Ord. 1488 2013-08-12 ORDINANCE NO. 4_83
ORDINANCE AUTHORIZING THE ISSUANCE OF CITY OF PEARLAND, TEXAS
CERTIFICATES OF OBLIGATION, SERIES 2013; PRESCRIBING THE TERMS AND
FORM THEREOF; PROVIDING FOR THE PAYMENT OF THE PRINCIPAL THEREOF
AND INTEREST THEREON; AWARDING THE SALE THEREOF; MAKING OTHER
PROVISIONS REGARDING SUCH CERTIFICATES, INCLUDING USE OF THE
PROCEEDS THEREOF, AND MATTERS INCIDENT THERETO; AND DECLARING AN
EMERGENCY
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PEARLAND,
TEXAS:
ARTICLE I
FINDINGS AND DETERMINATIONS
Section 1.1: Findings and Determinations. The City Council hereby officially finds
and determines that:
(a) The City of Pearland, Texas (the "City"), acting through its City Council, is
authorized pursuant to and in accordance with the provisions of Texas Local Government Code,
Chapter 271, Subchapter C, as amended (the "Act"), to issue certificates of obligation to provide
all or part of the funds to pay contractual obligations to be incurred for the construction of public
works and the purchase of materials, supplies, equipment, machinery, buildings, land and rights-
of-way for authorized needs and purposes and for the payment of contractual obligations for
professional services, to wit: (i) the construction of hike and bike trails within the City; (ii)
upgrades to the City's traffic communication system; (iii) design and construction of a new fire
station at Yost Road and FM 518; (iv) construction of an administrative building on Veterans
Drive for fire and emergency services; (v) improvements to and equipment of the Westside
Library; and (vi) professional services rendered in connection with the above listed projects.
(b) The City Council authorized the publication of a notice of intention to issue
Certificates of Obligation, Series 2013 (the "Certificates") to the effect that the City Council was
tentatively scheduled to meet at 7:30 p.m. on August 12, 2013 at its regular meeting place to
adopt an ordinance authorizing the issuance of the Certificates to be payable from (i) an ad
valorem tax levied, within the limits prescribed by law, on the taxable property located within
the City, and (ii) the revenues to be derived from the City's water and sewer system (the
"System") after the payment of all operation and maintenance expenses thereof (the "Net
Revenues") in an amount not to exceed $10,000, to the extent that ad valorem taxes are ever
insufficient or unavailable for such purposes, provided that the pledge of Net Revenues is and
shall be subordinate in all respects to the pledge of Net Revenues to the payment of any
obligation of the City, whether authorized heretofore or hereafter, which the City designates as
having a pledge senior to the pledge of the Net Revenues to the payment of the Certificates.
(c) Such notice was published at the times and in the manner required by the Act.
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(d) No petition signed by at least five percent (5%) of the qualified voters of the City
has been filed with or presented to any official of the City protesting the issuance of such
Certificates on or before August 12, 2013, or the date of passage of this Ordinance.
(e) The City has determined that it is in the best interests of the City and that it is
otherwise desirable to issue the Certificates to provide all or part of the funds to pay contractual
obligations to be incurred for the purposes authorized by the Act.
ARTICLE II
DEFINITIONS AND INTERPRETATIONS
Section 2.1: Definitions. As used herein, the following terms shall have the
meanings specified, unless the context clearly indicates otherwise:
"Act" shall mean Texas Local Government Code, Chapter 271, Subchapter C, as
amended.
"Attorney General" shall mean the Attorney General of the State of Texas.
"Certificate" or "Certificates" shall mean any or all of the City of Pearland, Texas
Certificates of Obligation, Series 2013, authorized by this Ordinance.
"City" shall mean the City of Pearland, Texas and, where appropriate, its City Council.
"City Council" shall mean the governing body of the City.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Comptroller" shall mean the Comptroller of Public Accounts of the State of Texas.
"Debt Service Fund" shall mean the Certificates of Obligation, Series 2013 Debt Service
Fund established by the City and described in section 5.2 of this Ordinance.
"Fiscal Year" shall mean the City's then designated fiscal year, which currently is the
twelve-month period beginning on the first day of October of a calendar year and ending on the
last day of September of the next succeeding calendar year and each such period may be
designated with the number of the calendar year in which such period ends.
"Interest Payment Date," when used in connection with any Certificate, shall mean
March 1, 2014, and each September 1 and March 1 thereafter until maturity or earlier redemption
of such Certificate.
"MSRB" means the Municipal Securities Rulemaking Board.
"Ordinance" shall mean this Ordinance and all amendments hereof and supplements
hereto.
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"Outstanding", when used with reference to the Certificates, shall mean, as of a particular
date, all Certificates theretofore and thereupon delivered pursuant to this Ordinance except: (a)
any Certificates canceled by or on behalf of the City at or before such date; (b) any Certificates
defeased pursuant to the defeasance provisions of this Ordinance or otherwise defeased as
permitted by applicable law; and (c) any Certificates in lieu of or in substitution for which a
replacement Certificate shall have been delivered pursuant to this Ordinance.
"Paying Agent/Registrar" shall mean Wells Fargo Bank, National Association and its
successors in that capacity.
"Paying Agent/Registrar Agreement" shall mean the agreement between the City and the
Paying Agent/Registrar as described more particularly in Section 6.1 hereof.
"Purchaser" shall mean the entity or entities specified in Section 7.1 hereof
"Record Date" shall mean the close of business on the 15th day of the calendar month
immediately preceding the applicable Interest Payment Date.
"Register" shall mean the registration books for the Certificates kept by the Paying
Agent/Registrar in which are maintained the names and addresses of, and the principal amounts
registered to, each Registered Owner of Certificates.
"Registered Owner" shall mean the person or entity in whose name any Certificate is
registered in the Register.
"Rule" means SEC Rule 15c2-12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission.
