R95-62 10-23-95•
RESOLUTION NO. R95-62
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND,
TEXAS, APPROVING THE RESOLUTION OF BRAZORIA COUNTY
MUNICIPAL UTILITY DISTRICT NO. 5 AUTHORIZING THE ISSUANCE
OF $2,020,000 UNLIMITED TAX BONDS, SERIES 1995.
WHEREAS, Brazoria County Municipal Utility District No. 5 (the
"District") is located within the extraterritorial jurisdiction of
the City of Pearland, Texas (the "City"); and
WHEREAS, by Resolution No. R80-13, dated June 9, 1980, the
City consented to the creation of the District and placed certain
conditions on the issuance of bonds by the District, including the
approval by the City Council of the District[s resolution
authorizing the issuance of such bonds; and
WHEREAS, the City Council has considered such a bond
resolution in connection with the issuance of the District's
proposed $2,020,000 Unlimited Tax Bonds, Series 1995 and has found
it to be acceptable;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF PEARLAND, TEXAS, THAT:
1. All of the matters and facts set forth in the preamble
hereof are true and correct.
2. The resolution of the board of directors of Brazoria County
Municipal Utility District No. 5, attached hereto and made a part
hereof as Exhibit A, authorizing the issuance of its $2,020,000
Unlimited Tax Bonds, Series 1995, is hereby approved.
3. The Mayor of the City of Pearland is hereby authorized to
execute such letters or other documents required to be provided to
the Attorney General of Texas in connection with the issuance of
such bonds by the District.
4. This Resolution shall take effect immediately from and
after its passage in accordance with the provisions of the Charter
of the City of Pearland and it is accordingly so resolved.
•
PASSED, APPROVED and ADOPTED this
A. D., 1995.
ATTEST:
DA C. BEN 'TEZ
CI SECRETARY
APPROVED AS TO FORM:
AM MOTES MCCULLUGH
CI Y ATTORNEY
day of /-•-•(!;6•41c)
1
TOM REID
MAYOR
OFFICIAL STATEMENT DATED OCTOR 30, 1995 X
CD
CA
IN THE OPINION OF BOND COUNSEL, INTEREST ON THE BONDS IS EXCLUDABLE FROM GROSS INCOME FOR FEDERAL p
INCOME TAX PURPOSES UNDER EXISTING LAW AND THE BONDS ARE NOT PRIVATE ACTIVITY BONDS.SEE "LEGAL MATTERS -
FOR A DISCUSSION OF BOND COUNSEL'S OPINIONS, INCLUDING A DESCRIPTION OF ALTERNATIVE MINIMUM TAX CONSE• m Pt
QUENCES FOR CORPORATIONS. X 0
The District has designated the Bonds as "qualified tax-exempt obligations."See "LEGAL MATTERS-Quaked Tax-Exempt Obligation. D z
Purchase of the Bonds by Financial Institutions." "'' 0
NEW ISSUE D X
$2,020,000 CO
BRAZORIA COUNTY MUNICIPAL UTILITY DISTRICT NO. 5 i N
(A Political Subdivision of the State of Texas, located within Brazoria County)
UNLIMITED TAX BONDS, SERIES 1995
The $2,020,000 Brazoria County Municipal Utility District No. 5 Unlimited Tax Bonds, Series 1995 (the "Bonds") are
obligations of Brazoria County Municipal Utility District No.5 (the"District") and are not obligations of the State of Texas,Brazoria
County,Texas, the City of Pearland,Texas,or any entity other than the District. Neither the faith and credit nor the taxing power of
the State of Texas,Brazoria County,Texas,the City of Pearland,Texas,or any entity other than the District is pledged to the payment
of the principal of or interest on the Bonds.
Dated: November 1, 1995 Due: September 1, as shown below
•
Principal of the Bonds is payable at the corporate trust office of Texas Commerce Bank National Association,in Dallas,Texas,the
1 paying agent/registrar(the"Registrar").Tnterest on the Bonds 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 "Registered Owner") at the close of
business on the 15th calendar day of the month next preceding each interest payment date (the "Record Date"), or by such other
customary banking arrangements as may be agreed upo y the Registrar and the Registered Owner at a risk and pense of the
Registered Owner.Interest is payable September I, 199 (ten-month interest payment),and each Marc 1 and Sept er 1 thereafter
until the earlier of maturity or redemption.The Bond re fully registered in denominations of$5,000 or any integral multiple thereof.
MATURITY SCHEDUL
(Due September
Initial Initial
Principal Interest Reoffering Principal Interest Reoffering
Amount Maturity Rate Yield(a) Amount Maturity Rate Yield(a)
$ 55,000 1998 � 4.75% 4.75% $110,000 2007(b) 5.70% 5.80%
60,000 1999 5.00 5.00 115,000 2008(b) 5.80 5.90
65,000 2000 5.00 5.10 125,000 2009(b) 6.00 6.00
75,000 2001 5.10 5.20 135,000 2010(b) 6.00 6.10
80,000 2002 5.20 5.30 145,000 2011(b) 6.00 6.15
85,000 2003 5.30 5.40 155,000 2012(b) 6.125 6.25
90,000 2004 5.40 5.50 165,000 2013(b) 6.125 6.25
95,000 2005 5.50 5.60 175,000 2014(b) 6.25 6.30
100,000 2006(b) 5.60 5.70 190,000 2015J' 6.25 6.30
(a) Information with respect to the initial reoffering yields of the Bonds is the responsibility of the Underwriter.Initial reoffering yields represent the
initial offering price,which may be changed for subsequent purchasers.
(b) The Bonds maturing on or after September 1,2006,shall be subject to redemption and payment at the option of the District,in whole or from time
to time in part on September 1,2005,or on any date thereafter, at the par value thereof plus accrued interest to the date fixed for redemption.
If less than all of the Bonds are redeemed at any time, the particular Bonds to be redeemed shall be selected by the District in
integral multiples of$5,000 within any one maturity.The registered owner of any Bond, all or a portion of which has been called for
redemption,shall be required to present same to the Registrar for payment of the redemption price on the portion of the Bond so called
j for redemption and issuance of a new Bond in the principal amount equal to the portion of such Bond not redeemed.
The Bonds constitute the fifth series of unlimited tax bonds issued by the District for the purpose of acquiring and constructing a
waterworks, wastewater and storm drainage system to serve the District, and to refund certain of such bonds issued for such purpose,
$5,985,000 in principal amount of which are outstanding as of the date of this Official Statement.Voters in the District have authorized
a total of$17,670,000 principal amount of bonds for the purpose of acquiring and constructing a waterworks, wastewater and storm
drainage system to serve the District,and for refunding purposes. Following the issuance of the Bonds,$9,585,000 principal amount of
unlimited tax bonds authorized by the District's voters will remain unissued.See"THE BONDS-Issuance of Additional Debt."The
Bonds,when issued,constitute valid and legally binding obligations of the District, payable from the proceeds of a continuing, direct
annual ad valorem tax,without legal limitation as to rate or amount,levied against all taxable property within the District. See"THE
BONDS-Source of Payment."
The Bonds are offered subject to prior sale,when,as and if issued by the District and accepted by the Underwriter,subject to the
approval of the Attorney General of Texas and of Coats,Rose,Yale,Holm,Ryman&Lee, P.C.,Bond Counsel.Delivery of the Bonds
is expected on or about November 30, 1995.
TABLE OF CONTENTS
Page No.
USE OF INFORMATION IN OFFICIAL STATEMENT 3
SALE AND DISTRIBUTION OF THE BONDS 3
Award of the Bonds 3
Marketability 3
Securities Laws 4
Municipal Bond Rating 4
Continuing Availability of Financial Information; Exemption From Rule 15c2-12: 4
OFFICIAL STATEMENT SUMMARY 5
RISK FACTORS = 8
THE BONDS 11
General 11
Assignments, Transfers and Exchanges 11
Redemption of the Bonds 11
Replacement of Registrar 12
Authority for Issuance 12
Outstanding Bonds 12
Source of Payment 12
Issuance of Additional Debt 13
No Arbitrage 13
Annexation and Consolidation 13
; Registered Owners' Remedies 14
Bankruptcy Limitation to Registered Owners' Rights 14
Legal Investment and Eligibility to Secure Public Funds in Texas 15
Defe. s nce 15
Use and Distribution of Bond Proceeds 15
THE DISTRICT 17
Authority. - 17
Description 18
Management of the District 18
Tax Assessor/Collector 19
Bookkeeper 19
Operator - 19
Auditor 19
Engineer 19
Financial Advisor • - 19
Attorney - 19
DEVELOPER 20
Role of the Developer - 20
' Description of the Developer 20
DEVELOPMENT AND HOME CONSTRUCTION 22
FUTURE DEVELOPMENT 23
' AERIAL PHOTOGRAPH OF THE DISTRICT 24
PHOTOGRAPHS TAKEN WITHIN THE DISTRICT 25
PHOTOGRAPHS TAKEN WITHIN THE DISTRICT 26
DISTRICT DEBT 27
, Debt Service Requirement Schedule 27
Bonded Indebtedness 28
Estimated Direct and Overlapping Debt Statement 30
Debt Ratios 30
' TAX DATA 31
General 31
Tax Rate Limitation 31
Maintenance Tax 31
Historical Values and Tax Collection History 31
Analysis of Tax Base 32
r-
Principal 1995 Taxpayers33
Exemptions 33
Tax Rate Calculations 34
Estimated Overlapping Taxes 34
TAXING PROCEDURES . . . . . . . . . . . . . . . . .- .. . . . .. . ... .-. - 35
Authority to Levy Taxes 35
Property Tax Code and County-wide Appraisal District . 35
Property Subject to Taxation by the District 35
Tax Abatement 36
Valuation of Property for Taxation , _ 36
District and Taxpayer Remedies 37
Levy and Collection of Taxes 37
District's Rights in the Event of Tax Delinquencies 37
THE SYSTEM 38
Regulation 38
Description 38
RISK FACTORS 39
General 39
Factors Affecting Taxable Values and Tax Payments 39
Principal Land Owner's Obligations to the District - 40
Maximum Impact on District Tax Rates 40
Tax Collection Limitations 41
Registered Owners' Remedies and Bankruptcy 41
The Effect of the Financial Institutions Act of 1989 on Tax Collections of the District 42
Marketability - 42
Future Debt 42
Competitive Nature of Houston Residential Housing Market 43
Continuing Compliance with Certain Covenants 43
- Approval of the Bonds 43
LEGAL MATTERS 43
Legal Opinions 43
No-Litigation Certificate 44
Tax Exemption 44
Tax Accounting Treatment of Original Issue Discount Bonds 45
Qualified Tax-Exempt Obligations-Purchase of the Bonds by Financial Institutions 46
OFFICIAL STATEMENT 46
General 46
Experts 47
Certification as to Official Statement 47
_ Updating of Official.Statement _ 47
Official Statement "Deemed Final" 47
Continuing Availability of Financial Information; Exemption from Rule 15c2-12, _ 48
APPENDIX A-LOCATION MAP
APPENDIX B -FINANCIAL STATEMENTS OF THE DISTRICT
2
1
USE OF INFORMATION IN OFFICIAL STATEMENT
No dealer, broker, salesman or other person has been authorized to give any information or to make any
representations other than those contained in-this Official Statement and, if given or made, such other information
or representations must not be relied upon as having been authorized by the District.
This Official Statement does not constitute,and is not authorized by the District for use in connection with,an offer
to sell or the solicitation of any offer to buy in any state in which such offer or solicitation is not authorized or in
which-the person making such offeror solicitation is not qualified to do so or to any person to whom it is unlawful
to make such offer or r solicitation. . - -
All of the summaries of the statutes,orders, resolutions,contracts,audits,and engineering and other related reports
set forth in the Official Statement are made 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, copies of
which are available from the Financial-Advisor. =
This Official Statement contains, in part, estimates, assumptions and matters of opinion which are not intended as
statements of fact, and no representation is made as to the correctness of such estimates, assumptions, or matters
of opinion, or that they will-be realized. 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 District or other
matters described herein since the date hereof. However, the District has-agreed to keep this Official Statement
current by amendment or sticker to reflect material changes in the affairs of the District and, to the extent that
information actually comes to its attention, the other matters described in the Official Statement until delivery of
the Bonds to the Initial Purchaser of the Bonds(as hereinafter defined)._See "OFFICIAL STATEMENT-Updating
of Official Statement." All changes in the affairs of the District and other matters described in the Official Statement
subsequent to the delivery of the' Bonds and all information with-respect to the resale of the Bonds is the
responsibility of the Initial Purchaser.
SALE AND DISTRIBUTION OF THE BONDS
Award of the Bonds
After requesting competitive bids-for the Bonds, the District has accepted the lowest bid, which was tendered by
a syndicate managed by Southwest Securities,Inc.,with account members Oppenheimer-&Co.,Inc. and The GMS
Group, Inc. (collectively referred to herein as the "Underwriter" or the "Initial Purchaser") to purchase the Bonds
bearing the interest rates shown under "MATURITY SCHEDULE" at a price of 97.2% of the par value thereof
plus accrued interest to the date of delivery,which resulted in a net effective interest rate of 6.1511%,as calculated
pursuant to Article 717k-2, Vernon's Texas Civil Statutes, as amended.
Marketability
The District has no control over the reoffering yields or prices of the Bonds or over trading of the Bonds in the
secondary market. Moreover, there is no assurance that a secondary market will be made in the Bonds. If there is
a secondary market, the difference between the bid and asked prices of the Bonds may be greater than the difference
between the bid and asked prices of bonds of comparable maturity and quality issued by more traditional municipal
entities, as bonds of such entities are more generally bought, sold or traded in the secondary market.
3
Securities Laws
No registration statement relating to the Bonds has been filed with the Securities and Exchange Commission under
the Securities Act of 1933,as amended,in reliance upon exemptions provided thereunder.The Bonds have not been
registered or qualified under the Securities Act of Texas in reliance upon various exemptions contained therein;nor
have the Bonds been registered or qualified under the securities acts of any other jurisdictions.The District assumes
no responsibility for registration or qualification of the Bonds under the securities laws of any jurisdiction in which
the Bonds may be offered, sold, or otherwise transferred. This disclaimer of responsibility for registration or
qualification for sale or other disposition of the Bonds should not be construed as.an interpretation of any kind with
regard to the availability of any exemption from securities registration or qualification provisions:
Municipal Bond Rating -
The District has made no application for a municipal bond rating of the Bonds, nor is it expected that the District
would have been successful in receiving an investment grade rating had such an application been made.
Continuing Availability of Financial Information;Exemption From Rule 15c2-12:
Pursuant to Texas Law, the District has its financial statements prepared in accordance with generally accepted
accounting principles, and has its financial statements audited by a certified public account in accordance with
generally accepted auditing standards within 120 days after the close of its fiscal year. The District audit report
is filed with the TNRCC within 135 days after the close of its fiscal year. Copies of each audit report are also filed
in the office of the District.
The District's financial records and audit reports are available for public inspection during regular business hours
at the office of the District and copies will be provided on written request, to the extent permitted by law, upon
payment of copying charges. Requests for copies should be addressed to the District in care of Coats, Rose, Yale,
Holm, Ryman&Lee, P.C., 1001 Fannin, 800 First City Tower, Houston, Texas 77002.
Except for its obligation to comply with the foregoing legal requirements, the District has not agreed and does not
expect to provide bondholders or any other person with continuing information about its financial condition,results
of operations, or other data subsequent to issuance of the Bonds.
After issuance of the Bonds, the total amount of outstanding obligations for the District will be less than
$10,000,000. Therefore, under the provisions of Rule 15c2-12 of the Securities and Exchange Commission, no
undertaking to provide the continuing disclosure otherwise required by Rule 15c2-12 is required with respect to
obligations, such as the Bonds, sold prior to January 1, 1996.
4
OFFICIAL STATEMENT SUMMARY
The following material is a summary of certain information contained herein and is qualified in its entirety by the
detailed information and financial statements appearing elsewhere in this Official Statement.
THE BONDS
The Issuer Brazoria County Municipal Utility District No. 5 (the "District"),
a political subdivision of the State of Texas, is located in Brazoria
County, Texas. See "THE DISTRICT."
The Issue Brazoria County Municipal Utility District No. 5 Unlimited Tax
Bonds, Series 1995, in the aggregate principal amount of
$2,020,000. Interest accrues from November 1, 1995, and is
payable September 1, 1996(ten-month interest payment),and each
March 1 and September 1 thereafter until the earlier of stated
maturity or redemption. The Bonds mature serially on September
1, in each year 1998 through 2015, both inclusive. The Bonds
maturing on or after September 1, 2006,are subject to redemption,
in whole or from time to time in part, on September 1, 2005, or
on any date thereafter, at par plus accrued interest to the date fixed
for redemption. See "THE BONDS -General."
Source of Payment The Bonds are payable from a continuing, direct annual ad
valorem tax, without legal limitation as to rate or amount, levied
against all taxable property within the District. See"THE BONDS
-Source of Payment."
Principal Use of Proceeds Proceeds of the sale of the Bonds will be used to(i)reimburse the
Developer(defined below under the caption "Developer") for the
costs relating to the construction of water distribution,wastewater
collection, and storm drainage facilities (the "System") to serve
129 fully developed single-family residential lots platted as
Southdown, Section 5, and for phase 3 of a storm water detention
pond; (ii)finance the District's share of the cost of construction of
a joint water plant and expansion of a joint wastewater treatment
plant; (iii) pay engineering costs associated with the design and
construction of such facilities; (iv) purchase land for a detention
pond site and for a buffer zone around the joint wastewater
treatment plant; (v) pay interest on funds advanced on the
District's behalf by the Developer; (vi)capitalize an amount equal
to one year in interest payments on the Bonds; and (vii)pay for
administrative and issuance costs, legal fees, fiscal agent's fees,
and certain financing costs related to the issuance of the Bonds.
See "THE BONDS - Use and Distribution of Bond Proceeds."
Payment Record The District has previously issued $1,735,000 Unlimited Tax
Bonds, Series 1982 (the "Series 1982 Bonds"), $2,750,000
Unlimited Tax Bonds, Series 1983 (the "Series 1983 Bonds"),
$1,620,000 Unlimited Tax Bonds, Series 1984 Bonds(the "Series
1984 Bonds") and $6,065,000 Unlimited Tax Refunding Bonds,
Series 1992(the "Series 1992 Refunding Bonds")to refund certain
maturities of the Series 1982, Series 1983 and Series 1984 Bonds
(collectively,the"Outstanding Bonds"),none of which Series 1982
5
Bonds and Series 1983 Bonds, $165,000 of which Series 1984
Bonds and$5,820,000 of which Series 1992 Refunding Bonds are
outstanding as of the date of this Official Statement. The District
will capitalize an amount equal to one year in interest payments on
the Bonds from the proceeds of the sale of the Bonds, and will
deposit such sum in the District's Debt Service Fund to make such
payments. The District has timely made all payments due to date
on the Outstanding Bonds. See "THE BONDS - Outstanding •
Bonds".
