification should be directed to Counsel. LEGAL OPINIONS: The Certificates are offered when,as and if issued,subject to the unqualified legal opinion of the Attorney General of the State of Texas, and the approving legal opinion of Vinson & Elkins, Houston, Texas, Bond Counsel (see Legal Opinions in Official Statement); the opinion of said firm will be printed on the Certificates. CERTIFICATION OF OFFICIAL STATEMENT: At the time of payment for,and Initial Delivery of,the Initial Certificates, the City will execute and deliver to the Purchaser a certificate in the form set forth in the Official Statement. n1 � 1 CHANGE IN TAX EXEMPT STATUS: At any time before the Certificates are tendered for delivery, the Purchaser may withdraw his bid if the interest received by private holders on bonds of the same type and character shall be declared to be taxable income under present federal income tax laws, either by ruling of the Internal Revenue Service or by a decision of any Federal court, or shall be declared taxable or be required to be taken into account in computing any federal income taxes,by the terms of any federal income tax law enacted subsequent to the date of this Notice of Sale. GENERAL FINANCIAL ADVISOR Rauscher Pierce Refsnes, Inc. is employed as Financial Advisor to the City in connection with the issuance of the Certificates. The Financial Advisor's fee for services rendered with respect to the sale of the Certificates is contingent upon the issuance and delivery of the Certificates. The City has authorized Rauscher Pierce Refsnes, Inc. to submit a bid for the Certificates, either independently or as a member of a syndicate organi7Pd to submit a bid for the Certificates. Rauscher Pierce Refsnes, Inc., in its capacity as Financial Advisor, has not verified and does not assume any responsibility for the information, covenants and representations contained in any of the contractual obligation documentation with respect to the federal income tax status of the Certificates. BLUE SKY LAWS: By submission of his bid,the Purchaser represents that the sale of the Certificates in states other than Texas will be made only pursuant to exemptions from registration or,where necessary,the Purchaser will register the Certificates in accordance with the securities law of the states in which the Certificates are offered or sold. The City agrees to cooperate with the Purchaser,at the Purchaser's written request and expense, in registering the Certificates or obtaining an exemption from registration in any state where such action is necessary. MUNICIPAL CERTIFICATE INSURANCE The City has submitted an application for municipal insurance. OFFICIAL STATEMENT By accepting the winning bid, the City agrees to the following representations and covenants to assist the Purchaser in complying with Rule 15c2-12 of the Securities and Exchange Commission ("SEC"). FINAL OFFICIAL STATEMENT: The City has prepared the accompanying Official Statement for dissemination to potential purchasers of the Certificates,but will not prepare any other document or version for such purpose except as described below. The Purchaser will be responsible for informing the City of the initial offering yields. The City will prepare a supplement to the Official Statement describing these offering yields, the interest rates on the Certificates, the selling compensation, the final debt service schedule, the ratings assigned to the Certificates (if not currently included), and the terms of and obligor on any policy of municipal bond insurance. Accordingly, the City deems the accompanying Official Statement to be final as of its date, within the meaning of SEC Rule 15c2-12(b)(1), except for the omission of the foregoing items. By delivering the final Official Statement or any amendment or supplement thereto to the Purchaser on or after the sale date, the City represents the same to be complete as of such date, within the meaning of SEC Rule 15c2-12(e)(3). Notwithstanding the foregoing, the only representations concerning the absence of material misstatements or omissions from the Official Statement which are or will be made by the City are those described in the Official Statement under "CERTIFICATION OF THE OFFICIAL STATEMENT." DELIVERY OF OFFICIAL STATEMENTS: The City will furnish to the Purchaser (and to each other participating underwriter of the Certificates, within the meaning of SEC Rule 15c2-12(a), designated by the Purchaser),within seven days after the sale date,up to 200 Official Statements. The City will also furnish to the Purchaser a like number of any supplement or amendment prepared by the City for dissemination to potential purchasers of the Certificates as described above as well as such additional copies of the Official Statement or any supplement or amendment as the Purchaser may request prior to the 90th day after the end of the underwriting period referred to in SEC Rule 15c2-12(e)(2). The City will pay the expense of preparing up to 200 copies of the Official Statement and all copies of any supplement or amendment issued on or before the delivery date, but the Purchaser must pay for all other copies of the Official Statement or any supplement or amendment thereto. iv ... 41111116 — ADDITIONAL COPIES OF NOTICE, BID FORM AND STATEMENT: A limited number of additional copies of this Notice of Sale, the Official Bid Form and the Official Statement, as available over and above the normal mailing, may be obtained at the offices of Rauscher Pierce Refsnes, Inc., 1001 Fannin, Suite 700, Houston, Texas, 77002, Financial Advisor to the City. On the date of the sale, the Council will, in the Ordinance authorizing the issuance of the Certificates, confirm its approval of the form and content of the Official Statement, and any addenda, supplement or amendment thereto, and authorize its use in the reoffering of the Certificates by the Purchaser. /s/ Mayor City of Pearland, Texas ATTEST: /s/ City Clerk City of Pearland, Texas March 25, 1991 v CERTIFICATE OF UNDERWRITER The undersigned hereby certifies as follows with respect to the sale of $2,125,000 City of Pearland, Combination Tax and Revenue, Certificates of Obligation, Series 1991 (the "Certificates"). 1. The undersigned is the underwriter or the manager of the syndicate of underwriters which purchased the obligations from City of Pearland (the "Issuer") at competitive sale. 2. The undersigned and/or one or more other members of the underwriting syndicate, if any, have made a bona fide offering of the Certificates of each maturity to the public. 3. The initial offering price (expressed as a yield) for the Certificates of each maturity at which a substantial amount of the Certificates of such maturity was sold to the public is as set forth below: Principal Amount Date of Maturing Maturity Yield $ 50,000 March 1, 1992 % 90,000 March 1, 1993 % 90,000 March 1, 1994 % 110,000 March 1, 1995 % 115,000 March 1, 1996 % 100,000 March 1, 1997 % 135,000 March 1, 1998 % 140,000 March 1, 1999 % 150,000 March 1, 2000 % 165,000 March 1, 2001 % 170,000 March 1, 2002 % 180,000 March 1, 2003 % 200,000 March 1, 2004 % 210,000 March 1, 2005 % 220,000 March 1, 2006 % 4. The term "public," as used herein, means persons other than houses, brokers, dealers, and similar persons or organizations acting in the capacity of underwriters or wholesalers. 5. The offering prices described above reflect current market prices at the time of such sales. 6. The undersigned understands that the statements made herein will be relied upon by the Issuer in its effort to comply with the conditions imposed by the Internal Revenue Code of 1986 on the exclusion of interest on the Certificates from the gross income of their owners and that this bond will be delivered to the Issuer on or before the delivery date of the Certificates. Executed and delivered this day of , 1991. (Name of Underwriter or Manager) Title: vi Aft OFFICIAL BID FORM April 8, 1991 Mayor and City Council City of Pearland 3519 Liberty Drive Pearland, Texas 77581 Ladies and Gentlemen: Subject to the terms of your Official Notice of Sale and Official Statement, dated March 25, 1991, which are incorporated herein by reference, we hereby submit the following bid for $2,125,000 CITY OF PEARLAND, TEXAS COMBINATION TAX AND REVENUE,CERTIFICATES OF OBLIGATION,SERIES 1991,dated May 1, 1991. This offer is being made for all of the Certificates and for not less than all. For said legally issued Certificates of Obligation,we will pay you the par value thereof,plus accrued interest from their date to the date of delivery to us, plus a cash premium of$ for Certificates of Obligation maturing and bearing interest per annum as follows: Maturity Date Principal Amount Interest Rate March 1, 1992 $ 50,000 % March 1, 1993 90,000 -% March 1, 1994 90,000 % March 1, 1995 110,000 -% March 1, 1996 115,000 -% March 1, 1997 100,000 -% March 1, 1998 135,000 % March 1, 1999 140,000 % March 1, 2000 150,000 -% March 1, 2001 165,000 % March 1, 2002 170,000 -% March 1, 2003 180,000 -% March 1, 2004 200,000 % March 1, 2005 210,000 % March 1, 2006 220,000 % Interest cost, in accordance with the above bid, is: Gross Interest Cost $ Less: Premium $ NET INTEREST COST $ EFFECTIVE INTEREST RATE % The Initial Certificates shall be registered in the name of (syndicate manager). We will advise First City, Texas - Houston NA, Houston, Texas the Paying Agent/Registrar, on forms to be provided by the Paying Agent/Registrar and on registration instructions at least five business days prior to the date set for Initial Delivery. Cashier's Check of the Bank, , Texas, in the amount of $42,500,which represents our Good Faith Deposit (is attached hereto) or(has been made available to you prior to the opening of this Bid), and is submitted in accordance with the terms as set forth in the"Official Notice of Sale" and "Official Statement." Upon delivery of the Certificates, said check shall be returned to us if our bid is accepted and the Certificates are awarded to us. We agree to accept delivery of and make payment for the Initial Certificates in immediately available funds at the Corporate Trust Office, First City, Texas - Houston NA., Houston, Texas not later than 10:00 A.M., on May 5, 1991, or thereafter on the date the Certificates are tendered for delivery, pursuant to the terms set forth in the Official Notice of Sale. r The undersigned agrees to complete, execute and deliver to the City, by the date of delivery of the Certificates, a certificate relating to the "issue price" of the Certificates in the form and to the effect attached to or accompanying the Official Notice of Sale, with such changes thereto as may be acceptable to the City. Respectfully submitted, By Authorized Representative ACCEPTED this 8th day of April, 1991, by the City Council, City of Pearland, Texas. Mayor ATTEST: City Clerk Return of Good Faith Check is hereby acknowledged: Firm: By: (For your information you will find attached a list of the group of underwriters associated with us in this proposal) AIM. 411M. BOND YEARS $2,125,000 CITY OF PEARLAND, TEXAS (Brazoria and Harris Counties, Texas) COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION SERIES 1991 Dated: May 1, 1991 Due: As shown below Years Maturity Cumulative Date Amount Years Bond Years March 1, 1992 $ 50,000 41.6667 41.6667 March 1, 1993 90,000 165.0000 206.6667 March 1, 1994 90,000 255.0000 461.6667 March 1, 1995 110,000 421.6667 883.3333 March 1, 1996 115,000 555.8333 1,439.1667 March 1, 1997 100,000 583.3333 2,022.5000 March 1, 1998 135,000 922.5000 2,945.0000 March 1, 1999 14.0,000 1,096.6667 4,041.6667 March 1, 2000 150,000 1,325.0000 5,366.6667 March 1, 2001 165,000 1,622.5000 6,989.1667 March 1, 2002 170,000 1,841.6667 8,830.8333 March 1, 2003 180,000 2,130.0000 10,960.8333 March 1, 2004 200,000 2,566.6667 13,527.5000 March 1, 2005 210,000 2,905.0000 16,432.5000 March 1, 2006 220.000 3.263.3333 19,695.8333 $2.125,000 19.695.8333 AVERAGE MATURITY - 9.2686 YEARS PRELIM 'ARY OFFICIAL STATEMENT DATED 140.RCH25. 1991 This Preliminary Official Statement as subject to completion and amendment and is intended solely for the solicitation of initial bids to purchase the Certificates. Upon the sale of the Certificates, the Official Statement will be completed and delivered to the Purchaser. N N d N Y 43 THE DELIVERY OF THE CERTIFICATES IS SUBJECT TO THE OPINION OF BOND COUNSEL TO o• a THE EFFECT THAT,UNDER EXISTING LAW AND ASSUMING CONTINUING COMPLIANCE WITH CA v d IV COVENANTS OF THE ORDINANCE, INTEREST ON THE CERTIFICATES IS EXCLUDABLE FROM " J GROSS INCOME OF THE OWNERS THEREOF FOR FEDERAL INCOME TAX PURPOSES AND IS ... ," NOT SUBJECT TO THE ALTERNATIVE MINIMUM TAX ON INDIVIDUALS OR, EXCEPT AS t i, -g DESCRIBED HEREIN, CORPORATIONS. SEE "TAX EXEMPTION" HEREIN. Sz c , o NEW ISSUE t � � ,� 03 L. N U y g = THE CITY OF PEARLAND,TEXAS . y co ; (A political subdivision of the State of Texas located within Brazoria and Harris Counties) COMBINATION TAX AND REVENUE i co o` CERTIFICATES OF OBLIGATION T g Series 1991 1 " H Dated: May 1, 1991 c a,..w 2..i. Principal and interest is payable at the principal corporate trust office of the First City,Texas - Houston NA., rn '..o P PY P P rP tY, ✓ c .- Houston, Texas, the paying agent/registrar (the "Registrar"). Interest is payable March 1, 1992, and each E o September 1 and March 1 thereafter until maturity or prior redemption. The Certificates are subject to o a redemption prior to their scheduled maturities on March 1,2001 or any date thereafter,at the option of the City. M _ Upon redemption the Bonds will be payable at a price equal to the principal amount thereof plus accrued v = interest to the date of redemption. The Certificates are issued in fully registered form in integral multiples of ▪w $5,000. Interest on the Certificates will be payable by check or draft,dated as of the interest payment date, and N c ' mailed by the Registrar to registered owners shown on the records of the Registrar on the last business day of ai •Y 8 the month next preceding each interest payment date (the "Record Date"). 03 ,o -D ,C 2. d.2. 3 MATURITY SCHEDULE y 7.J (Due March 1) .c c L Initial Initial c o o Interest Reoffering Interest Reoffering 8 -.; Amount Maturity Rate Yield (a) Amount Maturity Rate Yield (a) vW o N• ., o $ 50,000 1992 % % $150,000 2000 % % 2 `0 90,000 1993 165,000 2001 w w 90,000 1994 170,000 2002(b) I- .. 4-o d 110,000 1995 180,000 2003(b) M W o 115,000 1996 200,000 2004(b) c ..c 100,000 1997 210,000 2005(b) T3 - S 135,000 1998 220,000 2006(b) I, a C 140,000 1999 1 2 i 4) o c ti " (a) The initial yields will be established by and are the sole responsibility of the Purchaser, and may "• ° subsequently be changed. i ,� (b) The Certificates maturing March 1,2002 through March 1,2006,both inclusive, are subject to redemption, w e ° `o w at the option of the City, at the par value thereof plus accrued interest, in whole or in part, on March 1, � H " 2001, or any date thereafter. L W •E;c•"_ 5 5 The above certificates(the"Certificates")constitute all the certificates authorized by the council on April 8, 1991. Z. o c .j, The Certificates, when issued, will constitute valid and binding obligations of The City of Pearland (the "City") d A.- L H 5 and will be payable from the proceeds of an annual ad valorem tax, levied within the limits prescribed by law, . a, N against taxable property within the City and will be furhter payable from a junior and subordinate pledge of the :E L o net revenues of the City's waterworks and sewer system in an amount not to exceed$10,000 of such net revenues d 0 = per annum. I- vRI a H The Certificates are offered when, as and if issued subject to the approving opinion of the Attorney General of the State of Texas and the opinion of Vinson & Elkins, Houston, Texas, Certificate Counsel to the City, as to the validity of the issuance of the Certificates under the Constitution and the laws of the State of Texas. The Certificates are expected to be available for delivery on or about May 8, 1991. 4111111. TABLE OF CONTENTS ... Page USE OF INFORMATION IN OFFICIAL STATEMENT 3 SALE AND DISTRIBUTION OF THE CERTIFICATES 3 Sale of the Certificates 3 Prices and Marketability 3 Securities Laws 3 Ratings 4 Municipal Bond Insurance 4 OFFICIAL STATEMENT SUMMARY 5 THE CERTIFICATES 6 Description of the Certificates 6 Source of Payment 6 Authority for Issuance 7 Use of Proceeds 7 Future Bond Issues 7 Legal Investments in Texas 7 Remedies in the Event of Default 7 PRO-FORMA DEBT SERVICE SCHEDULE 8 DEBT STATEMENT 8 General 8 Certificateed Indebtedness 9 Estimated Overlapping Debt 9 Debt Ratios 9 TAX DATA 10 General 10 Property Tax Code and County-Wide Appraisal District 10 Tax Rate Limitations 10 Property Subject to Taxation by the City 10 Notice and Hearing Procedures 11 Levy and Collection of Taxes 11 Collection of Delinquent Taxes 12 Historical Analysis of Tax Collection 12 Analysis of Tax Base 13 Estimated Overlapping Taxes 14 Sales Tax 15 SELECTED FINANCIAL DATA 16 Historical Operations of the City's General Fund 16 General Fund and Debt Service Fund Balance for the Past Five Fiscal Years 16 Pension Fund 17 Financial Statements 17 ADMINISTRATION OF THE CITY 17 Mayor and City Council 17 Administration 18 LEGAL MATTERS 19 Legal Opinions 19 No-Litigation Certificate 19 No Material Adverse Change 19 TAX MATTERS 19 Tax Exemption 19 QUALIFIED TAX-EXEMPT OBLIGATIONS 20 GENERAL CONSIDERATIONS 21 Sources and Compilation of Information 21 Certification as to Official Statement 21 Updating of Official Statement 21 APPENDIX A - ECONOMIC AND DEMOGRAPHIC CHARACTERISTICS APPENDIX B - FINANCIAL STATEMENTS OF THE CITY 2 41104. Airs USE OF INFORMATION IN OFFICIAL STATEMENT No dealer,broker, salesman or other person has been authorized by the City to give any information or to make any representation other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by the City. This Official Statement is not to be used in an offer to sell or the solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation. Any information and expressions of opinion herein contained are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City or other matters described herein since the date hereof. SALE AND DISTRIBUTION OF THE CERTIFICATES Sale of the Certificates: After requesting competitive bids for the Certificates, the City has accepted the bid resulting in the lowest net interest cost,which bid was tendered by a syndicate composed of ("Purchaser") to purchase the Certificates bearing the interest rates shown under "MATURITY SCHEDULE" at a price of the par value thereof, plus a cash premium of$ , plus accrued interest to the date of delivery. The net effective interest rate on the Certificates was % was calculated pursuant to Article 717k-2 of Vernon's Annotated Texas Civil Statutes. Prices and Marketability: The delivery of the Certificates is conditioned upon the receipt by the City of a certificate executed and delivered by the Purchaser on or before the date of delivery of the Certificates stating the prices at which a substantial amount of the Certificates of each maturity have been sold to the public. For this purpose, the term "public" shall not include any person who is a certificate house, broker or similar person acting in the capacity of underwriter or wholesaler. The City has no control over trading of the Certificates after a bona fide offering of the Certificates is made by the Purchaser at the yields specified on the cover page. Information concerning reoffering yields or prices is the responsibility of the Purchaser. The prices and other terms respecting the offering and sale of the Certificates may be changed from time to time by the Purchaser after the Certificates are released for sale, and the Certificates may be offered and sold at prices other than the initial offering price,including sales to dealers who may sell the Certificates into investment accounts. IN CONNECTION WITH THE OFFERING OF THE CERTIFICATES,THE PURCHASER MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CERTIFICATES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING,IF COMMENCED,MAY BE DISCONTINUED AT ANY TIME. Securities Laws: No registration statement relating to the Certificates has been filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, in reliance upon the exemptions provided thereunder. The Certificates have not been registered or qualified under the Securities Act of Texas in reliance upon various exemptions contained therein; nor have the Certificates been registered or qualified under the securities acts of any jurisdiction. The City assumes no responsibility for registration or qualification of the Certificates under the securities laws of any jurisdiction in which the Certificates may be offered, sold or otherwise transferred. This disclaimer of responsibility for registration or qualification for sale or other disposition of the Certificates shall not be construed as an interpretation of any kind with regard to the availability of any exemption from securities registration or qualification provisions in such jurisdictions. 3 Rating In connection with the sale of the Certificates, the City has made application to both Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's Corporation ("S&P") for ratings and the ratings of " " and " ", respectively, have been assigned to the Certificates. An explanation of the significance of such ratings may be obtained from Moody's and S&P. The ratings reflect only the views of Moody's and S&P and the City makes no representation as to the appropriateness of such ratings. There is no assurance that such ratings will continue for any period of time or that they will not be revised downward or withdrawn entirely by Moody's or S&P if, in the judgment of Moody's or S&P, circumstances so warrant. Any such downward revision or withdrawl of the ratings may have an adverse effect on the market price of the Certificates. Municipal Bond Insurance: The City has made application for municipal bond insurance under the bidders option program. The premium for such insurance, if used, will be paid for by the Purchaser. 