Section 2.2: Interpretations. All terms defined herein and all pronouns used in this
Ordinance shall be deemed to apply equally to singular and plural and to all genders. The titles
and headings of the articles and sections of this Ordinance have been inserted for convenience of
reference only and are not to be considered a part hereof and shall not in any way modify or
restrict any of the terms or provisions hereof This Ordinance and all the terms and provisions
hereof shall be liberally construed to effectuate the purposes set forth herein and to sustain the
validity of the Certificates and the validity of the levy of ad valorem taxes to pay the principal of
and interest on the Certificates.
ARTICLE III
TERMS OF THE CERTIFICATES
Section 3.1: Amount, Purpose and Authorization. The Certificates shall be issued
in fully registered form, without coupons, under and pursuant to the authority of the Act in
the total authorized aggregate principal amount of TWO MILLION SEVEN HUNDRED
FORTY FIVE THOUSAND AND NO/100 DOLLARS ($2,745,000) for the purpose of
providing all or part of the funds to pay contractual obligations to be incurred for the
purposes described in paragraph 1.1(a) hereof
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Section 3.2: Designation, Date and Interest Payment Dates. The Certificates shall
be designated as the "City of Pearland, Texas Certificates of Obligation, Series 2013," and
shall be dated August 1, 2013. The Certificates shall bear interest at the rates set forth in
Section 3.3 below, from the later of the August 1, 2013 or the most recent Interest Payment
Date to which interest has been paid or duly provided for, calculated on the basis of a 360-
day year of twelve 30-day months, payable on March 1, 2014, and each September 1 and
March 1 thereafter until maturity or earlier redemption.
If interest on any Certificate is not paid on any Interest Payment Date and continues
unpaid for thirty (30) days thereafter, the Paying Agent/Registrar shall establish a new record
date for the payment of such interest, to be known as a Special Record Date. The Paying
Agent/Registrar shall establish a Special Record Date when funds to make such interest payment
are received from or on behalf of the City. Such Special Record Date shall be fifteen (15) days
prior to the date fixed for payment of such past due interest, and notice of the date of payment
and the Special Record Date shall be sent by United States mail, first class, postage prepaid, not
later than five (5) days prior to the Special Record Date, to each affected Registered Owner as of
the close of business on the day prior to mailing of such notice.
Section 3.3: Numbers, Denomination, Interest Rates and Maturities. The
Certificates shall be issued bearing the numbers, in the principal amounts and bearing
interest at the rates set forth in the following schedule, and may be transferred and
exchanged as set out in this Ordinance. The Certificates shall mature on March 1 in each
of the years and in the amounts set out in such schedule. Certificates delivered in transfer
of or in exchange for other Certificates shall be numbered in order of their authentication
by the Paying Agent/Registrar, shall be in the denomination of$5,000 or integral multiples
thereof and shall mature on the same date and bear interest at the same rate as the
Certificate or Certificates in lieu of which they are delivered.
Certificate Year of Principal Interest
Number Maturity Amount Rate
R-1
R-2
R-3
R-4
R-5
R-6
R-7
R-8
R-9
R-10
R-11
R-12
R-13
R-14
R-15
R-16
R-17
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R-18
R-19
R-20
Section 3.4: Redemption Prior to Maturity. (a) Optional Redemption. The
Certificates maturing on and after March 1, 2024 are subject to redemption prior to maturity,
at the option of the City, in whole or in part, on March 1, 2023, or any date thereafter, at par
plus accrued interest to the date fixed for redemption.
(b) Certificates may be redeemed in part only in integral multiples of $5,000. If a
Certificate subject to redemption is in a denomination larger than $5,000, a portion of such
Certificate may be redeemed, but only in integral multiples of$5,000. In selecting portions of
Certificates for redemption, each Certificate shall be treated as representing that number of
Certificates of$5,000 denomination which is obtained by dividing the principal amount of such
Certificate by $5,000. Upon presentation and surrender of any Certificate for redemption in part,
the Paying Agent/Registrar, in accordance with the provisions of this Ordinance, shall
authenticate and deliver in exchange therefor a Certificate or Certificates of like maturity and
interest rate in an aggregate principal amount equal to the unredeemed portion of the Certificate
so surrendered.
(c) Notice of any redemption, identifying the Certificates or portions thereof to be
redeemed, shall be sent by United States mail, first class, postage prepaid, to the Registered
Owners thereof at their addresses as shown on the Register, not less than thirty (30) days before
the date fixed for such redemption. By the date fixed for redemption, due provision shall be
made with the Paying Agent/Registrar for the payment of the redemption price of the Certificates
called for redemption. If such notice of redemption is given, and if due provision for such
payment is made, all as provided above, the Certificates which are to be so redeemed thereby
automatically shall be redeemed prior to their scheduled maturities, they shall not bear interest
after the date fixed for redemption, and they shall not be regarded as being Outstanding except
for the purpose of being paid with the funds so provided for such payment.
Section 3.5: Manner of Payment, Characteristics, Execution and Authentication.
The Paying Agent/Registrar is hereby appointed the paying agent for the Certificates. The
Certificates shall be payable, shall have the characteristics and shall be executed, sealed,
registered and authenticated, all as provided and in the manner indicated in the FORM OF
CERTIFICATES set forth in Article IV of this Ordinance. If any officer of the City whose
manual or facsimile signature shall appear on the Certificates shall cease to be such officer
before the authentication of the Certificates or before the delivery of the Certificates, such
manual or facsimile signature shall nevertheless be valid and sufficient for all purposes as if
such officer had remained in such office.
The approving legal opinion of Andrews Kurth LLP, Houston, Texas, Bond Counsel,
may be printed on the back of the Certificates over the certification of the City Secretary, which
may be executed in facsimile but errors or omissions in the printing of the opinion shall have no
effect on the validity of the Certificates.
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The City may secure identification numbers through CUSIP Global Services, managed on
behalf of the American Bankers Association by Standard & Poor's Financial Services LLC, and
may authorize the printing of such numbers on the face of the Certificates. It is expressly
provided, however, that the presence or absence of CUSIP numbers on the Certificates shall be
of no significance or effect in regard to the legality thereof and neither the City nor the attorneys
approving said Certificates as to legality are to be held responsible for CUSIP numbers
incorrectly printed on the Certificates.