Municipal Bond Rating The District does not intend to make application to a rating service
for a municipal bond rating of the Bonds, nor is it expected that
the District would have been successful in obtaining an investment
grade rating had such application been made. See "SALE AND
DISTRIBUTION OF THE BONDS - Municipal Bond Rating."
Qualified Tax-Exempt
Obligations In the Bond Resolution,the District states that it has designated the
Bonds as "qualified tax-exempt obligations." The District
represents that it has or will take such action as it deems necessary
for the Bonds to constitute"qualified tax-exempt obligations." See
"LEGAL MATTERS - Qualified Tax-Exempt Obligations -
Purchase of the Bonds by Financial Institutions."
THE DISTRICT
Description Brazoria County Municipal Utility District No. 5, of Brazoria
County, Texas, a political subdivision of the State of Texas, was
created by the Texas Water Commission, now the TexasNatural
Resource Conservation Commission on March 18, 1981. The
District contains approximately 500 acres of land. The District is
located approximately 13 miles south of the central business district
of Houston, Texas, and approximately seven miles south of the
intersection of Interstate Highway 610 and State Highway 288.
State Highway 288 traverses the western portion of the District.
Approximately 19 District acres lie to the west of SH 288, and
approximately 481 District acres lie to the east of SH 288. The
District is located entirely within Brazoria County and the
extraterritorial jurisdiction of the City of Pearland. See "THE
DISTRICT - Description" and "APPENDIX A - LOCATION
MAP."
Developer The development and home construction activity which has
occurred to date in the District is described below under the
caption "Development and Home Construction." Such
development and home construction activity includes (i) the
completion of the development of 953 single-family residential lots,
and (ii)the construction of 869 homes, including 20 homes under
construction: Lennar Homes of Texas, Inc., a wholly-owned
subsidiary of Lennar Corporation (collectively, "Lennar" or the
"Developer"), a publicly traded corporation whose stock is listed
on the New York Stock Exchange, on March 9, 1994, purchased
28 fully developed single-family residential lots plus approximately
6
193 acres of undeveloped and approximately 21 acres of partially
developed land located in the District from SLS Enterprises
("SLS"). Lennar subsequently purchased 4 additional lots from
SLS. The 1995 Assessed Valuation of property now owned by
Lennar comprises approximately 1.60% of the District's total 1995
Assessed Valuation. No other owner of property located within
the District owns property the 1995 Assessed Valuation of which
is greater than 1.00% of the District's total 1995 Assessed
Valuation. See "DEVELOPER," and "TAX DATA - Principal
1995 Property Owners." Lennar has developed Southdown,
Section 5 (129 single-family residential lots on approximately 29
of such acres) and is currently constructing homes in the District
as described below under the caption "Development and Home
Construction." See "DEVELOPMENT AND HOME
CONSTRUCTION."
Development and Home Construction.. . According to the :District's Engineer, the development of
approximately 214 of the District's approximate 500 acres is
complete. Such acres have been developed as four platted
sections of the Southdown subdivision which contain(i)953 fully
developed single-family residential lots (Southdown, Sections 1
through 3 and 5)plus(ii)two reserves aggregating approximately
2 acres. As of October 1, 1995,the District contained 869 homes,
including 20 homes under construction. The District financed the
cost of acquiring and constructing the water supply and
distribution, wastewater collection and treatment, and storm
drainage system (the "System") to serve the 824 fully developed
single-family residential lots located within Southdown,Sections 1
through 3 with proceeds of the Outstanding Bonds,and the District
will acquire the water distribution,wastewater collection and storm
sewer facilities which Lennar has constructed to serve the 129 fully
developed single-family residential lots located within Southdown,
Section 5 with a portion of the proceeds of the sale of the Bonds.
See "THE SYSTEM." There are approximately 167 acres of land
located within the District available for future development,
approximately 146 acres of which are currently undeveloped, and
approximately 21 acres of which are partially developed. Such
undeveloped and partially developed acres are owned by Lennar.
See "Developer" above. In addition, approximately 102 District
acres are contained within street and drainage rights-of-way,
detention ponds,District plant sites, or are otherwise not available
for development. Although Lennar's current plans for the
undeveloped acres, as reported by Lennar,include the development
thereof into single-family residential lots when Lennar's current lot
inventory is depleted, Lennar has no obligation to the District to
develop any of such land in any particular manner or at all, and
may sell the land and lots which it owns in the District at its sole
discretion. Therefore, the District cannot represent when, or
whether, any of such currently undeveloped acres might be
developed. Lennar, as reported by Lennar, expects that the 21
partially developed acres will be used in the future for commercial
purposes. Approximately 10 of such acres have had underground
7
water, sewer and drainage lines extended to the perimeter thereof,
and approximately 11 of such acres have had street paving
extended to the perimeter thereof. See "FUTURE
DEVELOPMENT," "RISK FACTORS -Principal Land Owner's
Obligations to the District," and "DEVELOPMENT AND HOME
CONSTRUCTION."
Lennar is currently constructing homes in the District which range
in size from approximately 1,700 to 3,200 square feet of living
area and in sales price from approximately$93,000 to $131,000.
RISK FACTORS
THE BONDS ARE SUBJECT TO SPECIAL RISK FACTORS AS SET FORTH IN THIS OFFICIAL
STATEMENT. PROSPECTIVE PURCHASERS SHOULD CAREFULLY EXAMINE THE ENTIRE OFFICIAL
STATEMENT BEFORE MAKING THEIR INVESTMENT DECISIONS,ESPECIALLY THE PORTION OF THE
OFFICIAL STATEMENT ENTITLED "RISK FACTORS."
8
SELECTED FINANCIAL INFORMATION
(UNAUDITED)
1994 Assessed Valuation $50,482,380(a)
(100% of estimated market value as of January 1, 1994)
See "TAX DATA" and "TAXING PROCEDURES."
1995 Assessed Valuation - $56,050,890(b)
(100% of estimated market value as of January 1, 1995)
See "TAX DATA" and "TAXING PROCEDURES."
Estimated Valuation at October 1, 1995
(100% of estimated market value as of October 1, 1995)
See "TAX DATA" and "TAXING PROCEDURES." $61,929,860(c)
Direct Debt
Outstanding Bonds $ 5,985,000
The Bonds 2,020,000
$ 8,005,000(d)
Estimated Overlapping Debt $ 2,049,017(e)
Total Direct and Estimated Overlapping Debt $10,054,017(e)
Debt Service Fund upon delivery of the Bonds' $ 334,059(f)
1994 and Anticipated 1995 Tax Rate per $100 of Assessed Valuation $1.199(e)(g)
Direct Debt Ratios
: as a percentage of 1995 Assessed Valuation 14.28%
: as a percentage of Estimated Valuation at October 1, 1995 12.93%
Direct and Estimated Overlapping Debt Ratios
: as a percentage of 1995 Assessed Valuation 17.94%
: as a percentage of Estimated Valuation at October 1, 1995 16.23%
Average Percentage of Total Tax Collections (1990-1994) 99.93%
Average Annual Debt Service Requirements
on the Bonds and the Outstanding Bonds (1996-2012) $775,924
Maximum Annual Debt Service Requirement
on the Bonds and the Outstanding Bonds(2011) $795,263
Tax Rate per $100 of Assessed Valuation Required to Pay Average Annual
Debt Service Requirements on the Bonds and the Outstanding Bonds
(1996-2012)at 95% Tax Collections
Based Upon 1995 Assessed Valuation $1.46
Based Upon Estimated Valuation at October 1, 1995 $1.32
Tax Rate per $100 of Assessed Valuation Required to Pay
Maximum Annual Debt Service Requirement on the Bonds and the
Outstanding Bonds (2002) at 95% Tax Collections
Based Upon 1995 Assessed Valuation $1.50
Based Upon Estimated Valuation at October 1, 1995 $1.36
•
Number of Single-Family Homes (including 20 homes under construction)
as of October 1, 1995 - 869
(a) As of January 1, 1994. All property located in the District is valued on the tax-rolls by the Brazoria
County Appraisal District (the "Appraisal District") at 100% of estimated value as of January 1 of each
year. The District's tax roll is certified by the Brazoria County Appraisal Review Board (the "Appraisal
Review Board"). See "INVESTMENT CONSIDERATIONS -Factors Affecting Taxable Values and Tax
Payments."
(b) As of January 1, 1995, and comprises the District's 1995 tax roll. Such amount includes the aggregate of
values resulting from the development and construction of taxable improvements from January 1, 1994,
through December 31, 1994. The District's 1995 tax roll has been certified by the Appraisal Review
Board. See "TAXING PROCEDURES".
(c) Provided by the Appraisal District for informational purposes only, this amount is an estimate of the value
of all taxable property located within the District as of October 1, 1995, and includes an estimate of values
resulting from the development and construction of taxable improvements from January 1, 1995, through
September 30, 1995. No tax will be levied for 1995 on the increased valuation of such improvements
constructed subsequent to January 1, 1995, since the District's tax is levied annually on the valuation of
property as of January 1. The valuation of such additional improvements may vary significantly from this
estimate when the Appraisal Review Board certifies the valuation of District property for 1996. See
"TAXING PROCEDURES".
(d) See "DISTRICT DEBT."
(e) The District anticipates levying a tax rate of$1.199 per $100 of Assessed Valuation, the same tax rate
levied by the District in 1994. Such a tax rate is higher than the tax levied by many municipal utility
districts in the Houston metropolitan area. Moreover, as described in this Official Statement under the
caption "TAX DATA - Estimated Overlapping Taxes," assuming a 1995 District tax levy of$1.199 per
$100 of Assessed Valuation, the aggregate of the tax levies of all units of government which levy taxes
against the property located within the District is$3.3347 per$100 of Assessed Valuation. Such aggregate
levy is higher than the aggregate of the tax levies of many municipal utility districts located within the
Houston metropolitan area. One must consider the total tax burden of all overlapping jurisdictions imposed
upon property located within the District as contrasted with property located in comparable real estate
developments to gauge the relative tax burden on property within the District. The tax rate necessary to
service the debt issued or to be issued by the District, and the tax rates levied by other overlapping
jurisdictions, are subject to numerous uncertainties and variables, and thus the District can give no
assurance that the composite tax rates imposed by overlapping jurisdictions,plus the District's tax rate, will
be comparable with the tax rates of competing projects. To the extent that the District's composite tax rates
are not competitive with competing developments,the growth of property tax values in the District and the
investment quality or security of the Bonds could be adversely affected. See "RISK FACTORS -Factors
Affecting Taxable Values and Tax Payments" and "TAX DATA."
(f) Neither Texas law nor the Bond Resolution requires the District to maintain any particular sum in the Debt
Service Fund. Such sum includes an amount sufficient to pay one year in-interest payments on the Bonds
which will be capitalized from the proceeds of the sale of the Bonds and deposited in the District's Debt
Service Fund.
(g) The TNRCC in its Order authorizing the District to issue the Bonds advised the District to levy an initial
tax not less than$1.196 per $100 of Assessed Valuation.
10
THE BONDS
General
The following is a description of some of the terms and conditions of the Bonds, which description is qualified in
its entirety by reference to the resolution (the "Bond Resolution") of the Board of Directors of the District (the
"Board") authorizing the issuance of the Bonds. A copy of the Bond Resolution may be obtained from the District
upon written request made to the District's Financial Advisor, Rauscher Pierce Refsnes, Inc., 1001 Fannin, Suite
700, Houston,Texas 77002. - -
The $2,020,000 Brazoria County Municipal Utility District No. 5 Unlimited Tax-Bonds, Series 1995, are dated
November 1, 1995,with interest payable September 1, 1996'(ten-month interest payment);and each March 1 and
September 1 thereafter until the earlier of maturity or redemption. The Bonds-are'fully-registered serial bonds
maturing on September 1 of the years shown under "MATURITY SCHEDULE" on the cover page of this Official
Statement. Principal of the Bonds will be payable to the registered owners (the "Registered Owners") at maturity
or redemption upon presentation to the principal payment office of Texas Commerce Bank National Association,
in Dallas,Texas (the "Registrar"). Interest on the Bonds 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 at the
close of business on the 15th calendar day of the month next preceding the interest payment date (the "Record
Date"). '
Assignments, Transfers and Exchanges
The Bonds may be transferred, registered and assigned only on the registration books of the Registrar, and such
registration and transfer shall be without expense or service charge to the Registered Owner, except for any tax or
other governmental charges required to be paid with respect to such registration and transfer. A Bond may be
assigned by the execution of an assignment form on the Bonds or by other instrument of transfer and assignment
acceptable to the Registrar. At any time after the date of delivery of the Bonds to the Initial Purchaser (the "-Initial
Delivery"), any Bond may be transferred or exchanged upon its presentment and surrender at the office of the
Registrar,duly endorsed for transfer or accompanied by an assignment duly executed by the Registered Owner.To
the extent possible,new Bonds issued in an exchange or transfer of Bonds will be delivered to the Registered Owner
or assignee of the owner in not more than three business days after the receipt of the request in proper form to
transfer or exchange the Bonds. New Bonds registered and delivered in an exchange or transfer shall be in
denominations of$5,000 or any integral multiple thereof for any one maturity and for a like aggregate principal
ti amount as the Bond or Bonds surrendered for exchange or transfer. Neither the District nor the Registrar is required
(1) to transfer or exchange any Bond during a period beginning'at the opening of business on a Record Date and
ending at the close of business on the next succeeding interest payment date,or(2)to transfer or exchange any Bond
selected for redemption in whole or in part within thirty(30)calendar days of the redemption date.The District has
agreed to replace mutilated, destroyed, lost or stolen Bonds upon surrender of the mutilated Bonds, on receipt of
satisfactory evidence of such destruction, loss or theft and receipt by the District and the Registrar of security or
indemnity to keep them harmless. The District will require payment of taxes, governmental charges and other
expenses in connection with any such replacement. '
Redemption of the-Bonds
The Bonds maturing on or after September 1, 2006, shall be subject to redemption and payment at the option of
the District, in whole or from time to time in part, on September 1, 2005, or on any date thereafter, at par plus
accrued interest to the date fixed for redemption. 'Notice of the exercise of the reserved right of redemption will
be given by the Registrar at least thirty(30)days prior to the redemption date by sending such notice by first class
mail to the Registered Owner of each Bond to be redeemed in whole or in part at the address shown on the bond
register. If less than all of the Bonds are redeemed at any time, the particular Bonds to be redeemed shall be
11
selected by the District in integral multiples of$5,000 within any one maturity. If less than all of the Bonds within
one maturity are to be redeemed, the Registrar shall select the Bonds to be redeemed by lot or other random
method. The Registered Owner of any Bond, all or a portion of which has been called for redemption, shall be
required to present same to the Registrar for payment of the redemption price on the portion of the Bonds so called
for redemption and issuance of a new Bond in the principal amount equal to the portion of such Bond not redeemed.
Replacement of Registrar
Provision is made in the Bond Resolution for replacement of the Registrar. If the Registrar is replaced by the
District, the new paying agent/registrar shall act in the same capacity as the previous Registrar. In order to act as
Registrar for the Bonds, any paying agent/registrar selected by the District shall be a national or state banking
institution,organized and doing business under the laws of the United States of America or of any State, authorized
under such laws to exercise trust powers, and subject to supervision or examination by federal or state authority.
Authority for Issuance
The Bonds constitute the fifth installment of$17,670,000 in bonds for waterworks, sanitary sewer and drainage
facilities, and for refunding purposes authorized at elections held within the District on April 4, 1981, November
8, 1983, and November 7, 1987. Following the issuance of the Bonds, an aggregate of $9,585,000 principal
amount of bonds will remain authorized but unissued. See "Issuance of Additional Debt."
The Bonds are issued pursuant to the Bond Resolution, Chapters 49 and 54 of the Texas Water Code, and Article
XVI, Section 59 of the Texas Constitution.Issuance of the Bonds has been further authorized by the Texas Natural
Resource Conservation Commission(the "TNRCC"), formerly the Texas Water Commission (the "TWC"). The
City Council of the City of Pearland, Texas ("Pearland"), which is also required to approve the issuance of the
Bonds, approved the Bonds to be issued at a Pearland Council meeting.
Outstanding Bonds
The District has previously issued $1,735,000 Unlimited Tax Bonds, Series 1982 (the "Series 1982 Bonds"),
$2,750,000 Unlimited Tax Bonds,Series 1983(the"Series 1983 Bonds"),$1,620,000 Unlimited Tax Bonds,Series
1984 (the "Series 1984 Bonds") and $6,065,000 Unlimited Tax Refunding Bonds, Series 1992 (the "Series 1992
Refunding Bonds")to refund certain maturities of the Series 1982,Series 1983 and Series 1984 Bonds(collectively,
the"Outstanding Bonds"),none of which Series 1982 Bonds and Series 1983 Bonds, $165,000 of which Series 1984
Bonds and $5,820,000 of which Series 1992 Refunding Bonds are outstanding as of the date of this Official
Statement. The District has timely made all payments due to date on the Outstanding Bonds.
Source of Payment
The Outstanding Bonds and the Bonds are payable from the proceeds of a continuing,direct annual ad valorem tax,
without legal limitation as to rate or amount, levied against all taxable property located within the District. In the
Bond Resolution, the District covenants to levy a sufficient tax to pay principal of and interest on the Bonds, with
full allowance being made for delinquencies, costs of collections, Registrar fees and Appraisal District fees. Tax
proceeds, after deduction for collection costs,will be placed in the debt service fund and used solely to pay principal
of and interest on the Outstanding Bonds and the Bonds, and on additional bonds payable from taxes which may
be issued, and Registrar fees.
The Bonds are obligations of the District and are not the obligations of the State of Texas, Brazoria County,
Pearland, or any entity other than the District.
12
Issuance of Additional Debt
The District may issue additional bonds with the approval of the TNRCC, necessary to provide improvements and
facilities consistent with the purposes for which the District was created. The District's voters have authorized the
issuance of$17,670,000 unlimited tax bonds, and could authorize additional amounts. Following the issuance of
the Bonds, $9,585,000 unlimited tax bonds will remain authorized but unissued. The Bond Resolution imposes no
limitation on the amount of additional parity bonds which may be issued by the District (if authorized by the
District's voters and approved by the Board and the TNRCC).