4 aft AIM OFFICIAL STATEMENT SUMMARY The following material is qualified in its entirety by the detailed information and financial statements appearing elsewhere in this Official Statement. - General - The Issuer The City of Pearland, a political subdivision of the State of Texas located within Brazoria and Harris Counties. The Certificates $2,125,000 Combination Tax and Revenue, Certificates of Obligation,Series 1991, dated May 1, 1991;various amounts due March 1, 1992 through 2006. Payment of Interest March 1,1992,and each September 1 and March 1 thereafter, until maturity or prior redemption. Source of Payment Principal of and interest on the Certificates are payable from a continuing, direct annual ad valorem tax levied with the limits prescribed by law and will be further payable from a junior and subordinate pledge of the net revenues of the City's waterworks and sewer system in an amount not to exceed $10,000 of such net revenues per annum. Other Characteristics The Certificates are issued in fully registered form in integral multiples of$5,000.The Certificates are subject to redemption prior to their scheduled maturities on March 1, 2001 or any date thereafter at the option of the City. Upon redemption the Bonds will be payable at a price equal to the principal amount thereof plus accrued interest to the date of redemption. Use of Proceeds Proceeds from the sale of the Certificates are to be used for a City park, senior citizens building and street and drainage right of way and improvements. The proceeds will also be used to pay costs incurred in the issuance of the Certificates. See "Use of Proceeds". Ratings Moody's Investors Service,Inc Standard&Poor's Corporation Population 1990 Census - 18,697. - Financial Highlights - (Unaudited) 1990 Certified Assessed Valuation (100% of Estimated Market Value) $575,624,520(a) Direct Tax Debt Outstanding Debt (as of March 15, 1991) $ 17,689,392 The Certificates 2,125,000 Total Direct Debt $ 19,764,392 Estimated Overlapping Debt $ 22.221.716 Total Direct Tax Supported and Estimated Overlapping Debt $ 41.986,108 Interest and Sinking Fund Balance (as of March 15, 1991) $ 1,642,532 (a) Certified by the Brazoria County Appraisal District. 5 . 1 % of 1990 Certified Per Debt Ratios: Assessed Valuation Capita Direct Debt 3.43% $1,057 Direct and Estimated Overlapping Debt 7.29% $2,246 Annual Requirements: Average (Fiscal Years 1991/2009) S2,350,825 Maximum (1993) $1,932,523 Tax Collections: Arithmetic Average, Tax Years (1986/1990) - Current Year 97.27% - Current and Prior Years 99.20% THE CERTIFICATES Description of the Certificates: The Certificates are dated May 1, 1991,bear interest from such date at the stated interest rates indicated under "MATURITY SCHEDULE", which interest is payable March 1, 1992, and each September 1, and March 1 thereafter until maturity or prior redemption. The Certificates are issued in fully registered form in denominations of $5,000 each or any multiple thereof. The Certificates are subject to redemption prior to scheduled maturities on March 1, 2001 or any date thereafter at the option of the City. Upon redemption the Bonds will be payable at a price equal to the principal amount thereof plus accrued interest to the date of redemption. Principal of and interest on the Certificates are payable at the principal corporate trust office of the First City, Texas - Houston NA., Houston,Texas. Interest on the Certificates will be payable by check or draft, dated as of the interest payment date, and mailed by the Registrar to registered owners as shown on the records of the Registrar. The Certificates are transferable only on the certificate register kept by the Registrar upon surrender and reissuance. The Certificates are exchangeable for an equal principal amount of Certificates of the same maturity in any authorized denomination upon surrender of the Certificates to be exchanged at the principal corporate trust office of the Registrar. No service charge will be made for any transfer,but the City may require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The record date (the "Record Date") for the interest payable on any interest payment date means the 15th calendar day of the month next preceding such interest payment date. It will be required that all transfers be made within three business days after request and presentation. The City has agreed to replace mutilated,destroyed,lost or stolen Certificates upon surrender of the mutilated Certificates, or receipt of satisfactory evidence of such destruction, loss or theft, and receipt by the City and the Registrar of security or indemnity to keep them harmless. The City may require payment of taxes,governmental charges and other expenses in connection with any such replacement. Source of Payment: The Certificates,together with other outstanding debt on a parity with the Certificates(the"Outstanding Debt"), are payable as to principal and interest from, and secured by, the proceeds of a continuing, direct annual ad valorem tax,levied within the limits prescribed by law,against taxable property within the City and will be further payable from a junior and subordinate pledge of the net revenues of the City's waterworks and sewer system in an amount not to exceed $10,000 of such net revenues per annum. In the Ordinance, the City covenants that while the Certificates are outstanding, it will levy, assess and undertake to collect such tax. See also"Remedies in the Event of Default." 6 I^ AN i r Authority for Issuance: The Certificates are being issued pursuant to the applicable provisions of the Constitution and laws of the State of Texas,particularly Sections 271.041-271.063,Texas Local Government Code, as amended, and the provisions of an ordinance(the"Ordinance")adopted by the City Council on April 8,1991,and which specifically authorizes the sale and issuance of the Certificates. Further reference to the Ordinance is hereby made. No election is required as a prerequisite to the sale and issuance of certificates of obligation, unless a petition signed by 5% of the qualified voters of the City is filed with the City Secretary protesting the issuance of such certificates prior to the issuance. Use of Proceeds: Proceeds of the Certificates are being used to provide funds for a City park, senior citizens building and street and drainage right of way and improvements. The proceeds will also be used to pay the costs of issuance of the Certificates, including the Financial Advisor's fee and Bond Counsel's fee, both of which are contingent upon the sale of the Certificates, as well as other administrative costs incurred. Future Bond Issues: Following the issuance of the Certificates, there will remain no Certificates authorized by the City. Currently, the City Council has no plans to authorize additional certificates of obligation or bonds; however, the City reserves the right to issue such certificates of obligation or bonds if authorized by the electorate. Depending on the rate of development within the City,changes in assessed valuation,and the amounts,interest rates,maturities and time of issuance of additional bonds, increases in the City's annual ad valorem tax rate may be required to provide for the payment of the principal of and interest on the outstanding bonds, the Bonds, and such future bonds. Legal Investments in Texas: Pursuant to Section 9 of the Bond Procedures Act of 1981,as amended,Texas Revised Civil Statutes Annotated Article 717k-6 (the "Procedures Act"), all certificates issued by the City constitute negotiable instruments, and are investment securities governed by Chapter 8, Texas Uniform Commercial Code, notwithstanding any provisions of law or court decision to the contrary, and are legal and authorized investments for banks, savings banks, trust companies, building and loan associations, savings and loan associations, insurance companies, fiduciaries, and trustees, and for sinking fund of cities, towns, villages, school districts, and other political subdivisions or public agencies of the State of Texas. The Procedures Act further provides that the Certificates are eligible to secure deposits of public funds of the state, its agencies and political subdivisions, and are legal security for those deposits to the extent of their market value. No review by the City has been made of the laws in other states to determine whether the Certificates are legal investments for various institutions in those states. Remedies in the Event of Default: The Ordinance requires the City to assess and collect ad valorem taxes each year sufficient to pay principal and interest when due on the Certificates. The Ordinance does not provide any other security for the payment of the Certificates, or any express remedies in the event of default, and makes no provision for acceleration of maturity of the Certificates in the event of default,and does not provide for a trustee to protect the rights of the Certificateholder. 7 4111.o. IOW Although a Certificateholder could presumably obtain a judgment against the City in the event of default in the payment of principal or interest on the Certificates, such judgment could not be satisfied by execution against any property of the City. A Certificateholder could, in the event of default,ask a court for a mandamus or court order compelling the City to levy, assess and collect sufficient ad valorem taxes to pay principal of and interest on the Certificates as it falls due on the Certificates or to perform the City's other obligations under the Ordinance. Such remedy might need to be enforced on a periodic basis. The enforcement of a claim for payment of principal or interest on the Certificates would be subject to judicial discretion, sovereign police powers and the applicable provisions of the federal bankruptcy laws and to any other similar laws affecting the rights of political subdivisions generally. PRO-FORMA DEBT SERVICE SCHEDULE The following sets forth the principal and interest on the City's outstanding certificates, and the principal and estimated interest on the Certificates. Fiscal Year Outstanding The Certificates Total New Total Debt Ending Debt $2,125.000 Principal & Service 9-30 Requirement Principal Interest(a) Interest Requirement 1991 $ 2,348,864 $ 2,348,864 1992 2,106,659 $ 50,000 $ 189,563 $ 239,563 2,346,222 1993 2,123,800 90,000 137,025 227,025 2,350,825 1994 2,123,396 90,000 130,950 220,950 2,344,346 1995 1,592,318 110,000 124,200 234,200 1,826,518 1996 1,592,989 115,000 116,606 231,606 1,824,595 1997 1,622,558 100,000 109,350 209,350 1,831,908 1998 1,590,483 135,000 101,419 236,419 1,826,902 1999 1,592,956 140,000 92,138 232,138 1,825,094 2000 1,594,670 150,000 82,350 232,350 1,827,020 2001 1,590,179 165,000 71,719 236,719 1,826,898 2002 1,596,588 170,000 60,413 230,413 1,827,001 2003 1,595,088 180,000 48,600 228,600 1,823,688 2004 1,591,913 200,000 35,775 235,775 1,827,688 2005 1,595,324 210,000 21,938 231,938 1,827,262 2006 1,596,008 220,000 7,425 227,425 1,823,433 2007 1,824,680 1,824,680 2008 1,820,000 1,820,000 2009 1,765,000 1.765.000 $ 33,263,473 $2,125,000 $10,067,167 $3,454,471 .$36,717,944 Average Annual Debt Service Requirements (1991/2009) $ 2,350,825 Maximum Annual Debt Service Requirement (1993) $ 1,932,523 (a) Interest estimated at 6.75% for illustration purposes. DEBT STATEMENT General: The following tables and calculations relate to the Certificates and to all other tax supported debt of the City. In addition to outstanding certificates and the City has also issued revenue certificates and has incurred contractual and other indebtedness and liabilities which are not included below but which are significant in amount. The City and various other political subdivisions of government which overlap all or a portion of the City are empowered to incur debt to be paid from revenues raised or to be raised by ad valorem taxation against all or a portion of property within the City. 8 Ainb. ANY Certificateed Indebtedness: 1990 Certified Assessed Valuation (100% Estimated Market Value) $575,624,520(a) Direct Ad Valorem Tax Debt Outstanding Debt (as of March 15, 1991) $ 17,639,392 The Certificates 2,125,000 Total Direct Ad Valorem Tax Debt $ 19,764,392 Interest & Sinking Fund Balance (as of March 15, 1991) ,$ 1,642,532 (a) Certified by the Brazoria County Appraisal District. Estimated Overlapping Debt: The following table indicates the indebtedness,defined as outstanding certificates payable from ad valorem taxes, of governmental entities overlapping the City and the estimated percentages and amounts of such indebtedness attributable to property within the City. This information is based upon data secured from the individual jurisdictions and/or the Texas Municipal Reports. Such figures do not indicate the tax burden levied by the applicable taxing jurisdictions for operation and maintenance or for other purposes. The City has not independently verified the accuracy or completeness of the information shown below except for amounts related to the City. Overlapping Taxing Jurisdiction Debt as of 3-15-91 Percent Amount Brazoria County $ 3,790,000 6.30% $ 238,770 Clear Creek I.S.D. 77,305,000(a) 1.10 850,355 Harris County 166,695,000 .05 83,348 Harris County Toll Road 550,000,000 .05 275,000 Harris County Flood Control 298,970,000 .05 149,485 Pearland I.S.D. 33,772,000(b) 60.91 20,570,525 Port of Houston 108,180,000 .05 54,090 Harris County Department of Education 285,000 .05 143 TOTAL ESTIMATED OVERLAPPING DEBT $22,221,716 The City 19,764,392 TOTAL DIRECT AND ESTIMATED OVERLAPPING DEBT $41,986,108 (a) Includes $23,000,000 Unlimited Tax School Building Bonds, Series 1991 selling on 3-4-91. (b) Includes $1,500,000 Unlimited Tax School Building Bonds, Series 1991 sold on 2-28-91. Debt Ratios: Direct and Overlapping Direct Debt Debt Per 1990 Certified Assessed Valuation ($575,624,520) 3.43% 7.29% Per Capita (18,697) $1,057 $2,246 9 TAX DATA General: One of the City's principal sources of operational revenue and its principal source of funds for debt service payments is the receipts from ad valorem taxation. See"FINANCIAL OPERATIONS OF THE DISTRICT - Sources of Revenue". The following is a recapitulation of (a) the Texas Property Tax Code, including methodology,limitations,remedies and procedures;(b)historical analysis of collection and trends of tax receipts and provisions for delinquencies; and (c) an analysis of the tax base, including relative property composition, principal taxpayers and adequacy of the tax base to service debt requirements;and(d) taxation that may add to the City's taxpayers' tax costs. Property Tax Code and County-Wide Appraisal District: The Texas Property Tax Code (the "Property Tax Code") establishes for each county in Texas a single appraisal district with responsibility for recording and appraising property for all taxing units within the county, and a single appraisal review board,with responsibility for reviewing and equalizing the values established by the appraisal district. The Property Tax Code requires the appraisal district, by May 15 of each year, or as soon thereafter as practicable, to prepare appraisal records of property as of January 1 of each year based upon market value. The chief appraiser must give written notice before May 15, or as soon thereafter as practicable, to each property owner whose property value is appraised higher than the prior tax year or the value rendered by the property owner or whose property was not on the appraisal roll the preceding year or whose property was reappraised in the current tax year. Notice must also be given if ownership of the property changed during the preceding year. The appraisal review board has the ultimate responsibility for determining the value of all taxable property within the City; however, any property owner who has timely filed notice with the appraisal review board may appeal a final determination by the appraisal review board by filing suit in a Texas district court. Prior to such appeal or any tax delinquency date,however, the property owner must pay the tax due on the value of that portion of the property involved that is not in dispute or the amount of tax imposed in the prior year,whichever is greater, or the amount of tax due under the order from which the appeal is taken. In such event, the value of the property in question will be determined by the court, or by a jury, if requested by any party. In addition taxing units, such as the City are entitled to challenge certain matters before the appraisal review board, including the level of appraisals of a certain category of property,the exclusion of property from the appraisal records or the grant in whole or in part of an exemption.A taxing unit may not,however,challenge the valuation of individual properties. Although the City has the responsibility for establishing tax rates and levying and collecting its taxes each year, under the Property Tax Code the City does not establish appraisal standards or determine the frequency of revaluation or reappraisal. The appraisal district is governed by a board of directors elected by the governing bodies of the county and all cities,towns,school districts and,if entitled to vote,the conservation and reclamation districts that participate in the appraisal district. The Property Tax Code requires each appraisal district to implement a plan for periodic reappraisal of property to update appraised values. Such plan must provide for reappraisal of all real property in the appraisal district at least once every three years. It is not known what frequency of reappraisals will be utilized by the Brazoria County Appraisal District or whether reappraisals will be conducted on a zone or county-wide basis. Tax Rate Limitations: Article XI, Section 5 of the Texas Constitution, provides for an overall limitation for Home Rule Cities of $2.50 per$100 assessed valuation. The Attorney General of Texas follows a policy,with respect to Home Rule Cities which have such a$2.50 limitation,of approving ad valorem tax bonds only to the extent that all of such city's ad valorem tax debt can be serviced by a tax rate of$1.50 at 90% collection. Property Subject to Taxation by the City: Except for certain exemptions provided by Texas law, all real and tangible personal property and certain categories of intangible personal property with a tax situs in the District is subject to taxation by the District; however,no effort is expected to be made by the Brazoria County Appraisal District to include on the tax roll tangible or intangible personal property not devoted to commercial or industrial use. Principal categories of exempt property include: property owned by the State of Texas or its political subdivisions, property used for public purposes; property exempt from ad valorem taxation by federal law, certain household goods, family 10 supplies, and personal effects; farm products owned by the producer; certain property owned by charitable organizations,youth development associations,religious organizations,and qualified schools;designated historical sites; solar and wind-powered energy devices; most individually-owned automobiles; and property of disabled veterans, only to the extent of$3,000 of taxable property. In addition, taxpayers who are over 65 years of age are entitled to apply for an additional exemption from market value of their residential homestead of$25,000. These over 65 exemptions and disabled veterans exemptions amounted to $16,843,390 from the 1990 tax roll. Voters of the State of Texas cast ballots on November 3, 1981, approving a state constitutional amendment which permits local governments the option of granting homestead exemptions of up to 20% of market value thereafter. The City has elected not to grant this additional exemption for the 1990 tax year. An eligible owner of agricultural and timberland may apply to have such properties which meet certain requirements appraised on the basis of productivity value or market value, whichever is less. The loss of value due to property values based on productivity value on the 1990 tax roll approximate $18,681,170. On November 7, 1989, voters of the State of Texas approved an amendment to the constitution of the State of Texas which authorizes a property tax exemption for certain business personal property. The City Council has the option to take official action to override the exemption and to continue taxing the property exempted by the amendment. On December 11, 1989, the City's City Council took such official action to tax the property in 1990 and to disallow the exemption for 1991 and all future years. The City Council may elect to allow the exemption in subsequent years which could result in a reduction of the City's tax base. Notice and Hearing Procedures: The Property Tax Code establishes procedures for providing notice and the opportunity for a hearing for taxpayers in the event of certain proposed tax increases and provides for taxpayer referenda which could result in the repeal of certain tax increases.The Property Tax Code also establishes a procedure for notice to property owners of reappraisals reflecting increased properly values over $1,000, appraisals which are higher than renditions, and appraisals of property not previously on an appraisal roll. Levy and Collection of Taxes: The City is responsible for the collection of its taxes, unless it elects to transfer such functions to another governmental entity. By September 1 of each year, or as soon thereafter as practicable, the rate of taxation is set by the City Council of the City based upon the valuation of property within the City as of the preceding January 1 and the amount required to be raised for debt service, maintenance purposes and authorized contractual obligations. The City Council may under certain circumstances be required to advertise and hold a public hearing within the City on a proposed tax rate before the City Council can hold a public meeting to vote on the tax rate. If the tax rate adopted exceeds by more than 8%the rate needed to pay debt service and certain contractual obligations and to produce, when applied to the property which was on the prior year's roll, the prior year's total taxes levied for purposes other than debt service and such contractual obligations,such excess portion of the levy may, subject to constitutional restrictions on the impairment of existing obligations be repealed at an election within the City held upon petition of 10% of the