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HomeMy WebLinkAbout03560 ORD - 10/10/1953TEXAS: AN ORDINANCE N0. 3560 AUTHORIZING AND DIRECTING THE CITY MANAGER FOR AND ON BEHALF OF THE CITY OF CORPUS CHRISTI TO MAKE A WRITTEN OFFER TO THE HOLDERS OF THE NOW OUTSTANDING WATER REVENUE BONDS, SERIES 1948 AND 1948A, ?UNDER CONDITIONS WHICH WOULD PERMIT THE CITY TO MODIFY THE DEED OF TRUST SECURING SAID WATER REVENUE BONDS; AND DECLARING AN EMERGENCY. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CORPUS CHRISTI, SECTION 1. THAT THE CITY MANAGER BE, AND HE IS HEREBY, AUTHORIZED AND DIRECTED FOR AND ON BEHALF OF THE CITY OF CORPUS CHRISTI TO MAKE A WRITTEN OFFER TO THE HOLDERS OF THE NOW OUTSTANDING WATER REVENUE BONDS, SERIES 1948 AND 1948A, UNDER CONDITIONS WHICH WOULD PERMIT THE CITY TO MODIFY THE DEED OF TRUST SECURING SAID WATER REVENUE BONDS, A COPY OF WHICH OFFER IS ATTACHED HERETO. SECTION 2. THAT THE NECESSITY FOR MAKING THIS WRITTEN OFFER AT THIS TIME TO THE HOLDERS OF CERTAIN OU75TANDING WATER REVENUE BONDS FOR THE PURCHASE OF SUCH BONDS, AND TO MODIFY THE DEED OF TRUST SECURING SAID WATER REVENUE BONDS CREATES A PUBLIC EMERGENCY AND AN IMPERATIVE PUBLIC NECESSITY REQUIRING THE SUS- PENSION OF THE CHARTER RULE THAT NO ORDINANCE OR RESOLUTION SHALL BE PASSED FINALLY ON THE DATE OF ITS INTRODUCTION AND THAT SUCH ORDINANCE OR RESOLUTION SHALL BE READ AT THREE SEVERAL MEETINGS OF THE CITY COUNCIL, AND THE MAYOR, HAVING DECLARED SUCH EMERGENCY AND NECESSITY TO EXIST, HAVING REQUESTED THE SUSPENSION OF SAID CHARTER RULE AND THAT THIS ORDINANCE BE PASSED FINALLY ON THE DATE OF ITS INTRO- DUCTION AND THAT SUCH ORDINANCE TAKE EFFECT AND BE IN FULL FORCE AND EFFECT FROM AND AFTER ITS PASSAGE, IT IS ACCORDINGLY PASSED AND APPROVED, THIS THE DAY OF OCTOBER, 1953° l7 ATTEST CITY SECRETARY, ( r'i APPROVED ASS TO LEGAL FORM: t' CITY ATTORNEY 35(p C) THE CITY CORPUS CHRISTI, TEXAS CITY COUNCIL A. A. LICHTENSTEIN ELLROY KINO .111. FAFTdN W. TAMES BRACE P. C. CALLAWAY i. S, NAISMITH CITV Of MM NETI/ T TO THE HOLDERS OF: CORPUS CHRISTI, TEXAS, WATERWORKS REVENUE BONDS SERIES 1948 AND 1948A CITY MANAGER RUSSELL E, M CLURE CITY OFFICES 'M SOUTH SHORELINE POST OFFICE SOX IEII TELEPHONE 3 -45R THIS LETTER IS WRITTEN TO SOLICIT YOUR COOPERATION IN WORKING OUT A PLAN WHICH WILL PROTECT YOUR INVESTMENT, MATERIALLY INCREASE THE YIELD YOU ARE CURRENTLY RECEIVING AND ENHANCE THE VALUE OF THE BONDS YOU OW'N� ANO WILL ENABLE OUR CITY TO FINANCE FUTURE IMPROVEMENTS TO ITS WATER WORKS 0.NO SEWER SYSTEMS ON A MORE FAVORABLE BASIS. OUR CITY CONTINUES TO GROW AT A STRONG BUT STEADY RATE. A5 THIS GROWTH TAKES PLACE THE CITY I5 CALLED UPON TO ENLARGE AND EXTEND ITS MUNICIPAL SERVICES, ESPECIALLY THOSE FOR WATER AND SANITARY SEWER. MANY IMPROVEMENTS