HomeMy WebLinkAbout021873 RES - 02/22/1994AN RESOLUTION
APPROVING ALL DOCUMENTS AND FISCAL ARRANGEMENTS REQUIRED
FOR THE PROPOSED SALE OF WATER SUPPLY REVENUE REFUNDING
BONDS BY THE NUECES RIVER AUTHORITY, INCLUDING THE
RESOLUTION, OFFICIAL STATEMENT, NOTICE OF REDEMPTION, AND
BOND PURCHASE AGREEMENT, AS PROPOSED, SUBSTANTIAL COPIES
OF WHICH ARE ATTACHED HERETO AND MADE A PART HEREOF AS
EXHIBIT A; AUTHORIZING THE CITY MANAGER, DIRECTOR OF
FINANCE, AND THE CITY ATTORNEY TO REVIEW EACH OF SAID
INSTRUMENTS UPON FINAL EXECUTION BY THE NUECES RIVER
AUTHORITY; AND DECLARING AN EMERGENCY.
WHEREAS, the City of Corpus Christi (the "City") entered
into a contract dated May 27, 1976, as supplemented on August 24,
1978, and March 29, 1979, (the "Contract") with Nueces River
Authority (the "Authority") concerning construction of Nueces River
Reclamation Project, Texas (Choke Canyon Reservoir Project) (the
"Project"); and
WHEREAS, under the terms of said Contract the Authority
and the City have joint control of all fiscal arrangements in
connection with the sale of revenue bonds for the Project,
including interest rates and maturities and said Contract requires
that each resolution authorizing such revenue bonds and each
Official Statement relating to such revenue bonds shall be approved
by the City; and
WHEREAS, the Nueces River Authority issued its Water
Supply Revenue Bonds, Series 1979 (City of Corpus Christi Project)
in the aggregate principal amount of $13,000,000 to finance certain
costs of the Project (the "Series 1979 Bonds"); and
WHEREAS, pursuant to the Contract the City acquired the
right to the water made available by the Project; and
WHEREAS, under the Contract, the Series 1979 Bonds and
any bonds issued to refund such bonds are payable from amounts paid
by the City; and
WHEREAS, the City's staff and Financial Advisor have
recommended that $7,450,000 in aggregate principal amount of the
Series 1979 Bonds be refunded to realize a debt service saving
which would result in lowering the City's payments under the
Contract:
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF CORPUS CHRISTI, TEXAS:
SECTION 1. That the form of the bond resolution,
official statement, and Bond Purchase Agreement, as proposed,
substantial copies of which are attached hereto and made a part
hereof as Exhibit A are hereby approved and that each of said
instruments as executed and finally approved by the Nueces River
183
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Authority, together with all of the final financial information
shall be considered approved by the City Council of the City of
Corpus Christi upon formal review by the Director of Finance, City
Manager, and City Attorney for the City of Corpus Christi, Texas,
and a determination by them that the final forms of said
instruments comply with the aforesaid contract and any supplements
thereto and applicable State law. A certified copy of each of said
instruments as finally approved by the Nueces River Authority and
reviewed by each of said officials on behalf of the City shall be
attached to this ordinance and made a part hereof.
SECTION 2. That the City Council hereby approves the
Notice of Redemption for the Series 1979 Bonds to be refunded and
redeemed on April 1, 1994, attached as part of Exhibit A and
incorporated herein, and agrees to pay the costs associated with
publishing such notice and the costs associated with publishing or
otherwise giving any notices required to revoke such redemption in
the event the refunding of the Series 1979 Bonds is not
accomplished by the redemption date, all as contemplated by the
contract, in any event not to exceed the customary changes
associated with giving such notice.
ATTEST:
Cit 2 Secretary
APPROVED: 0az. DAY OF
JAMES R. BRAY JR., CITY ATTORNEY
By
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Q 1"� 08- 2
MAYOR
THE CI CORPUS CHRISTI
19n_
RESOLUTION AUTHORIZING THE ISSUANCE OF
BONDS, AUTHORIZING THE EXECUTION OF A BOND
PURCHASE AGREEMENT, APPROVING AN OFFICIAL
STATEMENT AND AUTHC)RjZjNt5 OTHER ACTIONS IN
CONNECTION THEREWITH
STATE OF TEXAS
NUECES RIVER AUTHORITY
WHEREAS, under authority of Article XVI, Section 59 of the Texas Constitution,
the Nueces River Authority was created as a conservation and reclamation district, a
governmental agency, body politic and corporate, by Acts 1935, 44th Legislature, First Called
Session, Chapter 427, as last amended by Acts 1985, 69th Legislature, Chapter 665 (the
latter being herein referred to as the "Act"); and
WHEREAS, pursuant to the authority granted in the Act, the Authority has entered
into a contract by and among the United States of America, the City of Corpus Christi,
Texas (herein defined as the "City"), and the Authority, dated June 30, 1976 (herein defined
as the "Federal Contract"), providing for the construction and operation and maintenance
of the Nueces River Reclamation Project, Texas authorized by the Reclamation
Development Act of 1974 approved October 27, 1974 (Public Law 93-493), such project
_
knn.vn ev: die l.xiv P (`on•(ir, Ite$erVlJ/, Y70jCct (herein L1Cfinr ' .•_ •t.- "Dh..:.. _.�.�.
and _.. _.a,,,.. �,
WHEREAS, under the te:n+s of: ,e rederat Contract, the Authority and the City and
the United States provided, within the limitations therein contained, monies for the
construction of the Project including acquisition of land therefor; and
WHEREAS, pursuant to the Federal Contract, the Authority and the City agreed to
advance to the United States part of the monies for such purposes; and
WHEREAS, pursuant to a contract by and between the Authority and City dated the
27th day of May, 1976 as supplemented on August 24, 1978 and March 29, 1979 (herein
defined as the "Contract"), the Authority and the City delineated their respective
responsibilities under the Federal Contract and established their rights in the use of water
available from the Project, and resolved other matters germane to the Project as the same
affects the relationship between the Authority and the City; and
WHEREAS, in accordance with the terms of the Contract the City has assumed
responsibility for the care, operation and maintenance of the Project unless such
responsibility is transferred to the Authority by amendment to the Contract and such care,
operation and maintenance of the Project shall be carried out in compliance with the
applicable requirements of the United States and the Texas Water Commission (now the
Texas Natural Resources Conservation Commission) and in compliance with the
requirements of the Federal Contract and the Contract; and
2ndDraft/2/18/94
WHEREAS, pursuant to the Contract the Authority issued its Nueces River Authority
Water Supply Revenue Bonds, Series 1979, (City of Corpus Christi Project) in the aggregate
principal amount of $13,000,000 (the "Series 1979 Bonds") pursuant to a resolution adopted
by the Board of Directors of the Authority on April 4, 1979 (the "Series 1979 Resolution")
to make the advance payments to the United States; and
WHEREAS, pursuant to the Contract such Series 1979 Bonds and any bonds issued
on a parity therewith are to be secured by a pledge of the payments to be made to the
Authority by the City pursuant to the Contract and such payments are to be made from the
revenues of the City's waterworks system, as an operating expense of such system; and
WHEREAS, by resolution adopted on February 22, 1994, by the City Council of the
City approved the form of this Resolution and the draft Preliminary Official Statement
relating to the bonds herein authorized, authorized the City Manager to approve the final
form of this Resolution, the Bond Purchase Agreement and the Final Official Statement
relating to the bonds, and requested that the Authority refund $7,450,000 in aggregate
principal amount of the Series 1979 Bonds (the "Refunded Bonds") and redeem said
Refunded Bonds on April 1, 1994; and
WHEREAS, it is hereby found and determined necessary and proper for the
Authority to issue revenue bonds to refund the Refunded Bonds with such refunding bonds
¢s, Ix issued 4-. "Additional Roads" nursuant to the provision of the Serie, 1973 ^c;iolutioa
and to bt .carred, all in accordance with the terms of the Federal Contract and tae
Contract; anti.
WHEREAS, as it is hereby found and determined that the refunding of the Refunded
Bonds will result in a gross debt service savings of $ and a net present
value savings of $ , the Authority hereby finds and determines that it is
necessary and proper to issue the herein authorized bonds;
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF
THE NUECES RIVER AUTHORITY:
ARTICLE
DEFINITIONS
Section 1.1. TERMS. The terms defined in this section for all purposes of this
Resolution, except where the context by clear implication shall otherwise require, shall have
the respective meanings as follows, to -wit:
"Act" - The Act as defined in the recitals to this Resolution.
2ndDraft2/18/94 2
"Additional Bonds" - Bonds issued on a parity with the Series 1979 Bonds and the
Series 1994 Bonds pursuant to the terms of this Resolution.
"Authority" - Nueces River Authority and any other public b:;dy or agency at any time
succeeding to the property rights, powers and obligations thereof.
"Board" or "Board of Directors" - the duly appointed and acting Board of Directors
of the Authority.
"Bond" or "Bonds" - One or more of the Series 1979 Bonds, the Series 1994 Bonds
and the Additional Bonds, as the case may be, authorized by the Resolution.
"Bond Resolution" - The Series 1979 Resolution, this Resolution and any other
Resolution of the Board authorizing the Additional Bonds.
"City" - The City of Corpus Christi, Texas.
"City Manager" - The duly appointed and acting City Manager of the City.
"Construction Fund" - The fund by that name crated by Section 6.1 of the Series 1979
Resolution.
"Consulting Engineer? - The independent engineer or engh tcri.ng fit,. cn
:;urporation employed by the Authority in accordance with Article VIII of the Series 1979
Resolution.
"Contract" - The contract between the Authority and the City dated the 27th day of
May, 1976, as supplemented on August 24, 1978 and March 29, 1979 and as hereafter
supplemented or amended.
"Contract Payment Fund" - Nueces River Authority Contract Payments for Debt
Service Fund created by Section 5.2 of the Series 1979 Resolution.
"Contract Payments for Debt Service" - The payments made by the City to the
Authority pursuant to the Contract as are necessary to pay the principal of and/or interest
on the Bonds and to make deposits in the Reserve Fund or other Funds as may be required
by the Bond Resolution.
"DTC' - The Depository Trust Company, New York, New York, or any successor
securities depository.
"DTC Participant" - Securities 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.
2ndDraft)2/18/94 3
"Executive Director" - The duly appointed and acting Executive Director of the
Authority.
"redo; al Contract" Th rnptraet 1'v and among the T Tnites-i States of America, the
City and the Authntity, dated June 30, 1976, providing for the construction, operation and
maintenance of the Project and entitled "Contract Among the United States of America, City
of Corpus Christi, Texas, and the Nueces River Authority, Nueces River Reclamation
Project, Texas". -
year.
"Financial Advisor" - First Southwest Company, San Antonio, Texas, or its successor.
"Fiscal Year" - The twelve month period beginning September 1 of each calendar
"Interest and Sinking Fund" - Nueces River Authority Water Supply Revenue Bonds
Interest and Sinking Fund created by 5.2 of the Series 1979 Resolution.
"Investment Securities" -Direct obligations of, or obligations the principal of and the
interest on which are unconditionally guaranteed by, the United States Government, Federal
Intermediate Credit Banks, Federal Land Banks, Federal National Mortgage Association,
Federal Hume I..ian 13 n s Lr FlaaLc. fo: C 2cpc; t;:z6.
Yw
'Paying hgent/Rc ,is..ed" - Texas Commerce Bank National Association, Houston,
Tcxas, or its successors.
"Project" - All features comprising the Nueces River Reclamation Project, Texas,
authorized by the Act of Congress approved October 27, 1974 (Public Law 93-493), and
constructed or provided under the terms of the Federal Contract; also known as the Choke
Canyon Reservoir Project.
"Reserve Fund" - Nueces River Authority Water Supply Revenue Bonds Reserve
Fund created by Section 5.2 of the Series 1979 Resolution.
'Resolution" - This resolution, as from time to time it may be amended.
"Series 1979 Bonds" - Nueces River Authority Water Supply Revenue Bonds, Series
1979 (City of Corpus Christi Project) authorized by the Series 1979 Resolution.
"Series 1994 Bonds" - Nueces River Authority Water Supply Revenue Refunding
Bonds, Series 1994 (City of Corpus Christi Project) authorized by this Resolution.
'Trustee" - Texas Commerce Bank National Association, a national banking
association organized and existing under the laws of the United States, with its principal
office in Houston, Texas, or its successor.
"United States" - The United States of America.
2ndDraft/2/18/94 4
Section 1.2. CONSTRUCTION. This Resolution, except where the context by clear
implication shall otherwise require, shall be construed and applied in a manner that the
singular and plural both include the other, and pronouns include both singular and plural
attd ii.c!ude all rndnr^
ARTICLE TWO
GENERAL TERMS. PROVISIONS AND CHARACTERISTICS OF THE
SERIES 1994 BONDS
Section 2.1. GENERAL TERMS. The principal of and interest on the Bonds shall
be payable in lawful money of the United States of America, without exchange or collection
charges upon presentation and surrender at the principal corporate trust offices of Texas
Commerce Bank National Associatoin in Austin, Texas. The Bonds shall be special
obligations of the Authority and the principal thereof, premium, if any, and the interest
thereon shall be secured by a first lien on and shall be payable only out of the revenues
herein pledged.
Section 2.2. SERIES 1994 BONDS ARE ADDITIONAL BONDS. The Bonds shall
be Additional Bonds to the Series 1979 Bonds and as such shall be on a parity without
nrinrity as to the security of any Bond over any other Bond by reason of series, date of issue°
tc ter• �W_.•
�... i.c.. of m.:.'__ lky, :....::, iV: ::uvGly ul h..j ;;;,..-,i characteri,.ec whatsoever.
Section 2.3. CHARACTERISTICS OF THE BONDS. Registration. l'rr nsfe,
Conversion and Exchange: Authentication: Rook -Entry Only System. (a) The Authority
shall keep or cause to be kept at the principal corporate trust office of the Paying
Agent/Registrar in Austin, Texas books or records for the registration of the transfer,
conversion and exchange of the Bonds (the "Registration Books"), and the Authority hereby
appoints the Paying Agent/Registrar as its registrar and transfer agent to keep such books
or records and make such registrations of transfers, conversions and exchanges under such
reasonable regulations as the Authority and Paying Agent/Registrar may prescribe; and the
Paying Agent/Registrar shall make such registrations, transfers, conversions and exchanges
as herein provided. The Paying Agent/Registrar shall obtain and record in the Registration
Books the address of the registered owner of each Bond to which payments with respect to
the Bonds shall be mailed, as herein provided; but it shall be the duty of each registered
owner to notify the Paying Agent/Registrar in writing of the address to which payments shall
be mailed, and such interest payments shall not be mailed unless such notice has been given.
To the extent possible and under reasonable circumstances, all transfers of Bonds shall be
made within three business days after request and presentation thereof. The Authority shall
have the right to inspect the Registration Books during regular business hours of the Paying
Agent/Registrar, but otherwise the Paying Agent/Registrar shall keep the Registration Books
confidential and, unless otherwise required by law, shall not permit their inspection by any
other entity. The Paying Agent/Registrar's standard or customary fees and charges for
making such registration, transfer, conversion, exchange and delivery of a substitute Bond
or Bonds shall be paid as provided in the FORM OF BOND set forth in this Resolution.
Registration of assignments, transfers, conversions and exchanges of Bonds shall be made
in the manner provided and with the effect stated in the FORM OF BOND set forth in this
2ndDraft/2/18/94 5
Resolution. Each substitute Bond shall bear a letter and/or number to distinguish it from
each other Bond.
An authorized represe..tative, o t a pay rg Aoent'Registrar shall, before the delivery
of any such Bond, date and manually sign the Paying Agent/Registrar's Authentication
Certificate, and no such Bond shall be deemed to be issued or outstanding unless such
Certificate is so executed. The Paying Agent/Registrar promptly shall cancel all paid Bonds
and Bonds surrendered for conversion and exchange. No additional ordinances, orders, or
resolutions need be passed or adopted by the governing body of the Authority or any other
body or person so as to accomplish the foregoing conversion and exchange of any Bond or
portion thereof, and the Paying Agent/Registrar shall provide for the printing, execution, and
delivery of the substitute Bonds in the manner prescribed herein. Pursuant to Vemon's
Ann. Tex. Civ. St. Art. 717k-6, and particularly Section 6 thereof, the duty of conversion and
exchange of Bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar, and,
upon the execution of said Certificate, the converted and exchanged Bond shall be valid,
incontestable, and enforceable in the same manner and with the same effect as the Bonds
which initially were issued and delivered pursuant to this Resolution, approved by the
Attorney General, and registered by the Comptroller of Public Accounts.
(b) Payment of Bonds and Interest. The Authority hereby further appoints the
Paying Agent/Registrar to act as the paving agent for paying the principal of and interest on
the L2z±, a;; as provided in this Resolution. 7-ke ayi ."T r. -n' - ha!I .. ,
J" �-b"-"���l.tya.. G. ..w. �:..:.p proper
records of all payments made by the Authority and the Day;ng Agent/Registrar with respect.
to the Bond:, and of ail conversions and exchanges of Bonds, and all replacements of Bonds,
as provided iz this Resolution. However, in the event of a nonpayment of interest on a
scheduled payment date, and for thirty (30) days thereafter, a new record date for such
interest payment (a "Special Record Date") will be established by the Paying Agent/Reg-
istrar, if and when funds for the payment of such interest have been received from the
Authority. Notice of the Special Record Date and of the scheduled payment date of the
past due interest (which shall be 15 days after the Special Record Date) shall be sent at least
five (5) business days prior to the Special Record Date by United States mail, first-class
postage prepaid, to the address of each registered owner appearing on the Registration
Books at the close of business on the last business day next preceding the date of mailing
of such notice.
(c) In General. The Bonds (i) shall be issued in fully registered form, without
interest coupons, with the principal of and interest on such Bonds to be payable only to the
registered owners thereof, (ii) may be redeemed prior to their scheduled maturities (notice
of which shall be given to the Paying Agent/Registrar by the Authority at least 40 days prior
to any such redemption date), (iii) may be transferred and assigned, (iv) may be converted
and exchanged for other Bonds, (v) shall have the characteristics, (vi) shall be signed, sealed,
executed and authenticated, (vii) the principal of and interest on the Bonds shall be payable,
and (viii) shall be administered and the Paying Agent/Registrar and the Authority shall have
certain duties and responsibilities with respect to the Bonds, all as provided, and in the
manner and to the effect as required or indicated, in the FORM OF BOND set forth in this
Resolution. The Bonds initially issued and delivered pursuant to this Resolution are not
required to be, and shall not be, authenticated by the Paying Agent/Registrar, but on each
2ndDraft/2/18/94 6
substitute Bond issued in conversion of and exchange for any Bond or Bonds issued under
this Resolution the Paying Agent/Registrar shall execute the PAYING AGENT/REGIS-
TRAR'S AUTHENTICATION CERTIFICATE, in the form set forth in the FORM OF
PO u.
(a) Substitc.c Paying Agent/Registrar. The Authonty covenants with the registered
owners of the Bonds that at all times while the Bonds are outstanding the Authority will
provide a competent and legally qualified bank, trust company, financial institution, or other
agency to act as and perform the services of Paying Agent/Registrar for the Bonds under this
Resolution, and that the Paying Agent/Registrar will be one such entity. The Authority
reserves the right to, and may, at its option, change the Paying Agent/Registrar upon not less
than 120 days written notice to the Paying Agent/Registrar, to be effective not later than 60
days prior to the next principal or interest payment date after such notice. In the event that
the entity at any time acting as Paying Agent/Registrar (or its successor by merger, acquisi-
tion, or other method) should resign or otherwise cease to act as such, the Authority
covenants that promptly it will appoint a competent and legally qualified bank, trust
company, financial institution, or other agency to act as Paying Agent/Registrar under this
Resolution. Upon any change in the Paying Agent/Registrar, the previous Paying
Agent/Registrar promptly shall transfer and deliver the Registration Books (or a copy
thereof), along with all other pertinent books and records relating to the Bonds, to the new
Paying Agent/Registrar designated and appointed by the Authority. Upon any change in the
Fayfrr t ge t,Registra,, the Authority nrmmrth• w ll ecruse a wri: cn xu.t:c thfr:c. to be seta;
by the : ew Thying Agent/Rcgistrar to each registered owner of the Bonds, by Ut itec' Stites
mail, iirst-class postage prepaid, which notice also shall give the address of the new Paying
AgeniReglstrar. By accepting the position and performing as sua, ea;11 raying
Agent/Registrar shall be deemed to have agreed to the provisions of this Resolution, and
a certified copy of this Resolution shall be delivered to each Paying Agent/Registrar.
(e) Book -Entry Only System Generally. The Bonds issued in exchange for the Bonds
initially issued and delivered under this Resolution shall be issued in the form of a separate
single fully registered Bond for each of the maturities thereof registered in the name of Cede
& Co., as nominee of The Depository Trust Company, New York, New York ('DTC'), and
except as provided in subsection (b) hereof, all of the Bonds shall be registered in the name
of Cede & Co., as nominee of DTC.
With respect to Bonds registered in the name of Cede & Co., as nominee of DTC,
the Authority 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 on the Bonds. Without limiting the immediately preceding sentence, the Authority
and the Paying Agent/Registrar shall have no responsibility or obligation with respect to (i)
the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any
ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other
person, other than the Bondholder, as shown on the Registration Books, of any notice with
respect to the Bonds, including any notice of redemption, or (iii) the payment to any DTC
Participant or any other person, other than a Bondholder, as shown in the Registration
Books, of any amount with respect to principal of, premium, if any, and interest on, or
Compounded Amount of, the Bonds. Notwithstanding any other provision of this Resolution
2ndDraft/2/18/94 7
to the contrary but to the extent permitted by law, the Authority and the Paying
Agent/Registrar shall be entitled to treat and consider the person in whose name each Bond
is registered in the Registration Books as the absolute owner of such Bond for the purpose
of payment of principal, premium, if anyand interest, with respect to such Bond. for the
purpose of giving notices of redemption and other matters with respect to such Bond, for
the purpose of registering transfers with respect to such Bond, and for all other purposes
whatsoever. The Paying Agent/Registrar shall pay all principal of, premium, if any, and
interest on, the Bonds only to or upon the order of the respective owners, as shown in the
Registration Books as provided in this Resolution, or their respective attorneys duly
authorized in writing, and all such payments shall be valid and effective to fully satisfy and
discharge the Authority's obligations with respect to payment of principal of, premium, if
any, and interest on, the Bonds to the extent of the sum or sums so paid. No person other
than an owner, as shown in the Registration Books, shall receive a Bond certificate
evidencing the obligation of the Authority to make payments of principal, premium, if any,
and interest, or Compounded Amount, as the case may be, pursuant to this Resolution.
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 Resolution with respect to interest checks being mailed to the
registered owner at the close of business on the Record Date, the word "Cede & Co.," in this
Resolution shall refer to such new nominee of DTC.
(4) >uccescr SAc,,.:ties Deposltury: "Lunsfers Outside B2^k-F_ tw v.M cr !i
the event that the Authority determines tL discontinue the use of the.. Book Entry Only
System througi: DTC or DTC determines to discontinue prcviaing its services with respect
to the Bonds, the Authority shah (9 appoint a successor securities depository, qualified to
act as such under Section 17A of the Securities and Exchange Act of 1934, as amended,
notify DTC and DTC Participants of the appointment of such successor securities depository
and transfer one or more separate Bonds to such successor securities depository or (ii) notify
DTC and DTC Participants of the availability through DTC of Bonds and transfer one or
more separate Bonds to DTC Participants having Bonds credited to their DTC accounts.
In such event, the Bonds shall no longer be restricted to being registered in the Registration
Books 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
Bondholders transferring or exchanging Bonds shall designate in accordance with the
provisions of this Resolution.
(g) Payment to Cede & Co. Notwithstanding any other provision of this Resolution
to the contrary, so long as any Bond is registered in the name of Cede & Co., as nominee
of DTC, all payments with respect to principal of, premium, if any, and interest on such
Bond and all notices with respect to such Bond shall be made and given, respectively, in the
manner provided in the representation letter of the Authority to DTC.
(h) Notice of Redemption.
(i) In addition to the Notice of Redemption set forth in the FORM OF
BOND, the Paying Agent/Registrar shall give notice of redemption of the Bonds by
mail first-class postage prepaid at least thirty (30) days prior to a redemption date
2ndDratt/2/18/94 8
to each registered securities depository and to any national information service that
disseminates redemption notices. In addition, in the event of a redemption caused
by an advance refunding of the Bonds, the Paying Agent/Registrar shall send a
second a@hMC of redemption rG ale persons specified in the immediately preceding
sentence at Least thirty (30) days but not more than ninety .(90) days prior to the
actual redemption date. Any notice sent to the registered securities depositories or
such national information services shall be sent so that they are received at least two
(2) days prior to the general mailing or publication date of such notice. The Paying
Agent/Registrar shall also send a notice of prepayment or redemption to the
registered owner of any Bond who has not sent the Bonds in for redemption sixty
(60) days after the redemption date.
(ii) Each Notice of Redemption, whether required in the FORM OF BOND
or in this Section, shall contain a description of the Bonds to be redeemed including
the complete name of the Bonds, the Series, the date of issue, the interest rate, the
maturity date, the CUSIP number, the certificate numbers, the amounts called of
each certificate, the publications and mailing date for the notice, the date of
redemption, the redemption price, the name of the Paying Agent/Registrar and the
address at which the Bonds may be redeemed, including a contact person and
telephone number.
(iu) All redemption p ;^nen': .:z by t±;s Paying !roc i/Registrar ; ;1.. .
Bondholders shall include a CUSH' number relating to each amount paid to sue)
registered owner.
(i) In case any person who shall have signed or signed and sealed any Bond as an
officer of the Authority shall have ceased to be such officer before the Bonds so signed or
signed and sealed shall have been actually delivered, such Bonds, nevertheless, may delivered
and issued as though the person who signed or signed and sealed such Bond had not ceased
to be such officer of the Authority. Any Bonds issuable hereunder may be signed and sealed
on behalf of the Authority by such persons as at the actual date of the execution of such
Bonds shall be proper officers of the Authority although at the date of such Bonds any such
person shall not have been an officer of the Authority. The Bonds to be attached to the
Bonds shall be executed by the manual or facsimile signatures of the President and the
Secretary of the Authority, and the Authority may adopt or use for that purpose the
facsimile signature of any persons who shall have been such officers notwithstanding the fact
that they may have ceased to be such officers at the time when such Bonds are actually
authenticated and delivered. The official seal of said Authority shall be impressed, or
printed, or lithographed on each of the Bonds.
Section 2.4. FORM OF BOND. The form of the Bonds, including the form of
Paying Agent/Registrar's Authentication Certificate, the form of Assignment and the form
of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to
be attached only to the Bonds initially issued and delivered pursuant to this Resolution, shall
be, respectively, substantially as follows, with such appropriate variations, omissions, or
insertions as are permitted or required by this Resolution:
2ndDraft/2/1&94 9
FORM OF BOND
UNITED STATES OF AMERICA
STATE OF TEXAS
XA.:
NUECES RIVER AUTHORITY
WAFER SUPPLY REVENUE REFUNDING BONDS,
SERIES 1994
(CITY OF CORPUS CHRISTI PROJECT)
R-1
PRINCIPAL
AMOUNT
INTEREST RATE DATE OF BONDS MATURITY DATE CUSIP NO.
% March 1, 1994 April 1,
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
!)N
TWE MATE MATURITY . • JF.CESRIIER.AUT HOPTTY
_ ,.x.21 x DATE _ _rv�..L�l.ii dUU'YL:, the 1+ _
(the "Authority"), being a political subdivision of the State of Texas, hereby proaaris's to pay
to the REGISTERED OWNER specified above (hereinafter called the "registered owner")
the principal amount specified above end t:, pay interest thereon from March 1, 1994, on
October 1, 1994, and semiannually on each April 1 and October 1 thereafter to the maturity
date specified above, at the interest rate per annum specified above; except that if this Bond
is required to be authenticated and the date of its authentication is later than the first
Record Date (hereinafter defined), such principal amount shall bear interest from the
interest payment date next preceding the date of authentication, unless such date of
authentication is after any Record Date but on or before the next following interest payment
date, in which case such principal amount shall bear interest from such next following
interest payment date; provided, however, that if on the date of authentication hereof the
interest on the Bond or Bonds, if any, for which this Bond is being exchanged or converted
from is due but has not been paid, then this Bond shall bear interest from the date to which
such interest has been paid in full.
THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money
of the United States of America, without exchange or collection charges solely from funds
of the Authority required by the Bond Resolution to be on deposit with the Paying
Agent/Registrar for such purpose as hereinafter provided. The principal of this Bond shall
be paid to the registered owner hereof upon presentation and surrender of this Bond at
maturity at the principal corporate trust office of Texas Commerce Bank National
Association in Austin, Texas, which is the "Paying Agent/Registrar" for this Bond. The
payment of interest on this Bond shall be made by the Paying Agent/Registrar to the
registered owner hereof on each interest payment date by check dated as of such interest
payment date, and such check shall be sent by the Paying Agent/Registrar by United States
2ndDraft/2/18/94 10
mail, first class postage prepaid, on each such interest payment date, to the registered owner
hereof, at its address as it appeared on the fifteenth day of the month next preceding each
such date (the 'Record Date") on the Registration Books kept by the Paying
Agent/Registrar, as hereinafter daaat "aid. L^, uadition, interest payments may be made by
such other methods, acceptable to the Paying Agent/Registrar, requested by and at the risk
anti expense of the registered owner. Any accrued interest due at maturity shall oe para to
the registered owner upon presentation and surrender of this Bond for payment at the
principal corporate trust office of the Paying Agent/Registrar. The Authority covenants with
the registered owner of this Bond that on or before each principal payment date and interest
payment date for this Bond it will make available to the Paying Agent/Registrar, from the
"Interest and Sinking Fund" as provided by the Bond Resolution (hereinafter defined), the
amounts required to provide for the payment, in immediately available funds, of all principal
of and interest on the Bonds, when due.
IF THE DATE for any payment due on this Bond shall be a Saturday, Sunday, a
legal holiday, or a day on which banking institutions in the city where the principal corporate
trust office of the Paying Agent/Registrar is located are authorized by law or executive order
to close, or the United States Postal Service is not open for business, then the date for such
payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday,
or day on which banking institutions are authorized to close, or the United States Postal
Service is not open for business; and payment on such date shall have the same force and
effect as L` y de nn the &ate payinent was -due.
TIES BOND is one of a Series of Bonds dat4.dr. of March 1, 1994, authorized by
Resolution adopted by the Board of Directors of the Authority on march 3, 1994 (the "Bond
Resolution") in accordance with the Constitution and laws of the State of Texas in the
principal amount of $ (the 'Bonds") for the purpose of refunding $7,450,000 in
aggregate principal amount of the outstanding Nueces River Authority Water Supply
Revenue Bonds, Series 1979 (City of Corpus Christi Project).
ON APRIL 1, or any date thereafter, the outstanding Bonds of this Series may
be redeemed prior to their scheduled maturities, at the option of the Authority, with funds
derived from any available and lawful source, as a whole, or in part, (provided that a portion
of a Bond may be redeemed only in an integral multiple of $5,000) at the redemption price
of the principal amount of Bonds called for redemption, plus accrued interest thereon to the
date fixed for redemption. If less than all of the Bonds are to be redeemed, the Authority
shall determine the maturity or maturities and the amounts thereof to be redeemed and shall
direct the Paying Agent/Registrar to call by lot Bonds, or portions thereof, within such
maturity or maturities and in such principal amounts, for redemption; provided that during
any period in which ownership of the Bonds is determined by a book entry at a securities
depository for the Bonds, if fewer than all of the Bonds of the same maturity and bearing
the same interest rate are to be redeemed, the particular Bonds of such maturity and
bearing such interest rate shall be selected in accordance with the arrangements between the
Authority and the securities depository.
2ndDraft/2/18/94 11
AT LEAST 30 days prior to the date fixed for any redemption of Bonds or portions
thereof prior to maturity, a written notice of such redemption shall be sent by the Paying
Agent/Registrar by United States mail, first-class postage prepaid, to the registered owner
of each Bond to be redeemed at its address as it anoeared en tnc day uck noti ,c of
redemption is mailed; provided, however, that the failure to send. mail or receive such
not:�e, or any detect therein or in the sending or mailing thereof, shall not affect the validity
or effectiveness of the proceedings for the redemption of any Bond. By the date fixed for
any such redemption, due provision shall be made with the Paying Agent/Registrar for the
payment of the required redemption price for the Bonds or portions thereof which are to
be so redeemed. If such notice of redemption is given and if due provision for such
payment is made, all as provided above, the Bonds or portions thereof which are to be so
redeemed thereby automatically shall be treated as redeemed prior to their scheduled
maturities, and they shall not bear interest after the date fixed for redemption, and they shall
not be regarded as being outstanding except for the right of the registered owner to receive
the redemption price from the Paying Agent/Registrar out of the funds provided for such
payment. If a portion of any Bond shall be redeemed, a substitute Bond or Bonds having
the same maturity date, bearing interest at the same rate, in any denomination or
denominations in any integral multiple of $5,000, at the written request of the registered
owner, and in an aggregate principal amount equal to the unredeemed portion thereof, will
be issued to the registered owner upon the surrender thereof for cancellation, at the expense
of the Authority, all as provided in the Bond Resolution.
AlAll..01,IDS OF THIS SERIES are issuable solely as fully registered Bosuds, t - short
Int -.1 est coupons, m the uenomination of ai,,' integral multiple of $5,000. As prordeC
Bond Resolution, this Bond may, at the request of the registered owner or the assignee or
assignees hereof, be assigned, transferred, converted into and exchanged for a like aggregate
amount of fully registered Bonds, without interest coupons, payable to the appropriate
registered owner, assignee or assignees, as the case may be, having any authorized
denomination or denominations as requested in writing by the appropriate registered owner,
assignee or assignees, as the case may be, upon surrender of this Bond to the Paying
Agent/Registrar for cancellation, all in accordance with the form and procedures set forth
in the Bond Resolution. Among other requirements for such assignment and transfer, this
Bond must be presented and surrendered to the Paying Agent/Registrar, together with
proper instruments of assignment, in form and with guarantee of signatures satisfactory to
the Paying Agent/Registrar, evidencing assignment of this Bond or any portion or portions
hereof in any authorized denomination to the assignee or assignees in whose name or names
this Bond or any such portion or portions hereof is or are to be registered. The Form of
Assignment printed or endorsed on this Bond may be executed by the registered owner to
evidence the assignment hereof, but such method is not exclusive, and other instruments of
assignment satisfactory to the Paying Agent/Registrar may be used to evidence the
assignment of this Bond or any portion or portions hereof from time to time by the
registered owner. The Authority shall pay the Paying Agent/Registrar's reasonable standard
or customary fees and charges for transferring and exchanging any Bond or portion thereof.
Any taxes or governmental charges required to be paid with respect thereto shall be paid
by the one requesting such assignment, transfer, conversion or exchange, as a condition
precedent to the exercise of such privilege. The Paying Agent/Registrar shall not be
required to make any such transfer or exchange with respect to any Bond or any portion
2ndDraft/2/18I94 12
thereof called for redemption prior to maturity, within 45 days prior to its redemption date;
provided, however, such limitation of transfer shall not be applicable to an exchange by the
Registered Owner of an unredeemed balance of a Bond called for redemption in part.
IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the
Authority, resigns, or otherwise ceases to act as such, the Authority has covenanted in the
Bond Resolution that it promptly will appoint a competent and legally qualified substitute
therefor, and cause written notice thereof to be mailed to the registered owners of the
Bonds.
IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and
validly authorized, issued, and delivered; that all acts, conditions, and things required or
proper to be performed, exist, and be done precedent to or in the authorization, issuance,
and delivery of this Bond have been performed, existed, and been done in accordance with
law; that this Bond is a special obligation of the Authority, and that the principal of and
interest on this Bond, together with the Nueces River Authority Water Supply Revenue
Bonds, Series 1979 (City of Corpus Christi Project) are payable from, and secured by a first
lien on and pledge of certain payments to be made by the City of Corpus Christi, Texas to
the Authority pursuant to a contract dated the 27th day of May, 1976, as supplemented and
amended.
E ATT) A.'nhurity has : c r cci the right, subject to the restric:knt s 32nd, az-1
by reference, in the Bond Resolution authorzitng this series of Bonds, to is 'z tddit onai
parity revenue bonds which also may be made payable from and secured by a first lien on
and pledge of the aforesaid payment.; securing this series of Bonds.