City's qualified voters. Taxes are due on receipt of the tax bill, and become delinquent after January 31 of the following year, or on the first day of the calendar month next following the expiration of twenty-one (21) days after mailing of the tax bills, whichever occurs later. A delinquent tax account incurs an initial penalty of six percent (6%) of the amount of the tax and accrues an additional penalty of one percent(1 %) per month up to July 1,at which time the total penalty becomes twelve percent(12%).In addition,delinquent taxes accrue interest at one percent(1%) per month.If the tax is not paid by July 1,an additional penalty of up to fifteen percent (15%) may under certain circumstances be imposed by the City. The Property Tax Code also makes provision for the split payment of taxes, discounts for early payments, partial payments of taxes and the postponement of the delinquency date of taxes under certain circumstances, however, the City does not permit such payments, except for those over 65 as stated in the new revision of the State Property Tax Code. 11 Collection of Delinquent Taxes: Taxes levied by the City are a personal obligation of the property on January 1 of the year for which the tax is imposed. On January 1 of each year, a tax lien attaches to property to secure the payment of all taxes, penalties and interest ultimately imposed for the year on the property.The lien exists in favor of the State and each taxing unit, including the City, having the power to tax the property.The City's tax lien is on a parity with tax liens of all other such taxing units.A tax lien on real property has priority over the claim of most creditors and other holders of liens on the property encumbered by the tax lien,whether or not the debt or lien existed before the attachment of the tax lien. In the event a taxpayer fails to make timely payment of taxes due the City, the City may file suit to foreclose its lien securing payment of the tax, to enforce personal liability for the tax,or both. Whether a lien of the United States is on a parity with or takes priority over a tax lien of the City is determined by applicable federal law. In the absence of such federal law, the City's tax lien takes priority over a tax lien of the United States. The ability of the City to collect delinquent taxes by foreclosure may be adversely affected by the amount of taxes owed to other taxing units, the foreclosure sale price attributable to market conditions,the taxpayer's right to redeem the property within two years of foreclosure,or by bankruptcy proceedings which restrain the collection of a taxpayer's debts. Historical Analysis of Tax Collection: - Collection Ratios - Tax Rate % of Collections Tax Assessed Per $100 of Adjusted Current Current and Fiscal Year Year Valuation Assessed Valuation Tax Levy Year Prior Years Ending 9-30 1985 $591,810,120 $0.600 $3,544,618 96.92 98.79 1986 1986 554,727,670 .700 3,902,598 96.99 99.07 1987 1987 558,4'77,970 .735 4,103,794 96.97 99.06 1988 1988 562,461,502 .825 4,640,320 98.04 100.24 1989 1989 576,486,290 .825 4,756,012 97.45 98.86 1990 1990 575,624,520 .800 4,604,996 (a) (a) 1991 (a) In process of collection. - Tax Rate Distribution - 1990 1989 1988 1987 1986 1985 Maintenance $0.378 $0.340 $0.310 $0.275 $0.246 $0.269 Debt Service .422 .485 .515 .460 .454 .331 Total $0.800 0.825 0.825 0.735 0.700 $0.600 12 dill. AIMS - Analysis of Delinquent Taxes - The following is an analysis, by tax year, of taxes delinquent as of September 30, 1990. Uncollected Adjusted Percentage Tax Year as of September 30, 1990 Tax Levy of Tax Levy 1989 $112,877 $4,756,012 2.37% 1988 64,748 4,640,320 1.40 1987 46,006 4,103,794 1.12 1986 25,806 3,902,598 .66 1985 12,629 3,544,618 .36 1984 6,952 3,145,445 .22 1983 10,930 2,842,011 .38 1982 1,402 2,729,115 .05 1981 768 2,042,409 .04 1980 564 1,879,362 .03 1979 & Prior 1.227 (a) (a) $283,909 (a) Various levies & percentages. - Delinquent Tax Collection Procedures - In addition to the legal procedures and penalties described under"Authority for Taxation',the City retained a Delinquent Tax Attorney on a contract basis to file suit to collect delinquent taxes due the City. The fees due such attorney for acting as Delinquent Tax Attorney are payable from an additional penalty imposed upon the delinquent taxpayer, not to exceed 15% of the tax due. Analysis of Tax Base: - Tax Base Distribution - 1990 Tax Roll 1989 Tax Roll Type of Property Amount % Amount % Residential $377,044,890 61.69% $367,782,560 63.80% Acreage 37,219,370 6.09 37,390,970 6.49 Vacant Lots/Tracts 23,082,590 3.78 24,707,630 4.10 Farm & Ranch 2,571,840 .42 2,490,610 .43 Commercial 122,233,690 20.00 121,857,500 21.14 Industrial 27,716,620 4.54 27,617,140 4.79 Mineral Reserves 7,820 .01 12,180 .01 Utilities 19,920,410 3.26 19,726,270 3.42 Other 1.351.850 .22 1,299.780 .23 Gross Value $611,149,080 $602,884,640 Less: Exemptions (35,524,560)(a) (26,398,350) Net Value $575,624,529 $576,486,290 (a) Increase due to increase of over 65 exemption. 13 , AM. A0110 - Principal Taxpayers - Taxpayer Type of Property 1990 Tax Roll 1989 Tax Roll W.R. Grace Co. (Chance Collar & Homco) Oil Field Equipment $13,289,360 $11,191,290 Hausman - Banfield Prop. Apartments 8,637,250 8,880,350 Southwestern Bell Telephone Utility 8,127,950 7,972,470 Ron Carter Chevrolet Co. Automobile Dealership 6,586,680 4,858,500 Houston Lighting& Power Co. Utility 5,307,890 5,069,980 Whispering Winds, Ltd. & Assos. Apartments & Townhomes 5,161,960 5,161,960 Wal-Mart Shopping Center 5,086,470 4,949,550 Energy Coatings Company Pipe Coating & Storage 4,510,830 4,305,190 Windmill Park Apts. #1 & #2 Apartments 4,485,440 4,492,560 K-Mart Inc. Shopping Center 3387,190 3,787.190 Total Ten Principal Taxpayers .164,981,020 $60,669,040 Percentage Ten Principal Taxpayers Comprise of their Respective Tax Rolls 12.89% 10.52% - Tax Adequacy - Average Annual Debt Service Requirements based on Total New Debt Service (1991/2009) $1,932,523 Tax Rate of$0.354 per $100 assessed valuation against the 1990 Assessed Valuation, at 95% collection, produces $1,935,825 Maximum Annual Debt Service Requirements based on Total New Debt Service (in the year 1993) $2,350,825 Tax Rate of$0.43 per $100 assessed valuation against the 1990 Assessed Valuation, at 95% collection, produces $2,351,426 Estimated Overlapping Taxes: Under Texas law, if ad valorem taxes levied by a taxing authority become delinquent, a lien is created upon the property which has been taxed, which lien is on a parity with any tax lien on such property in favor of the City. In addition to ad valorem taxes required to retire the aforementioned direct and estimated overlapping debt, certain taxing jurisdictions including those mentioned in Estimated Overlapping Debt are also authorized by Texas law to assess, levy, and collect ad valorem taxes for operation, maintenance, administrative and/or general revenue purposes. Set forth below is an estimation of ad valorem taxes levied on a $50,000 single-family residence by such jurisdictions, assuming the assessments are made at their claimed basis of assessment (100%). Such residence is further assumed to be located within Brazoria County wherein substantially all of the residential property within the City is located. No recognition is given to local assessments for civic association dues, fire department contributions, or other charges made by other than political subdivisions. 1990 Tax Estimated Taxing Jurisdictions Rate/$100 1990 Tax Bill The City $0.800 $ 400.00 Brazoria County .265 132.50 Brazoria County Drainage District No. 4 .129 64.50 Pearland Independent School District 1.460 730.00 Estimated Total 1990 Tax Bill 52151 $1,327.00 14 Sales Tax: - Authority - The City has adopted the provisions of Article 1066c, Vernon's Texas Civil Statutes, as amended, which grants the City the power to impose and levy a 1% sales tax. The City may not pledge the proceeds from the Sales Tax as security for the Bonds. - Collection History - The State Comptroller, after deduction of a 2% service fee, currently remits the City's portion of sales tax collections monthly. By statute the Comptroller is required to remit at least twice annually. The following is an analysis of the collection history of the City's sales tax: Ad Valorem Taxation Comparisons Fiscal Year Sales Tax Equivalent Tax Rate % of Actual Ended 9-30 Receipts Tax Year Equivalent Tax Levy 1980 $ 863,670 (1Q79) $0.534 56.20% 1981 1,075,582 (1980) 0.612 57.51 1982 1,133,869 (1981) 0.344 55.52 1983 820,623 (1982) 0.301 30.69 1984 1,107,194 (1983) 0.265 38.96 1985 1,133,396 (1984) 0.263 36.25 1986 991,896 (1985) 0.168 28.04 1987 943,940 (1986) 0.170 24.19 1988 1,150,291 (1987) 0.206 28.03 1989 1,212,455 (1988) 0.216 26.13 1990 1,460,341 (1989) 0.254 30.71 15 SELECTED FINANCIAL DATA Historical Operations of the City's General Fund: The following is a condensed statement of revenues and expenses of the City's General Fund for the past five fiscal years. The inclusion of the following table is not intended to imply that any revenues of the City,other than receipts from ad valorem taxes as provided in the Ordinance, are pledged to pay principal and interest on the Bonds. Fiscal Year Ended September 30. 1990 1989 1988 1987 1986 REVENUES General Property Taxes $1,990,236 $1,838,580 $1,528,117 $1,450,072 $1,652,899 Penalties & Interest 57,895 71,420 60,303 51,579 56,351 Sales Taxes 1,460,341 1,212,455 1,150,291 943,940 991,896 Franchises 693,302 642,180 623,632 581,617 629,038 Licenses & Permits 267,962 139,418 143,198 138,998 112,553 Interest 213,659 161,323 63,184 69,865 89,699 Sanitation (a) (a) 858,071 838,298 860,379 Fines & Forfeitures 212,538 265,062 234,687 231,117 225,674 Intergovernmental -0- -0- 12,500 15,368 138,030 Miscellaneous 194.803 175.776 200.754 200.742 41.000 Total Revenues $5,090,730 $4,506,214 $4,874,737 $4,521,596 $4,797,519 EXPENDITURES General Government $1,104,528 $1,004,376 $ 1,055,090 $1,163,619 $1,047,947 Police 1,385,354 1,296,526 1,317,699 1,287,421 1,183,047 Fire 112,677 108,912 133,134 229,210 97,017 Public Safety 281,113 307,938 324,372 249,250 192,577 Streets & Drainage 751,594 585,833 746,677 601,056 837,894 Sanitation (a) (a) 560,141 636,330 643,380 Public Works 425,159 383,850 525,066 582,421 662,622 Community Services 413.879 350.476 394.294 419.405 508.331 Total $4,474,302 $4,037,911 $5,056,473 $5,168,712 $5,172,815 (a) Sanitation revenues and expenditures reported in Enterprise Fund beginning October 1, 1988. General Fund and Debt Service Fund Balance for the Past Five Fiscal Years: Fiscal Year Ended September 30, 1990 1989 1988 1987 1986 General Fund $2,021,098 $1,062,052 $ 271,347 $ 203,083 $ 656,805 Debt Service Fund $ 893,878 $ 764,512 $ 622,168 $ 539,571 $ 444,267 16 i f Pension Fund: The City participates in the Texas Municipal Retirement System (TMRS), an agency operated by the State of Texas. Employees of municipal governmental entities who participate in TMRS contribute a fixed percentage, currently 5%of their gross pay,and the municipal employer contributes twice such sum to TMRS. As employees leave municipal employment other than through retirement, they may withdraw from TMRS those funds they contributed, but forfeit their employer's contributions. Each municipal employer's requirements for current contributions are offset by the amounts of such forfeitures. As of March 1, 1990, the City employed 134 full-time employees and 8 part-time employees. All full-time employees are covered by TMRS and the City's contribution for this fiscal year as of September 30, 1989, amounted to approximately$144,239 which includes amortization of prior service cost over 25 years. The City had an unfunded accrued liability for prior service benefits in the amount of approximately $831,965 as of September 30, 1989. The liability for prior service benefits will be amortized over a period of twenty-five years of less by contributions from the City which are a level percentage of payroll. Financial Statement$: A copy of the City's Financial Statements for the fiscal year ended September 30, 1990, is attached hereto in the APPENDIX B. Copies of such statements for preceding years are available, for a fee, upon request. ADMINISTRATION OF THE CITY Mayor and City Council: Policy-making and supervisory functions are the responsibility of and are vested in the Mayor and City Council fo the City, under provisions of the "Charter of the City of Pearland" (the "Charter") approved by the electorate February 6, 1971. The Council is elected at large on the first Saturday in May. The Mayor and five Council members serve three-year staggered terms. The Mayor is entitled to vote only in the event of a tie and has no power to veto Council action. Members of the Council are described below: Council Members Period Served May Term Expires Occupation C.V. (Vic) Coppinger 1 year 1993 Chairman/President Mayor Westside National Bank David L. Smith, Jr. 3 years 1991 Real Estate Broker Mayor Pro Tem Richard F. Tetens 6 years 1991 Vice President, Council Member Omsco Industries Inc. DA. Miller Jr. 2 years 1992 Professor Council Member Alvin Community College William E. Wolff 3 years 1992 Retired Council Member Randy Weber 1 year 1993 Owner, Council Member Weber's Air & Heat 17 Administration_ Under provisions of the Charter, the Council enacts local legislation, adopts budgets, determines policies and appoints the City Manager, who is charged with the duties of executing the laws and administering the government of the City. As the chief executive officer and head of the administrative branch of the City government, the City Manager is given the power and duties to: (1) Appoint and remove all department heads and all other employees in the administrative service of the City and may authorize the head of a department to appoint and remove subordinates in his respective department; (2) Prepare the budget annually, submit it to Council, and be responsible for its administration; (3) Prepare and submit to Council a complete report on the finances and administrative activities of the City; (4) Keep Council advised of the financial condition and future needs of the City and make appropriate recommendations; and (5) Perform such other necessary duties as prescribed by the Charter or required by Council. Members of the administrative staff are described below: City Manager - James O. DeShazer - Mr. DeShazer has served as the Acting City Manager of Pearland since January 16, 1990 and was appointed City Manager August 30, 1990. He was also employed by the City from December, 1972 to July, 1982 as the City's Tax Assessor/Collector and Assistant City Manager. Mr. DeShazer majored in Business Management with elective in Accounting at University of Tulsa. He also attended the Murray State School of Agriculture of Tishomingo, Oklahoma from 1950 to 1952. Mr. DeShazer is a Certified Texas Assessor (C.TA.) and a Registrered Professional Appraiser (R.PA.) Director of Finance - Janet S. Eastburn - Ms. Eastburn has served as Director of Finance since April 1, 1986. She was appointed to Assistant Director of Finance in 1982 and has been employed in the City's Finance Department for 20 years. For the past three years the City has received from the Government Finance Officers Association of the United States and Canada the"Distinguished Budget Presentation Award",and since 1976 the "Certificate of Achievement for Excellance in Financial Reporting." Janet is currently attending the University of Houston Clear Lake. She is also a member of the Gulf Coast Chapter of Government Finance Officers Association, Government Finance Officers Association of Texas,and Government Finance Officers Association of the United States and Canada. Tax Assessor/Collector - Barbara J. Lenamon- Ms. Lenamon has been the Tax Assessor/Collector of the City since 1982, has been employed by the City since 1974 and has nineteen (19) years experience in taxation. She is a Certified Texas Assessor (C.TA.) and a Registered Professional Assessor (R.PA.). Ms. Lenamon is a member of Texas Association of Assessing Officers (TAA.O.) and the Texas Association of Municipal Tax Administrators (TA.M.TA.). She received an Associate Degree in General Business from Alvin Community College in 1960 and holds a real estate license in Texas. Consultants: The City has retained several consultants to perform professional services in connection with the independent auditing of its books and records and other City activities. Several of these consultants are identified below: Bond Counsel Vinson & Elkins Houston, Texas Certified Public Accountants Earl Lairson & Co. Houston, Texas 18 LEGAL MATTERS Legal Opinions: The City will furnish the Underwriter a transcript of certain certified proceedings prepared incident to the authorization and issuance of the Bonds, including a certified copy of the unqualified approving opinion of the Attorney General of Texas,as recorded in the Bond Register of the Comptroller of Public Accounts of the State of Texas, to the effect that the Bonds, which the Attorney General will have examined, are valid and binding obligations of the City under the Constitution and laws of the State of Texas. The City also will furnish the approving legal opinion of Vinson&Elkins,Bond Counsel,to the effect that,based upon an examination of such transcript, the Bonds are valid and binding obligations of the City under the Constitution and laws of the State of Texas. The legal opinion of Bond Counsel will further state that the Bonds are payable,both as to principal and interest, from the levy of ad valorem taxes, within the limits prescribed by law, against taxable property within the City. The opinion of Bond Counsel is expected to be reproduced on the back panel of the Bonds over a certification by the City Secretary attesting that such legal opinion is dated as of the date of delivery of and payment for the Bonds and is a true and correct copy of the original opinion. Errors or omissions in the printing of such legal opinion on the Bonds shall not affect the validity of the Bonds nor constitute cause for the failure or refusal by the Underwriter to accept delivery of and pay for the Bonds. No-Litigation Certificate: The City will furnish to the Underwriter a certificate,dated as of the date of delivery of the Bonds,executed by an authorized officer of the Board, to the effect that no litigation of any nature has been filed or is then pending or threatened,either in state or federal courts,contesting or attacking the Bonds;restraining or enjoining the issuance, execution or delivery of the Bonds;affecting the provisions made for the payment of or security for the Bonds; in any manner questioning the authority or proceedings for the issuance,execution, or delivery of the Bonds; or affecting the validity of the Bonds. No Material Adverse Change: The obligations of the Underwriter to take and pay for the Bonds, and of the City to deliver the Bonds, are subject to the condition that, up to the time of delivery of and receipt of payment for the Bonds, there shall have been no material adverse change in the condition(financial or otherwise)of the City subsequent to the date of sale from that set forth or contemplated in the Preliminary Official Statement, as it may have been supplemented or amended through the date of sale. TAX MATTERS Tax Exemption: In the opinion of Vinson& Elkins, Bond Counsel, (i) interest on the Current Interest Bonds is excludable from gross income for federal income tax purposes under existing law, ( ii) certain "original issue discount" on the Capital Appreciation Bonds is excludable from gross income for federal income tax purposes under existing law as described more fully in "Tax Accounting Treatment of Capital Appreciation Bonds" and (iii) the Bonds are not"private activity bonds"under the Internal Revenue Code of 1986, as amended(the"Code"), and interest on the Bonds is not subject to the alternative minimum tax on individuals and corporations, except as described below in the discussion regarding the "adjusted net book income" and "adjusted current earnings" adjustments for corporations. 