Section 3.6: Authentication. Except for the Certificates to be initially issued,which
need not be authenticated by the Registrar, only such Certificates as shall bear thereon a
certificate of authentication, substantially in the form provided in Article IV of this
Ordinance, manually executed by an authorized representative of the Paying Agent/Registrar,
shall be entitled to the benefits of this Ordinance or shall be valid or obligatory for any
purpose. Such duly executed certificate of authentication shall be conclusive evidence that
the Certificate so authenticated was delivered by the Paying Agent/Registrar hereunder.
Section 3.7: Ownership. The City, the Paying Agent/Registrar and any other
person may treat the person in whose name any Certificate is registered as the absolute owner
of such Certificate for the purpose of making and receiving payment of the principal thereof
and interest thereon and for all other purposes, whether or not such Certificate is overdue,
and neither the City nor the Paying Agent/Registrar shall be bound by any notice or
knowledge to the contrary. All payments made to the person deemed to be the Registered
Owner of any Certificate in accordance with this Section shall be valid and effective and
shall discharge the liability of the City and the Paying Agent/Registrar upon such Certificate
to the extent of the sums paid.
Section 3.8: Registration, Transfer and Exchange. The Paying Agent/Registrar is
hereby appointed the registrar for the Certificates. So long as any Certificate remains
Outstanding, the Paying Agent/Registrar shall keep the Register at its office in Houston,
Texas in which, subject to such reasonable regulations as it may prescribe, the Paying
Agent/Registrar shall provide for the registration and transfer of the Certificates in
accordance with the terms of this Ordinance.
Each Certificate shall be transferable only upon the presentation and surrender thereof at
the principal corporate trust office of the Paying Agent/Registrar, accompanied by an assignment
duly executed by the Registered Owner or his authorized representative in form satisfactory to
the Paying Agent/Registrar. Upon due presentation of any Certificate for transfer, the Paying
Agent/Registrar shall authenticate and deliver in exchange therefor, within seventy-two (72)
hours after such presentation, a new Certificate or Certificates, registered in the name of the
transferee or transferees, in authorized denominations and of the same maturity and aggregate
principal amount and bearing interest at the same rate as the Certificate or Certificates so
presented and surrendered.
All Certificates shall be exchangeable upon the presentation and surrender thereof at the
principal corporate trust office of the Paying Agent/Registrar for a Certificate or Certificates,
maturity and interest rate and in any authorized denomination, in an aggregate principal amount
equal to the unpaid principal amount of the Certificate or Certificates presented for exchange.
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The Paying Agent/Registrar shall be and is hereby authorized to authenticate and deliver
exchange Certificates in accordance with the provisions of this Section. Each Certificate
delivered by the Paying Agent/Registrar in accordance with this Section shall be entitled to the
benefits and security of this Ordinance to the same extent as the Certificate or Certificates in lieu
of which such Certificate is delivered.
All Certificates issued in transfer or exchange shall be delivered to the Registered
Owners thereof at the principal corporate trust office of the Paying Agent/Registrar or sent by
United States mail, first class, postage prepaid.
The City or the Paying Agent/Registrar may require the Registered Owner of any
Certificate to pay a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with the transfer or exchange of such Certificate. Any fee or charge of
the Paying Agent/Registrar for such transfer or exchange shall be paid by the City.
The Paying Agent/Registrar shall not be required to transfer or exchange any Certificate
called for redemption in whole or in part during the forty-five (45) day period immediately prior
to the date fixed for redemption; provided, however, that this restriction shall not apply to the
transfer or exchange by the Registered Owner of the unredeemed portion of a Certificate called
for redemption in part.
Section 3.9: Replacement Certificates. Upon the presentation and surrender to the
Paying Agent/Registrar of a damaged or mutilated Certificate, the Paying Agent/Registrar
shall authenticate and deliver in exchange therefor a replacement Certificate, of the same
maturity, interest rate and principal amount, bearing a number not contemporaneously
outstanding. The City or the Paying Agent/Registrar may require the Registered Owner of
such Certificate to pay a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith and any other expenses connected therewith,
including the fees and expenses of the Paying Agent/Registrar and the City.
If any Certificate is lost, apparently destroyed or wrongfully taken, the City, pursuant to
the applicable laws of the State of Texas and ordinances of the City, and in the absence of notice
or knowledge that such Certificate has been acquired by a bona fide purchaser, shall execute, and
the Paying Agent/Registrar shall authenticate and deliver, a replacement Certificate of the same
maturity, interest rate and principal amount, bearing a number not contemporaneously
outstanding, provided that the Registered Owner thereof shall have:
(a) furnished to the City and the Paying Agent/Registrar satisfactory evidence of the
ownership of and the circumstances of the loss, destruction or theft of such Certificate;
(b) furnished such security or indemnity as may be required by the Paying
Agent/Registrar and the City to save and hold them harmless;
(c) paid all expenses and charges in connection therewith, including, but not limited
to, printing costs, legal fees, fees of the Paying Agent/Registrar and any tax or other
governmental charge that may be imposed; and
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(d) met any other reasonable requirements of the City and the Paying
Agent/Registrar.
If, after the delivery of such replacement Certificate, a bona fide purchaser of the original
Certificate in lieu of which such replacement Certificate was issued presents for payment such
original Certificate, the City and the Paying Agent/Registrar shall be entitled to recover such
replacement Certificate from the person to whom it was delivered or any person taking
therefrom, except a bona fide purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the
City or the Paying Agent/Registrar in connection therewith.
If any such mutilated, lost, apparently destroyed or wrongfully taken Certificate has
become or is about to become due and payable, the City in its discretion may, instead of issuing a
replacement Certificate, authorize the Paying Agent/Registrar to pay such Certificate.
Each replacement Certificate delivered in accordance with this Section shall be entitled to
the benefits and security of this Ordinance to the same extent as the Certificate or Certificates in
lieu of which such replacement Certificate is delivered.