AND EXTENSIONS HAVE BEEN MADE FROM EARNINGS BUT THE INCREASED DEMANDS FOR SERVICE MAKE IT IMPOSSIBLE TO FINANCE MAJOR ENLARGEMENTS AND EX- TENSIONS FROM TH15 SOURCE. CURRENT DEMANDS ON EXISTING FACILITIES ARE VIRTUALLY AT THE MAXIMUM LEVEL. WATER AND SEWER SERVICES ARE CLOSELY RELATED. A SEWER SYSTEM WITHOUT WATER IS USELESS. AS WATER SERVICE IS EXTENDED THE DEMAND FOR SEWER SERVICE FOLLOWS. IN ORDER TO FINANCE FUTURE NEEDS ON A SOUND BASIS CONSISTENT WITH GOOD BUSINESS POLICY, WE THINK IT IS TO THE BEST INTEREST OF THE BONDHOLDERS AND THE CITY TO WORK OUT A PLAN WHICH WILL PERMIT THE CITY TO FINANCE FUTURE IMPROVEMENTS AND EXTENSIONS THROUGH THE ISSUANCE OF WATERWORKS AND SEWER SYSTEMS REVENUE BONDS SECURED BY AND PAYABLE FROM THE COMBINED NET EARNINGS OF THE TWO SYSTEMS. AT THE PRESENT TIME THE CITY HAS OUTSTANDING $3,961,,0100 OF WATERWORKS REVENUE BOND ($1,861,000 SERIES 1948 AND $2,100,000 SERIES 1948-A) AND $72,000 SEWER REVENUE BONDS. THE SEWER REVENUE BONDS ARE SCHEDULED TO MATURE IN 1954 AND 1955; AND THE CITY HAS MADE ARRANGEMENTS TO ACQUIRE AND CANCEL THESE BONDS RELEASING THE LIEN ON THE NET REVENUES OF THAT SYSTEM. THE OUTSTANDING WATER �EVENUE *ONDS ARE SECURED BY A DEED OF TRUST. IN ORDER TO CHANGE THE DEED OF TRUST AND PUT THIS PLAN IN OPERATION, IT WILL BE NECESSARY TO OBTAIN THE CONSENT OF THE HOLDERS OF NOT LESS THAN 75% OF THE OUT- STANDING BONDS. IF THE NECESSARY 75% 15 OBTAINED, CONSENTING HOLDERS WILL TURN IN THEIR WATER REVENUE BONDS AND RECEIVE IN EXCHANGE FOR THEM A LIKE AMOUNT OF WATERWORKS & SEWER SYSTEMS REFUNDING REVENUE BONDS, MATURING SERIALLY FROM JUNE 1, 1954, TO JUNE 1, 1965, AND BEARING INTEREST AT THE RATE OF R 1/2%. ELSE- WHERE IN THIS LETTER THESE BONDS_. WILL BE CALLED THE 11REFUNDING BONOSII. BONDS WILL BE EXCHANGED IN ORDER OF MATURITIES. FOR EXAMPLE; THE LONGEST MATURITY OUTSTAND BONDS ARE DUE JUNE 1, 1977, AND THESE MATURITIES WOULD BE EXCHANGED FOR THE REFUNDING 3 112% BONDS DUE JUNE 1, 1965. A SCHEDULE SHOWING HOW THIS EXCHANGE WILL BE MADE 15 ATTACHED AND MARKED EXHIBIT NO. 1. BRIEFLY THE DEED OF TRUST WILL BE AMENDED TO PROVIDE: A. THAT THE BONDS ISSUED TO REFUND THE OUTSTANDING WATERWORKS REVENUE BONDS, SERIES 1948 AND SERIES 1948A AS WELL AS ANY ADDITIONAL BONDS TO BE ISSUEDj WILL BE SECURED BY THE COMBINED NET EARNINGS OF THE WATERWORKS AND SEWER SYSTEMS; AND B. THAT ADDITIONAL PARITY BONDS MAY BE ISSUED ONLY FOR IMPROVEMENTS OR EXTENSIONS OR REPAIRS ORI£PLACEMENTS OF AND TO THE WATERWORKS SYSTEM AND SEWER SYSTEM. THE RIGHT TO ISSUE ADDITIONAL BONDS AT ANY TIME WILL BE SUBJECT TO THE FOLLOWING LIMITATIONS AND CONDITIONS: (1) THAT NET EARNING FOR THE PRECEDING YEAR ARE NOT LESS THAN ONE AND THREE QUARTER (1 3/4) TIMES THE MAXIMUM TOTAL AMOUNT OF PRINCIPAL AND INTEREST