Based on present engineering cost estimates and on development plans supplied by the Developer, in the opinion
of the District's consulting engineer, Ferro-Saylors, Inc. (the "Engineer"), the$9,585,000 authorized but unissued
bonds will be adequate to finance the extension of water, wastewater and storm drainage facilities and services to
serve all of the remaining undeveloped portions of the District. See "DEVELOPMENT AND HOME
CONSTRUCTION," "FUTURE DEVELOPMENT," and "THE SYSTEM."
The District also is authorized by statute to engage in fire-fighting activities,including the issuing of bonds payable
from taxes for such purposes. Before the District could issue such bonds, the following actions would be required:
(a) authorization of a detailed master plan and bonds for such purpose by the qualified voters in the District; (b)
amendment to the existing Pearland ordinance specifying the purpose for which the District may issue bonds; (c)
approval of the master plan and bonds by the TNRCC; and(d)approval of bonds by the Attorney General of Texas.
The Board has not considered calling an election at this time for such purposes. The District has no information
concerning any determination by Pearland with respect to modification of its ordinance.If additional debt obligations
are issued in the future by the District, such issuance may increase gross debt/property ratios and might adversely
affect the investment security of the Bonds. See "RISK FACTORS -Future Debt."
Under certain circumstances the District also is authorized to construct,develop and maintain park and recreational
facilities and to construct roads. It is not anticipated at this time that the District will participate in such activities.
No Arbitrage
The District certifies that based upon all facts and estimates now known or reasonably expected to be in existence
on the date the Bonds are delivered and paid for, the District reasonably expects that the proceeds of the Bonds will
not be used in a manner that would cause the Bonds, or any portion of the Bonds, to be "arbitrage bonds" under
the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations prescribed thereunder.
Furthermore, all officers, employees and agents of the District have been authorized and directed to provide
certifications of facts and estimates that are material to the reasonable expectations of the District as of the date the
Bonds are delivered and paid for. In particular, all or any officers of the District are authorized to certify to the
facts and circumstances and reasonable expectations of the District on the date the Bonds are delivered and paid for
regarding the amount and use of the proceeds of the Bonds.Moreover,the District covenants that it shall make such
use of the proceeds of the Bonds, regulate investment of proceeds of the Bonds and take such other and further
actions and follow such procedures, including, without limitation, calculating the yield on the Bonds, as may be
required so that the Bonds shall not become "arbitrage bonds"under the Code and the regulations prescribed from
time to time thereunder.
Annexation and Consolidation
The District lies within the extraterritorial jurisdiction of Pearland. Under Texas law, the District may be annexed
in whole, but not in part, by Pearland without the District's consent, in which case Pearland must dissolve the
District and assume the assets, functions and obligations of the District,including the Bonds,and any other bonded
indebtedness of the District existing at the time of annexation. No representation is made concerning the likelihood
of annexation or the ability of Pearland to make debt service payments should annexation occur.
The District has the right to consolidate with other districts and, in connection therewith, to provide for the
consolidation of the District's System with the water and wastewater systems of the district or districts with which
it is consolidating. No representation is made that the District will ever consolidate its System with other systems.
13
Registered Owners' Remedies
Pursuant to Texas law, the Bond Resolution provides that, in the event the District defaults in the payment of the
principal of or interest on any of the Bonds when due, fails to make payments required by the Bond Resolution into
the Debt Service Fund, or defaults in the observance or performance of any of the other covenants, conditions or
obligations set forth in the Bond Resolution, any Registered Owner shall be entitled to seek a writ of mandamus
from a court of competent jurisdiction compelling and requiring the District to make such payments or to observe
and perform such covenants, obligations or conditions. Such right is in addition to other rights the Registered
Owners may be provided by the laws of the State of Texas.
In the event of default in the payment of principal of or interest on the Bonds, the Registered Owners may seek a
writ of mandamus requiring the District to levy adequate taxes to make such payments. Except for the remedy of
mandamus, the Bond Resolution does not specifically provide for remedies to a Registered Owner in the event of
a District default, nor does it provide for the appointment of a trustee to protect and enforce the interests of the
Registered Owners. There is no acceleration of maturity of the Bonds in the event of default and, consequently, the
remedy of mandamus may have to be relied upon from year to year. Although the Registered Owners could obtain
a judgment against the District, such a judgment could not be enforced by direct levy and execution against the
District's property. Further, the Registered Owners cannot themselves foreclose on the property of the District or
sell property within the District in order to pay the principal of or interest on the Bonds. The enforceability of the
rights and remedies of the Registered Owners may be further limited by laws relating to bankruptcy,reorganization
or other similar laws of general application affecting the rights of creditors of political subdivisions such as the
District. For example, a Chapter 9 bankruptcy proceeding by the District could delay or eliminate payment of
principal or interest to the Registered Owners. See "Bankruptcy Limitation to Registered Owners' Rights"below.
Bankruptcy Limitation to Registered Owners' Rights
The enforceability of the rights and remedies of the Registered Owners may be limited by laws relating to
bankruptcy, reorganization or other similar laws of general application affecting the rights of creditors of political
subdivisions such as the District. Subject to the requirements of Texas law, the District may voluntarily proceed
under Chapter 9 of the Federal Bankruptcy Code, 11 U.S.C. 901-946, if the District: (1)is generally authorized
to file for federal bankruptcy protection by State law; (2) is insolvent or unable to meet its debts as they mature;
(3)desires to effect a plan to adjust such debts; and(4)has either obtained the agreement of or negotiated in good
faith with its creditors or is unable to negotiate with its creditors because negotiation is impracticable. Under Texas
law,_a municipal utility district such as the District must obtain the approval of the TNRCC prior to filing for
bankruptcy. The TNRCC must investigate the financial condition of the District and will authorize the District to
proceed only if the TNRCC determines that the District has fully exercised its rights and powers under Texas law
and remains unable to meet its debts and other obligations as they mature.
If the District decides in the future to proceed voluntarily under the Federal Bankruptcy Code, the District would
develop and file a plan for the adjustment of its debts and the Bankruptcy Court would confirm the District's plan
if: (1)the plan complies with the applicable provisions of the Federal Bankruptcy Code; (2)all payments to be made
in connection with the plan are fully disclosed and reasonable; (3)the District is not prohibited by law from taking
any action necessary to carry out the plan; (4) administrative expenses are paid in full; and (5) the plan is in the
best interests of creditors and is feasible. If such a plan were confirmed by the bankruptcy court, it could, among
other things, affect a Registered Owner by reducing or eliminating the amount of indebtedness, deferring or
rearranging the debt service schedule, reducing or eliminating the interest rate, modifying or abrogating collateral
or security._arrangements,. substituting (in whole or in part) other securities, and otherwise compromising and
modifying the rights andremedies of such Registered Owner's claim against the District.
14
Legal Investment and Eligibility to Secure Public Funds in Texas
The Texas Legislature has enacted four partially conflicting statutes which pertain to the eligibility of bonds issued
by a municipal utility district as investments for certain entities and as security for deposits of public funds in Texas:
Section 54.515 of the Water Code;Article 717k-6,Vemon's Texas Civil Statutes;Chapter 2256,Texas Government
Code ("Public Funds Investment Act"); and Chapter 2257, Texas Government Code ("Public Funds Collateral
Act"). After reconciling their conflicting provisions, these four statutes provide the following authorization:
1. Whether rated or unrated,bonds of the District(including the Bonds)are authorized investments in the State
of Texas for banks, savings and loan associations, insurance companies, fiduciaries, trustees and the State
of Texas;
2. Bonds of the District(including the Bonds)are authorized investments for political subdivisions of the State
of Texas only if they have been rated by a nationally recognized investment rating firm and have received
a rating of not less than "A" or its equivalent; and
3. Whether rated or unrated,bonds of the District(including the Bonds)may be used to secure the deposit of
public funds in the State of Texas.
The District has not made any investigation of any other laws, rules, regulations or investment criteria that might
affect the suitability of the Bonds for any of the above purposes or limit the authority of any of the above entities
or persons to purchase or invest in the Bonds.
The District makes no representation that the Bonds will be acceptable to banks, savings and loan associations, or
public entities for investment purposes or to secure deposits of public funds. The District has made no investigation
of other laws, regulations,or investment criteria that might apply to or otherwise limit the availability of the Bonds
for investment or collateral purposes. Prospective purchasers are urged to carefully evaluate the investment quality
of the Bonds as to the acceptability of the Bonds for investment or collateral purposes.
Defeasance
The District may defease the provisions of the Bond Resolution and discharge its obligations to the Registered
Owners of any or all of the Bonds to pay principal, interest and redemption price thereon in any manner permitted
by law.
•
Use and Distribution of Bond Proceeds
Proceeds of the sale of the Bonds will be used to (i) reimburse the Developer (defined below under the caption
"DEVELOPER"), for the costs relatin to the construction of water is n n,wastewater collection,and storm
drainage facilities(the ' ystem") serve 129 fully developed single-family residential lots platted as South
Section 52 andJoLplia.w 3 of a storm, tiC detegation_pond; (ii) finance the District's share of tke cost of
construction of a joint water plant and expansion of a joint wastewater treatn ._-• (iii)p engineeringcosts
,associated with the design and construction of such-facilities; (iv)apurchase land for a detention and site and for
a bu£fe ne around the oint wastewaterr fearment plant;(v)pay interest on fun w yawed -thel)istr#ct's behalf
by the Deyeloper;_(vi)capitalize an amount equal to one year in interest payments on the Bonds; and(vii)pav for
administrative and issuance costs, legal fees, fiscal agent's fees and certain financing costs related to the issuance
of the Bonds.
15
I Construction Costs
Developer District
Share Share
A. Developer Contribution Items (a)
1. Southdown, Section 5
a. Storm Sewer $ 80,213 187,163
b. Wastewater 33,777 78,812
c. Water 26,545 61,939
d. Well Pointing 18,643 43,499
e. Miscellaneous 4,264 9,949
Subtotal $ 163,442 $ 381,362
2. Engineering/Inspecting $ 24,210 $ 56,490
3. Detention Pond
a. Detention Pond Phase III $ 16,185 $ 37,764
Total Developer Contribution Items $ 203,837 $ 475,617
B. District Items
1. Water Plant
a. Plant Construction $ 602,453
b. Generator 47.439
Subtotal $ 649,892
2. Wastewater Plant
a. Generator, Aeration, Added Capacity $ 147,588
b. Noise Building 21.084
Subtotal $ 168,672
3. Engineering $ 101,957
4. Contingencies $ 105,000
5. Land(Wastewater Treatment Plant Buffer Zone) $ 10,708
6. Land (Detention Pond Site) 60.464
Total District Items $1,096,693
TOTAL CONSTRUCTION COSTS $1,572,310
16
II. Non-Construction Cost
A. Legal Fees S 50,500
B. Fiscal Agent Fees 40,400
C. Interest Cost
1. Capitalized Interest(1 year) 116,690
2. Developer Interest (b) 74,000
D. Bond Discount 56,560
E. Bond Issuance Expense 31,540
F. TNRCC Bond Issuance Fee 5,050
G. Bond Application Report Cost 24,000
H. Contingency (c) 48.950
TOTAL NON-CONSTRUCTION COSTS $ 447.690
TOTAL BOND ISSUE REQUIREMENT wags
00
(a) The rules of the TNRCC require in certain instances that developers within a district subject to the jurisdiction
of the TNRCC contribute to the construction program of such district an amount of money equal to thirty
percent (30%) of the construction costs of certain water, sewer and drainage facilities in that district. The
Developer has to date expended funds equal to or in excess of its required contribution toward the construction
and acquisition of the facilities being financed with the proceeds of the sale of the Bonds.
(b) Represents interest owed to the Developer on advances of construction costs and engineering fees made on the
District's behalf by the Developer. The actual amount of interest owed will be calculated at the lesser of(i)
the net effective interest rate borne by the Bonds or(ii)the interest rate at which the Developer has borrowed
funds.
(c) Represents funds which may be used by the District only upon approval of the TNRCC.
In the instance that approved estimated amounts exceed actual costs, the difference comprises a surplus which may
be expended for uses approved by the TNRCC. In the instance that 'actual costs exceed previously approved
estimated amounts and contingencies, additional TNRCC approval and the issuance of additional bonds may be
required. The Engineer has advised the District that the proceeds of the sale of the Bonds should be sufficient to
reimburse the Developer for the costs of the above-described facilities. However, the District cannot and does not
guarantee the sufficiency of such funds for such purposes.
THE DISTRICT
Authority
The District is a municipal utility district created pursuant to an order of the Texas Water Commission (the
"TWC"), now the TNRCC, dated March 18, 1981. The District was created pursuant to the authority of Chapter
54, Texas Water Code, and Article XVI, Section 59 of the Texas Constitution. The rights, powers, privileges,
authority, and functions of the District are established by the general,laws of the State of Texas pertaining to
municipal utility districts,particularly Chapters 49 and 54,Texas Water Code,as amended. The principal functions
of the District are to finance, construct, own, and operate waterworks, wastewater, and drainage facilities and to
provide such facilities and services to the customers of the District. The District, if approved by the voters within
the District,the TNRCC, and other governmental entities having jurisdiction,may establish, operate, and maintain
a fire department,independently or with one or more other conservation and reclamation districts,and provide such
facilities and services to the customers of the District. Under certain circumstances the District also is authorized
to construct, develop and maintain park and recreational facilities and to construct roads. The District is subject
to the continuing supervision of the TNRCC in certain matters.
17
The District is empowered, among other things, to purchase, construct, operate, and maintain all works,
improvements, facilities, and plants necessary for the supply of water; the collection, transportation,and treatment
of wastewater; and the control and diversion of storm water. -
Under certain limited circumstances the District also is authorized to construct, develop and maintain park and
recreational facilities and to construct roads. In addition,the District is authorized to establish,operate and maintain
a fire department,independently or with one or more other conservation and reclamation districts,and provide such
facilities and services to the customers of the District.
The TNRCC exercises continuing supervisory jurisdiction over the District. In order to obtain the.consent of
Pearland, within whose extraterritorial jurisdiction the District lies, the District has agreed to observe certain
Pearland,requirements. These requirements limit the purposes for which the District may sell bonds for the
acquisition and improvement of waterworks, wastewater, and drainage facilities;limit the net effective interest rate
on such-bonds and other terms of such bonds;and require approval by Pearland of the District's construction plans
and specifications, and the issuance of bonds.
Description -
When created, the. District contained approximately 423 acres of land. Subsequent annexations of land have
incrpaRed the- area of the District to its-present size of approximately 500 acres. The District is located
approximately 13 miles south of the central business district of Houston, Texas, and approximately seven miles
south of the intersection of Interstate Highway 610 and State Highway 288. State Highway 288 traverses the
western portion of the District. Approximately 19 District acres lie to the west of SH 288,and approximately 481
District acres lie to the east of SH 288. . The District is located entirely within Brazoria County and the
extraterritorial jurisdiction of the City of Pearland. See "APPENDIX A-LOCATION MAP."
Management of the District -
`
The District is governed by the Board of Directors(the"Board"),consisting of five directors,who have control over
and management supervision of all affairs of the District. -All of the Directors reside in the District. The directors
serve four-year staggered terms. Elections are held in even numbered years on the first Saturday in May. The
current members and officers of the Board, along with their occupations, are listed below:
Term Expires
Name Title Occupation in May
Ricki A. Willoughby President Group Account 1998
Representative
Jack T. Hollis Vice President Operations Manager Flood 1996
and Fire Restoration
David Denton Assistant Vice President and
Assistant Secretary/Treasurer Engineer . 1998
Kelly C. Flanagan Secretary/Treasurer - Computer Technician 1998
Phil Nedbalek Assistant Secretary/Treasurer General Manager 1996
Swor's Glass and
Mirror
18
Although the District does not have a general manager or any other full-time employees,it has contracted for utility
system operating, bookkeeping, tax assessing and collecting, auditing, engineering, financial advisory and legal
services as follows:
Tax Assessor/Collector
The District has engaged Wallace P. Hutchinson, Friendswood, Texas, as the District's Tax Assessor/Collector.
According to Mr. Hutchinson, he presently serves 49 taxing units as tax assessor/collector. The Tax
Assessor/Collector applies the District's tax levy to tax rolls prepared by the Brazoria County Appraisal District
and bills and collects such levy.
Bookkeeper
The District's bookkeeper is District Data Services,Inc., which acts as bookkeeper for approximately 90 utility
districts.
Operator
ECO Resources, Inc. is the general operator of the System. According to ECO Resources, Inc., it is currently
engaged as utility system operator for 130 utility districts.
Auditor
The District has employed McCall&Company, Certified Public Accountants, to audit its financial statements for
the year ending September 30, 1995. A copy of the District's audit for the fiscal year ended September 30, 1994,
is included as "APPENDIX `B'" to this Official Statement.
Engineer -
The consulting engineer for the District in connection with the design and construction of the facilities for which
the Bonds are being sold to reimburse the Developer is Ferro-Saylors, Inc. (the "Engineer"). The Engineer has
also been employed by the Developer in connection'with certain planning activities and the design of certain streets
and related improvements within the District. ' ' '
financial Advisor
The District has engaged Rauscher Pierce Refsnes,Inc.as financial advisor(the"Financial Advisor")to the District.
The fees paid to the Financial Advisor for services rendered in connection with the issuance of the Bonds are based
on a percentage of the Bonds actually issued and sold. Therefore, the payment of-such fees is contingent upon the
sale and delivery of the Bonds.
Attorney
The District has engaged Coats, Rose,Yale, Holm,Ryman&Lee, P.C., Houston,Texas as general counsel to the
District and as bond counsel ("Bond Counsel") in connection with the issuance of the Bonds. The fees to be paid
Bond Counsel in connection with the issuance of the Bonds are based on a percentage of the Bonds actually issued
and sold. Therefore, the-payment of such fees is contingent upon the sale and delivery of the Bonds. See"LEGAL
MATTERS.•
19
DEVELOPER
Role of the Developer
In general, the activities of a developer in a municipal utility district such as the District include purchasing the land
within the District,designing the subdivision,designing the utilities and streets to be constructed in the subdivision,
designing any community facilities to be built, defining a marketing program and building schedule, securing
necessary governmental approvals and permits for development, arranging for the construction of roads and the
installation of utilities(including,in some cases, water, wastewater, and drainage facilities pursuant to the rules of
the TNRCC, as well as gas, telephone, and electric service) and selling improved lots and commercial reserves to
builders, developers, or other third parties. In most instances, the developer will be required to pay up to thirty
percent of the cost of constructing certain of the water, wastewater and drainage facilities in a utility district
pursuant to the rules of the TNRCC. The relative success or failure of a developer to perform such activities in
development of the property within a utility district may have a profound effect on the security of the unlimited tax
bonds issued by a district. A developer is generally under no obligation to a district to develop the property which
it owns in a district. Furthermore, there is no restriction on a developer's right to sell any or all of the land which
it owns within a district. In addition, a developer is ordinarily a major taxpayer within a municipal utility district
during the development phase,of the property.
