Ord. 1528 2016-07-11 ORDINANCE NO. 1528
An Ordinance of the City Council of the City of Pearland,Texas,authorizing
issuance of City of Pearland, Texas, water and sewer system revenue bonds,
series 2016c; prescribing the terms thereof; 'providing for the payment
thereof; awarding the sale thereof; and making other provisions regarding
such bonds and matters incident thereto.
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PEARLAND,TEXAS:
ARTICLE I
FINDINGS AND DETERMINATIONS
Section 1.1. Findings and Determinations. It is hereby officially found and determined
that:
(a) The City is authorized by Chapter 1502, Texas Government Code, as
amended, to issue revenue bonds payable from the revenues of its water and sewer
system for the purpose of constructing repairs, improvements, additions and extensions to
the City's waterworks and sanitary sewer system.
(b) The City Council now deems it to be in the best interest of the City to
issue, sell and deliver the Series 2016C Bonds (hereinafter defined) as hereinafter
authorized, pursuant to the laws of the State of Texas, including specifically, Chapter
1502,Texas Government Code.
(c) The conditions precedent to the issuance of additional bonds which are
contained in the ordinances authorizing the issuance of the Previously Issued Bonds and
the Series 2016C Bonds (hereinafter defined)have been met, and the City is authorized to
issue the revenue bonds and make the pledges and covenants set forth herein.
(d) The Series 2016C Bonds herein authorized for issuance are to be delivered
to the Texas Water Development Board (the"TWDB" or the "Purchaser") in evidence of
a loan commitment received in the aggregate amount of the Series 2016C Bonds.
ARTICLE II
DEFINITIONS AND INTERPRETATIONS
Section 2.1. Definitions. In this Ordinance, the following terms shall have the
following meanings, unless the context clearly indicates otherwise:
"Act"shall mean, collectively Chapter 1502, Texas Government Code, as amended.
"Additional Bonds" shall mean the additional revenue bonds permitted to be issued by
the City pursuant to Section 6.1 hereof.
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"Average Annual Principal and Interest Requirements" shall mean the average annual
principal and interest requirements for all Bonds. Upon the issuance of the Series 2016C Bonds,
the Average Annual Principal and Interest Requirements are hereby determined to be
$7,956,725.30 and shall be recomputed upon the issuance of each series of Additional Bonds and
set forth in each ordinance authorizing the issuance of Additional Bonds. For purposes of
calculating the Average Annual Principal and Interest Requirements with respect to any variable
rate Additional Bonds, interest on such bonds shall be calculated in accordance with Section 6.1
of this Ordinance.
"Bonds" shall mean any or all of the Previously Issued Bonds, the Series 2016C Bonds
and any Additional Bonds from time to time hereafter issued, but only to the extent such Bonds
remain Outstanding within the meaning of this Ordinance.
"Business Day" shall mean any day other than (1) a Saturday or a Sunday, (2) a legal
holiday or the equivalent on which banking institutions generally are authorized or required to
close in New York, New York or Houston, Texas or any other city in which is located the
principal corporate trust office of the Paying Agent/Registrar or (3) a day on which the New
York Stock Exchange is closed in whole or in part.
"City" shall mean the City of Pearland, Texas, and, where appropriate, the City Council
thereof and any successor to the City as owner of the System.
"Code"shall mean the Internal Revenue Code of 1986,as amended.
"Defeasance Securities"means (1)direct, non-callable obligations of the United States of
America, including obligations that are unconditionally guaranteed by the United States of
America, (2) non-callable obligations of an agency or instrumentality of the United States of
America, including obligations that are unconditionally guaranteed or insured by the agency or
instrumentality and that, on the date of the purchase thereof are rated as to investment quality by
a nationally recognized investment rating firm not less than "AAA" or its equivalent, and (3)
non-callable obligations of a state or an agency or a county, municipality, or other political
subdivision of a state that have been refunded and that, on the date the governing body of the
City adopts or approves the proceedings authorizing the financial arrangements are rated as to
investment quality by a nationally recognized investment rating firm not less than "AAA" or its
equivalent.
"DTC" shall mean The Depository Trust Company of New York, New York, or any
successor securities depository.
"DTC Participant" shall mean brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations on whose behalf DTC was created to hold securities
to facilitate the clearance and settlement of securities transactions among DTC Participants.
"Fiscal Year" shall mean the City's fiscal year, which currently runs from October 1 to
September 30, but which may be changed from time to time by the City.
"Gross Revenues" shall mean all revenues, income and receipts of every nature derived
or received by the City from the operation and ownership of the System; the interest income
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from the investment or deposit of money in the Revenue Fund and the Reserve Fund (each
hereinafter defined in Article V hereof); and any other revenues hereafter pledged to the payment
of all Bonds. Gross Revenues shall not include any of (i) grants from, or payments by, any
federal, state or local governmental agency or authority or any other entity or person, the use of
which is restricted by law or by the terms of the grant or payment to capital expenditures of the
System, (ii) capital assets, debt service funds or debt service reserve funds of water districts or
other public or private sewer systems annexed, acquired or otherwise assumed by the City or(iii)
any interest earned on items(i)or(ii)above.
"Interest Payment Date," when used in connection with any Series 2016C Bond, shall
mean September 1 or March 1 of each year as applicable commencing March 1,2017.
"Maintenance and Operation Expenses" shall mean the reasonable and necessary
expenses of operation and maintenance of the System, including all salaries, labor, materials,
repairs and extensions necessary to render efficient service (but only such repairs and extensions
as, in the judgment of the governing body of the City, are necessary to keep the System in
operation and render adequate service to the City and the inhabitants thereof, or such as might be
necessary to meet some physical accident or conditions which would otherwise impair the
Bonds), and all payments (including payments of amounts equal to all or a part of the debt
service on bonds issued by other political subdivisions and authorities of the State of Texas)
under contracts which are now or hereafter defined as operating expenses by the Legislature of
Texas. Depreciation shall never be considered as a Maintenance and Operation Expense.
Maintenance and Operation Expenses shall include, without limitation, all payments under
contracts for the impoundment, conveyance or treatment of water or otherwise which are now or
hereafter defined as operating expenses by the Legislature of Texas and the treatment of such
payments as Maintenance and Operation Expenses shall not be affected in any way if,
subsequent to entering into such contracts, the City acquires as a part of the System title to any
properties or facilities used to impound, convey or treat water under such contracts, or if the City
contracts to acquire title to such properties or facilities as a part of the System upon the final
payment of debt service on the bonds issued to finance such properties or facilities.
"MSRB"means the Municipal Securities Rulemaking Board.
"Net Revenues" shall mean all Gross Revenues remaining after deducting the
Maintenance and Operation Expenses.
"Ordinance" shall mean this Bond Ordinance and all amendments hereof and
supplements hereto.
"Outstanding"when used with reference to the Bonds shall mean, as of a particular date,
all such bonds theretofore delivered except: (a) any such bond canceled by or on behalf of the
City at or before said date; (b) any such bond defeased pursuant to the defeasance provisions of
the ordinance authorizing its issuance, or otherwise defeased as permitted by applicable law; and
(c) any such bond in lieu of or in substitution for which another bond shall have been delivered
pursuant to the ordinance authorizing the issuance of such bond.
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"Owner" or "Registered Owner" when used with respect to any Bond, shall mean the
person or entity in whose name such Bond is registered in the Register. Any reference to a
particular percentage or proportion of the Owners of the Bonds of a particular class or series of
Bonds shall mean the Owners at a particular time of the specified percentage or proportion in
aggregate principal amount of all Bonds or the Bonds of such class or series then Outstanding.
"Paying Agent/Registrar" shall mean Wells Fargo Bank, N.A., Minneapolis, Minnesota,
and its successors in that capacity.
"Previously Issued Bonds" shall mean the Outstanding City of Pearland, Texas, Water
and Sewer System Adjustable Rate Revenue Bonds, Series 1999, City of Pearland, Texas, Water
and Sewer System Revenue Bonds, Series 2003, the City of Pearland, Texas, Water and Sewer
System Revenue and Refunding Bonds, Series 2006, the City of Pearland, Texas, Water and
Sewer System Revenue Bonds, Series 2007, the City of Pearland, Texas, Water and Sewer
System Revenue Bonds, Series 2008, the City of Pearland, Texas, Water and Sewer System
Revenue Bonds, Series 2009, the City of Pearland, Texas, Water and Sewer System Revenue
Bonds, Series 2010A, the City of Pearland, Texas, Water and Sewer System Revenue Refunding
Bonds, Series 2010B, the City of Pearland, Texas Water and Sewer System Revenue and
Refunding Bonds, Series 2012, the City of Pearland, Texas Water and Sewer System Revenue
Bonds, Series 2014 and the City of Pearland, Texas Water and Sewer System Revenue Bonds,
Series 2016A.
"Purchaser"shall mean the Texas Water Development Board.
"Record Date" shall mean, with respect to any Interest Payment Date, the fifteenth day
of the month,whether or not a Business Day, next preceding each Interest Payment Date.
"Register" shall mean the books of registration kept by the Paying Agent/Registrar in
which are maintained the names and addresses of and the principal amounts registered to each
Owner of Series 2016C Bonds.
"Series 2016C Bonds" shall mean the City of Pearland, Texas, Water and Sewer System
Revenue Bonds, Series 2016C, authorized by this Ordinance.
"Special Project" shall mean, to the extent permitted by law, any water or sewer system
property, improvement or facility declared by the City not to be part of the System, for which the
costs of acquisition, construction, and installation are paid from proceeds of a financing
transaction other than the issuance of bonds payable from ad valorem taxes or revenues of the
System and for which all maintenance and operation expenses are payable from sources other
than ad valorem taxes or revenues of the System, but only to the extent that and for so long as all
or any part of the revenues or proceeds of which are or will be pledged to secure the payment or
repayment of such costs of acquisition, construction, and installation under such financing
transaction.
"Subordinate Lien Obligations" shall mean the obligations permitted to be issued by the
City pursuant to Section 6.2 hereof.
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"Surety Policy" shall mean and include a surety bond, bond insurance policy or other
credit agreement, as authorized by Section 1502.064, Texas Government Code, provided that the
issuer of any Surety Policy shall be rated in the highest rating category at the time of issuance of
such Surety Policy by A.M. Best Company, Standard & Poor's Ratings Group, or Moody's
Investors Service. A Surety Policy shall insure all Bonds and Additional Bonds on a pro rata
basis. A Surety Policy may include a letter of credit or other agreement or instrument, including
any related reimbursement or financial guaranty agreement, whereby the issuer is obligated to
provide funds up to and including the maximum amount and under the conditions specified in
such agreement or instrument.
"System" shall mean all properties, facilities, improvements, equipment, interests, rights
and powers constituting the water and sewer system of the City, and all future extensions,
replacements, betterments, additions, improvements, enlargements, acquisitions, purchases and
repairs to the System, including without limitation, all those heretofore or hereafter acquired as a
result of the annexation and dissolution of water districts or the acquisition of the properties or
assets of any other public, private or non-profit entities. The System shall not include any
Special Project.
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 and the Table of Contents 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 Series 2016C Bonds and the
validity of the lien on and pledge of the Net Revenues to secure the payment of the Series 2016C
Bonds.
