HomeMy WebLinkAbout024231 ORD - 09/19/2000CERTIFICATE FOR ORDINANCE
THE STATE OF TEXAS
COUNTY OF NUECES
CITY OF CORPUS CHRISTI
On this the 19th day of September, 2000, the City Council of the City of Corpus Chfisti,
Texas convened in Regular Meeting, with the following members of said Council present, to-wit:
Samuel L. Neal, Jr.
Betty Jean Longoria,
Melody Cooper,
Arnold Gonzales, Ph.D.,
Rex Kinnison,
Henry Garrett,
John Longofia,
Javier D Colmenero,
Mark Scott
David Garcia,
James Bray,
Jorge Cruz-Aedo,
Armando Chapa,
Mayor
Councilmembers
City Manager,
City Attorney,
Director of Finance,
City Secretary
with the following absent: none, constituting a quorum, at which time the following among other
business was transacted:
City Manager David Garcia presented for the consideration of the Council an ordinance
authorizing the issuance of Utility System Revenue Refunding Bonds, Series 2000-A. The ordinance
was read by the City Secretary. The motion to pass the ordinance was carried by the following vote.
AYES:
All members of the City Council shown present above voted
"Aye".
NAYS: None.
ABSENT WHEN VOTiNG: None.
The Mayor announced that the ordinance had been passed. The ordinance is as follows:
ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF
$42,520,000 CITY OF CORPUS CHRISTI, TEXAS UTILITY SYSTEM
REVENUE REFUNDING BONDS, SERIES 2000-A
THE STATE OF TEXAS
COUNTY OF NUECES
CITY OF CORPUS CHRISTI
WHEREAS, the City of Corpus Christi, Texas (the "City" or the "Issuer"), a "home-rule" city
operating under a home-rule charter adopted pursuant to Section 5 of Article XI of the Texas
Constitution, with a population according to the latest federal decennial census of in excess ofg0,000,
has heretofore issued its City of Corpus Christi, Texas Utility System Revenue Refunding Bonds,
Series 1990 (the "Series 1990 Bonds"), its Utility System Revenue Bonds, Series 1994 (the "Series
1994 Bonds"), its Utility System Revenue Bonds, Series 1994-A (the "Series 1994-A Bonds"), its
Utility System Revenue Bonds, Series 1995 (the "Series 1995 Bonds"), its Utility System Revenue
Bonds, Series 1995-A (the "Series 1995-A Bonds"), its City of Corpus Christi, Texas Utility System
Revenue Refunding and Improvement Bonds, Series 1999 (the "Series 1999 Bonds"), its City of
Corpus Christi, Texas Utility System Revenue Refunding and Improvement Bonds, Series 1999-A,
in the aggregate principal amount of$15,750,000 (the "Series 1999-A Bonds") and its City of Corpus
Christi, Texas Utility System Revenue Refunding Bonds, Series 2000 (the "Series 2000 Bonds"); and
WHEREAS, the Series 1990 Bonds, the Series 1994 Bonds, the Series 1994-A Bonds, the
Series 1995 Bonds, the Series 1995-A Bonds, the Series 1999 Bonds, the Series 1999-A Bonds and
the Series 2000 Bonds are sometimes collectively referred to herein as the "Previously Issued Priority
Bonds"; and
WHEREAS, the City has established an interim financing program pursuant to which the City
has issued commercial paper notes designated "City of Corpus Christi, Texas Utility System
Commercial Paper Notes, Series A", to be issued from time to time in an aggregate principal amount
not to exceed $50,000,000 at any one time outstanding (the "Commercial Paper Notes"); and
WHEREAS, the City currently has outstanding Commercial Paper Notes in the aggregate
principal amount of $43,140,000; and
WHEREAS, in the ordinance authorizing the issuance of the Series 1990 Bonds (the "Base
Ordinance"), the City reserved the right to issue revenue bonds on a parity with the Series 1990
Bonds; and
WHEREAS, it is appropriate and necessary, in order to provide the citizens of the City more
efficient and reliable service, to issue revenue bonds on a parity with the Previously Issued Priority
Bonds for the purpose of refunding all of the outstanding Commercial Paper Notes; and
WHEREAS, the bonds hereinafier authorized are to be issued and delivered pursuant to the
laws of the State of Texas, including specifically Chapters 1207 and 1502, Texas Government Code,
as amended, for the purposes set forth above.