Section 3.10: Cancellation. All Certificates paid or redeemed in accordance with
this Ordinance, and all Certificates in lieu of which exchange Certificates or replacement
Certificates are authenticated and delivered in accordance herewith, shall be canceled and
destroyed upon the making of proper records regarding such payment or redemption. The
Paying Agent/Registrar shall periodically furnish the City with certificates of destruction of
such Certificates.
ARTICLE IV
FORM OF CERTIFICATES
The Certificates, including the Form of Comptroller's Registration Certificate, Form of
Paying Agent/Registrar Authentication Certificate, and Form of Assignment, shall be in
substantially the form set forth in Exhibit A hereto, with such omissions, insertions and
variations as may be necessary or desirable, and not prohibited by this Ordinance.
ARTICLE V
SECURITY FOR THE CERTIFICATES
Section 5.1: Pledge and Levy of Taxes and Revenues. (a) To provide for the
payment of principal of and interest on the Certificates, there is hereby levied, within the
limits prescribed by law, for the current year and each succeeding year thereafter, while the
Certificates or any part of the principal thereof and the interest thereon remain outstanding
and unpaid, an ad valorem tax upon all taxable property within the City sufficient to pay the
interest on the Certificates and to create and provide a sinking fund of not less than 2% of the
principal amount of the Certificates or not less than the principal payable out of such tax,
whichever is greater, with full allowance being made for tax delinquencies and the costs of
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tax collection, and such taxes, when collected, shall be applied to the payment of principal of
and interest on the Certificates by deposit to the Debt Service Fund and to no other purpose.
(b) The City hereby declares its purpose and intent to provide and levy a tax legally
sufficient to pay the principal of and interest on the Certificates, it having been determined that
the existing and available taxing authority of the City for such purpose is adequate to permit a
legally sufficient tax. As long as any Certificates remain outstanding, all moneys on deposit in,
or credited to, the Debt Service Fund shall be secured by a pledge of security, as provided by law
for cities in the State of Texas.
(c) In addition, pursuant to the authority of Chapter 1502, Texas Government Code,
as amended, the City also hereby pledges the revenues to be derived from the City's water and
sewer system, after the payment of all operation and maintenance expenses thereof (the "Net
Revenues"), in an amount not to exceed $10,000, to the payment of the principal of and interest
on the Certificates, provided that the pledge of Net Revenues is and shall be subordinate in all
respects to the pledge of Net Revenues to the payment of any obligation of the City, whether
authorized heretofore or hereafter, which the City designates as having a pledge senior to the
pledge of the Net Revenues to the payment of the Certificates. The City also reserves the right to
issue, for any lawful purpose at any time, in one or more installments, bonds, certificates of
obligation and other obligations of any kind, secured in whole or in part by a pledge of Net
Revenues, that may be prior and superior in right to, on a parity with, or junior and subordinate
to the pledge of Net Revenues securing the Certificates.
(d) The City hereby appropriates from current funds on hand and legally available
therefor, funds sufficient, when added to the accrued interest received from the sale of the
Certificates, to pay the interest on the Certificates payable on March 1, 2014.
Section 5.2: Debt Service Fund. The Certificates of Obligation, Series 2013 Debt
Service Fund (the "Debt Service Fund") is hereby created as a special fund solely for the
benefit of the Certificates. The City shall establish and maintain such fund at an official City
depository and shall keep such fund separate and apart from all other funds and accounts of
the City. Any amount on deposit in the Debt Service Fund shall be maintained by the City in
trust for the Registered Owners of the Certificates. Such amount, plus any other amounts
deposited by the City into such fund and any and all investment earnings on amounts on
deposit in such fund, shall be used only to pay the principal of, premium, if any, and interest
on the Certificates.
Section 5.3: Further Proceedings. After the Certificates to be initially issued have
been executed, it shall be the duty of the Mayor to deliver the Certificates to be initially
issued and all pertinent records and proceedings to the Attorney General for examination and
approval. After the Certificates to be initially issued shall have been approved by the
Attorney General, they shall be delivered to the Comptroller for registration. Upon
registration of the Certificates to be initially issued, the Comptroller (or a deputy lawfully
designated in writing to act for the Comptroller) shall manually sign the Comptroller's
registration certificate prescribed herein to be affixed or attached to the Certificates to be
initially issued, and the seal of said Comptroller shall be impressed, or placed in facsimile,
thereon.
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ARTICLE VI
CONCERNING THE PAYING AGENT/REGISTRAR
Section 6.1: Acceptance. Wells Fargo Bank, National Association, is hereby
appointed as the initial Paying Agent/Registrar for the Certificates pursuant to the terms and
provisions of the Paying Agent/Registrar Agreement by and between the City and the Paying
Agent/Registrar. The Paying Agent/Registrar Agreement shall be substantially in the form
attached hereto as Exhibit B, the terms and provisions of which are hereby approved, and the
Mayor is hereby authorized to execute and deliver such Paying Agent/Registrar Agreement
on behalf of the City in multiple counterparts and the City Secretary is hereby authorized to
attest thereto and affix the City's seal. Such initial Paying Agent/Registrar and any successor
Paying Agent/Registrar, by undertaking the performance of the duties of the Paying
Agent/Registrar hereunder, and in consideration of the payment of any fees pursuant to the
terms of any contract between the Paying Agent/Registrar and the City and/or the deposits of
money pursuant to this Ordinance, shall be deemed to accept and agree to abide by the terms
of this Ordinance.
Section 6.2: Trust Funds. All money transferred to the Paying Agent/Registrar in
its capacity as Paying Agent/Registrar for the Certificates under this Ordinance (except any
sums representing Paying Agent/Registrar's fees) shall be held in trust for the benefit of the
City, shall be the property of the City and shall be disbursed in accordance with this
Ordinance.
Section 6.3: Certificates Presented. Subject to the provisions of Section 6.4, all
matured Certificates presented to the Paying Agent/Registrar for payment shall be paid
without the necessity of further instructions from the City. Such Certificates shall be
canceled as provided herein.