ARTICLE III
TERMS OF THE SERIES 2016C BONDS
Section 3.1. Name, Amount, Purpose, Authorization. The City of Pearland, Texas
Water and Sewer System Revenue Bonds, Series 2016C shall be issued in fully registered form,
without coupons, in the aggregate principal amount of Fifty Million One Hundred Thousand
Dollars ($50,100,000) for the purposes of (i) constructing certain repairs, improvements,
additions and extensions to the System, and (ii) payment of expenses of issuance of the Series
2016C Bonds,all under and pursuant to the authority of the Act and all other applicable law.
Section 3.2. Numbers, Date and Denomination. The Series 2016C Bonds shall be
initially issued bearing the numbers, in the principal amounts and bearing interest at the rates set
forth in Section 3.3 hereof. The Series 2016C Bonds shall be dated as of July 28, 2016 and shall
be issued in denominations of$5,000 of principal amount or any integral multiple thereof.
Section 3.3. Interest Payment Dates, Interest Rates and Maturities. The Series 2016C
Bonds shall bear interest from the later of the date of delivery of the Series 2016C Bonds to the
Purchaser, or the most recent Interest Payment Date to which interest has been paid or duly
provided for, at the rate or rates per annum set forth below, calculated on the basis of a 360-day
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year composed of twelve 30-day months and payable semiannually on March 1 and September 1
of each year, commencing March 1, 2017, until maturity or prior redemption.
The Series 2016C Bonds shall mature and become payable on the dates and in the
respective principal amounts set forth below, subject to prior redemption as set forth in this
Ordinance:
Bond Maturity Principal Interest
Number (09/01) Amount Rate
R-1 2017 $1,860,000 0.000%
R-2 2018 1,860,000 0.000
R-3 2019 1,860,000 0.000
R-4 2020 1,860,000 0.000
R-5 2021 1,855,000 0.000
R-6 2022 1,700,000 0.000
R-7 2023 1,700,000 0.090
R-8 2024 1,700,000 0.200
R-9 2025 1,700,000 0.320
R-10 2026 1,700,000 0.430
R-11 2027 1,700,000 0.540
R-l2 2028 1,700,000 0.590
R-13 2029 1,700,000 0.640
R-14 2030 1,700,000 0.700
R-15 2031 1,700,000 0.760
R-16 2032 1,700,000 0.820
R-17 2033 1,700,000 0.870
R-18 2034 1,700,000 0.920
R-19 2035 1,700,000 0.960
R-20 2036 1,700,000 1.000
R-21 2037 1,700,000 1.020
R-22 2038 1,700,000 1.040
R-23 2039 1,700,000 1.060
R-24 2040 1,700,000 1.070
R-25 2041 1,700,000 1.080
R-26 2042 1,700,000 1.090
R-27 2043 1,700,000 1.100
R-28 2044 1,700,000 1.110
R-29 2045 1,705,000 1.120
Section 3.4. Redemption Prior to Maturity.
(a) Optional Redemption - The City reserves the right, at its option, to redeem
prior to maturity Series 2016C Bonds maturing on or after September 1, 2026, in inverse
order of maturity, in whole or in part, in principal installments of$5,000 or any integral
multiple thereof, on September 1, 2025, or any date thereafter, at a price equal to the
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principal amount of the Series 2016C Bonds or portions thereof called for redemption
plus accrued interest to the date of redemption.
(b) Series 2016C Bonds may be redeemed only in integral multiples of$5,000
of principal amount. If a Series 2016C Bond subject to redemption is in a denomination
larger than $5,000, a portion of such Series 2016C Bond may be redeemed, but only in
integral multiples of$5,000. In selecting portions of Series 2016C Bonds for redemption,
the Registrar shall treat each Series 2016C Bond as representing that number of Series
2016C Bonds of$5,000 denomination which is obtained by dividing the principal amount
of such Series 2016C Bond by $5,000. Upon surrender of any Series 2016C Bond for
redemption in part, the Registrar, in accordance with Section 3.13 hereof, shall
authenticate and deliver in exchange therefor a Series 2016C Bond or Bonds of like
maturity and interest rate in an aggregate principal amount equal to the unredeemed
portion of the Series 2016C Bond so surrendered.
(c) Not less than thirty (30) days prior to a redemption date for the Series
2016C Bonds, a notice of redemption will be sent by U.S. mail, first class postage
prepaid, in the name of the City to each Owner of a Series 2016C Bond to be redeemed in
whole or in part at the address of such Owner appearing on the Register at the close of
business on the Business Day next preceding the date of mailing. Such notices shall state
the redemption date, the redemption price, the place at which Series 2016C Bonds are to
be surrendered for payment and, if less than all Series 2016C Bonds outstanding are to be
redeemed, the numbers of Series 2016C Bonds or portions thereof to be redeemed. Any
notice of redemption so mailed as provided in this Section will be conclusively presumed
to have been duly given, whether or not the Owner receives such notice. By the date
fixed for redemption, due provision shall be made with the Registrar for payment of the
redemption price of the Series 2016C Bonds or portions thereof to be redeemed. When
Series 2016C Bonds have been called for redemption in whole or in part and notice of
redemption has been given as herein provided, the Series 2016C Bonds or portions
thereof so redeemed shall no longer be regarded to be outstanding, except for the purpose
of receiving payment solely from the funds so provided for redemption, and interest
which would otherwise accrue or compound after the redemption date on any Series
2016C Bond or portion thereof called for redemption shall terminate on the date fixed for
redemption.
Section 3.5. Manner of Payment, Characteristics, Execution and Authentication. The
Paying Agent/Registrar shall be the paying agent for the Series 2016C Bonds. The Series 2016C
Bonds shall be payable, shall have the characteristics, shall be signed and executed, shall be
sealed, and shall be authenticated, all as provided Form of Bond included as Exhibit A to this
Ordinance. The Series 2016C Bonds initially delivered shall also have attached or affixed to
each such Series 2016C Bond the registration certificate of the Comptroller of Public Accounts
of the State of Texas.
The Series 2016C Bonds shall be signed on behalf of the City by the Mayor and
countersigned by the City Secretary by their manual, lithographed, or facsimile signatures
thereon. Such facsimile signature on the Series 2016C Bonds shall have the same effect as if
j each of the Series 2016C Bonds had been signed manually and in person by each of said
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officials. If any officer of the City whose manual or facsimile signature shall appear on the
Series 2016C Bonds, as provided in the Form of Bond included as Exhibit A hereto, shall cease
to be such officer before the authentication of the Series 2016C Bonds or before the delivery of
the Series 2016C Bonds, 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 Series 2016C Bonds over the certification of the City Secretary, which
may be executed in facsimile. CUSIP numbers also may be printed on the Series 2016C Bonds,
but errors or omissions in the printing of either the opinion or the numbers shall have no effect
on the validity of the Series 2016C Bonds.
Section 3.6. Approval by Attorney General; Registration by Comptroller. The Initial
Series 2016C Bond shall be delivered to the Attorney General of the State of Texas for
examination and approval and shall be registered by the Comptroller of Public Accounts of the
State of Texas. The manually executed registration certificate of such Comptroller substantially
in the form provided in Exhibit A of this Ordinance shall be affixed or attached to the Initial
Series 2016C Bonds.
Section 3.7. Authentication. Except for the Series 2016C Bonds to be initially issued,
which need not be authenticated, only such Series 2016C Bonds as shall bear thereon a
certificate of authentication substantially in the form provided in Exhibit A of this Ordinance,
manually executed by an authorized representative of the Paying Agent/Registrar, shall be
entitled to the benefits of this Ordinance or shall be valid or obligatory for any purpose. Such
duly executed certificate of authentication shall be conclusive evidence that the Series 2016C
Bond so authenticated was delivered by the Paying Agent/Registrar hereunder.
Section 3.8. Special Record Date. If interest on any Series 2016C Bond is not paid on
any Interest Payment Date and continues unpaid for 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 Registered Owner of an affected Series 2016C Bond as of the close of
business on the day prior to the mailing of such notice.
Section 3.9. Ownership. Subject to the further provisions of this Section, the City, the
Paying Agent/Registrar, and any other person may treat the person in whose name any Series
2016C Bond is registered on the Register as the absolute Owner of such Series 2016C Bond for
the purpose of making and receiving payment of the principal of or interest on such Series 2016C
Bond, and for all other purposes, whether or not such Series 2016C Bond is overdue, and neither
the City nor the Paying Agent/Registrar shall be bound by any notice or knowledge to the
contrary. All payments made to the person deemed to be the Owner of any Series 2016C Bond
in accordance with this Section 3.9 shall be valid and effectual and shall discharge the liability of
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the City and the Paying Agent/Registrar upon such Series 2016C Bond to the extent of the sums
paid.
Section 3.10. Book-Entry Only System. The definitive Series 2016C Bonds shall be
initially issued in the form of a separate single fully registered Series 2016C Bond for each of the
maturities thereof. Upon initial issuance, the ownership of each such Series 2016C Bond shall
be registered in the name of Cede & Co., as nominee of DTC, and except as provided in Section
3.12 hereof, all of the Outstanding Bonds shall be registered in the name of Cede & Co., as
nominee of DTC. Upon delivery by DTC to the Paying Agent/Registrar of written notice to the
effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject
to the provisions in this Ordinance with respect to interest checks being mailed to the Owner at
the close of business on the Record Date, the word "Cede&Co." in this Ordinance shall refer to
such new nominee of DTC.
With respect to Series 2016C Bonds registered in the name of Cede&Co., as nominee of
DTC, the City and the Paying Agent/Registrar shall have no responsibility or obligation to any
DTC Participant or to any person on behalf of whom such a DTC Participant holds an interest in
the Series 2016C Bonds. Without limiting the immediately preceding sentence, the City and the
Paying Agent/Registrar shall have no responsibility or obligation with respect to (a)the accuracy
of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership
interest in the Series 2016C Bonds, (b) the delivery to any DTC Participant or any other person,
other than a Registered Owner of a Series 2016C Bond, as shown on the Register, of any notice
with respect to the Series 2016C Bonds, including any notice of redemption or(c)the payment to
any DTC Participant or any other person,other than a Registered Owner of a Series 2016C Bond
as shown in the Register, of any amount with respect to principal of Series 2016C Bonds,
premium, if any, or interest on the Series 2016C Bonds.
Except as provided in Section 3.11 of this Ordinance, the City and the Paying
Agent/Registrar shall be entitled to treat and consider the person in whose name each Series
2016C Bond is registered in the Register as the absolute owner of such Series 2016C Bond for
the purpose of payment of principal of, premium, if any, and interest on Series 2016C Bonds, for
the purpose of giving notices of redemption and other matters with respect to such Series 2016C
Bond, for the purpose of registering transfer with respect to such Series 2016C Bond, and for all
other purposes whatsoever. The Paying Agent/Registrar shall pay all principal of Series 2016C
Bonds, premium, if any, and interest on the Series 2016C Bonds only to or upon the order of the
respective owners, as shown in the Register as provided in this Ordinance, or their respective
attorneys duly authorized in writing, and all such payments shall be valid and effective to fully
satisfy and discharge the City's obligations with respect to payment of principal of, premium, if
any, and interest on the Series 2016C Bonds to the extent of the sum or sums so paid. No person
other than an owner shall receive a Series 2016C Bond evidencing the obligation of the City to
make payments of amounts due pursuant to this Ordinance.