024231
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF CORPUS CIIRISTI, TEXAS:
Section 1. BONDS AUTHORIZED. That the City's bonds (the "Bonds") are hereby
authorized to be issued in the aggregate principal amount of $42,520,000 for the purpose of refunding
the City's outstanding Commercial Paper Notes, issued initially to finance improvements and
extensions to the System. The Bonds shall be designated as the "City of Corpus Christi, Texas Utility
System Revenue Refunding Bonds, Series 2000-A". The Bonds shall be issued, shall be payable, are
subject to redemption prior to their scheduled maturities, shall have the characteristics, and shall be
signed and executed (and the Bonds shall be sealed), all as provided, and in the manner indicated, in
the FORM OF BOND set forth in Section 6 of this Ordinance.
Section 2. DATE AND MATURITIES. That the Bonds shall be dated September 15, 2000,
shall be in an Authorized Denomination, shall be numbered consecutively from R- 1 upward, and shall
mature on July 15 in each of the years, and in the amounts, respectively, unless redeemed prior to
maturity as required or permitted in the FORM OF BOND set forth in Section 6 of this Ordinance,
as set forth in the following schedule:
YEARS AMOUNTS(S) YEARS AMOUNTS(S)
2001 970,000 2011 2,060,000
2002 1,340,000 2012 2,175,000
2003 1,400,000 2013 2,300,000
2004 1,465,000 2014 2,435,000
2005 1,530,000 2015 2,580,000
2006 1,600,000 2016 2,730,000
2007 1,675,000 2017 2,895,000
2008 1,765,000 2018 3,070,000
2009 1,860,000 2019 3,255,000
2010 1,965,000 2020 3,450,000
Section 3. RIGHT OF PRIOR REDEMPTION. (a) That the City reserves the right to
redeem the Bonds maturing on and after July 15,2011, in whole, or in part, on July 15, 2010 or on
any date thereafter, at the redemption price of par plus accrued interest thereon to the date fixed for
redemption. The Bonds or portions thereof redeemed within a maturity shall be selected by lot or
other customary random method selected by the Paying Agent/Registrar (hereinafter defined);
provided that a portion of a Bond may be redeemed only in an integral multiple of $5,000.
(b) Notice of any such redemption of Bonds shall be given in the following manner, to-wit,
(i) a written notice of such redemption shall be given to the registered owner of each Bond or a
portion thereof being called for redemption not more than 60 days nor less than 30 days prior to the
date fixed for such redemption by depositing such notice in the United States Mail, first-class postage
prepaid, addressed to each such registered owner at his address shown on the Registration Books
(hereinafier defined) of the Paying Agent/Registrar and (ii) a notice of such redemption shall be
published one time, at least 30 days prior to the date fixed for such redemption, in a journal or
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publication of general circulation in the United States of America which carries as a regular feature
notices of redemption of municipal bonds; provided, however, that the failure to send, mail, or receive
such notice described in clause (i) above, 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 Bond, as
publication of notice as described in clause (ii) above shall be the only notice actually required in
connection with or as a prerequisite to the redemption of any Bonds. By the date fixed for any such
redemption due provision shall be made by the City with the Paying Agent/Registrar for the payment
of the required redemption price for the Bonds or the portions thereof which are to be so redeemed,
plus accrued interest thereon to the date fixed for redemption. Ifsuch notice ofredemption is given,
and if due provision for such payment is made, all as provided above, the Bonds, or the portions
thereof which are to be so redeemed, thereby automatically shall be redeemed prior to their scheduled
maturities, and shall not bear interest after the date fixed for their redemption, and shall not be
regarded as being outstanding except for the right of the registered owner to receive the redemption
price plus accrued interest to the date fixed for redemption from the Paying Agent/Registrar out of
the funds provided for such payment. The Paying Agent/Registrar shall record in the Registration
Books all such redemptions of principal of the Bonds or any portion thereo£ Ira portion &any Bond
shall be redeemed, a substitute Bond or Bonds having the same maturity date, bearing interest at the
same rate, in any Authorized Denomination 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 City, all as provided in this
Ordinance. The maturities of Bonds to be called for redemption shall be determined by the City. The
Bonds or portions to be redeemed within each such maturity shall be selected by lot or other
customas-/random method selected by the Paying Agent/Registrar (provided that a portion of a Bond
may be redeemed only in an integral multiple of $5,000). The City shall give written notice to the
Paying Agent/Registrar of any such redemption of Bonds at least 60 calendar days (or such shorter
period as is acceptable to the Paying Agent/Registrar) prior to such redemption.