THE HOLDER HEREOF shall never have the right to demand payment of this
obligation out of any funds raised or to be raised by taxation.
BY BECOMING the registered owner of this Bond, the registered owner thereby
acknowledges all of the terms and provisions of the Bond Resolution, agrees to be bound
by such terms and provisions, acknowledges that the Bond Resolution is duly recorded and
available for inspection in the official minutes and records of the governing body of the
Authority, and agrees that the terms and provisions of this Bond and the Bond Resolution
constitute a contract between each registered owner hereof and the Authority.
IN WITNESS WHEREOF, the Authority has caused this Bond to be signed with the
manusl or facsimile signature of the Chairman of the Authority and countersigned with the
manusi or facsimile signature of the Secretary of the Authority, and has caused the official
seal of the Authority to be duly impressed, or placed in facsimile, on this Bond.
Secretary, Board of Directors
(SEAL)
2ndDraft/2/18I94
13
Chairman, Board of Directors
FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
(To be executed if this Bond is not accompanied by an
executed Registration Certificate of the Comptroller
at Public Accounts of the State of Texas)
It is hereby certified that this Bond has been issued under the provisions of the Bond
Resolution described in the text of this Bond; and that this Bond has been issued in
exchange for a bond or bonds, or a portion of a bond or bonds of a series which originally
was approved by the Attorney General of the State of Texas and registered by the
Comptroller of Public Accounts of the State of Texas.
Dated:
Paying Agent/Registrar
By
Authorized Representative
FORM OF ASSIGNMENT:
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto
Please insert Social Security or
Other Identifying Number of Transferee
Please print or typewrite name and address, including zip code of Transferee)
the within Bond
and all rights thereunder, and hereby irrevocably constitutes and appoints
attorney, to register the transfer of the within Bond on the books kept for registration
thereof, with full power of substitution in the premises.
Dated:
2ndDraft/2/18/94 14
Signature Guaranteed:
NOTICE: Signature(s) must be
guaranteed by a member
firm of the New York Stock
Exchange or a commercial
bank or trust company.
NOTICE. The signatnre above
must correspond with the name
of the Registered Owner as it
appears upon the front of this
Bond in every particular,
without alteration or
enlargement or any change
whatever.
FORM OF REGISTRATION CERTIFICATE OF
THE COMPTROLLER OF PUBLIC ACCOUNTS:
COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO.
I hereby certify that this Bond has been examined, certified as to validity, and
approved by the Attorney General of the State of Texas, and that this Bond has been
registered by the Comptroller of Public Accounts of the State of Texas.
\Uitne,c _r' Si at,ire and seal t iz
Comptroller of Public Accounts
of the State of Texas
(COMPTROLLER'S SEAL)
[INSURANCE LEGEND]
ARTICLE THREE
AUTHORIZATION AND ISSUANCE OF BONDS
Section 3.1. DESIGNATION. The Bonds of Nueces River Authority to be entitled
"Nueces River Authority Water Supply Revenue Refunding Bonds, Series 1994 (City of
Corpus Christi Project) (the "Series 1994 Bonds")" shall be issued in the maximum aggregate
principal amount of $8,000,000 in accordance with the provisions of the Constitution and
Statutes of the State of Texas, including Article 16, Section 59 of the Texas Constitution and
the Act for the purpose of refunding the Refunded Bonds in the aggregate principal amount
of $7,450,000.
Section 3.2. DATE, DENOMINATIONS, NUMBERS, MATURITIES OF BONDS
AND INTEREST. The Series 1994 Bonds shall be dated March 1, 1994, shall be numbered
consecutively from R-1 upward, shall be in the denomination of $5,000 or any integral
multiple thereof, and shall mature and become due and payable serially on April 1 in each
of the years and amounts to be set forth in the Bond Purchase Agreement. The Series 1994
2ndDraft/2/18/94 15
Bonds shall bear interest at the per annum rates set forth in the Bond Purchase Agreement.
Said interest shall be payable on October 1, 1994 and semiannually thereafter on April 1 and
October 1 until paid.
Sert,gn 3 3 UNDER WRTI'hR AND. BOND PURCHASE AGREEMENT (a)
M. E. Allison & Co., inc. is nereby designated the senior managing underwriter (the
"Underwriter") for the Series 1994 Bonds.
(b) As authorized by Article 717q, as amended, the General Manager of the
Authority is hereby authorized to act on behalf of the Authority in selling and delivering the
Series 1994 Bonds and carrying out the other procedures specified in this Resolution relating
to the issuance of the Series 1994 Bonds, to the extent not provided by this Resolution,
including determining and fixing the price at which the Series 1994 Bonds will be sold, the
years in which the Series 1994 Bonds will mature, the principal amount to mature in each
of such years, the aggregate principal amount of the Series 1994 Bonds, the rate of interest
to be borne by each such maturity, the dates, price and terms upon and at which the Series
1994 Bonds shall be subject to redemption prior to maturity at the option of the Authority,
as well as any mandatory sinking fund redemption provisions, and all other matters relating
to the issuance, sale, and delivery of the Series 1994 Bonds and the refunding of the
Refunded Bonds all as specified in the Bond Purchase Agreement. In establishing the
aggregate principal amount of the Series 1994 Bonds, the General Manager shall establish
an amount not to er:ce d the amou,st Scetion. 3.1, hi an amount sufncient to
provide for the r:.• of the Ref ::__c_' Bonds and which will result in OK- ina imnr—.
reduction in debt ServLc is to the Authority, based on bond markt conditions and
available interest rates for the Series 1994 Bonds on the date of execution of tiie Bond
Purchase Agreement, all as determined by the General Manager.
The General Manager is authorized to complete, execute, and deliver a Bond
Purchase Agreement in substantially the form presented to the Board at the meeting at
which this Resolution is adopted, with such modifications as are deemed necessary by the
General Manager, provided that the price to be paid for the Series 1994 Bonds shall be not
less than 90% of the aggregate principal amount thereof plus accrued interest thereon from
its date to its delivery, and no maturity shall bear interest at a rate greater than 10% per
annum. The General Manager is further authorized, for and on behalf of the Authority to
approve the Official Statement, and any supplements thereto, relating to the Series 1994
Bonds. It is further provided, however, that, notwithstanding the foregoing provisions, the
Series 1994 Bonds shall not be delivered unless (1) the refunding of the Refunded Bonds
will result in a reduction in the aggregate amount of principal and interest which otherwise
would be payable with respect to the Refunded Bonds, both on an actual and a present
value basis of at least 3%, and (2) prior to delivery, the Series 1994 Bonds have been rated
by a nationally recognized rating agency for municipal securities in one of the four highest
rating categories for long term obligations, as required by Vernon's Ann. Tex. Civ. St. Article
717q, as amended.
Section 3.4. ADDITIONAL BONDS. One or more series of Bonds, on a parity with
and in addition to the Series 1979 Bonds and the Series 1994 Bonds may be issued,
2ndDraft/2/18,94 16
authenticated and delivered under the conditions, for the purposes and pursuant to the
provisions of Sections 3.4 and 3.5 of the Series 1979 Resolution.
ARTICLE FOUR
REDEMPTION OF SERIES 1994 BONDS
Section 4.1. GENERAL Any redemption of all or any part of the Series 1994
Bonds issued under the provisions of this Resolution or in accordance therewith which are
subject to redemption shall be made in the manner provided in this Article.
Section 4.2. PARTIAL REDEMPTION. In case of the redemption of less than all
the Series 1994 Bonds outstanding, except as otherwise provided herein or in the resolution
or resolution authorizing such Series 1994 Bonds, the particular Series 1994 Bonds to be
redeemed shall be selected from all the outstanding Series 1994 Bonds as provided in the
Form of Bonds.
Section 4.3. OPTIONAL REDEMPTION. All Series 1994 Bonds scheduled to
mature on and after April 1, shall be optional for redemption prior to their scheduled
maturities, in whole, or in part, at the option of the Authority, on any date at redemption
prices (expressed as a percentage of principal amount) plus accrued interest to the
reI exion jzta a. follnwv.
=:aclesnption Date Redemption Price
At least 30 days prior to the date fixed for any redemption of Series 1994 Bonds or
portions thereof prior to maturity, a written notice of such redemption shall be sent by the
Paying Agent/Registrar by United States mail, first-class postage prepaid, to the registered
owner of each Series 1994 Bond to be redeemed at its address as it appeared on the day
such notice of redemption is mailed; provided, however, that the failure to send, mail or
receive such notice, or any defect therein or in the sending or mailing thereof, shall not
affect the validity or effectiveness of the proceedings for the redemption of any Series 1994
Bond. By the date fixed for any such redemption, due provision shall be made with the
Paying Agent/Registrar for the payment of the required redemption price for the Bonds or
portions thereof which are to be so redeemed. If such notice of redemption is given and if
due provision for such payment is made, all as provided above, the Series 1994 Bonds or
portions thereof which are to be so redeemed thereby automatically shall be treated as
redeemed prior to their scheduled maturities, and they shall not bear interest after the date
fixed for redemption, and they shall not be regarded as being outstanding except for the
right of the registered owner to receive the redemption price from the Paying
Agent/Registrar out of the funds provided for such payment.
2ndDraft/2/18/94 17
Section 4.4. REDEMPTION OF ADDITIONAL BONDS. Additional Bonds shall
be subject to redemption prior to their stated maturities as may be provided in the
resolution or resolutions authorizing their issuance.
ARTICLE FIVE
PLEDGE AND FUNDS
Section 5.1. PLEDGE. The principal of and interest on the Bonds shall be paid and
secured by a first lien on and pledge of the Contract Payments for Debt Service, and said
lien and pledge are hereby irrevocably confirmed, and the holders of the Bonds shall never
have the right to demand payment thereof out of any funds of the Authority.
Section 5.2. FUNDS. (a) The following special funds of the Authority created with
the Trustee by the Series 1979 Resolution are hereby confirmed, to wit:
(i) the "Nueces River Authority Contract Payments for Debt
Service Fund" (the "Contract Payment Fund");
(ii) the "Nueces River Authority Water Supply Revenue Bonds
Interest and Sinking Fund (the "Interest and Sinking Fund");
(iii) the "Nueces River Authority Water Supply Revenue Bonds
Resent Fund' (the 'Re -rve
(b) All moneys in said Funds are pledged to the purposes expressed herein and
in the Series 1979 Resolution.
(c) Pursuant to the Series 1979 Resolution all of said Funds created by this
Section shall be kept with the Trustee.
Section 5.3. CONTRACT PAYMENT FUND. All Contract Payments for Debt
Service shall be received by the Trustee from the Authority and shall be deposited by the
Trustee as received into the Contract Payment Fund.
Section 5.4. FLOW OF FUNDS. Moneys on deposit in the Contract Payment Fund
shall be transferred by the Trustee in the following sequence and order of priority and on
the following dates, to -wit:
(a) The Trustee shall transfer to the Interest and Sinking Fund -
(i) on or before each March 25 and September 25 such amounts as will
be sufficient, together with other funds therein, to pay the interest on the Bonds on
the next succeeding interest payment date thereof; and
2ndDraftf2/18/94 18
(ii) on or before each March 25 and September 25 through March 25, _
one-half of such amounts as will be sufficient, together with other funds, therein, to
pay the principal of the Bonds maturing on the next succeeding April 1.
(b) So long as the amount on deposit in the Reserve Fund equals or exceeds a
sum equal to the amount requued to pay the interest on and principal of the Bonds
outstanding during the Fiscal Year such payments are the greatest, no transfers into the
Reserve Fund shall be required under this paragraph (b). However, should the amount on
deposit in said Fund ever be less than a sum equal to the amount required to pay the
interest on and principal of the Bonds outstanding during the Fiscal Year such payments are
the greatest, the Trustee shall replace any deficiency therein in not more than ten (10) equal
installments by making transfers in the necessary amounts into said Fund from the Contract
Payment Fund on or before each March 25 and September 25 beginning with the March 25
of the Fiscal Year following the Fiscal Year in which the deficiency occurred. The Authority
shall make payments to the Trustee for the credit of the Contract Payment Fund at the
times and in the amounts required to permit the timely transfers required by this Section
to be made from the Contract Payment Fund to the Reserve Fund.
Section 5.5. USE OF INTEREST AND SINKING FUND. Monies on deposit in the
Interest and Sinking Fund each year shall be used solely and exclusively first for the purpose
of paying the interest on and principal of the Bonds as such interest comes due and the
pzintripai tbrreof mat1ares; nr for the purpose of rallinv ar! ,L.,fze1ling Rctd; pik-tz
maturity rt the applicable redemption price and/or for the purpose of purcc?,asirg Bonds its
the open market for rerirnmeut for prices not greater than ine par vake plus ccruec
iineresi of any Bonds thus purchased or if redeemable prior to states ma:nrity, not greater
than the redemption price on the next succeeding redemption date. No purchases shall be
made of Bonds with monies in the Interest and Sinking Fund which would result in not
having sufficient monies therein to pay Bonds at their stated maturities. The Trustee timely
shall make available the funds on deposit therein to the Paying Agents for such purposes.
At such time as the monies and investments in the Interest and Sinking Fund and the
Reserve Fund shall equal the aggregate principal amount of the Bonds outstanding and
interest thereon to stated maturity dates of such Bonds, or, if any of such Bonds shall be
redeemable prior to stated maturity, the interest thereon to such redemption dates and any
applicable premium, no further transfers shall be made to the Interest and Sinking Fund.
Section 5.6. USE OF RESERVE FUND. For so long as any of the Bond shall be
outstanding the Reserve Fund shall be held as a reserve for the payment of principal of and
interest on the Bonds when and if monies on deposit in the Interest and Sinking Fund shall
not be sufficient for such purpose. If such deficiencies occur, the Trustee shall transfer
money on deposit in the Reserve Fund to the Interest and Sinking Fund for the uses
specified for that Fund. The monies in the Reserve Fund shall be used to pay the last of
the Bonds outstanding.
Section 5.7. SECURITY AND INVESTMENT OF FUNDS. The trustee will secure
and keep secured, in the manner required by law, all cash funds on deposit with it, and will
cause the Paying Agents to secure all funds deposited with them as other trust funds are
secured. The Trustee shall invest the monies in the Interest and Sinking Fund, the Reserve
2ndDraft2/18/94 19
Fund, and the Contract Payment Fund fully and continuously in Investment Securities or
Certificates of Deposit of State and National Banks which shall be lawfully insured or
secured by Investment Securities, all in accordance with resolutions from time to time
adopted by the Board, approved by t!'e City and delivered to the Trustee. Such investments
shah be converted to cash only at the times monies are needed for payments required by this
t &a;utlun. Ali interest aild income on s:.cn mvzstmcuts as reaiizcx shall te deposited m w
the Contract Payment Fund.
ARTICLE SIX
BOND PROCEEDS AND REDEMPTION OF THE REFUNDED BONDS
Section 6.1. BOND PROCEEDS. Promptly after the delivery of the Bonds, the
proceeds received from the sale thereof together with the legally available funds on hand,
including the amounts to be released from the funds securing the Refunded Bonds upon the
defeasance of the Refunded Bonds shall be deposited and disbursed as follows:
(a) To the Interest and Sinking Fund, an amount representing the accrued
interest received from the Purchasers.
(b) To the Authority's General Fund from Bond proceeds, an amount equal
to the estimated expense. in connection with the issuance and sale of the Bonds.
(d) To the he Into*e , :u''ylriling Fund. the bale.;;:;., of the Yiocccc:;, received
from the ale of the Rod's and the. i.:nda released from the Reserve Fund, being an
amount which will be sufficient to timely pay the principal of, interest on and
redemption premium due on the Refunded Bonds on April 1, 1994, the redemption
date.
In the event that the Bond proceeds deposited in the Authority's General Fund to
pay the expenses in connection with the issuance and sale of the Bonds are in excess of the
amount needed for such purpose, such excess shall be removed from the General Fund and
deposited into the Interest and Sinking Fund to be used to pay interest on the Bonds.
Section 6.2. REDEMPTION OF REFUNDED BONDS. The Refunded Bonds are
hereby called for redemption prior to maturity on April 1, 1994 at a redemption price equal
to 102.5% of the principal amount of such redeemed bonds plus accrued interest to the
redemption date. The form of Notice of Redemption attached to this Resolution is hereby
approved and the General Manager is authorized and directed to take such actions as are
necessary to assure the redemption of the Refunded Bonds. The General Manager is
further authorized and directed to take such actions and give such notices as are necessary
to revoke the redemption of the Refunded Bonds in the event the Series 1994 Bonds are
not delivered by the redemption date for the Refunded Bonds.
In addition to the notice of redemption given in accordance with the resolution
authorizing the Refunded Bonds, the notice of redemption shall also be given by United
States mail, first-class, postage prepaid to each registered securities depository and to any
2ndDraft/2/18/94 20
national information service that disseminates redemption notices. Any notice sent to the
registered securities depositories or such national information services shall be sent as soon
as possible after the sale of the Series 1994 Bonds.
ARTICLE SEVEN
GENERAL COVENANTS
Section 7.1. RECORDS. (a) The Authority will keep or cause to be kept proper
books of record and account in which full, true and correct entries will be made of all
income, expenses and transactions of and in relation to the Project and each and every part
thereof in accordance with accounting practices recommended by the National Committee
on Governmental Accounting and within ninety (90) days after the close of each Fiscal Year
the Authority will furnish to the City, the Municipal Advisory Council of Texas, the Financial
Advisor, and any holder of any Bonds who may so request a signed or certified copy of a
report by a Certified Public Accountant covering the preceding Fiscal Year.
(b) The holder or holders of any Bonds or any duly authorized agent or agents of
such holders, shall have the right at all reasonable times to inspect all such records, accounts
and data relating to the Authority and the Project, and to inspect the Project and all
properties comprising same.
Section. 7.7. COMPLLet CE WITH CONTRACT. To the end that thy: Contrnct
Payments for Debi Setvice :ill be trade hi accordance Wt.n the Contract and the same
Le sufficient it, pay the tSonds and the interest thereon as they become due, the Autimunty
will comply with the terms of the Contract and keep the same in effect, and will enforce the
terms of the Contract. The Authority will not consent to any amendment to the Contract
which would extend the time of the payment of any amounts due thereunder or which would
in any manner impair or adversely affect the rights of the holders of the Bonds from time
to time.
Section 7.3. COMPLIANCE WITH FEDERAL CONTRACT. To the end that the
Project will be properly maintained and the rights of the Authority and the holders of the
Bonds will be preserved and protected, the Authority will comply with the terms of the
Federal Contract and will enforce the terms of the Federal Contract.
Section 7.4. CORPORATE EXISTENCE OF AUTHORITY. The Authority
represents that it is a conservation and reclamation district, and a governmental agency and
body politic and corporate, duly created, organized and existing under the Constitution and
laws of the State of Texas and has proper authority from all other public bodies and
authorities, if any, having jurisdiction thereof to operate, maintain, repair, renew and replace
the Project or any interest therein. The Authority will at all times maintain its corporate
existence and maintain a lawful Board of Directors, and at all times function and act in the
best interest of the Project and the bondholders. The Authority hereby further covenants
that it has the lawful power to pledge the revenues supporting the Bonds; that all corporate
action on its part to that end has been duly and validly taken; and that the Bonds issued
2ndDraft/2/18,94 21
hereunder shall be ratably secured under said pledge in such manner that one Bond shall
have no preference over any other Bond of said issue.
Section 7.5. FURTHER ENCUMBRANCES. The Ar°"nrity covenants that in no
event wnile any of the bonds or interest thereon remains outstanding and unpaid, shall the
/Autitority sell, mut gage, tease or otherwise dispose of its interest m the Project, or any
substantial part thereof, nor shall the Authority further encumber the Contract Payments for
Debt Service in any manner except in accordance with this Resolution, or unless such
encumbrance shall be made junior and subordinate in all respects to the lien and pledge
herein created for the benefit of the Bonds and the interest thereon.
Section 7.6. INSURANCE. (a) The Authority will, or will cause the City at all times
to keep insured with a responsible insurance company or companies, such of the plants,
structures, buildings, stations, machinery and equipment of the Project against risk of
accidents or casualties against which insurance is usually carried by similar governmental
entities operating like properties, to maintain insurance against public liability and property
damage in a reasonable amount, provided such insurance can be procured at reasonable
cost, and to maintain workmen's compensation insurance with a responsible insurance
company or companies or a State -approved workmen's compensation plan or program.
However, at any time while any contractor engaged in the construction shall be fully
responsible therefor, the Authority shall not be required to carry or cause to be carried any
of the foregoing insurance.
(b) in Me even: u,f any Loss or damage and proceeds from such i T:;urance policies
are available the Authority wili apply or cansc to be applied proceeds of insurance policies
covering such loss or damage solely for that purpose. The Authority will use its best efforts
to have the work of reconstruction or repair begun promptly after such Loss or damage shall
occur and have the same continued and properly completed as expeditiously as possible.
If engineering assistance is not available from the United States, the Authority will procure
or cause to be procured the advice and recommendation in writing of Consulting Engineers
concerning such reconstruction before it is undertaken.
(c) Any amounts remaining after the completion of and payment for any such
reconstruction or repair shall be deposited to the credit of the Contract Payment Fund.
Section 7.7. MAINTENANCE, REVIEW AND INSPECTION. The Authority
recognizes that the Federal Contract provides that a representative of the United States with
a representative of the Authority and the City may, from time to time, review the
maintenance of the Project being operated by the Authority and the City to determine the
condition of the Project and adequacy of the maintenance program. A report of the review
including recommendations, if any, will be prepared by the United States and copies will be
furnished to the Authority and the City. If deemed necessary by the United States or the
Authority and the City, special inspections of the Project and the books and records being
maintained will be made by the United States to ascertain, in the event of any operation and
maintenance deficiency remedial measures required for correction to assist the Authority and
City in solving specific problems. Any such inspection or audit shall, except in the case of
emergency, be made in written notice to the Authority and the City, and the actual cost
2ndDraft/2/18i94 22
thereof shall be paid by the Authority and the City to the United States. Should this
arrangement for reviews and inspections be terminated for any reason, while any of the
Bonds is outstanding, the Authority will employ or cause to be employed, a Consulting
Engineer to give all necessary a de.irable 1d ce arra recommendations to the end that the
Project shall be operated and maintained in the most efficient and satisfactory manner.
Further, the Authority shall cause the Consult:.,g Engineer to make in writing a review and
report on the physical condition of the Project works once every three years, including their
recommendations as to (1) the proper maintenance, repair and operation of the Project,
including their findings as to whether or not properties have been maintained in good repair
and sound operating condition; and (2) the improvements, renewals and replacements which
should be made. A copy of such report and review shall be filed with the City and the
Authority.
Section 7.8. CONTINUING EFFECT OF AUTHORITY'S STATUTORY RIGHTS.
No provision contained in this Resolution shall in any way affect the statutory right of the
Authority to issue bonds except bonds on a parity with the Bonds which shall be issued in
accordance with the Series 1979 Resolution and this Resolution.
ARTICLE EIGHT
TRUSTEE
Section 8.1. TRUSTEE ACCEPTT/1NC' . By the execution of the Acceptance Clause
at the e.:d hereof, the Trustee does hereby affirm thI ;acceptance of the trust imposed by
the Series i973 P,eaobltion anti tiiia resolution and agrees to comply with the terms thereof.
Section 8.2. NO LIABILITY. The Trustee shall not be liable for any act done or
step taken or omitted by it, including losses incurred in buying and selling investments, or
any mistake of fact or law or for anything which it may do or refrain from doing, except for
its negligence and/or its willful misconduct in the performance of any obligation imposed
upon it hereunder. The Trustee shall not be responsible in any manner whatsoever for the
recitals or statements contained in the Bonds or any proceedings taken in connection
therewith or statements of the Authority contained in this Resolution.
Section 8.3. NO RESPONSIBILITY. The Trustee shall have no responsibility to any
persons in connection herewith except those specifically provided herein and shall not be
responsible for anything done or omitted to be done by it except for its own negligence
and/or willful misconduct. The Authority covenants that it will not commence any action
against the Trustee, in equity or otherwise as a result of any action taken or thing done by
the Trustee pursuant to this Resolution or pursuant to any written demand or authorization
for which provision is herein made.
Section 8.4. TRUST AND OTHER AGREEMENTS. The Trustee, except as herein
indicated and as a Paying Agent/Registrar and a Trustee with respect to certain of the
Authority's bond issues, is not a party to any other agreement or undertaking between the
Authority and the Trustee nor is it bound by nor need it give consideration to the terms or
provisions of any agreement or undertaking between the Authority and other persons, and
2ndDraftf2/18, 94 23
the Trustee assents to and is to give consideration only to the terms and provisions of this
Resolution. Unless it is specifically provided, the Trustee has no duty to determine or
inquire into the happening or occurrence of any event or contingency or the performance
or failure of performance of the A*.aiwriiy with respect to arrangements or contracts with
others, the Trustee's sole duty hereunder being to deposit monies and to dispose of and
deliver the same in accordance with instructions nerein.
Section 8.5. OBLIGATION TO USE REASONABLE CARE AND DILIGENCE.
If, however, the Trustee be called upon by the terms of this Resolution to determine the
occurrence of any event or contingency, Trustee shall be obligated, in making such
determination, only to exercise reasonable care and diligence, and in event of error in
making such determination Trustee shall be liable only for its own willful misconduct and/or
negligence in the light of all the circumstances, taking into consideration the time and
facilities available to Trustee in the ordinary conduct of its business. In determining the
occurrence of any such event or contingency Trustee may request from the Authority or any
other person such reasonable additional evidence as Trustee in its discretion may deem
necessary to determine any fact relating to the occurrence of such event or contingency, an
in this connection may inquire and consult, among others, with the Authority at any time and
Trustee shall not be liable for any damages resulting from its delay in acting hereunder
pending its examination of the additional evidence requested by it.
Sectits'. 8.6. TRI.TCTEE RELIAIIC;t . ON AU'l HO.RTTY The Tnuree
by the Authority to rely upon the -epresertations, both actual and implied, of the Authority
and all other persons connected with this Resolution 2.,d the deposited property as to
authority to execute this Rrolution, notifications, receipts or instructions hereunder, and
relationships among persons, including persons authorized to receive delivery hereunder, and
Trustee shall not be liable to any person in any manner for such reliance.
Section 8.7. GOOD FAITH RELIANCE BY TRUSTEE. The Trustee may act upon
any written notice, request, waiver, consent, certificate, receipt, authorization, power of
attorney, or other instrument or document which Trustee in good faith believes to be
genuine and to be what it purports to be.
Section 8.8. TRUSTEE RELATIONSHIP WITH AUTHORITY AND CITY. The
Trustee or any company of which it is a subsidiary or in which it may be interested, or any
officer, stockholder or director of the Trustee or of any such company, in its or his individual
or fiduciary capacity, may acquire, hold or dispose of Bonds or coupons, or may engage in
or be interested in any financial or other transaction with the City or the Authority or any
corporation in which the City or the Authority may be interested, and the Trustee may act
as depository, trustee or agent for the City or the Authority or for any committee or body
of holders of Bonds, whether or not secured hereby, all with the same rights as though the
Trustee were not Trustee hereunder.
Section 8.9. USE OF TRUSTEE FUNDS. Nothing in this Resolution shall require
the Trustee to expend or risk its own funds or incur financial liability in the performance or
exercise of any of its rights, powers or duties if it does not have reasonable grounds to
2ndDraft/2/18/94 24
believe that the funds will be repaid or that it will be adequately indemnified as to risk and
liability.
Section 8.1O. REMOVAL ANT? RESIGNATION. (a) The Trustee and any
successor hereafter appointed may at any time resign from the trust hereby created by giving
90 days' written notice to the Authority and such resignation shall take effect upon the
appointment of a successor Trustee by the bondholders or by the Authority. Such notice
may be served personally or sent by registered mail.
(b) The Trustee at any time acting hereunder may be removed at any time by an
instrument or concurrent instruments in writing delivered to the Trustee and to the
Authority and the City or instruments or concurrent instruments in writing delivered by the
Authority and the City to the Trustee and signed by the holders a majority in amount of the
Bonds.
(c) In case the Trustee hereunder shall resign or be removed, or be dissolved, or
shall be in course of dissolution or liquidation or otherwise become incapable of acting
hereunder, or in case the Trustee shall be taken under control of any public officer or
officers or of a receiver appointed by a court, a successor may be appointed by the holders
of a majority in principal amount of the Bonds hereby secured and then outstanding, by an
instrument or concurrent instruments in writing signed by such holders, or by their attorneys
in fart duly au iiterleo; ptuvided, ne,erthclase thstt in rqg< ^f et:h varrnn^v the At.i crit--
byan instilment execu ,:d by =.f.o;u:rati of the Bn rd, and signed by its President, and
attested by its Secretary under its corpora e seal, may appoint a temporary 'I"rustee to illi
such vacancy until a successor shall be appointed by the bondholders in the manner abo:c
provided; and any such temporary Trustee so appointed by the Authority shall immediately
and without further act be superseded by the Trustee so appointed by such bondholders.
Every such temporary Trustee so appointed by the Authority shall be a trust company or
bank or bank and trust company located in a Federal Reserve City in the State of Texas, in
good standing, having a cumulative capital, surplus and undivided profits and reserves of not
less than twenty-five million dollars ($25,000,000), if there be such an institution willing,
qualified and able to accept the trust upon reasonable and customary terms.
Section 8.11. FEES. The Authority will pay or cause to be paid to the Trustee its
reasonable fees for its services as Trustee and Paying Agent/Registrar as set forth in the
Paying Agent/Registrar Agreement presented to the Board.
Section 8.12. NOTICE. Any notice, authorization, request or demand required or
permitted to be given hereunder shall be in writing and shall be deemed to have been duly
given when mailed by registered or certified mail, postage prepaid addressed as follows:
Executive Director
Nueces River Authority
P.O. Box 349
Uvalde, Texas 78801
2ndDraft2/18/94 25
City Manager
City of Corpus Christi
P.O. Box 9277
Corpus Christi, Texas 78408
Lorpus Christi National Bank
P.O. Box 301
Corpus Christi, Texas 78403
The United States Post Office registered or certified mail receipt showing delivery of the
aforesaid shall be conclusive evidence of the date and fact of delivery.
Either party may change the address to which notices are to be delivered by giving
to the other party not Tess than ten (10) days prior notice thereof.
Section 8.13. COMPLETION. Upon the taking of all the actions as described herein
by Trustee the Trustee shall have no further obligations or responsibilities to any of the
parties hereto or to any other person or persons in connection with this Resolution
ARTICLE NINE
DEFEASANCE
Section 9.1. DEFEASANCE. Any Bond shall be deemed to be paid and no longer
outstanding when payment of the principal of, redemption premium, if any, on such Bond,
plus interest thereon to the due date thereof (whether such due date be by reason of
maturity, upon redemption, or otherwise), either (a) shall have been made or caused to be
made in accordance with the terms thereof, or (b) shall have been provided by irrevocably
depositing with a Paying Agent, in trust and irrevocably set aside exclusively for such
payment (1) money sufficient to make such payment or (2) Federal Securities, as defined
hereinafter in this Article, certified by an independent public accounting firm of national
reputation to mature as to principal and interest in such amount and at such times as will
insure the availability without reinvestment, of sufficient money to make such payment, and
all necessary and proper fees, compensation, and expenses of the Paying Agents for the
Bonds pertaining to the Bond with respect to which such deposit is made shall have been
paid or the payment thereof provided for. At such time as a Bond shall be deemed to be
paid hereunder, as aforesaid, it shall no longer be secured by or entitled to the benefits of
this Resolution, except for the purposes of any such payment from such money or Federal
Securities.
Section 9.2. DEFEASANCE BY INVESTMENT IN FEDERAL SECURITIES. The
deposit under clause (b) of Section 9.1 shall be deemed a payment of a Bond as aforesaid
when proper notice of redemption of such Bond shall have been given in accordance with
this Resolution or irrevocable provisions have Ween made for the giving of such notice. Any
money so deposited with a Paying Agent/Registrar as provided in this Article may at the
2ndDraft/2/18/94 26
direction of the Authority also be invested in Federal Securities, maturing in the amounts
and times as hereinbefore set forth, and all income from all Federal Securities in the hands
of a Paying Agent/Registrar pursuant to this Article which is not required for the payment
of the DOT.?., the -cdernntinr premium, if any, and interest thereon, with respect to which
such money has been so deposited, shall be turned over to the Authority.
Section 9.3. FEDERAL SECURITIES. For the purpose of this Article, the term
"Federal Securities" shall mean direct obligations of the United States of America, including
obligations which are unconditionally guaranteed by the United States of America, and which
are noncallable and which at the time of investment are legal investments under the laws of
the State of Texas for the money proposed to be invested therein.
Section 9.4. USE OF FEDERAL SECURITIES. Notwithstanding any provision of
any other Article of this Resolution which may be contrary to the provisions of this Article,
all money or Federal Securities set aside and held in trust pursuant to the provisions of this
Article for the payment of Bonds, the redemption premium, if any, and interest thereon,
shall be applied to and used solely for the payment of the particular Bonds, the redemption
premium, if any, and interest thereon, with respect to which such money or Federal
Securities have been so set aside in trust.
Section 9.5. AMENDMENT AFTER PURCHASE OF FEDERAL SECURITIES.
Nctt.'t! ctani:.-' anwt i.;g else-rbere in this Resolution cortaitat.d, :f money or :'Cdera;
Se.:rities have ':•ce tlept-r:A:7t5. or set acide with a Paying Agent/Registrar pursua t
to this
A,;Sc,c for tete payment; of l�ot;ds and such Rosins snall not have in tart been actually paid
foil, tit, amendment to the provisions of this Article shall be made without the of
the owner of each Bond affected thereby.
ARTICLE TEN
COVENANTS REGARDING TAX -EXEMPTION
Section 10.1. COVENANTS REGARDING TAX -EXEMPTION. The Authority
covenants to refrain from any action which would adversely affect, or to take such action to
ensure, the treatment of the Bonds as obligations described in section 103 of the Code, the
interest on which is not includable in the "gross income" of the holder for purposes of
federal income taxation. In furtherance thereof, the Authority covenants as follows:
(a) to take any action to assure that no more than 10 percent of the proceeds
of the Bonds or the projects financed therewith (less amounts deposited to a reserve
fund, if any) are used for any "private business use," as defined in section 141(b)(6)
of the Code or, if more than 10 percent of the proceeds or the projects financed
therewith are so used, such amounts, whether or not received by the Authority, with
respect to such private business use, do not, under the terms of this Order or any
underlying arrangement, directly or indirectly, secure or provide for the payment of
more than 10 percent of the debt service on the Bonds, in contravention of section
141(b)(2) of the Code;
2ndDraft/2/18/94 27
(b) to take any action to assure that in the event that the "private business
use" described in subsection (a) hereof exceeds 5 percent of the proceeds of the
Bonds or the projects financed therewith (less amounts deposited into a reserve fund,
if any) then the amount in excc.b 5 perc..l: used for a "private business use"
which is "related" and not "disproportionate," within the meaning of section 141(b)(3)
of me Code, to the governmental use;
(c) to take any action to assure that no amount which is greater than the
lesser of $5,000,000, or 5 percent of the proceeds of the Bonds (less amounts
deposited into a reserve fund, if any) is directly or indirectly used to finance loans to
persons, other than state or local governmental units, in contravention of section
141(c) of the Code;
(d) to refrain from taking any action which would otherwise result in the
Bonds being treated as "private activity bonds" within the meaning of section 141(b)
of the Code;
(e) to refrain from taking any action that would result in the Bonds being
"federally guaranteed" within the meaning of section 149(b) of the Code;
(0 to refrain from using any portion of the proceeds of the Bonds, directly
or ind_lectlj, to acrn+ire of to icpinee Iamis which were ed,. tli-'rtly or in'iireatly.
to acquire investment properi (as defined in c.ec€o,1 14°(b)(2) of the Code) which
produces a materially higher ::t:id over the tern cf + e Boads, other than iuvesrment
property acquintd with
(1) proceeds of the Bonds invested for a reasonable temporary period of 3
years or less or, in the case of a refunding bond, for a period of 30 days or
less until such proceeds are needed for the purpose for which the bonds are
issued,
(2) amounts invested in a bona fide debt service fund, within the meaning
of section 1.148-1(b) of the Treasury Regulations, and
(3) amounts deposited in any reasonably required reserve or replacement
fund to the extent such amounts do not exceed 10 percent of the proceeds of
the Bonds;
(g) to otherwise restrict the use of the proceeds of the Bonds or amounts
treated as proceeds of the Bonds, as may be necessary, so that the Bonds do not
otherwise contravene the requirements of section 148 of the Code (relating to
arbitrage) and, to the extent applicable, section 149(d) of the Code (relating to
advance refundings);
(h) to pay to the United States of America at least once during each five-year
period (beginning on the date of delivery of the Bonds) an amount that is at least
equal to 90 percent of the "Excess Earnings," within the meaning of section 148(0 of
2ndDraft/2/18H4 28
the Code and to pay to the United States of America, not later than 60 days after the
Bonds have been paid in full, 100 percent of the amount then required to be paid as
a result of Excess Earnings under section 148(f) of the Code; and
(i) to maintain such records as will enable the Authority to fulfill its
responsibilities under this se zzion and section 148 of the Code and to retain such
records for at least six years following the final payment of principal and interest on
the Bonds.