Description of the Developer
The development and home construction activity which has occurred to date in the District is described below under
the caption "DEVELOPMENT AND HOME CONSTRUCTION." Such development and home construction
activity includes(i)the completion of the development of 953 single-family residential lots and(ii)the construction
of 869 homes, including 20 homes under construction. Lennar Homes of Texas, Inc., a wholly-owned subsidiary
of Lennar Corporation(collectively, "Lennar"or the"Developer"),on March 9, 1994,purchased 28 fully developed
single-family residential lots plus approximately 193 acres of undeveloped and approximately 21 acres of partially
developed land located in the District from SLS Enterprises ("SLS"). Lennar subsequently purchased 4 additional
lots from SLS. The 1995 Assessed Valuation of property now owned by Lennar comprises approximately 1.60%
of the District's total 1995 Assessed Valuation. No other owner of property located within he District owns
property the 1995 Assessed Valuation of which is greater than 1.00% of the District's total 1995 Assessed
Valuation. Lennar has developed Southdown, Section 5 (129 single-family residential lots on approximately 29 of
such acres)and is constructing homes in the District as described below under the caption"DEVELOPMENT AND
HOME CONSTRUCTION." See "RISK FACTORS -Factors Affecting Taxable Values and Tax Payments," and
"TAX DATA -Principal 1995 Property Owners."
Lennar Corporation(together with its subsidiaries,the "Company),is a full service real estate company. The stock
of Lennar is listed on the New York Stock Exchange, and Lennar is subject to the information requirements of the
Securities Exchange Act of 1934,as amended, and in accordance therewith files reports and other information with
the Securities and Exchange Commission("SEC"). Reports,proxy statements and other information filed by Lennar
can be inspected at the office of the SEC at Room 1024, 450 5th Street, N.W., Washington, D.C. 20549; Room
1204 Everett McKinley Dirksen Building,219 South Dearborn Street, Chicago,lllinois 60604;Suite 500 East,5757
Wilshire Boulevard,Los Angeles, California 90036-3648;and Room 1028 Federal Building,26 Federal Plaza,New
York, New York, 10278. Copies of such material can be obtained from the Public Reference section of the SEC,
Washington, D.C. 20549, at prescribed rates. The Company's operations include homebuilding, real estate
investment and financial services. The Company's homebuilding operations include the construction and sale of
homes, as well as the purchase, development and sale of residential land. The Investment Division is involved in
the development, management and leasing, as well as the acquisition and sale, of commercial real estate and other
real estate related assets. The financial services operations consist of mortgage loan servicing and origination,
closing and title services and investments in rated commercial real estate mortgage-backed securities.
20
In 1992,the Company, through its Investment Division,began acquiring portfolios of commercial real estate assets,
including real estate related loans, which it believed it could liquidate at a profit. The Company has entered into
a total of six partnerships as of November 30, 1994, all of which have been formed to acquire and manage a
portfolio of assets. The six partnerships include four new partnerships which were formed during 1994. Shortly
after the end of the 1994 fiscal year, the Company formed a seventh partnership which consisted primarily of assets
located in California and consequently opened an Investment Division office in Los Angeles. The Company shares
in the profits and losses of the partnerships and also receives fees for the management and disposition of the
partnerships' assets. The Company has also been active in acquiring additional commercial real estate assets for
its own account during the past several years.
During 1994,the Company also began acquiring,at a discount,portions of commercial real estate mortgage-backed
securities. The Company's Investment Division invests in the unrated portions of these securities and the Financial
Services Division invests in rated portions. The Company's Investment Division partnerships also retain portions
of these securities when they are the issuer of the securities. The Company's Investment Division is the special
servicer on behalf of all the certificate holders (the majority of which are not Lennar entities) of the commercial
mortgage-backed securities which are held by the Company and its partnerships.
Since 1991 the Company has expanded its homebuilding operations by entering the following new markets: Dallas,
Texas in 1991; Houston, Texas and Port St. Lucie, Florida in 1992 and Sarasota, Florida in 1994.
The Company operates principally in three industry segments -homebuilding,real estate investment and financial
services. The financial information related to these industry segments is contained in the financial statements
incorporated by reference to pages 19 through 33 of the Company's 1994 Annual Report to Stockholders.
The Company and its predecessor have been building homes since 1954. The Company believes that, since its
acquisition of Development Corporation of America in 1986,it has each year delivered more homes in Florida than
any other homebuilder. The Company has been building homes in Arizona since 1972, where it currently is one
of the leading homebuilders. In 1991, the Company began building homes in the Dallas/Ft.Worth area of Texas,
in 1992 it started homebuilding operations in Houston, Texas, and Port St. Lucie, Florida and in late 1994 the
Company began homebuilding operations in Sarasota,Florida. The Company has constructed and sold over 100,000
homes to date.
The Company's homebuilding activities in Florida are principally conducted through Lennar Homes, Inc. In
Arizona and Texas, they are conducted through Lennar Homes of Arizona, Inc. and Lennar Homes of Texas, Inc.,
respectively.
The Company is involved in all phases of planning and building in its residential communities, including land
acquisition, site planning, preparation of land, improvement of undeveloped and partially developed acreage,
construction and marketing of homes. The Company subcontracts virtually all segments of development and
construction to others.
The Company sells single-family attached and detached homes and condominiums in buildings generally one to five
stories in height. Homes sold by the Company are primarily in the moderate price range for the areas in which they
are located. They are targeted primarily at first time homebuyers,move-up homebuyers and,in some communities,
retirees. The average sales price of a Lennar Home was $126,200 in fiscal 1994.
21
n
DEVELOPMENT AND HOME CONSTRUCTION
According to the District's Engineer,the development of approximately 214 of the District's approximate 500 acres
is complete. Such acres have been developed as four platted sections of the Southdown subdivision which contain
(i)953 fully developed single-family residential lots(Southdown,Sections 1 through 3 and 5)plus(ii)two reserves
aggregating approximately 2 acres. As,of October 1, 1995, the District contained 869 single-family-residences,
including 20 residences under construction. The District financed the cost of acquiring and constructing the water
supply and distribution, wastewater collection and treatment, and storm drainage system(the "System") to serve
the 824 fully developed single-family residential lots located within Southdown,Sections 1 through 3 with proceMc
of the Outstanding Bonds,and the District will acquire the water distribution,wastewater collection and storm sewer
facilities which Lennar has constructed to serve the 129 fully developed single-family residential lots located within
Southdown, Section 5 with a portion of the proceeds of the sale of the Bonds. There are approximately 167 acres
of land located within the District available for future development,approximately 146 acres of which are currently
undeveloped, and approximately 21 acres of which are partially developed. Such undeveloped and partially
developed acres are owned by Lennar. See "DEVELOPER" above. In addition,approximately 102 District acres
are contained within street and drainage rights-of-way, detention ponds, District plant sites, or are otherwise not
available for development. Although Lennar's current plans for the undeveloped acres, as reported by Lennar,
include the development thereof into single-family residential lots when Lennar's current lot inventory is depleted,
Lennar has no obligation to the District to develop any of such land in any particular manner or at all,and may sell
the land and lots which it owns in the District at its sole discretion. Therefore, the District cannot represent when,
or whether,any of such currently undeveloped acres might be developed. Lennar, as reported by Lennar, expects
that the 21 partially developed acres will be used in the future for commercial purposes. Approximately 10 of such
acres have had underground water, sewer and drainage lines extended to the perimeter thereof, and approximately
11 of such acres have had street paving extended to the perimeter thereof. See "FUTURE DEVELOPMENT"and
"RISK FACTORS -.Principal Land Owner's Obligations to the District."
Lennar is currently constructing homes in the District which range in size from approximately 1,700 to 3,200 square
feet of living area and in sales price from approximately$93,000 to $131,000.
As of October. 1, 1995, the status of home construction in the District was as follows:
Residential Units
Southdown Southdown Southdown Southdown
Section 1 Section 2 Section 3 Section 5 Total
Homes Completed
Sold and Occupied 258 326 230 28 842
Sold and Unoccupied 0 0 0 4 4
Unsold 0 0 0 1 1
Models 0 0 0 2 2
Subtotal 258 326 230 35 849
Homes Under Construction
Sold 0 0 -. 0 13 13
Unsold 0 0 0 7 7
Models 0 0 0 0 0
Subtotal 0 0 0 20 20
TOTALS 258 326 230 55 869
22
•
Legal Investment and Eligibility to Secure Public Funds in Texas
The Texas Legislature has enacted four partially conflicting statutes which pertain to the eligibility of bonds issued
by a municipal utility district as investments for certain entities and as security for deposits of public funds in Texas:
Section 54.515 of the Water Code;Article 717k-6,Vernon's Texas Civil Statutes;Chapter 2256,Texas Government
Code ("Public Funds Investment Act"); and Chapter 2257, Texas Government Code ("Public Funds Collateral
Act"). After reconciling their conflicting provisions, these four statutes provide the following authorization:
1. Whether rated or unrated,bonds of the District(including the Bonds)are authorized investments in the State
of Texas for banks, savings-and loan associations, insurance companies, fiduciaries, trustees and the State
of Texas;
2. Bonds of the District(including the Bonds)are authorized investments for political subdivisions of the State
of Texas only if they have been rated by a nationally recognized investment rating firm and have received
a rating of not less than "A" or its equivalent; and =
3. Whether rated or unrated, bonds of the District(including the Bonds)may be used to secure the deposit of
public funds in the State of Texas.
The District has not made any investigation of any other laws, rules, regulations or investment criteria that might
affect the suitability of the Bonds for any of the above purposes or limit the authority of any of the above entities
or persons to purchase or invest in the Bonds.
The District makes no representation that the Bonds will be acceptable to banks, savings and loan associations, or
public entities for investment purposes or to secure deposits of public funds. The District has made no investigation
of other laws, regulations,or investment criteria that might apply to or otherwise limit the availability of the Bonds
for investment or collateral purposes. Prospective purchasers are urged to carefully evaluate the investment quality
of the Bonds as to the acceptability of the Bonds for investment or collateral purposes. -
Defeasance-
The District may defease the provisions of the Bond Resolution and discharge its obligations to the Registered
Owners of any or all of the Bonds to pay principal, interest and redemption price thereon in any manner permitted
by law.
Use and Distribution of Bond Proceeds
Proceeds of the sale of the Bonds will be used to (i) reimburse the Developer (defined below under the caption
"DEVELOPER"), for the costs relating to the construction of water distribution,'wastewater collection,and storm
drainage facilities(the "System") to serve 129 fully developed single-family residential lots platted as_Southdown,
Section 5, and for phase 3 of a storm water detention pond; (ii) finance the District's share of the cost of
construction of a joint water plant and expansion of a joint wastewater treatment plant; (iii)pay engineering costs
associated with the design and construction of such facilities; (iv)purchase land for a detention pond site and for
a buffer zone around the joint wastewater treatment plant;(v)pay interest on funds advanced on the District's behalf
by the Developer; (vi)capitalize an amount equal to one year in interest payments on the Bonds; and(vii)pay for
administrative and issuance costs, legal fees, fiscal agent's fees, and certain financing costs related to the issuance
of the Bonds.
15
n
I. Construction Costs
Developer District
Share Share
A. Developer Contribution Items (a)
1. Southdown, Section 5
a. Storm Sewer $ 80,213 187,163
b. Wastewater 33,777 78,812
c. Water 26,545 61,939
d. Well Pointing 18,643 43,499
e. Miscellaneous 4.264 9.949
Subtotal $ 163,442 $ 381,362
2. Engineering/Inspecting $ 24,210 $ 56,490
3. Detention Pond
a. Detention Pond Phase III $ 16.185 $ 37.764
Total Developer Contribution Items $ 203,837 $ 475,617
B. District Items
1. Water Plant
a. Plant Construction $ 602,453
b. Generator 47.439
Subtotal $ 649,892
2. Wastewater Plant
a. Generator, Aeration,Added Capacity $ 147,588
b. Noise Building 21.084
Subtotal $ 168,672
3. Engineering $ 101,957
4. Contingencies $ 105,000
5. Land(Wastewater Treatment Plant Buffer Zone) $ 10,708
6. Land(Detention Pond Site) 60.464
Total District Items $1.096,693
TOTAL CONSTRUCTION COSTS $1,572,310
16
9
(11
II. Non-Construction Cost
A. Legal Fees $ 50,500
B. Fiscal Agent Fees 40,400
C. Interest Cost
1. Capitalized Interest (1 year) 116,690
2. Developer Interest (b) 74,000
D. Bond Discount 56,560
E. Bond Issuance Expense 31,540
F. TNRCC Bond Issuance Fee 5,050
G. Bond Application Report Cost 24,000
H. Contingency (c) 48.950
TOTAL NON-CONSTRUCTION COSTS $ 447,690
TOTAL BOND ISSUE REQUIREMENT: 12.020.00Q
(a) The rules of the TNRCC require in certain instances that developers within a district subject to the jurisdiction
of the TNRCC contribute to the construction program of such district an amount of money equal to thirty
percent (30%) of the construction costs of certain water, sewer and drainage facilities in that district. The
Developer has to date expended funds equal to or in excess of its required contribution toward the construction
and acquisition of the facilities being financed with the proceeds of the sale of the Bonds.
(b) Represents interest owed to the Developer on advances of construction costs and engineering fees made on the
District's behalf by the Developer. The actual amount of interest owed will be calculated at the lesser of(i)
the net effective interest rate borne by the Bonds or(ii)the interest rate at which the Developer has borrowed
funds.
(c) Represents funds which may be used by the District only upon approval of the TNRCC.
In the instance that approved estimated amounts exceed actual costs, the difference comprises a surplus which may
be expended for uses approved'by the TNRCC. In the instance'that actual costs exceed previously approved
estimated amounts and contingencies, additional TNRCC approval and the issuance of additional bonds may be
required. The Engineer has advised the District that the proceeds of the sale of the Bonds should be sufficient to
reimburse the Developer for the costs of the above-described facilities. However, the District cannot and does not
guarantee the sufficiency of such funds for such purposes.
THE DISTRICT -
Authority '
The District is a municipal utility district created pursuant to an order of the Texas Water Commission (the
"TWC"), now the TNRCC, dated March 18,'1981. The District was created pursuant to the authority of Chapter
54, Texas Water Code, and Article XVI, Section 59 of the Texas Constitution. The rights, powers, privileges,
authority, and functions of the District are established by the general laws of the State of Texas pertaining to
municipal utility districts,particularly Chapters 49 and 54,Texas Water Code,as amended. The principal functions
of the District are to finance, construct, own, and operate waterworks, wastewater, and drainage facilities and to
provide such facilities and services to the customers of the District. The District, if approved by the voters within
the District,the TNRCC, and other governmental entities having jurisdiction,may establish,operate, and maintain
a fire department,independently or with one or more other conservation and reclamation districts,and provide such
facilities and services to the customers of the District. Under certain circumstances the District also is authorized
to construct, develop and maintain park and recreational facilities and to construct roads. The District is subject
to the continuing supervision of the TNRCC in certain matters.
17
The District is empowered, among other things, to purchase, construct, operate, and maintain all works,
improvements, facilities,and plants n?r8csary for the supply of water; the collection, transportation,and treatment
of wastewater; and the control and diversion of storm water.
Under certain limited circumstances the District also is authorized to construct, develop and maintain park and
recreational facilities and to construct roads.In addition,the District is authorized to establish,operate and maintain
a fire department,independently or with one or more other conservation and reclamation districts,and provide such
facilities and services to the customers of the District.
The TNRCC exercises continuing supervisory jurisdiction over the District. In order to obtain the consent of
Pearland, within whose extraterritorial jurisdiction the District lies, the District has agreed to observe certain
Pearland requirements. These requirements limit the purposes for which the District may sell bonds for the
acquisition and improvement of waterworks,wastewater, and drainage facilities;limit the net effective interest rate
on such bonds and other terms of such bonds;and require approval by Pearland of the District's construction plans
and specifications, and the issuance of bonds.
Description
When created, .the District contained approximately 423 acres of land. Subsequent annexations of land have
increased the area of the District to its present size of approximately 500 acres. The District is located
approximately 13 miles south of the central business district of Houston, Texas, and approximately seven miles
south of the intersection of Interstate Highway 610 and State Highway 288. State Highway 288 traverses the
western portion of the District. Approximately 19 District acres lie to the west of SH 288,and approximately 481
District acres lie to the,east,of SH 288. .The District is_located entirely within Brazoria County and the
extraterritorial jurisdiction of the City of Pearland. See "APPENDIX A -LOCATION MAP."
Management of the District
The District is governed by the Board of Directors(the"Board"),consisting of five directors,who have control over
and management supervision of all affairs of the District. All of the Directors reside in the District. The directors
serve four-year staggered terms. Elections are held in even numbered years on the first Saturday in May. The
current members and officers of the Board, along with their occupations, are listed below:
Term Expires
Name Title - Occupation in May
Ricki A. Willoughby President Group Account 1998
Representative
Jack T. Hollis Vice President Operations Manager Flood 1996
and Fire Restoration
David Denton Assistant Vice President and
Assistant Secretary/Treasurer Engineer 1998
Kelly C. Flanagan. Secretary/Treasurer- . Computer_Technician 1998
Phil Nedbalek Assistant Secretary/Treasurer General Manager 1996
Swor's Glass and
Mirror
18
Although the District does not have a general manager or any other full-time employees,it has contracted for utility
system operating, bookkeeping, tax assessing and collecting, auditing, engineering, financial advisory and legal
services as follows:
•
Tax Assessor/Collector
The District has engaged Wallace P. Hutchinson,Friendswood, Texas, as the District's Tax Assessor/Collector.
According to Mr. Hutchinson, he presently -serves 49 taxing units as tax assessor/collector. The Tax
Assessor/Collector applies the`District's tax levy to tax rolls prepared by the Brazoria County Appraisal District
and bills and collects such levy.
•
Bookkeeper
The District's bookkeeper is District Data Services, Inc., which acts as bookkeeper for approximately 90 utility
districts. .
Operator • _
•
ECO Resources, Inc. is the general operator of the System. According to ECO Resources;=Inc., it is currently
engaged as utility system operator for 130 utility districts.