(c) (i) In addition to the manner of providing notice of redemption of Bonds as set forth
above, the Paying Agent/Registrar shall give notice of redemption &Bonds by either United States
Mail, first-class postage prepaid, or electronic mail, at least thirty (30) days prior to a redemption date
to each URMSIR and the S1D. In addition, in the event of a redemption caused by an advance
refunding of the Bonds, the Paying Agent/Registrar shall send a second notice of redemption to the
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 each URMSIR and the SIR
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 owner of any Bond who has not sent the Bonds in for redemption sixty (60) days
after the redemption date.
(ii) Each redemption notice, whether required in the FORM OF BOND or otherwise by this
Ordinance, shall contain a description of the Bonds to be redeemed including the complete name of
the Bonds, the series, the date otissue, the interest rate, the maturity date, the CUSIP number, if any,
the certificate numbers, the amounts called of each certificate, the publication 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 Bond may be redeemed including a contact person and telephone number.
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(iii) All redemption payments made by the Paying Agent/Registrar to the registered owners
of the Bonds shall include a CUSIP number relating to each amount paid to such registered owner.
Section 4. INTEREST. That the Bonds scheduled to mature during the years, respectively,
set forth below shall bear interest at the following rates per annum:
maturities 2001 ...........4.300%
maturities 2002 ...........4.400%
maturities 2003 ...........4.500%
maturities 2004 ...........4.500%
maturities 2005 ...........4.600%
maturities 2006 ...........4.600%
maturities 2007 ...........5.500%
maturities 2008 ...........5.500%
maturities 2009 ...........5.500%
maturities 2010 ...........4.800%
maturities 2011 ...........5.750%
maturities 2012 ...........5.750%
maturities 2013 ...........5.875%
maturities 2014 ...........5.875%
maturities 2015 ...........5.875%
maturities 2016 ...........6.000%
maturities 2017 ...........6~ 000%
maturities 2018 ...........6.000%
maturities 2019 ...........6.000%
maturities 2020 ...........6.000%
Said interest shall be payable to the registered owner of any such Bond in the manner provided and
on the dates stated in the FORM OF BOND set forth in this Ordinance.
Section 5. CHARACTERISTICS OF THE BONDS. (a) Registration, Transfer,
Conversion and Exchange; Authentication The City shall keep or cause to be kept at the
designated trust office in Houston, Texas (the "Designated Trust Office") of The Chase Manhattan
Bank (the "Paying Agent/Registrar") books or records for the registration of the transfer, conversion
and exchange of the Bonds (the "Registration Books"), and the City 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 City
and the Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make such regis-
trations, transfers, conversions and exchanges as herein provided. The execution of a "Paying
Agent/Registrar Agreement", in such form as is approved by the City Attorney, is hereby authorized.
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. The City shall have the right to inspect the Registration
Books during regular business hours of the Paying Agent/Registrar, but otherwise the Paying
Agent/P, egistrar shall keep the Registration Books confidential and, unless otherwise required by law,
shall not permit their inspection by any other entity. The City shall pay 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. 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 Section 6 of this Ordinance. Each substitute Bond shall bear a letter and/or
number to distinguish it from each other Bond.
An authorized representative of the Paying Agent/Registrar shall, before the delivery of any
such Bond, date and manually sign said 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 City 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 Chapter 1206, Texas Government Code, 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 Ordinance, approved by the Attorney
General, and registered by the Comptroller of Public Accounts.
(b) Payment of Bonds and Interest. The City hereby further appoints the Paying
Agent/Registrar to act as the paying agent for paying the principal of, premium, if any, and interest
on the Bonds, all as provided in this Ordinance. The Paying Agent/Registrar shall keep proper
records of all payments made by the City and the Paying Agent/Registrar with respect to the Bonds.