For purposes of the foregoing, the Authority understands that in the case of a refunding
bond, the term proceeds includes transferred proceeds and, for purposes of (a) and (b)
above, proceeds of the refunded bonds expended prior to the date of issuance of the Bonds.
It is the understanding of the Authority that the covenants contained herein are intended
to assure compliance with the Code and any regulations or rulings promulgated by the U.S.
Department of the Treasury pursuant thereto. In the event that regulations or rulings are
hereafter promulgated which modify or expand provisions of the Code, as applicable to the
Bonds, the Authority will not be required to comply with any covenant contained herein to
the extent that such failure to comply, in the opinion of nationally -recognized bond counsel,
will not adversely affect the exemption from federal income taxation of interest on the Bonds
under section 103 of the Code. In the event that regulations or rulings are hereafter
promulgated which impose additional requirements which are applicable to the Bonds, the
Authority wrens to comply th the adeitiona' reouir.ments to the. Pxtent necessary, ' . *hp
opinion of nationally -recd ;, xi bone coup ei, to preserve the exemption from federal
income taxation of interest on the Bon'ie Unnc, section 10a o. the Cone. In furtherance of
such intention, t..: Authority hereby authorizes and directs the Director of Finance to
execute any documents, certificates or reports required by the Code and in make such
elections, on behalf of the Authority, which may be permitted by the Code as are consistent
with the purpose for the issuance of the Bonds.
In order to facilitate compliance with the above covenants (h) and (i), a 'Rebate
Fund" is hereby established by the Authority for the sole benefit of the United States of
America, and such fund shall not be subject to the claim of any other person, including
without limitation the bondholders. The Rebate Fund is established for the additional
purpose of compliance with section 148 of the Code.
ARTICLE XI
MISCELLANEOUS
Section 11.1. AMENDMENTS NOT REQUIRING NOTICE OR CONSENT.
Without any prior action by or notice to the holders of the Bonds, the Authority may, from
time to time, and at any time, amend this Resolution:
(1) to add to the covenants and undertakings of the Authority contained
in this Resolution such additional covenants and undertakings as may be authorized
or permitted by laws; or
2ndDraft/2/18,94 29
(2) to cure any ambiguity, defective or inconsistent provisions of this
Resolution and to accomplish any other purposes not inconsistent with the provisions
of this Resolution and which shall not impair the security afforded hereby.
section 11.2. U'1 HER AMENDMENT PROCEDURES. (a) The holders of Bonds
aggregating in principal amount of three-fourths of the aggiegate principal arnc;:nt of iionds
and Additional Bonds at the time outstanding (not including in any case any such bonds
which may then be held or owned by or for the account of the Authority) shall have the
right from time to time to approve an amendment of this Resolution which may be deemed
necessary or desirable by the Authority, provided, however, that without the consent of the
holders of all of the outstanding Bonds, nothing herein contained shall permit or be
construed to permit the amendment of the terms and conditions contained in this Resolution
or in the Bonds so as to:
(1) Make any change in the maturity of the outstanding Bonds or
Additional Bonds;
(2) Reduce the rate of interest borne by any of the outstanding Bonds or
Additional Bonds;
(3) Reduce the amount of the principal payable on the outstanding Bonds
or Additional Bowls;
(4) Modify the terms of payment of princ pal of or interest on the
outstanding Bonds or Additional Bnndc of any of theist, or impose any conditions
with respect to such payment;
(5) Affect the rights of the holders of less than all of the Bonds or
Additional Bonds then outstanding;
(6) Change the minimum percentage of the principal amount of Bonds
necessary for consent to such amendment.
(b) If at any time the Authority shall desire to amend the Resolution under this
Section, the Authority shall cause notice of the proposed amendment to be published in a
financial newspaper or journal published in the State of Texas, once during each calendar
week for at least four successive calendar weeks. Such notice shall briefly set forth the
nature of the proposed amendment and shall state that a copy thereof is on file at the places
of payment for inspection by all holders of Bonds and Additional Bonds. Such publication
is not required, however, if notice in writing is given to each holder of Bonds and Additional
Bonds.
(c) Whenever at any time not less than thirty days and within one year from the
date of the first publication of said notice or other service of written notice the Authority
shall receive an instrument or instruments executed by the holders of at least three-fourths
in aggregate principal amount of Bonds and Additional Bonds then outstanding, which
instrument or instruments shall refer to the proposed amendment described in said notice
2ndDraft/2/18 94 30
and which specifically consent to and approve such amendment in substantially the form of
the copy thereof on file with the places of payment, the Authority may adopt the
amendatory resolution in substantially the same form.
(d) Upon the adoption of any amendatory resolution pursuant to the provisions
hereof, the Resolution shall be deemed to be mutat-red in accordance with such amendatory
resolution, and the respective rights, duties and obligations under the Resolution of the
Authority and all the holders of outstanding Bonds and Additional Bonds shall thereafter
be determined, exercised and enforced hereunder, subject in all respects to such
amendments.
(e) Any consent given by the holder of a Bond pursuant to the provisions of this
Section shall be irrevocable for a period of six months from the date of the first publication
of the notice provided for in this Section, and shall be conclusive and binding upon all future
holders of the same Bond during such period. Such consent may be revoked at any time
after six months from the date of the first publication of such notice by the holder who gave
such consent, or by a successor in title, by filing notice thereof with the places of payment
and the Authority, but such revocation shall not be effective if the holders of three-fourths
aggregate principal amount of the Bonds and Additional Bonds outstanding prior to the
attempted revocation, consented to and approved the amendment.
(f Fnr the pt'rosr- t1:1S Scction, the font of Me hnidino nF_ Bc'zd. by
bondholder and the amount and ::umber„ of such Bonds, and the d9te of his holding same
may be piov.ided by the affidavit of the person claiming to b:, such holder, or by a certificate
executed by any i. st cnrmpaay, oank, oanxer, or any other depository, wherever situated,
showing that at the date therein mentioned such person had on deposit with such trust
company, bank, banker or other depository, the Bonds described in such certificate. The
Authority may conclusively assume that such ownership continues until written notice to the
contrary is served upon the Authority.
Section 11.3. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED
BONDS. (a) Replacement Bonds. In the event any outstanding Bond is damaged,
mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed,
executed, and delivered, a new bond of the same principal amount, maturity, and interest
rate, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement for such
Bond in the manner hereinafter provided.
(b) Application for Replacement Bonds. Application for replacement of damaged,
mutilated, lost, stolen, or destroyed Bonds shall be made by the registered owner thereof to
the Paying Agent/Registrar. In every case of loss, theft, or destruction of a Bond, the
registered owner applying for a replacement bond shall furnish to the Authority and to the
Paying Agent/Registrar such security or indemnity as may be required by them to save each
of them harmless from any loss or damage with respect thereto. Also, in every case of loss,
theft, or destruction of a Bond, the registered owner shall furnish to the Authority and to
the Paying Agent/Registrar evidence to their satisfaction of the loss, theft, or destruction of
such Bond. In every case of damage or mutilation of a Bond, the registered owner shall
surrender to the Paying Agent/Registrar for cancellation the Bond so damaged or mutilated.
2ndDraft/2/18/94 31
(c) No Default Occurred. Notwithstanding the foregoing provisions of this Section,
in the event any such Bond shall have matured, and no default has occurred which is then
continuing in the payment of the principal of, redemption premium, if any, or interest on the
Bond. the Authority may authorize the payment of the same (without surrender therccf
except in the case of a damaged or mutilated Bond) instead of issuing a replacement Bond,
provided security or indemnity is furnished as above provided in this Section.
(d) Charge for Issuing Replacement Bonds. Prior to the issuance of any replacement
bond, the Paying Agent/Registrar shall charge the registered owner of such Bond with all
legal, printing, and other expenses in connection therewith. Every replacement bond issued
pursuant to the provisions of this Section by virtue of the fact that any Bond is lost, stolen,
or destroyed shall constitute a contractual obligation of the Authority whether or not the
lost, stolen, or destroyed Bond shall be found at any time, or be enforceable by anyone, and
shall be entitled to all the benefits of this Order equally and proportionately with any and
all other Bonds duly issued under this Order.
(e) Authority for Issuing Replacement Bonds. In accordance with Section 6 of
Vernon's Ann. Tex. Civ. St. Art. 717k-6, this Section 9 of this Order shall constitute authority
for the issuance of any such replacement bond without necessity of further action by the
governing body of the Authority or any other body or person, and the duty of the
replacement of such bonds is hereby authorized and imposed upon the Paying
Attend!? and the. Paving Agent/R-gistrnr shall 4'�thc iticaic and deliver such ands
' J v
the form and manne5and w^th the effect, as provided in Section 4(a) of this Orde: fel
Bawd^ issued in conveisiou and exchange Lot other Bonds.
Section 11.4. DIRECTOR AND OFFICER LIABILITY. No recourse under or
upon any obligation, covenant or agreement contained in this Resolution, or in any Bond
hereby secured, or under any judgment obtained against the Authority, or by the
enforcement of any assessment or by any legal or equitable proceeding by virtue of any
constitution or statute or otherwise, or under any circumstances, under or independent of
this Resolution, shall be had against any director or officer, as such, past, present or future,
of the Authority, nor either directly or through the Authority, or through a receiver or
trustee in bankruptcy, or otherwise, for the payment for or to the Authority or any receiver
thereof, or for or to the holder of any Bond issued hereunder or otherwise, of any sum that
may be due and unpaid by the Authority upon any such Bond. Any and all personal liability
of every nature, whether at common law or in equity, or by statute or by constitution or
otherwise, of any such director or officer, individually or in his official capacity, to respond
by reason of an act or omission on his part or otherwise, or for any sum that may remain
due and unpaid upon the Bonds hereby secured or any of them, is hereby expressly waived
and released by the purchasers and holders of the Bonds as a condition of and consideration
for the issuance and sale of such Bonds.
Section 11.5. CUSTODY, APPROVAL, AND REGISTRATION OF BONDS;
BOND COUNSEL'S OPINION, CUSIP NUMBERS AND CONTINGENT INSURANCE
PROVISION, IF OBTAINED. The President of the Board of Directors of the Authority
is hereby authorized to have control of the Bonds initially issued and delivered hereunder
and all necessary records and proceedings pertaining to the Bonds pending their delivery and
2ndDraft/2/18/94 32
their investigation, examination, and approval by the Attorney General of the State of Texas,
and their registration by the Comptroller of Public Accounts of the State of Texas. Upon
registration of the Bonds said Comptroller of Public Accounts (or a deputy designated in
writing to act for said Cor'ptrollrr) than manuallysign t'.te Comptroller's Registration
Certificate attached to such Bonds. and the seal of said Comptroller shall be impressed, or
placed in facsimile, on such Certificate. The approving legal opinion of the Authority's Bond
Counsel and the assigned CUSIP numbers may, at the option of the Authority, be printed
on the Bonds issued and delivered under this Resolution, but neither shall have any legal
effect, and shall be solely for the convenience and information of the registered owners of
the Bonds. The appropriate schedules from Exhibit A attached hereto may be printed on
the Bonds, but errors or omissions in the printing thereof or the numbers therein shall have
no effect on the validity of such Bonds. In addition, if bond insurance is obtained, the Bonds
may bear an appropriate legend as provided by the insurer.
Section 11.6. FURTHER PROCEDURES. The President or Vice President and
Secretary of the Board of Directors and the General Manager of the Authority, and all other
officers, employees and agents of the Authority, and each of them, shall be and they are
hereby 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 Authority the Letter of
Representation with DTC regarding the Book -Entry Only System, the Paying
A nn..•t/Ft:r:ernr !gr. emen, thz Paying Agcnt/Regl
t,sar and all at; ._.., 7.:s,
whetter or not herein mentioned, as may be necessary or d:sirable in order to ea--,-; cur the
terms and provisions of thiz Resolution, the fetter of Representation, the Bonds, the sale
of the Bonds pursuant to the Land rurchase Agreement and the Official Statement.
Notwithstanding anything to the contrary contained herein, while the Bonds are subject to
DTC's Book -Entry Only System and to the extent permitted by law, the Letter of
Representation is hereby incorporated herein and its provisions shall prevail over any other
provisions of this Resolution in the event of conflict. In case any officer whose signature
shall appear on any Bond shall cease to be such officer before the delivery of such Bond,
such signature shall nevertheless be valid and sufficient for all purposes the same as if such
officer had remained in office until such delivery.
Section 11.7. PRELIMINARY OFFICIAL STATEMENT. The Preliminary Official
Statement dated -, 1994, relating to the Series 1994 Bonds and its distribution
by the Underwriters is hereby approved.
Section 11.8. DTC LETTER OF REPRESENTATION. The General Manager of
the Authority is hereby authorized and directed to enter into a Letter of Representation with
DTC with respect to the Bonds to implement the Book -Entry -Only System. The Letter of
Representation shall be in substantially the form and substance submitted to the Board at
the meeting at which this Resolution is adopted.
Section 11.9. PAYING AGENT/REGISTRAR AGREEMENT. The Paying
Agent/Registrar Agreement by and between the Authority and the Paying Agent/Registrar,
in substantially the form and substance submitted to the Board at the meeting at which this
Resolution is adopted is hereby approved and the General Manager of the Authority is
2ndDraft/2/18/94 33
hereby authorized to complete, amend, modify, and execute the Paying Agent/Registrar
Agreement.
Section /1.10 R} .SC'TSSJON (W TNrflNSLSTE. !'r' B(121 RD ACTIONS. Al!
resolutions, orders or other actior° of the Board heretofore adopted, passed or taken
inconsistent with this Resolution are hereby rescinded.
2ndDraftt2/18/94 34
PRELIMINARY OFFICIAL STATEMENT DATED FEBRUARY 22, 1994
NEW ISSUE - BOOK -ENTRY -ONLY SYSTEM
Ratings:
Moody's: " "
In the opinion of McCall, Parkhurst & Horton L.L.P., Bond Counsel, interest on the Bonds is,
except as set forth under "Tax Matters" herein, excludable from gross income for federal income
tax purposes under existing statutes, regulations, published rulings and court decisions on the
date of delivery, thereof. See "Tax Matters" for a discussion of collateral federal tax
consequences, including a description of alternative minimum tax consequences for corporations.
THE AUTHORITY WILL DESIGNATE THE BONDS AS
"QUALIFIED TAX-EXEMPT OBLIGATIONS"
FOR FINANCIAL INSTITUTIONS
$7,800,000
NUECES RIVER AUTHORITY
WATER SUPPLY REVENUE CURRENT REFUNDING BONDS,
(CITY OF CORPUS CHRISTI, TEXAS PROJECT), SERIES 1994
Dated: February 15, 1994 Due: April 1, as shown below
The "Nueces River Authority Water Supply Revenue Current Refunding Bonds (City of Corpus
Christi, Texas Project), Series 1994" (the "Bonds") are special obligations of the Nueces River
Authority (the "Authority"), a political subdivision of the State of Texas, payable as to principal
and interest solely from, and secured solely by, a pledge of and lien on, certain payments (the
"Payments Under the Contract") to be made by the City of Corpus Christi, Texas (the "City")
pursuant to the Contract between Nueces River Authority and City of Corpus Christi on
Nueces River Reclamation Project, Texas (Choke Canyon Reservoir Project), as amended (the
"Contract"), between the Authority and the City. The Bonds are also secured by a pledge of
the money in all Funds created by the Bond Resolution. Such pledged Payments Under the
Contract and money in the Funds are herein referred to as the "Pledged Security." The Bonds
are secured on a parity with respect to the Pledged Security with the Authority's currently
outstanding revenue bonds issued for the benefit of the City and any revenue bonds hereafter
issued by the Authority. The Bonds are payable for the Gross Revenues of the City's Utility
Systems and as such are prior and superior to the lien on and pledge of the Net Revenues of
the Systems securing the payment of the City's currently outstanding revenue bond
indebtedness. The Bonds do not constitute a legal or equitable pledge, charge, lien or
encumbrance upon any property of the Authority, except with respect to the Pledged Security,
and the owner of a Bond shall never have the right to demand payment of the Bonds from any
other sources or properties of the Authority, the City, or the State of Texas (see "Security for
the Bonds"). The Authority has no taxing power.
Interest on the Bonds will accrue from the dated date as shown above and will be payable on
April 1 and October 1 each year, commencing October 1, 1994, and will be calculated on the
basis of a 360 -day year of twelve 30 -day months. Interest on the Bonds is payable by check
mailed on each interest payment date to the registered owners thereof at their respective
addresses as they appear on the books of the paying agent/registrar (the "Paying
Agent/Registrar"), initially The Frost National Bank, Corpus Christi, Texas, on the "Record
Date" (see "Bond Information"). The principal of all the Bonds shall be payable, upon
009279202
presentation and surrender, at the principal corporate trust office of the Paying
Agent/Registrar. The definitive Bonds will be issued only as fully registered obligations in the
denomination of $6,000 or any integral multiple thereof.
MATURITY SCHEDULE
Amount Stated Yield/
Rate Maturity Price
$55,000 . % 1995 . %
535,000 _. % 1996 . . %
560,000 _. % 1998 . %
550,000 _.%a 1999 %
590,000 _. % 2000 —. %
630,000 . % 2001 %a
670,000 __ % 2002 _. %
660,000 _% 2003 %a
700,000 _. % 2004 —%
740,000 _. % 2005 —. %
775,000 . % 2006 . —%
815,000 _._% 2007 . %
(Accrued Interest from February 15, 1994 to be added.)
The Authority reserves the right, at its option, to redeem the Bonds, having stated maturities
on and after April 1, 2005, in whole or in part in principal &mounts of $5,000 or any integral
multiple thereof, on April 1, 2004, or any date thereafter, at the par value thereof plus accrued
interest to the date fixed for redemption. If less than all of a maturity is to be redeemed, the
Paying Agent/Registrar shall determine by lot the Bonds, or portions thereof, within such
maturity to be redeemed.
The Bonds are offered for delivery when, as and if issued and received by the Underwriter,
subject to the opinions of the Attorney General of the State of Texas, and McCall, Parkhurst
& Horton L.L.P., Dallas, Texas, Bond Counsel for the Authority, as to the validity of the
issuance of the Bonds under the Constitution and laws of the State of Texas. Certain matters
will be passed upon for the Underwriter by its counsel, Fulbright & Jaworski L.L.P., San
Antonio, Texas. Certain legal matters relating to the legality, validity and enforceability of the
Contract will be passed upon by the Authority's General Counsel and the City Attorney. It
is expected that the Bonds will be available for delivery in definitive form through the services
of The Depository Trust Company, New York, New York on or about March _, 1994.
M.E. ALLISON & CO., INC. TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as selling agent
0092792.02
-11-
For purposes of compliance with Rule 15c2-12 of the Securities Exchange Commission,
this document constitutes an official statement of the Authority and the City with
respect to the Bonds that has been deemed "final" by the Authority and the City as of
its date except for the omission of no more than the information permitted by Rule
15c2-12.
No dealer, salesman or any person has been authorized by the Authority, the City, or
the Underwriter to give any information or to make any representations, other than
the information and representations contained herein, in connection with the offering
of the Bonds, and if given or made, such information or representations must not be
relied upon as having been authorized by the Authority, the City or the Underwriter.
This Official Statement does not constitute an offer to sell or the solicitation of an offer
to buy, nor shall there be any sale of, any of the Bonds by any person in any
jurisdiction in which it is unlawful for such person to make such offer, solicitation or
sale.
Certain information set forth in this Official Statement has been furnished by the
Authority and the City and other sources which are believed to be reliable, but such
information is not guaranteed as to accuracy or completeness by, and is not to be
construed as a representation by, the Authority, the City, or the Underwriter. The
information and expressions of opinion contained herein are subject to change without
notice and neither the delivery of this Official Statement nor any sale made hereunder
shall, under any circumstances, create any implication that there has been no change
in the affairs of the Authority or the City since the date hereof.
THE BONDS ARE EXEMPT FROM REGISTRATION WITH THE SECURITIES AND
EXCHANGE COMMISSION AND CONSEQUENTLY HAVE NOT BEEN
REGISTERED THEREWITH. THE REGISTRATION, QUALIFICATION, OR
EXEMPTION OF THE BONDS IN ACCORDANCE WITH APPLICABLE
SECURITIES LAW PROVISIONS OF THE JURISDICTIONS IN WHICH THESE
SECURITIES HAVE BEEN REGISTERED, QUALIFIED, OR EXEMPTED SHOULD
NOT BE REGARDED AS A RECOMMENDATION FOR THE PURCHASE
THEREOF.
IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER
MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR
MAINTAIN THE MARKET PRICE OF SUCH BONDS AT A LEVEL ABOVE THOSE
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
008274202
TABLE OF CONTENTS
CITY ADMINISTRATION
SELECTED DATA FROM THE OFFICIAL STATEMENT wii-
ii
INTRODUCTION
-1-
PLAN OF FINANCING 2
DESCRIPTION OF THE BONDS 4
BOOK -ENTRY -ONLY SYSTEM
-7
NUECES RIVER AUTHORITY
-9
-
CHOKE CANYON PROJECT 10
AUTHORITY'S FINANCIAL STATEMENTS -11-
ESTIMATED DEBT SERVICE REQUIREMENTS -12-
SUMMARY OF CERTAIN CONTRACTS -13-
CONTRACT AMONG UNITED STATES OF AMERICA, CITY OF CORPUS CHRISTI
AND NUECES RIVER AUTHORITY (THE FEDERAL CONTRACT) -15-
SUMMARY OF CERTAIN PROVISIONS OF THE BOND RESOLUTION 16-
ADDITIONAL BONDS - 18
PLEDGE AND FUNDS -19-
BOND PROCEEDS AND THE CONSTRUCTION FUND -21-
CERTAIN GENERAL COVENANTS
-22-
AMENDMENT OF RESOLUTION 25 -
SYSTEMS INDEBTEDNESS
-27-
1994-98 CAPITAL IMPROVEMENTS PROGRAM -28-
SYSTEMS FINANCIAL INFORMATION -28-
SYSTEM STATISTICS 32-
THE COMBINED SYSTEM - 38
SYSTEM RATES
SYSTEM CAPITAL IMPROVEMENT PLAN -5
LEGAL MATTERS -511-
-
LITIGATION -52-
LITIGATION AND REGULATION RELATING TO THE CITY -52
-53-
TAX MATTERS
REGISTRATION AND QUALIFICATION OF BONDS FOR SALE -58-
THE BONDS AS LEGAL INVESTMENTS IN TEXAS -58
RATINGS -58-
GENERAL INFORMATION -59-
UNDERWRITING -59-
OTHER MATTERS -59-
CERTIFICATION OF THE OFFICIAL STATEMENT -60-
USE OF INFORMATION IN OFFICIAL STATEMENT -60-
FINANCIAL ADVISOR -60-
MISCELLANEOUS -60-
-61-
CONTRACT BETWEEN CORPUS CHRISTI AND NUECES RIVER AUTHORITY .... Appendix A
CERTAIN AUDITED FINANCIAL STATEMENT Appendix B
CITY OF CORPUS CHRISTI DEMOGRAPHIC AND ECONOMIC DATA Appendix C
FORM OF OPINION OF BOND COUNSEL Appendix D
0092742.02
-iv-
0092742.02
-r
City of Corpus Christi, Texas
1201 Leopard
Corpus Christi, Texas 78401
(512) 880-3200
CITY ADMINISTRATION
ELECTED OFFICIALS
Mayor
Mary Rhodes
Council Members
Betty Jean Longoria, District 1
Cezar Galindo, District 2
David Noyola, District 3
Dr. David McNichols, District 4
Melody Cooper, District 5
Edward A. Martin, At Large
Clif Moss, At Large
Dr. Jack Best, At Large
CERTAIN APPOINTED OFFICIALS
Name Position
Juan Garza
Bill Hennings
Vacant
W. Thomas Utter
Jorge G. Garza, CPA
Rosie G. Vela, CPA
James Bray
Armando Chapa
Bond Counsel
Paying Agent
Financial Advisors
City Manager
Deputy City Manager
Group Manager, Public Works and Utilities
Group Manager, Development Services
Group Manager, Administrative Services
Director of Finance
City Attorney
City Secretary
CONSULTANTS AND ADVISORS
McCall, Parkhurst & Horton L.L.P, Dallas, Texas
The Frost National Bank
Corpus Christi, Texas
M. E. Allison & Co., Inc., San Antonio, Texas
-v-
SELECTED DATA FROM THE OFFICIAL STATEMENT
The selected data on this page is subject in all respects to the more complete
information and definitions contained or incorporated in this Official Statement. The
offering of the Bonds to potential investors is made only by means of this entire Official
Statement. No person is authorized to detach this data page from this Official
Statement or to otherwise use it without the entire Official Statement.
This data page was prepared to present the purchasers of the Bonds information
concerning the Bonds, the revenues pledged to payment of the Bonds, the description
of the revenue base and other pertinent data, all as more fully described herein.
The Issuer... The Nueces River Authority (the "Authority") is a conservation and
reclamation district, a body politic and corporate and a
governmental agency of the State of Texas, created in 1935 and
existing under the Texas Constitution and laws of the State of
Texas including, particularly, Article XVI, Section 59, of the Texas
Constitution and Texas Revised Civil Statutes Annotated Article
8280-115, as amended. The Authority has the power and the
responsibility to develop and conserve the water resources of the
Nueces River Basin, consisting of 22 counties which lie wholly or
partially within the basin, a total of approximately 16,000 square
miles. The Authority is governed by a board of twenty-one
directors appointed by the Governor of the State of Texas with the
advice and consent of the Texas Senate. Members serve for a term
of six years and until a successor is appointed and qualified.
The City... The City of Corpus Christi, Texas (the "City") is a political
subdivision located in Nueces County operating as a home -rule city
under the laws of the State of Texas and a charter approved by the
voters in January, 19 The City operates under the
Council/Manager form of government. The Council formulates
operating policies for the City while the City Manager is the Chief
Administrative Officer.
The Bonds...
Security for
the Bonds...
0092742.02
The Bonds are being issued in the principal amount of $7,800,000
pursuant to the authority set forth in Texas Revised Civil Statutes
Annotated Article 717k, as amended, and a resolution to be adopted
by the Board of Directors of the Authority. (See "Description of the
Bonds").
The Bonds constitute special obligations of the Authority payable
solely from certain payments (the "Payments Under the Contract")
to be made by the City of Corpus Christi, Texas pursuant to the
Contract between the Nueces River Authority and City of Corpus
-vi-
Christi on Nueces River Reclamation Project, Texas (Choke Canyon
Reservoir Project), as amended (the "Contract"), between the
Authority and the City. The Bonds are also secured by a pledge of
the money in all Funds created by the Bond Resolution. Such
pledged payments under the Contract and money in the funds are
herein referred to as the "Pledged Security." (See "Security For The
Bonds").
Optional
Redemption... The Authority reserves the right, at its option, to redeem the
Bonds, having stated maturities on and after April 1, 2005, in
whole or in part in principal amounts of $5,000 or any integral
multiple thereof, on April 1, 2004, or any date thereafter, at the par
value thereof plus accrued interest to the date fixed for redemption.
(See "Description of The Bonds - Optional Redemption".)
Tax Exemption... In the opinion of Bond Counsel, the interest will be excludable from
gross income for federal income tax purposes under existing law,
subject to matters described under "Tax Matters" herein, including
the alternative minimum tax on corporations.
Qualified
Tax -Exempt
Obligations... The Authority will designate the Bonds as "Qualified Tax -Exempt
Obligations" for financial institutions. (See "Tax Matters - Qualified
Tax -Exempt Obligations".)
Future Bond
Sales... Except as described in this Official Statement, neither the
Authority nor the City anticipate the issuance of additional debt
during the next six months.
Use of Bond
Delivery...
Payment
Record...
0092742.02
7-
Proceeds from the sale of the Bonds will be used to advance refund
for savings certain maturities of the currently outstanding Series
1979 Bonds and to pay the costs of issuance of the Bonds. (See
"Plan of Financing --Purpose").
When issued, anticipated on or about March , 1994.
Neither the Authority nor the City has ever defaulted on the
payment of their bonded indebtedness.
-vii-
[This page intentionally left blank]
0092742.02
OFFICIAL STATEMENT
$7,800,000
NUECES RIVER AUTHORITY
WATER SUPPLY REVENUE CURRENT REFUNDING BONDS,
(City of Corpus Christi, Texas Project)
SERIES 1994
INTRODUCTION
The purpose of this Official Statement, which includes the cover page and appendices
hereto, is to set forth information concerning the Nueces River Authority (the
"Authority"), the City of Corpus Christi, Texas (the "City"), and the Authority's Water
Supply Revenue Current Refunding Bonds (City of Corpus Christi, Texas Project),
Series 1994 (the "Bonds").
The Bonds are being issued pursuant to a resolution (the "Resolution") to be adopted
by the Board of Directors of the Authority (the "Board of Directors") pursuant to the
authority set forth in Texas Revised Civil Statutes Annotated Article 717k, as amended.
Capitalized terms not defined elsewhere and used herein have the meanings assigned
to such terms in the Resolution which are set forth herein and incorporated by
reference for all purposes.
There follows in this Official Statement brief descriptions of the Bonds, the Authority,
the City, the Contract between Nueces River Authority and City of Corpus Christi on
Nueces River Reclamation Project, Texas (Choke Canyon Reservoir Project), as
amended (the "Contract"), the Resolution and the Authority's Utility Systems (the
"Systems"). All descriptions of documents contained herein are only summaries and are
qualified in their entirety by reference to each such document. Copies of such
documents may be obtained from the Authority's Financial Advisor, First Southwest
Company, 1850 One Riverwalk Place, San Antonio, Texas 78205, upon payment of
reasonable copying, handling, and delivery charges.
This Official Statement speaks only as to its date, and the information contained herein
is subject to change. Copies of the Final Official Statement and Escrow Agreement will
be deposited with the Municipal Securities Rulemaking Board, 1818 N. Street,
Northwest, Suite 800, Washington, D.C. 20036-2491.
0092742.02
-I-
PLAN OF FINANCING
Purpose
The Authority and the City initially entered into the Contract as of May 27, 1976
pursuant to which the Authority issued $13,000,000 of obligations designated as
"Nueces River Authority Water Supply Revenue Bonds, Series 1979 (City of Corpus
Christi, Texas Project)" (the "Series 1979 Bonds") for the purpose of constructing the
Choke Canyon Project. See "Choke Canyon Project" herein. The Bonds are being
issued as additional parity bonds with the Series 1979 Bonds which will remain
outstanding after the refunding is accomplished by the Bonds. As used herein, the term
"Bonds" shall mean collectively (after the issuance of the Bonds) the outstanding Series
1979 Bonds and the Bonds.
The Bonds are being issued to refund, in advance of their maturity, those Series 1979
Bonds which mature on April 1 in the years 1996 through 2007, which are presently
outstanding in the principal amount of $7,450,000. The bonds being refunded in
advance of their maturity are collectively known as the "Refunded Bonds." The
refunding of the Refunded Bonds produces a present value debt service savings.
Refunded Bonds
The Resolution will provide that, net of financing expenses, underwriting discount and
accrued interest, the proceeds from the sale of the Bonds win be held pursuant to the
terms of an Escrow Agreement (die "Escrow Agent") by and between the Authority and
the Corpus Christi National Bank, Corpus Christi, Texas (the "Escrow Agent"), in an
escrow account (the "Escrow Fund") and used to purchase direct obligations of the
United States of America (the "Federal Securities").
In accordance with the terms of the Escrow Agreement, the Escrow Fund is irrevocably
pledged to the payment of the principal of and interest on the Refunded Bonds.
By the deposit of the Federal Securities with the Escrow Agent pursuant to the Escrow
Agreement, the Authority will have effected the defeasance of the Refunded Bonds.
The Refunded Bonds will cease to be payable from the Payments Under the Contract
(hereinafter defined) but will be payable solely from the principal of and interest on the
Federal Securities and cash held for such purpose by the Escrow Agent, and the
Refunded Bonds will not be included in or considered to be outstanding obligations of
the Authority for any purpose.
Simultaneously with the issuance of the Bonds, the Authority will give irrevocable
instructions to provide notice to the owners of the Refunded Bonds that the Refunded
Bonds will be redeemed prior to stated maturity on the first optional redemption date,
on which date money will be made available to redeem the Refunded Bonds from money
held under the Escrow Agreement.
0092792.02
-2-
Sources and Uses of Funds
The proceeds from the sale of the Bonds, together with Funds provided by the
Authority, will be applied approximately as follows:
Sources of Funds:
Principal Amount of the Bonds $
Less: Original Issue Discount
Accrued Interest
Authority Contribution
Total Available Funds
Uses of Funds:
Deposit to the Escrow Fund
Costs of Issuance
Underwriter's Discount
Bond Insurance
Deposit to Interest and Sinking Fund
Total Application of Funds
[The remainder of this page intentionally left blank]
0092742.02
-3-
r
DESCRIPTION OF THE BONDS
General
The Bonds are dated February 15, 1994. Interest on the Bonds will be calculated on
the basis of a 360 -day year composed of twelve 30 -day months, will accrue from
February 15, 1994, and is payable semiannually on April 1 and October 1 of each year
commencing October 1, 1994. Principal is payable upon presentation and surrender at
the principal corporate trust office of the Paying Agent/Registrar (hereinafter defined).
The Bonds are stated to mature on April 1 in the years and in the principal amounts
set forth on the cover page hereof.
Interest on the Bonds is payable by check mailed on or before each Interest Payment
Date by the Paying Agent/Registrar to the registered owner at the last known address
as it appears on the Paying Agent/Registrar's books on the record date (the "Record
Date") which, for the interest payable on any Interest Payment Date, is the fifteenth
day of the month next preceding such Interest Payment Date. The Bonds are issued
only as fully registered obligations in the denomination of $5,000 or any integral
multiple thereof.
If interest on any bond is not paid on any Interest Payment Date and continues unpaid
for thirty 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, when funds to
make such interest payment are received from or on behalf of the Authority. Such
Special Record Date shall be fifteen 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 mad, first class, postage prepaid, not later than five days prior
to the Special Record Date, to each Owner of an affected bond.
If the date for the payment of the principal of or interest on the Bonds shall not be a
"Business Day," i.e., a Saturday, Sunday, a legal holiday or a day on which the Paying
Agent/Registrar is authorized by law or executive order to remain closed, then the date
for such payment shall be the next succeeding Business Day, and payment on such date
shall have the same force and effect as if made on the original date payment was due.
Security
The principal of and interest on the Bonds shall be paid from and secured by a first lien
on and pledge of the Payments Under the Contract and the holders of the Bonds shall
never have the right to demand payment out of any funds of the Authority. The City
is unconditionally required to pay the Trustee for the account of the Authority amounts
sufficient to pay the principal of and interest on the Bonds and all other payments
required of the City by the Resolution regardless of whether or not the Authority
actually provides such water supply or whether or not the City actually receives and
uses such water. (See Summary of Certain Contracts). Holders of the Bonds are
entitled to rely on this regardless of any other contracts or agreements between the
0092742.02
-4-
City and the Authority or any other party. The payments by the City to the Trustee
will be made by the City solely from the Gross Revenues of the City's Systems as an
maintenance and operating expense of such Systems. Accordingly, the payment of the
Debt Service on the Bonds is prior and superior to the lien on and pledge of the Net
Revenues of the Systems securing the payment of the City's currently outstanding
revenue bond indebtedness. The Bonds will be special revenue obligations of the
Authority payable solely from payments received from the City, and the Authority shall
never have the right to demand payment of the amounts due from the City from funds
raised or to be raised from taxation by the City.