Auditor =_
The District has employed McCall&-Company,'Certified Public Accountants; to audit its financial statements for
the year ending September 30, 1995. A copy of the District's audit for the fiscal year ended September 30, 1994,
is included as "APPENDIX 'B'" to this Official Statement. -
Engineer •
The consulting engineer for the District in connection with the design and construction of the facilities for which
the Bonds are being sold to reimburse the'Developer is Ferro-Saylors, Inc. (the "Engineer"). The Engineer has
also been employed by the Developer in connection with certain planning activities and the design of certain streets
and related improvements within the District. •` -
Financial Advisor
The District has engaged Rauscher Pierce Refsnes Inc:as financial advisor(the"Financial Advisor")to the District.
The fees paid to the Financial Advisor for services rendered in connection'with the issuance of the Bonds are based
on a percentage of the Bonds actually issued and sold: Therefore, the payment of such fees is contingent upon the
sale and delivery of the Bonds-. -
Attorney
The District has engaged Coats,Rose, Yale, Holm,Ryman&Lee, P.C.,Houston;Texas as general counsel to the
District and as bond-counsel ("Bond Counsel") in connection with the issuance of the Bonds. The fees to be paid
Bond Counsel in connection with the issuance of the Bonds are based on a percentage of the Bonds actually issued
and sold. Therefore, the payment of such fees is contingent upon the sale and delivery of the Bonds. See "LEGAL
MATTERS."
19
DEVELOPER
Role of the Developer
In general, the activities of a developer in a municipal utility district such as the District include purchasing the land
within the District,designing the subdivision,designing the utilities and streets to be constructed in the subdivision,
designing any community facilities to be built, defining a marketing program and building schedule, securing
necessary governmental approvals and permits for development, arranging for the construction of.roads and the
installation of utilities(including,in some cases, water, wastewater, and drainage facilities pursuant to the rules of
the TNRCC, as well as gas, telephone, and electric service) and selling improved lots and commercial reserves to
builders, developers, or other third parties. In most instances, the developer will be required to pay up to thirty
percent of the cost of constructing certain of the water, wastewater and drainage facilities in a utility district
pursuant to the rules of the TNRCC. The relative success or failure of a developer to perform such activities in
development of the property within a utility district may have a profound effect on the security of the unlimited tax
bonds issued by a district. A developer is generally under no obligation to a district to develop the property which
it owns in a district. Furthermore, there is no restriction on a developer's right to sell any or all of the land which
it owns within a district. In addition, a developer is ordinarily a major taxpayer within a municipal utility district
during the development phase of the property.
Description of the Developer _
The development and home construction activity which has occurred to date in the District is described below under
the caption "DEVELOPMENT AND HOME CONSTRUCTION." Such development and home construction
activity includes(i)the completion of the development of 953 single-family residential lots and(ii)the construction
of 869 homes, including 20 homes under construction. Lennar Homes of Texas, Inc., a wholly-owned subsidiary
of Lennar Corporation(collectively, "Lennar"or the"Developer"),on March 9;1994,purchased 28 fully developed
single-family residential lots plus approximately 193 acres of undeveloped and approximately 21 acres of partially
developed land located in the District from SLS Enterprises ("SLS"). Lennar subsequently purchased 4 additional
lots from SLS. The 1995 Assessed Valuation of property now owned by Lennar comprises approximately 1.60%.
of the District's total 1995 Assessed Valuation. No other owner of property located within he District owns
property the 1995 Assessed.Valuation of which is greater than 1.00% of the District's total 1995 Assessed
Valuation. Lennar has developed Southdown, Section 5 (129 single-family residential lots on approximately 29 of
such acres) and is constructing homes in the District as described below under the caption"DEVELOPMENT AND
HOME CONSTRUCTION." See "RISK FACTORS -Factors Affecting Taxable Values and Tax Payments," and
"TAX DATA-Principal 1995 Property Owners."
Lennar Corporation(together with its subsidiaries,the "Company), is a full service real estate company. The stock
of Lennar is listed on the New York Stock Exchange, and Lennar is subject to the information requirements of.the
Securities Exchange Act of 1934,.as amended, and in accordance therewith files reports and other information with
the Securities and Exchange Commission("SEC"). Reports,proxy statements and other information filed by Lennar
can be inspected at the office of the SEC at Room 1024, 450 5th Street, N.W., Washington, D.C. 20549; Room
1204 Everett McKinley Dirksen Building,219 South Dearborn Street, Chicago,Illinois 60604;Suite 500 East,5757
Wilshire Boulevard,Los Angeles, California 90036-3648;and Room 1028 Federal Building,26 Federal Plaza,New
York, New York, 10278. Copies of such material can be obtained from the Public Reference section of the SEC,
Washington, D.C. 20549, at prescribed rates. The Company's operations include homebuilding, real estate
investment and financial services. The Company's homebuilding operations include the construction and sale of
homes, as well as the purchase, development and sale of residential land. The Investment Division is involved in
the development, management and leasing, as well as the acquisition and sale, of commercial real estate and other
real estate related assets. The financial services operations consist of mortgage loan servicing and origination,
closing and title services and investments in rated commercial real estate mortgage-backed securities.
20
F
APPENDIX A
LOCATION MAP
•
CITY OF HOUSTON
OP WO imih
1.14.10
I.H.10
•.4.OAt\AAA
efN 0�` . 51e
C
althT}\ • •
•` CLEAR
,s'1 3RAZORIA CO.
u"
BRAZORIA COUNTY ,' , ' a�RLANo
MI c I1 E E K
0.
M.U.0 NO.5 1 F11.e1e
I
I
I FN.33441
I
I
f
/ •O Oaf 2 1 • ,=4r /
fs..e I
ALVIN
/
Eft
Continuing Availability of Financial Information;Exemption from Rule 15c2-12
Pursuant to Texas Law, the District has its financial statements prepared in accordance with generally accepted
accounting principles, and has its financial statements audited by a certified public accountant in accordance with
generally accepted auditing standards within 120 days after the close of its fiscal year. The District audit report
is filed with the TNRCC within 135 days after the close of its fiscal year. Copies of each audit report are also filed
in the office of the District.
The District's financial records and audit reports are available for public inspection during regular business hours
at the office of the District and copies will be provided on written request, to the extent permitted by law, upon
payment of copying charges. Requests for copies should be addressed to the District in care of Coats, Rose,Yale,
Holm, Ryman&Lee, P.C., 1001 Fannin, 800 First City Tower, Houston, Texas 77002.
Except for its obligation to comply with the foregoing legal requirements, the District has not agreed and does not
expect to provide bondholders or any other person with continuing information about its financial condition,results
of operations, or other data subsequent to issuance of the Bonds.
After issuance of the Bonds, the total amount of outstanding obligations for the District will be less than
$10,000,000. Therefore, under the provisions of Rule.15c2-12 of the Securities and Exchange Commission, no
undertaking to provide the continuing disclosure otherwise required by Rule 15c2-12 is required with respect to
obligations, such as the Bonds, sold prior to January. 1, 1996.
This Official Statement was approved by the Board of Directors of Brazoria County Municipal Utility District
No. 5 as of the date shown on the first page hereof.
/s/Ricki A. Willoughby
President, Board of Directors
Brazoria County Municipal
Utility District No. 5
ATTEST:
/s/Kelly C. Flanagan
Secretary, Board of Directors
Brazoria County Municipal
Utility District No. 5
48
Experts
The information contained in the Official Statement relating to engineering and to the description of the System,
and, in particular, that engineering information included in the sections entitled "THE BONDS - Use and
Distribution of Bond Proceeds," "THE DISTRICT"and"THE SYSTEM"has been provided by Ferro-Saylors,Inc.
and has been included herein in reliance upon the authority of said firm as experts in the field of civil engineering.
•
The information contained in this Official Statement relating to assessed valuations of property generally and, in
particular, that information concerning principal taxpayers, tax collection rates and valuations contained in the
sections captioned "TAX DATA" and "DISTRICT DEBT" has been provided by the Brazoria County Appraisal
District and Wallace P. Hutchinson. The District has included certain information herein in reliance upon Mr.
Hutchinson's authority as an expert in the field of tax assessing and real property appraisal.
The District's audited financial statements for the fiscal year ended September 30, 1994,were prepared by McCall
& Company, Certified Public Accountants, and have been included herein as "APPENDIX 'B'". McCall &
Company,Certified Public Accountants,has consented to the publication of such financial statements in this Official
Statement. -
Certification as to Official Statement
The District, acting by and through its Board of Directors in its official capacity and in reliance upon the experts
listed above, hereby certifies, as of the date hereof, that to the best of its knowledge and belief, the information,
statements and descriptions pertaining to the District and its affairs herein contain no untrue statements of a material
fact and do not omit to state any material fact neepccary to make the statements herein, in light of the circumstances
under which they were made,not misleading.The information,descriptions and statements concerning entities other
than the District, including particularly other governmental entities, have been obtained from sources believed to
be reliable, but the District has made no independent investigation or verification of such matters and makes no
representation as to the accuracy or completeness thereof.
Updating of Official Statement
If, subsequent to the date of the Official Statement, the District learns, through the ordinary course of business and
without undertaking any investigation or examination for such purposes, or is notified by the Initial Purchaser, of
any adverse event which causes the Official Statement to be materially misleading, and unless the Initial Purchaser
elects to terminate its obligation to purchase the Bonds, the District will promptly prepare and supply to the Initial
Purchaser an appropriate amendment or supplement to the Official Statement satisfactory to the Initial Purchaser;
provided, however, that the obligation of the District to so amend or supplement the Official Statement will
terminate when the District delivers the Bonds to the Initial Purchaser, unless the Initial Purchaser notifies the
District in writing on or before such date that less than all of the Bonds have been sold to ultimate customers, in
which case the District's obligations hereunder will extend for an additional period of time(but not more than 90
days after the date the District delivers the Bonds)until all of the Bonds have been sold to ultimate customers.
Official Statement "Deemed Final"
For purposes of compliance with Rule 15c(2)-12 of the Securities and Exchange Commission, this document, as
the same may be supplemented or corrected by the District from time to time, may be treated as an Official
• Statement with respect to the Bonds described herein and is "deemed final"by the District as of the date hereof(or
of any such supplement or correction)except for the omission of certain information referred to in the succeeding
paragraph.
The Official Statement,when further supplemented by adding information specifying the interest rates and certain
other information relating to the Bonds,shall constitute a "FINAL OFFICIAL STATEMENT" of the District with
respect to the Bonds, as that term is defined in Rule 15c(2)-12.
47
Under existing law, the original issue discount on each Original Issue Discount Bond is accrued daily to the stated
maturity thereof(in amounts calculated as described below for each six-month period ending on the date before the
semiannual anniversary dates of the date of the Bonds and ratably within each such six-month period) and the
accrued amount is added to an initial owner's basis for such Original Issue Discount Bond for purposes of
determining the amount of gain or loss recognized by such owner upon the redemption, sale or other disposition
thereof. The amount to be added to basis for each accrual period is equal to(a) the sum of the issue price and the
amount of original issue discount accrued in prior periods multiplied by the yield to stated maturity(determined on
the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual
period)less (b) the amounts payable as current interest during the accrual period on such Bond.
The federal income tax consequences of the purchase, ownership, and redemption, sale or other disposition of
Original Issue Discount Bonds which are not purchased in the initial offering at the initial offering price may be
determined according to rules which differ from those described above.All owners of Original Issue Discount Bonds
should consult their own tax advisors with respect to the determination for federal, state, and local income tax
purposes of interest accrued upon redemption, sale or other disposition of such Original Issue Discount Bonds and
with respect to the federal, state, local and foreign tax consequences of the purchase, ownership, redemption, sale
or other disposition of such Original Issue Discount Bonds.
Qualified Tax-Exempt Obligations -Purchase of the Bonds by Financial Institutions
The Code requires a pro rata reduction in the interest expense deduction of a financial institution to reflect such
financial institution's 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 include tax-exempt
obligations,such as the bonds, (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 during the calendar year is not expected to exceed $10,000,000.
The District will designate the Bonds as "qualified tax-exempt obligations"and has represented that the aggregate
amount of tax-exempt bonds (including the Bonds) issued by the District and entities aggregated with the District
under the Code, during calendar year 1995 is not expected to exceed$10,000,000 and that the District and entities
aggregated with the District under the Code have not designated more than$10,000,000 in "qualified tax-exempt
obligations"(including the Bonds) during calendar year 1995.
Based on the foregoing representations, Bond Counsel's opinion will state that the Bonds are "qualified tax exempt
obligations"under existing law.
Notwithstanding this exception, financial institutions acquiring the Bonds will be subject to a 20% disallowance to
allocable interest expense.
OFFICIAL STATEMENT
General
The information contained in this Official Statement has been obtained primarily from the District's records, the
Engineer, the Developer, the Tax Assessor/Collector and other sources believed to be reliable; however, no
representation is made as to the accuracy or completeness of the information contained herein, except as described
below. The summaries of the statutes, resolutions and engineering and other related reports set forth herein are
included 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.
46
Except as stated above,and as stated below in"Tax Accounting Treatment Of Original Issue Discount Bonds",Bond
Counsel will express no opinion as to any federal, state or local tax consequences resulting from the receipt or
accrual of interest on, or acquisition, ownership, 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, taxpayers who may be deemed to have incurred or continued indebtedness to
purchase or carry tax-exempt obligations and individuals otherwise qualifying for the earned income credit. 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 Bonds.
These categories of prospective purchasers should consult their own tax advisors as to the applicability of these
consequences.
Bond Counsel's opinions are based on existing law, which is subject to change. Such opinions are further based
on Bond Counsel's knowledge of facts as of the date thereof. Bond Counsel assumes no duty to update or
supplement its opinions to reflect any facts or circumstances that may thereafter come to Bond Counsel's attention
or to reflect any changes in any law that may thereafter occur or become effective.
Tax Accounting Treatment of Original Issue Discount Bonds
The initial public offering price for certain of the Bonds may be less than the stated retirement price at maturity
thereof(the "Original Issue Discount Bonds").
(a) The difference between (i) the amount payable at the maturity of each Original Issue Discount
Bond, and (ii) the initial offering price to the public of such Original Issue Discount Bond
constitutes original issue discount with respect to such Original Issue Discount Bond in the hands
of any owner who has purchased such Original Issue Discount Bond in the initial public offering
of the Bonds; and
(b) Such initial owner is entitled to exclude from gross income(as defined in Section 61 of the Code)
an amount of income with respect to such Original Issue Discount Bond equal to that portion of
the amount of such original issue discount allocable to the period that such Original Issue Discount
Bond continues to be owned by such owner.
In the event of the redemption,sale or other taxable disposition of such Original Issue Discount Bond prior to stated
maturity,however, the amount realized by such owner in excess of the basis of such Original Issue Discount Bond
in the hands of such owner(adjusted upward by the portion of the original issue discount allocable to the period for
which such Original Issue Discount Bond was held by such initial owner) is includable in gross income. (Because
original issue discount is treated as interest for federal income tax purposes, the discussion regarding interest on
the Bonds under the caption "Tax Exemption" generally applies, except as otherwise provided below, to original
issue discount on an Original Issue Discount Bond held by an owner who purchased such Bond at the initial offering
price in the initial public offering of the Bonds, and should be considered in connection with the discussion in this
portion of the Official Statement.)
In rendering the foregoing opinion,Bond Counsel will assume, in reliance upon certain representations of the Initial
Purchaser, that(a) the Initial Purchaser has purchased the Bonds for contemporaneous sale to the public and(b)all
of the Original Issue Discount Bonds have been initially offered, and a substantial amount of each maturity thereof
has been sold, to the general public in arm's-length transactions for a price(and with no other consideration being
included)not more than the initial offering prices thereof stated on the cover page of this Official Statement. Neither
the District nor Bond Counsel warrants that the 'Original Issue Discount Bonds will be offered and sold in
accordance with such assumptions.Certain of the representations of the Initial Purchaser,upon which Bond Counsel
will rely in rendering the foregoing opinion,will be based upon records or facts the Initial Purchaser had no reason
to believe were not correct.
45
(4116)
•
Coats,Rose, Yale, Holm,Ryman&Lee, P.C.,also serves as general counsel to the District on matters other than
the issuance of bonds. The legal fees paid to Bond Counsel for services rendered in connection with the issuance
of the Bonds are based on a percentage of the bonds actually issued, sold and delivered and, therefore, such fees
are contingent upon the sale and delivery of the Bonds.
No-Litigation Certificate
The District will furnish the Initial Purchaser a certificate, executed by the President and Secretary of the Board,
and dated as of the date of delivery of the Bonds, that to their knowledge, no litigation is pending or threatened
affecting the validity of the Bonds,or the levy and/or collection of taxes for the payment thereof,or the organization
or boundaries of the District, or the title of the officers thereof to their respective offices.
Tax Exemption
In the opinion of Coats, Rose, Yale, Holm, Ryman & Lee, P.C., Bond Counsel, (i) interest on the Bonds is
excludable from gross income for federal income tax purposes under existing law (ii) certain "original issue
discount"on the Bonds maturing on September 1,2000 through 2008,both inclusive,and 2010 through 2015,both
inclusive(the "Original Issue Discount Bonds"), is excludable from gross income for federal income tax purposes
under existing law as described more fully in "Tax Accounting Treatment of Original Issue Discount 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 will not be subject to the alternative minimum tax on individuals and corporations,except
as described below in the discussion regarding the adjusted current earnings adjustment for corporations.
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 District file an information report with the Internal
Revenue Service. The District has covenanted in the Bond Resolution that it will comply with these requirements.
Bond Counsel's opinion will assume continuing compliance with the covenants of the Bond Resolution 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 District and the Underwriter with respect
to matters solely within the knowledge of the District and the Underwriter, respectively, which Bond Counsel has
not independently verified. If the District should fail to comply with the covenants in the Bond Resolution or the
report 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 also imposes a 20% alternative minimum tax on the "alternative minimum taxable income" of a
corporation(other than any 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 0.12% "environmental tax" on the alternative minimum taxable
income of a corporation in excess of$2,000,000.Generally, for taxable years beginning after 1989,a corporation's
alternative minimum taxable income includes 75% of the amount by which a corporation's "adjusted current
earnings"exceeds its other"alternative minimum taxable income."Because interest on tax-exempt obligations,such
as the Bonds, is included in the corporation's "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 Bonds, received or accrued during the year.
44
n
Competitive Nature of .iouston Residential Housing Market
The housing industry in the Houston area is very competitive, and the District can give no assurance that the
building programs which are planned by Lennar or any future home builder(s)will be continued or completed. The
respective competitive positions of Lennar, and any other developer or home builder(s)which might attempt future
home building or development projects in the District in the sale of developed lots or in the construction and sale
of single-family residential units are affected by most of the factors discussed in this section, and such competitive
positions are directly related to tax revenues received by the District and the growth and maintenance of taxable
values in the District.