(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, (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 which shall be pay-
able, and (viii) shall be administered and the Paying Agent/Registrar and the City 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 Section 6 of this Ordinance. The
Bonds initially issued and delivered pursuant to this Ordinance are not required to be, and shall not
be, authenticated by the Paying Agent/Registrar, but on each substitute Bond issued in conversion
of and exchange for any Bond or Bonds issued under this Ordinance the Paying Agent/Registrar shall
execute the PAYiNG AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE, in the form
set forth in said FORM OF BOND.
(d) Substitute Paying Agent/Registrar. The City covenants with the registered owners of
the Bonds that at all times while the Bonds are outstanding a competent and legally qualified entity
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shall act as and perform the services of Paying Agent/Registrar for the Bonds under this Ordinance,
and that the Paying Agent/Registrar will be one entity. Such entity may be the City, to the extent
permitted by law, or a bank, trust company, financial institution, or other agency, as selected by the
City. The City 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, acquisition, or other
method) should resign or otherwise cease to act as such, the City covenants that promptly it will
appoint a competent and legally qualified entity to act as Paying Agent/Registrar under this
Ordinance. 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 City. Upon any change in the Paying Agent/Registrar, the City promptly will cause
a written notice thereof to be sent by the new Paying Agent/Registrar to each registered owner of the
Bonds, by United States Mall, first-class postage prepaid, which notice also shall give the address of
the new Paying Agent/Registrar. By accepting the position and performing as such, each Paying
Agent/Registrar shall be deemed to have agreed to the provisions of this Ordinance, and a certified
copy of this Ordinance shall be delivered to each Paying Agent/Registrar.
(e) Book Entry Only Systerr~ The Bonds issued in exchange for the Bonds initially issued
to the purchaser specified heroin shall be initially issued in the form of a separate single fully
registered Bond for each of the maturities thereof. Upon initial issuance, the ownership of each such
Bond shall be registered in the name of Cede & Co., as nominee of The Depository Trust Company
of New York CDTC"), and except as provided in subsection (f) hereof, all of the outstanding 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 Issuer
and the Paying Agent/Registrar shall have no responsibility or obligation to any securities brokers and
dealers, banks, trust companies, clearing corporations and certain other organizations on whose behalf
DTC was created CDTC Participant") to hold securities to facilitate the clearance and settlement of
securities transactions among DTC Participants or to any person on behalf of whom such a DTC
Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence, the
Issuer 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 a
registered owner of Bonds, as shown on the Registration Books, of any notice with respect to the
Bonds, or (iii) the payment to any DTC Participant or any other person, other than a registered owner
of Bonds, as shown in the Registration Books of any amount with respect to principal of or interest
on the Bonds. Notwithstanding any other provision of this Ordinance to the contrary, the Issuer 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 and interest 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 and interest on the Bonds only to or upon the order of the registered owners, as
shown in the Registration Books as provided in this Ordinance, or their respective attorneys duly
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authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge
the Issuer's obligations with respect to payment of principal of and interest on the Bonds to the extent
of the sum or sums so paid. No person other than a registered owner, as shown in the Registration
Books, shall receive a Bond evidencing the obligation of the Issuer to make payments of principal and
interest pursuant to this Ordinance. Upon delivery by DTC to the Paying Agent/Registrar of written
notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co.,
and subject to the provisions in this Ordinance with respect to interest checks being mailed to the
registered owner at the close of business on the Record date, the words "Cede & Co." in this
Ordinance shall refer to such new nominee of DTC
(~) Successor Secu~ties Depository. In the event that the Issuer determines that DTC is
incapable of discharging its responsibilities described herein and in the representation letter of the
Issuer to DTC or that it is in the best interest of the beneficial owners of the Bonds that they be able
to obtain certificated Bonds, the Issuer shall (i) appoint a successor securities depository, qualified
to act as such under Section 17(a) of the Securities and Exchange Act of 1934, as amended, notify
DTC 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 registered owners transferring or exchanging Bonds shall
designate, in accordance with the provisions of this Ordinance.
(h) DTCLetter of Representations. Notwithstanding any other provision of this Ordinance
to the contrary, so long as any Bond is registered in the name of Cede 8z Co., as nominee of DTC,
all payments with respect to principal of 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 Issuer to DTC.