Reserve Fund
From the proceeds of the Bonds, if any, and from the proceeds of any Additional Bonds,
there shall be deposited into the Reserve Fund an amount equal to the maximum
amount required to pay the interest on and the principal of all outstanding Bonds as
such interest becomes due and the principal thereof matures in any future Fiscal Year.
Should the amount on deposit in said Fund ever be less than required, the Authority
shall replace any deficiency therein in not more than ten (10) equal installments by
making transfers in the necessary amounts into said Fund on or before each March
25th and September 25th of the Fiscal Year following the Fiscal Year in which the
deficiency occurred. Money in the Reserve Fund shall be used to pay the last of the
Bonds outstanding.
Initial and Successor Paying Agent/Registrar
In the Resolution, the Authority has appointed the Corpus Christi National Bank,
Corpus Christi, Texas, to be the initial paying agent/registrar (the "Paying
Agent/Registrar") for the Bonds.
Provision is made in the Resolution for replacement of the Paying Agent/Registrar. If
the Paying Agent/Registrar is replaced by the Authority, the new Paying
Agent/Registrar shall accept the previous Paying Agent/Registrar's records and act in
the same capacity as the previous Paying Agent/Registrar. Any Paying Agent/Registrar
selected by the Authority shall be a legally qualified bank, trust company, financial
institution or other agency which may act as Paying Agent/Registrar. Successor Paying
Agent/Registrars, if any, shall be determined by the Authority.
Registration, Transfer and Exchange of the Bonds
The Bonds may be transferred, registered and assigned only on the regis&Mon books
of the Paying Agent/Registrar, and such registration and transfer shall be without
expense or service charge to the owner, except for any tax or other governmental
charges required to be paid with respect to such registration and transfer. A bond may
be assigned by the execution of an assignment form on the Bonds or by other
instrument of transfer and assignment acceptable to the Paying Agent/Registrar. A
Bond or Bonds will be delivered by the Paying Agent/Registrar in lieu of the bond being
0092792.02
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transferred or exchanged at the principal corporate trust office of the Paying
Agent/Registrar. To the extent possible, new Bonds issued in an exchange or transfer
of the Bonds will be delivered to the registered owner or assignee of the owner in not
more than three business days after the receipt of the Bonds to be canceled in the
exchange or transfer and the written instrument of transfer or request for exchange
duly executed by the owner or his duly authorized agent, in form satisfactory to the
Paying Agent/Registrar. New Bonds registered and delivered in an exchange or
transfer shall be in denominations of $5,000 or any integral multiple thereof for any
one maturity, shall specify the same maturity date and be for a like aggregate principal
amount as the Bond or Bonds surrendered for exchange or transfer.
Replacement Bonds
In case any Bond shall be mutilated, lost or stolen, the Paying Agent/Registrar may
authenticate and deliver a replacement bond of like maturity date, interest rate and
principal amount and bearing a number not contemporaneously outstanding, in
exchange and substitution for such mutilated Bond, or in lieu of and in substitution for
such destroyed, lost or stolen Bond, only upon (i) the filing by the Owner thereof with
the Authority and the Paying Agent/Registrar of satisfactory evidence of the
destruction, loss or diet of such Bond and (ii) the furnishing of indemnification in an
amount satisfactory to the Authority and the Paying Agent/Registrar to hold them
harmless. AH expenses and charges associated with such indemnity and with the
preparation, execution and delivery of a replacement Bond (including any tax or other
governmental charge imposed) shall be borne by the Owner of the mutilated, lost or
stolen Bond.
Optional Redemption
The Authority reserves the right, at its option, to redeem the Bonds maturing in the
years 2005 through 2007 in whole or in part in principal amounts of $5,000 or any
integral multiple thereof, on April 1, 2004, or any date thereafter, at the par value
thereof plus accrued interest to the date fixed for redemption. If less then all of the
Bonds are to be redeemed, the Authority shall determine the maturity or maturities to
be redeemed, and if less than all Bonds of a particular maturity are to be redeemed, the
Bonds within such maturity shall be selected by the Paying Agent/Registrar at random
and by lot. If a Bond (or any portion of the principal sum thereof) shall have been
called for redemption and notice of such redemption shall have been given, such Bond
(or the principal amount thereof to be redeemed) shall become due and payable on such
redemption date and interest thereon sham cease to accrue from and after the
redemption date provided funds for the payment of the redemption price and accrued
interest thereon are held by the Paying Agent/Registrar on the redemption date.
Notice of redemption shall be given by the Paying Agent/Registrar at least thirty days
prior to the date fixed for redemption by sending written notice by first class mail to
the Owner of each Bond to be redeemed at the address shown on the books of the
Paying Agent/Registrar. When the Bonds have been catted for redemption and due
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provision has been made to redeem the Bonds, then they shall no longer be regarded
as outstanding except for the purpose of receiving payment from the funds so provided
for redemption, and no additional interest shall accrue on the Bonds after the
redemption date.
Remedies in the Event of Default
The Resolution provides that in the event of default in the payment of the Bonds, the
Owners of the Bonds shall be entitled to a writ of mandamus compelling the Authority
and its officers to observe and perform the covenants and obligations of the Authority
under the Resolution, but provides no other security for the payment of the Bonds,
provides no express remedies, other than civil suit or mandamus, in the event of
default, makes no provision for acceleration of maturity of the Bonds in the event of
default, and does not provide for a trustee to protect the lights of the bondholders.
Although an Owner could presumably obtain a judgment against the Authority in the
event there should be a default in the payment of principal or interest on the Bonds,
such judgment could not be satisfied by execution against any property of the Authority
other than the revenues pledged to the payment of the Bonds. An Owner could, in the
event of default, seek relief through a mandamus, but such remedy may have to be
enforced on a periodic basis. The enforcement of a claim for payment of principal of
or interest on the Bonds would be subject to the applicable provisions of the federal
bankruptcy laws and to any other similar laws affecting the rights of creditors of
political subdivisions generally.
BOOK -ENTRY -ONLY SYSTEM
The following information has been provided by DTC for use in disclosure
documents:
The Depository Trust Company ("DTC"), New York, New York, will act as
securities depository for the Bonds. The Bonds will be issued as fully -registered
securities registered in the name of Cede & Co. (DTC's partnership nominee). One
fully -registered certificate will be issued for each maturity of the Bonds in the aggregate
principal amount of such maturity or maturity amount, and will be deposited with DTC.
DTC is a limited -purpose trust company organized under the New York Banking
Law, a 'banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency" registered pursuant
to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds
securities that its participants ("Direct Participants") deposit with DTC. DTC also
facilitates the settlement among Direct Participants of securities transactions, such as
transfers and pledges, in deposited securities through electronic computerized
book -entry changes in Direct Participants' accounts, thereby eliminating the need for
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physical movement of securities certificates. Direct Participants include securities
brokers and dealers, banks, trust companies, clearing corporations, and certain other
organizations. DTC is owned by a number of its Direct Participants and by the New
York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to the DTC system is also available to
others such as securities brokers and dealers, banks, and trust companies that clear
through or maintain a custodial relationship with a Direct Participant, either directly
or indirectly ("Indirect Participants"). The Rules applicable to DTC and its participants
are on file with the Securities and Exchange Commission.
Purchases of Bonds under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Bonds on DTC's records. The
ownership interest of each actual purchaser of the Bonds ("Beneficial Owner") is in turn
to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will
not receive written confirmation from DTC of their purchase, but Beneficial Owners are
expected to receive written confirmations providing details of the transaction, as well
as periodic statements of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction. Transfers of ownership
interest in the Bonds are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in the Bonds, except in the event that
use of the book -entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants
with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The
deposit of Bonds with DTC and their registration in the name of Cede & Co. effect no
change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners
of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose
accounts such Bonds are credited, which may or may not be the Beneficial Owners.
The Direct and Indirect Participants will remain responsible for keeping account of
their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants,
by Direct Participants to Indirect Participants, and by Direct Participants and Indirect
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from time to
time.
Redemption notices shall be sent to Cede & Co. If less than all of the Bonds
within an issue are being redeemed, DTC's practice is to determine by lot the amount
of the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the Bonds.
Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
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voting rights to those Direct Participants to whose accounts the Bonds are credited on
the record date (identified in a listing attached to the Omnibus Proxy).
Principal and interest payments on the Bonds will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on payable date in accordance with
their respective holdings shown on DTC's records unless DTC has reason to believe
that it will not receive payment on payable date. Payments by Direct or Indirect
Participants to Beneficial Owners will be governed by standing instructions and
customary practices, as is the case with securities held for the accounts of customers
in bearer form or registered in "street name," and will be the responsibility of such
Direct or Indirect Participant and not of DTC, the Paying Agent/Registrar or the City,
subject to any statutory or regulatory requirements as may be in effect from time to
time. Payment of principal and interest to DTC is the responsibility of the City,
disbursement of such payments to Direct Participants shall be the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners shall be the
responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with respect
to the Bonds at any time by giving reasonable notice to the City. Under such
circumstances, in the event that a successor securities depository is not obtained, Bonds
are required to be printed and delivered.
The City may decide to discontinue use of the system of book -entry transfers
through DTC (or a successor securities depository). In that event, Bonds will be
printed and delivered.
Information concerning DTC and the Book -Entry -Only System has been obtained
from DTC and is not guaranteed as to accuracy or completeness by, and is not to be
construed as a representation by the City or the Underwriters.
Use of Certain Terms in Other Sections of this Official Statement. In reading
this Official Statement it should be understood that while the Bonds are in the Book -
Entry -Only System, references in other sections of this Official Statement to registered
owners should be read to include the person for which the Direct or Indirect
Participant acquires an interest in the Bonds, but (i) all rights of ownership must be
exercised through DTC and the Book -Entry -Only System, and (ii) except as described
above, notices that are to be given to registered owners under the Order will be given
only to DTC.
NUECES RIVER AUTHORITY
The Authority is a conservation and reclamation district, a body politic and corporate
and a governmental agency of the State of Texas, created in 1935 and existing under
the Texas Constitution and laws of the State of Texas including, particularly,
Article XVI, Section 59, of the Texas Constitution and the Nueces River Authority Act
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(formerly complied as Article 8280-115, Texas Revised Civil Statutes, as amended). The
Authority is governed by a board of twenty-one directors appointed by the Governor of
the State of Texas. Each director serves a six-year term and until a successor is
appointed and qualified. The members' terms are staggered, with one-third of the
directors taking office on February 1st of each odd -numbered year. The present
directors, titles, and terms are listed below:
Name
Joseph E. Gardner, Jr., CPA
Robert Wagner
Dudley Q. Braly, D.D.S.
Bruce T. Foster
George A. Finley, III
Mary B. Autry
Madge Elizabeth Belcher
Margaret Bowman
Cleo Bustamante, Jr.
Lucinda J. Garcia
Susan C. Griffith
Robert D. Johanson
Ted Jones
Bob Mullen
Mary Melissa Ramos
Alvaro Saenz, CPA
Celina Solis
Patricia H. Sugarek
Paula S. Waddle
Janna Whatley Williams
Alfredo Zamora, Jr.
Con Mims
Position
President
First Vice President
Second Vice President
Secretary -Treasurer
Executive Committee
Member -at -Large
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Executive Director
Residence
Corpus Christi, Texas
Crystal City, Texas
Beeville, Texas
Hondo, Texas
Corpus Christi, Texas
Pipe Creek, Texas
Brackettville, Texas
Spofford, Texas
Carrizo Springs, Texas
Alice, Texas
Uvalde, Texas
Three Rivers, Texas
Ingleside, Texas
Alice, Texas
Floresville, Texas
Corpus Christi, Texas
San Diego, Texas
Skidmore, Texas
Corpus Christi, Texas
Odem, Texas
Cotulla, Texas
Uvalde, Texas
The Authority was established to develop, conserve and protect the water resources
within its service area, to aid in the prevention of damage to persons or property by the
and their tributaries, to maintain a water
quality program to protect such from serious degradation, and to
aid in the prevent of flooding within Counties.
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CHOKE CANYON PROJECT
[to be added]
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0092742.02
AUTHORITY'S FINANCIAL STATEMENTS
[to be added]
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ESTIMATED DEBT SERVICE REQUIREMENTS
The Bonds
Year
Ending Outstanding Grand Total
7-31 Debt prvice Principal Interest Total Debt Service
1994 $1,011,075 $0 $0 $233,000 $1,010,788
1995 985,075 55,000 367,093 422,093 940,593
1996 1,009,075 535,000 337,315 872,315 964,815
1997 979,825 520,000 319,660 839,660 932,160
1998 1,000,575 560,000 300,940 860,940 953,440
1999 968,075 550,000 279,660 829,660 922,160
2000 985,575 590,000 257,660 847,660 940,160
2001 1,000,650 630,000 232,880 862,880 955,380
2002 1,014,650 670,000 205,475 875,476 967,975
2003 975,000 660,000 175,660 835,660 928,160
2004 984,700 700,000 145,630 845,630 938,130
2005 991,300 740,000 113,080 853,080 945,580
2006 994,800 775,000 77,930 852,930 945,430
2007 995,200 815,000 40,343 855,343 947,843
2008 992,500 0 0 0 992,500
2009 997,500 0 0 0 997,500
Total $4,396,287 $7,800,000 $2,853,325 $10,886,325 $15,282,613
Excludes the Refunded Bonds.
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SUMMARY OF CERTAIN CONTRACTS
NUECES RIVER AUTHORITY AND CITY OF CORPUS CHRISTI. On May 27, 1976,
the Authority and the City entered into a contract, which among other things, provided
that the Authority and the City (Local Sponsors) would enter into a contract with the
United States of America acting through the Bureau of Reclamation to construct the
Project. The contract with the Bureau (The Federal Contract) was executed on June
30, 1976 and, as supplemented, among other things, provides that the City is obligated
to furnish part of the funds required for advance payments for construction of the
Municipal and Industrial Water Supply portion of the Project, and the Authority will
issue its Revenue Bonds to provide the additional funds for the balance of the required
advance payments. The City is obligated to pay the Trustee for the account of the
Authority amounts sufficient to pay the principal of and interest on the Bonds, and all
other payments required by the Bond Resolution. Payments by the City to the Trustee
are to be made regardless of whether or not the Authority actually provides such water,
or whether or not the City actually uses and receives such water. Holders of the Bonds
are entitled to rely on this regardless of any other contracts or agreements by the
Authority and the City, or any other parties. The payments by the City to the Trustee
shall be made by the City from the revenues of the City's Waterworks System as an
Operating Expense of such System. Parties to the contract agree that as between
themselves water permits related to the Project, including the right to impound water
in the Project's reservoir and the uses therefrom for any purpose, shall be owned in
perpetuity by the City and the Authority as tenants in common, with the City owning
and holding an undivided 80% interest therein and the Authority owning and holding
an undivided 20%.
For services rendered and to be rendered by the Authority during the preoperating
phase, the City will pay the Authority the following amounts: 1976 $25,000, 1977
$25,000, 1978 $35,000, 1979 $35,000, 1980 $40,000, increasing $5,000 per year until
the end of the preoperating period. Amounts in excess of $40,000 per annum will only
be due if they are specifically requested by the Authority's Board of Directors and if the
Board certifies that the amount in excess of $40,000 is necessary for operating
expenditures of the Authority, but such total payment shall not exceed $100,000.
1. SUPPORTING SERVICES
(a) The contract recognizes that the Authority has heretofore rendered special
services and will continue to do so during the life of the Project in water resource and
water quality planning for the entire Nueces River Basin, and also in assisting in
financing the Project, all of which are of direct benefit to the City, its inhabitants and
water customers.
(b) In consideration for such services and for the Authority's 20% undivided
interest in the Project water, the City agrees to pay the Authority during the operating
phase the greater of the following:
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L.,
(1) The sum of $100,000 per calendar year without any escalation for
cost of living or otherwise, or;
(2) $1.00 per million gallons of water for all raw water sold or used
each calendar year for municipal and industrial purposes from the
Project and Lake Corpus Christi including raw water used by the
City but excluding any water released for the bays and estuaries
and any other water released to the stream but not sold; the rate
of $1.00 per million gallons of water shall be adjusted each calendar
year by an amount equal in percentage to the percentage rise in the
U. S. Consumer Price Index (or the cost -of -living index which in
the future may replace or supersede the U. S. Consumer Price
Index) in the calendar year in question, with the Consumer Price
Index for 1976 being the Index on which said adjustments shall be
based. The Authority may use the income from such payments for
any lawful purpose as the Authority may determine, including
without limitation the general operating and administrative
expenses of the Authority.
2. OPERATION OF PROJECT
The City shall be responsible for the care, operation, and maintenance of the
Project and any additional facilities unless responsibility therefor is transferred to the
Authority by amendment to this Contract. The care, operation, and maintenance of the
Project and additional facilities shall be carried out in compliance with the applicable
requirements of the United States, the Commission, and other governmental agencies
having jurisdiction, and in compliance with the requirements of the Federal Contract
and this Contract.
The timing and rate of diverting, releasing or taking Project Water for any
purpose shall be controlled and directed by the City. (The City operates and maintains
the Wesley Seale Dam.)
3. WATER SALES
For the life of the Project, the City shall have the right to dispose of all of the
water produced by the Project whether operated as an individual unit or in system with
Lake Corpus Christi. All water sales shall be contracted by the City; provided,
however, if future circumstances warrant, the parties may, by separate mutual
agreement, establish conditions and procedures under which the Authority may contract
for the sale of water.
4. RATES
The City covenants it will fix, charge and collect rates for sale of water in such
amounts as will produce revenues sufficient to provide (1) for making all payments
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required to be made by the City under the contract and (2) for making payment of
other costs of operating and maintaining the waterworks system, and (3) for making
payment of principal and interest on all bonds heretofore or hereafter issued by the
City and payable from the net revenues of such system.
CONTRACT AMONG UNITED STATES OF AMERICA,
CITY OF CORPUS CHRISTI
AND NUECES RIVER AUTHORITY (THE FEDERAL CONTRACT)
The Reclamation Development Act of 1974 (Public Law 93-493, Sections 1001-1005),
88 Stat. 1486, 1496-1497 (1974), authorized construction, operation and maintenance
of Nueces River Project, also known as Choke Canyon Project.
Construction of the Project will be financed jointly between United States, the City of
Corpus Christi, and Nueces River Authority. The City of Corpus Christi and Nueces
River Authority are the Local Sponsors.
Advances for part of the reimbursable costs are payable to United States during the
construction period. The City of Corpus Christi has heretofore paid $6,737,000 and will
pay $4,542,517 more from funds on hand. Under the contract between the Authority
and the City of Corpus Christi, the Authority will issue its revenue bonds (The Bonds)
to provide funds for the payment of the remainder of such advance costs: The City
agrees to pay the remaining reimbursable project construction costs, and the principal
of and interest on the Authority's bonds.
The payments due under provisions of this contract shall be secured by a pledge of:
(1) The revenues of the City's waterworks system remaining after paying all
expenses of 0 & M of said system, including payments made to the Authority by the
City under terms of agreement between Contractors executed May 27, 1976, as
amended, all debt service, reserve, and other requirements in connection with the City's
Waterworks System's revenue bonds now or hereafter outstanding; however, the City
shall not be required to raise funds through taxation to meet its obligations under this
contract; and
(2) The net revenues, if any, from the sale of Project water by the parties
hereto outside the City's waterworks system.
The payment of all charges becoming due hereunder to the United States is a condition
precedent to receiving benefits under this contract. No water will be made available
through Project facilities during any period in which arrearages exist in the advance
payment of any 0 & M charges due the United States or payments are in arrears for
more than 12 months on any construction charges due the United States.
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The remaining reimbursable costs are approximately 65.30% of total Project costs
(excluding $657,000 for Archeology), allocated as follows: Municipal and Industrial
Water Supply Allocation 69.195%, Recreation Allocation 27.553%, and Fish and Wildlife
Allocation 3.252%.
Reimbursable costs for the Recreation allocation and the Fish & Wildlife allocation are
to be made in fifty annual payments commencing on the first year after the year in
which such Project works are, as announced by the Contracting Officer, sufficiently
completed to permit use of the Project facilities, and water is available, if such notice
is given prior to August 1st; otherwise to commence the second year after such notice
is given. Repayment of the Recreation allocation and the Fish & Wildlife allocation
may be derived entirely from gross revenues received from entrance and user fees or
charges collected for the use of such Recreation and Fish & Wildlife facilities of the
Project. As an alternative to making payments from entrance and user fees, the Local
Sponsors may apply water revenues or any other funds available to meet the scheduled
payments. Reimbursable costs for the Municipal and Industrial water supply allocation
shall be paid in forty annual installments, the first of which shall become due on
August 1st of the year after the year in which the Project works are, as announced by
the Contracting Officer, sufficiently complete to permit the use of the Project facilities
and water is available, if such notice is given prior to August 1st; otherwise to
commence in the second year after such notice is given.
SUMMARY OF
CERTAIN PROVISIONS OF THE BOND RESOLUTION
Definitions
"Additional Bonds" - Bonds issued on a parity with the Bonds pursuant to the terms of
this Resolution.
"Authority" - Nueces River Authority and any other public body or agency at any time
succeeding to the property rights, powers and obligations thereof.
"Board" or "Board of Directors" - The duly appointed and acting Board of Directors of
the Authority.
"Bond" or "Bonds" - One or more of the Bonds, as the case may be, authorized by the
Resolution.
"City" - The City of Corpus Christi, Texas.
"City Manager" - The duly appointed and acting City Manager of the City.
"Construction Fund" - The fund by that name.
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"Contract" - The contract between the Authority and the City dated the 27th day of
May, 1976, as heretofore or hereafter supplemented or amended.
"Contract Payment Fund" - Nueces River Authority Contract Payments for Debt Service
Fund.
"Contract Payments for Debt Service" - The payments made by the City to the
Authority pursuant to the Contract as are necessary to pay the principal and/or interest
on the Bonds, make deposits in the Reserve Fund or other Funds as may be required
by the Bond Resolution.
"Consulting Engineers" - The independent engineer or engineering firm or corporation
employed by the Authority.
"Costs of the Project" - Payments to be made by the Authority as advances to the
United States pursuant to the Federal Contract.
"Executive Director" - The duly appointed and acting Executive Director of the
Authority.
"Federal Contract" The contract by and among the United States of America, the City
and the Authority, dated June 30, 1976, providing for the construction, operation and
maintenance of the Project and entitled "Contract Among the United States of America,
the City of Corpus Christi, Texas, and the Nueces River Authority, Nueces River
Reclamation Project, Texas".
"Financial Advisor" - M. E. Allison & Co., Inc., San Antonio, Texas, or its successor.
"Fiscal Year" - The twelve month period beginning September I of each calendar year.
"Interest and Sinking Fund" - Nueces River Authority Water Supply Revenue Bonds
Interest and Sinking Fund.
"Investment Securities" - Direct obligations of, or obligations the principal of and the
interest on which are unconditionally guaranteed by, the United States Government,
Federal Intermediate Credit Banks, Federal Land Banks, Federal National Mortgage
Association, Federal Home Loan Banks or Banks for Cooperatives.
"Paying Agent", 'Paying Agents" - As the case may be, Corpus Christi National Bank,
Corpus Christi, Texas, and/or Mercantile National Bank at Dallas, Dallas, Texas, or
their successors.
"Project" - All features comprising the Nueces River Reclamation Project, Texas,
authorized by the act of Congress approved October 27, 1974 (Public Law 93-493), and
constructed or provided under the terms of the Federal Contract; also known as the
Choke Canyon Reservoir Project.
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"Reserve Fund" - Nueces River Authority Water Supply Revenue Bonds Reserve Fund.
"Resolution" - This resolution, as may be amended.
"Trustee" - Corpus Christi National Bank, Corpus Christi, Texas, a national banking
association organized and existing under the laws of the United States, with its
principal office in Corpus Christi, Texas, or its successor.
"United States" - The United States of America.
ADDITIONAL BONDS
One or more series of Bonds, on a parity with and in addition to the Series 1979
Revenue Bonds, may be authenticated and delivered for the purpose of providing
additional funds to complete the payment of the Costs of the Project. After the original
authentication and delivery of the aggregate authorized principal amount of the Bonds
of any such series no additional Bonds shall be authenticated and delivered under such
series designation. The Bonds of each series shall be authorized by a resolution or
resolutions of the Board of Directors, which shall specify:
(1) The authorized principal amount of such series, the designation
thereof, and the directions for delivery of the Bonds to or upon the order of the
purchasers therein named upon payment of the purchase price therein set forth;
(2) The purpose or purposes for which such series of the Bonds is being
issued;
(3) The date of such series and maturity dates of the Bonds thereof,
provided that every maturity date shall fall on April 1;
(4) The interest rate or rates of such Bonds, and the interest payment
dates therefor, provided that the interest rate shall be identical for all Bonds of
like maturity and the interest payment dates shall be semi-annual and shall be
identical for all Bonds of a series;
(5)
The redemption terms, if any, for such Bonds; and
(6) Any other matters deemed
inconsistent with the provisions of this Re
Such Bonds may be authenticated, delivered
than the total authorized principal amount of
Authority may direct.
0092742.02
T
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appropriate or necessary and not
solution.
and paid for in installments of less
a series from time to time as the
PLEDGE AND FUNDS
Pledge. The principal of and interest on the Bonds shall be paid and secured by a first
lien on and pledge of the Contract Payments for Debt Service, and said lien and pledge
are hereby irrevocably created, and the holders of the Bonds shall never have the right
to demand payment thereof out of any other funds of the Authority.
Funds. (a) The following special funds of the Authority are hereby created with the
Trustee, to -wit:
(i) the "Nueces River Authority Contract Payments for Debt Service
Fund" (the "Contract Payment Fund");
(ii) the "Nueces River Authority Water Supply Revenue Bonds Interest
and Sinking Fund (the "Interest and Sinking Fund");
(iii) the "Nueces River Authority Water Supply Revenue Bonds Reserve
Fund" (the "Reserve Fund").
(b) All monies in said Funds are pledged to the purposes expressed herein.
(c) All of said Funds created, continued or re-established shall be kept with
the Trustee.
Contract Payment Fund. All Contract Payments for Debt Service shall be deposited by
the Trustee as received into the Contract Payment Fund.
Flow of Funds. Monies on deposit in the Contract Payment Fund shall be transferred
by the Trustee in the following sequence and order of priority and on the following
dates, to -wit:
(a) The Trustee shall transfer to the Interest and Sinking Fund -
(i) beginning on or before September 25, 1979, and on or before each
March 25 and September 25 thereafter such amounts as will be
sufficient to pay the interest on the Bonds on the next interest
payment date thereof; and
(ii) beginning on or before September 25, 1980, and on or before each
March 25 and September 25 thereafter through March 25, 2009,
one-half of such amounts as will be sufficient to pay the principal
of the Bonds maturing on the next April 1.
(b) So long as the amount on deposit in the Reserve Fund equals or exceeds
a sum equal to the amount required to pay the interest on and principal of the Bonds
outstanding during the Fiscal Year such payments are the greatest, no transfers into
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the Reserve Fund shall be required under this paragraph (b). However, should the
amount on deposit in said Fund ever be less than a sum equal to the amount required.
to pay the interest on and principal of the Bonds outstanding during the Fiscal Year
such payments are the greatest, the Authority shall replace any deficiency therein in
not more than ten (10) equal installments by making transfers in the necessary
amounts into said Fund on or before each March 25 and September 25 beginning with
the March 25 of the Fiscal Year following the Fiscal Year in which the deficiency
occurred.
Use of Interest and Sinking Fund. Monies on deposit in the Interest and Sinking Fund
each year shall be used solely and exclusively first for the purpose of paying the interest
on and principal of the Bonds as such interest comes due and the principal thereof
matures; or for the purpose of calling and redeeming Bonds prior to maturity at the
applicable redemption price and/or for the purpose of purchasing Bonds in the open
market for retirement for prices not greater than the par value plus accrued interest
of any Bonds thus purchased or if redeemable prior to stated maturity, not greater than
the redemption price on the next succeeding redemption date. No purchases shall be
made of the Bonds with monies in the Interest and Sinking Fund which would result
in not having sufficient monies therein to pay the Bonds at their stated maturities.
The Trustee timely shall make available the funds on deposit therein to the Paying
Agents for such purposes. At such time as the monies and investments in the Interest
and Sinking Fund and the Reserve Fund shall equal the aggregate principal, amount of
the Bonds outstanding and interest thereon to stated maturity dates of such Bonds, or
if any of such Bonds shall be redeemable prior to stated maturity, the interest thereon
to such redemption dates and any applicable premium, no further transfers shall be
made to the Interest and Sinking Fund.
Use of Reserve Fund. For so long as any of the Bonds shall be outstanding the Reserve
Fund shall be held as a reserve for the payment of principal of and interest on the
Bonds when and if monies on deposit in the Interest and Sinking Fund shall not be
sufficient for such purpose. If such deficiencies occur, the Trustee shall transfer money
on deposit in the Reserve Fund to the Interest and Sinking Fund for the uses specified
for that Fund. The monies in the Reserve Fund shall be used to pay the last of the
Bonds outstanding.
Security and Investment Funds. The Trustee will secure and keep secured, in the
manner required by law, all cash funds on deposit with it, and will cause the Paying
Agents to secure all funds deposited with them as other trust funds are secured. So
long as the Trustee and the Paying Agents are national banks, their compliance with
Section 9.10 of Regulation 9 of the Comptroller of the Currency of the United States
Treasury shall constitute compliance with this Section. The Trustee shall invest the
monies in the Interest and Sinking Fund, the Reserve Fund, and the Contract Payment
Fund fully and continuously in Investment Securities or Certificates of Deposit of State
and National Banks which shall be lawfully insured or secured by Investment
Securities, all in accordance with resolutions from time to time adopted by the Board,
approved by the City and delivered to the Trustee. Such investments shall be converted
0092742.02
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to cash only at the times monies are needed for payments required by this Resolution.
All interest and income on such investments as realized shall be deposited into the
Contract Payment Fund.
BOND PROCEEDS AND THE CONSTRUCTION FUND
Construction Fund. A special fund is hereby established with the Trustee to be entitled
the "Construction Fund".
Bond Proceeds. The proceeds of the Bonds shall be received by the Trustee, and shall
be deposited or paid out as follows: (1) to the credit of the Interest and Sinking Fund,
the interest accrued, if any, on the Bonds to date of delivery to the purchasers thereof,
(2) to the Reserve Fund, an amount equal to the maximum amount to pay the interest
on and principal of all outstanding Bonds in any Fiscal Year, (3) to the Authority for
payment of the costs of issuance of the Series 1979 Bonds, and (4) to the Construction
Fund, the balance.
Use of Monies. (a) The Authority shall apply monies in the Construction Fund to the
Costs of the Project. All payments from the Construction Fund shall be subject to the
provisions and restrictions set forth herein, and the Trustee shall not cause or permit
to be paid from the Construction Fund any sums except in accordance with such
provisions and restrictions.
(b) The Trustee shall invest funds held in the Construction Fund in
Investment Securities unless otherwise directed by the Board. Such obligations
together with the interest thereon, shall be held in and shall at all times be a part of
the Construction Fund. Any income derived from and any profit or loss on any such
investment of monies on deposit in the Construction Fund shall be credited or debited,
as the case may be, to the Construction Fund.
Payment on Bonds. Notwithstanding any other provisions herein, to the extent that
other monies are not available therefor, amounts in the Construction Fund shall be
applied to the payment of principal and interest on the Bonds when due.
Disbursements From Construction Fund. Before any monies shall be withdrawn or any
payments shall be made from the Construction Fund which directly relate to the
physical construction and equipment thereof there shall be filed with and approved by
the Trustee -
(a) A voucher which may contain any number of items signed by the
Executive Director and the City Manager stating in respect of each item to be paid -
(1) the item number of the payment;
(2) the amount or amounts to be paid; and
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(3) the purpose for which the obligation is to be paid; and
(b) A certificate signed by the Executive Director and the City Manager and
attached to the voucher certifying that the obligations in the stated amounts are owed
by the Authority as advances to the United States pursuant to the Federal Contract and
that each item thereof is a proper charge against the Construction Fund and has not
been paid.
If the Trustee shall deter -mine that such voucher and certificate are in the form
and contain the information required herein, it shall be authorized to make payment
thereof.
Completion of the Project. When the Project shall have been completed in accordance
with the plans and specifications, and when all amounts due shall have been paid, the
Executive Director and the City Manager shall file with the Trustee a certificate so
stating, and thereupon the Trustee shall cause the transfer of all monies remaining in
the Construction Fund, if any, to the Interest and Sinking Fund.
CERTAIN GENERAL COVENANTS
Insurance: The Authority will or will cause the City at all times to keep insured with
a responsible insurance company or companies, such of the plants, structures, buildings,
stations, machinery and equipment of the Project against risks of accidents or casualties
against which insurance is usually carried by similar governmental entities operating
like properties, and will also maintain or cause the City to maintain insurance against
public liability and property damage in a reasonable amount, provided such insurance
can be procured at reasonable cost, and maintain workmen's compensation insurance
with a responsible insurance company or companies or a state approved workmen's
compensation plan or program. However, at any time while any contractor engaged in
the construction shall be fully responsible therefore, the Authority shall not be required
to carry or cause to be carried any of the foregoing insurance.
Review and Inspection of Project Works for Determining Adequacy of Maintenance: The
Authority recognizes that the Federal Contract provides that a representative of the
United States with a representative of the Authority and the City may, from time to
time, review the maintenance of the Project being operated by the Authority and the
City to determine the condition of the Project and adequacy of the maintenance
program. A report of the review including recommendations, if any, will be prepared
by the United States and copies will be furnished to the Authority and the City. If
deemed necessary by the United States or the Authority and the City, special
inspections of the Project and the books and records being maintained will be made by
the United States to ascertain, in the event of any operation and maintenance
deficiency, remedial measures required for correction or to assist the Authority and the
City in solving specific problems. Any such inspection or audit shall, except in the case
of emergency, be made after written notice to the Authority and the City, and the
0092742.02
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actual cost thereof shall be paid by the Authority and the City to the United States.
Should this arrangement for reviews and inspections be terminated for any reason,
while any of the Bonds is outstanding, the Authority will employ or cause to be
employed, a Consulting Engineer to give all necessary or desirable advice and
recommendations to the end that the Project shall be operated and maintained in the
most efficient and satisfactory manner. Further, the Authority shall cause the
Consulting Engineer to make in writing a review and report on the physical condition
of the Project works once every three years, including their recommendations as to (1)
the proper maintenance, repair and operation of the Project, including their findings
as to whether or not properties have been maintained in good repair and sound
operating condition; and (2) the improvements, renewals and replacements which
should be made. A copy of such report and review shall be filed with the City and the
Authority.
Books & Records: The Authority will keep or cause to be kept proper books of record
and account in which full, true and correct entries will be made of all income, expenses
and transactions of and in relation to the Project and each and every part thereof in
accordance with accounting practices recommended by the National Committee on
Governmental Accounting and within ninety (90) days after the close of each Fiscal
Year the Authority will furnish to the City, the Municipal Advisory Council of Texas,
the Financial Advisor, and any holder of the Bonds who may so request a signed or
certified copy of a report by a Certified Public Accountant covering the preceding Fiscal
Year.
Inspection: That the holder or holders of any Bonds or Additional Bonds or any duly
authorized agent or agents of such holders, shall have the right at all reasonable times
to inspect all such records, accounts and data relating to the Authority and the Project,
and to inspect the Project and all properties comprising same.
Legal Authority: The Authority represents that it is a conservation and reclamation
district, and a governmental agency and body politic and corporate, duly created,
organized and existing under the Constitution and laws of the State of Texas and has
proper authority from all other public bodies and authorities, if any, having jurisdiction
thereof to construct, acquire, operate, maintain, repair, renew and replace the Project;
that it will at all times maintain its corporate existence and maintain a lawful power
to pledge the revenues supporting the Bonds; that all corporate action on its part to
that end has been duly and validly taken; and that the Bonds issued hereunder shall
be ratably secured under said pledge in such manner that one Bond shall have no
preference over any other Bond of said issue.