Section 6.4: Unclaimed Funds Held by the Paying Agent/Registrar. Funds held by
the Paying Agent/Registrar that represent principal of and interest on the Certificates
remaining unclaimed by the Registered Owner thereof after the expiration of three years
from the date such funds have become due and payable (a) shall be reported and disposed of
by the Paying Agent/Registrar in accordance with the provisions of Title 6 of the Texas
Property Code, as amended, to the extent such provisions are applicable to such funds, or (b)
to the extent such provisions do not apply to the funds, such funds shall be paid by the
Paying Agent/Registrar to the City upon receipt by the Paying Agent/Registrar of a written
request therefor from the City.
The Paying Agent/Registrar shall have no liability to the Registered Owners of the
Certificates by virtue of actions taken in compliance with this Section.
Section 6.5: Paying Agent/Registrar May Own Certificates. The Paying
Agent/Registrar in its individual or any other capacity, may become the owner or pledgee of
Certificates with the same rights it would have if it were not the Paying Agent/Registrar.
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Section 6.6: Successor Paying Agents/Registrars. The City covenants that at all
times while any Certificates are Outstanding it will provide a legally qualified bank, trust
company, financial institution or other agency to act as Paying Agent/Registrar for the
Certificates. The City reserves the right to change the Paying Agent/Registrar for the
Certificates on not less than sixty (60) days' written notice to the Paying Agent/Registrar, as
long as any such notice is effective not less than 60 days prior to the next succeeding
principal or interest payment date on the Certificates. Promptly upon the appointment of any
successor Paying Agent/Registrar, the previous Paying Agent/Registrar shall deliver the
Register or a copy thereof to the new Paying Agent/Registrar, and the new Paying
Agent/Registrar shall notify each Registered Owner, by United States mail, first class,
postage prepaid, of such change and of the address of the new Paying Agent/Registrar. Each
Paying Agent/Registrar hereunder, by acting in that capacity, shall be deemed to have agreed
to the provisions of this Ordinance.
ARTICLE VII
PROVISIONS CONCERNING SALE AND
APPLICATION OF PROCEEDS OF CERTIFICATES
Section 7.1: Sale of Certificates. The Certificates are hereby sold and shall be
delivered to the Purchaser at a price of par, in accordance with the terms of the Bid Form of
even date herewith, presented to and hereby approved by the City Council, which price and
terms are hereby found and determined to be the most advantageous reasonably obtainable
by the City. The Mayor and other appropriate officials of the City are hereby authorized to
do any and all things necessary or desirable to satisfy the conditions set out therein and to
provide for the issuance and delivery of the Certificates.
Section 7.2: Approval, Registration and Delivery. The Mayor is hereby authorized
to have control and custody of the Certificates and all necessary records and proceedings
pertaining thereto pending their delivery, and the Mayor and other officers and employees of
the City are hereby authorized and directed to make such certifications and to execute such
instruments as may be necessary to accomplish the delivery of the Certificates and to assure
the investigation, examination and approval thereof by the Attorney General and the
registration of the initial Certificates by the Comptroller. Upon registration of the
Certificates, the Comptroller (or the Comptroller's certificates clerk or an assistant
certificates clerk lawfully designated in writing to act for the Comptroller) shall manually
sign the Comptroller's Registration Certificates prescribed herein to be attached or affixed to
each Certificates initially delivered and the seal of the Comptroller shall be impressed or
printed or lithographed thereon.
Section 7.3: Application of Proceeds of Certificates. Proceeds from the sale of the
Certificates shall, promptly upon receipt by the City, be applied as follows:
(1) Accrued interest, if any, shall be deposited into the Debt Service Fund created in
Section 5.2 of this Ordinance;
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(2) A portion of the proceeds shall be applied to pay expenses arising in connection
with the issuance of the Certificates;
(3) The remaining proceeds shall be applied, together with other funds of the City, to
provide funds to pay contractual obligations to be incurred for the purposes set forth in Section
3.1 of this Ordinance.
Section 7.4: Tax Exemption. The City intends that the interest on the Certificates
on the Certificates shall be excludable from gross income of the owners thereof for federal
income tax purposes pursuant to Sections 103 and 141 through 150 of the Internal Revenue
Code of 1986, as amended, (the "Code") and all applicable temporary, proposed and final
regulations (the "Regulations") and procedures promulgated thereunder and applicable to the
Certificates. For this purpose, the City covenants that it will monitor and control the receipt,
investment, expenditure and use of all gross proceeds of the Certificates (including all
property, the acquisition, construction or improvement of which is to be financed directly or
indirectly with the proceeds of the Certificates) and take or omit to take such other and
further actions as may be required by Sections 103 and 141 through 150 of the Code and the
Regulations to cause the interest on the Certificates to be and remain excludable from the
gross income, as defined in Section 61 of the Code, of the owners of the Certificates for
federal income tax purposes. Without limiting the generality of the foregoing, the City shall
comply with each of the following covenants:
(a) The City will use all of the proceeds of the Certificates to (i)provide funds for the
purposes described in Section 3.1 of this Ordinance, which will be owned and
operated by the City and (ii) to pay the costs of issuing the Certificates. The City
will not use any portion of the proceeds of the Certificates to pay the principal of
or interest or redemption premium on, any other obligation of the City or a related
person.
(b) The City will not directly or indirectly take any action, or omit to take any action,
which action or omission would cause the Certificates to constitute "private
activity bonds" within the meaning of Section 141(a) of the Code.
(c) Principal of and interest on the Certificates will be paid solely from ad valorem
taxes collected by the City, investment earnings on such collections, and as
available, proceeds of the Certificates.
(d) Based upon all facts and estimates now known or reasonably expected to be in
existence on the date the Certificates are delivered, the City reasonably expects
that the proceeds of the Certificates will not be used in a manner that would cause
the Certificates or any portion thereof to be an "arbitrage bond" within the
meaning of Section 148 of the Code.