Section 3.11. Payments and Notices to Cede & Co. Notwithstanding any other
provision of this Ordinance to the contrary, as long as any Series 2016C Bonds are registered in
the name of Cede & Co., as nominee of DTC, all payments with respect to principal of,
premium, if any, and interest on the Series 2016C Bonds, and all notices with respect to such
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Series 2016C Bonds shall be made and given, respectively, in the manner provided in the
representation letter of the City to DTC.
Section 3.12. Successor Securities Depository; Transfer Outside Book-Entry Only
System. In the event that the City or the Paying Agent/Registrar determines that DTC is
incapable of discharging its responsibilities described herein and in the representation letter of
the City to DTC, and that it is in the best interest of the beneficial owners of the Series 2016C
Bonds that they be able to obtain certificated Series 2016C Bonds, the City or the Paying
Agent/Registrar shall (a) appoint a successor securities depository, qualified to act as such under
Section 17(a) of the Securities and Exchange Act of 1934, as amended, notify DTC of the
appointment of such successor securities depository and transfer one or more separate Series
2016C Bonds to such successor securities depository or (b) notify DTC of the availability
through DTC of Series 2016C Bonds and transfer one or more separate Series 2016C Bonds to
DTC Participants having Series 2016C Bonds credited to their DTC accounts. In such event, the
Series 2016C Bonds shall no longer be restricted to being registered in the Register in the name
of Cede&Co., as nominee of DTC, but may be registered in the name of the successor securities
depository, or its nominee, or in whatever name or names a Registered Owner of a Series 2016C
Bond transferring or exchanging Series 2016C Bonds shall designate, in accordance with the
provisions of this Ordinance.
Section 3.13. Registration, Transfer, and Exchange. The Paying Agent/Registrar shall
keep the Register at its principal corporate trust office and, subject to such reasonable regulations
as it may prescribe, the Paying Agent/Registrar shall provide for the registration and transfer of
Series 2016C Bonds in accordance with the terms of this Ordinance.
Each Series 2016C Bond shall be transferable only upon the presentation and surrender
thereof at the principal corporate trust office of the Paying Agent/Registrar, duly endorsed for
transfer, or accompanied by an assignment duly executed by the Registered Owner or his
authorized representative in form satisfactory to the Paying Agent/Registrar. Upon due
presentation of any Series 2016C Bond in proper form for transfer, the Paying Agent/Registrar
shall authenticate and deliver in exchange therefor, within three (3) Business Days after such
presentation, a new Series 2016C Bond or Series 2016C Bonds, registered in the name of the
transferee or transferees, in the same maturity and aggregate principal amount and bearing
interest at the same rate as the Series 2016C Bond or Series 2016C Bonds so presented.
All Series 2016C Bonds shall be exchangeable upon presentation and surrender thereof at
the principal corporate trust office of the Paying Agent/Registrar for a Series 2016C Bond or
Series 2016C Bonds of the same maturity in any authorized denomination and interest rate, in an
aggregate amount equal to the unpaid principal amount of the Series 2016C Bond or Series
2016C Bonds presented for exchange. The Paying Agent/Registrar shall be and is hereby
authorized to authenticate and deliver exchange Series 2016C Bonds in accordance with the
provisions of this Section 3.11. Each Series 2016C Bond delivered in accordance with this
Section 3.11 shall be entitled to the benefits and security of this Ordinance to the same extent as
the Series 2016C Bond or Series 2016C Bonds in lieu of which such Series 2016C Bond is
delivered.
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The City or the Paying Agent/Registrar may require the Owner of any Series 2016C
Bond to pay a sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with the transfer or exchange of such Series 2016C Bond. 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 Series
2016C Bond 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
Series 2016C Bond called for redemption in part.
Section 3.14. Cancellation of Series 2016C Bonds. All Series 2016C Bonds paid or
redeemed in accordance with this Ordinance, and all Series 2016C Bonds in lieu of which
exchange Series 2016C Bonds or replacement Series 2016C Bonds 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 furnish the
City with appropriate certificates of destruction of such Series 2016C Bonds.
Section 3.15. Mutilated. Lost,or Stolen Series 2016C Bonds. Upon the presentation and
surrender to the Paying Agent/Registrar of a mutilated Series 2016C Bond, the Paying
Agent/Registrar shall authenticate and deliver in exchange therefor a replacement Bond of like
maturity, interest rate, and principal amount, bearing a number not contemporaneously
outstanding. The City or the Paying Agent/Registrar may require the Owner of such Series
2016C Bond to pay a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith and any other expenses connected therewith, including the fees
and expenses of the Paying Agent/Registrar.
If any Series 2016C Bond is lost, apparently destroyed, or wrongfully taken, the City,
pursuant to the applicable laws of the State of Texas, and in the absence of notice or knowledge
that such Series 2016C Bond has been acquired by a bona fide purchaser, shall execute and the
Paying Agent/Registrar shall authenticate and deliver, a replacement Series 2016C Bond of like
maturity, interest rate, and principal amount, bearing a number not contemporaneously
outstanding,provided that the Owner thereof shall have:
(a) furnished to the City and the Paying Agent/Registrar satisfactory evidence
of the ownership of and the circumstances of the loss, destruction or theft of such Series
2016C Bond;
(b) furnished such security or indemnity as may be required by the Paying
Agent/Registrar and the City to save them harmless;
(c) paid all expenses and charges in connection therewith, including, but not
limited to, printing costs, legal fees, fees of the Paying Agent/Registrar, and any tax or
other governmental charge that may be imposed; and
(d) met any other reasonable requirements of the City and the Paying
Agent/Registrar.
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If,after the delivery of such replacement Series 2016C Bond, a bona fide purchaser of the
original Bond in lieu of which such replacement Bond was issued presents for payment such
original Series 2016C Bond, the City and the Paying Agent/Registrar shall be entitled to recover
such replacement Series 2016C Bond from the person to whom it was delivered or any person
taking therefrom, except a bona fide purchaser, and shall be entitled to recover upon the security
or indemnity provided therefor to the extent of any loss, damage,cost,or expense incurred by the
City or the Paying Agent/Registrar in connection therewith.
If any such mutilated, lost, apparently destroyed, or wrongfully taken Series 2016C Bond
has become or is about to become due and payable, the City in its discretion may, instead of
issuing a replacement Series 2016C Bond, authorize the Paying Agent/Registrar to pay such
Series 2016C Bond.
Each replacement Series 2016C Bond delivered in accordance with this Section 3.13
shall be entitled to the benefits and security of this Ordinance to the same extent as the Series
2016C Bond or Series 2016C Bonds in lieu of which such replacement Series 2016C Bond is
delivered.
ARTICLE IV
FORM OF SERIES 2016C BONDS AND CERTIFICATES
Section 4.1. Forms. The form of the Series 2016C Bonds, including the form of the
Paying Agent/Registrar's Authentication Certificate, the form of Assignment, the form of the
Comptroller's Registration Certificate and the form of the Statement of Insurance, if any, which
shall be attached or affixed to the Initial Series 2016C Bonds, shall be, respectively, as described
in Exhibit A to this Ordinance, with such additions,deletions,and variations as may be necessary
or desirable and not prohibited by this Ordinance.
Section 4.2. Legal Opinion; CUSIP Numbers. The approving legal opinion of
Andrews Kurth LLP, Houston,Texas, Bond Counsel, may be printed on the Series 2016C Bonds
over the certification of the City Secretary, which may be executed in facsimile. CUSIP numbers
also may be printed on the Series 2016C Bonds, but errors or omissions in the printing of either
the opinion or the numbers shall have no effect on the validity of the Series 2016C Bonds.
ARTICLE V
SECURITY AND SOURCE OF
PAYMENT FOR THE BONDS
Section 5.1. Pledge and Source of Payment. The City hereby covenants and agrees
that Gross Revenues of the System shall, as collected and received by the City, be deposited and
paid into the special funds hereinafter established, and shall be applied in the manner hereinafter
set forth, in order to provide for the payment of all Maintenance and Operation Expenses and to
provide for the payment of principal of, interest on and any redemption premiums on the Bonds
and all expenses of paying same; and to provide for the disposition of the remaining Net
Revenues. The Bonds shall constitute special obligations of the City that shall be payable solely
from and shall be equally and ratably secured by a first lien on and pledge of the Net Revenues
as collected and received by the City from the operation and ownership of the System, which Net
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Revenues shall, in the manner herein provided, be set aside for and are hereby pledged to the
payment of the Bonds in the Interest and Sinking Fund and the Reserve Fund as hereinafter
provided, and the Bonds shall be, in all respects, on a parity with and of equal dignity with one
another. The Owners of the Bonds shall never have the right to demand payment of either the
principal of, interest on or any redemption premium on the Bonds out of any funds raised or to
be raised by taxation.
Section 5.2. Rates and Charges. So long as any Bonds remain Outstanding, the City
shall fix, charge and collect rates and charges for the use and services of the System which are
calculated to be fully sufficient to produce Net Revenues in each Fiscal Year at least equal to
115% of the principal and interest requirements scheduled to occur in such Fiscal Year on all
Bonds then Outstanding, plus an amount equal to the sum of all deposits required to be made to
the Reserve Fund in such Fiscal Year (but in no event shall Net Revenues ever be less than the
amount required to establish and maintain the Interest and Sinking Fund and the Reserve Fund as
hereinafter provided) and, to the extent that funds for such purpose are not otherwise available,
to pay all other outstanding obligations payable from the Net Revenues of the System, including
all amounts owed by the City to a provider of a Surety Policy, if any, as and when the same
become due. For the purpose of complying with its obligation to fix, charge and collect rates and
charges, as herein provided, the City shall be entitled to rely on the certificate described in
Section 6.1 of this Ordinance, as therein provided, in determining the amount of interest
anticipated to be paid in respect of Bonds bearing interest at a variable rate.
The City will not grant or permit any free service from the System, except for public
buildings and institutions operated by the City. In addition, the City will not grant or permit any
free service from the System permitted by the previous sentence if to do so would violate any
condition or covenant to which the City is bound in connection with any federal grant agreement
or otherwise.
Section 5.3. Special Funds. The following "Special Funds" shall be established,
maintained and accounted for as hereinafter provided so long as any of the Bonds remain
Outstanding:
(a) Revenue Fund;
(b) Interest and Sinking Fund; and
(c) Reserve Fund.
All of such Funds shall be maintained as separate accounts on the books of the City. The
Interest and Sinking Fund and the Reserve Fund shall constitute trust funds which shall be held
in trust for the Owners of the Bonds and the proceeds of which shall be pledged to the payment
of the Bonds. All of the Funds named above shall be used solely as herein provided so long as
any Bonds remain Outstanding.