Continuing Compliance with Certain Covenants
The Bond Resolution contains covenants by the District intended to preserve the exclusion from gross income of
interest on the Bonds. Failure of the District to comply with such covenants on a continuous basis prior to maturity
of the Bonds could result in interest on the Bonds becoming taxable retroactively to the date of original issuance.
See "LEGAL MATTERS -Tax Exemption."
Approval of the.Bonds -
As required by law, engineering plans, specifications and estimates of construction costs for the facilities and
services to be purchased or constructed by the District with theproceeds of the Bonds have been approved, subject
to certain conditions,by the TNRCC. See "THE BONDS --Use and Distribution of Bond Proceeds." In addition,
the Attorney General of Texas must approve the legality of the Bonds prior to their delivery.
Neither the TNRCC nor the Attorney General of Texas passes upon or guarantees the security of.the Bonds as an
investment, nor have the foregoing authorities passed upon the adequacy or accuracy of the information contained
in this Official Statement. -
LEGAL MATTERS
Legal Opinions -
Delivery of the Bonds will be accompanied by the unqualified approving legal 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 are valid and binding obligations of the District under the Constitution and laws of the State of Texas,
and all taxable property within the District is subject to the levy of ad valorem taxes to pay the same, without legal
limitation as to rate or amount,based upon examination of a transcript of certified proceedings held incident to the
issuance and authorization of the Bonds, and the approving legal opinion of Coats, Rose, Yale, Holm, Ryman&
Lee, P.C., Bond Counsel for the District, to a like effect. Such opinions express no opinion with respect to the
sufficiency of the security for or the marketability of the Bonds. Bond Counsel's opinion also will address the
matters described below under "Tax Exemption."
Bond Counsel has reviewed the information appearing in this Official Statement under "THE BONDS -General"
- "Assignments, Transfers and Exchanges," - "Redemption of Bonds," - "Replacement of Registrar," - "Authority
for Issuance," - "Source of Payment," . "Issuance of Additional Debt," - "No Arbitrage," - "Annexation and
Consolidation," - "Registered Owners' Remedies," - "Legal Investment and Eligibility to Secure Public Funds in
Texas,"and-"Defeasance," "THE DISTRICT-Authority"and"Attorney," "TAXING PROCEDURES," "LEGAL
MATTERS —Tax Exemption," "-Tax Accounting Treatment of Original Issue Discount Bonds,"and "-Qualified
Tax-Exempt Obligations - Purchase of the Bonds by Financial Institutions" solely to determine whether such
information, insofar as it relates to matters of law, is true and correct and whether such information fairly
summarizes matters of law, the provisions of the documents referred to therein and conforms to the provisions of
the Order of the TNRCC approving the Bonds and to the requirements of Pearland with respect to the sale of the
Bonds. Bond Counsel has not, however, independently verified any of the factual information contained in this
Official Statement nor has it conducted an investigation of the affairs of the District for the purpose of passing upon
the accuracy or completeness of this Official Statement. No person is entitled to rely upon Bond Counsel's limited
participation as an assumption of responsibility for or an expression of opinion of any kind with regard to the
accuracy or completeness of any information contained herein, other than the matters discussed immediately above.
43
The Effect of the Financial Institutions Act of 1989 on Tax Collections of the District
The Financial Institutions Reform,Recovery and Enforcement Act of 1989-("FIRREA"),contains certain provisions
-which affect the time for protesting property valuations, the fixing of tax:liens and the-collection of penalties and
interest on delinquent taxes on real property owned by the Federal Deposit Insurance Corporation ("FDIC") and
the Resolution Trust Corporation("RTC")when the FDIC or RTC is.acting as the conservator or receiver of an
insolvent financial institution.
Under FIRREA real property held by the FDIC/RTC is still subject to ad valorem taxation,but such act states(i)
that no real property of the FDIC/RTC shall be subject to foreclosure or sale without the consent of the FDIC/RTC
and no involuntary liens shall attach to such property, (ii)the FDIC or RTC shall not be liable for any penalties,
interest, or fines, including those arising from the failure to.pay any real or personal property tax when due and
(iii)notwithstanding-failure of a person to challenge anappraisal in accordance with state law,-such value shall be
determined as of the period for which such tax is imposed. - - - -
There has been no definitive judicial determination of the-validity of these provisions of FIRREA or how they are
to be construed and reconciled with respect to conflicting state laws. It is also not known whether`_the FDIC or RTC
will attempt to claim the FIRREA exemptions as to the time--for contesting valuations and tax assessments-made
prior to and after the enactment of FIRREA. Accordingly, to the extent the FIRREA provisions-are valid and
applicable to any property in the District, and to the extent that the FDIC Or RTC attempts to enforce the-same,
these provisions may affect the timeliness of collection of taxes on property, if any, owned by the FDIC or RTC
in the District, and may prevent the collection of penalties and interest on such taxes.
Marketability
The District has no understanding(other than the initial reofferingyields)with the InitialPurchaser regarding the
reoffering yields or prices of the Bonds and,has-no control over the trading-of the Bonds in the secondary market.
Moreover, there is no assurance that a secondary--market will-be made for the Bonds.If-there is a secondary market,
the difference between the bid and asked price ofthe Bonds may be-greater than the bid-and asked spread of other
bonds generally-bought,sold or traded in the-secondary market. See "SALE AND DISTRIBUTION OF THE
BONDS."
Future Debt
The District has the right to issue the remaining $9,585,000 authorized but unissued bonds for waterworks,
wastewater and drainage facilities and-for refunding purposes(see "THE BONDS--Issuance of Additional Debt"),
and such additional bonds as may hereafter beapproved by both the Board and voters of the District. The District
also has the right toissue certain other additional bonds, special project bonds,'and other obligations described in
the Bond Resolution.-All of the remaining$9,585,000 in bonds for waterworks;-wastewater-and-drainage facilities
and for refunding purposes which have heretofore been authorized-by the voters of the District may be issued by
the District-from time to time as needed. The issuance of such $9,585,000 in bonds for waterworks, wastewater
and drainage facilities is also subject-to TNRCC authorization.
The District's Engineer estimates that the aforementioned$9,585,000 authorized bonds which remain unissued will
-be adequate to finance the construction of all water, wastewater and drainage facilities to provide service to all of
the currently undeveloped portions of the District.If additional bonds are issued in the future and property values
have not increased proportionately,-such issuance may increase gross-debt/property valuation ratios and-thereby
adversely affect the investment quality or security of the Bonds and the Outstanding.Bonds. -
42
plant will be the respon47ity of the District in which each respective famy is located. According to the District's
Engineer, the existing water plant(prior to construction of the second water plant) contains capacity sufficient to
provide service to a total of 1,941 connections, of which 1,016 connections are allocated to the District,including
the 953 existing and proposed connections in Southdown,Sections 1,2, 3 and 5, 50 connections which the District
has allocated to the Pearland Independent School District, and approximately 13 commercial connections.
-Wastewater Treatment -
The District financed the District's pro rata portion of the cost of an aggregate 700,000 gallons-per-day("g.p.d.")
permanent wastewater treatment plant which the District shares with M.U.D. No. 4 with a portion of the proceeds
of the Outstanding Bonds. The District,owns 65.64% of the capacity of the facility, and M.U.D. No. 4 owns the
remainder. According to_the District's Engineer,the capacity to which the District is entitled in the joint wastewater
treatment facility,consisting of 1,838 of a total of 2,800 connections, is adequate to provide capacity to serve the
953 existing and proposed connections in Southdown,Sections 1, 2, 3 and 5, 50 connections which the District has
allocated to the Pearland Independent School District,and approximately 13 commercial connections. The District
will finance its pro rata share of the cost of certain improvements to the_facility with a portion of the proceeds of
the sale of the Bonds. These improvements are necessary to enable the District to meet the requirements of the
TNRCC waste discharge permit covering the plant.
- 100-Year Flood Plain- -
According to the District's Engineer, the Federal Emergency Management Agency Flood Hazard Boundary Map
currently_in effect which covers the land located in the District indicates that no area located within Southdown,
Sections 1, 2 and 3, and 5, which contain the 953 single-family residential lots which have been developed in the
District to date, is located within the 100-year flood plain of Clear Creek. Approximately 60 District acres, which
are contained within detention ponds or are otherwise not currently expected to be developed, are located within
the 100-year flood plain of Clear Creek.
_ RISK FACTORS "
General
The Bonds, which are obligations of the District and not of the State of Texas, Brazoria County, Texas, the City
of Pearland, Texas, or any political subdivision other than the District,are secured by a continuing,direct, annual
ad valorem tax, without legal limitation as to rate or amount, on all taxable property located within the District.
See "THE BONDS - Source of Payment;" The ultimate security for payment of the principal of and interest on
the Bonds depends upon the ability of the District to collect from the property owners within the District taxes levied
against all taxable property located within the.District or, in the event taxes are not collected and foreclosure
proceedings are instituted by the District,upon the value of the taxable property with respect to taxes levied by the
District and by other taxing authorities. The District makes no representations that over the life ofthe Bonds the
property within the District will maintain a value sufficient to justify continued payment of taxes by the_property
owners. The potential increase in taxable_valuation of District property is directly related to the economics of the
residential housing industry, not only due to general economic conditions, but also due to the particular factors
discussed below.
Factors Affecting Taxable Values and Tax.Payments
The rate of home construction within the District is directly related to the vitality of the residential housing.industry.
New residential housing construction can be significantly affected by factors_such as general economic activity,
interest rates, credit availability,construction costs, the level of unemployment and consumer demand. Decreased
levels of home construction activity restrict the growth of property values in the District. Although the District
currently contains a total of 953 fully developed single-family residential lots on which 869 single-family homes have
been constructed (including 20 homes under construction), and 84 vacant fully developed lots which are currently
available for home construction as described in the sections of this Official Statement entitled "DEVELOPMENT
AND HOME CONSTRUCTION" and "THE SYSTEM," and although Lennar is currently constructing homes
within the District, the District cannot predict the pace or magnitude of any future development or home
construction in the District in addition to the aforementioned development and home construction which has
heretofore taken place in the District.
39 -
111
Freeport Goods Exemption: Freeport goods are goods, wares, merchandise, other tangible personal
property and ores, other than oil,natural gas and other petroleum products, which have been acquired or
brought into the state for assembling,storing,manufacturing,repair,maintenance,processing or fabricating
or used to repair or maintain aircraft of a certified air carrier and shipped out of the state within 175 days.
Freeport Goods are exempted from taxation by the District.
- I
Tax Abatement
Brazoria County or the City of Pearland may designate all or part of the area within the District as a reinvestment
zone.Thereafter,the City of Pearland.(after annexation,)Brazoria County,the Pearland Independent School District
and the District, at the option and discretion of each entity,may enter into tax abatement agreements with owners
of property within the zone. Prior to entering into a tax abatement agreement, each entity must adopt guidelines and
criteria for establishing tax abatement, which each entity will follow in granting tax abatement to owners of
property. The tax abatement agreements may exempt from ad valorem taxation by each of the applicable taxing
jurisdictions, including the District, for a period of up to ten (10) years, all or any part of any increase in the
assessed valuation of property covered by the agreement over its assessed valuation in the year in which the
agreement is executed, on the condition that the property owner make specified improvements or repairs to the
property in conformity with the terms of the tax abatement. The terms of all tax abatement agreements must be
substantially the same.
Valuation of Property for Taxation
Generally, property in the District must be appraised by the Appraisal District at market value as of January 1 of
each year. Once an appraisal roll is prepared and finally approved by the Appraisal Review Board, it is used by the
District in establishing its tax rolls and tax rate. Assessments under the Property Tax Code are to be based on one
hundred percent (100%)of market value, as such is defined in the Property Tax Code.
The Property Tax Code permits land designated for agricultural use, open space or timberland to be appraised at
its value based on the land's capacity to produce agricultural or timber products rather than at its market value. The
Property Tax Code permits under certain circumstances that residential real property inventory held by a person in
the trade or business be valued at the price all of such property would bring if sold as a-unit to a purchaser who
would continue the business.Provisions of the Property Tax Code are complex and are not fully summarized here.
Landowners wishing to avail themselves of the agricultural use, open space or timberland designation or residential
real property inventory designation must apply for the designation and the appraiser is required by the Property Tax
Code to act on each claimant's right to the designation individually.A claimant may waive the special valuation as
to taxation by some political subdivisions while claiming it as to another. If a claimant receives the agricultural use
designation and later loses it by changing the use of the property or selling it to an unqualified owner, the District
can collect taxes based on the new use, including taxes for the previous three years for agricultural use and taxes
for the previous five years for open space land and timberland.
The Property Tax Code requires the Appraisal District to implement a plan for periodic reappraisal of property to
update appraisal values. The plan must provide for appraisal of all real property in the Appraisal District at least
once every three(3)years. It is not known what frequency of reappraisals will be utilized by the Appraisal District
or whether reappraisals will be conducted on a zone or county-wide basis. The District, however, at its expense,
has the right to obtain from the Appraisal District a current estimate of appraised values within the District or an
estimate of any new property or improvements within the District.While such current estimate of appraised values
may serve to indicate the rate and extent of growth of taxable values within the District, it cannot be used for
establishing a tax rate within the District until such time as the Appraisal District chooses to formally.include such
values on its appraisal roll.
36
TAX DATA
General
All taxable property within the District is subject to the assessment, levy and collection by the District of a
continuing, direct annual ad valorem tax without legal limitation as to rate or amount, sufficient to pay principal
of and interest on the Outstanding Bonds and the Bonds(see "TAXING PROCEDURES").The Board of Directors
of the District has in its Bond Resolution covenanted to assess and levy for each year that all or any part of the
Bonds remain outstanding and unpaid a tax ample and sufficient to produce funds to pay the principal of and interest
on the Bonds(see "THE BONDS" and "RISK FACTORS"). The District expects to levy a tax for debt service for
1995 at a rate of$1.199 per $100 Assessed Valuation.
Tax Rate Limitation
Debt Service: Unlimited(no legal limit as to rate or amount).
Maintenance: $0.25 per$100 Assessed Valuation.
Maintenance Tax
The Board of Directors of the District has the statutory authority to levy and collect an annual ad valorem tax for
maintenance of the District's improvements if such maintenance tax is authorized by vote of the District's electors.
On April 4, 1981, the Board was authorized by a vote of the District's electors to levy such maintenance tax in an
amount not to exceed$0.25 per $100 of assessed valuation. Such tax, when levied, is in addition to taxes which
the District is authorized to levy for paying principal of and interest on the Outstanding Bonds and the Bonds and
any parity bonds which may be issued in the future. The District has not levied a maintenance tax to date, and the
District does not anticipate levying a maintenance tax for 1995.
Historical Values and Tax Collection History
The following statement of tax collections sets forth, in condensed form, the historical Assessed Valuation and tax
collections of the District. Such summary has been prepared for inclusion herein based upon information obtained
from District records. Reference is made to such records, including the District's annual audited financial
statements, for more complete information.
% Collections
Assessed Tax Adjusted Current & Year Ending
Tax Year Valuation Rate(a) Levy Prior Years (b) 9/30
1985 $37,348,890 $1.640 $616,256.68- 100.00% 1986
1986 37,077,630 $1.640 611,780.89 100.00% 1987
1987 35,137,490 $1.640 576,254.84 100.00% 1988
1988 31,376,000 $1.640 514,566.40 100.00% 1989
1989 31,139,450 $1.640 510,686.98 100.00% 1990
1990 29,713,560 $1.640 487,302.38 100.00% 1991
1991 31,675,430 $1.605 508,390.65 100.00% 1992
1992 35,191,910 $1.544 543,363.09 100.00% 1993
1993 38,729,720 $1.520 588,691.74 99.99% 1994
1994 50,482,380 $1.199 605,283.74 99.64% 1995
(a) Per $100 of Assessed Valuation.
(b) Such percentages reflect cumulative total collections for each year from the time each respective annual tax was
levied through September 30, 1995. The amount of tax collected for each levy on a current basis (by
September 30 of the year following each respective levy) is not reflected in this statement.
31
Estimated Direct and Overlapping Debt Statement-
Other governmental entities whose boundaries overlap the District have outstanding bonds payable from ad valorem
taxes. The following statement of direct and estimated overlapping ad valorem tax debt was developed from
information contained in "Texas Municipal Reports," published by the Municipal Advisory Council of Texas, or
other available information.Except for the amount relating to the District,the District has not independently verified
the accuracy or completeness of such information,and no person is entitled to rely upon such information as being
accurate or complete. Furthermore, certain of the entities listed below may have issued additional bonds since the
dates stated in this table, and such entities may have programs requiring the issuance of substantial amounts of
additional bonds,the amount of which cannot presently be determined.Political subdivisions overlapping the District
are authorized by Texas law to levy and collect ad valorem taxes for operation,maintenance and/or general revenue
purposes in addition to taxes for payment of their debt, and some are presently levying and collecting such taxes.
Estimated
Debt as of Overlapping
October 1, 1995 Percent Amount
Brazoria County $34,787,503 0.6546% $ 227,719
Pearland Independent School District 39,481,845 4.6133 1.821.298
TOTAL ESTIMATED OVERLAPPING DEBT $2,049,017
TOTAL DIRECT.DEBT (the District) $ 8,005,000 . 8.005,000(a)
TOTAL DIRECT AND ESTIMATED -
OVERLAPPING DEBT _ $10,054,017
Ratio of Total Direct and Estimated
Overlapping Debt to:
1995 Assessed Valuation 17.94%
Estimated Valuation at October 1, 1995 16.23%
(a) See "Bonded Indebtedness" above.
Debt Ratios
% of
% of 1995 Estimated
Assessed Valuation
Valuation at October 1. 1995
Direct Debt 14.28% 12.93%
Direct and Estimated Overlapping Debt 17.94% 16.23%
30
DISTRICT DEBT
Debt Service Requirement Schedule
The following schedule sets forth the total debt service requirements for the Outstanding Bonds and the Bonds.