Section 6. FORM OF BONDS. (a) That the form of all Bonds, including the form of the
Paying Agent/Registrar's Certificate, the form of Assignment, and the form of the Comptroller's
Registration Certificate to be attached only to the Bonds initially issued and delivered pursuant to this
Ordinance, shall be, respectively, substantially as follows, with such appropriate variations, omissions,
or insertions as are permitted or required by this Ordinance:
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FORM OF BOND:
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTY OF NUECES
CITY OF CORPUS CffRISTI, TEXAS
UTILITY SYSTEM REVENUE
REFUNDING BOND
SERIES 2000-A
MATURITY INTEREST BOND
DATE RATE DATE CUSIP
ON THE MATURITY DATE SPECIFIED ABOVE, THE CITY OF CORPUS CHRISTI,
IN NUECES COUNTY, TEXAS (the "Issuer"), hereby promises to pay to
, or to the registered assignee hereof(either being hereinafier called the
"registered owner") the principal amount of
DOLLARS
and to pay interest thereon from the Bond Date specified above, on January 15,2001 and semiannu-
ally on each July 15 and January 15 thereafter to the maturity date specified above, or the date of
redemption prior to maturity, at the interest rate per annum specified above; except that if the Paying
Agent/Registrar's Authentication Certificate appearing on the face of this Bond is dated later than
January 15, 2001, such interest is payable semiannually on each July 15 and January 15 following
such date.
THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of the
United States of America, without exchange or collection charges. The principal of this Bond shall
be paid to the registered owner hereof upon presentation and surrender of this Bond at maturity or
upon the date fixed for its redemption prior to maturity, at the designated trust office in Dallas, Texas
(the "Designated Trust Office") of The Chase Manhattan Bank, 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 or draft, dated as of such
interest payment date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the
Issuer required by the ordinance authorizing the issuance of this Bond (the "Bond Ordinance") to be
on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided; and such check
or draft shall be sent by the Paying Agent/Registrar by United States mail, first-class postage prepaid,
on each such interest payment date, to the registered owner hereof, at its address as it appeared on
the last business day of the month next preceding each such date (the "Record Date") on the
Registration Books kept by the Paying Agent/Registrar, as hereinafter described. Any accrued
interest due at maturity or upon the redemption of this Bond prior to maturity as provided herein shall
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be paid to the registered owner upon presentation and surrender of this Bond for redemption and
payment at the Designated Trust Office of the Paying Agent/Registrar. The Issuer covenants with
the registered owner of this Bond that on or before each principal payment date, interest payment
date, and accrued interest payment date for this Bond it will make available to the Paying
Agent/Registrar, from the "Debt Service Fund" created by the Bond Ordinance, the mounts required
to provide for the payment, in immediately available funds, of all principal of and interest on the
Bonds, when due.
IF THE DATE forthe payment of the principal of or interest on this Bond shall be a Saturday,
Sunday, a legal holiday, or a day on which banking institutions in the City where the Designated 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 if made on the original date payment
was due.
THIS BOND is one of a series of bonds of like tenor and effect except as to number, principal
amount, interest rate, maturity, and right of prior redemption, dated as of the Bond Date specified
above, aggregating $42,520,000 (herein sometimes called the "Bonds"), issued for the purpose of
refunding all of the City's outstanding Utility System Commercial Paper Notes, Series A, issued
initially to finance improvements and extensions to the Utility System.
THE OUTSTANDING BOND S maturing on and after July 15, 2011 may be redeemed prior
to their scheduled maturities, at the option of the Issuer, in whole, or in part on July 15, 2010, or on
any date thereafter, at the redemption price of par plus accrued interest thereon to the date fixed for
redemption. The Bonds or portions thereof redeemed within a maturity shall be selected by lot or
other customary random method selected by the Paying Agent/Registrar (provided that a portion of
a Bond may be redeemed only in an integral multiple of $5,000); provided, that during any period in
which ownership of the Bonds is determined only 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 Board and the securities depository.