TO BECOME DUE IN ANY FUTURE YEAR ON ALL OBLIGATIONS THEN OUTSTANDING AND THEN TO BE ISSUED; (2) THAT AN ESTIMATE BY AN INDEPENDENT ENGINEER OR ENGINEERING FIRM EMPLOYED BY THE CITY AND ACCEPTABLE TO THE TRUSTEE SHOWS THAT, IN HIS OR THEIR OPINION, THE NET REVENUES OF THE SYSTEMS FOR EACH YEAR FROM THE DATE OF SUCH CERTIFICATE UNTIL THE MATURITY DATE OF THE LAST MATURING BOND WILL BE EQUAL TO AT LEAST ONE AND THREE — QUARTER. (1 3/4) TIMES THE MAXIMUM AMOUNT REQUIRED IN ANY YEAR TO PAY PRINCIPAL OF AND INTEREST ON ALL OBLIGATIONS THEN OUTSTANDING AND THEN TO BE ISSUED; (3) A CERTIFICATE BY THE MAYOR AND CITY SECRETARY SHOWING THE NET REVENUES OF THE SYSTEMS FOR THE PRECEDING CALENDAR YEAR AND FOR ALL COMPLETED MONTHS OF THE THEN CURRENT YEAR; (4) A CERTIFICATE BY AN INDEPENDENT AUDITOR ACCEPTABEL TO THE TRUSTEE OR BY A CERTIFIED PUBLIC ACCOUNTANT ATTESTING TO THE CORRECTNESS OF THE FIGURES CONTAINED IN THE CERTIFICATE BY THE MAYOR AND CITY SECRETARY; (5) A BALANCE SHEET AND ANY SUCH ADDITIONAL DATA AS MAY BE NECESSARY TO SHOW THE STATUS OF EACH OF THE FUNDS CREATED UNDER THE DEED OF TRUSTS CERTIFIED TO BY AN AUDITOR OR CERTIFIED PUBLIC ACCOUNT - ANT, EFFECTIVE AT A TIME NOT MORE THAN THIRTY (30) DAYS PRIOR TO THE DATE OF SUCH CERTIFICATE; C. THAT FUNDS IN THE REDEMPTION FUND MAY BE USED TO PURCHASE BONDS ON THE "TENDER PLAN" AFTER PROPER ADVERTISEMENT FOR TENDERS. IF SUFFICIENT BONDS CANNOT BE BOUGHT AT SATISFACTORY PRICES UNDER THE TENDER PLAN THE CITY SHALL BE OBLIGATED TO EXHAUST ALL FUNDS IN EXCESS OF �5a000 AT LEAST ONCE EACH TWO YEARS BY EXERCISING THE CITY'S RIGHT TO REDEEM BONDS PRIOR TO THEIR SCHEDULED MATURITY DATES IN ACCORDANCE WITH THE — 2 — REDEMPTION PROVISION CONTAINED IN THE BONDS; D. THAT IN THE EVENT THE CITY SHOULD SELL MATHIS DAM TO THE LOWER NUECES RIVER WATER SUPPLY DISTRICT, THE PROCEEDS ($2,071,165) WILL BE PLACED IN THE REDEMPTION FUND AND BE USED TO REDEEM OUTSTANDING BONDS. (IN 1152 THIS PROVISION WAS AGREED TO BY THE HOLDERS OF MORE THAN 80% OF THE OUTSTANDING BONDS AND WILL NOT BE DISTRUSED BY THE PROPOSED OPERATION). E. THAT THE CITY SHALL HAVE THE RIGHT TO CALL BONDS FOR PAYMENT IN ACCORDANCE WITH THE REDEMPTION PROVISION CONTAINED IN THE BONDS OUT OF ANY FUNDS AVAILABLE TO THE CITY. IF THIS PLAN IS PUT INTO EFFECT, THE CITY EXPECTS TO CALL AN ELECTION (TENTATIVE DATE, NOVEMBER 24, 1953) TO AUTHORIZE THE ISSUANCE OF: I. REFUNDING BONDS $3,9611,000 WATERWORKS AND SEWER SYSTEMS REFUNDING � 11/2% REVENUE BONDS TO BE DATED DECEMBER 1, 1153, INTEREST PAYABLE JUNE 1, 1954, AND SEMIANNUALLY THEREAFTER, BOTH PRINCIPAL AND INTEREST TO BE PAYABLE AT MERCANTILE NATIONAL BANK AT DALLAS, TEXAS, OR AT THE OPTION OF THE HOLDER AT CHEMICAL BANK AND TRUST COMPANY, NEW YORK, NEW YORK. SUCH BONDS TO MATURE SERIALLY