No Sale or Encumbrance: The Authority covenants that in no event while any of the
Bonds or interest thereon remains outstanding and unpaid, shall the Authority sell,
mortgage, lease or otherwise dispose of its interest in the Project, or any substantial
part thereof, nor shall the Authority further encumber the Contract Payments for Debt
Service in any manner except in accordance with this Section, or unless such
X4.02
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encumbrance shall be made junior and subordinate in all respects to the lien and pledge
herein created for the benefit of the Bonds and the interest thereon.
No Arbitrage: The Authority covenants to and with the purchaser of the Bonds that it
will make no use of the proceeds of the Bonds at any time throughout the term of this
issue of the Bonds which, if such use had been reasonably expected on the date of
delivery of the Bonds to and payment for the Bonds by the purchasers, would have
caused the Bonds to be arbitrage bonds within the meaning of Section 103 (c) of the
Internal Revenue Code of 1954, as amended, or any regulations or rulings pertaining
thereto; and by this covenant the Authority is obligated to comply with the
requirements of the aforesaid Section 103 (c) and all applicable and pertinent
Department of the Treasury regulations relating to arbitrage Bonds. The Authority
further covenants that the proceeds of the Bonds will not otherwise be used directly or
indirectly so as to cause all or any part of the Bonds to be or become arbitrage Bonds
within the meaning of the aforesaid Section 103 (c), or any regulations or rulings
pertaining thereto.
Defeasance: Any bond shall be deemed to be paid and no longer outstanding when
payment of the principal of, redemption premium, if any, on such Bond, plus interest
thereon to the due date thereof (whether such due date be by reason of maturity, upon
redemption, or otherwise), either (a) shall have been made or caused to be made in
accordance with the terms thereof, or (b) shall have been provided by irrevocably
depositing with a Paying Agent, in trust and irrevocably set aside exclusively for such
payment (1) money sufficient to make such payment or (2) Federal Securities, as
defined hereinafter in this Article, certified by an independent public accounting firm
of national reputation to mature as to principal and interest in such amount and at
such times as will insure the availability without reinvestment, of sufficient money to
make such payment, and all necessary and proper fees, compensation, and expenses of
the Paying Agents for the Bonds pertaining to the Bond with respect to which such
deposit is made shall have been paid or the payment thereof provided for. At such time
as a Bond shall be deemed to be paid hereunder, as aforesaid, it shall no longer be
secured by or entitled to the benefits of this Resolution, except for the purposes of any
such payment from such money or Federal Securities.
The deposit under clause (b) of Section 9.1 shall be deemed a payment of a Bond as
aforesaid when proper notice of redemption of such Bond shall have been given, in
accordance with this Resolution. Any money so deposited with a Paying Agent as
provided in this Article may at the direction of the Authority also be invested in
Federal Securities, maturing in the amounts and times as hereinbefore set forth, and
all income from all Federal Securities in the hands of a Paying Agent pursuant to this
Article which is not required for the payment of the Bond, the redemption premium,
if any, and interest thereon, with respect to which such money has been so deposited,
shall be turned over to the Authority.
For the purpose of this Article, the term "Federal Securities" shall mean direct
obligations of the United States of America, including obligations the principal of and
0092742.02
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interest on which are unconditionally guaranteed by the United States of America, and
which are noncallable and which at the time of investment are legal investments under
the laws of the State of Texas for the money proposed to be invested therein.
Notwithstanding any provision of any other Article of this Resolution which may be
contrary to the provisions of this Article, all money or Federal Securities set aside and
held in trust pursuant to the provisions of this Article for the payment of the Bonds,
the redemption premium, if any, and interest thereon, shall be applied to and used
solely for the payment of the particular Bonds, the redemption premium, if any, and
interest thereon, with respect to which such money or Federal Securities have been so
set aside in trust.
Notwithstanding anything elsewhere in this Resolution contained, if money or Federal
Securities have been deposited or set aside with a Paying Agent pursuant to this Article
for the payment of the Bonds and such Bonds shall not have in fact been actually paid
in full, no amendment to the provisions of this Article shall be made without the
consent of the owner of each Bond affected thereby.
AMENDMENT OF RESOLUTION
The holders of the Bonds aggregating in principal amount of three-fourths of the
aggregate principal amount of the Bonds and Additional Bonds at the time outstanding
(not including in any case any such bonds which may then be held or owned by or for
the account of the Authority) shall have the right from time to time to approve an
amendment of this Resolution which may be deemed necessary or desirable by the
Authority, provided, however, that without the consent of the holders of all of the
outstanding Bonds, nothing herein contained shall permit or be construed to permit the
amendment of the terms and conditions contained in this Resolution or in the Bonds
so as to:
0092742.02
(1) Make any change in the maturity of the outstanding Bonds or Additional
Bonds;
(2) Reduce the rate of interest borne by any of the outstanding Bonds or
Additional Bonds;
(3) Reduce the amount of the principal payable on the outstanding Bonds or
Additional Bonds;
(4) Modify the terms of payment of principal of or interest on the outstanding
Bonds or Additional Bonds or any of them, or impose any conditions with
respect to such payment;
(5) Affect the rights of the holders of less than all of the Bonds or Additional
Bonds then outstanding;
-25-
(6) Change the minimum percentage of the principal amount of the Bonds
necessary for consent to such amendment.
If at any time the Authority shall desire to amend the Resolution under this Section,
the Authority shall cause notice of the proposed amendment to be published in a
financial newspaper or journal published in the State of Texas, once during each
calendar week for at least four successive calendar weeks. Such notice shall briefly set
forth the nature of the proposed amendment and shall state that a copy thereof is on
file at the places of payment for inspection by all holders of the Bonds and Additional
Bonds. Such publication is not required, however, if notice in writing is given to each
holder of the Bonds and Additional Bonds.
Whenever at any time not less than thirty days and within one year from the date of
the first publication of said notice or other service of written notice the Authority shall
receive an instrument or instruments executed by the holders of at least three-fourths
in aggregate principal amount of the Bonds and Additional Bonds then outstanding,
which instrument or instruments shall refer to the proposed amendment described in
said notice and which specifically consent to and approve such amendment in
substantially the form of the copy thereof on file with the places of payment, the
Authority may adopt the amendatory resolution in substantially the same form.
Upon the adoption of any amendatory resolution pursuant to the provisions hereof, the
Resolution shall be deemed to be amended in accordance with such amendatory
resolution, and the respective rights, duties and obligations under the Resolution of the
Authority and all the holders of outstanding Bonds and Additional Bonds shall
thereafter be determined, exercised and enforced hereunder, subject in all respects to
such amendments.
Any consent given by the holder of a Bond pursuant to the provisions of this Section
shall be irrevocable for a period of six months from the date of the first publication of
the notice provided for in this Section, and shall be conclusive and binding upon all
future holders of the same Bond during such period. Such consent may be revoked at
any time after six months from the date of the first publication of such notice by the
holder who gave such consent, or by a successor in title, by filing notice thereof with
the places of payment and the Authority, but such revocation shall not be effective if
the holders of three-fourths aggregate principal amount of the Bonds and Additional
Bonds outstanding prior to the attempted revocation, consented to and approved the
amendment.
For the purpose of this Section, the fact of the holding of the Bonds by any bondholder
and the amount and numbers of such Bonds, and the date of his holding same may be
proved by the affidavit of the person claiming to be such holder, or by a certificate
executed by any trust company bank, banker, or any other depositary, wherever
situated, showing that at the date therein mentioned such person had on deposit with
such trust company, bank, banker or other depositary, the Bonds described in such
0092742.02
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certificate. The Authority may conclusively assume that such ownership continues until
written notice to the contrary is served upon the Authority.
SYSTEMS INDEBTEDNESS
In 1990, the City established by ordinance (the "1990 Ordinance") a unified
water, wastewater, and gas utility system (the "System"). Pursuant to the term of the
1990 Ordinance, the City issued its Utility System Revenue Refunding Bonds, Series
1990 (the "Series 1990 Bonds"), of which there is outstanding $60,035,000 in principal
amount. Previously each system was operated as a separate enterprise fund. The City
has recently adopted a five year Capital Improvement Program. The following table
sets forth the projects and proposed funding sources:
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1994-98 CAPITAL IMPROVEMENTS PROGRAM
FY 1993-94 FY 1994-95 FY 1995-96 FY 1996-97 FY 1997-98 TOTAL
Water Projects 117,387,033 $1,950,000 $7,145,000 $11,935,000 $1,375,000 $39,792,033
Water Supply 0 0 14,000,000 0 94,000,000 108,000,000
Wastewater Projects 9,504,780 48,050,000 10,970,000 15,000,000 16,130,000 99,654,780
Storm Water Projects 1,445,000 2,130,000 516,000 2,480,000 1,990,000 8,561,000
$28,336,813 $52,130,000 $32,631,000 $29,415,000 $113,495,000 $256,007,813
PROPOSED FUNDING SOURCES:
Construction Reserves $2,926,813 $0 10 $0 $0 $2,926,813
Wesley Seale Maint 5,750,000 0 0 0 0 5,750,000
Reserves
Stormwater Revenue 0 $2,130,000 516,000 2,480,000 1,990,000 7,116,000
Bonds
Water Revenue Bonds 11,140,000 1,950,000 7,145,000 11,935,000 1,375,000 33,545,000
Wastewater Revenue 8,520,000 48,050,000 10,970,000 15,000,000 16,130,000 98,670,000
Bonds
Revenue Bonds/Water 0 0 14,000,000 0 94,000,000 108,000,000
Supply
TOTAL PROGRAM $28,336,813 $52,130,000 $32,631,000 $29,415,000 $113,495,000 $256,007,813
To finance the 1993-94 program of $28,336,813, the City will use $8,676,813 of reserve
fund cash on hand and will sell in the public market $11,140,000 Utility System Revenue
Bonds, Series 1994 (the "Bonds") for that portion relating to water projects. The City will also
place privately with the Texas Water Development Board $8,520,000 Utility System Revenue
Bonds, Series 1994-A (the "Series 1994-A Bonds") for that portion relating to wastewater
projects. Both the Bonds offered for sale under this Official Statement and the Series 1994-A
Bonds to be placed privately with the Texas Water Development Board constitute parity
obligations are on a parity with the outstanding Series 1990 Bonds.
SYSTEMS FINANCIAL INFORMATION
Pledged Revenues of the System
The following schedule sets forth the Pledged Revenues of the combined System for the Years
ended July 31, 1989 through 1993. Pledged Revenues are calculated pursuant to the terms of
the Ordinance without regard to depreciation, certain capital outlays and certain accruals. See
"SECURITY FOR THE BONDS - Pledge of Pledged Revenues." Because the City's Financial
Statements contained in Appendix C are prepared in accordance with generally accepted
accounting principles, on an accrual basis, they do not contain calculations of Pledged
Revenues. The figures for each of the Years 1989 and 1990 were calculated by combining the
calculations of Net Revenues for the City's water system, wastewater system and gas system,
which were derived from the City's Comprehensive Annual Financial Reports for each Year.
FISCAL YEAR ENDING JULY 31
1993 1992 1991 1990 1989
Operating Revenues:
Water System $30,657,165 $27,192,367 $28,502,116 $29,473,231 $28,889,425
Wastewater System 18,262,428 17,105,382 17,725,246 16,840,090 14,117,961
Gas System 23,532,324 22,035,772 21,359,498 23 198,797 21 395,410
0092142.02
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Total Revenues 372,451,917 $66,333,521 $67,586,860 169.512,118 164,402,796
°pending Ripeness
Water System $17,558,277 $16,028,911 $17,411,890 $14,540,672 $14,038,173
Wastewater System 13,911,396 13,532,519 15,281,333 12,020,403 9,212,776
Gas System 23,066,493 21.285.144 20,853.976 22.017.710 20.271.791
Total Expenses 154,536.166 350,846.574 553.547.199 $48,578,785 $43,522,740
Combined Operating Income $17,915,751 $15,486,947 514,039,661 $20,933,333 $20,880,056
Combined Non -Operating
Revenue (Expense) 36,541,965 36,016,483 510.604,604 54,414,478 53.544.328
Net Revenues Available for
Debt Service $24.457,716 321,503.430 $24,644,265 525,347.811 324,424,384,
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The following calculation sets forth the coverage of the average annual debt service
requirements on the Bonds by the System Net Revenues for Fiscal Year 1993.
Average Annual Debt
Service on the Bonds $
Pro Forma Coverage by
1993 Net Revenues times
Obligations Payable from System Revenues
The following sets forth, as of February 28, 1994, the total outstanding revenue obligations
payable from System revenues, adjusted to reflect the issuance of the Bonds and Concurrent
Bonds:
Contract Revenue Bonds (Palyable as an Operating Expense):
Nueces River Authority " $10,100,000
Priority Bonds:
Series 1990 Bonds $60,035,000
Series 1994 Bonds 11,140,000
Series 1994-A Bonds 8.520.000 $79,695,000
Subordinated Obligations:
U.S. Dept. of the Interior Choke Canyon Agreement `2' $73.810.900
Total -- All Obligations Payable from System Revenues $163,605.900
1' Under a 1976 agreement, as supplemented, the City agreed to pay, as on Operating Expense
of the System, amounts calculated to be sufficient to cover debt service on the $10,100,000
Nueces River Authority Water Supply Revenue Bonds, Series 1979, issued to finance a
portion of the cost of the Choke Canyon project.
2' Under an agreement with the U.S. Department of the Interior (Bureau of Reclamation), the
City has agreed to pay, out of surplus water revenues, such amount, with interest at
5.116%, subject to certain deferrals, in installments through 2039. (See "SYSTEM
FINANCIAL INFORMATION - Subordinated Debt Service Requirements" and Note 16 in
Appendix D.)
Subordinated Obligations Debt Service Requirements
As of July 31, 1993, the amount owed to the United States Department of the Interior (Bureau
of Reclamation) for the City's remaining share of the costs of the Choke Canyon Project is
$73,810,900 (of which $59,273,876 are allocable to water supply construction costs, $14,516,257
to recreation costs and $20,767 to fish and wildlife costs). Such amounts for water supply are
payable over a term of 40 years to 2024 and amounts for recreation and fish and wildlife over
a term of 50 years to 2039, in each case with interest at 5.116% per annum. See "System Debt
Service Requirements" and Note 16 in Appendix D for the repayment schedule. As of July 31,
1993, the City had accumulated out of surplus System revenues $22,279,355 as a reserve for
this contract obligation.
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System Debt Service Requirements
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SYSTEM STATISTICS
WATER SYSTEM STATISTICS
Water Sales (in Million Gallons)
Fiscal Year Ended July 31
1993 1992 1991 1990 1989
TREATED WATER
Inside City
Residential "' 5,855 5,703 6,443 7,045 6,932
Commercial 12' 4,125 3,969 4,213 4,288 4,174
Industrial 2,234 2,016 2,174 1,991 1,888
Other 131 1 089 1 046 1 326 1 361 1 136
Subtotal 13,303 12,734 14,156 14,685 14,130
Outside City
Residential (1) 10 8 9 11 12
Commercial `�) 236 244 214 215 200
Industrial 9,569 8,566 8,061 8,141 8,238
Other'31 1 1 1 1 1
Subtotal 9,816 8,819 8,285 8,368 8,451
Outside City Wholesale 2 248 22071 22070 2.442 2.265
Total Treated Water 25,367 23,624 24,511 25,495 24,846
UNTREATED WATER 9,331 8,079 9,081 9,420 9,400
TOTAL 34 698 31 703 33 592 34 915 34 246
`D Includes one and two family residences.
i2) Includes multifamily over two family residential.
13' Includes hospitals, schools, churches, municipal and other governmental use. In some
cases, individual governmental entities may have multiple accounts as a result of multiple
facilities.
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TREATED WATER
Inside City
Residential )1) $10,110,958 $9,287,123 $10,482,929 $11,330,822 $11,104,221
Commercial (2) 5,205,676 4,830,383 5,103,051 5,156,947 4,997,671
Industrial 1,743,318 1,485,836 1,575,175 1,426,651 1,363,535
Other X3) 1,402,639 1,281.725 1,518.486 1,548.387 1.351.390
Subtotal 18,462,591 16,885,067 18,679,641 19,462,807 18,816,817
Outside City
Residential (I) 35,000 26,000 29,000 35,000 36,000
Commercial (2) 423,000 407,000 384,000 383,000 367,000
Industrial 9,161,000 7,777,000 7,297,000 7,317,000 7,300,000
Other {) 4.000 4,000 3.000 3.000 3.000
Subtotal 9,623,000 8,214,000 7,713,000 7,738,000 7,706,000
Outside City Wholesale 1.478,000 1 284 000 1 319 000 1 521 000 1 479 000
Total Treated Water 29,563,591 26,383,067 27,711,641 28,721,807 28,001,817
UNTREATED WATER 1,326.000 993 000 997 000 1 012 000 1 067 000
TOTAL30889591 $27.376,067 $28.708,641, $29,733.807 $29,068,817
Water Sales (in $) `4)
Fiscal Year Ended July 31
1993 1992 1991 1990 1989
n)
12)
(3)
4)
Includes one and two family residences.
Includes multifamily over two family residential.
Includes hospitals, schools, churches, municipal and other governmental use. In some
cases, individual governmental entities may have multiple accounts as a result of multiple
facilities.
Prepared from System records on a cash basis and therefore will not agree with the
financial statements in Appendix D which are prepared on an accrual basis.
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TREATED WATER
Number of Water Customers
Fiscal Years Ended July 31
1993 1992 1991 1990 1989
Inside City
Residential "' 65,830 65,038 64,415 63,745 63,197
Commercial (2) 6,497 6,504 6,494 6,564 6,589
Industrial 45 44 45 46 48
Other `3' 1.119 1.093 1.070 1.046 1.024
Subtotal 73,491 72,679 72,024 71,401 70,858
Outside City
Residential (1) 122 104 104 104 111
Commercial `2' 135 135 135 139 139
Industrial 46 44 45 42 36
Other f37 2 3 3 2 2
Subtotal 305 286 287 287 288
Outside City Wholesale 3 3 3 '3 3
Total Treated Water 73,799 72,968 72,314 71,691 71,149
UNTREATED WATER 8 8 7 7 8
TOTAL 73.807 72.976 72.321 71.698 71.156
"' Includes one and two family residences.
12' Includes multifamily over two family residential and commercial.
`31 Includes hospitals, schools, churches, municipal and other governmental use. In some
cases, individual governmental entities may have multiple accounts as a result of multiple
facilities.
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Largest Water Customers (Based on Revenues)
(Fiscal Years ended July 31)
1993 1992
Treated Water
Corn Products $1,780,228 $1,378,180
Corpus Christi Petrochemical 1,730,349 1,415,780
Koch Refining 1,337,790 1,052,020
Champlin Refining 1,241,871 1,308,010
Central Power & Light 927,900 477,400
Southwestern Refinery 880,074 725,520
Coastal Corp. 685,271 633,440
American Chrome & Chemical 355,389 279,540
Howell Refining 332,240 325,200
Celanese Corp. 11 284,837 231,330
Total $9,555.949 17.826,420
In fiscal year 1991-92 Celanese Corp was not one of the top ten customers.
Wholesale Treated Water
San Patricio Municipal
Water District $1,001,000 $867,719
Nueces County Water
Control & Imp. Dist. No. 4 185,288 188,000
South Texas Water Authority 291.000 230.000
Total 11,477,000 11,285,000
Wholesale Untreated Water
San Patricio Municipal
Water District $631,000 $457,000
Alice Water District 156,000 97,000
City of Mathis 100,000 72,000
Beeville Water Supply District 33,000 56,000
Various Industrial Customers 405.000 303,000
Total
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11,3250009E 85.000
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Water Operating Statistics
(in millions of gallons)
1993 1992 1991 1990 1989
Rainfall (inches) m 42.50 52.23 29.58 22.48 22.50
Water Supply
System Firm Yield in acre feet 168,155 168,155 168,155 168,155 168,155
System Demand in acre feet 119,797 112,957 118,926 125,904 122,835
Water Production
Rated Capacity in Million Gallons per Day 144 144 144 144 144
Maximum Daily Demand in Million 115.86 116.78 112.5 125.79 116.11
Gallons per Day
Water Distribution
Unaccounted for Percentage (%) 12.21 15.63 15.42 17.37 15.67
Per Capita Consumption in Gallons
Per Day 149.62 145.50 160.73 174.45 168.42
`1) Rainfall measured at Corpus Christi International Airport. This measurement does not
reflect rainfall elsewhere in the Nueces River Basin Watershed.
0092742.02
WASTEWATER SYSTEM STATISTICS
Ten Largest Wastewater Customers
(Fiscal Years ended July 31)
1993 1992
Sam Kang Beef Processors, Inc. $496,359 $303,705
Hygeia 179,205 123,869
Southwestern Delivery 91,358 60,059
CC Housing Authority 85,254 87,702
Borden 60,579 63,723
Hoechst Celanese 50,983 47,543
Memorial Hospital 45,672 39,801
Glenwillow Apartments 35,235 30,989
Holiday Inn 34,658 32,075
Willowick Apartments 33,630 33,440
TOTAL $1,085,933 $822,906
11"-
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Number of Wastewater Customers
Fiscal Years Ended July 31
1993 1992 1991 1990 1989
Inside City
Residential 65,384 63,701 62,985 62,231 61,211
Commercial's) 6,454 6,490 6,429 6,432 6,380
Outside City
Residential
Commercial °1
TOTAL
5 3 3 2 4
20 21 21 18 16
70,8637700 69.438a. 68 683 67 611
(1) Includes multifamily residential (over two family residential), commercial, industrial and
public agencies.
Plant
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Wastewater Treatment
(millions of gallons)
Fiscal Years Ended July 31
1993 1992 1991 1990 1989
Broadway 2,341 2,372 2,115 2,144 2,152
Oso 5,095 ' 5,451 4,832 4,899 4,462
Westside 1,060 1,149 1,137 1,049 1,076
Allison 907 998 929 995 874
Laguna Shores 0 0 24 51 32
Laguna Madre 680 831 542 531 551
Whitecap 311 287 267 230 195
Total 10,394 11,087 99.846 9 899 99,341
Daily Average 28.4 30.3 26.9 27.1 25.6
GAS SYSTEM STATISTICS
Annual Gas Purchases and Sales
(12 months ended July 31, 1993)
Average Day 11,446 Mcf
Maximum Day 34,936 Mcf
Purchases 4,189,053 Mcf
Sales 4,153,154 Mcf
Lost & Unaccounted-for Gas 35,899 Mcf (.85%)
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r
Gas Connections
(As of December 31, 1993)
53,134 Residential
2,944 Commercial
443 Hospitals, Schools, & Churches
32 Industrial Customers
56,553 Active Customers
Ten Larzest Gas Customers
(Fiscal Year Ended July 31)
1993 1992
Naval Air Station $1,309,699 $1,311,034
Coastal Staten Crude Gathering Co. 420,365 71,033
Spohn Hospital 316,585 299,408
Driscoll Hospital 212,404 184,243
Memorial Hospital 189,206 180,802
H.E. Butt Grocery 185,276 159,213
Del Mar College183,214
H.E. Butt Bake161,956 132,943
Corpus Christi Linen Supply 125,937 108,901
Corpus Christi Housing Authority 115,127 111,123
Total $3,212,122
$2.741,914
THE COMBINED SYSTEM
The System was established by the 1990 Ordinance as a combined utility system which includes
the City's existing water system, wastewater system and gas system. The following is a
description of the three components of the System.
Description of Water System
Service Area. The water system serves not only the City of Corpus Christi, but also provides
water to several municipalities and industries within a 70 mile radius of the City. The service
area is a relatively dry region of South Texas bordering on the Gulf of Mexico, with heaviest
rainfall and stream flow in the Spring and Fall.
Water Supply. The water supply is drawn from the Nueces River Basin which has three
principal rivers: the Atascosa River, the Frio River and the Nueces River. The Atascosa and
Frio Rivers join the Nueces River above Lake Corpus Christi below Choke Canyon Reservoir.
For planning purposes, the Nueces Basin is treated as a single hydrologic unit. The Nueces
River Basin covers 16,950 square miles.
The City of Corpus Christi is the largest water right holder in the Nueces River Basin and the
largest user of water from the Lake Corpus Christi/Choke Canyon Reservoir water supply
system.
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Lake Corpus Christi was completed in 1958 with a surface area of 19,251 acres and a storage
capacity of 241,241 acre-feet at 94 feet MSL (mean sea level). Lake Corpus Christ is fed by the
tows of the Nueces River, the Atascosa River and the Frio River. Water from the Frio River
passes through Choke Canyon Reservoir.
Choke Canyon Reservoir was completed in 1982 with a surface area of 25,733 acres and a
storage capacity of 691,130 acre-feet at 220.5 feet MSL (mean sea level). Choke Canyon
Reservoir is fed by the Frio River and San Miguel Creek.
The combined firm yield of the supply system which consists of Lake Corpus Christi, Choke
Canyon and the Nueces, Atascosa and the Frio Rivers is 168,155 acre-feet. The firm yield
incorporates the Operation Plan mandated in the Texas Water Commission's (now the Texas
Natural Resource Conservation Commission) Interim Operating Order of March 1992. This
firm yield of 168,155 acre-feet is estimated to meet the Municipal and Industrial Demand of
the service area until approximately 2003.
To augment current surface water supplies, the City of Corpus Christi has in place a
supplemental ground water supply program of 17 wells with a turn -on capacity of 25+MGD.
In December 1993 the City entered into a contract with the Lavaca-Navidad River Authority
(LNRA) to purchase 41,840 acre-feet of water per annum from Lake Texana for municipal and
industrial purposes. The primary term is for 42 years with an option to renew for an
additional 50 years. The purchase is on a take -or -pay basis. In addition to the LNRA contract
the City is negotiating with the Garwood Irrigation Company for additional water from the
Colorado River.
Water Treatment and Distribution. "Raw" water is processed at the O. N. Stevens Water Plant
located in the western end of Corpus Christi. The Plant currently has a rated capacity of 144
MGD, but with proposed renovations of 12 of the 22 filters the Plant may be re -rated to 196
MGD.
The City has five ground storage reservoir pump stations and four elevated storage tanks with
a total distribution system storage of 42.85 MG. The elevated storage tanks are used to
provide emergency storage and to absorb peak demand loads.
The water distribution system has approximately 1,400 miles of pipe ranging in size from 2"
to 54".
Water Customers. The City of Corpus Christi is a regional water supplier in that in addition
to the "raw" water used by the City for its own customers, the City sells "raw" water and
"treated" water on a wholesale basis.
The City sells "raw" water to the Alice Water Authority (City of Alice), the Beeville Water
Supply District (City of Beeville), the City of Mathis, Choke Canyon Water System (Federal
Bureau of Prisons), Koch Refinery and Hoechst -Celanese Chemical.
The City sells "treated" water to the South Texas Water Authority (Cities of Kingsville, Bishop,
Agua Dulce, Banquete, Driscoll and Ricardo), Nueces County Water Control & Improvement
District No. 4 (City of Port Aransas) and the Violet Water Supply Corporation.
0092742.02
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The City sells "raw" and "treated" water to the San Patricio Municipal Water District (Cities
of Odem, Taft, Gregory, Portland, Ingleside, Rockport, etc).
Such "treated" and "raw" wholesale water sales are generally pursuant to long term contracts
for "treated" water and perpetual contracts for "raw" water.
Choke Canyon Reservoir Contracts. The Choke Canyon Dam was constructed by the United
States Department of the Interior (Bureau of Reclamation) pursuant to a joint sponsorship
contract with the City and Nueces River Authority. Unites its joint agreement with the
Bureau, the City agreed to fund a portion of the costs of the Choke Canyon Project and to pay
the project's operating expenses. To finance its share of such costs, the City has (i) previously
issued $15 million of water revenue bonds the unpaid and refinanced balance of which are
being refunded by the Bonds, (ii) agreed to pay (as an Operating Expense of the System) the
debt service on Nueces River Authority Water Supply Revenue Bonds, Series 1979 (of which
$10,100,00 are presently outstanding), and (iii) agreed to make certain contractual payments
to the United States Department of the Interior which, together with certain deferrals and
interest calculated at 5.116%, are scheduled to be payable through 2039 in annual payments.
See "SYSTEM FINANCIAL INFORMATION -Subordinated Obligation Debt Service
Requirements." All payment obligations to the United States Department of the Interior are
on a subordinated basis to the Bonds.
The Department of the Interior has granted to the System in perpetuity 80% of the yield of
Choke Canyon and the remaining 20% to the Nueces River Authority, which has assigned its
20% to the System in consideration for the System paying the Authority $100,000 per year,
subject to certain escalations.
Description of Wastewater System
Service Area. The wastewater system service area is primarily within the City.
Wastewater Treatment and Collection System . The City owns and operates six wastewater
treatment plants with combined treatment capacity of 41.0 MGD. Wastewater is collected and
brought to the wastewater treatment plants through approximately 1, 160 miles of sanitary
sewer pipes and 91 lift stations throughout the City and its service area.
Wastewater Customers. Currently, the wastewater system has approximately 71,300 metered
customers. In August 1993 Wastewater customers began paying for Wastewater service based
on their average winter consumption. This winter average will be used for one full year with
the next year's changes being adjusted to reflect the prior winter's average water consumption.
Environmental Requirements. In FY 92-93, the average aggregate daily flow at the System's
wastewater treatment plant averaged 28.4 MGD, which is approximately 69% of the aggregate
permitted capacity of all the plants. of the plants (including the largest, the 16.2 MGD Oso
Plant) have regularly exceeded 75% of their capacity (which triggers a requirement by the
Texas Natural Resource Conservation Commission (TNRCC) to start designing an expansion
to increase the treatment capacity of such plant). To comply with the TNRCC's requirements,
the City recently completed a project to divert about 1.0 MGD from the Oso system to the
Westside Plant. Also, the City has already awarded a contract for the design of Whitecap plant
expansion. This plant will be expanded to treat 2.5 MGD of domestic wastewater.
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The other major projects which the City will commence in the near future and will impact the
environment are (i) the expansion and upgrade of the Westside Treatment Plant which will
increase the treatment capacity from 6.0 MGD to 8.0 MGD and will further improve the
quality of effluent discharged to the Oso Creek. (ii) the rehabilitation of some of the major
trunk mains and the force mains. This would reduce the chances of bypassing untreated
sewage and contaminating the waters of the United States. (iii) the upgrade of the Allison
plant for tertiary treatment to improve the quality of effluent. This will further reduce the
organic loading of the Nueces River. (iv) the odor abatement at the treatment plants which will
reduce the emission of hydrogen sulfide and other toxic gases into the atmosphere. All these
projects are recommended for funding through the 1994-98 Capital Improvement Program.
Description of Gas System
Service Area. The gas system serves the City and some areas outside of the City limits near
existing gas lines. The Largest customer is the Corpus Christi Naval Air Station.
Gas Supply. The gas distribution system currently purchases its gas supply from Reata
Industrial Gas, L.P., a subsidiary of Valero Transmission, L.P. The City is obligated to only
pay for gas delivered at a cost under a contractual formula based each month on the Houston
Ship Channel market price. The Gas Division will be soliciting bids during 1999 for a natural
gas supply for the next four and a half (4 1/2) years with the contract commencing on January
1, 1995.
Gas Distribution. The City gas system distributes gas to its customers through a gas
distribution system of approximately 1,158 miles. The gas distribution system also includes
three major purchase points, 16 smaller purchase points, and 97 regulator stations.
Gas Customers. As of December 31, 1993, the gas system had 56,533 customers. The City's
rate structure for all gas customers allows the City to pass through to its customers all costs
of gas purchased by adding the cost of gas to the cost of service.
System Management and Employees
Management. The Water Division, Wastewater Division and Gas Division are all divisions of
the City's Public Utilities Department, and are under the supervision of the Group Manager
of Public Work and Utilities who reports to the Deputy City Manager.
Victor S. Medina, P.E. - Water Superintendent
Mr. Medina holds a B.S. degree in Civil Engineering and is a graduate of the University of
Texas at Austin. He has worked for the City since 1972. In 1982, he was named
Superintendent of the Gas Division and served as Director of Engineering Services from 1986
to 1988. In January 1992 Mr. Medina was appointed Water Superintendent.
00E12742.02
4l_
Wayne R. Cockroft, P.E. - Wastewater Superintendent
Mr. Cockroft holds a Bachelor of Science degree in Civil Engineering from the University of
Texas at Austin and is a Registered Professional Engineer. Mr. Cockroft has worked for the
City for 22 years, after previously working for the Texas Highway Department. After serving
in various capacities in the Water Department, he was appointed Wastewater Superintendent
in 1988.
Lloyd C. Lindeburg - Gas Superintendent
Mr. Lindeburg is a graduate of the University of Corpus Christi with a Bachelor of Science
degree in Petroleum Engineering. Mr. Lindeburg began his career with the City of Corpus
Christi -Gas Division in 1958 as a Gas Engineer. In March, 1985, he became Assistant Gas
Superintendent and in October, 1986, was promoted to Gas Superintendent.
James A. Dodson - Regional Water Director
Mr. Dodson holds a Bachelor of Science degree in Marine Science from Texas A & M University
at Galveston. He also received a masters degree in Public Administration from the Lyndon B.
Johnson School of Public Affairs at the University of Texas at Austin. Mr. Dodson has worked
for the City since 1989 as Administrative Assistant and Stormwater Superintendent. He was
appointed to his present post in May 1992.
Employees. As of July 31, 1993 the number of employees of the Water Division, Wastewater
Division and Gas Division were as follows:
Water Division
Wastewater Division
Gas Division
243 employees (1)
208 employees
139 employees
SYSTEM RATES
Ratemaking
The City Council has the power to establish and increase rates for service provided by the
System, subject to some contractual limitations and subject to the limited regulatory
jurisdiction discussed below. In setting water, wastewater and gas rates, the City is bound by
the legal requirement that such rates must be reasonable, equal, and uniform and that no free
service may be allowed, except at the discretion of the City Council for certain public buildings
and facilities operated by the City. By law, the City must charge and collect rates sufficient
to pay all operating, maintenance, depreciation, replacement, betterment, and interest charges
of the System and to maintain an interest and sinking fund sufficient to pay any bonds or
notes issued to purchase, construct, or improve the System or any outstanding indebtedness
of the System.
Rates for sales of water to other political subdivisions on a wholesale basis, and certain appeals
of rates for outside -City customers, are subject to the jurisdiction of the Texas Water
Commission ("TWC") now know as the Texas National Resource and Conservation Commission
("TNRCC"). By law, however, the TWC may not fix a rate which is less than the amount
0092742.02
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required to meet the debt service and bond coverage requirements of the Water Facilities.
Certain disputes as to sales of surface water may also be subject to the jurisdiction of the TWC.
Gas rates are subject to appeal to the Texas Railroad Commission.
In setting rates, the City Council must consider, among other things, the current federal
guidelines regarding user charges and certain charges required of federal construction grant
recipients under the Clean Water Act. Usage of the Sewer Facilities is not metered for rate
purposes. Instead, sewer rates are based upon water usage during the winter months and are
adjusted each year based on water consumption the previous winter.
The magnitude and frequency of rate increases will depend upon factors such as the rate at
which Operating Expenses increase in the future, the interest rate on System revenue bonds
sold to meet the System's future capital requirements, the extent to which System revenue
bonds are used to meet those capital requirements, the volume of water and gas sold and
future changes in environmental requirements.
Charter Amendment Regarding Rates
On January 19, 1991, the residents of the City voted to approve an amendment to the City
Charter of the City, the effect of which would be to limit the amount of rate increase for each
utility service operated by the City in any fiscal year to six percent over the rate charged the
preceding year. The amendment further provides that a higher rate may be adopted on a
temporary basis for the next fiscal year if all members of the City Council declare an
emergency.
Since the adoption of the Charter amendment, the City Council has not increased rates, nor
had the need to increase rates, for any utility service operated by the City above the six percent
per year limitation. The City has been advised by bond counsel that under current Texas law,
the imposition of a cap on utility rates through charter amendment would be inconsistent with
the Constitution and laws of the State of Texas, and the City could legally raise rates in a
fiscal year in excess of the six percent limitation.
The City makes no representation as to whether future City Councils will abide by or seek
changes in the Charter amendment, nor does it make any representations as to the future
effect on the operation of the system if rate increases are restricted to the six percent per year
limit.