19 The Code imposes a number of requirements that must be satisfied for interest on state or local obligations, such as the Bonds, to be excludable from gross income for federal income tax purposes. These requirements include limitations on the use of bond proceeds and the source of repayment of bonds, limitations on the investment of bond proceeds prior to expenditure,a requirement that excess arbitrage earned on the investment of bond proceeds be paid periodically to the United States and a requirement that the issuer file an information report with the Internal Revenue Service. The City has covenanted in the Bond Ordinance that it will comply with these requirements. Bond Counsel's opinion will assume continuing compliance with the covenants of the Bond Ordinance pertaining to those sections of the Code which affect the exclusion from gross income of interest on the Bonds for federal income tax purposes and,in addition,will rely on representations by the City with respect to matters solely within the knowledge of the City,which Bond Counsel has not independently verified. If the City should fail to comply with the covenants in the Bond Ordinance or if the foregoing representations should be determined to be inaccurate or incomplete, interest on the Bonds could become taxable from the date of delivery of the Bonds, regardless of the date on which the event causing such taxability occurs. The Code imposes a 20% alternative minimum tax on the "alternative minimum taxable income" of a corporation(other than any S corporation,regulated investment company,REIT,or REMIC),if the amount of such alternative minimum tax is greater than the amount of the corporation's regular income tax.The"Superfund Revenue Act of 1986"also imposes an additional .12%"environmental tax"on the alternative minimum taxable income of a corporation in excess of$2,000,000. Generally,for taxable years beginning in 1989, a corporation's alternative minimum taxable income includes 50% of the amount by which a corporation's "adjusted net book income" exceeds its alternative minimum taxable income. For later taxable years, a corporation's alternative minimum taxable income will include 75% of the amount by which a corporation's "adjusted current earnings" exceeds its alternative minimum taxable income.Because interest on tax-exempt obligations,such as the Bonds, is included in a corporation's"adjusted net book income"and"adjusted current earnings,"ownership of the Bonds could subject a corporation to alternative minimum tax consequences. Under the Code,taxpayers are required to report on their returns the amount of tax-exempt interest,such as interest on the Current Interest Bonds and original issue discount with respect to the Capital Appreciation Bonds, received or accrued during the year. Except as stated above(and as stated below in"Tax Accounting Treatment of Capital Appreciation Bonds") Bond Counsel will express no opinion as to any federal, state or local tax consequences resulting from the ownership of, receipt of interest on, or disposition of, the Bonds. Prospective purchasers of the Bonds should be aware that the ownership of tax-exempt obligations may result in collateral federal income tax consequences to financial institutions, life insurance and property and casualty insurance companies,certain S corporations with Subchapter C earnings and profits,individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations. In addition, certain foreign corporations doing business in the United States may be subject to the "branch profits tax" on their effectively-connected earnings and profits, including tax-exempt interest such as interest on the Current Interest Bonds and original issue discount with respect to the Capital Appreciation Bonds.These categories of prospective purchasers should consult their own tax advisors as to the applicability of these consequences. QUALIFIED TAX-EXEMPT OBLIGATIONS Under section 265 of the Code, no deduction is allowed in the calculation of the federal income tax of a financial institution for the portion of such financial institution's interest expense paid or incurred on indebtedness which is deemed under the Code to have been incurred or continued to acquire or carry an investment in tax-exempt obligations acquired after August 7, 1986. An exception to the foregoing provision is provided in the Code for"qualified tax-exempt obligations,"which includes tax-exempt obligations,such as the Bonds, if such obligations are (a) designated by the issuer as"qualified tax-exempt obligations" and (b) issued by a political subdivision for which the aggregate amount of tax-exempt obligations(not including private activity bonds other than"qualified 501(c)(3)bonds")to be issued by such political subdivision and all entities aggregated with the issuer under the Code during the calendar year is not expected to exceed $10 million. 20 Y % The City expects to designate the Certificates as"qualified tax-exempt obligations"and has represented that the aggregate amount of tax-exempt bonds(including the Bonds)issued by the City and the entities aggregated with the City under the Code during calendar year 1990 is not expected to exceed$10 million and that the City and entities aggregated with the City under the Code have not designated more than $10 million in "qualified tax-exempt obligations" (including the Bonds) during calendar year 1990. Notwithstanding the applicability of this exception,the fmancial institutions acquiring the Bonds will continue to be subject to rules in effect under prior law which disallows the deduction of 20 percent of the interest expense allocable to tax-exempt obligations, including the Bonds. GENERAL CONSIDERATIONS Sources and Compilation of Information: The information contained in this Official Statement has been obtained primarily from the City and from other sources believed to be reliable. No representation is made as to the accuracy or completeness of the information derived from sources other than the City.The summaries of the statutes,orders, and other related documents are included herein subject to all of the provisions of such documents. These summaries do not purport to be complete statements of such provisions and reference is made to such documents for further information. The information contained in this Official Statement in the section entitled "APPENDIX B Financial Statements of the City" has been provided by Earl Lairson& Co., Certified Public Accountants, and has been included herein in reliance upon their authority as an expert in the fields of auditing and accounting. Bond Counsel has reviewed the information herein contained under the captions "THE CERTIFICATES," "LEGAL MATTERS," and "TAX MATTERS," solely to determine whether such information fairly and accurately describes the Certificates,the Ordinance,and the law set out therein. Bond Counsel has neither independently verified other factual information contained in this Official Statement nor conducted an investigation of the affairs of the City for the purpose of passing upon the accuracy or completeness of this Official Statement.No person is entitled to rely upon the limited participation of such firms as an assumption of responsibility for, or an expression of opinion of any kind with regard to, the accuracy or completeness of any of the other information contained herein. Certification as to Official Statement: At the time of payment for and delivery of the Bonds, the City will furnish the Purchaser a certificate, executed by the City Secretary and Mayor,acting in their official capacities,to the effect that to the best of their knowledge and belief: (a) the descriptions and statements of or pertaining to the City contained in this Official Statement,on the date thereof and on the date of delivery were and are true and correct in all material respects; (b)insofar as the City and its affairs,including its financial affairs,are concerned,this Official Statement did not and does not contain an untrue statement of a material fact or omit to state a material fact required to be stated herein or necessary to make the statements herein,in the light of the circumstances under which they were made, not misleading; and (c) insofar as the descriptions and statements, including financial data contained in this Official Statement, of or pertaining to entities other than the City and their activities are concerned, such statements and data have been obtained from sources which the City believes to be reliable and that the City has no reason to believe that they are untrue in any material respect. Updating of Official Statement: The City will keep the Official Statement current by amendment or sticker to reflect material changes in the affairs of the City and,to the extent that information comes to its attention,in the other matters described in the Official Statement,until the delivery of the Certificates. All changes in the affairs of the City and other matters described in the Official Statement subsequent to the delivery of the Certificates and all information with respect to the resale of the Certificates shall be the responsibility of the Purchaser. 21 d► + This Official Statement was duly authorized and approved by the City Council of the City of Pearland, as of the date specified on the first page hereof. /s/ Mayor City of Pearland ATTEST: /s/ City Secretary City of Pearland 22 • ' b APPENDIX A - Economic and Demographic Characteristics The following information has been derived from various sources, including the Texas Almanac, Texas Municipal Reports, U.S. Census data, Texas Department of Agriculture, "Sales Management Survey of Buying Power", and City officials. While such sources are believed to be reliable, no representation is made as to the accuracy thereof. - City Economics - The City of Pearland is a commercial center located in the northeast corner of Brazoria County, bordering the City of Houston to the north. The City is traversed by State Highway 35 and Farm-to-Market Road 518. The City's 1980 census was 13,248, increasing 105.6% since 1970. Because of the City's proximity to Houston, the area has experienced continuing growth in residential, commercial and some light industrial development. At present there are numerous subdivisions either developed or under construction with homes ranging in value from $40,000 to $125,000, the average being approximately $55,000. There are approximately 456 business establishments located within the City which are rated by Dun and Bradstreet. Three banks within the City held combined deposits of$155,742,351 as of December 31, 1989, up from $138,640,930 of a year earlier. - Building Permits - (Source - City of Pearland) Residential Commercial Other Total Value Total Value Total Value Total Value 1973 140 $ 5,253,000 20 $ 511,750 130 $ 390,405 290 $ 6,155,155 1974 117 4,310,900 19 1,171,700 144 496,428 280 5,979,028 1975 237 9,501,800 170 2,844,800 156 1,142,600 563 13,489,200 1976 295 14,188,100 268 5,471,893 197 1,109,387 760 20,769,380 1977 386 21,489,824 31 2,759,699 282 3,514,385 698 27,763,908 1978 491 23,298,945 160 8,414,422 270 3,113,533 921 34,826,900 1979 207 13,024,664 36 7,150,700 386 2,167,264 629 22,342,628 1980 94 7,485,570 18 2,204,200 495 3,007,071 607 12,696,841 1981 67 5,950,754 21 7,589,359 359 8,613,123 447 22,153,236 1982 113 8,240,600 28 3,353,835 309 5,588,377 450 17,182,812 1983 300 23,873,350 19 6,760,800 279 4,117,281 598 34,751,431 1984 231 18,135,848 31 6,314,418 328 12,329,177 590 36,779,443 1985 139 18,018,608 41 2,781,094 300 3,424,632 480 24,224,334 1986 129 11,738,284 45 3,128,100 540 3,262,872 714 18,129,256 1987 58 6,062,000 11 364,832 155 522,330 224 6,949,162 1988 403 16,537,601 59 1,725,431 119 566,734 581 18,829,766 1989 372 15,493,010 47 2,022,386 138 20,791,944 557 38,307,340 Mineral Production: According to the Texas Mid-Continent Oil and Gas Association, Brazoria County in 1986 produced 6.6 million barrels of crude oil and 78.5 billion cubic feet of natural gas,ranking 20th in State production with a combined total oil and gas value of$218.7 million. Agriculture: According to the"Texas Crop and Livestock Reporting Service",1985 cash receipts from agriculture totaled$41.5 million, of which crops contributed $24.5 million and livestock and livestock products contributed $20.7 million. In 1985 the County ranked third statewide in rice production with 2.0 million CWT and fourth statewide in 1984 with 1.1 million CWT, and is one of the State's leading counties in beef cattle production. Also contributing to the agricultural economy are grain sorghums, hay, wheat, oats, corn, soybeans, cotton, fruits, vegetables and pecans. In 1984, Brazoria County produced 4,400 bushels of oats and 78,000 bushels of all wheat. As of 1-1-86, there were 58,000 head of cattle on ranches. Manufacturing and Commerce: Employment in the County is provided by the extensive petro-chemical industry and includes the following other industries: railroad tank cars,fabricated steel products,sulphur products,concrete,mattress and upholstery,printing, sheet metal and machine works, seafood processing, instruments and valve systems, and various others. (Source: Texas Municipal Report and Brazosport Industrial Committee.) Also adding to the general economy of the county are fishing,tourism and recreation activities and agribusiness. Varner-Hogg State Park attracts approximately 50,000 to 85,000 visitors during each season. The Gulf Intracoastal Waterway comes through the lowlands near Surfside Beach and is an important waterway in America with reported annual tonnage compared to the Panama Canal and Suez Canal. - Bank Deposits for City of Pearland - (Source - Texas Banking Red Book) 12-31-1989 12-31-1988 12-31-1987 12-31-1986 12-31-1985 12-31-1984 12-31-1983 Pearland State Bank $ 80,106,851$ 72,396,348$ 70,953,000 $ 65,571,667$ 65,331,819$ 65,038,517$ 60,853,982 First National Bank 32,508,913 29,602,406 28,933,296 29,948,197 27,092,861 26,513,108 28,274,572 West Side National 43,126,587 36,642,176 31.490.813 29,382,923 24,071,909 19.930.059 11.270.114 Total $155,742,351$138,640,930$131,377,109 $124,902,787$116,496,589$111,481,684$100,398,668 Industrial activities within the City and surrounding area include the manufacturing of pipe, concrete building materials, mining equipment, lighting fixtures, large storage tanks and the fabrication and forging of steel. The following is a list of the major industrial employers located within the City. Name Product Employment Aggreko, Inc. Rental of heavy industrial equipment 40 Chance Collar Co. Oilfield equipment 150 Chappell Instrument Corp. General machining job shop 42 Column's Column manufacturing 20 Davis-Lynch Inc. Oilfield specialties 100 Energy Coatings Enameling & coating pipe 100 Gate Concrete Precast & prestressed concrete floor & roof slabs 25 Homco International Inc. Oilfield equipment 87 Koza's Custom Cresting Embroidering for trade, silk screen printing of textiles 50 Markload Systems Electronic 23 Metec Thermal spray powder 20 NRG Products Fabrication of wire mesh 80 Packing Service Co., Inc. Solvents & chemicals 50 Pauluhn Electric Co. Marine lighting 120 Plating & Finishing Corp. Metal finishing; electroplating 10 Replacement Parts Corp. Special mechanical packing 27 Texas Honing Inc. Honed metal tubing 25 West Mfg. Co., Inc. L.R. Aluminum shutters 20 Tri-State Oil Tools Oilfield equipment service 12 Beam Systems Offshore marine equipment 10 Imperial Trucking Grain haulers 75 Atlas Wireline Services Oilfield equipment service 50 Brazoria County, (the"County) is a Gulf Coast county comprising the Brazoria Primary Metropolitan Statistical Area, which is a component of the Houston-Galveston-Brazoria CMSA. The economy is based on mineral production,manufacturing and agriculture. In 1980,the County had a population of 169,587,an increase of 56.6 since 1970. According to the Texas Almanac, 1986-87, the County was created in 1836 and organized in 1837 from the Municipality of Brazoria,which name is derived from the Brazos River. It averages approximately$642 million per year from income oil, gas, magnesium, salt, stone, sand and gravel and has produced nearly a billion barrels of oil since 1902. Also,it averages approximately$45 million per year from agriculture,55%from rice,sorghums,soybeans, and commercial turf, and 45% from livestock. w a Draft III: 3/11/91 This Official Notice of Sale does not alone constitute an invitation for bids but is merely notice of sale of the obligations described herein. The invitation for bids on such Certificates is being made by means of this Official Notice of Sale, the Official Bid Form and the Official Statement. Prospective purchasers are urged to carefully examine all the documents to determine investment quality of the Certificates. OFFICIAL NOTICE OF SALE $2,125,000 THE CITY OF PEARLAND (Brazoria and Harris Counties,Texas) COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION,SERIES 1991 THE SALE CERTIFICATES OF OBLIGATION OFFERED FOR SALE AT COMPETITIVE BID: The City Council(the "Council") of the City of Pearland (the "City") is offering for sale at competitive bid its $2,125,000 Combination Tax and Revenue Certificates of Obligation, Series 1991 (the "Certificates"). PLACE AND TIME OF SALE: The Council will receive sealed bids at the City Hall, 3519 Liberty Drive, Pearland,Texas 77581 until 7:30 P.M.,C.D.S.T.,Monday,April 8, 1991, and the bids will be opened and publicly read. Sealed bids, which must be submitted in duplicate on the Official Bid Form and plainly marked "Bid for Certificates," are to be addressed to "Mayor and City Council, City of Pearland, Texas." All bids must be delivered at the above address prior to the above-scheduled time. Any bid received after such scheduled time for bid opening will not be accepted and will be returned unopened. AWARD OF THE CERTIFICATES: The Council will take action to award the Certificates (or reject all bids) at a regular meeting of the City Council on the date of the bid opening, and will adopt an ordinance authorizing the Certificates and approving the Official Statement(the"Ordinance"). The City reserves the right to reject any or all bids and to waive any irregularities. THE CERTIFICATES DESCRIPTION: The Certificates will be dated May 1, 1991 and interest will be calculated on the basis of a 360-day year of twelve 30-day months. Interest on the Certificates will be paid on March 1, 1992, and semiannually on September 1 and March 1 of each year thereafter until maturity or prior redemption. The Certificates are subject to redemption prior to their scheduled maturities on March 1, 2001, or any date thereafter,at the option of the City. Upon redemption the Bonds will be payable at a price equal to the principal amount thereof plus accrued interest to the date of redemption. The Certificates will be issued in fully registered form in principal amounts of$5,000 or any integral multiple thereof. Principal and semiannual interest will be paid by First City, Texas - Houston, NA., Houston, Texas the Paying Agent/Registrar. Interest will be paid by check dated as of the interest payment date and mailed on or before each interest payment date by the Paying Agent/Registrar to the registered owner appearing on the Paying Agent/Registrar's books on the Record Date (hereinafter defined). Principal will be paid to the registered owners at maturity upon presentation of the Certificates to the Paying Agent/Registrar. The Certificates will mature in each year as follows: Maturity Date Principal Amount March 1, 1992 $ 50,000 March 1, 1993 90,000 March 1, 1994 90,000 March 1, 1995 110,000 March 1, 1996 115,000 March 1, 1997 100,000 March 1, 1998 135,000 March 1, 1999 140,000 March 1, 2000 150,000 March 1, 2001 165,000 March 1, 2002 170,000 March 1, 2003 180,000 March 1, 2004 200,000 March 1, 2005 210,000 March 1, 2006 220,000 I' r`` s s 4 t' PAYING AGENT/REGISTRAR: The initial Paying Agent/Registrar shall be First City,Texas-Houston NA, Houston, Texas (see "Paying Agent/Registrar" in Official Statement). SOURCE OF PAYMENT: The Certificates are direct obligations of the City, and the principal thereof and interest thereon are payable from the proceeds of an annual ad valorem tax levied upon all taxable property within the City, within the limits prescribed by law and will be further payable from a junior and subordinate pledge of the net revenues of the City's waterworks and sewer system in an amount not to exceed S10,000 of such net revenues per annum. Further details with reference to the Certificates are set forth in the Official Statement. CONDITIONS OF THE SALE TYPES OF BIDS AND INTEREST RATES: The Certificates will be sold in one block on an "All or None" basis, and at a price of not less than their par value plus accrued interest to the date of delivery of the Certificates. Bidders are invited to name the rate(s) of interest to be borne by the Certificates, provided that each rate bid must be in a multiple of 1/8 of 1% or 1/20 of 1% and the net effective interest rate for the Certificates (calculated in the manner required by Texas Revised Civil Statutes Annotated Article 717k-2, as amended)must not exceed 15%. The highest rate bid may not exceed the lowest rate bid by more than 1 1/2% in rate. No limitation is imposed upon bidders as to the number of rates or changes which may be used. All Certificates of one maturity must bear one and the same rate. No bids involving supplemental interest rates will be considered. Each bidder shall state in his bid the total interest cost in dollars and the net effective interest rate determined hereby,which shall be considered informative only and not as a part of the bid. BASIS OF AWARD: For the purpose of awarding sale of the Certificates, the interest cost of each bid will be computed by determining at the rate(s) specified therein, the total dollar cost of all interest on the Certificates from the date thereof to their respective maturities, using the table of Certificate Years herein, and deducting therefrom the premium bid, if any. Subject to the City's right to reject any or all bids and to waive any irregularities,the Certificates will be awarded to the bidder(the"Purchaser")whose complying bid,based on the above computation, produces the lowest net interest cost to the City. GOOD FAITH DEPOSIT: A Good Faith Deposit,payable to the"City of Pearland"in the amount of S42,500, is required. Such Good Faith Deposit shall be in the form of a Cashier's Check, which is to be retained uncashed by the City pending the Purchaser's compliance with the terms of his bid and the Notice of Sale and Bidding Instructions. The Good Faith Deposit may accompany the Official Bid Form or it may be submitted separately. If submitted separately, it shall be made available to the City prior to the opening of the bids, and shall be accompanied by instructions from the bank on which drawn which authorize its use as a Good Faith Deposit by the Purchaser who shall be named in such instructions. The Good Faith Deposit of the Purchaser will be returned on the date of delivery of the Certificates. No interest will be allowed on the Good Faith Deposit. In the event the Purchaser should fail or refuse to take up and pay for the Certificates in accordance with his bid, then said check shall be cashed and accepted by the City as full and complete liquidated damages. The checks accompanying bids other than the winning bid will be returned immediately after the bids are opened, and an award of the Certificates has been made. DELIVERY OF THE CERTIFICATES AND ACCOMPANYING DOCUMENTS CUSIP NUMBERS: It is anticipated that CUSIP identification numbers will appear on the Certificates, but neither the failure to print or type such number on any Certificates nor any error with respect thereto shall constitute cause for a failure or refusal by the Purchaser to accept delivery of and pay for the Certificates in accordance with the terms of this Notice of Sale and the terms of the Official Bid Form. All expenses in relation to the printing or typing of CUSIP numbers on the Certificates shall be paid by the City;provided,however,that the CUSIP Service Bureau fee for the assignment of the numbers shall be the responsibility of and shall be paid for by the Purchaser. ll • • INITIAL DELIVERY OF INITIAL CERTIFICATES: Initial Delivery will be accomplished by the issuance of registered Certificates in the aggregate principal amount