Section 5.4. Flow of Funds. Gross Revenues of the System shall be deposited as
collected into the Revenue Fund. Moneys from time to time on deposit to the credit of the
Revenue Fund shall be applied in the following manner and in the following order of priority:
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(a) First, to pay Maintenance and Operation Expenses and to provide by
encumbrance for the payment of all obligations incurred by the City for Maintenance and
Operation Expenses and to establish and maintain an operating reserve equal to one
month's estimated Maintenance and Operation Expenses;
(b) Second, to make all deposits into the Interest and Sinking Fund required
by any ordinance authorizing the issuance of Bonds;
(c) Third, to reimburse the provider of a Surety Bond any amounts advanced
under such Surety Bond;
(d) Fourth, to pay interest to any provider of a Surety Bond any amounts
advanced under such Surety Bond;
(e) Fifth, to make all deposits into the Reserve Fund required by any
ordinance authorizing the issuance of Bonds;
(f) Sixth, to make all deposits, as may be required by any ordinance of the
City authorizing the issuance of certain Subordinate Lien Obligations described in
Section 6.2 hereof, in order to provide for the payment of and security for such
Subordinate Lien Obligations; and
(g) Seventh, for any lawful purpose.
Section 5.5. Interest and Sinking Fund. On or before the last Business Day of each
month so long as any Bonds remain Outstanding, after making all required payments and
provision for payment of Maintenance and Operation Expenses, there shall be transferred into
the Interest and Sinking Fund from the Revenue Fund the following amounts:
(a) Such amounts, in approximately equal monthly installments, as will be
sufficient to accumulate the amount required to pay the interest scheduled to become due
on the Bonds on the next Interest Payment Date;and
(b) Such amounts, in approximately equal monthly installments, as will be
sufficient to accumulate the amount required to pay the next maturing principal of the
Bonds (i.e., the principal amount payable on the next September 1), including the
principal amounts of, and any redemption premiums on, any Bonds payable as a result of
the operation or exercise of any mandatory or optional redemption provision contained in
any ordinance authorizing the issuance of Bonds.
Whenever the total amounts on deposit to the credit of the Interest and Sinking Fund and
the Reserve Fund shall be equivalent to the sum of the aggregate principal amount of all
Outstanding Bonds plus the aggregate amount of all interest accrued and to accrue thereon, no
further payments need be made into the Interest and Sinking Fund or the Reserve Fund, and such
Bonds shall not be regarded as being Outstanding except for the purpose of being paid with the
moneys on deposit in such Funds.
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Moneys deposited to the credit of the Interest and Sinking Fund shall be used solely for
the purpose of paying principal (at maturity, prior redemption or tender, or to purchase Bonds in
the open market to be credited against mandatory redemption requirements), interest and
redemption premiums on the Bonds, plus all bank charges and other costs and expenses relating
to such payment.
On or before each date principal becomes due and/or each Interest Payment Date on the
Bonds, the City shall transfer from the Interest and Sinking Fund to the Paying Agent for the
Bonds an amount equal to the principal of, interest on and any redemption premiums payable on
the Bonds on such date, together with an amount equal to all bank charges and other costs and
expenses relating to such payment. The Paying Agent shall destroy all paid Bonds and shall
provide the City with an appropriate certificate of destruction.
Section 5.6. Reserve Fund. On or before the last Business Day of each month so long
as any Bonds remain Outstanding, after making all required payments and provision for payment
of Maintenance and Operation Expenses and after making all required transfers into the Interest
and Sinking Fund, there shall be transferred into the Reserve Fund from the Revenue Fund
amounts equal to one-sixtieth (1/60th) of the Average Annual Principal and Interest
Requirements on the Bonds unless or until there has been accumulated in the Reserve Fund
money and investments in an aggregate amount at least equal to the Average Annual Principal
and Interest Requirements on the Bonds; provided that additional deposits into the Reserve Fund
sufficient to provide for the increased reserve requirements resulting from the issuance of any
Additional Bonds shall be made by not later than 60 months from the date of issuance of such
Additional Bonds as required by Section 6.1(d)hereof. Such additional deposits into the Reserve
Fund in connection with the issuance of any Additional Bonds shall be made each month in
amounts equal to one-sixtieth (1/60th) of the Average Annual Principal and Interest
Requirements on the Bonds and such Additional Bonds. After such amount has accumulated in
the Reserve Fund and so long thereafter as such fund contains such amount, no further deposits
shall be required to be made into the Reserve Fund, and any excess amounts in the Fund may be
transferred to the Revenue Fund; but if and whenever the balance in the Reserve Fund is reduced
below such amount, monthly deposits into such Fund shall be resumed and continued in amounts
at least equal to one-twelfth (1/12th)of the Average Annual Principal and Interest Requirements
on the Bonds until the Reserve Fund has been restored to such amount. The Reserve Fund shall
be used to pay the principal of and interest on the Bonds at any time when there is not sufficient
money available in the Interest and Sinking Fund for such purpose and it may be used finally to
pay and retire the last Bonds to mature or be redeemed.
The requirements of the immediately preceding paragraph of this Section
notwithstanding, the City may provide a Surety Policy or Policies issued in amounts equal to all
or part of the Average Annual Principal and Interest Requirements on the Bonds in lieu of
depositing cash into the Reserve Fund; provided, however, that no such Surety Policy may be so
substituted unless(i)the ordinance authorizing the substitution of the Surety Policy for all or part
of the Average Annual Principal and Interest Requirements on the Bonds contains a finding that
such substitution is cost effective and (ii) the City obtains an opinion of nationally recognized
bond counsel that such substitution is permitted by applicable Texas law then in effect. If a
Surety Policy or Policies are issued in accordance with the preceding sentence, such Surety
Policy or Policies shall be drawn upon and reimbursed on a pro rata basis.
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In the event a Surety Policy issued to satisfy all or a part of the City's obligation with
respect to the Reserve Fund causes the amount then on deposit in the Reserve Fund to exceed the
Average Annual Principal and Interest Requirements on all Bonds, the City may transfer such
excess amount to any fund or funds established for the payment of or security for Bonds or any
Subordinate Lien Obligations (including any escrow established for the final payment of any
such obligations pursuant to Chapter 1207, Texas Government Code); provided, however, that
no funds constituting bond proceeds shall be transferred for the benefit of the Subordinate Lien
Obligations.
Section 5.7. Deficiencies in Funds. If in any month there shall not be deposited into
any fund maintained pursuant to this Article the full amounts required hereinabove, amounts
equivalent to such deficiency shall be set apart and paid into such Special Fund or Funds from
the first available and unallocated moneys in the Revenue Fund, and such payment shall be in
addition to the amounts otherwise required to be paid into such Funds during any succeeding
month or months. To the extent necessary, the rates and charges for the System shall be
increased to make up for any such deficiencies.
Section 5.8. Investment of Funds; Transfer of Investment Income.
(a) Money in the Revenue Fund, the Interest and Sinking Fund and the
Reserve Fund may, at the option of the City, be invested in time deposits or certificates of
deposit secured in the manner required by law for public funds, or be invested in direct
obligations of, or obligations the principal of and interest on which are unconditionally
guaranteed by, the United States of America, in obligations of any agencies or
instrumentalities of the United States of America or as otherwise permitted by state law;
provided that all such deposits and investments shall be made in such manner(which may
include repurchase agreements for such investments with any national bank) that the
money required to be expended from any Special Fund will be available at the proper
time or times, and provided further that in no event shall such deposits or investments of
moneys in the Reserve Fund mature later than the final maturity date of the Bonds. All
such investments shall be valued in terms of current market value no less frequently than
the last Business Day of the City's Fiscal Year, except that any direct obligations of the
United States of America - State and Local Government Series shall be continuously
valued at their par value or principal face amount. Any obligation in which money is so
invested shall be kept and held in an official depository of the City, except as hereinafter
provided. For purposes of maximizing investment returns, money in such funds may be
invested,together with money in other funds or with other money of the City, in common
investments of the kind described above, or in a common pool of such investments which
shall be kept and held at an official depository of the City, which shall not be deemed to
be or constitute a commingling of such money or funds provided that safekeeping
receipts or certificates of participation clearly evidencing the investment or investment
pool in which such money is invested and the share thereof purchased with such money
or owned by such fund are held by or on behalf of each such fund. If necessary, such
investments shall be promptly sold to prevent any default.
(b) All interest and income derived from such deposits and investments shall
be credited monthly to the Special Fund from which such investment was made.
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Section 5.9. Security for Uninvested Funds. So long as any Bonds remain
Outstanding, all uninvested moneys on deposit in, or credited to, the Revenue Fund, the Interest
and Sinking Fund and the Reserve Fund shall be secured by the pledge of security as provided by
law for cities in the State of Texas.
ARTICLE VI
ADDITIONAL BONDS
Section 6.1. Additional Bonds. The City reserves the right to issue, for any lawful
purpose, including the refunding of any previously issued Bonds or any other bonds or
obligations of the City issued in connection with the System or payable from Net Revenues, one
or more series of Additional Bonds on a parity with the Outstanding Bonds and any Additional
Bonds then Outstanding, payable from, and secured by a first lien on, the Net Revenues of the
System;provided,however,that no Additional Bonds may be issued unless:
(a) All Additional Bonds shall mature only on September 1 and interest
thereon shall be payable only on March 1 and September 1;
(b) The Interest and Sinking Fund and the Reserve Fund each contains the
amount of money then required to be on deposit therein;
(c) For either the preceding Fiscal Year or any consecutive 12-month period
out of the 15-month period immediately preceding the month in which the bond
ordinance authorizing such Additional Bonds is adopted(the"Base Period")either:
(1) Net Revenues are certified by the Director of Finance of the City to
have been equal to at least one hundred and forty percent (140%) of the Average
Annual Principal and Interest Requirements on all Bonds, after giving effect to
the issuance of the Additional Bonds to be issued; or
(2) Net Revenues, adjusted to give effect to any rate increase or
annexation of territory placed into effect or consummated prior to the adoption of
the ordinance authorizing the Additional Bonds to the same extent as if such rate
increase or annexation had been placed into effect or consummated prior to the
commencement of the Base Period, would have been equal to at least the amount
required in paragraph (1) above, as certified by an independent consulting
engineer or independent firm of consulting engineers;
Provided, however, that this requirement shall not apply to the issuance of any series of
Additional Bonds for refunding purposes that will not have the result of increasing the average
annual principal and interest requirements on the Bonds;and
(d) Provision is made in the bond ordinance authorizing the Additional Bonds
then proposed to be issued for(1)additional payments into the Interest and Sinking Fund
sufficient to provide for the payment of the increased principal of and interest on the
Bonds resulting from the issuance of such Additional Bonds, and (2)additional payments
into the Reserve Fund sufficient to provide for the accumulation therein of the increased
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reserve requirement resulting from the issuance of such Additional Bonds, by not later
than sixty(60)months from the date of issuance of such Additional Bonds.
The provisions of this Section 6.1(a) notwithstanding, the City may issue Additional
Bonds that bear interest at a variable rate. Such variable rate bonds may mature on dates other
than September 1 and interest thereon may be payable on dates other than March 1 or September
1; provided that the issuance of Additional Bonds as variable rate bonds may not cause the total
amount of Outstanding Bonds that are variable rate bonds to exceed 50% (20% as long as the
Series 1999 Bonds shall remain outstanding) of the aggregate principal amount of all
Outstanding Bonds and Subordinate Lien Obligations at the time of such issuance. For purposes
of calculating the funding requirements for the Reserve Fund and for the purposes of calculating
compliance with the conditions precedent to the issuance of Additional Bonds pursuant to
Section 6.1(c) and the rate covenant set forth in Section 5.2, any Bonds that are variable rate
bonds shall be assumed to bear interest at a rate which shall be estimated and certified by the
financial advisor to the City as the rate that would be borne by such variable rate bonds if they
were at the date of such certification issued as Bonds bearing a fixed rate of interest to their
scheduled maturity or maturities.