NOTICE OF any such redemption of Bonds shall be given in the following manner, to-wit,
(i) a written notice of such redemption shall be given to the registered owner of each Bond or a
portion thereof being called for redemption not more than 60 days nor less than 30 days prior to the
date fixed for such redemption by depositing such notice in the United States Mail, first-class, postage
prepaid, addressed to each such registered owner at the address thereof shown on the Registration
Books of the Paying Agent/Registrar and (ii) a notice of such redemption shall be published one time,
at least 30 days prior to the date fixed for such redemption, in a journal or publication of general
circulation in the United States of America or the State of Texas which carries as a regular feature
notices of redemption of municipal bonds; provided, however, that the failure to send, mail, or receive
such notice described in clause (i) above, 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 Bond, as
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publication of notice as described in clause (ii) above shall be the only notice actually required in
connection with or as a prerequisite to the redemption of any Bonds. By the date fixed for any such
redemption due provision shall be made by the Issuer with the Paying AgentJKegistrar for the
payment of the required redemption price for this Bond or the portion hereof which is to be so re-
deemed, plus accrued interest thereon to the date fixed for redemption. If such notice of redemption
is given, and if due provision for such payment is made, all as provided above, this Bond, or the
portion hereof which is to be so redeemed, thereby automatically shall be redeemed prior to its
scheduled maturity, and shall not bear or accrue interest after the date fixed for its redemption, and
shall not be regarded as being outstanding except for the fight of the registered owner to receive the
redemption price plus accrued interest to the date fixed for redemption from the Paying Agent/Reg-
istrar out of the funds provided for such payment. The Paying Agent/Registrar shall record in the
Registration Books all such redemptions of principal amount of this Bond or any portion hereo£ 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 Authorized Denomination 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
Issuer, all as provided in the Bond Ordinance.
ALL BONDS OF THIS SERIES are issuable solely as fully registered bonds, without interest
coupons, in an Authorized Denomination (as defined in the Bond Ordinance). As provided in the
Bond Ordinance, 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 sur-
render of this Bond to the Paying Agent/Registrar at its Designated Trust Office for cancellation, all
in accordance with the form and procedures set forth in the Bond Ordinance. 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 satisfac-
tory 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 one requesting such con-
version and exchange shall pay the Paying Agent/Registrar's reasonable standard or customary fees
and charges for convening and exchanging any Bond or portion thereof In any circumstance, any
taxes or governmental charges required to be paid with respect thereto shall be paid by the one re-
questing such assignment, transfer, conversion or exchange, as a condition precedent to the exercise
of such privilege. The foregoing notwithstanding, in the case of the conversion and exchange of an
assigned and transferred Bond or Bonds or any portion or portions thereof, such fees and charges of
the Paying Agent/Registrar will be paid by the Issuer. The Paying Agent/Registrar shall not be
required (i) to make any such transfer, conversion or exchange during the period beginning at the
opening of business 30 days before the day of the first mailing of a notice of redemption and ending
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at the close of business on the day of such mailing, or (ii) to transfer, convert or exchange any Bonds
so selected for redemption when such redemption is scheduled to occur within 30 calendar days;
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 pan.
WHENEVER the beneficial ownership of this Bond is determined by a book entry at a
securities depository for the Bonds, the foregoing requirements of holding, delivering or transferring
this Bond shall be modified to require the appropriate person or entity to meet the requirements of
the securities depository as to registering or transferring the book entry to produce the same effect.
IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the Issuer, resigns,
or otherwise ceases to act as such, the lssuer has covenanted in the Bond Ordinance that it promptly
will appoint a competent and legally qualified substitute therefor, whose qualifications substantially
are similar to the previous Paying Agent/Registrar it is replacing, and promptly will cause written
notice thereof to be mailed to the registered owners of the Bonds.
BY BECOMING the registered owner of this Bond, the registered owner thereby
acknowledges all of the terms and provisions of the Bond Ordinance, agrees to be bound by such
terms and provisions, acknowledges that the Bond Ordinance is duly recorded and available for
inspection in the official minutes and records of the Issuer, and agrees that the terms and provisions
of this Bond and the Bond Ordinance constitute a contract between each registered owner hereof and
the Issuer.
THE BONDS are special obligations of the Issuer payable solely from and equally secured
by a first lien on and pledge of the "Pledged Revenues" (as such term is defined in the Bond
Ordinance) of the System. The Issuer has reserved the right, subject to the restrictions stated, and
adopted by reference, in the Bond Ordinance, to issue additional parity revenue bonds which also may
be made payable from, and secured by a first lien on and pledge of, the aforesaid Pledged Revenues.
For a more complete description and identification of the revenues and funds pledged to the payment
of the Bonds, and other obligations of the Issuer secured by and payable from the same source or
sources as the Bonds, reference is hereby made to the Bond Ordinance.