of$2,125,000,payable to the Purchaser, signed by the Mayor and City Clerk of the City,approved by the Attorney General,and registered and manually signed by the Comptroller of Public Accounts. Initial Delivery will be at the corporate trust office of the Paying Agent/Registrar. Payment for the Certificates must be made in immediately available funds for unconditional credit to the City,or as otherwise directed by the City. The Purchaser will be given five(5) business days'notice of the time fixed for delivery of the Certificates. It is anticipated that Initial Delivery of the Initial Certificates can be made on or about May 8, 1991, and it is understood and agreed that the Purchaser will accept delivery and make payment for the Initial Certificates by 10:00 A.M., on May 8, 1991, or thereafter on the date the Certificates are tendered for delivery,up to and including June 10, 1991. If for any reason the City is unable to make delivery on or before June 10, 1991, then the City shall immediately contact the Purchaser and offer to allow the Purchaser to extend his offer for an additional fifteen (15) days. If the Purchaser does not elect to extend his offer within six(6) days thereafter,then his Good Faith Deposit will be returned, and both the City and the Purchaser shall be relieved of any further obligation. In no event shall the City be liable for any damages, whether direct, consequential or otherwise, by reason of its failure to deliver the Certificates. DELIVERY OF DEFINITIVE CERTIFICATES: Upon payment for the Initial Certificates at the time of the Initial Delivery,the Paying Agent/Registrar shall cancel the Initial Certificates,provided registration instructions have been received by the Paying Agent/Registrar, and shall register and deliver the registered definitive Certificates, in any integral multiple of $5,000 for any one maturity, in accordance with written instructions received from the Purchaser and/or members of the Purchaser's syndicate account. It shall be the duty of the Purchaser and/or members of the Purchaser's syndicate account to furnish to the Paying Agent/Registrar, at least five business days prior to the Initial Delivery,fmal written instructions designating the names in which the Certificatcs are to be registered, the addresses of the registered owners, the maturities, interest rates and denominations. The Paying Agent/Registrar will not be required to accept registration instructions after the fifth business day prior to Initial Delivery. If such instructions are not received within the specified time period, the cancellation of the Initial Certificates and delivery of registered definitive Certificates will be delayed until such instructions are received. CONDITIONS TO DELIVERY: The obligation of the Purchaser to take up and pay for the Certificates is subject to the Purchaser's receipt of(a) the legal opinion of Vinson&Elkins,Houston,Texas, Counsel for the City ("Bond Counsel"), (b) certificate to the effect that no litigation of any nature has been filed or is then pending to restrain the issuance and delivery of the Certificates, and (c) the certification as to the Official Statement, all as further described in the Official Statement. In order to provide the City with information required to enable it to comply with certain conditions of the Internal Revenue Code of 1986 relating to the exclusion of interest on the Certificates from the gross income of their owners,the Purchaser will be required to complete,execute,and deliver to the City a certification as to their"issue price"substantially in the form and to the effect attached hereto or accompanying this Notice of Sale. In the event the Purchaser will not reoffer the Certificates for sale or is unable to sell a substantial amount of the Certificates of any maturity by the date of delivery, such certificate may be modified in a manner approved by the City. In no event will the City fail to deliver the Certificates as a result of the Purchaser's inability to sell a substantial amount of Certificates at a particular price prior to delivery. Each bidder,by submitting its bid, agrees to complete, execute, and deliver such a certificate, if its bid is accepted by the City. It will be the responsibility of the Purchaser to institute such syndicate reporting requirements,to make such investigation,or otherwise to ascertain the facts necessary to enable it to make such certification with reasonable certainty. Any questions concerning such certification should be directed to Counsel. LEGAL OPINIONS: The Certificates are offered when,as and if issued,subject to the unqualified legal opinion of the Attorney General of the State of Texas, and the approving legal opinion of Vinson & Elkins, Houston, Texas, Bond Counsel (see Legal Opinions in Official Statement); the opinion of said firm will be printed on the Certificates. CERTIFICATION OF OFFICIAL STATEMENT: At the time of payment for,and Initial Delivery of,the Initial Certificates, the City will execute and deliver to the Purchaser a certificate in the form set forth in the Official Statement. CHANGE IN TAX EXEMPT STATUS: At any time before the Certificates are tendered for delivery, the Purchaser may withdraw his bid if the interest received by private holders on bonds of the same type and character shall be declared to be taxable income under present federal income tax laws, either by ruling of the Internal Revenue Service or by a decision of any Federal court, or shall be declared taxable or be required to be taken into account in computing any federal income taxes,by the terms of any federal income tax law enacted subsequent to the date of this Notice of Sale. GENERAL FINANCIAL ADVISOR: Rauscher Pierce Refsnes, Inc. is employed as Financial Advisor to the City in connection with the issuance of the Certificates. The Financial Advisor's fee for services rendered with respect to the sale of the Certificates is contingent upon the issuance and delivery of the Certificates. The City has authorized Rauscher Pierce Refsnes, Inc. to submit a bid for the Certificates, either independently or as a member of a syndicate organized to submit a bid for the Certificates. Rauscher Pierce Refsnes, Inc., in its capacity as Financial Advisor, has not verified and does not assume any responsibility for the information, covenants and representations contained in any of the contractual obligation documentation with respect to the federal income tax status of the Certificates. BLUE SKY LAWS: By submission of his bid,the Purchaser represents that the sale of the Certificates in states other than Texas will be made only pursuant to exemptions from registration or,where necessary,the Purchaser will register the Certificates in accordance with the securities law of the states in which the Certificates are offered or sold. The City agrees to cooperate with the Purchaser,at the Purchaser's written request and expense, in registering the Certificates or obtaining an exemption from registration in any state where such action is necessary. MUNICIPAL CERTIFICATE INSURANCE: The City has submitted an application for municipal insurance. OFFICIAL STATEMENT By accepting the winning bid, the City agrees to the following representations and covenants to assist the Purchaser in complying with Rule 15c2-12 of the Securities and Exchange Commission ("SEC"). FINAL OFFICIAL STATEMENT: The City has prepared the accompanying Official Statement for dissemination to potential purchasers of the Certificates,but will not prepare any other document or version for such purpose except as described below. The Purchaser will be responsible for informing the City of the initial offering yields. The City will prepare a supplement to the Official Statement describing these offering yields, the interest rates on the Certificates, the selling compensation, the final debt service schedule, the ratings assigned to the Certificates (if not currently included), and the terms of and obligor on any policy of municipal bond insurance. Accordingly, the City deems the accompanying Official Statement to be final as of its date, within the meaning of SEC Rule 15c2-12(b)(1), except for the omission of the foregoing items. By delivering the final Official Statement or any amendment or supplement thereto to the Purchaser on or after the sale date, the City represents the same to be complete as of such date, within the meaning of SEC Rule 15c2-12(e)(3). Notwithstanding the foregoing, the only representations concerning the absence of material misstatements or omissions from the Official Statement which are or will be made by the City are those described in the Official Statement under "CERTIFICATION OF THE OFFICIAL STATEMENT." DELIVERY OF OFFICIAL STATEMENTS: The City will furnish to the Purchaser (and to each other participating underwriter of the Certificates, within the meaning of SEC Rule 15c2-12(a), designated by the Purchaser),within seven days after the sale date, up to 200 Official Statements. The City will also furnish to the Purchaser a like number of any supplement or amendment prepared by the City for dissemination to potential purchasers of the Certificates as described above as well as such additional copies of the Official Statement or any supplement or amendment as the Purchaser may request prior to the 90th day after the end of the underwriting period referred to in SEC Rule 15c2-12(e)(2). The City will pay the expense of preparing up to 200 copies of the Official Statement and all copies of any supplement or amendment issued on or before the delivery date, but the Purchaser must pay for all other copies of the Official Statement or any supplement or amendment thereto. iv Aft • ADDITIONAL COPIES OF NOTICE, BID FORM AND STATEMENT: A limited number of additional copies of this Notice of Sale, the Official Bid Form and the Official Statement, as available over and above the normal mailing, may be obtained at the offices of Rauscher Pierce Refsnes, Inc., 1001 Fannin, Suite 700, Houston, Texas, 77002, Financial Advisor to the City. On the date of the sale, the Council will, in the Ordinance authorizing the issuance of the Certificates, confirm its approval of the form and content of the Official Statement, and any addenda, supplement or amendment thereto, and authorize its use in the reoffering of the Certificates by the Purchaser. /s/ Mayor City of Pearland, Texas ATTEST: /s/ City Clerk City of Pearland, Texas March 25, 1991 v • CERTIFICATE OF UNDERWRITER The undersigned hereby certifies as follows with respect to the sale of $2,125,000 City of Pearland, Combination Tax and Revenue, Certificates of Obligation, Series 1991 (the "Certificates"). 1. The undersigned is the underwriter or the manager of the syndicate of underwriters which purchased the obligations from City of Pearland (the "Issuer") at competitive sale. 2. The undersigned and/or one or more other members of the underwriting syndicate, if any, have made a bona fide offering of the Certificates of each maturity to the public. 3. The initial offering price (expressed as a yield) for the Certificates of each maturity at which a substantial amount of the Certificates of such maturity was sold to the public is as set forth below: Principal Amount Date of Maturing Maturity Yield $ 50,000 March 1, 1992 % 90,000 March 1, 1993 % 90,000 March 1, 1994 % 110,000 March 1, 1995 % 115,000 March 1, 1996 % 100,000 March 1, 1997 % 135,000 March 1, 1998 % 140,000 March 1, 1999 % 150,000 March 1, 2000 % 165,000 March 1, 2001 % 170,000 March 1, 2002 % 180,000 March 1, 2003 % 200,000 March 1, 2004 % 210,000 March 1, 2005 % 220,000 March 1, 2006 % 4. The term "public," as used herein, means persons other than houses, brokers, dealers, and similar persons or organizations acting in the capacity of underwriters or wholesalers. 5. The offering prices described above reflect current market prices at the time of such sales. 6. The undersigned understands that the statements made herein will be relied upon by the Issuer in its effort to comply with the conditions imposed by the Internal Revenue Code of 1986 on the exclusion of interest on the Certificates from the gross income of their owners and that this bond will be delivered to the Issuer on or before the delivery date of the Certificates. Executed and delivered this day of , 1991. (Name of Underwriter or Manager) Title: vi OFFICIAL BID FORM April 8, 1991 Mayor and City Council City of Pearland 3519 Liberty Drive Pearland, Texas 77581 Ladies and Gentlemen: Subject to the terms of your Official Notice of Sale and Official Statement, dated March 25, 1991, which are incorporated herein by reference, we hereby submit the following bid for $2,125,000 CITY OF PEARLAND, TEXAS COMBINATION TAX AND REVENUE,CERTIFICATES OF OBLIGATION,SERIES 1991,dated May 1, 1991. This offer is being made for all of the Certificates and for not less than all. For said legally issued Certificates of Obligation,we will pay you the par value thereof,plus accrued interest from their date to the date of delivery to us, plus a cash premium of$ for Certificates of Obligation maturing and bearing interest per annum as follows: Maturity Date Principal Amount Interest Rate March 1, 1992 $ 50,000 % March 1, 1993 90,000 % March 1, 1994 90,000 -% March 1, 1995 110,000 -% March 1, 1996 115,000 -% March 1, 1997 100,000 -% March 1, 1998 135,000 % March 1, 1999 140,000 -% March 1, 2000 150,000 -% March 1, 2001 165,000 -% March 1, 2002 170,000 % March 1, 2003 180,000 % March 1, 2004 200,000 % March 1, 2005 210,000 % March 1, 2006 220,000 % Interest cost, in accordance with the above bid, is: Gross Interest Cost $ Less: Premium NET INTEREST COST $ EFFECTIVE INTEREST RATE % The Initial Certificates shall be registered in the name of (syndicate manager). We will advise First City, Texas - Houston NA., Houston, Texas the Paying Agent/Registrar, on forms to be provided by the Paying Agent/Registrar and on registration instructions at least five business days prior to the date set for Initial Delivery. Cashier's Check of the Bank, , Texas, in the amount of $42,500,which represents our Good Faith Deposit(is attached hereto) or(has been made available to you prior to the opening of this Bid), and is submitted in accordance with the terms as set forth in the "Official Notice of Sale" and "Official Statement." Upon delivery of the Certificates, said check shall be returned to us if our bid is accepted and the Certificates are awarded to us. We agree to accept delivery of and make payment for the Initial Certificates in immediately available funds at the Corporate Trust Office, First City, Texas - Houston NA., Houston, Texas not later than 10:00 A.M., on May 5, 1991, or thereafter on the date the Certificates are tendered for delivery, pursuant to the terms set forth in the Official Notice of Sale. Pik 1 I • The undersigned agrees to complete, execute and deliver to the City,by the date of delivery of the Certificates, a certificate relating to the "issue price" of the Certificates in the form and to the effect attached to or accompanying the Official Notice of Sale, with such changes thereto as may be acceptable to the City. Respectfully submitted, By Authorized Representative ACCEPTED this 8th day of April, 1991, by the City Council, City of Pearland, Texas. Mayor ATTEST: City Clerk Return of Good Faith Check is hereby acknowledged: Firm: By: (For your information you will find attached a list of the group of underwriters associated with us in this proposal) #114 t • BOND YEARS $2,125,000 CITY OF PEARLAND, TEXAS (Brazoria and Harris Counties, Texas) COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION SERIES 1991 Dated: May 1, 1991 Due: As shown below Years Maturity Cumulative Date Amount Years Bond Years March 1, 1992 $ 50,000 March 1, 1993 90,000 March 1, 1994 90,000 March 1, 1995 110,000 March 1, 1996 115,000 March 1, 1997 100,000 March 1, 1998 135,000 March 1, 1999 140,000 March 1, 2000 L50,000 March 1, 2001 165,000 March 1, 2002 170,000 March 1,2003 180,000 March 1, 2004 200,000 March 1, 2005 210,000 March 1, 2006 220.000 $2,125,000 AVERAGE MATURITY - YEARS PRELIMINARY OFFICIAL STATEMENT DATED Mike.CH 25. 1991 This Preliminary Official Statement is subject to completion and amendment and is intended solely for the solicitation of initial bids to purchase the Certificates. Upon the sale of the Certificates, the Official Statement will be completed and delivered to the Purchaser. ,N W 0 L 0 Cr, -,1 y 4, THE DELIVERY OF THE CERTIFICATES IS SUBJECT TO THE OPINION OF BOND COUNSEL TO o a THE EFFECT THAT,UNDER EXISTING LAW AND ASSUMING CONTINUING COMPLIANCE WITH in • a, W COVENANTS OF THE ORDINANCE, INTEREST ON THE CERTIFICATES IS EXCLUDABLE FROM co• co y t GROSS INCOME OF THE OWNERS THEREOF FOR FEDERAL INCOME TAX PURPOSES AND IS L NOT SUBJECT TO THE ALTERNATIVE MINIMUM TAX ON INDIVIDUALS OR, EXCEPT AS ° i DESCRIBED HEREIN, CORPORATIONS. SEE "TAX EXEMPTION" HEREIN. .8 m o • o NEW ISSUE c a, L u $2,125,000 iTHE CITY OF PEARLAND, TEXAS • 03 . N D (A political subdivision of the State of Texas located within Brazoria and Harris Counties) COMBINATION TAX AND REVENUE • c ° CERTIFICATES OF OBLIGATION E• T °• M Series 1991 2 y Dated: May 1, 1991 L " O, O `a v •.- o o Principal and interest is payable at the principal corporate trust office of the First City, Texas - Houston NA., C Houston, Texas, the paying agent/registrar (the "Registrar"). Interest is payable March 1, 1992, and each L LO September 1 and March 1 thereafter until maturity or prior redemption. The Certificates are subject to " ° redemptionprior to their scheduled maturities on March 1,2001 or anydate thereafter,at the option of the City. ° .o a P P Upon redemption the Bonds will be payable at a price equal to the principal amount thereof plus accrued v ° i interest to the date of redemption. The Certificates are issued in fully registered form in integral multiples of o $5,000. Interest on the Certificates will be payable by check or draft, dated as of the interest payment date, and H o ' mailed by the Registrar to registered owners shown on the records of the Registrar on the last business day of v;, S the month next preceding each interest payment date (the "Record Date"). 'a my C_3 L ; MATURITY SCHEDULE t HT. (Due March 1) 13 L N c - c- InitialInitial 0 coo Interest Reoffering Interest Reoffering g Amount Maturity Rate Yield (a) Amount Maturity Rate Yield (a) v43 O N ., O .° $ 50,000 1992 % % $150,000 2000 % % y 90,000 1993 165,000 2001 L L.0 090,000 1994 170,000 2002(b) ` 0•- 110,000 1995 180,000 2003(b) L `0 0 115,000 1996 200,000 2004(b) C .0 100,000 1997 210,000 2005(b) 3- y 135,000 1998 220,000 2006(b) c ; C 140,000 1999 1S s y• " (a) The initial yields will be established by and are the sole responsibility of the Purchaser, and may c •° subsequently be changed. ,Z 1 1:" (b) The Certificates maturing March 1,2002 through March 1,2006,both inclusive, are subject to redemption, CO y o w at the option of the City, at the par value thereof plus accrued interest, in whole or in part, on March 1, � (,,H.; u 2001, or any date thereafter. ` ." T. 'N The above certificates(the"Certificates")constitute all the certificates authorized by the council on April 8, 1991. .E w � 7 d o ,c The Certificates,when issued, will constitute valid and binding obligations of The City of Pearland (the "City") a L N and will be payable from the proceeds of an annual ad valorem tax, levied within the limits prescribed by law, y c v N against taxable property within the City and will be furhter payable from a junior and subordinate pledge of the e L*0 net revenues of the City's waterworks and sewer system in an amount not to exceed$10,000 of such net revenues ' 1 per annum. L 0 03 d N The Certificates are offered when, as and if issued subject to the approving opinion of the Attorney General of the State of Texas and the opinion of Vinson & Elkins, Houston, Texas, Certificate Counsel to the City, as to the validity of the issuance of the Certificates under the Constitution and the laws of the State of Texas. The Certificates are expected to be available for delivery on or about May 8, 1991. .a. TABLE OF CONTENTS ,`, 7 Page USE OF INFORMATION IN OFFICIAL STATEMENT 3 SALE AND DISTRIBUTION OF THE CERTIFICATES 3 Sale of the Certificates 3 Prices and Marketability 3 Securities Laws 3 Ratings 4 Municipal Bond Insurance 4 OFFICIAL STATEMENT SUMMARY 5 THE CERTIFICATES 6 Description of the Certificates 6 Source of Payment 6 Authority for Issuance 7 Use of Proceeds 7 Future Bond Issues 7 Legal Investments in Texas 7 Remedies in the Event of Default 7 PRO-FORMA DEBT SERVICE SCHEDULE 8 DEBT STATEMENT 8 General 8 Certificateed Indebtedness 9 Estimated Overlapping Debt 9 Debt Ratios 9 TAX DATA 10 General 10 Property Tax Code and County-Wide Appraisal District 10 Tax Rate Limitations 10 Property Subject to Taxation by the City 10 Notice and Hearing Procedures 11 Levy and Collection of Taxes 11 Collection of Delinquent Taxes 12 Historical Analysis of Tax Collection 12 Analysis of Tax Base 13 Estimated Overlapping Taxes 14 Sales Tax 15 SELECTED FINANCIAL DATA 16 Historical Operations of the City's General Fund 16 General Fund and Debt Service Fund Balance for the Past Five Fiscal Years 16 Pension Fund 17 Financial Statements 17 ADMINISTRATION OF THE CITY 17 Mayor and City Council 17 Administration 18 LEGAL MATTERS 19 Legal Opinions 19 No-Litigation Certificate 19 No Material Adverse Change 19 TAX MATTERS 19 Tax Exemption 19 QUALIFIED TAX-EXEMPT OBLIGATIONS 20 GENERAL CONSIDERATIONS 21 Sources and Compilation of Information 21 Certification as to Official Statement 21 Updating of Official Statement 21 APPENDIX A - ECONOMIC AND DEMOGRAPHIC CHARACTERISTICS APPENDIX B - FINANCIAL STATEMENTS OF THE CITY 2 USE OF INFORMATION IN OFFICIAL STATEMENT No dealer,broker, salesman or other person has been authorized by the City to give any information or to make any representation other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by the City. This Official Statement is not to be used in an offer to sell or the solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation. Any information and expressions of opinion herein contained are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City or other matters described herein since the date hereof. SALE AND DISTRIBUTION OF THE CERTIFICATES Sale of the Certificates: After requesting competitive bids for the Certificates, the City has accepted the bid resulting in the lowest net interest cost,which bid was tendered by a syndicate composed of ("Purchaser") to purchase the Certificates bearing the interest rates shown under "MATURITY SCHEDULE" at a price of the par value thereof, plus a cash premium of$ , plus accrued interest to the date of delivery. The net effective interest rate on the Certificates was % was calculated pursuant to Article 717k-2 of Vernon's Annotated Texas Civil Statutes. Prices and Marketability: The delivery of the Certificates is conditioned upon the receipt by the City of a certificate executed and delivered by the Purchaser on or before the date of delivery of the Certificates stating the prices at which a substantial amount of the Certificates of each maturity have been sold to the public. For this purpose, the term "public" shall not include any person who is a certificate house, broker or similar person acting in the capacity of underwriter or wholesaler. The City has no control over trading of the Certificates after a bona fide offering of the Certificates is made by the Purchaser at the yields specified on the cover page. Information concerning reoffering yields or prices is the responsibility of the Purchaser. The prices and other terms respecting the offering and sale of the Certificates may be changed from time to time by the Purchaser after the Certificates are released for sale, and the Certificates may be offered and sold at prices other than the initial offering price,including sales to dealers who may sell the Certificates into investment accounts. IN CONNECTION WITH THE OFFERING OF THE CERTIFICATES,THE PURCHASER MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CERTIFICATES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING,IF COMMENCED,MAY BE DISCONTINUED AT ANY TIME. Securities Laws: No registration statement relating to the Certificates has been filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, in reliance upon the exemptions provided thereunder. The Certificates have not been registered or qualified under the Securities Act of Texas in reliance upon various exemptions contained therein; nor have the Certificates been registered or qualified under the securities acts of any jurisdiction. The City assumes no responsibility for registration or qualification of the Certificates under the securities laws of any jurisdiction in which the Certificates may be offered, sold or otherwise transferred. This disclaimer of responsibility for registration or qualification for sale or other disposition of the Certificates shall not be construed as an interpretation of any kind with regard to the availability of any exemption from securities registration or qualification provisions in such jurisdictions. 