Section 6.2. Subordinate Lien Obligations. The City reserves the right to issue, for any
lawful purpose, bonds, notes or other obligations secured in whole or in part by liens on the Net
Revenues that are junior and subordinate to the lien on Net Revenues securing payment of the
Bonds. Such Subordinate Lien Obligations may be further secured by any other source of
payment lawfully available for such purposes. In the event that the City should decide to issue
such Subordinate Lien Obligations as variable rate bonds, for purposes of calculating the funding
requirements for the reserve fund for such Subordinate Lien Obligations, the variable rate bonds
shall be assumed to bear interest at the rate of 10% per annum, and for purposes of calculating
compliance with any conditions precedent to the issuance of additional Subordinate Lien
Obligations and any rate covenants relating to such Subordinate Lien Obligations, the variable
rate bonds shall be assumed to bear interest at the higher of 9%per annum or the highest variable
rate over the preceding twenty-four(24)months.
Deposits may be made pursuant to Section 5.4(f) of this Ordinance into such funds as
may be created and maintained for the payment of and security for Subordinate Lien Obligations
described in this Section (including a reserve fund not to exceed the Average Annual Principal
and Interest Requirements on such Subordinate Lien Obligations and any provisions for curing
deficiencies in such funds), but only to the extent that the aggregate Outstanding principal
amount of such Subordinate Lien Obligations does not exceed 50% of the aggregate principal
amount of Bonds and Subordinate Lien Obligations Outstanding on the date of such calculation.
Section 6.3. Special Project Bonds. The City reserves the right to issue revenue bonds
secured by liens on and pledges of revenues and proceeds derived from Special Projects.
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ARTICLE VII
COVENANTS AND PROVISIONS
RELATING TO BONDS
Section 7.1. Punctual Payment of Bonds. The City covenants that it will punctually
pay or cause to be paid the interest on and principal of all Bonds according to the terms thereof
and will faithfully do and perform, and at all times fully observe, any and all covenants,
undertakings, stipulations and provisions contained in this Ordinance and in any other ordinance
authorizing the issuance of such Bonds.
Section 7.2. Power to Own and Operate System; Ratemaking Power. The City
covenants that it has all necessary power and authority to own and operate the System as herein
described and provided and that it possesses, and shall exercise, all necessary power and
authority to establish, fix, increase, impose and collect rates and charges for the use and services
of the System in the amounts required to comply with the covenants and provisions contained
herein.
Section 7.3. Maintenance of System. So long as any Bonds remain Outstanding, the
City covenants that it will at all times maintain the System, or within the limits of its authority
cause the same to be maintained, in good condition and working order and will operate the same,
or cause the same to be operated, in an efficient and economical manner at a reasonable cost and
in accordance with sound business principles. In operating and maintaining the System,the City
will comply with all contractual provisions and agreements entered into by it and with all valid
rules, regulations, directions or orders of any governmental, administrative or judicial body
promulgating same, noncompliance with which would materially and adversely affect the
operation of the System.
Section 7.4. Sale or Encumbrance of System. So long as any Bonds remain
Outstanding, the City covenants that it will not sell, dispose of or, except as permitted in Article
VI, further encumber the System; provided, however, that this provision shall not prevent the
City from disposing of any portion of the System which is being replaced or is deemed by the
City to be obsolete,worn out, surplus or no longer needed for the proper operation of the System.
Net proceeds from any such disposition may be deposited in the Revenue Fund and,
notwithstanding any other provision contained herein, shall be used only for System purposes.
Any agreement pursuant to which the City contracts with a person, corporation, municipal
corporation or political subdivision to operate the System or to lease and/or operate all or part of
the System shall not be considered as an encumbrance of the System.
Section 7.5. Insurance. The City covenants that it will keep the System insured with
insurers of good standing, against risks, accidents or casualties against which and to the extent
customarily insured against by political subdivisions of the State of Texas operating similar
properties,to the extent that such insurance is available. All net proceeds of such insurance shall
be applied to repair or replace any insured property that is damaged or destroyed, or shall be
deposited in the Revenue Fund, or shall be used to redeem Outstanding Bonds. The cost of all
such insurance, together with any additional insurance, shall be a part of the Maintenance and
Operation Expenses.
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Section 7.6. Accounts, Records and Audits. So long as any Bonds remain Outstanding,
the City covenants that it will maintain a proper and complete system of records and accounts
pertaining to the operation of the System in which full,true and proper entries will be made of all
dealings, transactions, business and affairs which in any way affect or pertain to the System or
the Gross Revenues or the Net Revenues thereof. The City shall, after the close of each Fiscal
Year, prepare financial statements of the System, and have those financial statements audited by
an independent certified public accountant or independent firm of certified public accountants.
After the audit, the City shall furnish a copy of these audited financial statements, together with
the independent certified public accountant's report thereon, without cost, to the Municipal
Advisory Council of Texas, the major municipal rating agencies, and any Owners of Bonds who
shall request the same. All expenses incurred in preparing such audits shall be Maintenance and
Operation Expenses.
Section 7.7. Competition. To the extent it legally may, the City covenants that it will
not grant any franchise or permit for the acquisition, construction or operation of any competing
facilities which might be used as a substitute for the System and will prohibit the operation of
any such competing facilities to the extent that such competing facilities would impair the City's
ability to pay principal of or interest on the Bonds.
Section 7.8. Pledge and Encumbrance of Net Revenues. The City covenants that it has
the lawful power to create a lien on and to pledge the Net Revenues to secure the payment of the
Bonds, and has lawfully exercised such power under the Constitution and laws of the State of
Texas. The City further covenants that, other than to the payment of the Bonds, the Net
Revenues are not and will not be made subject to any other lien, pledge or encumbrance to
secure the payment of any debt or obligation of the City, unless such lien, pledge or
encumbrance is junior and subordinate to the lien and pledge securing payment of the Bonds.
Section 7.9. Covenants with Respect to Certain Assumed Water District Bonds. So
long as any Bonds remain Outstanding,the City covenants as follows:
(a) To the extent it legally may, the City will impose, and strictly enforce, the
requirement upon all water districts located within the City's extraterritorial jurisdiction
that any bonds issued by such water districts which are secured in whole or in part by
pledges of or liens on water or sewer system revenues shall provide that all such pledges
of and liens on water or sewer system revenues shall automatically terminate upon the
annexation and dissolution of the district by the City;
(b) The City shall use its best efforts to redeem, refund or defease all annexed
water district bonds assumed by the City which by their own terms are secured in whole
or in part by pledges of or liens on water or sewer system revenues which do not
terminate upon annexation and dissolution by the City of such water district, or otherwise
to provide for the discharge of such pledges or liens on water or sewer system revenues;
and
(c) Pursuant to Section 43.075, Texas Local Government Code (successor to
Article 1182c-1, Vernon's Texas Civil Statutes, as amended), the City shall, unless it has
theretofore made adequate provision for the payment thereof, annually levy and cause to
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be collected taxes upon all taxable property of the City sufficient to pay principal of and
interest, as they respectively become due and payable, on all assumed bonds, warrants
and other obligations that were issued by water districts that have been annexed to, and
dissolved by, the City, and which are by their own terms secured in whole or in part by a
lien on or pledge of water or sewer system revenues which did not terminate upon the
annexation and dissolution by the City of such water district.
Section 7.10. Registered Owners' Rights and Remedies. This Ordinance shall constitute
a contract between the City and the Owners of the Series 2016C Bonds from time to time
Outstanding and this Ordinance shall be and remain irrepealable until the Series 2016C Bonds
and the interest thereon shall be fully paid or discharged or provision therefor shall have been
made as provided herein. In the event of a default in the payment of the principal of or interest
on any of the Series 2016C Bonds or a default in the performance of any duty or covenant
provided by law or in this Ordinance, the Owner or Owners of any of the Series 2016C Bonds
may pursue all legal remedies afforded by the Constitution and laws of the State of Texas to
compel the City to remedy such default and to prevent further default or defaults. Without in any
way limiting the generality of the foregoing, it is expressly provided that any Owner of any of
the Series 2016C Bonds may at law or in equity, by suit, action, mandamus, or other
proceedings, enforce and compel performance of all duties required to be performed by the City
under this Ordinance, including the making and collection of reasonable and sufficient rates and
charges for the use and services of the System, the deposit of the revenues thereof into the
Special Funds herein provided, and the application of such revenues in the manner required in
this Ordinance.
Section 7.11. Defeasance. The City may defease the provisions of this Ordinance and
discharge its obligations to the Registered Owners of any or all of the Series 2016C Bonds to pay
the principal of and interest thereon in any manner now or hereafter permitted by law, including
by depositing with the Paying Agent/Registrar or with the State Treasurer of the State of Texas
either:
(a) cash in an amount equal to the principal amount of such Series 2016C
Bonds plus interest thereon to the date of maturity or redemption; or
(b) pursuant to an escrow or trust agreement,cash and/or(i)direct noncallable
obligations of United States of America, including obligations that are unconditionally
guaranteed by the United States of America; (ii) noncallable obligations of an agency or
instrumentality of the United States, including obligations that are unconditionally
guaranteed or insured by the agency or instrumentality and that, on the date the governing
body of the issuer adopts or approves the proceedings authorizing the issuance of
refunding bonds, are rated as to investment quality by a nationally recognized investment
rating firm not less than AAA or its equivalent; or(iii) noncallable obligations of a state
or an agency or a county, municipality, or other political subdivision of a state that have
been refunded and that, on the date the governing body of the issuer adopts or approves
the proceedings authorizing the issuance of refunding bonds, are rated as to investment
quality by a nationally recognized investment rating firm not less than AAA or its
equivalent, which, in the case of (i), (ii) or (iii), may be in book-entry form, and the
principal of and interest on which will, when due or redeemable at the option of the
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f
holder, without further investment or reinvestment of either the principal amount thereof
or the interest earnings thereon, provide money in an amount which, together with other
moneys, if any,held in such escrow at the same time and available for such purpose, shall
be sufficient to provide for the timely payment of the principal of and interest thereon to
the date of maturity or earlier redemption;
provided, however, that if any of the Series 2016C Bonds are to be redeemed prior to their
respective dates of maturity, provision shall have been made for giving notice of redemption as
provided in this Ordinance. Upon such deposit, such Series 2016C Bonds shall no longer be
regarded to be Outstanding or unpaid. Any surplus amounts not required to accomplish such
defeasance shall be returned to the City.
Section 7.12. Legal Holidays. In any case where the date of maturity of interest on or
principal of the Series 2016C Bonds or the date fixed for redemption of any Series 2016C Bonds
shall be in the City a legal holiday or a day on which the Paying Agent/Registrar for the Series
2016C Bonds is authorized by law to close, then payment of interest or principal need not be
made on such date but may be made on the next succeeding day not in the City a legal holiday or
a day on which such Paying Agent Registrar is authorized by law to close with the same force
and effect as if made on the date of maturity or the date fixed for redemption and no interest shall
accrue for the period from the date of maturity or redemption to the date of actual payment.