The Bonds Total
Outstanding . Principal Debt Service
Year Bonds (Due 9-1) Interest Requirements
1996 $ 601,268 $ 97,242 $ 698,510
1997 597,390 116,690 714,080
1998 597,110 $ 55,000- 116,690 768,790
1999 596,790 60,000 114,078 770,868
2000 601,345 - 65,000 111,078 777,423
2001 599,275 75,000 107,828 782,103
2002 600,650 80,000 104,003 784,653
2003 600,395 85,000 99,843 785,238
2004 598,553 90,000 95,338 783,891
2005 599,825 95,000 90,478 785,303
2006 599,100 100,000 85,253 784,353
2007 601,450 110,000 79,653 791,103
2008 601,700 115,000 73,383 790,083
2009 599,850 125,000 66,713 791,563
2010 600,725 135,000 59,213 794,938
2011 599,150 145,000 51,113 795,263
2012 595,125 155,000 42,413 792,538
2013 165,000 32,919 197,919
2014 175,000 22,813 197,813
2015 190,000 11,875 201.875
Totals $10,189,701 $2,020,000 $1,578,608 $13,788,309
Average Annual Requirements: (1996-2012) $775,924
Maximum Requirement: (2011) $795,263
27
•
PHOTOGRAPHS TAKEN WITHIN THE DISTRICT
(taken October, 1995)
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26
' EXHIBIT A
Page 2 of 2
BRAZORIA COUNTY MUNICIPAL UTILITY DISTRICT NO. 5 ,
COMBINED BALANCE SHEET -
ALL GOVERNMENTAL FUNDS AND ACCOUNT GROUPS
SEPTEMBER 30, 1994
•
Governmental Fund Types- Account Groups _
General General Total
Special Debt Capital Long-Term Fixed (Memorandum
LIABILITIES AND FUND EQUITY General Revenue Service Proiects Debt Assets ' Only)
.
LIABILITIES:
Accounts Payable $ 21,973 $ 13,187
Advances from Participants, Notes $ 2,640 $ $ $ $ 37,800
8 and 9 29,284 29,284
Due to Other Funds, Notes 8 and 9 6,454 2,848 ' 9,302
Security Deposits 39,543
39,543
Deferred Revenue 1,500 2,.744 ' 4,244
Bonds Payable, Note 3 6,165,0°0 6,165,000
TOTAL.LIABILITIES $ 69,470 $ 45,319 $ 5,384 $ -0- $ 6,165,000 $ -0- $ 6,285,173
FUND EQUITY:
Investment in General Fixed
• Assets, Note 6 $ $ $ $ $ $ 6,241,277 $ 6,241;277
Fund Balances:
Reserved for Authorized
Construction:
Net' Investment Revenues 21,423 21,4: r
•
Reserved for Future Debt Service 236,400 236,40
•
Reserved for Water and Sewer - „
' Plant Operations 14,817 14,817
Unreserved - Undesignated 262,828 262,828
TOTAL FUND EQUITY $ 277,645 $ -0- $ 236,400 $ 21,423 , $ -0- $ 6,241,277 $ 6,776,745
TOTAL LIABILITIES AND FUND EQUITY $ 347,115 $ 45,319 $ 241,784 $ 21,423 $ 6,165,000 $ 6,241,277 $13,061,918
The accompanying NOTES TO GENERAL PURPOSE FINANCIAL
STATEMENTS are an integral part of this report.
EXHIBIT A
Page 1 of 2
BRAZORIA COUNTY MUNICIPAL UTILITY DISTRICT NO. 5
COMBINED BALANCE SHEET - ,
ALL GOVERNMENTAL FUNDS AND ACCOUNT GROUPS
SEPTEMBER 30, 1994 •
Governmental Fund Types Account Groups
General General Total
Special Debt Capital Long-Term Fixed (Memorandum
ASSETS General Revenue Service Pro-jects Debt Assets Only)
Cash, Note 5 $ 36,428 $ 6,092
Temporary Investments - $ 38,872 $ 5,201 $ $ $ 86,593
At Cost, Note 5 263;911 11,110 200,168 16,222 491,411
Receivables:
Taxes 2,744 2,744
Service Accounts (Net of Reserve for
Doubtful Accounts of $300) 29',111 29,111
Due from Other Funds, Notes 8 and 9 2,848 6,454 9,302
Due from Other Governmental Unit, ,
Notes 8 and 9 " 21,634 21,634
Prepaid Expenditures 29 29
Advance for Regional Wastewater '
Treatment Plant Operations, Note 9 6,750 . 6,750
Advance for Joint Water Plant Operations',
Note 8 8,067 8,067
General Fixed Assets, Note 6 . 6,241,277 6,241,277
Amount Available' in Debt Service Fund . 236,400 236,400
Amount to be' Provided for Retirement
of General Long-Term Debt 5,928,600 5,928,600
TOTAL ASSETS • $ 347,115 $ .45,319, $ 241,784 $ 21,423 $ 6,165,000 $ 6,241,277 $13,061,918
'The accompanying NOTES TO GENERAL PURPOSE FINANCIAL
STATEMENTS are an integral part of this report.
McCALL & COMPANY
Certified Public Accountants
Memoer American
13405 Northwest Frwv. Institute of Certified
Suite 204 Public Accountants
Houston. Texas 77040
731462-0341 Texas Society of
Fax Certified Public
-13i462-2708 I Accountants
Board of Directors
Brazoria County Municipal
Utility District No. 5
Brazoria County, Texas
Independ'.ent Auditor' s Report
We have audited the General Purpose Financial Statements of Brazoria
County Municipal Utility District No. 5 at September 30 , 1994 and for
the year then ended, as listed in the preceding Table of Contents.
The General Purpose Financial Statements are the responsibility of
the management of the District . Our responsibility is to express an
opinion on the General Purpose Financial Statements based upon an
audit .
We have conducted the audit in accordance with generally accepted
auditing standards . These audit standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
General Purpose Financial Statements are free of material misstate-
ments . An audit includes examining, on a test basis, evidende sup-
porting the amounts and disclosures in the financial statements . An
audit also includes assessing the accounting principles used and sig-
nificant estimates made by management, as well as evaluating the
overall General Purpose Financial Statement presentation. We believe
the auditlprovides a reasonable basis for the opinion presented.
In our opinion, the General Purpose Financial Statements referred to
above present fairly, in all material respects, the financial posi-
tion of Brazoria County Municipal Utility District No. 5 as of
September \30 , 1994 and the results of its operations for the year
then ended, in conformity with generally accepted accounting princi-
ples .
- .` I
McCall & Company
Certified Public Accountants
January 3 , 1995
TABLE71
OF CONTENTS
EXHIBIT
INDEPENDENT AUDITOR' S REPORT
GENERAL PURPOSE FINANCIAL STATEMENTS
COMBINED BALANCE SHEET - ALL GOVERNMENTAL FUNDS
AND ACCOUNT GROUPS A
COMBINED STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL
FUNDS B
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCES - BUDGET AND ACTUAL - GENERAL FUND
AND SPECIAL REVENUE FUND C
COMBINING AND INDIVIDUAL FUND STATEMENTS
NOTES TO GENERAL PURPOSE FINANCIAL STATEMENTS D
SUPPLEMENTAL INFORMATION
(SEE SEPARATE SUMMARY OF SUPPLEMENTAL
SCHEDULES AND INDEPENDENT AUDITOR' S
REPORT ON SUPPLEMENTAL INFORMATION)
APPENDIX B
BRAZORIA COUNTY MUNICIPAL UTILITY DISTRICT NO. 5
BRAZORIA COUNTY, TEXAS
ANNUAL FINANCIAL REPORT
SEPTEMBER 30, 1994
• I
rn
BRAZORIA COUNTY MUNICIPAL UTILITY DISTRICT NO. 5
SPECIAL REVENUE FUNDS
COMBINING -BALANCE SHEET
SEPTEMBER 30 , 1994
Wastewater
Treatment Water
ASSETS Plant Plant Totals
Cash . $ .. 3 , 981 $ 2, 111 $ 6, 092
Temporary Investments -
At Cost 1, 040 10, 070 11, 110
Due from Other Funds - 6 , 454 - - -- 6, 454
Due from Other Governmental -
Unit 10 , 629 11, 005 21, 634
Prepaid Expenditures 29 - 29_
TOTAL ASSETS _ _$ 22 , 133 $ 23 , 186 ' $ 45, 319
LIABILITIES AND FUND EQUITY •
Liabilities :
Accounts Payable -- - $- 10 , 333 $ 2 , 854 $ 13, 187
- Due to Other Funds 2, 848 . 2,848.
Advances from Participants 11, 800 17 , 484 29, 284
TOTAL LIABILITIES $ 22 , 133 $ 23 , 186 $ 45, 319
FUND BALANCE
Fund Balances :
Unreserved - Undesignated $ -0- $
-0- $ -0-
TOTAL LIABILI-TIES AND FUND - -
BALANCE $ 22 , 133 $ 23 , 186 $ 45, 319
EXHIBIT D
Page 2 of 17
BRAZORIA COUNTY MUNICIPAL UTILITY DISTRICT NO. 5
NOTES TO GENERAL PURPOSE FINANCIAL STATEMENTS
SEPTEMBER 30 , 1994
NOTE 2 . SIGNIFICANT ACCOUNTING POLICIES' (Continued)
Funds -
(Continued) -
- 1
EXHIBIT D
Page 2 of 17
BRAZORIA COUNTY MUNICIPAL UTILITY DISTRICT NO. 5
NOTES TO GENERAL PURPOSE FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
NOTE 2 . SIGNIFICANT- ACCOUNTING POLICIES (Continued)
Funds
(Continued)
Debt Service Fund
To account for ad valorem taxes and financial resources accumulated
for debt service . The "Water District Accounting Manual" provides for
a separate tax fund for ad valorem debt service taxes and tax cash ac-
counts, which is combined with the debt service fund in this report .
Special Revenue Fund -
To account for financial resources collected and administered by the
District for the operation of a joint sewage treatment plant and a
joint water plant which are component units of the District .
General Fund
To account for resources not required to be accounted for in another
fund, customer service revenues and costs and general expenditures .
Account Groups -
General Long-Term Debt
To account for the unmatured" principal of general long-term debt obli-
gations .
General Fixed Assets
To account for completed facilities and district organizational costs .
The General Purpose Financial Statements include a total column which
is presented for memorandum purposes only and is not intended to pre-
sent Consolidated Financial Statements .
Basis of Accounting -
The accompanying financial statements have been prepared on the modi-
fied accrual basis of accounting. Under this method all expenditures
except bond interest and all revenues currently available are accrued.
EXHIBIT D
Page 3 of 17
BRAZORIA COUNTY MUNICIPAL UTILITY DISTRICT NO. 5
NOTES TO GENERAL PURPOSE FINANCIAL STATEMENTS
SEPTEMBER 30 , 1994
NOTE 2 . SIGNIFICANT ACCOUNTING POLICIES (Continued)
Basis of Accounting (Continued)
Property taxes considered available by the District and included in
revenue include taxes collected during the year and taxes collected
after year end which were considered available to defray the expendi-
tures of the current year. Deferred tax revenues are those taxes
which the District does not reasonably expect to be collected soon
enough in the subsequent period to finance current period expendi-
tures .
The District capitalized all costs associated with the creation of the
District and all costs directly associated with the sale of the bonds .
From the date of sale of bonds through the date of the significant
completion of related improvements, interest earnings and interest
expenditures related to the bond proceeds are being capitalized.
All general fixed assets, including infrastructure fixed assets, are
stated at the full costs of assets owned by the District, and any con-
tribution by others is recorded in fund equity.
In addition, the District capitalizes the cost of meters and boxes and
residential lines as a part of the water system in general fixed as-
sets . Repairs are not capitalized and replacements of fixed assets
are capitalized only to the extent that they exceed the cost of the
original assets . Depreciation is not recorded on general fixed
assets .
Amounts transferred from one fund to another fund are reported as an
other financing source or use. Loans by one fund to another fund and
amounts paid by one fund for another fund are reported as interfund
receivables and payables in the balance sheet if there is intent to
repay the amount and if the debtor fund has the ability to repay the
advance timely.
In compliance with governmental accounting principles, the Board of
Directors annually adopts unappropriated budgets for the General Fund
and the Special Revenue Funds .
The District does not have employees; therefore, a pension plan has
not been established.
Measurement Focus
Governmental fund types are accounted for on a spending or financial
flow measurement focus . Accordingly, only current assets and current
liabilities are included on the balance sheet, and the reported fund
(14)
EXHIBIT D
Page 4 of 17
BRAZORIA COUNTY MUNICIPAL UTILITY-DISTRICT. NO. 5
NOTES TO GENERAL PURPOSE FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
NOTE 2 . SIGNIFICANT ACCOUNTING POLICIES (Continued)
Measurement Focus (Continued) - -
balances provide an indication of available spendable or appropriable
resources . Operating statements of governmental fund types report
increases and decreases in available spendable resources . Fund bal-
ances are included on the balance sheet as follows :
Reserved:
To indicate fund equity which is legally segregated for a
specific future use . •
Unreserved:
Designated - To indicate fund equity for which the District
has made tentative plans .
Undesignated - To indicate fund equity which is available for
use in future periods . -
NOTE 3 . BONDS PAYABLE
Series 1983
Amounts Outstanding - September 30, 1994 - $ 70, 000
Interest Rates 10 . 50% - 12 . 00%
Maturity Dates - Serially March 1,
Beginning/Ending 1987/2009
Interest Payment Dates - March 1/
September 1
Callable Dates .- - . September 1,
1993*
* The District reserves the right, at its option, to redeem the
bonds ma-turing. on or after March 1, 1994-„prior to their sched-
uled maturities, in whole •or, from time to time, in part, in such
manner as the District may select, on September 1, 1993 , or on
any interest payment date thereafter, at the following redemption
prices (expressed as percentages of the principal amount) , plus
accrued interest on the bonds called for redemption to the date
fixed for redemption. Bonds maturing between 1996 - 2009 were
advance refunded and called for redemption on September 1, 1993 .
•
EXHIBIT D
Page 5 of 17
BRAZORIA COUNTY MUNICIPAL UTILITY DISTRICT NO . 5
NOTES TO GENERAL PURPOSE FINANCIAL STATEMENTS
SEPTEMBER 30 , 1994
NOTE 3 . BONDS PAYABLE (Continued)
Redemption Date Redemption Price
September 1, 1993 or March 1, 1994 102 - 1/2%
September 1, 1994 or March 1, 1995 102%
September 1, 1995 or March 1, 1996 101 - 1/2%
September 1, 1996 or March 1, 1997 101%
September 1, 1997 or March 1, 1998 100 - 1/2%
September 1, 1998 or Thereafter 100%
Series 1984
Amount Outstanding - September 30 , 1994 $ 210, 000
Interest Rates 10 . 50% - 13 . 50%
Maturity Dates - Serially March 1,
Beginning/Ending 1987/2008
Interest Payment Dates March 1,
September 1,
Callable Dates September 1,
1994**
** The District reserves the right, at it' s option, to redeem the
bonds maturing on or after March 1, 1995, prior to their sched-
uled maturities, in whole or, from time to time, in part, in such
manner as the District may select, on September 1, 1994, or on
any interest payment date thereafter, at the following redemption
prices (expressed as percentages of the principal amount) , plus
accrued interest on the bonds called for redemption to the date
fixed for redemption. A portion of these bonds was refunded.
See Note 14 . Bonds maturing between 1996 - 2009 were advance
refunded and called for redemption on September 1, 1994 .
EXHIBIT D
Page 6 of 17
BRAZORIA" COUNTY.MUNICIPAL UTILITY DISTRICT NO. 5
NOTES TO GENERAL. PURPOSE FINANCIAL- STATEMENTS
SEPTEMBER 30i !l 994
4h
NOTE 3 . BONDS PAYABLE (Continued)
- I Redemption Date Redemption Price
September 1, 1994 or March 1, 1995 - 102 1/2% -
September 1, 1995 or March 1, 1996 102%
September. 1, 1996 Or March 1, 1997 - 101 - 1/2%
September 1, 1997 or March 1, 1998 _ - 1010
September 1, 1998 or March 1, 1999 100 - 1/2%
September 1, 1999 or Thereafter 100%
Refunding
Series 1992
Amounts Outstanding - September 30, 1994 $ 5, 885, 000
I -
i
Interest Rates 4 . 00% - 7 . 00%
Maturity Dates - Serially March 1,
Beginning/Ending . 1993/2012
I Interest Payment Dates March 1/
September 1
Callable -Dates - March 1,
2001**
** The District reserves the right, at its option, to ,redeem the
bonds maturing on or after March 1, 2002, including Term Bonds,
prior to their scheduled .maturities, in whole or from time to
time =in part, in such manner as the District may select, on
i! March 1, 2001, or on any date thereafter at a price equal to the
, ; _principal amount. of the- bond? plus accrued interest to the .date
of redemption.
) The following is a summary of transactions regarding bonds payable for
the year ended September 30, 1994 :
EXHIBIT D
Page 9 of 17
BRAZORIA COUNTY MUNICIPAL UTILITY DISTRICT NO. 5
NOTES TO GENERAL PURPOSE FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
NOTE 4. SIGNIFICANT BOND RESOLUTION AND LEGAL REQUIREMENTS
(Continued)
B. The Bond Resolutions state that any profit realized from or
interest accruing on such investments shall belong to the
fund from which the monies for such investments were taken;
provided however, that at the discretion of the Board of Direc-
tors, the profits realized from and interest accruing on invest-
ments made from any fund may be transferred to the Debt Service
Fund. No transfers were made during the current fiscal year.
C. For the $6, 065, 000 Series 1992 Refunding Bond Issue funded on
November 17, 1992 , the District has covenanted that it will take
all necessary steps to comply with the requirement that rebatable
arbitrage earnings on the investment of the gross proceeds of the
Bonds, within the meaning of section 148 (f) of the Internal Rev-
enue Code, be rebated to the federal government . The minimum
requirement for determination of the rebatable amount is on the
five year anniversary of each issue.