Prior Rate Studies
In November, 1989, the City engaged the firms of CH2M Hill, Urban Engineering and Collier,
Johnson and Woods to perform cost -of -service rate studies for its water, wastewater and gas
utility divisions. Those studies, which were completed in August, 1990, were based upon a
series of assumptions that the City believes no longer to be accurate in view of the issuance
of the Bonds, the creation of the combined utility system and proposed modifications in the
System's capital improvement program. The studies propose a change in methodology of
establishing rates for the separate divisions and forecast the need for a series of rate increases
that range from being relatively insubstantial for the water division to increases ranging up
to 17% per annum in 1992 for the wastewater division. However, in view of the consolidation
of the System, change in financing plan, proposed changes in the capital improvement plan and
other matters, the City believes such studies now overstate the required rate increases
necessary for the operation of the System. The City has indicated that it intends to request
0092742.02
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such cost of service studies be revised and updated in light of the changed circumstances more
fully described in this Official Statement (see "PURPOSE AND PLAN OF FINANCING" and
"SYSTEM CAPITAL IMPROVEMENT PLAN").
The City is of the opinion that, notwithstanding the aforesaid studies, the System could be
adequately operated, maintained and expanded as needed to provide service to its service area
without requirement of increasing System -wide rates in excess of 6% per annum (see
"RATES - Charter Amendment Regarding Rates").
Water Rates
Rate Increases. The City Council authorized an increase in rates for water on the average of
approximately 6% effective January 1, 1994. Prior water rate increases were approved in 1990,
1988, 1983, 1982 and 1981 and rates were restructured in 1984.
Current Rates. Water rates are composed of a fixed minimum charge based on meter size and
an additional charge based on consumption above a minimum volume. The categories of rates
are set forth in the following table:
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Treated Water
Minimum Monthly Charge
Meter Size
(inches)
5/8 x 3/4 (Residential)
5/8 x 3/4 (Commercial)
1
1 1/2
2
3
4
6
8 and larger
Monthly Water Consumption Charge
Residential
Gallons Used
First 2,000 gallons
Next 4,000 gallons
Next 9,000 gallons
Next 15,000 gallons
Next 20,000 gallons
Over 50,000 gallons
First
Next
Next
Next
Next
Over
Commercial
Gallons Used
2,000 gallons
13,000 gallons
85,000 gallons
900,000 gallons
9,000,000 gallons
10,000,000 gallons
Capacity - Commodity Charges (1)
(Minimum Commercial Charge)
Rate per month per 1000 gallons
per day of maximum day
capacity requirement
- Regular Rate
Inside Outside
City Limits City Limits
$4.269 $8.539
5.955 11.921
9.225 18.438
15.180 30.359
23.359 46.707
82.606 165.203
94.179 188.359
141.270 282.551
211.955 423.922
Coster per
1000 Gallons 1000 Gallons
Minimum Minimum
$1.550 $2.989
1.663 2.989
2.090 2.989
2.505 2.989
2.989 2.989
CostCoat er per
er
1000 Gallons 1000 Gallons
Minimum Minimum
$1.550 $3.101
1.404 2.809
1.123 2.235
0.932 1.326
0.696 0.910
Inside Outside
City Limits City Limits
$10.461 $11.629
Rate per month per 1000 gallons 0.898 1.460
per day of excess hourly capacity
requirement (in excess of maximum
day capacity requirement)
Commodity charge for all water 0.313 0.403
per 1000 gallons
m
Applicable only to a limited class of major customers (currently Champlin Refinery and
Nueces County Water Control and Improvement District No. 4)
0092742.02
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Public Agency for Resale Rates
Treated water purchased at the treatment plant site by a public agency for resale.
0092742.02
Rate
Monthly Consumption 1000 Gallons
First 2,000 gallons Minimum
Next 13,000 gallons $ 1.505
Next 85,000 gallons 1.370
Next 900,000 gallons 1.089
Next 9,000,000 gallons 0.909
Over 10,000,000 gallons 0.674
-46-
Raw Water Rates
Pursuant to its City Charter, all of the City's "raw" water supply contracts with other public
and private entities must provide that all water be sold at published rates or at the average
cost of water taking into account all bond service requirements, maintenance, depreciation and
operating expenses, prorated as to the portion of the water system making such service
available and that the purchasers shall be entitled to no more than a proportionate share of
the City's water supply based on population. The following table reflects rates for untreated
water for industrial, municipal, and domestic accounts:
Untreated Water - Industrial, Municipal and Domestic
Commodity Charge
For all Water Consumed
Minimum Charges
Industrial -Monthly
Municipal -Monthly
Municipal -Annual
Domestic -Monthly
Domestic -Annual
The Commodity Charge for all water
*Annual Calculated Basic Cost*
$170.225
By Contract
By Contract
$5.674
$56.741
1.059998
1.059966
1.059985
sold under a wholesale contract shall be as follows:
$0.169/1,000 Gallons
Published Rate
Koch Refinery
Hoechst -Celanese
Choke Canyon Water System
Composite Cost
Alice Water Authority
Beeville Water Supply District
City of Mathis
San Patricio Municipal Water District
Wastewater Rates
$0.168/1,000 Gallons
Rate Increases. Rates for wastewater treatment service were increased approximately 6%
effective January 1, 1994. Additional rate increases will take effect August 1, 1994, 1995, 1996,
1997 and 1998. Prior rate increases were approved in 1992, 1990, 1989, 1988, 1986, 1985,
1984, 1983, 1982, 1981 and 1980.
Current Rates. Wastewater rates, which are based upon water consumption during the winter
months, are summarized in the following table (for customers with 250 parts per million or less
of biochemical oxygen demand, and 250 parts per million or less of suspended solids):
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Class
Minimum
One family maximum
Commercial minimum
Inside City Limits Outside City Limits
$ 8.245
For first 2,000 Gal.
$46.56
Up to 15,000 Gal.
$12.798
For first 2,000 Gal.
$16.490
For first 2,000 Gal.
$93.12
Up to 15,000 Gal.
$25.596
For first 2,000 Gal.
The charges in addition to the above minimums, as well as the charge for all other
sewer users, will be computed as dollars per one thousand (1,000) gallons of water used as
follows:
Inside City Limits
One Family Residential
(per 1,000 gallons of water)
Commercial
(per 1,000 gallons of water
Outside City Limits
One Family Residential)
(per 1,000 gallons of water)
Commercial
(per 1,000 gallons of water)
Dollars per 1.000 Gallons of Water Used
$1.666
$1.366
$3.332
$2.732
Additional charges for customers with 250 parts per million or more of biochemical oxygen
demand or 250 parts per million or more of total suspended solids are $0.1477 per pound and
$0.1061 per pound, respectively.
Gas Rates
Rate Increases. Gas rates were increased 2% effective with the billing cycle commencing on
or about February 1, 1994 for January service. Prior rate increases were approved on 1992,
1990, 1985, 1983, and 1982. In addition, the City passes through to customers the cost of gas
purchases.
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Current Rates. Gas rates are based on usage consumed in thousand cubic feet. Gas rates are
summarized in the following table:
Residential Customer Rate
Winter (November through April)
First 1 Mcf per month or less
Next 2 Mcf per month
Next 7 Mcf per month
Next 40 Mcf per month
All over 50 Mcf
Minimum Monthly Bill
Summer (April throuzh November)
First 1 Mcf per month or less
Next 2 Mcf per month
Next 5 Mcf per month
Next 30 Mcf per month
All over 38 Mcf
Minimum Monthly Bill
Part Year Customers
First 1 Mcf per month or less
Next 2 Mcf per month
Next 7 Mcf per month
Next 30 Mcf per month
All over 40 Mcf
Minimum Monthly Bill
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Seasonal Rates
-49-
Inside Outside
City Limits City Limits
$4.943 $6.100
2.775 3.112
1.605 1.774
1.516 1.673
1.078 1.168
4.943 6.100
$4.943
2.775
1.605
0.808
0.718
4.943
$6.100
3.112
1.774
0.887
0.763
6.100
Inside Outside
City Limits City Limits
$8.212 $9.864
7.426 8.483
3.527 3.999
1.516 1.673
1.078 1.168
8 212 9.864
General Customer Rates
First 1 Mcf per month or Tess
Next 2 Mcf per month
Next 7 Mcf per month
Next 40 Mcf per month
Next 50 Mcf per month
Next 100 Mcf per month
Next 100 Mcf per month
Next 700 Mcf per month
Next 1000 Mcf per month
Next 13000 Mcf per month
All over 15000 Mcf
Minimum Monthly Bill
Inside Outside
City Limits City Limits
$4.943 $6.100
2.775 3.112
2.594 2.921
2.494 2.809
1.078 1.168
0.898 0.965
0.786 0.842
0.752 0.797
0.650 0.650
0.584 0.584
0.561 0.561
4.943 6.100
Incentive Air Conditioning Summer Rate
(The incentive summer rate is limited to customers using an annual average of less than 15,000
cubic feet per month. These customers have gas operated air cooling and/or air conditioning
equipment and their average consumption in the seven summer months exceeds the average
use consumption in the five winter months.)
COST OF SERVICE PER MCF
Inside Outside
City Limits City Limits
First 1 Mcf per month or less $4.943 $6.100
Next 2 Mcf per month 2.775 3.112
Next 7 Mcf per month 2.594 2.962
Next 40 Mcf per month 1.898 2.134
Next 150 Mcf per month 0.808 .887
Next 300 Mcf per month 0.752 .797
Next 500 Mcf per month 0.650 .684
Next 14000 Mcf per month 0.584 .606
All over 15,000 0.561 .561
Minimum Monthly Bill 4.943 6.100
Purchased Gas Adjustment
Gas rates are subject to gas cost adjustments as follows: Rates will be adjusted monthly by the
City following the receipt of notice of cost of gas from the supplier to pass on to the consumer
the full amount of such cost adjusted for pressure base and gas lost and unaccounted-for
factors. All General customers who consume over 15,000 cubic feet in one month and who
receive gas from the City's distribution system at the same pressure which the City receives
from its supplier, which purchases at a pressure base of 14.65 psi, shall be billed 2.05% less per
Mcf for purchased gas adjustment.
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Interruptions
Deliveries of gas to commercial and industrial customers may be interrupted or curtailed in the
event of shortage in order to conserve gas for residential and other human need customers.
Billing and Collection
Users are billed monthly based on metered water and gas consumption. A bill is payable 10
days after the date on which the statement of account was mailed, and late payments incur a
$5 penalty if paid after the next billing.
If a user fails to make payment on or before the 30th day, the City sends a second written
notice to the customer restating the amount owed and setting forth the procedure by which
the user can discuss any dispute over the propriety of the charge with a customer service
representative.
Approximately one week after the second written notice, a City field representative is
dispatched to the user's address to collect the past -due billing or to cut off water and/or gas
service. Service is continued if payment is received at that time. If payment of past -due
billings plus applicable penalties is made after termination of service, then a reconnect fee of
$10 is also applicable. A user may be required to post a cash deposit, or in some cases, a surety
bond or a letter of credit may be used in lieu of a cash deposit for continued service if the user
demonstrates a history of delinquency. The deposit is based on an average of two months
consumption. If a user liable for System charges leaves the premises to which such charges
are applicable, the user will not be furnished service by the System at new premises occupied
by such user until all charges are paid.
SYSTEM CAPITAL IMPROVEMENT PLAN
Capital Improvement Plan. In order to meet the future utility needs and to comply with
applicable governmental and environmental regulations, the City periodically evaluates System
capabilities and makes plans and forecasts to accommodate future requirements in a timely
manner.
As part of the annual budgetary process, in January, 1994 the City Council approved a 5 -year
capital improvement plan for the water, wastewater and stormwater systems which totaled
approximately $256 million, of which approximately $40 million is for water improvements,
$108 million for water supply projects, $97 million for wastewater projects and $9 million for
storm water projects. It is anticipated that such improvements will be financed primarily with
revenue bonds.
The current 1993-94 capital improvement plan includes an estimated need for approximately
$28 million of capital expenditures for the water and wastewater and stormwater systems,
approximately $19.6 million of which would be financed with revenue bonds. In the capital
improvement plan, no major capital improvements are anticipated to be needed for the gas
system.
The City's ability to finance future capital improvements may depend upon its ability to
increase rates sufficiently to support the issuance of Additional Priority Bonds and generate
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surplus System revenues necessary to finance such improvements. See "RATES --Charter
Amendment Regarding Rates."
LEGAL MATTERS
When the Bonds are issued, the Attorney General of Texas will issue an opinion to the effect
that the Bonds are valid and legally binding special obligations of Authority and will approve
the Bonds, and, based upon an examination of a transcript of proceedings incident to the
issuance of the Bonds, McCall, Parkhurst & Horton L.L.P., Bond Counsel, will deliver their
legal opinion to the effect that the Bonds are valid, legally binding, and enforceable special
obligations of the Authority and are payable from and secured solely by a lien on and pledge
of the Gross Revenues of the Systems, except to the extent that the enforceability of the Bonds
may be affected by bankruptcy, insolvency, reorganization, moratorium, or other similar laws
affecting creditors' rights or the exercise of judicial discretion in accordance with general
principles of equity. The form of Bond Counsel's anticipated opinion is reproduced as
Appendix D hereto. In its capacity as Bond Counsel, McCall, Parkhurst & Horton L.L.P.,
Dallas, Texas has reviewed the information under the captions "
in the Official Statement and such firm is of the opinion that the information relating to the
Bonds and the Resolution contained under such captions is a fair and accurate summary of the
information purported to be shown and that the information and descriptions contained under
such captions relating to the provisions of applicable state and federal laws are correct as to
matters of law.
Neither the Attorney General nor Bond Counsel has been engaged to investigate or verify, and
accordingly neither will express any opinion concerning, the financial condition or capabilities
of the Authority, the content of this Official Statement (except as stated in the previous
paragraph), or the sufficiency of the security for or the value or marketability of the Bonds.
The fees to be paid to Bond Counsel are contingent upon sale and delivery of the Bonds.
Fulbright & Jaworski L.L.P., San Antonio, Texas, will pass upon certain legal matters for the
Underwriters.
LITIGATION
On the date of delivery of the Bonds to the Underwriter, the Authority will execute and deliver
to the Underwriter a certificate to the effect that, except as disclosed herein, no litigation of
any nature has been filed or is pending, as of that date, to restrain or enjoin the issuance or
delivery of the Bonds or which would affect the provisions made for their payment or security
or in any manner question the validity of the Bonds.
The Authority is not a party to any litigation or other proceeding pending or to its knowledge,
threatened, in any court, agency or other administrative body (either state or federal) which,
if decided adversely to the Authority, would have a material adverse effect on the financial
condition of the Authority.
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LITIGATION AND REGULATION RELATING TO THE CITY
System Claims and Litigation
The City is a defendant in various tort claims and lawsuits with respect to the System
involving general liability, automobile liability, civil rights actions, and various contractual
matters. In the opinion of the City's management and the City Attorney's office, the outcome
of the pending litigation will not have a material effect on the System's financial position or
operations.
Environmental Regulations
The City is subject to the environmental regulations of the State of Texas and the United
States in the operation of its water, wastewater and gas system activities. These regulations
are subject to change, and the City may be required to expend substantial funds to meet the
requirements of such regulatory authorities.
Safe Drinking Water Act. The federal Safe Drinking Water Act Amendments were signed into
law in June 1986. These amendments require the U.S. Environmental Protection Agency
(EPA) to regulate a wide variety of contaminants that may be present in drinking water,
including volatile organic chemicals, other synthetic organic chemicals, inorganic chemicals,
microbiological contaminants, and radionuclide contaminants. The list of contaminants to be
regulated is so lengthy that the amendments require EPA to establish a schedule for
developing regulations regarding the contaminants. There are several phases in EPA's
regulatory timetable that are to be undertaken over the next few years. The initial impact of
the amendments to the water system has been minimal as the City has been able to comply
with the regulations promulgated to date. The full impact would be difficult to project at this
time, and would be dependent upon what maximum contaminate levels may be set for some
future parameters. Many of these parameters, such as radionuclides and disinfection
by-products contaminants, may require treatment changes that have not as yet been es-
tablished by EPA.
Changes in the maximum amount of permitted levels of drinking water contaminants or other
treatment standards may substantially increase the cost of the maintenance and operation of
the System drinking water treatment facilities and require substantially increased capital
expenditures, which may be financed by the issuance of additional System bonds.
Federal and State Regulation of the Wastewater Facilities. The Wastewater System's
operations are regulated by the Clean Water Act and the Texas Water Code. All discharges of
pollutants into the nation's navigable waters must comply with the Clean Water Act. The
Clean Water Act allows municipal wastewater treatment plants to discharge treated effluent
to the extend allowed in permits issued by the EPA pursuant to the National Pollutant
Discharge Elimination System (the "NPDES") program, a national program established by the
Clean Water Act for issuing, revoking, monitoring, and enforcing wastewater discharge permits.
The Clean Water Act authorizes the EPA to delegate the EPA's NPDES permit responsibility
to state or interstate agencies after certain prerequisites have been met by the relevant
agencies. The Texas Natural Resource Conservation Commission (TNRCC) has requested
delegation of the NPDES program, but the EPA has not yet delegated its NPDES authority
to the State. Until the NPDES program is delegated to TNRCC, all wastewater discharges
must obtain a duplicative wastewater discharge permit from TNRCC. TNRCC's wastewater
discharge permits frequently contain different provisions from EPA's NPDES permits.
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r
NPDES permits set limits on the type and quantity of discharge, in accordance with state and
federal laws and regulations. The Clean Water Act requires municipal wastewater treatment
plants to meet secondary treatment effluent limitations (as defined in EPA regulations). The
Clean Water Act also requires that municipal plants meet any effluent limitations established
by state or federal laws or regulations which are more stringent than secondary treatment.
Under the Clean Water Act, states must identify any bodies of water for which more stringent
effluent standards are needed to achieve water quality standards. For each body of water, the
state is to establish the maximum allowable daily load of certain pollutants identified by the
EPA. The Clean Water Act allows municipalities to apply for extensions of applicable deadlines
for secondary or additional treatment.
TNRCC wastewater discharge permits establish effluent limitations which may be different
from the effluent limitations contained in NPDES permits for the same facilities. The
TNRCC's wastewater discharge permits are issued under authority granted to the agency by
the Texas Water Code.
Potential Penalties for the System's Violations. The failure by the City to achieve compliance
with the Clean Water Act could result in either a private plaintiff or the EPA instituting a civil
action for injunctive relief and civil penalties of up to $25,000 per day. In addition, the EPA
has the power to issue administrative orders compelling compliance with its regulations and
the applicable permits. The EPA can also bring criminal actions for recovery of penalties of
up to $50,000 per day for willful or negligent violations of permit conditions or discharge
without a permit. Violations of permits or administrative orders may result in the
disqualification of a municipality from eligibility for federal assistance to finance capital
improvements pursuant to the Clean Water Act.
Under State law, penalties for violation of State wastewater discharge permits or orders of the
TNRCC can be a maximum of $10,000 per day per violation. The Executive Director of the
TNRCC also has authority to levy administrative penalties of up to $10,000 per day for
violation of rules, orders or permits issued by the TNRCC. Any administrative penalty is
subject to judicial review. An injunctive order resulting from a civil action could require the
imposition of additional user or service charges or the issuance of additional bonds to finance
the improvements required to ameliorate a condition that may have caused the violation of a
TNRCC permit.
Status of Permits for Citv's Treatment Plants. All of the System's wastewater treatment
plants have been issued NPDES permits by EPA and discharge permits by TNRCC. All the
TNRCC permits were renewed within the last year. On the other hand, the first of NPDES
permits will come up for renewal by the end of 1995. An occasional upset may cause permit
violations but generally all six plants are in compliance with their respective discharge permits.
AdministrativeO d d P 1
a policy of aggressive enforcement of
Director has publicly stated that the
municipal wastewater discharges that
regulations. Since September 1, 1985,
number of Texas cities including the C
Order an Penalties
Resulting Therefrom. The TNRCC has announced
environmental laws and regulations. The Executive
TNRCC will emphasize enforcement efforts against
are operating in violation of their permits or other
administrative penalties have been assessed against a
ity.
The City of Corpus Christi was issued a TNRCC administrative order on October 6, 1993 for
overflows in the Oso Treatment Plant collection system due to heavy rains during 1991-92.
0092742.02
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The Agreed Order had several penalties and technical requirements. Among the penalty
requirements of the Agreed Order are the following:
1. The City paid a $28,000 administrative penalty and agreed to spend $20,000
toward the development and implementation of a Non -Point Source Pollution
Education Program.
2. Effective on the issuance date of the order, the City shall pay a stipulated
penalty of $2,500 per day for each day a bypass occurs in the Oso service area.
The stipulated penalty requirements of the Order have expired as of December
16, 1993 and the City did not pay any additional penalties.
3. The City shall submit monthly progress reports to TNRCC which summarize
actions during the month toward the Technical Requirements.
The Technical Requirements included items such as a Infiltration/Inflow (I/1) study within two
targeted areas of the Oso service area, complete the Home Road Lift Station Force Main
Project to direct flows toward the Westside Treatment Plant collection system (completed
December 16, 1993); do a targeted study area for the City's Water Conservation Plan, and do
a Non -Point Source Pollution Education Program.
The Agreed Order shall expire upon written notification from the Executive Director of the
TNRCC and not sooner than the City's completion and submittal of the I/I study results as
indicated in the Technical Requirements and provided the City of Corpus Christi has complied
with all terms and conditions set forth in the order to the satisfaction of the Executive
Director. However, the Agreed Order does not bar future legal action for violations of State
or Federal water pollution laws.
TAX MATTERS
Opinion
On the date of initial delivery of the Bonds, McCall, Parkhurst & Horton L.L.P., Dallas,
Texas, Bond Counsel, will render their opinion that, in accordance with statutes, regulations,
published rulings and court decisions existing on the date thereof (1) interest on the Bonds for
federal income tax purposes will be excludable from the "gross income" of the holders thereof
and (2) the Bonds will not be treated as "private activity bonds" the interest on which would
be included as an alternative minimum tax preference item under section 57(a)(5) of the
Internal Revenue Code of 1986 (the "Code"). Except as stated above, Bond Counsel will express
no opinion as to any other federal, state or local tax consequences of the purchase, ownership
or disposition of the Bonds. See Appendix D - Form of Bond Counsel's Opinion.
In rendering their opinion, Bond Counsel will rely upon (a) the Authority's no -arbitrage
certificate and (b) covenants of the Authority with respect to arbitrage, the application of the
proceeds to be received from the issuance and sale of the Bonds and certain other matters.
Failure of the Authority to comply with these representations or covenants could cause the
interest on the Bonds to become includable in gross income retroactively to the date of issuance
of the Bonds.
The law upon which Bond Counsel have based their opinion is subject to change by the
Congress and to subsequent judicial and administrative interpretation by the courts and the
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Department of the Treasury. There can be no assurance that such law or the interpretation
thereof will not be changed in a manner which would adversely affect the tax treatment of the
purchase, ownership or disposition of the Bonds.
Federal Income Tax Accounting Treatment of Original Issue Discount
The Underwriter has represented that the initial public offering price to be paid for one
or more maturities of the Bonds (the "Original Issue Discount Bonds") is less than the principal
amount or the maturity amount thereof. The difference between (i) the principal amount or
the maturity amount, as the case may be, of each Original Issue Discount Bond, and (ii) the
initial offering price to the public of such Original Issue Discount Bond constitutes original
issue discount with respect to such Original Issue Discount Bond in the hands of any owner
who has purchased such Original Issue Discount Bond in the initial public offering of the
Bonds. Under existing law, such initial owner is entitled to exclude from gross income (as
defined in section 61 of the Code) an amount of income with respect to such Original Issue
Discount Bond equal to that portion of the amount of such original issue discount allocable
to the period that such Original Issue Discount Bond continues to be owned by such owner.
For a discussion of certain collateral federal tax consequences, see discussion set forth below.
In the event of the redemption, sale or other taxable disposition of such Original Issue
Discount Bond prior to stated maturity, however, the amount realized by such owner in excess
of the basis of such Original Issue Discount Bond in the hands of such owner (adjusted upward
by the portion of the original issue discount allocable to the period for which such Original
Issue Discount Bond was held by such initial owner) is includable in gross income.
Under existing law, the original issue discount on each Original Issue Discount Bond
is accrued daily to the stated maturity thereof (in amounts calculated as described below for
each six-month period ending on the date before the semiannual anniversary dates of the date
of the Bonds and ratably within each such six-month period) and the accrued amount is added
to an initial owner's basis for such Original Issue Discount Bond for purposes of determining
the amount of gain or loss recognized by such owner upon the redemption, sale or other
disposition thereof. The amount to be added to basis for each accrual period is equal to (a) the
sum of the issue price and the amount of original issue discount accrued in prior periods
multiplied by the yield to stated maturity (determined on the basis of compounding at the close
of each accrual period and properly adjusted for the length of the accrual period) less (b) the
amounts payable as current interest during such accrual period on such Bond.
The federal income tax consequences of the purchase, ownership, redemption, sale or
other disposition of Original Issue Discount Bonds which are not purchased in the initial
offering at the initial offering price may be determined according to rules which differ from
those described above. All owners of Original Issue Discount Bonds should consult their own
tax advisors with respect to the determination for federal, state and local income tax purposes
of interest accrued upon redemption, sale or other disposition of such Original Issue Discount
Bonds and with respect to the federal, state, local and foreign tax consequences of the
purchase, ownership, redemption, sale or other disposition of such Original Issue Discount
Bonds.
Collateral Federal Income Tax Consequences
The following discussion is a summary of certain collateral federal income tax
consequences resulting from the purchase, ownership or disposition of the Bonds. This
0092792.02
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discussion is based on existing statutes, regulations, published rulings and court decisions, all
of which are subject to change or modification, retroactively.
The following discussion is applicable to investors, other than those who are subject to
special provisions of the Code, such as financial institutions, property and casualty insurance
companies, life insurance companies, individual recipients of Social Security or Railroad
Retirement benefits, certain S corporations with Subchapter C earnings and profits and
taxpayers who may be deemed to have incurred or continued indebtedness to purchase tax-
exempt obligations.
INVESTORS, INCLUDING THOSE WHO ARE SUBJECT TO SPECIAL PROVISIONS
OF THE CODE, SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX
TREATMENT WHICH MAY BE ANTICIPATED TO RESULT FROM THE PURCHASE,
OWNERSHIP AND DISPOSITION OF TAX-EXEMPT OBLIGATIONS BEFORE
DETERMINING WHETHER TO PURCHASE THE BONDS.
Interest on the Bonds will be includable as an adjustment for "adjusted earnings and
profits" to calculate the alternative minimum tax imposed on corporations by section 55 of the
Code. Section 55 of the Code imposes a tax equal to 20 percent for corporations, or 26 percent
for noncorporate taxpayers (28 percent for taxable income exceeding $175,000), of the
taxpayer's "alternative minimum taxable income," if the amount of such alternative minimum
tax is greater than the taxpayer's regular income tax for the taxable year.
Interest on the Bonds is includable in the "alternative minimum taxable income" of a
corporation (other than a regulated investment company or a real estate investment trust) for
purposes of determining the environmental tax imposed by section 59A of the Code. Section
59A of the Code imposes on a corporation an environmental tax, in addition to any other
income tax imposed by the Code, equal to 0.12 percent of the excess of the modified alternative
minimum taxable income of such corporation for the taxable year over $2,000,000.
Interest on the Bonds may be subject to the "branch profits tax" imposed on the
effectively -connected earnings and profits of a foreign corporation doing business in the United
States.
Under Section 6012 of the Code, holders of tax-exempt obligations, such as the Bonds,
may be required to disclose interest received or accrued during each taxable year on their
returns of federal income taxation.
Section 1276 of the Code provides for ordinary income tax treatment of gain recognized
upon the disposition of a tax-exempt obligation, such as the Bonds, if such obligation was
acquired at a "market discount" and if the fixed maturity of such obligation is equal to, or
exceeds, one year from the date of issue. Such treatment applies to "market discount bonds"
to the extent such gain does not exceed the accrued market discount of such bonds; although
for this purpose, a de minimis amount of market discount is ignored. A "market discount bond"
is one which is acquired by the holder at a purchase price which is less than the stated
redemption price at maturity or, in the case of a bond issued at an original issue discount, the
"revised issue price" (i.e., the issue price plus accrued original issue discount). The "accrued
market discount" is the amount which bears the same ratio to the market discount as the
number of days during which the holder holds the obligation bears to the number of days
between the acquisition date and the final maturity date.
0092742.02
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Qualified Tax -Exempt Obligations
Section 265(a) of the Code provides, in pertinent part, that interest paid or incurred by
a taxpayer, including a "financial institution", on indebtedness incurred or continued to
purchase or carry tax-exempt obligations is not deductible by such taxpayer in determining
taxable income. Section 265(b) of the Code provides an exception to the disallowance of such
deduction for any interest expense paid or incurred on indebtedness of a taxpayer which is a
"financial institution" allocable to tax-exempt obligations, other than "private activity bonds",
which are designated by an issuer as "qualified tax-exempt obligations". Section 265(b)(5) of
the Code defines the term "financial institution" as referring to any corporation described in
section 585(a)(2) of the Code, or any person accepting deposits from the public in the ordinary
course of such person's trade or business which is subject to federal or state supervision as a
financial institution.
The Authority expects to designate the Bonds as "qualified tax-exempt obligations"
within the meaning of section 265(b) of the Code. In furtherance of that designation, the
Authority will covenant to take such action which would assure or to refrain from such action
which would adversely affect the treatment of the Bonds as "qualified tax-exempt obligations".
State. Local and Foreign Taxes
Investors should consult their own tax advisors concerning the tax implications of the
purchase, ownership or disposition of the Bonds under applicable state or local laws. Foreign
investors should also consult their own tax advisors regarding the tax consequences unique to
investors who are not United States persons.
REGISTRATION AND QUALIFICATION OF BONDS FOR SALE
The sale of the Bonds has not been registered under the Federal Securities Act of 1933, as
amended, in reliance upon the exemption provided thereunder by Section 3(a)(2); and the
Bonds have not been qualified under the Securities Act of Texas in reliance upon various
exemptions contained therein; nor have the Bonds been qualified under the securities acts of
any jurisdiction. The Authority assumes no responsibility for qualification of the Bonds under
the securities laws of any jurisdiction in which the Bonds may be sold, assigned, pledged,
hypothecated or otherwise transferred. This disclaimer of responsibility for qualification for
sale or other disposition of the Bonds shall not be construed as an interpretation of any kind
with regard to the availability of any exemption from securities registration provisions.
THE BONDS AS LEGAL INVESTMENTS IN TEXAS
Section 9 of the Bond Procedures Act of 1981, as amended, provides that obligations, such as
the Bonds, are legal and authorized investments for banks, savings banks, trust companies,
building and loan associations, savings and loan associations, insurance companies, fiduciaries
and trustees, and for the sinking funds of cities, towns, villages, school districts and other
political subdivisions or public agencies of the State of Texas. If the Bonds have and maintain
a current rating as to investment quality of not Less than "A" or its equivalent by a nationally
recognized rating agency, they are eligible to secure deposits of any public fund of the State
or any political subdivision or public agency of the State, and are lawful and sufficient security
for the deposits to the extent of their market value. See "Rating" herein.
0097742.02
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The Authority has made no investigation of other laws, rules, regulations or investment
criteria which might apply to such institutions or entities or which might limit the suitability
of the Bonds for any of the foregoing purposes or limit the authority of such institutions or
entities to purchase or invest in the Bonds for such purposes. The Authority has made no
review of laws in other states to determine whether the Bonds are legal investments for
various institutions in those states.
RATINGS
Moody's Investors Service, Inc. and Standard & Poor's Corporation have assigned municipal
bond ratings of "" and " ", respectively, to the Bonds. An explanation of the significance
of such ratings may be obtained from the company furnishing the rating. The ratings reflect
only the respective views of such organizations and the Authority and the City make no
representation as to the appropriateness of the ratings. There is no assurance that such
ratings will continue for any given period of time or that they will not be revised downward
or withdrawn entirely if in the judgment of either or both companies, circumstances so
warrant. Any such downward revision or withdrawal of such ratings, or either of them, may
have an adverse effect on the market price of the Bonds.
GENERAL INFORMATION
The descriptions herein do not purport to be complete and all such descriptions or references
are qualified in their entirety by reference to the complete form of the Resolution or other
documents or source they summarize. Statements made herein involving estimates or
projections, whether or not expressly identified as such, should not be construed to be
statements of fact or as representations that such estimates or projections will ever be attained
or will approximate actual results. Any summaries or excerpts of constitutional provisions,
statutes, resolutions, or other documents do not purport to be complete statements of same and
are made subject to all of the provisions thereof. Reference should be made to such original
sources in all respects.
For additional information with respect to the financial condition of the City, a copy of the
July 31, 1993 Comprehensive Annual Financial Report of the City of Corpus Christi, Texas is
available upon written request addressed to the Office of the Director of Finance, City of
Corpus Christi, Corpus Christi, Texas 78469-9277.
The Bonds are payable solely from the Pledged Security as described herein. The inclusion in
the Appendices hereto of financial and other information with respect to other funds, assets
or resources of the Authority or the City is in no way intended to imply that any other
revenues or money of the City or the Authority are pledged to pay the principal of and interest
on the Bonds.
UNDERWRITING
M.E. Allison & Co., Inc. has agreed, subject to certain conditions, to purchase the Bonds from
the Authority at a price of $ , plus accrued interest on the Bonds to the date of
initial delivery of the Bonds to the Underwriter. The Underwriter's obligation is subject to
certain conditions precedent. The Underwriter will be obligated to purchase all of the Bonds
if any Bonds are purchased. The Bonds may be offered and sold to certain dealers and others
0092742.02
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at prices lower than such public offering prices, and such public prices may be changed, from
time to time, by the Underwriters.
OTHER MATTERS
All information contained in this Official Statement is subject, in all respects, to the complete
body of information contained in the original sources thereof and no guaranty, warranty or
other representation is made concerning the accuracy or completeness of the information
herein. In particular, no opinion or representation is rendered as to whether any projection
will approximate actual results, and all opinions, estimates and assumptions, whether or not
expressly identified as such, should not be considered statements of fact.
CERTIFICATION OF THE OFFICIAL STATEMENT
At the time of payment for and delivery of the Bonds, the Underwriter will be furnished a
certificate, executed by proper officials of the City and the Authority, acting in their official
capacity, to the effect that to the best of their knowledge and belief: (a) the descriptions and
statements of or pertaining to the Authority and the City contained in their Official Statement,
on the date of sale of the Bonds and on the date of the delivery of the Bonds, were and are true
and correct in all material respects; (b) insofar as the Authority and the City and their affairs,
including its financial affairs, are concerned, such Official Statement did not and does not
contain an untrue statement of material fact or omit to state or material fact regarding the
Authority or the City or their affairs, including financial affairs, required to be stated therein
or necessary to make the statements therein, in the light of the circumstances under which
they were made, not misleading; (c) insofar as the descriptions and statements including
financial data, of or pertaining to entities, other than the Authority or the City, and their
activities contained in such Official Statement are concerned, such statements and data have
been obtained from sources which the Authority or the City believes to be reliable and the
Authority or the City has no reason to believe that they are untrue in any material respect;
and (d) there has been no material adverse change in the financial condition of the Authority
or the City, since the date of the last financial statements of the City appearing in the Official
Statement.
USE OF INFORMATION IN OFFICIAL STATEMENT
The Official Statement has been prepared by the Underwriter. No person has been authorized
to give any information or to make any representations other than those contained in this
Official Statement, and if given or made, such other information or representations must not
be relied upon as having been authorized by the Authority or the City. This Official Statement
does not constitute an offer to sell or solicitation of an offer to buy in any state in which such
offer or solicitation is not authorized or in which the person making such offer or solicitation
is not qualified to do so or to any person to whom it is unlawful to make such offer of
solicitation.
FINANCIAL ADVISOR
First Southwest Company (the "Financial Advisor") is employed by the Authority in
connection with the issuance of the Bonds and in such capacity, has assisted the Authority in
0092742.02
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compiling documents related thereto. Although the Financial Advisor assisted in drafting this
Official Statement, the Financial Advisor has not independently verified all of the data
contained in it or conducted a detailed investigation of the affairs of the Authority to
determine the accuracy or completeness of this Official Statement. No person should presume
that the limited participation of the Financial Advisor means that the Financial Advisor
assumes any responsibility for the accuracy or completeness of any of the information
contained in the Official Statement. The fee of the Financial Advisor for services rendered is
contingent upon the issuance and sale of the Bonds.
MISCELLANEOUS
The Resolution authorizing the issuance of the Bonds will also approve the form and content
of this Official Statement and any addenda, supplement or amendment thereto and authorize
its further use in the reoffering of the Bonds by the Underwriter.