Section 7.13. Unavailability of Authorized Publication. If, because of the temporary or
permanent suspension of any newspaper, journal or other publication, or, for any reason,
publication of notice cannot be made meeting any requirements herein established, any notice
required to be published by the provisions of this Ordinance shall be given in such other manner
and at such time or times as in the judgment of the City or of the Paying Agent/Registrar (or
paying agent) for the Series 2016C Bonds shall most effectively approximate such required
publication and the giving of such notice in such manner shall for all purposes of this Ordinance
be deemed to be in compliance with the requirements for publication thereof.
Section 7.14. No Recourse Against City Officials. No recourse shall be had for the
payment of principal of or interest on any Series 2016C Bonds or for any claim based thereon or
on this Ordinance against any official of the City or any person executing any Series 2016C
Bonds.
Section 7.15. Amendment to Ordinance. The City may, with the consent of Owners
holding a majority in aggregate principal amount of the Bonds then Outstanding affected
thereby, amend, add to,or rescind any of the provisions of this Ordinance; provided that,without
the consent of all Owners of Outstanding Bonds, no such amendment, addition, or rescission
shall (1)extend the time or times of payment of the principal of, premium, if any, and interest on
the Bonds, reduce the principal amount thereof, the redemption price therefor, or the rate of
interest thereon, or in any other way modify the terms of payment of the principal of,premium, if
any, or interest on the Bonds, (2) give any preference to any Bond over any other Bond, or (3)
reduce the aggregate principal amount of Bonds required to be held by Owners for consent to
any such amendment, addition, or rescission.
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ARTICLE VIII
CONCERNING THE PAYING AGENT/REGISTRAR
Section 8.1. Acceptance. Wells Fargo Bank, N.A., Minneapolis, Minnesota, is hereby
appointed as the initial Paying Agent/Registrar for the Series 2016C Bonds. 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 fees
and/or deposits of money pursuant to this Ordinance, shall be deemed to accept and agree to
abide by the terms of this Ordinance. The registration of and payment of the principal of,
premium, if any, and interest on the Series 2016C Bonds when due shall be effectuated pursuant
to the terms of a Paying Agent/Registrar Agreement to be entered into by and between the City
and the Paying Agent/Registrar, which shall be substantially in the form attached hereto as
Exhibit B, the terms and provisions of which are hereby approved, and the Mayor and/or the
Mayor Pro Tern are hereby authorized to execute and deliver such Paying Agent/Registrar
Agreement on behalf of the City in multiple counterparts and the City Secretary is hereby
authorized to attest and affix the City's seal thereto.
Section 8.2. Fiduciary Account. All money transferred to the Paying Agent/Registrar
under this Ordinance(except sums representing Paying Agent/Registrar's fees) shall be held in a
fiduciary account for the benefit of the City, shall be the property of the City, and shall be
disbursed in accordance with this Ordinance.
Section 8.3. Bonds Presented. Subject to the provisions of Section 8.4, all matured
Series 2016C Bonds properly and timely presented to the Paying Agent/Registrar for payment
shall be paid without the necessity of further instructions from the City. Such Series 2016C
Bonds shall be canceled as provided herein.
Section 8.4. Series 2016C Bonds Not Timely Presented. The Paying Agent/Registrar
shall remit to the City, upon receipt of the certificate provided for herein, a sum equal to the
aggregate face amount of all Series 2016C Bonds which have not been presented for payment
prior to the date specified in such certificate. Such certificate shall:
(a) Specify the Series 2016C Bonds or portions thereof to which it applies and
the amount of each;
(b) Specify the date on which the City believes itself to be no longer obligated
to pay such Series 2016C Bonds or portions thereof by virtue of the expiration of the
applicable statute of limitations under the laws of the State of Texas; and
(c) Be signed by the Mayor and attested by the City Secretary.
Funds held by the Paying Agent/Registrar that represent principal of and interest on the
Series 2016C Bonds remaining unclaimed by any Registered Owner after the expiration of three
years from the date such funds have become due and payable (a) shall be reported and disposed
of by the Paying Agent/Registrar in accordance with the 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
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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 Owners of the Series 2016C
Bonds by virtue of actions taken in compliance with this Section.
Section 8.5. Paying Agent/Registrar May Own Series 2016C Bonds. The Paying
Agent/Registrar in its individual or any other capacity, may become the Owner or pledgee of
Series 2016C Bonds with the same rights it would have if it were not the Paying Agent/Registrar.
Section 8.6. Successor Paying Agents/Registrars. The City covenants that at all times
while any Series 2016C Bonds are Outstanding it will provide a legally qualified bank, trust
company, financial institution, or other agency to act as Paying Agent/Registrar for the Series
2016C Bonds. If the Paying Agent/Registrar or its successor for any reason no longer acts as
Paying Agent/Registrar hereunder, the City covenants that it will appoint a bank in the same city
as the Paying Agent/Registrar initially appointed to perform the duties of Paying Agent/Registrar
hereunder. Any successor Paying Agent/Registrar shall be either a national or state banking
institution, and a corporation organized and doing business under the laws of the United States of
America or any state, which is authorized under such laws to exercise trust powers and is subject
to supervision or examination by federal or state authority.
The City reserves the right to change the Paying Agent/Registrar for the Series 2016C
Bonds 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 sixty(60) days prior to the next succeeding principal or
interest payment date on the Series 2016C Bonds. Promptly upon the appointment of any
successor Paying Agent/Registrar, the previous Paying Agent/Registrar shall deliver the Register
or a copy thereof to the new Paying Agent/Registrar and the new Paying Agent/Registrar shall
notify each Registered Owner, by first-class mail, postage prepaid, of such change and of the
address of the new Paying Agent/Registrar. Each Paying Agent/Registrar hereunder, by acting
in that capacity, shall be deemed to have agreed to the provisions of this Ordinance.
ARTICLE IX
TAX EXEMPTION
Section 9.1. Covenants to Maintain Tax Exempt Status.
(a) Definitions. When used in this Section, the following terms have the following
meanings:
"Code" means the Internal Revenue Code of 1986, as amended by all legislation,
if any, enacted on or before the Issue Date.
"Computation Date" has the meaning stated in Section I.148-1(b) of the
Regulations.
"Gross Proceeds" has the meaning stated in Section 1.148-1(b) of the
Regulations.
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"Investment"has the meaning stated in Section 1.148-1(b)of the Regulations.
"Issue Date" for each series or sub-series of the Series 2016C Bonds or other
obligations of the City is the respective date on which such series or sub-series of the
Series 2016C Bonds or other obligations of the City is delivered against payment
therefor.
"Net Sale Proceeds" has the meaning stated in Section 1.148-1(b) of the
Regulations.
"Nonpurpose Investment" has the meaning stated in Section 1.148-1(b) of the
Regulations.
"Proceeds"has the meaning stated in Section 1.148-1(b) of the Regulations.
"Rebate Amount"has the meaning stated in Section 1.148-3 of the Regulations.
"Regulations"means the temporary or final Income Tax Regulations applicable to
the Bonds issued pursuant to Sections 141 through 150 of the Code. Any reference to a
section of the Regulations shall also refer to any successor provision to such section
hereafter promulgated by the Internal Revenue Service pursuant to Sections 141 through
150 of the Code and applicable to the Series 2016C Bonds.
"Yield of"
any Investment shall be computed in accordance with Section
1.148-5 of the Regulations,and
the Series 2016C Bonds shall be computed in accordance with
Section 1.148-4 of the Regulations.
(b) Not to Cause Interest to Become Taxable. The City shall not use, permit the use
of or omit to use Gross Proceeds or any other amounts (or any property the acquisition,
construction or improvement of which is to be financed directly or indirectly with Gross
Proceeds) in a manner which, if made or omitted, respectively, would cause the interest on such
Series 2016C Bond to become includable in the gross income, as defined in Section 61 of the
Code, of the owner thereof for federal income tax purposes. Without limiting the generality of
the foregoing, unless and until the City shall have received a written opinion of counsel
nationally recognized in the field of municipal bond law to the effect that failure to comply with
such covenant will not adversely affect the exemption from federal income tax of the interest on
any Series 2016C Bond, the City shall comply with each of the specific covenants in this
Section.
(c) No Private Use or Private Payments. Except as permitted by Section 141 of the
Code and the regulations and rulings thereunder, the City shall, at all times after the Issue Date
of any Series 2016C Bond and prior to the last stated maturity of the Series 2016C Bonds
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(1) exclusively own, operate, and possess all property the acquisition, construction, or
improvement of which is to be financed directly or indirectly with Gross Proceeds
of such Series 2016C Bond and not use or permit the use of such Gross Proceeds
or any property acquired, constructed, or improved with such Gross Proceeds in
any activity carried on by any person or entity other than a state or local
government, unless such use is solely as a member of the general public,or
(2) not directly or indirectly impose or accept any charge or other payment for use of
Gross Proceeds of such Series 2016C Bond or any property the acquisition,
construction or improvement of which is to be financed directly or indirectly with
such Gross Proceeds other than taxes of general application and interest earned on
investments acquired with such Gross Proceeds pending application for their
intended purposes.
(d) No Private Loan. Except to the extent permitted by Section 141 of the Code and
the regulations and rulings thereunder, the City shall not use Gross Proceeds of such Series
2016C Bond to make or finance loans to any person or entity other than a state or local
government. For purposes of the foregoing covenant, Gross Proceeds are considered to be
"loaned" to a person or entity if (1) property acquired, constructed or improved with Gross
Proceeds is sold or leased to such person or entity in a transaction which creates a debt for
federal income tax purposes, (2) capacity in or service from such property is committed to such
person or entity under a take-or-pay, output, or similar contract or arrangement, or (3) indirect
benefits, or burdens and benefits of ownership, of such Gross Proceeds or such property are
otherwise transferred in a transaction which is the economic equivalent of a loan.
(e) Not to Invest at Higher Yield. Except to the extent permitted by Section 148 of
the Code and the regulations and rulings thereunder, the City shall not, at any time prior to the
earlier of the final stated maturity or final payment of such Series 2016C Bond, directly or
indirectly invest Gross Proceeds of such Series 2016C Bond in any Investment (or use such
Gross Proceeds to replace money so invested), if as a result of such investment the Yield of all
Investments allocated to such Gross Proceeds whether then held or previously disposed of,
exceeds the Yield on the Series 2016C Bonds.
(f) Not Federally Guaranteed. Except to the extent permitted by Section 149(b) of
the Code and the regulations and rulings thereunder, the City shall not take or omit to take any
action which would cause the Series 2016C Bonds to be federally guaranteed within the meaning
of Section 149(b)of the Code and the regulations and rulings thereunder.
(g) Information Report. The City shall timely file with the Secretary of the Treasury
the information required by Section 149(e) of the Code with respect to each converted series of
the Series 2016C Bonds on such forms and in such place as such Secretary may prescribe.
(h) Payment of Rebate Amount. Except to the extent otherwise provided in Section
148(f)of the Code and the regulations and rulings thereunder,the City shall:
(1) account for all Gross Proceeds (including all receipts, expenditures and
investments thereof) on its books of account separately and apart from all other
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funds (and receipts, expenditures and investments thereof) and shall retain all
records of such accounting for at least six years after the final Computation Date.