THE ISSUER has reserved the right, subject to the restrictions stated, and adopted by
reference, in the Bond Ordinance, to amend the Bond Ordinance; and under some (but not all)
circumstances amendments must be approved by the owners of a majority in aggregate principal
amount of the outstanding Priority Bonds (as defined in the Bond Ordinance).
THE REGISTERED OWNER HEREOF shall never have the right to demand payment of this
obligation out of any funds raised or to be raised by taxation.
IT IS HEREBY certified and covenanted that this Bond has been duly and validly authorized,
issued and delivered; and 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.
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1N WITNESS WHEREOF, this Bond has been signed with the imprinted or lithographed
facsimile signature of the Mayor of said Issuer, attested by the imprinted or lithographed facsimile
signature of the City Secretary, and the official seal of said Issuer has been duly affixed to, printed,
lithographed or impressed on this Bond
ATTEST:
CITY OF CORPUS CHRISTI, TEXAS
By
Mayor
City Secretary
(SEAL)
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 of Public Accounts of the State of Texas)
It is hereby certified that this Bond has been issued under the provisions of the Bond
Ordinance described on the face of this Bond; and that this Bond has been issued in exchange for or
replacement of a bond, bonds, or a portion of a bond or bonds of an issue 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
The Chase Manhattan Bank
Paying Agent/Registrar
By:
Authorized Signatory
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FORM OF ASSIGNMENT:
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfers unto
Please insert Social Security or Taxpayer Identification Number of Transferee
/ /
(Please print or typewrite name and address, including zip code of Transferee)
the within Bond and all fights 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:
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 signature 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 whatsoever.
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* FORM OF COMPTROLLER'S REGISTRATION CERTIFICATE:
OFFICE OF COMPTROLLER:
STATE OF TEXAS
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.
Witness my signature and seal this
Comptroller of Public Accounts of
the State of Texas
(SEAL)
NOTE TO PRINTER:
*¶ not to be printed on Bond
(b) The printer of the Bonds is hereby directed to print on the Bonds the form of bond
counsel's opinion relating to the Bonds, and is hereby authorized to print on the Bonds an appropriate
statement of insurance furnished by a municipal bond insurance company providing municipal bond
insurance, if any, coveting all or any part of the Bonds.
Section 7. DEFINITIONS. That, as used in this Ordinance, the following terms shall have
the meanings set forth below, unless the text hereof specifically indicates otherwise:
The term "Account" shall mean any account created, established and maintained under the
terms of any ordinance authorizing the issuance of priority Bonds.
The term "Accountant" shall mean a nationally recognized independent certified public
accountant, or an independent firm of certified public accountants.
The term "AdditionalPriorityBonds" shall mean the additional revenue bonds which the City
reserves the right to issue in the future on a parity with the Previously Issued Priority Bonds and the
Bonds, as provided in this Ordinance.
The term "Amortization Installment" shall mean the amount of money which is required to
be deposited into the Mandatory Redemption Account for retirement of Term Bonds (whether at
maturity or by mandatory redemption and including redemption premium, if any).
The term ",4uthorizedDenommation" shall mean $5,000 or any integral multiple thereof
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The term "Average Annual Principal and Interest Requirements" shall mean that amount
equal to the average annual principal and interest requirements (including Amortization Installments)
of all Priority Bonds outstanding. With respect to Additional Priority Bonds that bear interest at a
rate which is not established at the time of issuance at a single numerical rate for each maturity of
such series, Average Annual Principal and Interest Requirements shall be calculated by (i) assuming
that the interest rate for every 12-month period on such bonds is equal to 9.20% or (ii) using the
highest numerical rate borne over the preceding 24 month period by such bonds, whichever is greater;
provided, that if such bonds have not borne interest at a variable rate for such 24 month period, such
rate shall be assumed to be 9.20% until such time as bonds have been outstanding for a 24 month
period. In making such determinations, it shall be assumed that the principal of such bonds is amor-
tized such that annual debt service is substantially level over the remaining stated life of such bonds.
The term "Base Ordinance" shall mean the ordinance authorizing the issuance of the Series
1990 Bonds.
The term "Bonds" shall mean the Series 2000-A Bonds.
The term "Capital Additions" shall mean a reservoir or other water storage facilities, a
wastewater treatment plant or an interest therein, a gas distribution system or an interest therein and
associated transmission facilities with respect to each and any combination thereof, which shall
become a part of the System.