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This Official Statement has been approved by the Board of Directors of the Authority and the
City Council of the City for distribution in accordance with the provisions of the Securities and
Exchange Commission's rule codified at 17 C.F.R. Section 240.15c2-12.
ATTEST:
Secretary, Board of Directors
Nueces River Authority
0092742.02
President, Board of Directors
Nueces River Authority
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0092742.02
APPENDIX A
CONTRACT BETWEEN CORPUS CHRISTI AND
NUECES RIVER AUTHORITY
A-1
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T
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A-2
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APPENDIX B
CERTAIN AUDITED FINANCIAL STATEMENT
B- I
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B-2
APPENDIX C
The following information has been provided by the City from sources it believes to be
reliable. Information contained herein regarding industries and other private institutions in
the Corpus Christi area are for general background purposes only.
CITY OF CORPUS CHRISTI
DEMOGRAPHIC AND ECONOMIC DATA
Population and Location
Corpus Christi is the eighth largest city in the State of Texas with a population of
257,453 based on the 1990 Census.
The geographic location of the City on the Gulf of Mexico and the Intercoastal
Waterway gives it one of the most strategic locations in the Southwest and has been important
to its economic development. From its early days, Corpus Christi has been a focal point for
the marketing, processing, packaging and distribution of agricultural commodities in a twelve -
county trade area. The Port of Corpus Christi opened the City to world commerce in 1926 and
the North American Free Trade Agreement (NAFTA) will place South Texas in the midst of
the world's largest freetrade zone.
Area and Topography
The area of the City has increased through annexations as the City's population and
industry grew. The City has had numerous orderly annexations and now contains
approximately 452 square miles, which is broken down to approximately 124 square miles of
land and 328 square miles of water. While the area covered by water contains no population
and does not require normal city services, it does produce considerable revenues from oil and
gas properties located therein.
The topography of Corpus Christi is generally flat with rich soils broken by numerous
bays. The elevation ranges from sea level to eighty-five feet.
Form of Government and Administration
The City was incorporated in 1852. It operated as a general law city until 1926 when
a Home Rule Charter with a commission form of government was adopted. The Charter was
amended in 1945 and the present Council -Manager form of government was adopted.
The City Council consists of the mayor and eight Council members, all elected for two
year terms. The Mayor and three Council members are elected at large while five are elected
from single member districts. These nine Officials are listed on page (ii) of this document.
The City Manager is appointed by the City Council and is the Chief Administrative and
Executive Officer. The Director of Finance is appointed by the City Manager and is charged
with the administration of fiscal affairs
The City Council fixes the annual tax rate based on a budget prepared under the
direction of the City Manager.
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The names, years of service, experience and background of certain appointed officials
are as follows:
Juan Garza - City Manager
On March 8, 1988, Juan Garza was appointed City Manager for the City of
Corpus Christi. Mr. Garza has worked for the City of Corpus Christi since 1983 and
from October, 1986 to March, 1988, served as the Assistant City Manager for
Administrative Services. Prior to that time, Mr. Garza was Director of Finance, where
he was responsible for the management of the financial affairs of the City, including
debt management and long range capital improvement financial planning. Mr. Garza
has also worked in the capacity of Deputy Director of Finance.
Prior to coming to Corpus Christi, Mr. Garza's experience included Finance
Director for the City of Moline, Illinois for 3 years, Assistant to the Finance Director
and positions in Planning and Engineering for the City of Evanston, Illinois, for 12
years.
Mr. Garza holds a Master's degree in Business Administration and a Bachelor
of Science degree -Mathematics from Loyola University of Chicago.
Bill Hennings - Deputy City Manager
Bill Hennings, Deputy City Manager, has been employed by the City of Corpus
Christi since 1971. He served as head of the building inspection, public works,
inspections and operations departments. Appointed Assistant City Manager in 1981,
he managed the Cultural Services Group until assuming responsibility for Development
Services in 1990. He assumed the position of Group Manager of Public Works and
Utilities in 1992 and was responsible for overseeing the Utilities, Solid Waste, Street
and Maintenance Service Departments. On September 6, 1993, Mr. Hennings was
appointed Deputy City Manager. Mr. Hennings has also served as executive vice
president of the Corpus Christi Area Oil Spill Control Association since 1976. A
graduate of the University of Louisville, Mr. Hennings holds Bachelor's and Master's
degrees in engineering from that institution and a Master of Business Administration
from Corpus Christi State University.
W. Thomas Utter - Group Manager, Development Services
W. Thomas Utter, Manager of the Development Services Group, has been
employed by the City of Corpus Christi since 1976. He served as Director of Housing
and Community Development until 1981 when he was appointed Assistant City
Manager for Urban Development. Since 1986, he has served as Assistant City Manager
for Economic Development. In November, 1990 Mr. Utter was appointed Director of
Public Works. In this position he managed operations of Street, Solid Waste, and
Maintenance Service Departments. In 1992, Mr. Utter was appointed to his present
post which oversees operations in the Engineering, Planning, Building Inspections and
other Development Service Departments. Prior to coming to Corpus Christi, Mr. Utter
held Directorship positions in several Urban Renewal and Community Development
Agencies in Texas, as well as faculty positions in economics at several Texas
universities. Mr. Utter completed his undergraduate studies at Clemson University and
graduate studies at Texas Tech University, both in economics. He was a HUD Public
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Leadership Fellow at the John F. Kennedy School of Government, Harvard University
in 1980 and served as President of the National Community Development Association
in 1985.
Jorge A. Garza - Group Manager, Administrative Services
Jorge A. Garza was appointed as Manager of the Administrative Service Group
for the city of Corpus Christi in November, 1990. As such, he oversees the Finance,
Human Resources, Municipal Court, Municipal Information Services, Materials
Management and Risk Management Departments. Prior to this appointment he was
Director of Finance, Assistant Director of Finance and Chief Accountant. Mr. Garza
has worked for the City of Corpus Christi since 1984. Before coming to work for the
City, Mr. Garza was in the U.S. Army for twenty years, retiring as Major.
Mr. Garza holds a Bachelor of Business Administration degree from Corpus
Christi State University and is a Certified Public Accountant.
Rosie Vela, CPA- Director of Finance
Rosie G. Vela was appointed Director of Finance in December 1990. She has
worked for the City of Corpus Christi since September, 1985, having served as Chief
Accountant, Controller, Assistant Director of Finance, and Director of Management and
Budget. Mrs. Vela holds Bachelor's and Master's degrees in Business Administration
from Corpus Christi State University, and is a Certified Public Accountant and
Certified Government Finance Officer.
Certain Govenunent Services Provided by the City
Public Safety ... The City provides police protection, fire protection, building inspection,
street lighting and traffic signals and civil defense. Law enforcement and civil defense is
provided through the Police Department. The City's Fire Department operates 14 fire stations
and the Emergency Medical Service throughout the City.
Public Services ... In addition to operating its water, wastewater disposal, and gas
systems, the City also provides garbage collection and disposal and maintenance of streets and
storm drainage areas.
Community Enrichment ... The City's main library and four branches are equipped with
over 344,848 volumes. The City owns and maintains approximately 231 parks containing over
1,932 acres. The City also owns extensive recreational facilities including 122 playgrounds, a
yacht basin and marina with 535 boat Mips, 4 municipal beaches, 2 fishing piers, 2 public golf
courses, 9 swimming pools, 43 tennis courts, several baseball and softball diamonds and 11
recreational centers. In addition, the City owns an auditorium, a coliseum, Harbor Playhouse,
the Corpus Christi Museum, the South Texas Art Museum, the Multicultural Center, the
Water Garden and a Community -Convention facility.
Airport and Transit System ... The City owns the Corpus Christi International Airport
situated on 2,430 acres. The regional transportation system provides passenger bus service
within the area and out-of-town charter services originating in the City.
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Health ... The City maintains preventive health services through health facilities within
the community.
The City does not have the responsibility of maintaining hospitals, a school system, or
a higher education system, and does not expend any funds in providing welfare.
CERTAIN ASPECTS OF THE CITY'S FINANCIAL PROCEDURES
Audit and Financial Reporting
The City Charter requires an annual audit to be made of the books of account, records
and transactions of the City by a Certified Public Accountant. The fiscal year of the City
begins the first day of August of each year and ends with the thirty-first day of July of the
following year. The Government Finance Officers Association of the United States (the
"GFOA") first awarded the City its Certificate of Conformance, later termed the Certificate of
Achievement for excellence in Financial Reporting, for its annual financial report for 1957.
The City was awarded the same recognition for its 1970, 1975, 1978, 1979, 1983 and 1984
through 1992 financial reports.
Budget Procedures
State laws and the City Charter require the preparation and filing of an annual budget.
The City Manager submits a proposed budget to the City Council at least sixty days prior to
the beginning of the fiscal year which estimates revenues and expenses for the next year. The
proposed expenditures will not exceed estimated revenues. The City Council shall adopt a
balanced budget prior to the beginning of the fiscal year. If the Council fails to adopt a budget
by the beginning of the fiscal year, the amounts appropriated for current operation for the
current fiscal year are deemed the adopted budget for the ensuing fiscal year on a month to
month basis, until such time as the Council adopts a budget for the ensuing year. The City
received the Distinguished Budget Presentation Award from the Government Finance Officer's
Association for fiscal years beginning August 1, 1988 through 1992.
Significant Accounting Policies
The City prepares its financial statements in accordance with the generally accepted
accounting principles for local governmental units as prescribed by the Governmental
Accounting Standards Board and the American Institute of Certified Public Accountants. A
summary of significant accounting policies of the City are set out in the Notes to Financial
Statements for the year ended July 31, 1993 located elsewhere in the financial section of the
Official Statement.
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ECONOMIC AND DEMOGRAPHIC CHARACTERISTICS
Population
The 1990 U.S. Census population for Corpus Christi was 257,453, which was
approximately 11% greater than the population reported in 1980. The table below shows the
history of population from 1920 to 1990:
Population Percent of Increase Over
U. S. Census Fieures for 1920-1990 Precedine Census
1920 10,522 27%
1930 27,741 163%
1940 57,301 106%
1950 108,053 88%
1960 167,690 54%
1970 204,525 21%
1980 232,134 13%
1990 257,453 11%
Corpus Christi Standard Metropolitan Statistical Area (SMSA) consists of Nueces and
San Patricio Counties and according to the 1990 U.S. Census had a population of 348,353.
Trade Area and Location
Corpus Christi's central trade area consists of five counties, Nueces, San Patricio,
Aransas, Jim Wells, and Kleberg. Each of the Counties maintains solid and diversified
economic bases which contribute material support to Corpus Christi, due to its location as a
trade center and shipping point.
The land is generally flat with strong mineral deposits, rich soil, excellent climate, and
a growing season of approximately 300 days. Grain sorghum and cotton are the principal
agricultural crops. The region also has a strong supply of livestock including beef, dairy cattle,
hogs and poultry.
The oil and gas industry is a major factor in the growth and economic stability within
the trade area. Mineral values vary depending on world market and demand. This industry
also provides a secondary market for petro -by-products and chemicals.
The trade area's principal outlet for agricultural and petroleum products is the Port of
Corpus Christi, which has served the area since 1926. The rebuilt grain elevator, completed
in 1983, adds to the port's capacity to handle various agricultural products. In 1992 the Port
handled a record breaking volume of 72.5 million tons of cargo, including 59 million tons of
petroleum products.
Corpus Christi has one of the most strategic located waterways in the Southwest with
deep water transportation to the Gulf of Mexico and barge traffic all along the Texas coast via
the Intra -coastal waterway. The nearest other port is in Brownsville, 160 miles to the south;
nearest retail and wholesale outlet is San Antonio, 145 miles to the northwest; and the nearest
heavy industry competition is Houston, 210 miles to the northeast.
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Industry
Corpus Christi industry provides a diversified product market including metal
fabrication, chemical processing, farm and ranch equipment, oil field equipment, cement,
clothing manufacturing, food processing, electronic and petrochemical products.
The diversification is primarily due to the commitment of the Port of Corpus Christi
to provide a quality deep water facility. The Port of Corpus Christi opened the area to world
markets in 1926. Deeper channels have for decades allowed Corpus Christi to be a competitive
port for bulk commodities requiring large, deep draft vessels. It is the terminus of a network
of oil and gas pipelines throughout Southwest Texas and extending into West Texas. The port
is located in Corpus Christi Bay and extends into the Gulf of Mexico along the South Texas
Coast. The inner harbor lies along a 91 mile stretch of dredge inland channel and basins
within Corpus Christi Bay. The port has four divisions, including the inner harbor which has
a channel depth of 45 feet; Harbor Island, near the entrance of the Gulf of Mexico; Port
Ingleside and La Quinta, both of these locations are along the north shore of Corpus Christi
Bay. Harbor Island, Port Ingleside, and La Quinta have all been deepened to 45 feet.
The Port of Corpus Christi is one of America's deepest inshore gulf ports. The
extension of the 45 foot channel across Corpus Christi Bay was completed in 1978 and the final
leg of dredging for the Inner Harbor, which deepened the Inner Harbor to 45 feet, was
completed in 1989. With completion of the dredging, the project provides the deepest channel
on the Gulf Coast for all reaches of the port. This project will enhance the area by expanding
the ability of the Port to handle additional bulk commodities.
The Port has full service container and heavy lift capability with direct rail from the
dock to ports of entry at Laredo, Brownsville and McAllen. The Port is an excellent position
to handle growing trade in the international marketplace.
Information on ships and barges using the Port's facilities can be obtained from the
Port of Corpus Christi office. It is estimated 1,185 ships and 5,339 barges used the Port's
facilities in 1989. There are a total of 6,816 linear feet of wharf frontage consisting of 27
public docks, 14 dry docks, 2 bulk terminals, 2 grain elevators (1 private --1 public) and 11 oil
docks. In addition, there are 14 private oil docks and 9 dry cargo docks owned and operated
by private industries. There is also a public compress with an average capacity to handle 2,500
bales of cotton per eight hour day.
During 1981 the City of Corpus Christi established the Corpus Christi Industrial
Development Corporation to facilitate business expansion within the City. The corporation
offers tax exempt industrial revenue bond funding for various new and expansion projects.
The Port of Corpus Christi has also developed a similar non-profit organization to provide tax
exempt industrial revenue bond funds to industries within Nueces County.
Establishment of Industrial Districts
In 1981 several industrial districts had been established upon the voluntary execution
of industrial district agreements by the City and industries located in two general areas of the
City's extraterritorial jurisdiction. Texas law gives the governing body of any city the right,
power, and authority to designate any part of the area located in its extraterritorial jurisdiction
as an industrial district. All industrial district agreements were extended for a seven year
period effective January 1, 1989.
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The terms of the industrial district agreement provide that the City has no obligation
to extend to the industrial districts any City services except fire protection to certain industries
who pay for this service, and other City services which are paid for by the industries separate
and apart from the annual industrial district in lieu of tax payment. The industrial district
agreement and the methods of determining the amount of the annual payment are subject to
all provisions of law relating to determination of market value including, but not limited to,
laws relating to rendition, assessment, equalization, and appeal.
The City received $4,048,920 in 1992-93 from the industrial district in lieu of tax
payments.
Corpus Christi Naval Air Station
In the training of pilots and maintenance of aircraft, the Navy uses more than 1,687
military and more than 1,334 civilian personnel.
Corpus Christi Army Depot
The Corpus Christi Army Depot has approximately 3,008 civilian and 8 military
personnel. CCAD is the Army's facility for complete maintenance, overhaul and repair of Army
helicopters. Navel Station Ingleside employs approximately 200 civilians and approximately
2,200 military personnel.
Foreign Tiede Zone
In 1985 the Department of Commerce approved an application for Grant of Permit to
operate a Foreign -Trade Zone. The Corpus Christi Foreign -Trade Zone ("FTZ") is unique in
several aspects: It comprises fifteen (15) separate areas made up of two (2) public agency sites,
three (3) privately operated storage sites and ten (10) subzones. Some of these subzones will
be operated by our petrochemical industry in an effort to better compete in the world oil
market.
Corpus Christi's Foreign -Trade Zone has become the first FTZ in the continental
United States to permit petroleum refiners to operate using full zone privileges.
The successful operation of the Foreign -Trade Zone could have very beneficial effects
on the economy of Corpus Christi. Users of a Foreign -Trade Zone are permitted to defer
customs duty on imports and in some cases avoid duty, tariffs and excise tax on certain exports.
Private Utilities
Southwestern Bell Telephone Company supplies telephone service to Corpus Christi.
Electricity is furnished by Central Power and Light Company (CPL) which has its
principal offices in Corpus Christi. CPL supplies electric service to a 44,000 square mile area
which reaches into 44 counties of South Texas. Three of CPL's largest power stations are
located in Corpus Christi.
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Banking
Sixteen banks are located in the City. The table below sets forth the total deposits as
of June 30 for the past ten years:
Year Amount
1984 $1,1889,486,199
1985 2,216,545,039
1986 2,250,374,930
1987 2,244,671,785
1988 2,257,245,901
1989 2,144,920,025
1990 2,118,486,199
1991 1,943,500,882
1992 1,824,843,587
1993 1,877,487,176
Transportation
The Port of Corpus Christi provides excellent access to the sea lanes of the world. The
Corpus Christi International Airport is served by seven airlines and the City is buying
additional land for future expansion. Three rail lines serve the City and provide good transit
time throughout the United States and Mexico. The City is tied into the Interstate highway
network providing an open highway access to the entire nation.
Corpus Christi International Airport has 2,430 acres with two fully instrumented
runways of 7,500 feet and 6,080 feet. Enplaning and deplaning passengers totaled 1,003,928
for the fiscal year ended July 31, 1993. There are 68 scheduled airline arrivals and departures
daily.
Education and Hospitals
There are five separate school districts within the City limits having ten high schools,
seventeen junior high schools and forty-nine elementary schools.
Higher education is provided by Texas A&M -Corpus Christi, a two year upper level
university which will become a four-year institution in 1994. The September, 1993 enrollment
was 4,391. The Corpus Christi Junior College District operates Del Mar College and offers two
year college lower level and vocational certificate programs. The September, 1993 enrollment
consisted of 11,233 students.
The U. S. Geological Survey operates a research facility at the Corpus Christi State
University campus conducting geological research on the sea floor of the Gulf of Mexico and
the Caribbean Sea.
The Blucher Institute is an endowed institute at Corpus Christi State University which
provides coastal land surveying and satellite map surveying services.
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The University of Texas Marine Science Institute is located in nearby Port Aransas and
provides graduate level work and research opportunities in the broad field of marine sciences.
Texas A&M University also operates two branches in the Corpus Christi area; the Texas
A&M Experiment Station and the Texas Agricultural Extension Service. The Experiment
Station is involved in research in the development of new technologies and the agricultural
extension works with the agribusiness sector of the area.
There are ten hospitals in the City with a total of over 1,800 beds and several expansion
programs underway.
Employment
The following table indicates the total civilian employment in the Corpus Christi MSA
for the period December, 1993 as compared to the prior periods of November, 1993 and
December, 1992:
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Civilian Labor Force
Unemployment
Percent Unemployment
Total Employment
Prior Periods
December November December
1993 1993 1992
169,900
14,400
8.5%
155,500
172,400 171,300
15,500 15,900
9.0% 9.3%
156,900 155,400
The following table shows certain nonagricultural wage and salary employment in the Corpus
Christi MSA for December and November, 1993 and December, 1992:
Manufacturing
Mining
Construction
Transportation, Commercial
and Utilities
Trade
Financial Insurance
and Real Estate
Services & Miscellaneous
Government
Total
December November December
1993 1993 1992
13,500
2,700
11,400
6,600
13,500
2,800
11,400
6,800
13,400
3,000
11,400
7,000
32,700 32,600 34,000
6,000
34,700
30.100
138,000
6,000 6,100
34,900
30.200
138,100
34,800
31.300
141,000
Source: Texas Employment Commission, Texas Labor Market Review December, 1993.
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Construction
The table below indicates the amount of construction activity in Corpus Christi:
Building Permits
Calendar (annually)
Year No. of Permits Value
1984 5,110 $237,279,849
1985 4,789 210,156,418
1986 4,357 160,586,764
1987 3,990 142,043,717
1988 4,018 97,030,619
1989 4,530 146,634,691
1990 4,507 90,316,613
1991 5,148 101,609,375
1992 5,723 118,092,107
1993 5,628 100,076,740
Tourist and Convention Business
Corpus Christi continues to be a favorite vacation spot for visitors, as reflected by the
1.2% increase in the hotel occupancy rate from fiscal year 1991-92, which itself reflected a
15.6% increase from the prior year. The impact of the increased visitor activity, however is
reflect throughout the community through increased spending in restaurants and shops.
Additional visitor attractions which have helped to spur this growth include:
• Greyhound Race Track;
• Texas State Aquarium;
• USS Lexington Museum on the Bay; and
• Las Caravelas, replicas of the Christopher Columbus ships.
The Corpus Christi Area Convention & Visitor's Bureau report indicates
189 conventions with 125,754 delegates spent approximately $69 million in Corpus Christi
during 1992-93. A focal point for entertainment and cultural activities in Corpus Christi is the
Bayfront Plaza complex, including the Convention Center and the Auditorium, Art Museum
of South Texas, Corpus Christi Museum, Harbor Playhouse, Water Garden and Heritage Park.
Nearby Mustang Island and Padre Island are easily accessible by a system of highways
and causeways and visitors can enjoy bathing and other recreational advantages offered by the
Gulf of Mexico. Because of the Gulf breezes, winters are mild and summers are comfortably
cool with an annual average mean temperature of 70 degrees. Boating and fishing
accommodations are good and Port Aransas on Mustang Island is famous for deep sea fishing.
The National Seashore Recreational Area on Padre Island has an 88 mile shoreline and
excellent facilities are provided by the National Park Service.
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0092742.02
APPENDIX D
FORM OF OPINION OF BOND COUNSEL
D-1
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$7,800,000'
NUECES RIVER AUTHORITY
WATER SUPPLY REVENUE CURRENT REFUNDING BONDS,
(CITY OF CORPUS CHRISTI, TEXAS PROJECT)
SERIES 1994
PURCHASE CONTRACT
March 3, 1994
Chairman and Board of Directors
Nueces River Authority
First State Bank Building, Suite 206
Uvalde, Texas 78802
Ladies and Gentlemen:
The undersigned (the "Underwriters"), acting through the Authorized
Representative designated in Section 1 hereof (the "Authorized Representative"), offer
to enter into the following agreement (this "Purchase Contract") with the NUECES
RIVER AUTHORITY (the "Authority') which, upon your acceptance of this offer, will
be binding upon you and upon the Underwriters. This Purchase Contract has also been
approved by the City Manager of the City of Corpus Christi, Texas (the "City").
The offer contained herein is made subject to your acceptance of this Purchase
Contract on or before 10:00 P.M., Uvalde, Texas time, on the date hereof and, if not so
accepted, will be subject to withdrawal by the Underwriters upon notice delivered to the
Authority by the Underwriters at any time prior to the acceptance hereof by the
Authority.
1. Purchase and Sale of the Bonds. Upon the terms and conditions and upon
the basis of the respective representations, warranties, and covenants set forth herein,
the Underwriters hereby agree to purchase from the Authority, and the Authority
hereby agrees to sell and deliver to the Underwriters, all (but not less than all) of an
aggregate of $7,800,000 principal amount of NUECES RIVER AUTHORITY WATER
SUPPLY REVENUE CURRENT REFUNDING BONDS, SERIES 1994 (CITY OF
'Preliminary, subject to change
0094427
CORPUS CHRISTI, TEXAS PROJECT) (the "Bonds"). The Bonds shall be dated
February 15, 1994 and shall have the stated maturities, be offered at the prices, and
bear interest at the rates per annum all as set forth in the Official Statement
(hereinafter defined). The purchase price for the Bonds is $
(representing an aggregate principal amount of $7,800,000 of Bonds, less an original
issue discount of $ , and less the Underwriter's discount of
$ ), together with accrued interest on the Bonds from February 15, 1994
to the date of the Closing.
The Bonds are to be issued pursuant to the provisions of Texas Revised Civil
Statutes Annotated Article 717k, as amended (the "Act") and are secured under the
provisions of a bond resolution authorizing their issuance and sale (the "Bond
Resolution") adopted by the Board of Directors of the Authority (the "Board") on
March 3, 1994. The Bonds are payable from and secured solely by a lien on and pledge
of the Gross Revenues of the City's utility systems (the "System") and by certain funds
and accounts created and established under the Bond Resolution and such security for
the Bonds is referred to herein as the "Pledged Security". The Bonds are to bear
interest, be subject to redemption, and be payable as provided in the Bond Resolution,
all as described in the Official Statement referred to below. Capitalized terms not
defined herein shall have the meanings ascribed in the Bond Resolution.
A portion of the proceeds received by the Authority from the sale of the Bonds
pursuant hereto and certain other funds of the Authority, if any, shall be deposited with
Corpus Christi National Bank, Corpus Christi, Texas, as escrow agent (the "Escrow
Agent"), under and pursuant to the escrow deposit letter (the "Escrow Agreement")
referred to in the Bond Resolution for the purpose of safeguarding certain proceeds of
the Bonds pending the redemption of the Refunded Bonds.
M. E. Allison & Co., Inc. represents that it has been duly authorized to execute
this Purchase Contract and has been duly authorized to act hereunder as the
Authorized Representative. All actions which may be taken by the Underwriters may
be taken by the Authorized Representative alone.
2. Public Offering. The Underwriters agree to make a bona fide public
offering of all of the Bonds at a price not to exceed the public offering price set forth
in Exhibit A attached hereto and on the cover of the Official Statement and may
subsequently change such offering price without any requirement of prior notice. The
Underwriters agree, for the purpose of enabling the Authority to comply with its
obligations set forth in Section 5(1) of this Purchase Contract, to inform the Authority
of the date of expiration of the initial offering period for the Bonds. The Underwriters
may offer and sell Bonds to certain dealers (including dealers depositing Bonds into
investment trusts) and others at prices lower than the public offering price stated on
the cover of the Official Statement. On or before Closing, the Authorized
Representative shall execute the certificate attached hereto as Exhibit A verifying the
initial offering prices to the public at which a substantial amount of each stated
maturity of the Bonds was sold to the public.
0094427
-2-
3. Official Statement. The Bonds are described in a final Official Statement
dated the date hereof, a substantially final version of which is attached hereto as
Exhibit B. Such final Official Statement, together with the Appendices thereto, as
further amended or supplemented only in the manner hereinafter provided, is herein
called the "Official Statement".
The Authority hereby authorizes and approves the distribution and use by the
Underwriters of the Official Statement in connection with the offering and sale of the
Bonds. In addition, the Authority hereby ratifies and approves the distribution of the
Preliminary Official Statement, dated February 22, 1994, (the "Preliminary Official
Statement") and its use by the Underwriters prior to the date hereof in connection with
the offering and sale of the Bonds. The Authority will deliver, on the date hereof, to
the Underwriters (i) two (2) copies of the Official Statement, executed by the
appropriate officials of the Authority, and (ii) two (2) certified copies of the Bond
Resolution. The Authority shall within seven days of the date hereof (exclusive of
Saturdays, Sundays, and legal holidays) provide additional printed copies of the Official
Statement in such form and number as the Underwriters may request in order to
enable the Underwriters to comply with its obligations set forth in 17 C.F.R.
Section 240.15c2-12 ("Rule 15c2 -1T). In the event that the number of additional copies
of the Official Statement supplied to the Underwriters pursuant to the immediately
preceding sentence shall prove to be insufficient to enable the Underwriters to comply
with its obligations under paragraph (b) of Rule 15c2-12, the Authority agrees to make
available from time to time such additional printed or photostatic copies of the Official
Statement as may be required to enable the Underwriters to comply with their
obligations under Rule 15c2-12. The Board hereby ratifies and approves the execution
by the Executive Director of the Authority of a Rule 15c2-12 Certificate pertaining to
the distribution of the Preliminary Official Statement. The City Manager of the City
will also execute a Rule 15c2-12 Certificate relating to the issuance of the Bonds.
4. Security Deposit. Delivered to the Authority herewith is a corporate check
of the Authorized Representative payable to the order of the Authority in the amount
of $78,000. The Authority agrees to hold such check uncashed until the Closing to
ensure the performance by the Underwriters of their obligation to purchase, accept
delivery of, and pay for the Bonds at the Closing. Concurrently with the payment by
the Underwriters of the purchase price of the Bonds at the Closing, the Authority shall
return such check to the Authorized Representative. Should the Authority fail to
deliver the Bonds at the Closing, or should the Authority be unable to satisfy the
conditions of the obligations of the Underwriters to purchase, accept delivery of, and
pay for the Bonds, as set forth in this Purchase Contract (unless waived by the
Authorized Representative), or should such obligations of the Underwriters be
terminated for any reason permitted by this Purchase Contract, such check shall
immediately be returned to the Authorized Representative. In the event the
Underwriters fail (other than for a reason permitted hereunder) to purchase, accept
delivery of, and pay for the Bonds at the Closing as herein provided, such check shall
be retained by the Authority as and for full liquidated damages for such failure of the
Underwriters and for any defaults hereunder on the part of the Underwriters.
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Acceptance of such check by the Authority shall constitute a full release and discharge
of all claims and damages for such failure and for any and all such defaults, and neither
the Authority nor any other person shall have any further action for damages, specific
performance, or any other legal or equitable relief against the Underwriters. The
Authorized Representative hereby agrees not to stop or cause payment on said check
to be stopped unless the Authority has breached any of the terms of this Purchase
Contract.
5. Representations and Warranties. The Authority hereby represents and
warrants to the Underwriters as follows:
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(a) The Authority is a political subdivision of the State of Texas and
a governmental agency and a body politic and corporate, duly created, organized
and existing in good standing under the laws of the State of Texas, created by
a special act of the Texas Legislature that is codified at Texas Revised Civil
Statutes Annotated Article 8280-115, as amended.
(b) The Authority has the power and is authorized under the laws of
the State of Texas, including particularly the Act, to (i) issue the Bonds for the
purpose for which they are to be issued, and (ii) enter into and perform this
Purchase Contract and the Escrow Agreement.
(c) The Authority has the requisite right, powers and authority (i) to
adopt the Bond Resolution authorizing the issuance of the Bonds and the
execution and delivery of this Purchase Contract and the Escrow Agreement, (ii)
to execute, deliver, and perform its obligations under this Purchase Contract and
the Escrow Agreement, and (iii) to consummate the transactions described in
such instruments and in the Official Statement, and the Authority has complied
with all provisions of applicable law in all matters relating to such transactions.
(d) The information contained in the Official Statement is and, as of
the date of Closing, will be correct in all material respects, and such information
does not contain and will not contain any untrue statement of a material fact
and does not omit and will not omit to state a material fact required to be stated
therein or necessary to make the statements in the Official Statement, in light
of the circumstances under which they were made, not misleading.
(e) The Authority has duly authorized all necessary action to be taken
by it for (i) the issuance and sale of the Bonds upon the terms set forth herein
and in the Official Statement; (ii) the approval of the Official Statement and the
signing of the Official Statement by duly authorized officers; and (iii) the
execution, delivery, and performance or receipt, as appropriate, of this Purchase
Contract, the Bonds, the Escrow Agreement, and any and all such other
agreements and documents as may be required to be executed, delivered, and
performed or received by the Authority in order to carry out, give effect to, and
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consummate the transactions described herein, in the Bonds, in the Official
Statement, and in the Escrow Agreement.
(0 The Bond Resolution is and, on the date of the Closing, will be in
full force, and, on the date of Closing, the Escrow Agreement will have been duly
executed and delivered by the Authority. The Bond Resolution is and, on the
date of the Closing, will be the legal and valid act of the Authority, and,
assuming the due authorization, execution, and delivery of such instruments by
the other parties thereto and their authority to perform such instruments, this
Purchase Contract is, and, on the date of the Closing, this Purchase Contract
and the Escrow Agreement will be the legal, valid, and binding agreements of the
parties thereto, enforceable in accordance with their respective terms (except to
the extent that such enforceability may be limited by bankruptcy, insolvency,
reorganization, and similar laws affecting creditors' rights generally and general
principles of equity).
(g) The Bonds, when issued, delivered, and paid for as herein provided,
will have been duly authorized, executed, and issued and will constitute legal,
valid, and binding obligations of the Authority entitled to the benefits of the
Bond Resolution, the Contract between Nueces River Authority and City of
Corpus Christi on Nueces River Reclamation Project, Texas (Choke Canyon
Reservoir Project), as amended (the "Contract") between the Authority and the
City, and the ordinance (the "Ordinance") which was adopted by the City Council
of the City on February 22, 1994. The City is also obligated to make payments
to the Authority pursuant to a contract between the City, the Authority, and the
United States Government executed on , 197_, as amended
(the "Federal Contract").
(h) Except as disclosed in the Official Statement, there is no action,
suit, proceeding, inquiry, or investigation at law or in equity or before or by any
court, public board, or body pending against the Authority or, to the knowledge
of the Authority, threatened against or affecting the Authority (or, to the
knowledge of the Authority, any basis therefor) contesting the due organization
and valid corporate existence of the Authority or the validity of the Act or
wherein an unfavorable decision, ruling, or finding would adversely affect (i) the
transactions described herein or in the Official Statement, (ii) the validity or due
adoption of the Bond Resolution, or the validity, due authorization, and
execution of the Bonds, this Purchase Contract, the Escrow Agreement, or any
agreement or instrument, including, but not limited to, the Contract and the
Federal Contract to which the Authority is a party and which is to be used in the
consummation of the transactions described herein or in the Official Statement,
(iii) the ability of the Authority to establish any fees or charges for its authorized
purposes, the receipt by the Authority of any funds from the State of Texas or
the United States Government or any of their agencies, or the lien on and pledge
of the Pledged Security (as defined in the Bond Resolution) to pay the principal
of and interest on the Bonds, or (iv) the federal tax-exempt status of the interest
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0094427
on the Bonds. Except as described in the Official Statement, the Authority is not
a party to any litigation or other proceeding pending or, to its knowledge,
threatened, in any court, agency, or other administrative body (either state or
federal) which, if decided adversely to the Authority, would have a materially
adverse effect on the financial condition of the Authority.
(i) The authorization, execution, and delivery by the Authority of the
Official Statement, this Purchase Contract, the Bonds, the Contract, the Escrow
Agreement, and the other documents described herein and in the Official
Statement, the adoption of the Bond Resolution by the Authority, the
consummation of the transactions described herein and therein and compliance
by the Authority with the provisions of such instruments, do not and will not
conflict with or constitute on the part of the Authority a breach of or a default
under any provision of the Constitution of the State of Texas or the Act or any
other existing law, court or administrative decision, regulation, decree, or order
or any agreement, indenture, mortgage, lease, or other instrument by which the
Authority or its properties are or, on the date of Closing, will be bound or
affected.
(j) Other than the opinion of the Attorney General of the State of
Texas approving the Bonds as required by law and the registration of the Bonds
by the Comptroller of Public Accounts of the State of Texas (which approval and
registration shall have been duly obtained or effected on or before the date of the
Closing), and other than such permits, consents, licenses, notices, and filings, if
any, as may be required under the securities or blue sky laws of any jurisdiction
as requested by the Underwriters (all of which shall have been duly made or
obtained on or before the date of the Closing, but in no event shall the Authority
be required to consent to any general service of process requirements in
connection with any such requests by the Underwriters), no permit, consent,
license, notice, or filing with governmental authorities is necessary or required
(i) to permit the Authority to execute and deliver this Purchase Contract, the
Escrow Agreement, or the other instruments and documents described herein or
therein, to perform its obligations hereunder and thereunder, or to consummate
the transactions described herein or therein, or (ii) to issue and deliver the
Bonds as described herein and in the Official Statement, or to perform in
accordance with the terms hereof and thereof, or (iii) to adopt and enact the
Bond Resolution, or to perform in accordance with the terms thereof, or to issue
and sell the Bonds as therein and in the Official Statement provided.
(k) The Authority has delivered, or made available, to the Authorized
Representative true, correct, complete, and legible copies of all information,
applications, reports, or other documents of any nature whatsoever submitted to
any rating agency for the purpose of obtaining a rating for the Bonds or the
Refunded Bonds, or both, or to any insurance company, bank, corporation or
other entity of any nature whatsoever for the purpose of obtaining a credit
facility in order to obtain a higher investment grade credit rating for the Bonds
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or the Refunded Bonds, or both, and, in each instance, true, correct, complete,
and legible copies of all correspondence or other communications relating,
directly or indirectly, thereto.