(e) At all times while the Certificates are outstanding, the City will identify and
properly account for all amounts constituting gross proceeds of the Certificates in
accordance with the Regulations. The City will monitor the yield on the
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investments of the proceeds of the Certificates and, to the extent required by the
Code and the Regulations, will restrict the yield on such investments to a yield
which is not materially higher than the yield on the Certificates. To the extent
necessary to prevent the Certificates from constituting "arbitrage bonds," the City
will make such payments as are necessary to cause the yield on all yield restricted
nonpurpose investments allocable to the Certificates to be less than the yield that is
materially higher than the yield on the Certificates.
(f) The City will not take any action or knowingly omit to take any action that, if
taken or omitted, would cause the Certificates to be treated as "federally
guaranteed" obligations for purposes of Section 149(b) of the Code.
(g) The City represents that not more than fifty percent (50%) of the proceeds of the
Certificates will be invested in nonpurpose investments (as defined in Section
148(f)(6)(A) of the Code) having a substantially guaranteed yield for four years or
more within the meaning of Section 149(g)(3)(A)(ii) of the Code, and the City
reasonably expects that at least eighty-five percent (85%) of the spendable
proceeds of the Certificates will be used to carry out the governmental purpose of
the Certificates within the three-year period beginning on the date of issue of the
Certificates.
(h) The City will take all necessary steps to comply with the requirement that certain
amounts earned by the City on the investment of the gross proceeds of the
Certificates, if any, be rebated to the federal government. Specifically, the City
will (i) maintain records regarding the receipt, investment, and expenditure of the
gross proceeds of the Certificates as may be required to calculate such excess
arbitrage profits separately from records of amounts on deposit in the funds and
accounts of the City allocable to other obligations of the City or moneys which do
not represent gross proceeds of any obligations of the City and retain such records
for at least six years after the day on which the last outstanding Certificate is
discharged, (ii) account for all gross proceeds under a reasonable, consistently
applied method of accounting, not employed as an artifice or device to avoid in
whole or in part, the requirements of Section 148 of the Code, including any
specified method of accounting required by applicable Regulations to be used for
all or a portion of any gross proceeds, (iii) calculate, at such times as are required
by applicable Regulations, the amount of excess arbitrage profits, if any, earned
from the investment of the gross proceeds of the Certificates and (iv) timely pay,
as required by applicable Regulations, all amounts required to be rebated to the
federal government. In addition, the City will exercise reasonable diligence to
assure that no errors are made in the calculations required by the preceding
sentence and, if such an error is made, to discover and promptly correct such error
within a reasonable amount of time thereafter, including payment to the federal
government of any delinquent amounts owed to it, interest thereon and any
penalty.
(i) The City will not directly or indirectly pay any amount otherwise payable to the
federal government pursuant to the foregoing requirements to any person other
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than the federal government by entering into any investment arrangement with
respect to the gross proceeds of the Certificates that might result in a reduction in
the amount required to be paid to the federal government because such
arrangement results in a smaller profit or a larger loss than would have resulted if
such arrangement had been at arm's length and had the yield on the Certificates
not been relevant to either party.
(j) The City will timely file or cause to be filed with the Secretary of the Treasury of
the United States the information required by Section 149(e) of the Code with
respect to the Certificates on such form and in such place as the Secretary may
prescribe.
(k) The City will not issue or use the Certificates as part of an "abusive arbitrage
device" (as defined in Section 1.148-10(a) of the Regulations). Without limiting
the foregoing, the Certificates are not and will not be a part of a transaction or
series of transactions that attempts to circumvent the provisions of Section 148 of
the Code and the Regulations, by (i) enabling the City to exploit the difference
between tax-exempt and taxable interest rates to gain a material financial
advantage, or (ii) increasing the burden on the market for tax-exempt obligations.
(1) Proper officers of the City charged with the responsibility for issuing the
Certificates are hereby directed to make, execute and deliver certifications as to
facts, estimates or circumstances in existence as of the date of issuance of the
Certificates and stating whether there are facts, estimates or circumstances that
would materially change the City's expectations. On or after the date of issuance
of the Certificates, the City will take such actions as are necessary and appropriate
to assure the continuous accuracy of the representations contained in such
certificates.
(m) The covenants and representations made or required by this Section are for the
benefit of the Certificate holders and any subsequent Certificate holder, and may
be relied upon by the Certificate holders and any subsequent Certificate holder and
bond counsel to the City.
In complying with the foregoing covenants, the City may rely upon an unqualified
opinion issued to the City by nationally recognized bond counsel that any action by the City or
reliance upon any interpretation of the Code or Regulations contained in such opinion will not
cause interest on the Certificates to be includable in gross income for federal income tax
purposes under existing law.
Notwithstanding any other provision of this Ordinance, the City's representations and
obligations under the covenants and provisions of this Section 6.5 shall survive the defeasance
and discharge of the Certificates for as long as such matters are relevant to the exclusion of
interest on the Certificates from the gross income of the owners for federal income tax purposes.
Section 7.5: Reserved.
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Section 7.6: Related Matters. In order that the City shall satisfy in a timely manner
all of its obligations under this Ordinance, the Mayor, the Mayor, City Secretary and all other
appropriate officers, agents, representatives and employees of the City are hereby authorized
and directed to take all other actions that are reasonably necessary to provide for the issuance
and delivery of the Certificates, including, without limitation, executing and delivering on
behalf of the City all certificates, consents, receipts, requests, notices, and other documents as
may be reasonably necessary to satisfy the City's obligations under this Ordinance and to
direct the transfer and application of funds of the City consistent with the provisions of this
Ordinance.
ARTICLE VIII
MISCELLANEOUS
Section 8.1: Defeasance. The Certificates may be discharged, defeased, redeemed
or refunded in any manner now or hereafter permitted by law.