3 41.. p • Ratings• Standard & Poor's Corporation and Moody's Investors Service, Inc. has assigned ratings of " " and " ", respectively, to this issue of Certificates. The above ratings are not recommendations to buy,sell or hold the certificates, and such ratings may be subject to revision or withdrawl at any time by the rating agencies. Any downward revision or withdrawl of either or both ratings may have an adverse effect on the market price of the Certificates. Municipal Bond Insurance: - COPY TO COME - 4 OFFICIAL STATEMENT SUMMARY The following material is qualified in its entirety by the detailed information and financial statements appearing elsewhere in this Official Statement. - General - The Issuer The City of Pearland, a political subdivision of the State of Texas located within Brazoria and Harris Counties. The Certificates $2,125,000 Combination Tax and Revenue, Certificates of Obligation,Series 1991, dated May 1, 1991;various amounts due March 1, 1992 through 2006. Payment of Interest March 1,1992,and each September 1 and March 1 thereafter, until maturity or prior redemption. Source of Payment Principal of and interest on the Certificates are payable from a continuing, direct annual ad valorem tax levied with the limits prescribed by law and will be further payable from a junior and subordinate pledge of the net revenues of the City's waterworks and sewer system in an amount not to exceed $10,000 of such net revenues per annum. Other Characteristics The Certificates are issued in fully registered form in integral multiples of$5,000.The Certificates are subject to redemption prior to their scheduled maturities on March 1, 2001 or any date thereafter at the option of the City. Upon redemption the Bonds will be payable at a price equal to the principal amount thereof plus accrued interest to the date of redemption. Use of Proceeds Proceeds from the sale of the Certificates are to be used for a City park, senior citizens building and street and drainage right of way and improvements. The proceeds will also be used to pay costs incurred in the issuance of the Certificates. See "Use of Proceeds". Ratings Moody's Investors Service,Inc " " Standard&Poor's Corporation Population 1990 Census - 18,697. - Financial Highlights - (Unaudited) 1990 Certified Assessed Valuation (100% of Estimated Market Value) $575,624,520(a) Direct Tax Debt Outstanding Debt (as of March 15, 1991) $ 17,689,392 The Certificates 2.125.000 Total Direct Debt $ 19,764,392 Estimated Overlapping Debt $ 22.221.716 Total Direct Tax Supported and Estimated Overlapping Debt $ 41.986.108 Interest and Sinking Fund Balance (as of March 15, 1991) $ 1.642.532 (a) Certified by the Brazoria County Appraisal District. 5 Ink IN& % of 1990 Certified Per Debt Ratios: Assessed Valuation Capita Direct Debt 3.43% $1,057 Direct and Estimated Overlapping Debt 7.29% $2,246 Annual Requirements: Average (Fiscal Years 1991/2009) $2,350,825 Maximum (1993) $1,932,523 Tax Collections: Arithmetic Average, Tax Years (1986/1990) - Current Year 97.27% - Current and Prior Years 99.20% THE CERTIFICATES Description of the Certificates: The Certificates are dated May 1, 1991,bear interest from such date at the stated interest rates indicated under "MATURITY SCHEDULE", which interest is payable March 1, 1992, and each September 1, and March 1 thereafter until maturity or prior redemption. The Certificates are issued in fully registered form in denominations of $5,000 each or any multiple thereof. The Certificates are subject to redemption prior to scheduled maturities on March 1, 2001 or any date thereafter at the option of the City. Upon redemption the Bonds will be payable at a price equal to the principal amount thereof plus accrued interest to the date of redemption. Principal of and interest on the Certificates are payable at the principal corporate trust office of the First City, Texas - Houston N.A., Houston, Texas. Interest on the Certificates will be payable by check or draft, dated as of the interest payment date, and mailed by the Registrar to registered owners as shown on the records of the Registrar. The Certificates are transferable only on the certificate register kept by the Registrar upon surrender and reissuance. The Certificates are exchangeable for an equal principal amount of Certificates of the same maturity in any authorized denomination upon surrender of the Certificates to be exchanged at the principal corporate trust office of the Registrar. No service charge will be made for any transfer,but the City may require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The record date (the "Record Date") for the interest payable on any interest payment date means the 15th calendar day of the month next preceding such interest payment date. It will be required that all transfers be made within three business days after request and presentation. The City has agreed to replace mutilated, destroyed, lost or stolen Certificates upon surrender of the mutilated Certificates, or receipt of satisfactory evidence of such destruction, loss or theft, and receipt by the City and the Registrar of security or indemnity to keep them harmless. The City may require payment of taxes,governmental charges and other expenses in connection with any such replacement. Source of Payment: The Certificates,together with other outstanding debt on a parity with the Certificates(the"Outstanding Debt"), are payable as to principal and interest from, and secured by, the proceeds of a continuing, direct annual ad valorem tax,levied within the limits prescribed by law,against taxable property within the City and will be further payable from a junior and subordinate pledge of the net revenues of the City's waterworks and sewer system in an amount not to exceed $10,000 of such net revenues per annum. In the Ordinance, the City covenants that while the Certificates are outstanding, it will levy, assess and undertake to collect such tax. See also"Remedies in the Event of Default." 6 Authority for Issuance: The Certificates are being issued pursuant to the applicable provisions of the Constitution and laws of the State of Texas, particularly Sections 271.041-271.063,Texas Local Government Code, as amended, and the provisions of an ordinance(the"Ordinance")adopted by the City Council on April 8, 1991,and which specifically authorizes the sale and issuance of the Certificates. Further reference to the Ordinance is hereby made. No election is required as a prerequisite to the sale and issuance of certificates of obligation, unless a petition signed by 5% of the qualified voters of the City is filed with the City Secretary protesting the issuance of such certificates prior to the issuance. Use of Proceeds Proceeds of the Certificates are being used to provide funds for a City park, senior citizens building and street and drainage right of way and improvements. The proceeds will also be used to pay the costs of issuance of the Certificates, including the Financial Advisor's fee and Bond Counsel's fee, both of which are contingent upon the sale of the Certificates, as well as other administrative costs incurred. Future Bond Issues: - COPY TO COME - Legal Investments in Texas: Pursuant to Section 9 of the Bond Procedures Act of 1981,as amended,Texas Revised Civil Statutes Annotated Article 717k-6 (the "Procedures Act"), all certificates issued by the City constitute negotiable instruments, and are investment securities governed by Chapter 8, Texas Uniform Commercial Code, notwithstanding any provisions of law or court decision to the contray, and are legal and authorized investments for banks, savings banks, trust companies, building and loan associations, savings and loan associations, insurance companies, fiduciaries, and trustees, and for sinking fund of cities, towns, villages, school districts, and other political subdivisions or public agencies of the State of Texas. The Procedures Act further provides that the Certificates are eligible to secure deposits of public funds of the state, its agencies and political subdivisions, and are legal security for those deposits to the extent of their market value. No review by the City has been made of the laws in other states to determine whether the Certificates are legal investments for various institutions in those states. Remedies in the Event of Default The Ordinance requires the City to assess and collect ad valorem taxes each year sufficient to pay principal and interest when due on the Certificates. The Ordinance does not provide any other security for the payment of the Certificates, or any express remedies in the event of default, and makes no provision for acceleration of maturity of the Certificates in the event of default,and does not provide for a trustee to protect the rights of the Certificateholder. 7 Although a Certificateholder could presumably obtain a judgment against the City in the event of default in the payment of principal or interest on the Certificates, such judgment could not be satisfied by execution against any property of the City. A Certificateholder could,in the event of default, ask a court for a mandamus or court order compelling the City to levy, assess and collect sufficient ad valorem taxes to pay principal of and interest on the Certificates as it falls due on the Certificates or to perform the City's other obligations under the Ordinance. Such remedy might need to be enforced on a periodic basis. The enforcement of a claim for payment of principal or interest on the Certificates would be subject to judicial discretion, sovereign police powers and the applicable provisions of the federal bankruptcy laws and to any other similar laws affecting the rights of political subdivisions generally. PRO-FORMA DEBT SERVICE SCHEDULE The following sets forth the principal and interest on the City's outstanding certificates, and the principal and estimated interest on the Certificates. Fiscal Year Outstanding The Certificates Total New Total Debt Ending Debt $2,125,000 Principal & Service 9-30 Requirement Principal Interest(a) Interest Requirement 1991 $ 2,348,864 $ 2,348,864 1992 2,106,659 $ 50,000 $ 189,563 $ 239,563 2,346,222 1993 2,123,800 90,000 137,025 227,025 2,350,825 1994 2,123,396 90,000 130,950 220,950 2,344,346 1995 1,592,318 110,000 124,200 234,200 1,826,518 1996 1,592,989 115,000 116,606 231,606 1,824,595 1997 1,622,558 100,000 109,350 209,350 1,831,908 1998 1,590,483 135,000 101,419 236,419 1,826,902 1999 1,592,956 140,000 92,138 232,138 1,825,094 2000 1,594,670 150,000 82,350 232,350 1,827,020 2001 1,590,179 165,000 71,719 236,719 1,826,898 2002 1,596,588 170,000 60,413 230,413 1,827,001 2003 1,595,088 180,000 48,600 228,600 1,823,688 2004 1,591,913 200,000 35,775 235,775 1,827,688 2005 1,595,324 210,000 21,938 231,938 1,827,262 2006 1,596,008 220,000 7,425 227,425 1,823,433 2007 1,824,680 1,824,680 2008 1,820,000 1,820,000 2009 1.765.000 1,765.000 $ 33263,473 2125 000 $10.067,167 $3.454,471 $36,717.944 Average Annual Debt Service Requirements (1991/2009) $ 2,350,825 Maximum Annual Debt Service Requirement (1993) $ 1,932,523 (a) Interest estimated at 6.75% for illustration purposes. DEBT STATEMENT General: The following tables and calculations relate to the Certificates and to all other tax supported debt of the City. In addition to outstanding certificates and the City has also issued revenue certificates and has incurred contractual and other indebtedness and liabilities which are not included below but which are significant in amount. The City and various other political subdivisions of government which overlap all or a portion of the City are empowered to incur debt to be paid from revenues raised or to be raised by ad valorem taxation against all or a portion of property within the City. 8 Certificateed Indebtedness: 1990 Certified Assessed Valuation (100% Estimated Market Value) $575,624,520(a) Direct Ad Valorem Tax Debt Outstanding Debt (as of March 15, 1991) $ 17,639,392 The Certificates 2.125.000 Total Direct Ad Valorem Tax Debt $ 19,764,392 Interest & Sinking Fund Balance (as of March 15, 1991) $ 1.642.532 (a) Certified by the Brazoria County Appraisal District. Estimated Overlapping Debt: The following table indicates the indebtedness,defined as outstanding certificates payable from ad valorem taxes, of governmental entities overlapping the City and the estimated percentages and amounts of such indebtedness attributable to property within the City. This information is based upon data secured from the individual jurisdictions and/or the Texas Municipal Reports. Such figures do not indicate the tax burden levied by the applicable taxing jurisdictions for operation and maintenance or for other purposes. The City has not independently verified the accuracy or completeness of the information shown below except for amounts related to the City. Overlapping Taxing Jurisdiction Debt as of 3-15-91 Percent Amount Brazoria County $ 3,790,000 6.30% $ 238,770 Clear Creek I.S.D. 77,305,000(a) 1.10 850,355 Harris County 166,695,000 .05 83,348 Harris County Toll Road 550,000,000 .05 275,000 Harris County Flood Control 298,970,000 .05 149,485 Pearland I.S.D. 33,772,000(b) 60.91 20,570,525 Port of Houston 108,180,000 .05 54,090 Harris County Department of Education 285,000 .05 143 TOTAL ESTIMATED OVERLAPPING DEBT $22,221,716 The City 19.764.392 TOTAL DIRECT AND ESTIMATED OVERLAPPING DEBT $41,986,108 (a) Includes $23,000,000 Unlimited Tax School Building Bonds, Series 1991 selling on 3-4-91. (b) Includes $1,500,000 Unlimited Tax School Building Bonds, Series 1991 sold on 2-28-91. Debt Ratios: Direct and Overlapping Direct Debt _ Debt Per 1990 Certified Assessed Valuation ($575,624,520) 3.43% 7.29% Per Capita (18,697) $1,057 $2,246 9 TAX DATA General: One of the City's principal sources of operational revenue and its principal source of funds for debt service payments is the receipts from ad valorem taxation. See "FINANCIAL OPERATIONS OF THE DISTRICT - Sources of Revenue". The following is a recapitulation of (a) the Texas Property Tax Code, including methodology,limitations,remedies and procedures;(b)historical analysis of collection and trends of tax receipts and provisions for delinquencies; and (c) an analysis of the tax base, including relative property composition, principal taxpayers and adequacy of the tax base to service debt requirements;and(d) taxation that may add to the City's taxpayers' tax costs. Property Tax Code and County-Wide Appraisal District: The Texas Property Tax Code (the "Property Tax Code") establishes for each county in Texas a single appraisal district with responsibility for recording and appraising property for all taxing units within the county, and a single appraisal review board,with responsibility for reviewing and equalizing the values established by the appraisal district. The Property Tax Code requires the appraisal district, by May 15 of each year, or as soon thereafter as practicable, to prepare appraisal records of property as of January 1 of each year based upon market value. The chief appraiser must give written notice before May 15, or as soon thereafter as practicable, to each property owner whose property value is appraised higher than the prior tax year or the value rendered by the property owner or whose property was not on the appraisal roll the preceding year or whose property was reappraised in the current tax year. Notice must also be given if ownership of the property changed during the preceding year. The appraisal review board has the ultimate responsibility for determining the value of all taxable property within the City, however, any property owner who has timely filed notice with the appraisal review board may appeal a final determination by the appraisal review board by filing suit in a Texas district court. Prior to such appeal or any tax delinquency date,however, the property owner must pay the tax due on the value of that portion of the property involved that is not in dispute or the amount of tax imposed in the prior year, whichever is greater, or the amount of tax due under the order from which the appeal is taken. In such event, the value of the property in question will be determined by the court, or by a jury, if requested by any party. In addition taxing units, such as the City are entitled to challenge certain matters before the appraisal review board, including the level of appraisals of a certain category of property, the exclusion of property from the appraisal records or the grant in whole or in part of an exemption.A taxing unit may not,however,challenge the valuation of individual properties. Although the City has the responsibility for establishing tax rates and levying and collecting its taxes each year, under the Property Tax Code the City does not establish appraisal standards or determine the frequency of revaluation or reappraisal. The appraisal district is governed by a board of directors elected by the governing bodies of the county and all cities,towns,school districts and,if entitled to vote,the conservation and reclamation districts that participate in the appraisal district. The Property Tax Code requires each appraisal district to implement a plan for periodic reappraisal of property to update appraised values. Such plan must provide for reappraisal of all real property in the appraisal district at least once every three years. It is not known what frequency of reappraisals will be utilized by the Brazoria County Appraisal District or whether reappraisals will be conducted on a zone or county-wide basis. Tax Rate Limitations: Article XI,Section 5 of the Texas Constitution,provides for an overall limitation for Home Rule Cities of $2.50 per $100 assessed valuation. The Attorney General of Texas follows a policy,with respect to Home Rule Cities which have such a$2.50 limitation, of approving ad valorem tax bonds only to the extent that all of such city's ad valorem tax debt can be serviced by a tax rate of$1.50 at 90% collection. Property Subject to Taxation by the City: Except for certain exemptions provided by Texas law, all real and tangible personal property and certain categories of intangible personal property with a tax situs in the District is subject to taxation by the District; however, no effort is expected to be made by the Brazoria County Appraisal District to include on the tax roll tangible or intangible personal property not devoted to commercial or industrial use. Principal categories of exempt property include: property owned by the State of Texas or its political subdivisions, property used for public purposes; property exempt from ad valorem taxation by federal law, certain household goods, family 10 Pik intk supplies, and personal effects; farm products owned by the producer; certain property owned by charitable organizations,youth development associations,religious organizations,and qualified schools;designated historical sites; solar and wind-powered energy devices; most individually-owned automobiles; and property of disabled veterans, only to the extent of$3,000 of taxable property. In addition, taxpayers who are disabled or over 65 years of age are entitled to apply for an additional exemption from market value of their residential homestead of$12,500. These over 65 exemptions and disabled veterans exemptions amounted to S16,843,390 from the 1990 tax roll. Voters of the State of Texas cast ballots on November 