AS FOLLOWS: 288,000 JUNE 1, 10/54 298,000 JUNE 1, 1955 300/,000 JUNE 1, 1956 320,000 JUNE 1, 1957 30,000 JUNE 1, 1 3 2,000 JUNE 11, 1959 354,000 JUNE 1, 11160 367,000 JUNE 1, 1961 380,000 JUNE 1, 1962 JUNE 1, 1116 �93,000 07,000 JUNE 1, 196 173,000 JUNE 1, 1965 ALL OF THE REFUNDING BONDS SHALL BE OPTIONAL ON ANY INTEREST PAYMENT DATE ON AND AFTER DECEMBER 1, 1975, AT A PRICE OF PAR AND ACCRUED INTEREST TO THE DATE FIXED FOR REDEMPTION PLUS A PREMIUM OF 3 1/2% OF THE PRINCIPAL AMOUNT. THE REFUNDING BONDS WILL BE EXCHANGED FOR THE OUTSTANDING WATERWORKS REVENUE BONDS, SERIES 1948 AND 1548A. IN THE EVENT THAT THE HOLDERS OF AT LEAST 15 %, BUT LESS THAN ALL, OF THE REFUNDING BONDS SERIES 1948 AND 1948A BONDS AGREE TO THIS EXCHANGE, THE DEED OF TRUST WILL BE MODIFIED AS AGREED TO BY THE 75% CONSENTING MAJORITY BUT THE AMOUNT OF THE REFUNDING BONDS WILL BE DECREASED 50 AS TO TAKE CARE OF ONLY SUCH HOLDERS AS DO AGREE TO ACCEPT THE EXCHANGE OFFER. THE MINORITY NON-CONSENTED BONDS WILL BE UNDISTRUBED. H. IMPROVEMENT BONDS THE CITY WILL ALSO VOTE TO AUTHORIZE THE ISSUANCE OF $12,000,000, - 3 - WATERWORKS AND SEWER SYSTEM REVENUE BONDS TO BE ISSUED FROM TIME TO TIME TO MAKE SUCH IMPROVEMENTS, BETTERMENTS AND EXTENSIONS TO THE WATERWORKS AND SEWER SYSTEMS AS MAY BE NEEDED. SUCH ADDITIONAL BONDS CAN BE ISSUED ONLY IN ACCORD- ANCE WITH THE PROVISIONS OF THE DEED OF TRUST GOVERNING THE ISSUANCE OF ADDI- TIONAL BONDS.M IT IS PROBABLE THAT 1T'HE CITY WILL SELL APPROXIMATELY $6,300,000 OF SUCH ADDITIONAL BONDS DURING 1954 AND POSSIBLY $4,700,000 DURING 1955. IMPROVEMENTS TO THE WATER SYSTEM WILL INCLUDE SUCH MAJOR ITEMS AS: THE CONSTRUCTION OF A BADLY NEEDED TREATMENT PLANT ($4,000,000), TRANSMISSION LINE FROM THE TREATMENT PLANT TO THE DISTRIBUTION SYSTEM ($2,880,000), GENERAL IMPROVEMENTS TO DISTRIBUTION SYSTEM ($1,113,200). THE SANITARY SEWER SYSTEM HAS BECOME GREATLY OVERLOADED AND ENLARGE - MENT5 AND IMPROVEMENTS MUST BE MADE. THESE IMPROVEMENTS WILL INCLUDE SUCH MAJOR Il -EMS AS: LATERALS (.4p174,000), ENLARGEMENTS OF BROADWAY TREATMENT PLANT ($902 '000), EXPANSION OF 050 TREATMENT PLANT ($956,800) TRUNK LINES ($635,700) ALL OF THESE IMPROVEMENTS ARE A NECESSITY AND WILL ADD MATERIALLY TO THE NET EARNINGS OF THE WATERWORKS AND SEWER SYSTEMS. INFORMATION AS To NET REVENUES NET EARNINGS OF THE SYSTEMS FOR THE FISCAL YEAR ENDED JULY 31, 1953, WERE AS FOLLOWS: WATERWORKS SYSTEM . . . . . . . . . . . . . $1,236,671.24 SEWER SYSTEM . . . . . . . . . . . . . 