NOTE 5 . CASH AND TEMPORARY INVESTMENTS
State Statutes authorize the District to invest in (1) obligations of
the United States or its instrumentalities, (2) direct obligations of
the State of Texas or its agencies, (3) collateralized mortgage obli-
gations directly issued by a federal agency or instrumentality of the
United _States, the underlying security for which is guaranteed by an
agency or instrumentality of the United States, (4) other obligations,
the principal of and interest on which are unconditionally guaranteed
or insured by the State. of_ Texas or the United States or its instru-
mentalities, (5) obligations of states, agencies, counties, cities,
and other political subdivisions of any state that are rated A or
higher by a nationally recognized investment rating agency, (6) cer-
tificates of deposit issued by institutions domiciled in the state
that are guaranteed or insured by the Federal Deposit Insurance Corpo-
ration or are secured as to principal by obligations described in the
preceding clauses or in any other manner and amount provided by law
for District deposits, (7) fully collateralized repurchase agreements
that have a defined termination date, are fully secured by obligations
described in clause (1) above, and are placed through a primary gov-
ernment securities dealer or a bank domiciled in the State of Texas,
(8) bankers' acceptances with the remaining term of 270 days or less,
if the short-term obligations of the accepting bank or its parent are
rated at least A-1 or P-1 or the equivalent by at least one nationally
recognized credit rating agency, (9) commercial paper that is rated at
least A-i or P-1 or the equivalent by either (a) two nationally recog-
nized credit rating agencies or (b) one nationally recognized credit
•
EXHIBIT D
Page 10 of 17
BRAZORIA COUNTY MUNICIPAL UTILITY DISTRICT NO. 5
NOTES TO GENERAL PURPOSE FINANCIAL STATEMENTS
SEPTEMBER 30 , 1994
NOTE 5 . CASH AND TEMPORARY INVESTMENTS (Continued)
• rating agency if the paper is fully secured by an irrevocable letter
of credit issued by a U. S . or state bank, (10) no-load money market
mutual funds registered with the Securities and Exchange Commission
that have a dollar weighted average portfolio maturity of 90 days or
less, invest exclusively in the foregoing obligations, and include in
their investment objectives the maintenance of a stable net asset
value of $1 for each share, (11) bonds issued, assumed, or guaranteed
by the State of Israel, and (12) a qualified common trust fund or com-
parable investment device that is owned or administered by a Texas-
domiciled bank and consists exclusively of obligations described
above . The District may invest in such obligations directly or
through government investment pools that invest solely in suchobliga-
tions as described above . --
Under Texas law, the District is required to invest its funds under
written investment policies that primarily emphasize safety of princi-
pal and liquidity and that address investment diversification, yield,
maturity, and the quality and capability of investment management, and
all District funds must be invested in investments that protect prin-
cipal, are consistent with the operating requirements of the District,
and yield the highest possible rate of. return. District' s investments
must be made "with judgment and care, under prevailing circumstances,
that a person of prudence, discretion, and intelligence would exercise
in the management of the person' s own affairs, not for speculation,
but for investment, considering the probable safety of capital and the
probable income to be derived" . No person may invest District funds
without express written authority- from- the Board of Directors .
Temporary investments include investments in Tex-Pool, a local govern-
ment investment pool managed by the Texas State Treasury. Cash
includes checking accounts, money market deposit accounts and savings
accounts . All temporary investments are reflected at cost which the
District considers to be market value.
The following balances were restricted by the Bond Resolutions and by
contractual requirements as of September 30, 1994 :
I -
EXHIBIT D
Page 13 of 17
BRAZORIA COUNTY MUNICIPAL UTILITY DISTRICT NO. 5
NOTES TO GENERAL PURPOSE FINANCIAL STATEMENTS
SEPTEMBER 30 , 1994
NOTE 8 . JOINT VENTURE FOR WATER PLANT OPERATIONS (Continued)
On August 16, 1994, the agreement was supplemented to extend the term
of the 1984 agreement to 1999 and stipulates that if District No. 4 is
required to construct a water plant within its boundaries, it will
operate and maintain the facility.
During the current fiscal year, the District recorded $40-, 91.6 as its
share of the operating cost of the plant and maintained an operating
reserve of $8, 067 . On May 23 , 1989 , District No. 4 transferred owner-
ship of water well capacity (243 connections) previously leased to the
District in exchange for ownership of an additional 12 , 000 gallons per
day capacity in the regional wastewater treatment plant . The partici-
pating districts and their respective pro rata share of ownership in
the water plant are : :
Percentage of Ownership
Other
Water Well Facilities
Brazoria County Municipal
Utility District No. 4 49 . 8 64 .4
Brazoria County Municipal
Utility District No. 5 50 . 2 . 35 . 6
Total 100 . 0 100 . 0
Transactions for the current year are as follows :
Brazoria Brazoria
County County
Municipal Municipal
Utility Utility
District No . 4 District No. 5 Total
Due (to) from
Participants at
October 1, 1993 $ 3 , 256 $ (4 , 042) $ (786)
Operating Costs 47, 582 41, 212 88 , 794
Capital Outlay 1, 354 748 2, 102
Payments from
Participants (45, 957) (43 , 340) (89, 297)
Interest Revenue (344) (296) (640)
Increase in Reserve 5, 114 2, 870 7, 984
Due (to) from
Pa-rticipants at _
September 30, 1994 $ 11, 005 $ (2 , 848) $ 8, 157
EXHIBIT D
Page 14 of 17
BRAZORIA COUNTY MUNICIPAL UTILITY DISTRICT NO. 5
NOTES TO GENERAL PURPOSE FINANCIAL STATEMENTS
SEPTEMBER 30 , 1994
NOTE 8 . JOINT VENTURE FOR WATER PLANT OPERATIONS (Continued)
- Brazoria
Brazoria l
County County
Municipal Municipal
- Utility - - Utility- -
- District No. 4 District No. 5 Total
Two Month' s Operating
Reserve at 9 , 500
October 1-, 1993 •- $ 4 , 303 $ 5 , 197 $ 9, 500
Increase in Reserve 5 , 114 2 , 870
Two Month' s Operating
- Reserve at 8 , 067 $ 17, 484
September 30 , 1994 $ 9, 417 $
_ l
NOTE 9 . JOINT VENTURE FOR WASTE DISPOSAL
On May 18 , 1983 , the District executed a forty (40) year contract with
Brazoria County Municipal Utility District No. 4 providing for both
districts to share in the construction and operations cost of a
-regional wastewater treatment plant . The contract provides - for each
district to pay its pro rata share of the construction costs and each
will be entitled to its pro rata share of capacity in the plant . In a
prior year, the District' s pro rata cost of constructing the plant was
capitalized into the General Fixed Asset Account Group -of the Dis-
trict . During the fiscal year ended September 30, 1994, the plant
capacity was expanded from 380 , 000 gallons per day to 700 ,-000 gallons
per day. District No. 4' s developer advanced monies for the cost of
the expansion.
The participating districts and their respective pro rata share of
capacity in the wastewater treatment plant are :
Percentage of
- Capacity . _ Total Capacity
Brazoria County Municipal Utility 240, 500 gpd 34 . 3.E
District No. 4
--Brazoria County 'Municipal Utility 459 , 500 gpd 65 . 64
District No. 5 100 . 00
700 , 000 gpd
Total
1 _
SCHEDULE 6
Page 2 of 2
BRAZORIA COUNTY MUNICIPAL UTILITY DISTRICT NO. 5
GENERAL LONG-TERM DEBT SERVICE REQUIREMENTS, BY YEARS
SEPTEMBER 30, 1994
TOTAL ANNUAL REQUIREMENT
REFUNDING S E R I E S - 1 9 9 2 A L L SERIES
Due During Due During Total
Fiscal Principal Interest Due Fiscal Total Total Principal I)
Years Ending -Due March 1/ Years Ending Principal Interest and Interest
•
September 30 March 1 September 1 Total September 30 Due Due Due
1995 $ 65,000 $ 396,975 $ 461,975 1995 $ 180,000 $ 420,578 $ 600,578
1996 145,000 391,362 536,362 1996 195,000 406,267 601,267
1997 150,000 383,025 533,025 1997 205,000 392,390 597,390
1998 160,000 373,875 533,875 1998 220,000 377,100 597,100
1999 235,000 361,790 596,790 1999 235,000 361,790 596,790
2000 255,000 346,345 601,345 2000 255,000 346,345 601,345
2001 270,000 329,275 599,275 2001. 270,000 329,275 599,275
2002 290,000 310,650 600,650 2002 290,000 310,650 600,650
2003 310,000 290,395 600,395 2003 310,000 290,395 600,395
2004 330,000 268,553 598,553 2004 330,000 268,553 598,553
2005 355,000 244,825 599,825 2005 355,000 244,825 599,825
2006 380,000 219,100 599,100 2006 380,000 219,100 599,100
2007 410,000 191,450 601,450 2007 410,000 191,450 - 601,450
2008 440,000 161,700 601,700 2008 440,000 161,700 601,700
2009 470,000 129,850 599,850 2009 470,000 129,850 599,850
2010 505,000 95,725 600,725 2010 505,000 95,725 600,725
2011 540,000.. 59,150 599,150 2011 540,000 59,150 599,150
2012 575,000 20,125 595,125 2012 575,000 20,125 595,125
TOTAL $ 5,885,000 $ 4,574,170 $10,459,170 TOTAL $ 6,165,000 $ 4,625,268 $10,790,268
. ,)
Cash and Temporary Investment Balance at September 30, 1994:
Debt Service Fund $ 239,040
See Accompanying Independent Auditor's
Report on Supplemental Information.
SCHEDULE 7
BRAZORIA COUNTY MUNICIPAL UTILITY DISTRICT NO. 5
ANALYSIS OF CHANGES IN GENERAL LONG-TERM DEBT
FOR THE YEAR ENDED SEPTEMBER 30, 1994
•
Current Year Transactions
Bonds Bonds
Outstanding Outstanding
Original October Retirements September
Description Bonds Issued 1, 1993 Bonds Sold Principal Interest 30, 1994 Paving Agent
' NCNB Texas N.A.
Corporate Trust
Brazoria.County Municipal Utility - Bond_Operations
District"No., 5 Unlimited Tax P. 0. Box 830501
Bonds - Series- 1983 -- --i$ 2,750,000 $ 135,000 $ . - $. 65,000 _ $ 10,832 $_. 70,000 . Dallas, TX • 7528.3
' ' Texas Commerce
Bank N.A.
Corporate Trust
Brazoria. County Municipal Utility . Products
District No. 5 Unlimited Tax • P.' O.'Box 4717-
Bonds - Series'1984 1,620,00,0 250,000 40,000 24,955 210,000 Houston, TX 77210
Texas Commerce
Bank N.A.
. Corporate-Trust
Brazoria.County Municipal Utility", , Products
District-No. 5 Unlimited Tax P. 0. Box 4717
Refunding Bonds - Series 1992 $ 6,065,000, ' $ 5,940,000 55,000 399,838 5,885,000 Houston, TX 77210
TOTAL $10,435,000 $ 6,325,000 $ -0- $ 160,000 $ 435,625 $ 6,165,000
- • - Tax and/or Tax - •- ._ - - - -
Bond Authority: Tax Bonds Refunding Bonds
Amount Authorized by Voters $ 6,105,000 $17,676,000
Less: Amount Issued 6,105,000 6,065,000
Add: Amount of Bonds Refunded
and Defeased 5,105,000
Remaining To Be Issued $ 5,105,000. $11,605,000
For interest rates, interest payment dates and
maturitydates, see Exhibit D, Footnote 3. See Accompanying Independent Auditor's
Report on Supplemental Information.
SCHEDULE 8
Page 1 of 2
BRAZORIA COUNTY MUNICIPAL UTILITY DISTRICT NO. 5
COMPARATIVE SCHEDULE OF REVENUE AND EXPENDITURES
GENERAL AND DEBT SERVICE FUNDS - FIVE YEARS
Amounts Percent of Total Revenue
1994 1993 1992 1991 1990 1994 1993 1992 1991 1990
GENERAL FUND REVENUES: -�
Service Revenues $ 273,852 $ 249,873 $ 212,554 $ 185,794 $ 190,843 75.0% 76.8% 83.9% 85.1% 91�
Penalty and Interest 9,006 11,069 8,153 7,663 6,929 2.5 3.4 3.2 3.5 3. ,
Tap Connection and Sewer
Inspection Fees 53,000 37,845 13,025 5,000 14.5 ' 11.6 5.1 2.3
STP Capacity. Lease 8,723 17,015 9,380 4,194 2.4 5.2 3.7 1.9
Interest on Investments 11,252 8,470 9,245 14,221 9,939 3.1 2.6 3.6 6.5 4.8
Miscellaneous 9,089 1,352 1,391 1,581 1,068 2.5 0.4 0.5 0.7 0.5
TOTAL GENERAL FUND REVENUES $ 364,922 $ 325,624 $ 253,748 $ 218,453 $ 208,779 100.0% 100.0% 100.0% 100.0% 100.0%
GENERAL FUND EXPENDITURES:
Professional Fees $ 25,494 $ 30,915 $ 38,665 $ 37,703 $ 19,350 7.0% 9.5% 15.2% 17.3% 9.3%
Purchased and Contracted
Services 177,842 141,746 173,848 95,164 96,123 48.7 43.5 68.5 43.6 46.0
Utilities 1,981 2,007 1,867 1,620 0.5 0.6 0.7 0.7
Repairs and Maintenance 53,106 47,158 24,287 16,492 10,891 14.6 f4.5 9.6 7.5 5.2
Recurring Operating
Expenditures 34,374 30,373 25,399 22,298 22,558 9.4 9.3 10.0 10:2 10.8
Capital Outlay 48,574 20,248 16,534 _ 2,421 15,890 13.3 6.2 6.5 1.1 7.6
TOTAL GENERAL FUND
EXPENDITURES $ 341,371 $ 272,447 $ 280,600 $ 175,698 $ 164,812 93.5% 83.6% 110.5% 80.4% 78.9%
EXCESS GENERAL FUND REVENUE
OVER (UNDER) EXPENDITURES $ 23,551 $ 53,177 $ (26,852: $ _42,755 $ 43,967 6.5% 16.4% (10.5)% 19.6% 21.1%:,)
See Accompanying Independent Auditor's
Report on Supplemental Information.
SCHEDULE 8
Page 2 of 2
BRAZORIA COUNTY MUNICIPAL UTILITY DISTRICT NO. 5 '
COMPARATIVE SCHEDULE OF REVENUE AND EXPENDITURES
GENERAL AND DEBT SERVICE FUNDS - FIVE YEARS '
Amounts Percent of Total Revenue
1994 1993 1992 1991 1990 1994 1993 1992 1991 199: 7)
DEBT SERVICE FUND REVENUES:
Tax Revenues $ 586,897 $ 543,804 $ 507,530 $ 490,613 $ 509,064 .96.8% 96.8% 95.4% 92.8% 91.3%
Penalty and Interest 3,459 1,738 1,150 2,773 2;967 0.6 0.3 0.2 0.5 0.5
Interest on Investments 15,714 - 16,301 23,503 _ 35,247 45,397 2.6 2.9 4.4 6.7 8.2
TOTAL DEBT SERVICE FUND
REVENUES $ 606,070 $ 561,843 $ 532,183. $ 528,633 $ 557,428 100.0% 100.0% 100.0% 100.0% 100.0%
DEBT SERVICE EXPENDITURES:
Tax Collection Expenditures $ 17,265 $ 18,672 $ . 18,297 $ 19,848 $ 15,643 2.8% 3.3% 3.4% 3.8% 2.8%
Debt Service Interest and
Fees 438,525 365,917 673,041 686,038 700,115 '72.4 ' 65.1 126.5 129.8 125.6
Debt Service Principal 160,000 215,000 115,000 100,000 95,000 26.4 38.3 21.6 18..9 17.0
Refunding Cost of
Issuance 2,075 789 _ 0.3
TOTAL DEBT SERVICE
EXPENDITURES $ 617,865 $ 600,378 $ 806,338 $ 805,886 $ 810,758 101.9% 106.7% 151.5% 152.5% 145.4%
EXCESS DEBT SERVICE REVENUE '
OVER (UNDER) EXPENDITURES $ (11,795) $ (38,535) $ (274,155) ' $ (277,253) $ (253,330) (1.9)% 6.7% (51.5)% (52:5)% (45.4)%
• See Accompanying Independent Auditor's
Report on Supplemental Information.
SCHEDULE 9 Ii
Page 1 of 3
i ��BRAZORIA COUNTY MUNICIPAL UTILITY DISTRICT NO. 5 I, I
INSURANCE COVERAGE
SEPTEMBER 30, 1994
Policy
Amount Clause
of Co-
Type of Coverage From/To Coverage Insurer/Name Insurance
FIDELITY BONDS
Tax Assessor/ 01/01/94 $ 10, 000 Western Surety
Collector 01/01/95 Company* None
Public Officials
Faithful Per- 04/15/94 $ 10, 000 Western Surety
formance Bond 04/15/95 Per Company* None
Director
Crime
Bond 12/01/93 $ 50, 000 Hartford Casualty
Bookkeeper 12/01/94 Insurance Company* None
GENERAL 10/20/93 Mid-Continent
LIABILITY 10/20/94 Casualty Company* None
General Aggregate Limit $2 , 000, 000
Products/Completed
Operations Aggregate
Limit 1, 000, 000
Personal and Advertising
Injury Limit 1, 000, 000
Each Occurrence Limit 1, 000, 000
Fire Damage Limit -
Any one fire 50 , 000
Medical Expense Limit -
Any one person 5, 000
* - Stock Company
See Accompanying Independent Auditor' s
Report on Supplemental Information.
(4415
SCHEDULE 9
Page 2 of 3
BRAZORIA -COUNTY MUNICIPAL -UTILITY DISTRICT NO, 5
INSURANCE COVERAGE
SEPTEMBER 30, -1_994
Policy
Amount Clause
of - Co-
Type -of Coverage . From/To Coverage--_ ' Insurer/Name - Insurance
GENERAL LIABILITY
(Continued)
Environmental Protection
Rider To General
Liability
Per Occurrence $ 300, 000
General Aggregate - 300, 000
Deductible-Per claim for -
1 compensatory damage 1, 000
; Deductible-Per claim for
clean-up costs 5, 000
AUTOMOBILE 10/20/93 Mid-Continent
LIABILITY 10/20/94 Casualty Company* None
Limit Per Accident $1, 000, 000
; + - PROPERTY - FIRE,
LIGHTING AND 10/20/93 $2, 130, 000 American
EXTENDED COVERAGE 10/20/94 Protection
Deductible 1, 000 Insurance Company* 100%
! I BOILER AND 10/20/93 American
MACHINERY 10/20/94 $2, 130, 000 Protection
Extra Expense 50, 000 Insurance Company* 100%
Deductible 5, 000
* - Stock Company
See- Accompanying 'Independent Auditor's-
! Report on Supplemental- Information.
SCHEDULE 9
Page 3 of 3
BRAZORIA COUNTY MUNICIPAL UTILITY DISTRICT NO. 5
INSURANCE COVERAGE
SEPTEMBER 30, 1994
Policy
Amount Clause
of Co-
Type of Coverage From/To Coverage Insurer/Name Insurance
DIRECTORS AND
OFFICERS 10/20/93 $1, 000, 000 Colonia
LIABILITY 10/20/94 Insurance Company* None
Deductible 500
UMBRELLA
LIABILITY 10/20/93 Mid-Continent
10/20/94 Casualty Company* None
General Aggregate $1, 000, 000
Selt-Retention 10 , 000
* - Stock Company
See Accompanying Independent Auditor' s
Report on Supplemental Information.
.®