Section 8.2: Application of Chapter 1208, Government Code. Chapter 1208,
Government Code, applies to the issuance of the Certificates and the pledge of the taxes
granted by the City under Section 5.1 of this Ordinance, and such pledge is therefore valid,
effective and perfected. If Texas law is amended at any time while the Certificates are
outstanding and unpaid such that the pledge of the taxes granted by the City under Section
5.1 of this Ordinance is to be subject to the filing requirements of Chapter 9, Business &
Commerce Code, then in order to preserve to the Registered Owners of the Certificates the
perfection of the security interest in said pledge, the City agrees to take such measures as it
determines are reasonable and necessary under Texas law to comply with the applicable
provisions of Chapter 9, Business & Commerce Code and enable a filing to perfect the
security interest in said pledge to occur.
Section 8.3: Ordinance a Contract - Amendments. This Ordinance shall constitute
a contract with the Registered Owners from time to time, be binding on the City, and shall
not be amended or repealed by the City so long as any Certificate remains Outstanding
except as permitted in this Section. The City may, without the consent of or notice to any
Registered Owners, from time to time and at any time, amend this Ordinance in any manner
not detrimental to the interests of the Registered Owners, including the curing of any
ambiguity, inconsistency, or formal defect or omission herein. In addition, the City may,
with the consent of Registered Owners who own in the aggregate 51% of the principal
amount of the Certificates then Outstanding, amend, add to, or rescind any of the provisions
of this Ordinance; provided that, without the consent of all Registered Owners of
Outstanding Certificates, no such amendment, addition, or rescission shall (i) extend the time
or times of payment of the principal of and interest on the Certificates, reduce the principal
amount thereof, the redemption price, or the rate of interest thereon, or in any other way
modify the terms of payment of the principal of or interest on the Certificates, (ii) give any
preference to any Certificate over any other Certificate, or (iii) reduce the aggregate principal
amount of Certificates required to be held by Registered Owners for consent to any such
amendment, addition, or rescission.
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Section 8.4: Legal Holidays. In any case where the date interest accrues and
becomes payable on the Certificates or principal of the Certificates matures or the date fixed
for redemption of any Certificates or a Record Date shall be in the City a Saturday, Sunday,
legal holiday or a day on which banking institutions are authorized by law to close, then
payment of interest or principal need not be made on such date, or the Record Date shall not
occur on such date, but payment may be made or the Record Date shall occur on the next
succeeding day which is not in the City a Saturday, Sunday, legal holiday or a day on which
banking institutions are authorized by law to close with the same force and effect as if (i)
made on the date of maturity or the date fixed for redemption and no interest shall accrue for
the period from the date of maturity or redemption to the date of actual payment or (ii) the
Record Date had occurred on the fifteenth day of that calendar month.
Section 8.5: No Recourse Against City Officials. No recourse shall be had for the
payment of principal of or interest on any Certificates or for any claim based thereon or on
this Ordinance against any official of the City or any person executing any Certificates.
Section 8.6: Further Proceedings. The Mayor, Mayor Pro-Tem, City Secretary and
other appropriate officials of the City are hereby authorized and directed to do any and all
things necessary and/or convenient to carry out the terms of this Ordinance.
Section 8.7: Severability. If any Section, paragraph, clause or provision of this
Ordinance shall for any reason be held to be invalid or unenforceable, the invalidity or
unenforceability of such Section, paragraph, clause or provision shall not affect any of the
remaining provisions of this Ordinance.
Section 8.8: Power to Revise Form of Documents. Notwithstanding any other
provision of this Ordinance, the Mayor is hereby authorized to make or approve such
revisions, additions, deletions, and variations to this Ordinance and in the form of the
documents attached hereto as exhibits as, in the judgment of the Mayor, and in the opinion of
Certificate Counsel to the City, may be necessary or convenient to carry out or assist in
carrying out the purposes of this Ordinance, or as may be required for approval of the
Certificates by the Attorney General of Texas; provided, however, that any changes to such
documents resulting in substantive amendments to the terms and conditions of the
Certificates or such documents shall be subject to the prior approval of the City Council
Section 8.9: Open Meeting. It is hereby found, determined and declared that a
sufficient written notice of the date, hour, place and subject of the meeting of the City
Council at which this Ordinance was adopted was posted at a place convenient and readily
accessible at all times to the general public at City Hall for the time required by law
preceding this meeting, as required by the Open Meetings Law, Chapter 551, Texas
Government Code, and that this meeting has been open to the public as required by law at all
times during which this Ordinance and the subject matter thereof has been discussed,
considered and formally acted upon. The City Council further ratifies, approves and
confirms such written notice and the contents and posting thereof.
Section 8.10: Official Statement. The City Council hereby approves the form and
content of the Preliminary Official Statement prepared for the initial offering and sale of the
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Bonds and hereby authorizes the preparation of a final Official Statement reflecting the terms of
the Bond Purchase Agreement and other relevant matters. The use of such Official Statement in
the reoffering of the Bonds by the Underwriter is hereby approved and authorized.
Section 8.11: Repealer. All orders, resolutions and ordinances, or parts thereof,
inconsistent herewith are hereby repealed to the extent of such inconsistency.
Section 8.12: Continuing Disclosure Undertaking. (a) Annual Reports. The City
will provide certain updated financial information and operating data to the MSRB annually
in an electronic format as prescribed by the MSRB and available via the Electronic
Municipal Market Access ("EMMA") system at www.emma.msrb.org. The information to
be updated includes all quantitative financial information and operating data with respect to
the City of the general type included in the final Official Statement authorized by Section
8.10 of this Ordinance under the headings "INVESTMENT AUTHORITY AND
INVESTMENT OBJECTIVES OF THE CITY - Current Investments," "CITY TAX DEBT,"
"TAX DATA" (except under the subheading "Estimated Overlapping Taxes"), "SELECTED
FINANCIAL DATA," and in APPENDIX `B." The City will update and provide this
information within six months after the end of each fiscal year.
If the City changes its fiscal year, it will submit a notice of such change to the MSRB,
and the date of the new fiscal year end prior to the next date by which the City otherwise would
be required to provide financial information and operating data pursuant to this Section.