3,1981, approving a state constitutional amendment which permits local governments the option of granting homestead exemptions of up to 20% of market value thereafter. The City has elected not to grant this additional exemption for the 1990 tax year. An eligible owner of agricultural and timberland may apply to have such properties which meet certain requirements appraised on the basis of productivity value or market value,whichever is less. The loss of value due to property values based on productivity value on the 1990 tax roll approximate $18,681,170. On November 7, 1989,voters of the State of Texas approved an amendment to the constitution of the State of Texas which authorizes a property tax exemption for certain business personal property. The City Council has the option to take official action to override the exemption and to continue taxing the property exempted by the amendment. On December 11, 1989,the City's City Council took such official action to tax the property in 1990 and to disallow the exemption for 1991 and all future years. The City Council may elect to allow the exemption in subsequent years which could result in a reduction of the City's tax base. Notice and Hearing Procedures: The Property Tax Code establishes procedures for providing notice and the opportunity for a hearing for taxpayers in the event of certain proposed tax increases and provides for taxpayer referenda which could result in the repeal of certain tax increases.The Property Tax Code also establishes a procedure for notice to property owners of reappraisals reflecting increased property values over 1,000, appraisaLs which are higher than renditions, and appraisals of property not previously on an appraisal roll. Levy and Collection of Taxes: The City is responsible for the collection of its taxes, unless it elects to transfer such functions to another governmental entity. By September 1 of each year, or as soon thereafter as practicable, the rate of taxation is set by the City Council of the City based upon the valuation of property within the City as of the preceding January 1 and the amount required to be raised for debt service, maintenance purposes and authorized contractual obligations. The City Council may under certain circumstances be required to advertise and hold a public hearing within the City on a proposed tax rate before the City Council can hold a public meeting to vote on the tax rate.If the tax rate adopted exceeds by more than 8%the rate needed to pay debt service and certain contractual obligations and to produce, when applied to the property which was on the prior year's roll, the prior year's total taxes levied for purposes other than debt service and such contractual obligations,such excess portion of the levy may, subject to constitutional restrictions on the impairment of existing obligations be repealed at an election within the City held upon petition of 10% of the City's qualified voters. Taxes are due on receipt of the tax bill, and become delinquent after January 31 of the following year, or on the first day of the calendar month next following the expiration of twenty-one(21) days after mailing of the tax bills, whichever occurs later. A delinquent tax account incurs an initial penalty of six percent (6%) of the amount of the tax and accrues an additional penalty of one percent(1%) per month up to July 1,at which time the total penalty becomes twelve percent(12%).In addition,delinquent taxes accrue interest at one percent(1%) per month.If the tax is not paid by July 1,an additional penalty of up to fifteen percent(15%)may under certain circumstances be imposed by the City. The Property Tax Code also makes provision for the split payment of taxes, discounts for early payments,partial payments of taxes and the postponement of the delinquency date of taxes under certain circumstances, however, the City does not permit such payments. 11 Collection of Delinquent Taxes: Taxes levied by the City are a personal obligation of the property on January 1 of the year for which the tax is imposed. On January 1 of each year, a tax lien attaches to property to secure the payment of all taxes, penalties and interest ultimately imposed for the year on the property. The lien exists in favor of the State and each taxing unit, including the City, having the power to tax the property. The City's tax lien is on a parity with tax liens of all other such taxing units. A tax lien on real property has priority over the claim of most creditors and other holders of liens on the property encumbered by the tax lien, whether or not the debt or lien existed before the attachment of the tax lien. In the event a taxpayer fails to make timely payment of taxes due the City, the City may file suit to foreclose its lien securing payment of the tax, to enforce personal liability for the tax, or both. Whether a lien of the United States is on a parity with or takes priority over a tax lien of the City is determined by applicable federal law. In the absence of such federal law, the City's tax lien takes priority over a tax lien of the United States. The ability of the City to collect delinquent taxes by foreclosure may be adversely affected by the amount of taxes owed to other taxing units, the foreclosure sale price attributable to market conditions, the taxpayer's right to redeem the property within two years of foreclosure, or by bankruptcy proceedings which restrain the collection of a taxpayer's debts. Historical Analysis of Tax Collection: - Collection Ratios - Tax Rate % of Collections Tax Assessed Per $100 of Adjusted Current Current and Fiscal Year Year Valuation Assessed Valuation Tax Levy Year Prior Years Ending 9-30 1985 $591,810,120 $0.600 $3,544,618 96.92 98.79 1986 1986 554,727,670 .700 3,902,598 96.99 99.07 1987 1987 558,477,970 .735 4,103,794 96.97 99.06 1988 1988 562,461,502 .825 4,640,320 98.04 100.24 1989 1989 576,486,290 .825 4,756,012 97.45 98.86 1990 1990 575,624,520 .800 4,604,996 (a) (a) 1991 (a) In process of collection. - Tax Rate Distribution - 1990 1989 1988 1987 1986 1985 Maintenance $0.378 $0.340 $0.310 $0.275 $0.246 $0.269 Debt Service .422 .485 .515 .460 .454 .331 Total jaa0 0.825 0.825 0.735 0..700 $0.600 12 VW AM. • - Analysis of Delinquent Taxes - The following is an analysis, by tax year, of taxes delinquent as of September 30, 1990. Uncollected Adjusted Percentage Tax Year as of September 30. 1990 Tax Levy of Tax Levy 1989 $112,877 $4,756,012 2.37% 1988 64,748 4,640,320 1.40 1987 46,006 4,103,794 1.12 1986 25,806 3,902,598 .66 1985 12,629 3,544,618 .36 1984 6,952 3,145,445 .22 1983 10,930 2,842,011 .38 1982 1,402 2,729,115 .05 1981 768 2,042,409 .04 1980 564 1,879,362 .03 1979 & Prior 1.227 (a) (a) $283,909 (a) Various levies & percentages. - Delinquent Tax Collection Procedures - In addition to the legal procedures and penalties described under"Authority for Taxation",the City retained a Delinquent Tax Attorney on a contract basis to file suit to collect delinquent taxes due the City. The fees due such attorney for acting as Delinquent Tax Attorney are payable from an additional penalty imposed upon the delinquent taxpayer, not to exceed 15% of the tax due. Analysis of Tax Base: - Tax Base Distribution - 1990 Tax Roll 1989 Tax Roll Type of Property Amount % Amount % Residential $377,044,890 61.69% $367,782,560 63.80% Acreage 37,219,370 6.09 37,390,970 6.49 Vacant Lots/Tracts 23,082,590 3.78 24,707,630 4.10 Farm & Ranch 2,571,840 .42 2,490,610 .43 Commercial 122,233,690 20.00 121,857,500 21.14 Industrial 27,716,620 4.54 27,617,140 4.79 Mineral Reserves 7,820 .01 12,180 .01 Utilities 19,920,410 3.26 19,726,270 3.42 Other 1,351.850 .22 1,299,780 .23 Gross Value $611,149,080 $602,884,640 Less: Exemptions 35.524.560 (26,398,350) Net Value $575,624,520 $576,486,290 13 - Principal Taxpayers - Taxpayer Type of Property 1990 Tax Roll 1989 Tax Roll W.R. Grace Co. (Chance Collar & Homco) Oil Field Equipment $13,289,360 $11,191,290 Hausman - Banfield Prop. Apartments 8,637,250 8,880,350 Southwestern Bell Telephone Utility 8,127,950 7,972,470 Ron Carter Chevrolet Co. Automobile Dealership 6,586,680 4,858,500 Houston Lighting & Power Co. Utility 5,307,890 5,069,980 Whispering Winds, Ltd. & Assos. Apartments & Townhomes 5,161,960 5,161,960 Wal-Mart Shopping Center 5,086,470 4,949,550 Energy Coatings Company Pipe Coating & Storage 4,510,830 4,305,190 Windmill Park Apts. #1 & #2 Apartments 4,485,440 4,492,560 K-Mart Inc. Shopping Center 3.787,190 3.787.190 Total Ten Principal Taxpayers $64,981,020 $60,669,040 Percentage Ten Principal Taxpayers Comprise of their Respective Tax Rolls 12.89% 10.52% - Tax Adequacy - Average Annual Debt Service Requirements based on Total New Debt Service (1991/2009) $1,932,523 Tax Rate of$0.354 per $100 assessed valuation against the 1990 Assessed Valuation, at 95% collection, produces $1,935,825 Maximum Annual Debt Service Requirements based on Total New Debt Service (in the year 1993) $2,350,825 Tax Rate of$0.43 per $100 assessed valuation against the 1990 Assessed Valuation, at 95% collection, produces $2,351,426 Estimated Overlapping Taxes- Under Texas law,if ad valorem taxes levied by a taxing authority become delinquent,a lien is created upon the property which has been taxed, which lien is on a parity with any tax lien on such property in favor of the City. In addition to ad valorem taxes required to retire the aforementioned direct and estimated overlapping debt,certain taxing jurisdictions including those mentioned above are also authorized by Texas law to assess,levy, and collect ad valorem taxes for operation, maintenance, administrative and/or general revenue purposes. Set forth below is an estimation of ad valorem taxes levied on a $50,000 single-family residence by such jurisdictions, assuming the assessments are made at their claimed basis of assessment (100%). Such residence is further assumed to be located within Brazoria County wherein substantially all of the residential property within the City is located. No recognition is given to local assessments for civic association dues,fire department contributions, or other charges made by other than political subdivisions. 1990 Tax Estimated Taxing Jurisdictions Rate/$100 1990 Tax Bill The City $0.800 $ 400.00 Brazoria County .265 132.50 Brazoria County Drainage District No. 4 .129 64.50 Pearland Independent School District 1.460 730.00 Estimated Total 1989 Tax Bill §=41 $1,327.00 14 Alik. .rook , Sales Tax -Authority- The City has adopted the provisions of Article 1066c, Vernon's Texas Civil Statutes, as amended, which grants the City the power to impose and levy a 1% sales tax. The City may not pledge the proceeds from the Sales Tax as security for the Bonds. - Collection History - The State Comptroller, after deduction of a 2% service fee, currently remits the City's portion of sales tax collections monthly. By statute the Comptroller is required to remit at least twice annually. The following is an analysis of the collection history of the City's sales tax: Ad Valorem Taxation Comparisons Fiscal Year Sales Tax Equivalent Tax Rate % of Actual Ended 9-30 Receipts Tax Year Equivalent Tax Levy 1980 $ 863,670 (1979) $0.534 56.20% 1981 1,075,582 (1980) 0.612 57.51 1982 1,133,869 (1981) 0.344 55.52 1983 820,623 (1982) 0.301 30.69 1984 1,107,194 (1983) 0.265 38.96 1985 1,133,396 (1984) 0.263 36.25 1986 991,896 (1985) 0.168 28.04 1987 943,940 (1986) 0.170 24.19 1988 1,150,291 (1987) 0.206 28.03 1989 1,212,455 (1988) 0.216 26.13 1990 1,460,341 (1989) 0.254 30.71 15 • Ada #11114 SELECTED FINANCIAL DATA Historical Operations of the City's General Fund: The following is a condensed statement of revenues and expenses of the City's General Fund for the past five fiscal years. The inclusion of the following table is not intended to imply that any revenues of the City,other than receipts from ad valorem taxes as provided in the Ordinance, are pledged to pay principal and interest on the Bonds. Fiscal Year Ended September 30. 1 1989 1988 1987 1986 REVENUES General Property Taxes $1,990,236 $1,838,580 $1,528,117 $1,450,072 $1,652,899 Penalties & Interest 57,895 71,420 60,303 51,579 56,351 Sales Taxes 1,460,341 1,212,455 1,150,291 943,940 991,896 Franchises 693,302 642,180 623,632 581,617 629,038 Licenses & Permits 267,962 139,418 143,198 138,998 112,553 Interest 213,659 161,323 63,184 69,865 89,699 Sanitation (a) (a) 858,071 838,298 860,379 Fmes & Forfeitures 212,538 265,062 234,687 231,117 225,674 Intergovernmental -0- -0- 12,500 15,368 138,030 Miscellaneous 194.803 175.776 200.754 200.742 41.000 Total Revenues 5 090 730 $4.506.214 $4.874.737 $4.521.596 $4.797.519 EXPENDITURES General Government $1,104,528 $1,004,376 $ 1,055,090 $1,163,619 $1,047,947 Police 1,385,354 1,296,526 1,317,699 1,287,421 1,183,047 Fire 112,677 108,912 133,134 229,210 97,017 Public Safety 281,113 307,938 324,372 249,250 192,577 Streets & Drainage 751,594 585,833 746,677 . 601,056 837,894 Sanitation (a) (a) 560,141 636,330 643,380 Public Works 425,159 383,850 525,066 582,421 662,622 Community Services 413.879 350,476 394,294 419.405 508.331 Total $4,474,302 03 47 911 35,056,473 , 168 712 $5,172,815 (a) Sanitation revenues and expenditures reported in Enterprise Fund beginning October 1, 1988. General Fund and Debt Service Fund Balance for the Past Five Fiscal Years: Fiscal Year Ended September 30. 199Q 1989 1988 1987 1986 General Fund $2,021,098 $1,062,052 $ 271,347 $ 203,083 $ 656,805 Debt Service Fund $ 893,878 $ 764,512 $ 622,168 $ 539,571 $ 444,267 16 Pension Fund: The City participates in the Texas Municipal Retirement System (TMRS), an agency operated by the State of Texas. Employees of municipal governmental entities who participate in TMRS contribute a fixed percentage, currently 5%of their gross pay,and the municipal employer contributes twice such sum to TMRS. As employees leave municipal employment other than through retirement, they may withdraw from TMRS those funds they contributed, but forfeit their employer's contributions. Each municipal employer's requirements for current contributions are offset by the amounts of such forfeitures. As of March 1, 1990, the City employed full-time employees and part-time employees. All full-time employees are covered by TMRS and the City's contribution for this fiscal year as of September 30, 1989, amounted to approximately$144,239 which includes amortization of prior service cost over 25 years. The City had an unfunded accrued liability for prior service benefits in the amount of approximately $831,965 as of September 30, 1989. The liability for prior service benefits will be amortized over a period of twenty-five years of less by contributions from the City which are a level percentage of payroll. Financial Statements: A copy of the City's Financial Statements for the fiscal year ended September 30, 1990, is attached hereto in the APPENDIX B. Copies of such statements for preceding years are available, for a fee, upon request. ADMINISTRATION OF THE CITY Mayor and City Council: Policy-making and supervisory functions are the responsibility of and are vested in the Mayor and City Council fo the City, under provisions of the "Charter of the City of Pearland" (the "Charter") approved by the electorate February 6, 1971. The Council is elected at large on the first Saturday in May. The Mayor and five Council members serve three-year staggered terms. The Mayor is entitled to vote only in the event of a tie and has no power to veto Council action. Members of the Council are described below: Council Members Period Served May Term Expires Occupation C.V. (Vic) Coppinger 1 year 1993 Chairman/President Mayor Westside National Bank David L. Smith,Jr. 3 years 1991 Real Estate Broker Mayor Pro Tem Richard F. Tetens 6 years 1991 Vice President, Council Member Omsco Industries Inc. DA. Miller Jr. 2 years 1992 Professor Council Member Alvin Community College William E. Wolff 3 years 1992 Retired Council Member Randy Weber 1 year 1993 Owner, Council Member Weber's Air & Heat 17 Ark Administration: Under provisions of the Charter, the Council enacts local legislation, adopts budgets, determines policies and appoints the City Manager, who is charged with the duties of executing the laws and administering the government of the City. As the chief executive officer and head of the administrative branch of the City government, the City Manager is given the power and duties to: (1) Appoint and remove all department heads and all other employees in the administrative service of the City and may authorize the head of a department to appoint and remove subordinates in his respective department; (2) Prepare the budget annually, submit it to Council, and be responsible for its administration; (3) Prepare and submit to Council a complete report on the finances and administrative activities of the City; (4) Keep Council advised of the financial condition and future needs of the City and make appropriate recommendations; and (5) Perform such other necessary duties as prescribed by the Charter or required by Council. Members of the administrative staff are described below: City Manager - James O. DeShazer - Mr. DeShazer has served as the Acting City Manager of Pearland since January 16, 1990 and was appointed City Manager August 30, 1990. He was also employed by the City from December, 1972 to July, 1982 as the City's Tax Assessor/Collector and Assistant City Manager. Mr. DeShazer majored in Business Management with elective in Accounting at University of Tulsa. He also attended the Murray State School of Agriculture of Tishomingo, Oklahoma from 1950 to 1952. Mr. DeShazer is a Certified Texas Assessor (C.TA.) and a Registrered Professional Appraiser (R.PA.) Director of Finance - Janet S. Eastburn - Ms. Eastburn has served as Director of Finance since April 1, 1986. She was appointed to Assistant Director of Finance in 1982 and has been employed in the City's Finance Department for 20 years. For the past three years the City has received from the Government Finance Officers Association of the United States and Canada the"Distinguished Budget Presentation Award",and since 1976 the "Certificate of Achievement for Excellance in Financial Reporting." Janet is currently attending the University of Houston Clear Lake. She is also a member of the Gulf Coast Chapter of Government Finance Officers Association,Government Finance Officers Association of Texas, and Government Finance Officers Association of the United States and Canada. Tax Assessor/Collector - Barbara J. Lenamon - Ms.Lenamon has been the Tax Assessor/Collector of the City since 1982, has been employed by the City since 1974 and has nineteen (19) years experience in taxation. She is a Certified Texas Assessor (C.TA.) and a Registered Professional Assessor (R.PA.). Ms. Lenamon is a member of Texas Association of Assessing Officers (TAA.O.) and the Texas Association of Municipal Tax Administrators (TA.M.TA.). She received an Associate Degree in General Business from Alvin Community College in 1960 and holds a real estate license in Texas. Consultants: The City has retained several consultants to perform professional services in connection with the independent auditing of its books and records and other City activities. Several of these consultants are identified below: Bond Counsel Vinson & Elkins Houston, Texas Certified Public Accountants Earl Lairson & Co. Houston, Texas 18 p Asit LEGAL MATTERS Legal Opinions: The City will furnish the Underwriter a transcript of certain certified proceedings prepared incident to the authorization and issuance of the Bonds, including a certified copy of the unqualified approving opinion of the Attorney General of Texas,as recorded in the Bond Register of the Comptroller of Public Accounts of the State of Texas, to the effect that the Bonds, which the Attorney General will have examined, are valid and binding obligations of the City under the Constitution and laws of the State of Texas. The City also will furnish the approving legal opinion of Vinson&Elkins,Bond Counsel,to the effect that,based upon an examination of such transcript, the Bonds are valid and binding obligations of the City under the Constitution and laws of the State of Texas. The legal opinion of Bond Counsel will further state that the Bonds are payable, both as to principal and interest, from the levy of ad valorem taxes, within the limits prescribed by law, against taxable property within the City. The opinion of Bond Counsel is expected to be reproduced on the back panel of the Bonds over a certification by the City Secretary attesting that such legal opinion is dated as of the date of delivery of and payment for the Bonds and is a true and correct copy of the original opinion. Errors or omissions in the printing of such legal opinion on the Bonds shall not affect the validity of the Bonds nor constitute cause for the failure or refusal by the Underwriter to accept delivery of and pay for the Bonds. No-Litigation Certificate: The City will furnish to the Underwriter a certificate,dated as of the date of delivery of the Bonds,executed by an authorized officer of the Board, to the effect that no litigation of any nature has been filed or is then pending or threatened,either in state or federal courts,contesting or attacking the Bonds;restraining or enjoining the issuance,execution or delivery of the Bonds;affecting the provisions made for the payment of or security for the Bonds;in any manner questioning the authority or proceedings for the issuance,execution,or delivery of the Bonds; or affecting the validity of the Bonds. No Material Adverse Change: The obligations of the Underwriter to take and pay for the Bonds, and of the City to deliver the Bonds, are subject to the condition that, up to the time of delivery of and receipt of payment for the Bonds, there shall have been no material adverse change in the condition(financial or otherwise) of the City subsequent to the date of sale from that set forth or contemplated in the Preliminary Official Statement, as it may have been supplemented or amended through the date of sale. TAX MATTERS Tax Exemption: In the opinion of Vinson & Elkins, Bond Counsel, (i) interest on the Current Interest Bonds is excludable from gross income for federal income tax purposes under existing law, ( ii) certain"original issue discount" on the Capital Appreciation Bonds is excludable from gross income for federal income tax purposes under existing law as described more fully in "Tax Accounting Treatment of Capital Appreciation Bonds" and (iii) the Bonds are not"private activity bonds"under the Internal Revenue Code of 1986, as amended(the"Code"), and interest on the Bonds is not subject to the alternative minimum tax on individuals and corporations, except as described below in the discussion regarding the "adjusted net book income" and "adjusted current earnings" adjustments for corporations. 