221,025.62 COMBINED NET EARNINGS . . . . . . . . . . . $1,457,696.86 'SEWER RATES WERE INCREASED 50% ON MAY 16, 1953. HAD THE RATE INCREASE BEEN IN EFFECT FOR THE ENTIRE YEAR, IT IS ESTIMATED NET EARNINGS WOULD HAVE AMOUNTED TO $379,833.77 OR A TOTAL OF $1,616,505.01 FOR THE COMBINED SYSTEMS. THE MAXIMUM ANNUAL DEBT SERVICE REQUIREMENT FOR THE $3,961,000 REFUNDING 3 1/2,% BONDS WILL BE $427,550. IIMMEDIATE PROCEDURE WE WOULD APPRECIATE HIGHLY HAVING YOUR INFORMAL REPLY TO THIS LETTER NOT LATER THAN OCTOBER 30, 1953• FOR YOUR CONVENIENCE WE ARE ENCLOSING IN DUPLICATE A FORM FOR INDICATING YOUR CONSENT. PLEASE RETAIN ONE COPY FOR YOUR FILES AND SEND THE EXECUTED COPY TO THE CITY, USING, IF CONVENIENT, THE ENCLOSED SELF-ADDRESSED STAMPED ENVELOPE. BY THIS METHOD WE WILL BE ABLE TO DETERMINE PROMPTLY WHETHER THE HOLDERS OF THE REQUIRED PERCENTAGE OF BONDS ARE FAVORABLE TO THE PROCEDURE. IF IT APPEARS THAT THE HOLDERS OF AT LEAST 75% OF THE OUTSTANDING BONDS ARE WILLING TO GO ALONG ON THIS PLAN WE WILL THEN TAKE IMMEDIATE STEPS OR THE TRUSTEE TO GIVE THE NECESSARY NOTICE AND AT THAT TIME WILL ASK THAT YOU FILE THE FORMAL CONSENT WHICH IS REQUIRED FOR ACTUAL MODIFICATION OF THE DEED OF TRUST. THE ELECTION ON THE ISSUANCE OF THE BONDS HAS BEEN SET TENTATIVELY FOR NOVEMBER 24TH. THIS MEANS THAT THE CITY MUST PASS THE ORDINANCE CALLING THE ELECTION DURING THE FIRST FOUR OR FIVE DAYS OF THE MONTHS OF NOVEMBER. UNLESS SUFFICIENT INFORMAL CONSENTS SHALL HAVE BEEN RECEIVED BY THAT DATE THE CITY WOULD NOT BE AUTHORIZED TO SUBMIT THE NECESSARY QUESTIONS TO THE VOTERS. ASSUMING THAT SUFFICIENT INFORMAL CONSENTS HAVE BEEN RECEIVED BY NOVEMBER 15T THE CITY WILL ALSO SET IN MOTION THE MACHINERY FOR MODIFYING THE DEED OF TRUST WHICH REQUIRES AT LEAST ONE MONTH. SHOULD YOU DESIRE ADDITIONAL INFORMATION WE SUGGEST THAT YOU CONTACT OUR FINANCIAL ADVISORS, M. E. ALLISON & CO.; INC. 16TH FLOOR MILAM BUILDING, SAN ANTONIO 5, TEXAS. YOU MAY BE ASSURED THAT YOUR COOPERATION WILL BE APPRECIATED BY THE CITY OF CORPUS CHRISTI AND ITS CITIZENS. YOURS VERY TRULY, CITY OF CORPUS CHRISTI BY COORR;PU,S /CHRISTI, TEXAS TO THE MEMBERS OF THE CITY COUNCIL CORPUS CHRISTI, TEXAS GENTLEMEN: FOR THE REASONS SET FORTH 1N THE EMERGENCY CLAUSE OF THE FOREGOING ORDINANCE, A PUBLIC EMERGENCY AND IMPERATIVE NECESSITY EXIST FOR THE SUSPENSION OF THE CHARTER RULE OR REQUIREMENT THAT NO ORDINANCE OR RESOLUTION SHALL BE PASSED FINALLY ON THE DATE IT IS INTRODUCED, AND THAT SUCH ORDINANCE OR RESOLUTION SHALL BE READ AT THREE MEETINGS OF THE CITY COUNCIL; I, THEREFORE, HEREBY REQUEST THAT YOU SUSPEND SAID CHARTER RULE OR REQUIREMENT AND PASS TH15 ORDINANCE FINALLY ON THE DATE IT IS INTRODUCED, OR AT THE PRESENT MEETING OF THE CITY COUNCIL. RESPECTFULLY, MAYOR CITY OF C S CHRISTI, TEXAS THE CHARTER RULE WAS SUSPENDED BY THE FOLLOWING VOTE: A. A. LICHTENSTEIN ELLROY KING P. C. CALLAWAY 4 JAMES,d NAISMITH W. JAMES BRACE THE ABOVE ORDINANCE WAS PASSED BY THE FOLLOWING VOTE: A. A. LICHTENSTEIN ELLROY KING P. C. CALLAWAY JAMES NAISMITH \ W. JAMES BRACE V 35 (10