The City may, however, to the extent permitted by law, commingle Gross
Proceeds of the Series 2016C Bonds with other money of the City, provided that
the City separately accounts for each receipt and expenditure of such Gross
Proceeds and the obligations acquired therewith,
(2) calculate the Rebate Amount with respect to such Series 2016C Bond not less
frequently than each Computation Date, in accordance with rules set forth in
Section 148(f) of the Code, Section 1.148-3 of the Regulations, and the rulings
thereunder. The City shall maintain a copy of such calculations for at least six
years after the final Computation Date,
(3) as additional consideration for the purchase of the Series 2016C Bonds by the
initial purchasers thereof and the loan of the money represented thereby, and in
order to induce such purchase by measures designed to ensure the excludability of
the interest thereon from the gross income of the owners thereof for federal
income tax purposes, pay to the United States the amount described in paragraph
(2) above at the times, in the installments, to the place, in the manner and
accompanied by such forms or other information as is or may be required by
Section 148(f)of the Code and the regulations and rulings thereunder, and
(4) exercise reasonable diligence to assure that no errors are made in the calculations
required by paragraph (2) and, if such error is made, to discover and promptly to
correct such error within a reasonable amount of time thereafter, including
payment to the United States of any interest and any penalty required by the
Regulations.
(i) Not to Divert Arbitrage Profits. Except to the extent permitted by Section 148 of
the Code and the regulations and rulings thereunder,the City shall not, at any time after the Issue
Date of the Series 2016C Bonds and prior to the earlier of the final stated maturity or final
payment of the Series 2016C Bonds, enter into any transaction that reduces the amount required
to be paid to the United States pursuant to Subsection(h)of this Section because such transaction
results in a smaller profit or a larger loss than would have resulted if the transaction had been at
arm's length and had the Yield of the Series 2016C Bonds,not been relevant to either party.
ARTICLE X
CONTINUING DISCLOSURE UNDERTAKING
Section 10.1. Annual Reports. The City shall provide annually to the Municipal
Securities Rulemaking Board (the"MSRB"), in an electronic format as prescribed by the MSRB,
within six months after the end of each fiscal year, financial information and operating data with
respect to the City of the general type described in Exhibit E hereto. Any financial statements so
to be provided shall be (1) prepared in accordance with the accounting principles described in
Exhibit E hereto and (2) audited, if the City commissions an audit of such statements and the
audit is completed within the period during which they must be provided. If audited financial
statements are not so provided, then the City shall provide unaudited financial statements for the
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applicable fiscal year by the required time, and audited financial statements when and if audited
financial statements become available.
If the City changes its fiscal year, it will notify the MSRB of the change (and of the date
of the new fiscal year end) prior to the next date by which the City otherwise would be required
to provide financial information and operating data pursuant to this Section.
The financial information and operating data to be provided pursuant to this Section may
be set forth in full in one or more documents or may be included by specific reference to
documents(i)available to the public on the MSRB's internet web site or(ii) filed with the SEC.
Section 10.2. Event Notices. The City shall notify the MSRB in a electronic format
prescribed by the MSRB, in a timely manner(not in excess of ten (10)days after the occurrence
of the event),of any of the following events with respect to the Series 2016C Bonds:
(a) Principal and interest payment delinquencies;
(b) Non-payment related defaults, if material;
(c) Unscheduled draws on debt service reserves reflecting financial
difficulties;
(d) Unscheduled draws on credit enhancements reflecting financial
difficulties;
(e) Substitution of credit or liquidity providers, or their failure to perform;
(f) Adverse tax opinions, the issuance by the Internal Revenue Service of
proposed or final determinations of taxability, Notices of Proposed Issue
(IRS Form 5701-TEB) or other material notices or determinations with
respect to the tax status of the Series 2016C Bonds, or other material
events affecting the tax status of the Series 2016C Bonds;
(g) Modifications to rights of holders of the Series 2016C Bonds, if material;
(h) Bond calls, if material,and tender offers;
(i) Defeasances;
(j) Release, substitution, or sale of property securing repayment of the Series
2016C Bonds, if material;
(k) Rating changes;
(1) Bankruptcy, insolvency, receivership or similar event of the City;
(m) The consummation of a merger, consolidation, or acquisition involving 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
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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
(n) Appointment of a successor or additional Paying Agent/Registrar or the
change of name of Paying Agent/Registrar, if material.
For the purposes of the event identified in clause (1),the event is considered to occur when
any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an
obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under
state or federal law in which a court or governmental authority has assumed jurisdiction over
substantially all of the assets or business of the obligated person, or if such jurisdiction has been
assumed by leaving the existing governing body and officials or officers in possession but subject to
the supervision and orders of a court or governmental authority,or the entry of an order confirming a
plan of reorganization, arrangement or liquidation by a court or governmental authority having
supervision or jurisdiction over substantially all of the assets or business of the obligated person.
The City shall notify the MSRB in an electronic format prescribed by the MSRB, in a
timely manner, of any failure by the City to provide financial information or operating data in
accordance with Section 10.1 of this Ordinance by the time required by such Section.
Section 10.3. Limitations, Disclaimers, and Amendments. The City shall be obligated
to observe and perform the covenants specified in this Article for so long as, but only for so long
as, the City remains an "obligated person" with respect to the Series 2016C Bonds within the
meaning of the Rule, except that the City in any event will give the notice required by Section
10.2 of any Series 2016C Bond calls and defeasance that cause the City to be no longer such an
"obligated person."
The provisions of this Article are for the sole benefit of the Owners and beneficial owners
of the Series 2016C Bonds, and nothing in this Article, express or implied, shall give any benefit
or any legal or equitable right, remedy, or claim hereunder to any other person. The City
undertakes to provide only the financial information, operating data, financial statements, and
notices which it has expressly agreed to provide pursuant to this Article and does not hereby
undertake to provide any other information that may be relevant or material to a complete
presentation of the City's financial results, condition, or prospects or hereby undertake to update
any information provided in accordance with this Article or otherwise, except as expressly
provided herein. The City does not make any representation or warranty concerning such
information or its usefulness to a decision to invest in or sell Series 2016C Bonds at any future
date.
UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE OWNER
OR BENEFICIAL OWNER OF ANY SERIES 2016C 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 ARTICLE, BUT EVERY RIGHT AND
REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT
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OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR
SPECIFIC PERFORMANCE.
No default by the City in observing or performing its obligations under this Article shall
constitute a breach of or default under this Ordinance for purposes of any other provision of this
Ordinance.
Nothing in this Article is intended or shall act to disclaim, waive or otherwise limit the
duties of the City under federal and state securities laws.
The provisions of this Article may be amended by the City from time to time to adapt to
changed circumstances that arise from a change in legal requirements, a change in law, or a
change in the identity, nature, status or type of operations of the City, but only if (1) the
provisions of this Article, as so amended, would have permitted an underwriter to purchase or
sell Series 2016C Bonds in the primary offering of the Series 2016C Bonds in compliance with
the Rule, taking into account any amendments or interpretations of the Rule to the date of such
amendment, as well as such changed circumstances, and (2) either (a) the Owners of a majority
in aggregate principal amount (or any greater amount required by any other provision of this
Ordinance that authorizes such an amendment) of the Outstanding Series 2016C Bonds consent
to such amendment or (b) a person or entity that is unaffiliated with the City (such as nationally
recognized bond counsel) determines that such amendment will not materially impair the
interests of the Owners and beneficial owners of the Series 2016C Bonds. If the City so amends
the provisions of this Article, it shall include with any amended financial information or
operating data next provided in accordance with Section 10.1 an explanation, in narrative form,
of the reasons for the amendment and of the impact of any change in the type of financial
information or operating data so provided. The City may also amend or repeal the provisions of
this Article if the SEC amends or repeals the applicable provisions of the Rule or a court of final
jurisdiction enters judgment that such provisions of the Rule are invalid, and the City also may
amend the provisions of this Article in its discretion in any other manner or circumstance, but in
either case only if and to the extent that the provisions of this sentence would not prevent an
underwriter from lawfully purchasing or selling Series 2016C Bonds in the primary offering of
the Series 2016C Bonds.
Section 10.4. Definitions. As used in this Article, the following terms have the
meanings ascribed to such terms below:
"MSRB"means the Municipal Securities Rulemaking Board.
"Rule"means SEC Rule 15c2-12, as amended from time to time.
"SEC"means the United States Securities and Exchange Commission.
ARTICLE XI
SALE AND DELIVERY OF BONDS; DEPOSIT OF PROCEEDS
Section 11.1. Sale of Series 2016C Bonds. The sale of the Series 2016C Bonds to the
Purchaser at a price of par, which price and terms are hereby found and determined to be the
most advantageous reasonably obtainable by the City. The Mayor, Mayor Pro-Tem and all other
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officials, agents and representatives of the City are hereby authorized to do any and all things
necessary or desirable to provide for the issuance and delivery of the Bonds.
Section 11.2. Approval, Registration and Delivery. The Mayor and the City Secretary
are hereby authorized to have control and custody of the Series 2016C Bonds and all necessary
records and proceedings pertaining thereto pending their delivery, and the Mayor of the City,the
City Secretary of the City, the City Manager of the City and other officers and employees of the
City are hereby authorized, directed and instructed to make such certifications and to execute
such instruments (including by printed facsimile signature, the Series 2016C Bonds) as may be
necessary to accomplish the delivery of the Series 2016C Bonds and to assure the investigation,
examination, and approval thereof by the Attorney General of Texas and the registration of the
initial Series 2016C Bonds by the Comptroller of Public Accounts of the State of Texas. Upon
registration of the Series 2016C Bonds, the Comptroller of Public Accounts of the State of Texas
(or a deputy designated in writing to act for him) shall be requested to sign manually the
registration certificate prescribed herein to be attached or affixed to each Series 2016C Bond
initially delivered and the seal of the Comptroller of Public Accounts of the State of Texas shall
be impressed or printed or lithographed thereon. Delivery of the Series 2016C Bonds is subject
to the unqualified approving opinion as to the legality of the Series 2016C Bonds of the Attorney
General of Texas and of Andrews Kurth LLP, Houston, Texas, Bond Counsel.
Section 11.3. Offering Documents. The City Council hereby approves the form and
content of the Private Placement Memorandum prepared in connection with the sale of the Series
2016C Bonds and presented to the City Council with this Ordinance and attached hereto as
Exhibit D, and authorizes the distribution and delivery of the Private Placement Memorandum to
the TWDB,as the purchaser of the Series 2016C Bonds.
Section 11.4. Application of Proceeds of Series 2016C Bonds. Immediately following
the delivery of the Series 2016C Bonds and prior to the deposit of the proceeds from the sale of
such Series 2016C Bonds in the Construction Fund established pursuant to Section 12.6 of this
Ordinance, such proceeds (less any amounts used to pay costs of issuance) shall be held in trust
and in escrow pursuant to the written escrow agreement described below pending written
authorization to release said proceeds.
A "Special Escrow Deposit Agreement" by and between the City and Wells Fargo Bank,
N.A. attached hereto as Exhibit C and incorporated herein by reference as a part of this
Ordinance for all purposes, is hereby approved as to form and content, and the Mayor and the
City Secretary of the City are hereby authorized and directed to execute such agreement in
substantially the same form and content herein approved.