19 AIM The Code imposes a number of requirements that must be satisfied for interest on state or local obligations, such as the Bonds, to be excludable from gross income for federal income tax purposes. These requirements include limitations on the use of bond proceeds and the source of repayment of bonds, limitations on the investment of bond proceeds prior to expenditure,a requirement that excess arbitrage earned on the investment of bond proceeds be paid periodically to the United States and a requirement that the issuer file an information report with the Internal Revenue Service. The City has covenanted in the Bond Ordinance that it will comply with these requirements. Bond Counsel's opinion will assume continuing compliance with the covenants of the Bond Ordinance pertaining to those sections of the Code which affect the exclusion from gross income of interest on the Bonds for federal income tax purposes and,in addition,will rely on representations by the City with respect to matters solely within the knowledge of the City, which Bond Counsel has not independently verified. If the City should fail to comply with the covenants in the Bond Ordinance or if the foregoing representations should be determined to be inaccurate or incomplete, interest on the Bonds could become taxable from the date of delivery of the Bonds, regardless of the date on which the event causing such taxability occurs. The Code imposes a 20% alternative minimum tax on the "alternative minimum taxable income" of a corporation (other than any S corporation, regulated investment company, REIT, or REMIC),if the amount of such alternative minimum tax is greater than the amount of the corporation's regular income tax.The"Superfund Revenue Act of 1986" also imposes an additional .12% "environmental tax" on the alternative minimum taxable income of a corporation in excess of$2,000,000. Generally, for taxable years beginning in 1989, a corporation's alternative minimum taxable income includes 50% of the amount by which a corporation's "adjusted net book income" exceeds its alternative minimum taxable income. For later taxable years, a corporation's alternative minimum taxable income will include 75% of the amount by which a corporation's "adjusted current earnings" exceeds its alternative minimum taxable income.Because interest on tax-exempt obligations, such as the Bonds, is included in a corporation's"adjusted net book income"and"adjusted current earnings,"ownership of the Bonds could subject a corporation to alternative minimum tax consequences. Under the Code, taxpayers are required to report on their returns the amount of tax-exempt interest, such as interest on the Current Interest Bonds and original issue discount with respect to the Capital Appreciation Bonds, received or accrued during the year. Except as stated above (and as stated below in"Tax Accounting Treatment of Capital Appreciation Bonds") Bond Counsel will express no opinion as to any federal, state or local tax consequences resulting from the ownership of, receipt of interest on, or disposition of, the Bonds. Prospective purchasers of the Bonds should be aware that the ownership of tax-exempt obligations may result in collateral federal income tax consequences to financial institutions, life insurance and property and casualty insurance companies,certain S corporations with Subchapter C earnings and profits,individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations. In addition, certain foreign corporations doing business in the United States may be subject to the "branch profits tax" on their effectively-connected earnings and profits, including tax-exempt interest such as interest on the Current Interest Bonds and original issue discount with respect to the Capital Appreciation Bonds.These categories of prospective purchasers should consult their own tax advisors as to the applicability of these consequences. QUALIFIED TAX-EXEMPT OBLIGATIONS Under section 265 of the Code, no deduction is allowed in the calculation of the federal income tax of a financial institution for the portion of such financial institution's interest expense paid or incurred on indebtedness which is deemed under the Code to have been incurred or continued to acquire or carry an investment in tax-exempt obligations acquired after August 7, 1986. An exception to the foregoing provision is provided in the Code for "qualified tax-exempt obligations," which includes tax-exempt obligations, such as the Bonds, if such obligations are (a) designated by the issuer as "qualified tax-exempt obligations" and (b) issued by a political subdivision for which the aggregate amount of tax-exempt obligations(not including private activity bonds other than"qualified 501(c)(3)bonds")to be issued by such political subdivision and all entities aggregated with the issuer under the Code during the calendar year is not expected to exceed $10 million. 20 .. a . The City expects to designate the Certificates as"qualified tax-exempt obligations"and has represented that the aggregate amount of tax-exempt bonds(including the Bonds) issued by the City and the entities aggregated with the City under the Code during calendar year 1990 is not expected to exceed$10 million and that the City and entities aggregated with the City under the Code have not designated more than $10 million in "qualified tax-exempt obligations" (including the Bonds) during calendar year 1990. Notwithstanding the applicability of this exception,the financial institutions acquiring the Bonds will continue to be subject to rules in effect under prior law which disallows the deduction of 20 percent of the interest expense allocable to tax-exempt obligations, including the Bonds. GENERAL CONSIDERATIONS Sources and Compilation of Information: The information contained in this Official Statement has been obtained primarily from the City and from other sources believed to be reliable. No representation is made as to the accuracy or completeness of the information derived from sources other than the City.The summaries of the statutes,orders, and other related documents are included herein subject to all of the provisions of such documents. These summaries do not purport to be complete statements of such provisions and reference is made to such documents for further information. The information contained in this Official Statement in the section entitled "APPENDIX B Financial Statements of the City" has been provided by Earl Lairson & Co., Certified Public Accountants, and has been included herein in reliance upon their authority as an expert in the fields of auditing and accounting. Bond Counsel has reviewed the information herein contained under the captions "THE CERTIFICATES," "LEGAL MATTERS," and "TAX MATTERS," solely to determine whether such information fairly and accurately describes the Certificates,the Ordinance,and the law set out therein. Bond Counsel has neither independently verified other factual information contained in this Official Statement nor conducted an investigation of the affairs of the City for the purpose of passing upon the accuracy or completeness of this Official Statement. No person is entitled to rely upon the limited participation of such firms as an assumption of responsibility for, or an expression of opinion of any kind with regard to, the accuracy or completeness of any of the other information contained herein. Certification as to Official Statement: At the time of payment for and delivery of the Bonds, the City will furnish the Purchaser a certificate, executed by the City Secretary and Mayor,acting in their official capacities,to the effect that to the best of their knowledge and belief: (a) the descriptions and statements of or pertaining to the City contained in this Official Statement,on the date thereof and on the date of delivery were and are true and correct in all material respects; (b)insofar as the City and its affairs,including its financial affairs,are concerned,this Official Statement did not and does not contain an untrue statement of a material fact or omit to state a material fact required to be stated herein or necessary to make the statements herein,in the light of the circumstances under which they were made, not misleading; and (c) insofar as the descriptions and statements, including financial data contained in this Official Statement, of or pertaining to entities other than the City and their activities are concerned, such statements and data have been obtained from sources which the City believes to be reliable and that the City has no reason to believe that they are untrue in any material respect. Updating of Official Statement: The City will keep the Official Statement current by amendment or sticker to reflect material changes in the affairs of the City and, to the extent that information comes to its attention, in the other matters described in the Official Statement, until the delivery of the Certificates. All changes in the affairs of the City and other matters described in the Official Statement subsequent to the delivery of the Certificates and all information with respect to the resale of the Certificates shall be the responsibility of the Purchaser. 21 This Official Statement was duly authorized and approved by the City Council of the City of Pearland, as of the date specified on the first page hereof. /s/ Mayor City of Pearland ATTEST: /s/ City Secretary City of Pearland 22 Auk APPENDIX A - Economic and Demographic Characteristics The following information has been derived from various sources, including the Texas Almanac, Texas Municipal Reports, U.S. Census data, Texas Department of Agriculture, "Sales Management Survey of Buying Power", and City officials. While such sources are believed to be reliable, no representation is made as to the accuracy thereof. - City Economics - The City of Pearland is a commercial center located in the northeast corner of Brazoria County, bordering the City of Houston to the north. The City is traversed by State Highway 35 and Farm-to-Market Road 518. The City's 1980 census was 13,248, increasing 105.6% since 1970. Because of the City's proximity to Houston, the area has experienced continuing growth in residential, commercial and some light industrial development. At present there are numerous subdivisions either developed or under construction with homes ranging in value from $40,000 to $125,000, the average being approximately $55,000. There are approximately 456 business establishments located within the City which are rated by Dun and Bradstreet. Three banks within the City held combined deposits of$155,742,351 as of December 31, 1989, up from $138,640,930 of a year earlier. - Building Permits - (Source - City of Pearland) Total Value Total Value Total Value Total Value 1973 140 $ 5,253,000 20 $ 511,750 130 $ 390,405 290 $ 6,155,155 1974 117 4,310,900 19 1,171,700 144 496,428 280 5,979,028 1975 237 9,501,800 170 2,844,800 156 1,142,600 563 13,489,200 1976 295 14,188,100 268 5,471,893 197 1,109,387 760 20,769,380 1977 386 21,489,824 31 2,759,699 282 3,514,385 698 27,763,908 1978 491 23,298,945 160 8,414,422 270 3,113,533 921 34,826,900 1979 207 13,024,664 36 7,150,700 386 2,167,264 629 22,342,628 1980 94 7,485,570 18 2,204,200 495 3,007,071 607 12,696,841 1981 67 5,950,754 21 7,589,359 359 8,613,123 447 22,153,236 1982 113 8,240,600 28 3,353,835 309 5,588,377 450 17,182,812 1983 300 23,873,350 19 6,760,800 279 4,117,281 598 34,751,431 1984 231 18,135,848 31 6,314,418 328 12,329,177 590 36,779,443 1985 139 18,018,608 41 2,781,094 300 3,424,632 480 24,224,334 1986 129 11,738,284 45 3,128,100 540 3,262,872 714 18,129,256 1987 58 6,062,000 11 364,832 155 522,330 224 6,949,162 1988 403 16,537,601 59 1,725,431 119 566,734 581 18,829,766 1989 372 15,493,010 47 2,022,386 138 20,791,944 557 38,307,340 Mineral Production: According to the Texas Mid-Continent Oil and Gas Association, Brazoria County in 1986 produced 6.6 million barrels of crude oil and 78.5 billion cubic feet of natural gas, ranking 20th in State production with a combined total oil and gas value of$218.7 million. Pik • Agriculture: According to the"Texas Crop and Livestock Reporting Service",1985 cash receipts from agriculture totaled$41.5 million, of which crops contributed $24.5 million and livestock and livestock products contributed$20.7 million. In 1985 the County ranked third statewide in rice production with 2.0 million CWT and fourth statewide in 1984 with 1.1 million CWT, and is one of the State's leading counties in beef cattle production. Also contributing to the agricultural economy are grain sorghums, hay, wheat, oats, corn, soybeans, cotton, fruits, vegetables and pecans. In 1984, Brazoria County produced 4,400 bushels of oats and 78,000 bushels of all wheat. As of 1-1-86, there were 58,000 head of cattle on ranches. Manufacturing and Commerce: Employment in the County is provided by the extensive petro-chemical industry and includes the following other industries: railroad tank cars,fabricated steel products,sulphur products,concrete,mattress and upholstery,printing, sheet metal and machine works, seafood processing, instruments and valve systems, and various others. (Source: Texas Municipal Report and Brazosport Industrial Committee.) Also adding to the general economy of the county are fishing,tourism and recreation activities and agribusiness. Varner-Hogg State Park attracts approximately 50,000 to 85,000 visitors during each season. The Gulf Intracoastal Waterway comes through the lowlands near Surfside Beach and is an important waterway in America with reported annual tonnage compared to the Panama Canal and Suez Canal. - Bank Deposits for City of Pearland - (Source - Texas Banking Red Book) 12-31-1989 12-31-1988 12-31-1987 12-31-1986 12-31-1985 12-31-1984 12-31-1983 Pearland State Bank $80,106,851$ 72,396,348$70,953,000 $ 65,571,667$65,331,819$65,038,517$60,853,982 First National Bank 32,508,913 29,602,406 28,933,296 29,948,197 27,092,861 26,513,108 28,274,572 West Side National 43,126,587 36,642,176 31,490,813 29.382.923 24,071,909 19,930,059 11270,114 Total $155,742,351$138,640,930$131,377,109 $124,902,787$116,496,589$111,481,684$100,398,668 Industrial activities within the City include the manufacturing of pipe, concrete building materials, mining equipment, lighting fixtures, large storage tanks and the fabrication and forging of steel. The following is a list of the major industrial employers located within the City. Name Product Employment Aggreko, Inc. Rental of heavy industrial equipment 40 Chance Collar Co. Oilfield equipment 150 Chappell Instrument Corp. General machining job shop 42 Column's Column manufacturing 20 Davis-Lynch Inc. Oilfield specialties 100 Energy Coatings Enameling& coating pipe 100 Gate Concrete Precast & prestressed concrete floor & roof slabs 25 Homco International Inc. Oilfield equipment 87 Koza's Custom Cresting Embroidering for trade, silk screen printing of textiles 50 Markload Systems Electronic 23 Metec Thermal spray powder 20 NRG Products Fabrication of wire mesh 80 Packing Service Co., Inc. Solvents & chemicals 50 Pauluhn Electric Co. Marine lighting 120 Plating& Finishing Corp. Metal fmishing, electroplating 10 Replacement Parts Corp. Special mechanical packing 27 Texas Honing Inc. Honed metal tubing 25 West Mfg. Co., Inc. L.R. Aluminum shutters 20 .r • • Brazoria County, (the "County) is a Gulf Coast county comprising the Brazoria Primary Metropolitan Statistical Area, which is a component of the Houston-Galveston-Brazoria CMSA. The economy is based on mineral production,manufacturing and agriculture. In 1980,the County had a population of 169,587,an increase of 56.6 since 1970. According to the Texas Almanac, 1986-87, the County was created in 1836 and organised in 1837 from the Municipality of Brazoria,which name is derived from the Brazos River. It averages approximately$642 million per year from income oil, gas, magnesium, salt, stone, sand and gravel and has produced nearly a billion barrels of oil since 1902. Also,it averages approximately$45 million per year from agriculture,55%from rice,sorghums,soybeans, and commercial turf, and 45% from livestock. le r + ECONOMIC AND GROWTH INDICATORS U.S. Census of Population (a) City of Pearland Brazoria County Number % Change Number % Change 1930 -- -- 23,054 + 11.84 1940 -- -- 27,069 + 17.42 1950 -- -- 46,549 + 71.96 1960 1,497 -- 76,204 + 63.71 1970 6,444 + 330.46 108,312 + 42.13 1980 13,248 + 105.59 169,587 + 56.57 (a) 1980 Census of Population and Housing, U. S. Dept. of Commerce, Bureau of the Census. Marketing Survey of Buying Power (a) Houston-Galveston Brazoria CMSA Brazoria County Population (12-31-88) (000's) Total Population 3,608,700 196.8 Median Age (of population) 30.1 29.9 %18-24 11.2 11.6 %25-34 21.5 20.1 %35-49 21.7 22.3 %50-Over 17.7 17.4 Number of Households 1,319.5 64,400 Retail Sales (1988) (000's) Food 5,646,099 $ 314,560 Eating and Drinking 2,538,407 68,325 General Merchandise 2,968,192 109,794 Furniture, Furnishings, Appliances 1,222,434 34,584 Automotive 6,353,087 270,735 Drug 759,109 26,396 Total Retail Sales 25,647,119 1,045,898 Effective Buying Income (1988) Total Effective Buying Income ("EBI) (000's) 44,691,894 $2,475,221 Median Household EBI 26,628 33,128 %Household EBI $10,000 to $19,999 21.0 14.6 $20,000 - $34,999 27.8 26.6 $35,000 - $49,999 18.4 24.7 $50,000 and Over 16.7 21.5 (a) Statistical data from"Sales &Marketing Management- 1989 Survey of Buying Power", copyright in 1989 Sales Management Survey of Buying Power: Further reproduction is forbidden. FEB 21 '91 13:32 RUSHER PIERCE P.c ~ AMENDED- ... /i1(.5,1,, IA-/ itk RAUSCHER PIERCE REFSNES,INC. City of Pearland Certicates of Obligation Series 1991 Tentative Schedule of Events Day/Date Action Participants Monday, February 25 City Council Approves Schedule RPR, City Wednesday, February 27 Preliminary Draft of Preliminary Official RPR, BC Statement (P.O.S.) (For Internal Usc Only) Friday, March 1 Second Draft of P.O.S. (Distribute to City RPR, BC and Bond Counsel) Friday, March 8 Third Draft of P.Q.S. (Distribute to all RPR Participants) Monday, Marclikr Approve Notice to Issue Certificates of RPR, BC, City Obligation (C.O.$) Wednesday,March 3 - Publish First Notice to Issue C.O.s City Thursday, March 14 Distribute to Rating Agencies and Bond Insurers RPR Friday, March 15 Final Draft of P.O.S. (Distribute to all RPR Participants for final comments) Wednesday, March /3 Publish Second Notice to Issue C.O.s RPR, City Thursday, March 21 Forward to City Council for approval RPR Monday, March 25 City Council - Review and Approve P.O.S. RPR, City Tuesday, March 26 Rating Agency and Insurance Approval RPR Thursday, March 28 Print and Mail F.O.S. RPR Monday, April 8 Sale Date - Adopt Order Issuing C.O.s RPR, City, BC Wednesday, May 8 Delivery RPR, BC City -City of Pearknd BC -Bond Counsel RPR -Rauscher Pierce Refsnes, Inc. - .. _, .. s.,. . c•1 2.111 FEB 21 '91 13:32 RAU HER PIERCE P.2 • RAUSCHER PIERCE REFSNES,INC. City of Learland Certicates of Obligation Series 1991 Tentative Schedule of Events Day/Date Action Partieipasa Monday, February 25 City Council Approves Schedule RPR, City Wednesday, February 27 Preliminary Draft of preliminary Official RPR, BC Statement (P.O.S.) (For Internal Use Only) Friday, March 1 Second Draft of P.O.S. (Distribute to City RPR, BC and Bond Counsel) Friday, March 8 Third Draft of P.Q.S. (Distribute to all RPR Participants) Monday, March 11 Approve Notice to Issue Certificates of RPR, BC, City Obligation (C.O.$) Wednesday, March 13 Publish First Notice to Issue C.O.s City Thursday, March 14 Distribute to Rating Agencies and Bond Insurers RPR Friday, March 15 Final Draft of P.O.S. (Distribute to all RPR Participants for final comments) Wednesday, March 20 Publish Second Notice to Issue C.O.s RPR, City Thursday, March 21 Forward to City Council for approval RPR Monday, March 25 City Council - Review and Approve P.O.S. RPR, City Tuesday, March 20 Rating Agency and Insurance Approval RPR Thursday, March 28 Print and Mail F.O.S. RPR Monday, April 8 Sale Date - Adopt Order Issuing C.O.s RPR, City, BC Wednesday, May 8 Delivery RPR, BC City -City of Pearland BC -Bond Counsel RPR -Rauscher Pierce Refsnes, Inc. CITY OF PEARLANO CERIIFICAIFS OF OBLIGATION SERIES 1991 INTEREST INTEREST PRESENT PRINCIPAL 0 6.750% 0 6.750X TOTAL TOTAL NEW TOTAL DEBT YEAR ENDING DEBT DUE DUE DUE NEW PRINCIPAL SERVICE 09/30 REQUIREMENT 03/01 03/01 09/01 INTEREST & INTEREST REQUIREMENT 1991 2,348,864 2,348,864 1992 2,106,659 50,000 119,531 70,031 189,563 239,563 2,346,222 1993 2,123,800 90,000 70,031 66,994 137,025 227,025 2,350,825 1994 2,123,396 90,000 66,994 63,956 130,950 220,950 2,344,346 1995 1,592,318 110,000 63,956 60,244 124,200 234,200 1,826,518 1996 1,592,989 115,000 60,244 56,363 116,606 231,606 1,624,595 1997 1,622,553 100,000 56,363 52,988 109,350 209,350 1,831,908 1998 1,590,433 135,000 52,988 48,431 101,419 236,419 1,826,902 1999 1,592,956 140,000 48,431 43,706 92,138 232,138 1,825,094 4 2000 1,594,670 150,000 43,706 38,644 82,350 232,350 1,827,020 2001 1,590,179 165,000 38,644 33,075 71,719 236,719 1,826,898 2002 1,596,588 170,000 33,075 27,338 60,413 230,413 1,827,001 2003 1,595,088 180,000 27,338 21,263 48,600 228,600 1,823,688 2004 1,591,913 200,000 21,263 14,513 35,775 235,775 1,827,688 2005 1,595,324 210,000 14,513 . 7,425 21,938 231,938 1,827,262 2006 1,596,008 220,000 7,425 7,425 227,425 1,823,433 2007 1,824,680 1,824,680 2008 1,820,000 1,820,000 2009 1,765,000 1,765,000 S33,263,473 S2,125,000 S724,502 S604,971 S1,329,471 $3,454,471 S36,717,944 DATED: 5/01/91 DUE: 3/01/92 - 3/01/06 FIRST COUPON: 3/01/92 4 Prepared by: Rauscher Pierce Reisnes, Inc. 02/19/91 NEW918 0L090