The financial information and operating data to be provided may be set forth in full in
one or more documents or may be included by specific reference to any document available to
the public on the MSRB's Internet Web site or filed with the SEC, as permitted by the SEC
Rule. The updated information will include audited financial statements, if the City
commissions an audit and it is completed by the required time. If audited financial statements
are not available by the required time, the City will provide unaudited financial statements by the
required time and audited financial statements when and if such audited statements become
available. Any such financial statements will be prepared in accordance with the accounting
principals described in APPENDIX B or such other accounting principals as the City may
require to employ from time to time pursuant to State law or regulation.
(b) Material Event Notices. The City shall notify the MSRB in an electronic format
prescribed by the MSRB, in a timely manner (not in excess of ten (10) days after the occurrence
of the event), of any of the following events with respect to the Bonds:
(i) Principal and interest payment delinquencies;
(ii) Non-payment related defaults, if material;
(iii) Unscheduled draws on debt service reserves reflecting financial
difficulties;
(iv) Unscheduled draws on credit enhancements reflecting financial
difficulties;
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HOU:3339814.1
(v) Substitution of credit or liquidity providers or their failure to
perform;
(vi) Adverse tax opinions, the issuance by the Internal Revenue Service
of proposed or final determinations of taxability,Notices of Proposed
Issue (IRS Form 5701-TEB) or other material notices or
determinations with respect to the tax status of the Bonds, or other
material events affecting the tax status of the Bonds;
(vii) Modifications to rights of holders of the Bonds, if material;
(viii) Bond calls, if material, and tender offers;
(ix) Defeasances;
(x) Release, substitution, or sale of property securing repayment of the
Bonds, if material;
(xi) Rating changes;
(xii) Bankruptcy, insolvency, receivership or similar event of the City;
(xiii) The consummation of a merger, consolidation, or acquisition
involving the City or the sale of all or substantially all of the assets
of the City, other than in the ordinary course of business, the entry
into a definitive agreement to undertake such an action or the
termination of a definitive agreement relating to any such actions,
other than pursuant to its terms, if material; and
(xiv) Appointment of a successor Paying Agent/Registrar or change in
the name of the Paying Agent/Registrar, if material.
For the purposes, any event described in the immediate proceeding paragraph (12) is
considered to occur when any of the following occur: the appointment of a receiver, fiscal agent
or similar officer for the City in a proceeding Under States Bankruptcy Code or any other
proceeding under state or federal law in which a court or governmental authority has assumed
jurisdiction over substantially all of the assets or business of the City, or if such jurisdiction has
been assumed by leaving the existing governing body and officials or officers in possession but
subject to the supervision and orders of a court or governmental authority, or the entry of order
confirming a plan of reorganization, arrangement or liquidation by a court or governmental
authority having supervision or jurisdiction over substantially all of the assets or business of the
City.
The City shall notify the MSRB, in a timely manner, of any failure by the City to provide
financial information or operating data in accordance this Section by the time required by such
Section.
(c) Limitations, Disclaimers, and Amendments. The City shall be obligated to
observe and perform the covenants specified in this Section for so long as, but only for so long
as, the City remains an "obligated person" with respect to the Bonds within the meaning of the
Rule, except that the City in any event will give notice of any deposit made in accordance with
Texas law that causes Bonds no longer to be outstanding.
The provisions of this Section are for the sole benefit of the holders and the beneficial
owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or
any legal or equitable right, remedy, or claim hereunder to any other person. The City
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HOU:3339814.1
undertakes to provide only the financial information, operating data, financial statements, and
notices which it has expressly agreed to provide pursuant to this Section and does not hereby
undertake to provide any other information that may be relevant or material to a complete
presentation of the City's financial results, condition, or prospects or hereby undertake to update
any information provided in accordance with this Section or otherwise, except as expressly
provided herein. The City does not make any representation or warranty concerning such
information or its usefulness to a decision to invest in or sell Bonds at any future date.
UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER
OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR
TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY
THE CITY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY
COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF
ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH
BREACH SHALL BE UNLIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC
PERFORMANCE.
No default by the City in observing or performing its obligations under this Section shall
comprise a breach of or default under this Order for purposes of any other provision of this
Order.
Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the
duties of the City under federal and state securities laws.
The provisions of this Section may be amended by the City from time to time to adapt to
changed circumstances that arise from a change in legal requirements, a change in law, or a
change in the identity, nature, or status or type of principal payment of the City, if (1) the
agreement, as so amended, would have permitted an underwriter to purchase or sell Bonds in the
initial primary offering in compliance with the Rule, taking into account any amendments or
interpretations of the Rule to the date of such amendment, as well as such changed
circumstances, and (2) either(a) the holders of a majority in aggregate amount of the outstanding
Bonds consent to such amendment or (b) a person unaffiliated with the City (such as nationally
recognized bond counsel) determines that the amendment will not materially impair the interests
of the holders and beneficial owners of the Bonds. The City may also amend or repeal the
provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable
provisions of the Rule or a court of final jurisdiction enters judgment that such provisions of the
Rule are invalid, but only if and to the extent that the provisions of this sentence would not
prevent an underwriter from lawfully purchasing or selling Bonds in the primary offering of the
Bonds. If any such amendment is made, the City will include in its next annual update an
explanation in narrative form of the reasons for the change and its impact on the type of
operating data or financial information being provided.
Section 8.13: Emergency. It is hereby officially found and determined that this
Ordinance relates to an immediate public emergency affecting life, health, property and the
public peace, and that such emergency exists, the specific emergency being that the proceeds
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from the sale of the Certificates are required as soon as possible for necessary and urgently
needed improvements, and that this Ordinance be passed and approved on the date of its
introduction.
Section 8.14: Effective Date. This Ordinance shall be in force and effect from and
after its passage on the date shown below.
[signature page follows]
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PASSED AND APPROVED on first reading pursuant to Section 3.10 of the City Charter
this August 12, 2013.
CITY OF PEARLAND, TEXAS
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Mayor
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Exhibit A—Form of Certificate
Exhibit B —Paying Agent/Registrar Agreement
Exhibit C - Bid Form
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