(1) If at any time after the date of this Purchase Contract but before
the first to occur of (i) the date upon which the Underwriters notify the
Authority that the period of the initial public offering of the Bonds has expired
or (ii) the date that is 180 days after the date hereof, any event shall occur which
might or would cause the Official Statement to contain any untrue statement of
a material fact or to omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, the Authority shall notify the
Underwriters thereof, and, if in the opinion of the Underwriters such event
requires the preparation and publication of a supplement or amendment to the
Official Statement, the Authority will at its expense (except as set forth below)
supplement or amend the Official Statement in a form and in a manner approved
by the Underwriters and furnish to the Underwriters the number of copies
requested by the Underwriters in order to enable the Underwriters to comply
with Rule 15c2-12; provided, however, that the cost of any such supplement or
amendment required after 90 days from the date hereof shall be borne by the
Underwriters.
(m) Between the date of this Purchase Contract and the date of the
Closing the Authority shall disclose to, discuss with, and provide any information
reasonably requested by the Underwriters in connection with any breach,
default, or failure to comply, of whatever nature and of which the Authority has
knowledge, regarding any law, loan agreement, indenture, or other agreement
to which the Authority is a party or to which the Authority or any of the
property or assets of the Authority is otherwise subject.
(n) The Authority has not been notified of any listing or proposed
listing by the Internal Revenue Service to the effect that the Authority is a bond
issuer whose arbitrage certificates may not be relied upon.
6. Delivery of. and Payment for. the Bonds. The consummation of the sale
of the Bonds to the Underwriters (the "Closing") shall be held at 10:00 a.m., San
Antonio, Texas time, on March _, 1994, at the offices of McCall, Parkhurst & Horton
L.L.P., 1225 One Riverwalk Place, 700 North Saint Mary's Street, San Antonio, Texas
78205 or at such other time, location, or date as shall be mutually agreed upon by the
Authority and the Authorized Representative.
Subject to the conditions stated herein, at the Closing the Authority will deliver,
or cause to be delivered, to the Underwriters the Bonds in temporary form, duly
executed and registered as hereinafter provided, together with the other documents
hereinafter mentioned, and the Underwriters will accept such delivery and pay the
purchase price of the Bonds as set forth in Section 1 hereof in immediately available
0094427
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funds by check or wire transfer to or for the account of the Authority. The definitive
Bonds shall be in fully registered form, bear proper CUSIP numbers, and be in
authorized denominations and registered in such names and in such amounts as the
Underwriters may request. It is anticipated that the definitive Bonds shall be issued
in the form of one typewritten or printed bond for each maturity, registered in the
name of Cede & Co., as the registered owner and nominee for The Depository Trust
Company, New York, New York ("DTC") in the same aggregate principal amount of the
Bonds. Delivery of the Definitive Bonds as aforesaid shall be made at the place in New
York, New York, designated by DTC. The Authority will have the opinion of Bond
Counsel attached to or printed on the Bonds. The definitive Bonds shall be made
available to the Underwriters for checking and packaging not less than 24 hours prior
to the Closing. After execution by the Authority, authentication by the paying
agent/registrar, and completion of checking and packaging, such Bonds shall be
transferred to and held in safe custody by the Underwriters. In lieu of the foregoing,
such Bonds shall be held in safe custody by the paying agent/registrar or any
authorized agent for the paying agent/registrar. The paying agent/registrar shall
release or authorize the release of such Bonds at the Closing from safe custody to the
Underwriters upon receipt by the Authority of payment for the Bonds as provided
herein.
In addition, the Authority and the Underwriters agree that there shall be a
preliminary Closing held at such place as the Authority and the Authorized
Representative shall mutually agree, commencing at least 24 hours prior to the Closing.
Drafts of all documents to be delivered at the Closing shall be prepared and distributed
to the parties and their counsel for review at least three business days prior to the
Closing.
7. Certain Conditions To Underwriter's Obligations. The obligations of the
Underwriters hereunder are subject to the satisfaction on or before the date of the
Closing of each of the following conditions (unless waived by the Authorized
Representative in writing):
(a) The representations and warranties of the Authority and the City
contained herein or on any certificate or other document delivered pursuant to
the provisions hereof shall be true on and as of the date of the Closing as though
such representations and warranties were made on and as of the date of the
Closing.
(b) The Authority and the City shall have performed and complied with
all agreements and conditions required by this Purchase Contract to be
performed or complied with by it prior to or on the date of the Closing.
(c) At the time of the Closing, the Bond Resolution, the Contract, and
the Ordinance shall be in full force and effect, and the Bond Resolution, the
Contract, and the Ordinance shall not have been amended, modified, or
supplemented, and the Official Statement shall not have been amended,
0094427
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0094427
modified, or supplemented, except as may have been agreed to in writing by the
Authorized Representative.
(d) At the time of the Closing, all official action of the Authority related
to the Bond Resolution shall be in full force and effect and shall not have been
amended, modified, or supplemented.
(e) The Authority and the City shall not have failed to pay principal
or interest when due on any of its outstanding obligations for borrowed money.
(0 Except as described in the Official Statement, no suit, action,
investigation, or legal or administrative proceeding shall be threatened or
pending before any court or governmental agency which is likely to result in the
restraint, prohibition, or the obtaining of damages or other relief in connection
with the issuance of the Bonds or the consummation of the transactions
described herein, or which, in the opinion of the Authorized Representative,
would have a materially adverse effect on the transactions described herein.
(g) All steps to be taken and all instruments and other documents to
be executed, and all other legal matters in connection with the transactions
described in this Purchase Contract shall be reasonably satisfactory in legal form
and effect to counsel for the Underwriters.
(h) At or prior to the Closing, the Underwriters shall have received two
(2) executed copies of each of the following documents:
(1) the opinion, dated the date of the Closing, of McCall,
Parkhurst & Horton L.L.P., as bond counsel ('Bond Counsel"), delivered
to the Underwriters, relating to, among other things, the validity of the
Bonds, the defeasance of the Refunded Bonds, and the tax-exempt status
of the interest on the Bonds for federal income tax purposes, in
substantially the form of attached as Appendix D to the Official
Statement;
(2) the opinion, dated the date of the Closing, of James Bray, the
City Attorney of the City, addressed to the City, the Authority, Bond
Counsel, the Underwriters, and counsel to the Underwriters in
substantially the form of Exhibit D hereto;
(3) the opinion, dated the date of the Closing, of Brown & Potts,
Austin, Texas, General Counsel to the Authority, addressed to the City,
the Authority, Bond Counsel, the Underwriters, and counsel to the
Underwriters in substantially the form of Exhibit E hereto;
(4) the supplemental opinion, dated the date of the Closing, of
Bond Counsel, addressed to the Authority, the City, the Underwriters, and
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0094427
the counsel to the Underwriters, in substantially the form of Exhibit F
hereto;
(5) an opinion, dated the date of the Closing, of Fulbright &
Jaworski L.L.P., counsel for the Underwriters, addressed to the
Underwriters in substantially the form of Exhibit G hereto;
(6) an opinion, dated the date of Closing, of
(the "Insurer"), addressed to the Underwriters, counsel to the
Underwriters, Bond Counsel, the City, and the Authority in a form
satisfactory to Bond Counsel and to the counsel to the Underwriters;
(7) a certificate of the Authority, dated the date of the Closing
and signed on its behalf by the Chairman of the Board and Executive
Director of the Authority acting solely in their official capacity, in form
satisfactory to counsel to the Underwriters, to the effect that (a) except
to the extent disclosed in the Official Statement, no litigation is pending
or, to the knowledge of such persons, threatened, in any court to restrain
or enjoin the issuance or delivery of the Bonds, the establishment of the
rates, fees, and other charges relating to the authorized purposes of the
Authority, the receipt by the Authority of any funds from the State of'
Texas or the United States Government or any of their agencies, the lien
on and pledge of the Pledged Security pledged to the payment of the
principal of and interest on the Bonds, or the pledge thereof, or in any
way contesting or affecting the validity of the Bonds, the Bond Resolution,
the Ordinance, the Contract, the Federal Contract, the Escrow Agreement,
or the Purchase Contract, or contesting the powers of the Authority to
issue the Bonds, or contesting the authorization of the Bonds, the Bond
Resolution, the Purchase Contract, the Contract, the Federal Contract,
the Ordinance, or the Escrow Agreement, or contesting in any way the
accuracy, completeness, or fairness of the Preliminary Official Statement
(to the extent not modified by the Official Statement) or the Official
Statement, or that would otherwise adversely affect in a material manner
the financial condition of the Authority; (b) to the best of our knowledge,
no event affecting the Authority has occurred since the date of the Official
Statement which should be disclosed therein for the purpose for which it
is to be used or which it is necessary to be disclosed therein in order to
make the statements and information therein not misleading in any
respect; (c) the representations and warranties of the Authority contained
in the Purchase Contract, or in any certificate or document delivered by
the Authority pursuant to the provisions thereof, are true and correct on
and as of the date of the Closing as though such representations and
warranties were made on and as the date of the Closing; (d) all
agreements or conditions to be performed or complied with by the
Authority under the Purchase Contract to effect delivery of the Bonds on
or prior to the date of Closing have been performed or complied with; and
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(e) there has not been any materially adverse change in the financial
condition of the Authority since August 31, 1993, the latest date to which
audited financial information is available;
(8) the Official Statement executed on behalf of the Authority
by the Chairman and Secretary of the Board;
(9) a copy of the Bond Resolution and all other orders,
ordinances, or resolutions or other proceedings of the Authority
authorizing the issuance and sale of the Bonds and the execution and
delivery of this Purchase Contract, the Official Statement, and the Escrow
Agreement in each case certified by the Secretary of the Board, as having
been duly adopted and being in full force and effect and as being true,
accurate, and complete copies thereof;
(10) an unqualified opinion, dated on or prior to the date of the
Closing, of the Attorney General of the State of Texas (the "Attorney
General"), relating to the legality and validity of the Bonds, the defeasance
of the Refunded Bonds, and approving the Bonds as required by law;
(11) evidence satisfactory to the Underwriters that the Bonds
have been registered by the Comptroller of Public Accounts of the State
of Texas as required by law;
(12) a letter from either Moody's Investors Service indicating a
rating for the Bonds which is not lower than " " and a letter from
Standard & Poor's Corporation indicating a rating for the Bonds which
is not lower than "
(13) a policy of bond insurance from the Insurer, which
unconditionally and irrevocably guarantees the full, complete, and timely
payment of an amount equal to the principal of and interest on the Bonds
and the closing certificates of the Insurer;
(14) a certificate of the City, dated the date of the Closing,
executed by the Mayor and City Manager of the City, acting solely in their
official capacity, in form satisfactory to counsel to the Underwriters, to
the effect that (i) except to the extent disclosed in the Official Statement,
no litigation is pending or, to the knowledge of such persons, threatened,
in any court to restrain or enjoin the issuance or delivery of the Bonds,
the establishment of the rates, fees, and other charges relating to the
System or the other authorized purposes of the City, the lien on and
pledge of the Pledged Security pledged to the payment of the principal of
and interest on the Bonds, or the pledge thereof, or in any way contesting
or affecting the validity of the Bonds, the Bond Resolution, the Contract,
the Federal Contract, the Ordinance, the Escrow Agreement, or the
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0094427
Purchase Contract, or contesting the powers of the Authority to issue the
Bonds, or contesting the authorization of the Bonds, the Bond Resolution;
the Purchase Contract, the Contract, the Federal Contract, the Ordinance,
or the Escrow Agreement, or contesting in any way the accuracy,
completeness, or fairness of the Preliminary Official Statement (to the
extent not modified by the Official Statement) or the Official Statement,
or that would otherwise adversely affect in a material manner the
financial condition of the City; (ii) to the best of our knowledge, no event
affecting the City has occurred since the date of the Official Statement
which should be disclosed therein for the purpose for which it is to be
used or which it is necessary to be disclosed therein in order to make the
statements and information therein not misleading in any respect; (iii) the
representations and warranties of the City contained in the Purchase
Contract, or in any certificate or document delivered by the City pursuant
to the provisions thereof, are true and correct on and as of the date of the
Closing as though such representations and warranties were made on and
as the date of the Closing; (iv) all agreements or conditions to be
performed or complied with by the City under the Purchase Contract to
effect delivery of the Bonds on or prior to the date of Closing have been
performed or complied with; and (v) there has not been any materially
adverse change in the financial condition of the City since July 31, 1993,
the latest date as of which audited financial information is available;
(15) the certificates required by the provisions of Section of the
Bond Resolution to issue the Bonds on a parity with the Authority's
outstanding indebtedness;
(16) a certificate of the Authority, dated the date of the Closing,
and signed by the Chairman of the Board and/or the Executive Director
of the Authority, in the form approved by Bond Counsel and satisfactory
to the Authorized Representative and Underwriter's counsel, with respect
to arbitrage matters;
(17) an executed copy of the Contract;
(18) an executed copy of the Ordinance; and
(19) an executed copy of the Federal Contract.
(i) The Underwriters shall receive such additional legal opinions,
certificates, proceedings, instruments, and other documents as counsel to the
Underwriters or Bond Counsel may reasonably request to evidence compliance
by the Authority with legal requirements, the truth and accuracy, as of the time
of Closing, of the representations and warranties of the Authority contained
herein, and the due performance or satisfaction by the Authority and the Escrow
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Agent at or prior to such time of all agreements then to be performed and all
conditions then to be satisfied by the Authority and the Escrow Agent.
(j) The Authority shall have returned the corporate check of the
Authorized Representative delivered to the Authority pursuant to Section 4
hereof.
All such opinions, certificates, letters, agreements, and documents will be
in compliance with the provisions hereof only if they are satisfactory in form and
substance to the Underwriters and its counsel and to Bond Counsel. The Underwriters
shall be entitled to receive such conformed copies or photocopies of such opinions,
certificates, letters, agreements, and documents as the Underwriters may reasonably
request.
8. Conditions to Obligations of the Authority. The obligations of the
Authority hereunder to deliver the Bonds shall be subject to receipt on or before the
date of the Closing of the purchase price set forth in Section 1 hereof and the opinion
of Bond Counsel described in Section 7(h)(1) hereof.
9. Termination. The Underwriters shall have the right to cancel their
obligation to purchase the Bonds if, between the date hereof and the Closing,
(i) legislation shall be enacted or recommended to the Congress for passage by the
President of the United States, or favorably reported for passage to either House of the
Congress by any committee of such House to which such legislation has been referred
for consideration, a decision by a court of the United States or the United States Tax
Court shall be rendered, or a ruling, regulation, or statement by or on behalf of the
Treasury Department of the United States, the Internal Revenue Service or other
governmental agency shall be made or proposed, the effect of any or all of which would
be to impose directly or indirectly federal income taxation upon interest received on
obligations of the general character of the Bonds or upon income of the general
character to be derived by the Authority in such a manner as, in the reasonable opinion
of the Underwriters, would materially adversely affect the market price of the Bonds,
or the market price generally of obligations of the general character of the Bonds, or
(ii) there shall exist any event which, in the reasonable judgment of the Underwriters,
either (a) makes untrue or incorrect in any material respect any statement or
information contained in the Official Statement or (b) is not reflected in the Official
Statement but should be reflected therein in order to make the statements and
information contained therein not misleading in any material respect, or (iii) there shall
have occurred any outbreak of hostilities or any national or international calamity or
crisis, including, without limitation, financial crisis, or a financial crisis or a default
with respect to the debt obligations of, or the institution of proceedings under the
federal or the state bankruptcy laws by or against the State of Texas or any political
subdivision, agency, or instrumentality of such State, the effect of which on the
financial markets of the United States being such as, in the reasonable judgment of the
Underwriters, would make it impracticable for the Underwriters to market the Bonds
or to enforce contracts for the sale of the Bonds, or (iv) there shall be in force a general
0094427
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suspension of trading on the New York Stock Exchange, or (v) a general banking
moratorium shall have been declared by either federal, Texas, or New York authorities,
or (vi) there shall have occurred any materially adverse change in the affairs or
financial condition of the Authority, except for changes which the Official Statement
discloses have occurred or may occur, or (vii) legislation shall be enacted or any action
shall be taken by the Securities and Exchange Commission which, in the opinion of
counsel for the Underwriters, has the effect of requiring the contemplated distribution
of the Bonds to be registered under the Securities Act of 1933, as amended, or requiring
the Bonds or the Bond Resolution or any other document relating to the Bonds or
transactions described herein to be qualified under the Trust Indenture Act of 1939, as
amended, or (viii) a stop order, ruling, regulation, or official statement by or on behalf
of the Securities and Exchange Commission shall be issued or made to the effect that
the issuance, offering, or sale of the Bonds, or of obligations of the general character
of the Bonds, is in violation of any provision of the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, or the Trust Indenture Act of 1939,
as amended, or (ix) any state blue sky or securities commission or other governmental
agency or body shall have withheld registration, exemption, or clearance of the offering
of the Bonds as described herein, or issued a stop order or similar ruling relating
thereto, and in the reasonable judgment of the Underwriters, the market for the Bonds
would be materially affected thereby, or (x) the Constitution of the State of Texas shall
be amended or an amendment shall be proposed, or legislation shall be enacted, or a
decision shall have been rendered as to matters of Texas law, or any order, ruling or
regulation shall have been rendered as to or on behalf of the State of Texas by an
official, agency, or department thereof, affecting the tax status of the Authority, its
property, income or the Pledged Security, its bonds (including the Bonds), or the
interest thereon, which in the reasonable judgment of the Underwriters would
materially affect the market price of the Bonds.
If the Authority shall be unable to satisfy the conditions to the obligations of the
Underwriters to purchase, to accept delivery of, and to pay for the Bonds contained in
this Purchase Contract, or if the obligations of the Underwriters to purchase, to accept
delivery of, and to pay for the Bonds shall be terminated for any reason permitted by
this Purchase Contract, this Purchase Contract shall terminate and be of no further
force or effect, and neither the Underwriters nor the Authority shall be under further
obligation hereunder, except that the respective obligations of the Authority and the
Underwriters set forth in Sections 11, 12, 13, 14, and 16 hereof shall continue in full
force and effect. In addition, the Authority shall promptly return the corporate check
of the Authorized Representative delivered to the Authority pursuant to Section 4
hereof.
10. Particular Covenants of the Authority. The Authority covenants and
agrees with the Underwriters as follows:
0094427
(a) The Authority shall cooperate with the Underwriters in amending
or supplementing the Official Statement whenever requested by the
-14-
Underwriters if, in the reasonable judgment of the Authorized Representative,
such amendment or supplement is required.
(b) The Authority shall not revise, amend, or supplement the Official
Statement unless such revision, amendment, or supplement has been previously
approved by the Authorized Representative.
(c) The Authority shall cooperate with the Underwriters and their
counsel in any endeavor to qualify the Bonds for offering and sale under the
securities or blue sky laws of such jurisdictions of the United States as the
Underwriters may request, and the Authority shall use its best efforts to effect
such qualifications and to maintain them in effect until the distribution of the
Bonds described in the Official Statement shall have been completed; provided,
however, the Authority shall not be required with respect to the offer or sale of
the Bonds to file a general written consent to suit or to file a general written
consent to service of process in any jurisdiction. The Authority consents to the
use of the Bond Resolution, Preliminary Official Statement, and the Official
Statement by the Underwriters in obtaining such qualifications.
(d) Any certificate or other instrument or document signed by an
authorized officer or agent of the Authority and delivered to the Underwriters
pursuant to the terms and provisions hereof shall be deemed to be a
representation and warranty made by the Authority to the Underwriters as to
the statements made therein.
(e) From and after the date of this Purchase Contract through and
including the time of the Closing, the Authority will not, without the prior
written consent of the Underwriters, issue any additional bonds, notes, or other
obligations for borrowed money payable and secured, in whole or in part, from
Pledged Security, and the Authority will not incur any material liabilities, direct
or contingent, relating to the Authority.
(f) If, at any time prior to the time of the Closing as herein provided,
an event occurs affecting the Authority which is materially adverse for the
purpose for which the Official Statement is to be used and is not disclosed in the
Official Statement, the Authority shall notify the Authorized Representative, and
if, in the opinion of the Authority and the Authorized Representative, such event
requires a supplement or amendment to the Official Statement, the Authority
shall supplement or amend the Official Statement in a form and in a manner
approved by the Underwriters and Bond Counsel to the Authority.
11. Survival of Representations. All representations, warranties, and
agreements of the Authority hereunder or in any certificate delivered pursuant hereto
shall remain operative and in full force and effect, regardless of any investigation made
by or on behalf of the Underwriters, and shall survive the delivery of and payment for
0094427
-15-
the Bonds and any termination of this Purchase Contract by the Underwriters pursuant
to the terms hereof.
12. Payment of Expenses. Costs related to the issuance and sale of the Bonds,
including, but not limited to, costs of preparation, printing, and mailing of the Bonds,
the Preliminary Official Statement, and the Official Statement, postage, the fees and
expenses of First Southwest Company, the financial advisors to the Authority, the cost
of obtaining credit ratings on the Bonds, the fees of the Insurer and the Attorney
General, the fees and costs of the paying agent/registrar bank, any fees and expenses
of any consultants, engineers, attorneys, or other persons retained by the City or
Authority relating to the issue of the Bonds, and the fees and disbursements of Bond
Counsel to the Authority, shall be paid out of the proceeds of the Bonds or other funds
of the Authority. The Underwriters shall pay for their costs related to the purchase of
the Bonds, including, without limitation, the appropriate advertising expenses and the
fees and expenses of their counsel.
13. No Personal Liability. None of the members of the Board, nor any officer,
agent, or employee of the Authority, shall be charged personally by the Underwriters
with any liability, or be held liable to the Underwriters under any term or provision of
this Purchase Contract, or because of its execution or attempted execution, or because
of any breach or attempted or alleged breach, of this Purchase Contract. All
representations, warranties, and agreements of the individual representatives of the
Authority and the Underwriters shall be deemed to be those of the parties each
represents and shall not create any personal liability for such individuals.
14. Indemnification. To the extent it legally may, the Authority assumes
liability for, and will indemnify and hold the Underwriters harmless from and against,
any liabilities, claims, damages, costs, and expenses (including legal fees and expenses)
(the "Liabilities") arising out of or in connection with the issuance and sale of the
Bonds, including without limitation, Liabilities arising out of or related to an actual or
alleged untrue statement of a material fact contained in the Official Statement or
otherwise made in connection with the issuance and sale of the Bonds or an actual or
alleged omission of a material fact necessary in order to make any statement contained
in the Official Statement or otherwise made in connection with the issuance and sale
of the Bonds, in light of the circumstances in which such statements were made, not
misleading; provided, however, that the foregoing indemnity shall not extend to any
Liabilities to the extent they arise from (i) an untrue statement by the Underwriters
of a material fact relating to the Underwriter's sale of the Bonds or an omission by the
Underwriters of a material fact relating to the Underwriter's sale of the Bonds
necessary in order to make any statement, in light of the circumstances in which such
statement was made, not misleading; (ii) the negligence of the Underwriters in the
performance or failure to perform their obligations hereunder; or (iii) any causes other
than negligent acts or omissions of the Authority; provided, further, that the standard
of negligence to be applied hereunder shall be the standard generally applied in the
municipal securities industry.
0094427
-16-
r�
15. Notices. Any notice or other communication to be given to the Authority
under this Purchase Contract may be given by delivering the same in writing at its
address set forth above, Attention: Chairman of the Board, and any notice or other
communication to be given to the Underwriters under this Purchase Contract may be
given by delivering the same in writing to M. E. Allison & Co., Inc., 112 East Pecan,
Suite 1200, San Antonio, Texas 78205, Attn: E. James Seal.
16. Parties. This Purchase Contract is made solely for the benefit of the
Authority and the Underwriters (including the successors or assigns of the
Underwriters), and no other person shall acquire or have any right hereunder or by
virtue hereof.
17. Governing Law. This Purchase Contract shall be governed by and
construed in accordance with the laws of the State of Texas and the United States of
America.
18. General. This Purchase Contract may be executed in several counterparts,
each of which shall be regarded as an original and all of which will constitute one and
the same instrument. The section headings of this Purchase Contract are for
convenience of reference only and shall not affect its interpretation. This Purchase
Contract shall become effective upon your acceptance hereof and delivery of a signed
copy of this Purchase Contract to the Authorized Representative.
[The remainder of this page intentionally left blank.]
0094427
-17-
Very truly yours,
M. E. ALLISON & CO., INC.
By:
Title: Senior Vice President
Accepted and agreed to as of
the date first above written:
NUECES RIVER AUTHORITY
By:
Chairman, Board of Directors
0094427
-18-
EXHIBIT A
ISSUE PRICE CERTIFICATE
The undersigned hereby certifies with respect to the sale of the "Nueces River Authority
Water Supply Revenue Current Refunding Revenue Bonds, Series 1994 (City of Corpus Christi,
Texas Project)" (the "Bonds"), issued in the aggregate principal amount of $7,800,000, as
follows:
1. The undersigned is the underwriter or the manager of the syndicate of
underwriters which has purchased the Bonds from the Nueces River Authority (the "Issuer").
2. The undersigned and/or one or more other members of the underwriting
syndicate, if any, have made a bona fide offering to the public of the Bonds of each stated
maturity at the respective prices set forth below.
3. The initial offering price (expressed as a percentage of principal amount or yield
and exclusive of accrued interest) for the Bonds of each stated maturity at which a substantial
amount of the Bonds (at least 10%) of such stated maturity was sold to the public is as set
forth below:
Principal Amount at
Stated Maturity ($)
Year of
Stated Maturity
Offering Price
or Yield (%)
55,000
1995
535,000
1996
520,000
1997
560,000
1998
550,000
1999
590,000
2000
630,000
2001
670,000
2002
660,000
2003
700,000
2004
740,000
2005
775,000
2006
815,000
2007
0094427
r-
4. The term 'public", as used herein, means persons other than bondhouses,
brokers, dealers, and similar persons or organizations acting in the capacity of underwriters
or wholesalers.
5. The offering prices described above reflect current market prices at the time of
such sales.
6. The CUSIP number of the Bond with the latest stated maturity is
7. The undersigned [have] [have not] purchased bond insurance on behalf of the
Issuer for the Bonds. The bond insurance has been purchased from (the
"Insurer") for a premium cost of $ (net of any nonguarantee cost, e.g, rating
agency fees). The amount of such cost is set forth in the Insurer's commitment and is
separately stated from all other fees or charges payable to the Insurer. The premium does not
exceed a reasonable charge for the transfer of credit risk taking into account payments charged
by guarantors in comparable transactions (including transactions in which a guarantee has no
involvement other than as a guarantor). The present value of the debt service savings expected
to be realized as a result of such insurance, discounted at a rate equal to the yield on the
Bonds, which results after recovery of the insurance premium, exceeds the present value of the
bond insurance premium.
8. The undersigned understands that the statements made herein will be relied
upon by the Issuer in its efforts to comply with the conditions imposed by the Internal
Revenue Code of 1986, as amended, and by Bond Counsel in rendering their legal opinion
concerning the excludability of interest on the Bonds from the gross income of their owners.
[The remainder of this page intentionally left blank]
0094427
EXECUTED AND DELIVERED this
M. E. ALLISON & CO., INC.
By:
Title:
0094427
0094427
EXHIBIT B
Official Statement
EXHIBIT C
[Letterhead of the City Attorney]
March , 1994
M. E. Allison & Co., Inc.
112 East Pecan, Suite 1200
San Antonio, Texas 78205
Fulbright & Jaworski L.L.P.
300 Convent Street, Suite 2200
San Antonio, Texas 78205
McCall, Parkhurst & Horton L.L.P.
717 North Harwood, Suite 900
Dallas, Texas 75201
Nueces River Authority
First State Bank Building
Uvalde, Texas 78802
City of Corpus Christi, Texas
1201 Leopard Street
Corpus Christi, Texas 78469
First Southwest Company
1850 One Riverwalk Place
700 North Saint Mary's
San Antonio, Texas 78205
Ladies and Gentlemen:
I serve as the City Attorney to the City of Corpus Christi, Texas (the
"City") and have acted as such in connection with the issuance of an aggregate of
$2,780,000 principal amount of Nueces River Authority Water Supply Revenue
Current Refunding Bonds, Series 1994 (City of Corpus Christi, Texas Project) (the
"Bonds") pursuant to the provisions of a resolution duly adopted by the Board of
Directors of the Nueces River Authority (the "Authority") on March 3, 1994 (the "Bond
Resolution"). Capitalized terms not otherwise defined in this opinion have the
meanings assigned in the Purchase Contract dated March 3, 1994, executed between
the Authority and M. E. Allison & Co., Inc., as the Authorized Representative of the
Underwriters (the "Purchase Contract").
In my capacity as the City Attorney, I have reviewed the following:
1. the Bond Resolution as adopted by the Board of Directors;
2. an executed counterpart of the Purchase Contract;
0094427
3. a copy of the Official Statement dated March 3, 1994;
4. the Contract, the Federal Contract, the Ordinance, and such other
agreements, documents, certificates, opinions, letters, and other
papers as I have deemed necessary or appropriate in rendering the
opinions set forth below; and
5. Texas Revised Civil Statutes Annotated Articles 717k and
8280-115, as amended (the "Acts"), and such other provisions of the
Constitution and laws of the State of Texas and the United States
of America as I believe necessary to enable me to render the
opinions herein contained.
In making my review, I have assumed the authenticity of all documents
and agreements submitted to me as originals, conformity to the originals of all
documents and agreements submitted to me as certified or photostatic copies, the
authenticity of the originals of such latter documents and agreements, and the
accuracy of the statement contained in such documents.
Based upon the foregoing, and subject to the qualifications and exceptions
hereinafter set forth, I am of the opinion that under the applicable laws of the United
States of America and the State of Texas in force and effect on the date hereof:
1. The City has duly adopted and enacted the Ordinance; the City has
full legal right, power, and authority to enter into the Contract, the
Federal Contract, and the Ordinance (collectively, the
"Agreements"); the City has duly authorized and approved the
execution and the delivery of, and the performance by the City of
the obligations contained in, the Agreements and the Bond
Resolution, and all other transactions contemplated by the Official
Statement; the City has complied with, and is in compliance with
Texas law in all respects relating to its obligations under the
Purchase Contract, the Contract, the Federal Contract, and the
Ordinance; and assuming the due authorization, execution, and
delivery by the other contracting parties of the Agreements, the
Agreements constitute valid, legal, and binding agreements of the
City, enforceable in accordance with their respective terms, subject
to bankruptcy, insolvency, reorganization or other laws relating to
or affecting the rights of creditors generally and general equitable
principles;
2. The City is a home rule municipality and a political subdivision of
the State of Texas and a body politic and corporate, duly created,
organized and existing and in good standing under the laws of the
State of Texas and the City's Home Rule Charter;
0094427
3. Except for permits and similar authorizations under the securities
or blue sky laws of certain jurisdictions, no consent, waiver or any
other action of any person, board or body, public or private, is
required as of the date hereof for the City to enter into the
Agreements, or to perform its obligations under any of the
Purchase Contract and the Agreements other than those which
have been duly and validly obtained and are in full force and effect;
4. Based on reasonable inquiry made of the responsible City
employees and public officials, the City is not, to the best of my
knowledge, in breach of or in default under any applicable law or
administrative regulation of the State of Texas or the United
States, or any applicable judgment or decree or any trust
agreement, loan agreement, bond, note, resolution, ordinance,
agreement or other instrument to which the City is party or is
otherwise subject and, to the best of my knowledge after due
inquiry, no event has occurred and is continuing which, with the
passage of time or the giving of notice, or both, would constitute
such a default by the City under any of the foregoing; and the
execution and delivery of the Agreements and compliance with the
provisions of each of such agreements or instruments does not
constitute a breach of or default under any applicable law or
administrative regulation of the State of Texas or the United States
or any applicable judgment or decree or, to the best of my
knowledge, any trust agreement, loan agreement, bond, note,
resolution, ordinance, agreement or other instrument to which the
City is a party or is otherwise subject; and
5. Except as disclosed in the Official Statement, no litigation is
pending, or, to my knowledge, threatened, in any court (a) in any
way challenging the titles of the Mayor or any of the other
members of the City Council to their respective offices, or
(b) challenging the establishment of the fees and charges relating
to the System or the other authorized purposes of the City, or
(c) seeking to restrain or enjoin the issuance or delivery of the
Bonds, or the lien on and pledge of the Pledged Security of the
System pledged to pay the principal of and interest on the Bonds,
or in any way contesting or affecting the validity or enforceability
of the Bond Resolution or the Agreements.
In addition, without having undertaken to determine independently the
accuracy and completeness of the statements contained in the Official Statement,
during my participation in the preparation of the Official Statement nothing has come
to my attention which would lead me to believe that the Official Statement (excluding
therefrom the financial and statistical data and forecasts included therein) contains
any untrue statement of a material fact or omits to state a material fact necessary to
0094427
make the statements therein, in the light of the circumstances under which they were
made, not misleading.
This opinion is furnished solely for your benefit and may be relied upon
only by the addressees hereof or anyone to whom specific permission is given in
writing by me.
Very truly yours,
0094427
CONDITIONAL
NOTICE OP REDEMPTION
NUECES RIVER AUTHORITY
SUBJECT TO THE PROVISIONS OF THE SECOND PARAGRAPH OF THIS
NOTICE, NOTICE IS HEREBY GIVEN that the Nueces River Authority (the "Authority")
has called for redemption on the date and at the redemption price specified, the below listed
outstanding Bonds of the Authority as follows:
Nueces River Authority Water Supply Revenue Bonds, Series 1979 (City of
Corpus Christi Project), dated April 1, 1979, maturing on April 1 in the years,
in the amounts, at a redemption date, at a redemption price of par, plus the
redemption premium set forth below, and accrued interest to the date fixed
for redemption, at the interest rates, and with cusip numbers as follows:
REDEMPTION REDEMPTION INTEREST CUSIP
DATE PRICE RATE NO.
MATURITY
DATE
1996
7
1999
2000
2001
2002
2003
2004
2005
2006
2007
PRINCIPAL
AMOUNT
450 n*?
450,001)
-2n
,2410
500,000
550,000
61A,000
650,000
650,000
700,000
750,000
800,000
850,000
April 1, 1094
April 1, 1994
April 1, :WI
April 1, 1t94
AN_'
- 1, i994
April 1, 1994
April 1, 1994
April 1, 1994
April 1, 1994
April 1, 1994
April 1, 1994
April 1, 1994
iM-1(d.'tb 6.0
102.1;: '.-7. 6 50
1m-_1/?°A 6.50%
102-12% 6.35%
102-12% 6.00%
102-12% 6.10%
102-12% 6.20%
102-12% 6.20%
102-12% 6.20%
102-12% 6.20%
102-12% 6.20%
870500AR8
S7C500A.5
o,U)wi•. T
870500AU1
870500AV9
870500AW7
870500AX5
870500AY3
870500AZA
870500BA4
870500BB2
870500BC0
aggregating $7,450,000 in principal amount (the "Refunded Bonds"). The Refunded Bonds
shall be redeemed in whole at the Texas Commerce Bank National Association, Dallas,
Texas (the successor to Mercantile National Bank at Dallas, and Corpus Christi National
Bank) the Paying Agent for the Refunded Bonds. Upon presentation of the Refunded
Bonds at the Paying Agent on the aforementioned redemption date, the holder thereof shall
be entitled to receive the Redemption Price equal to par and accrued interest to the
redemption date, plus a premium of 2-1/2%.
THIS CONDITIONAL NOTICE OF REDEMPTION AND THE PAYMENT
OF THE REDEMPTION PRICE on the Refunded Bonds on April 1, 1994 is subject to the
issuance and delivery of Nueces River Authority Water Supply Revenue Refunding Bonds,
Series 1994 (City of Corpus Christi Project) (the "Refunding Bonds") before April 1, 1994
in an amount sufficient to provide funds to pay in full of the Redemption Price of the
Refunded Bonds. In the event the Refunding Bonds have not been issued before April 1,
Corpus Christi, Texas
22 day of kLYvx✓v1
, 19 q4
The above resolution was passed by the following vote:
Mary Rhodes
Dr. Jack Best
Melody Cooper
Cezar Galindo
Betty Jean Longoria
Edward A. Martin
Dr. David McNichols
David Noyola
Clif Moss
\forms\066
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