Section 11.5. Related Matters. In order that the City shall satisfy in a timely manner all
of its obligations under this Ordinance, the Mayor, the City Manager, the City Secretary, the
Director of Finance and all other appropriate officers, agents, representatives and employees of
the City are hereby authorized and directed to take all other actions that are reasonably necessary
to provide for the issuance and delivery of the Series 2016C Bonds, 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
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obligations under this Ordinance and to direct the transfer and application of funds of the City
consistent with the provisions of this Ordinance.
Section 11.6. Control and Delivery of Series 2016C Bonds.
(a) The City Manager of the City is hereby authorized to have control of the
Series 2016C Bonds and all necessary records and proceedings pertaining hereto pending
investigation, examination and approval of the Attorney General of the State of Texas,
registration by the Comptroller of Public Accounts of the State and registration with
initial exchange or transfer by,the Paying Agent/Registrar.
(b) The Initial Series 2016C Bond(s) shall be the Series 2016C Bonds
submitted to the Office of the Attorney General of the State of Texas for approval,
certified and registered by the Office of the Comptroller of Public Accounts of the State
of Texas and delivered to the Purchaser. After registration by the Comptroller of Public
Accounts, delivery of the Series 2016C Bonds shall be made to the Purchaser under and
subject to the general supervision and direction of the Mayor, against receipt by the City
of all amounts due to the City under the terms of sale.
(c) The Mayor, the City Manager, the Director of Finance of the City, and all
other officers, employees, and agents of the City, and each of them, shall be and they are
expressly authorized, empowered, and directed from time to time and at any time to do
and perform all such acts and things and to execute, acknowledge, and deliver in the
name and under the corporate seal and on behalf of the City all such agreements,
certificates, and instruments, whether herein mentioned, as may be necessary or desirable
to carry out the terms and provisions of this Ordinance, the bonds, the sale and delivery
of the Series 2016C Bonds, the DTC Blanket Letter of Representations and the Official
Statement. The City Council hereby authorizes the payment of the fee of the Office of
the Attorney General of the State of Texas for the examination of the proceedings relating
to the issuance of the Series 2016C Bonds, in the amount determined in accordance with
the provisions of Section 1202.004,Texas Government Code.
ARTICLE XII
SPECIAL PROVISIONS RELATING TO
THE TEXAS WATER DEVELOPMENT BOARD
Section 12.1. Compliance with the Texas Water Development Board's Rules and
Regulations. The City will comply with all of the requirements contained in the resolution or
resolutions adopted by the TWDB with respect to the issuance of the Series 2016C Bonds in the
TWDB's rules,regulations and relevant statutes.
Section 12.2. Construction Fund: Timely Use of Proceeds. The proceeds of the Series
2016C Bonds shall be applied to establish at an official depository of the City a construction
fund (the "Construction Fund"), which shall be kept separate from all other accounts and funds
of the City. Monies on deposit in the Construction Fund shall be applied in accordance with the
applicable requirements of the Texas Water Code and the rules and regulations of the TWDB.
All funds deposited to the credit of the Construction Fund will be used in a timely and
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expeditious manner, as required by federal statute and EPA regulations, and the City will adhere
to the project schedule approved by the Executive Administrator.
Section 12.3. Records: Final Accounting. The City will keep and maintain full and
complete records and accounts pertaining to the construction of the projects financed with the
proceeds of sale of the Series 2016C Bonds, including the Construction Fund, in accordance with
the standards set forth by the Government Accounting Standard Board. Within 60 days of
completion,the City will submit to the TWDB a final accounting of the total costs of the projects
financed with the Series 2016C Bonds.
Section 12.4. Annual Audit. So long as any Series 2016C Bonds are held by the
TWDB, the City will annually submit to the TWDB's Executive Administrator, within 180 days
of the end of the City's fiscal year, a copy of its annual audited financial statements prepared in
accordance with generally acceptable auditing standards by a certified public accountant.
Section 12.5. Investment of Proceeds. Proceeds from the sale of the Series 2016C
Bonds shall be held at a designated state depository institution or other properly chartered and
authorized institution in accordance with the Public Funds Investment Act, Government Code,
Chapter 2256, and the Public Funds Collateral Act, Government Code,Chapter 2257.
Section 12.6. Surplus Proceeds. Any proceeds of the Series 2016C Bonds determined to
be surplus funds remaining after completion of one or more of the projects described in Section
3.1 hereof shall be used for the following purposes as approved by the Executive Administrator
of the TWDB: (1) to redeem, in inverse annual order, the Series 2016C Bonds owned by the
TWDB, (2) deposit into the Interest and Sinking Fund for the payment of interest or principal on
the Series 2016C Bonds owned by the TWDB, or (3) eligible project costs as authorized by the
Executive Administrator.
Section 12.7. Insurance. The City will maintain insurance on the projects financed with
the proceeds of the Series 2016C Bonds in amounts adequate to protect the TWDB's interest.
Section 12.8. Water Conservation Program. The City has implemented or will
implement an approved water conservation program required by the TWDB for so long as the
Series 2016C Bonds are outstanding.
Section 12.9. TWDB Remedies. The TWDB may exercise all remedies available to it in
law or equity, and any provision of the Series 2016C Bonds that restricts or limits the TWDB's
full exercise of these remedies shall be of no force and effect.
Section 12.10. Environmental Determination. The City will comply with any special
conditions specified by the TWDB's environmental determination until all financial obligations
to the TWDB have been discharged.
Section 12.11. Environmental Indemnification. The City shall indemnify, hold harmless
and protect the TWDB from any and all claims, causes of action or damages to the person or
property of third parties arising from the sampling, analysis, transport, storage, treatment and
disposition of any contaminated sewage sludge, contaminated sediments and/or contaminated
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media that may be generated by the City, its contractors, consultants, agents, officials and
employees as a result of activities relating to the project,to the extent permitted by law.
Section 12.12. Compliance with Davis-Bacon. All laborers and mechanics employed by
contractors and subcontractors for projects be paid wages at rates not less than those prevailing
on projects of a similar character in the City in accordance with the Davis-Bacon Act, and the
U.S. Department of Labor's implementing regulations and all project contracts shall mandate
compliance with the Davis-Bacon Act. All contracts and subcontracts for the construction of the
project carried out in whole or in part with proceeds of the Series 2016C Bonds shall insert in
full in any contract in excess of$2,000 the contracts clauses as provided by the TWDB.
Section 12.13. Federal Funding Accountability and Transparency Act. The City shall
provide the TWDB with all information required to be reported in accordance with the Federal
Funding Accountability and Transparency Act of 2006, Pub. L. 109-282. The City shall obtain a
Data Universal Numbering System Number and shall register with the System for Award
Management,and maintain such registration while the Series 2016C Bonds are outstanding.
Section 12.14. American Iron and Steel Requirement. The City will abide by all
applicable construction contract requirements related to the use of iron and steel products
produced in the United States, as required by the 2014 Federal Appropriations Act and related
State Revolving Fund Policy Guidelines.
Section 12.15.Additional Covenants Related to Tax-Exempt Status.
(a) The City will not use any portion of the proceeds of the Series 2016C
Bonds in a manner that would cause the Series 2016C Bonds to become"private activity
bonds"within the meaning of Section 141 of the Code,and the Regulations.
(b) No portion of the proceeds of the Series 2016C Bonds will be used,
directly or indirectly, in a manner that would cause the Series 2016C Bonds to be
"arbitrage bonds" within the meaning of Section 148(a) of the Code and Regulations,
including to acquire or to replace funds which were used, directly or indirectly to acquire
Nonpurpose Investments (as defined in the Code and Regulations)which produce a yield
materially higher than the yield on the TWDB's bonds that are issued to provide
financing for the Series 2016C Bonds (the "Source Series Bonds"), other than
Nonpurpose Investments acquired with:
(1) proceeds of the TWDB's Source Series Bonds invested for a
reasonable temporary period of up to three (3) years after the issue date of the
Source Series Bonds until such proceeds are needed for the facilities to be
financed;
(2) amounts invested in a bona fide debt service fund, within the
meaning of Section 1.148-1(b)of the Regulations;and
(3) amounts deposited in any reasonably required reserve or
replacement fund to the extent such amounts do not exceed the least of the
maximum annual debt service on the Series 2016C Bonds, 125% of the average
•
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HOU:3630804.2
annual debt service on the Series 2016C Bonds, or 10% of the stated principal
amount(or, in the case of a discount,the issue price)of the Series 2016C Bonds.
(c) Neither the City nor a related party thereto will acquire any of the
TWDB's Source Series Bonds in an amount related to the amount of the Series 2016C
Bonds.
ARTICLE XIII
MISCELLANEOUS
Section 13.1. Related Matters. In order that the City shall satisfy, in a timely manner,
all of its obligations under the Ordinance, the Mayor, the City Secretary and other appropriate
officers and agents of the City are hereby authorized and directed to take all other actions that are
reasonably necessary to provide for issuance and delivery of the Series 2016C Bonds, including
executing by manual or facsimile signature and delivering on behalf of the City all certificates,
consents, receipts, requests, notices, investment agreements and other documents as may be
reasonably necessary to satisfy the City's obligations under the Ordinance and to direct the
transfer and application of funds of the City consistent with the provisions of such Ordinance. If
requested by the Attorney General of Texas or his representatives, the Mayor may authorize such
ministerial changes in the written text of this Ordinance as are necessary to obtain the Attorney
General's approval and as he determines are consistent with the intent and purposes of this
Ordinance,which determination shall be final.
Section 13.2. Severability. If any Section, paragraph, clause or provision of this
Ordinance shall for any reason be held to be invalid or unenforceable, the invalidity or
unenforceability of such Section, paragraph, clause or provision shall not affect any of the
remaining provisions of this Ordinance.
Section 13.3. Open Meeting. It is hereby found, determined and declared that a
sufficient written notice of the date, hour, place and subject of the meeting of the City Council at
which this Ordinance was adopted was posted at a place convenient and readily accessible at all
times to the general public at the City Hall of the City for the time required by law preceding this
meeting, as required by the Open Meetings Act, Chapter 551, Texas Government Code, as
amended, 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 13.4. Governing Law. This Ordinance shall be construed in accordance with
and governed by the laws of the State of Texas.
Section 13.5. Repealer. All ordinances, or parts thereof inconsistent herewith, are
hereby repealed to the extent of such inconsistency.
Section 13.6. Emergency. It is hereby officially found and determined that this
Ordinance relates to an immediate public emergency affecting life, health, property and public
peace, and that such emergency exists, the specific emergency being that the proceeds from the
sale of the Series 2016C Bonds are required as soon as possible for necessary and urgently
35
11OU:3630804.2
needed improvements, and that this Ordinance be passed and approved on the date of its
introduction.
Section 13.7. Effective Date. This Ordinance shall be in force and effect from and after
its passage on the date shown below.
PASSED and APPROVED on First Reading this the 27th day of June, A.D., 2016.
c,. __ ,:....1Y,1 5.----2.i-ji
TOM REID
MAYOR
ATTEST:
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PASSED and APPROVED on Second and Final Reading this the 11t"day of July, A.D.,
2016.
< T/rn e2,-
TOM REID
MAYOR
ATTEST:
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NG IRFING ' _P I
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APPROVED AS TO FORM:
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DARRIN M. COKER
CITY ATTORNEY
36
HOU:3630804.2