The term "Capital Improvements" shall mean any capital extensions, improvements and
betterments to the System other than Capital Additions.
The term "CapitalizedInterest Account" shall mean the Account by that name which may be
created within the Debt Service Fund.
The terms "City" and "Issuer" shall mean the City of Corpus Christi, Texas.
The term "Code" shall mean the Intemal Revenue Code of 1986, and any amendments thereto.
The term "CommercialPaperNotes" shall have the meaning given such term in the preamble
to this Ordinance.
The term "Credit Facility" shall mean a policy of municipal bond insurance, a surety bond or
a letter or line of credit issued by a Credit Facility Provider in support of any Priority Bonds or
Subordinate Lien Bonds.
The term "Credit Facility Provider" shall mean (i) with respect to any Credit Facility
consisting of a policy of municipal bond insurance or a surety bond, an issuer of policies of insurance
insuring the timely payment of debt service on governmental obligations such as the Priority Bonds,
provided that a Rating Agency having an outstanding rating on the Priority Bonds would rate the
Priority Bonds fully insured by a standard policy issued by the issuer in its highest generic rating
category for such obligations; and (ii) with respect to any Credit Facility consisting of a letter or line
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of credit, any financial institution, provided that a Rating Agency having an outstanding rating on the
Priority Bonds would rate the Priority Bonds in its two highest generic rating categories for such
obligations if the letter or line of credit proposed to be issued by such financial institution secured the
timely payment of the entire principal amount of the series of priority Bonds and the interest thereon.
The term "Debt Service Fund' shall have the meaning given such term in Section 10 of this
Ordinance,
The term "DTC" shall have the meaning given such term in Section 5 to this Ordinance.
The term "EligibleInvestments" shall mean those investments in which the City is authorized
by law, including, but not limited to, the Public Funds Investment Act of 1987 (Chapter 2256, Texas
Government Code), as amended, to purchase, sell and invest its funds and funds under its control;
and provided further that Eligible Investments shall specifically include, with respect to the investment
of proceeds of any Priority Bonds, guaranteed investment contracts fully collateralized by
Government Obligations.
The term "Engineer of Record' shall mean the independent engineer or firm at the time
employed by the City to perform and carry out the duties imposed on such engineer or firm by this
Ordinance and having a favorable reputation nationally for skill and experience in the engineering of
water, sanitary sewer and/or gas systems of comparable size and character as those forming parts of
the System.
The term "Government Obligations" shall mean direct obligations of the United States of
America, including obligations the principal of and interest on which are unconditionally guaranteed
by the United States of America.
The term "Fund' shall mean any fund created, established and maintained under the terms of
any ordinance authorizing the issuance of Priority Bonds.
The term "GrossRevenues" shall mean, all revenues, income, and receipts derived or received
by the City from the operation and ownership of the System, including the interest income from the
investment or deposit of money in any Fund created by this Ordinance or maintained by the City in
connection with the System, other than those amounts subject to payment to the United States of
America as rebate pursuant to section 148 of the Code.
The term "Mandatory Redemption Account" shall mean the Account by that name within the
Debt Service Fund and established by an ordinance authorizing the issuance of priority Bonds.
The term "MSRB" means the Municipal Securities Rulemaking Board.
The terms "Net Revenues of the System" and "Net Revenues" shall mean all Gross Revenues
less Operating Expenses.
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The term "NRMSIR" means each person whom the SEC or its staff has determined to be a
nationally recognized municipal securities information repository within the meaning of the Rule from
time to time.
The term "OperatingExpenses" shall mean the expenses of operation and maintenance of the
System, including all salaries, labor, materials, repairs, and extensions necessary to render efficient
service, provided, however, that only such repairs and extensions, as in the judgment of the City,
reasonably and fairly exercised by the passage of appropriate ordinances, are necessary to render
adequate service, or such as might be necessary to meet some physical accident or condition which
would otherwise impair any Priority Bonds. Operating Expenses shall include the purchase of water,
sewer and gas services as received from other entities and the expenses related thereto, and, to the
extent permitted by law, Operating Expenses may include payments made on or in respect of
obtaining and maintaining any Credit Facility. Depreciation, and payments from the System Fund to
other funds established in this Ordinance, shall never be considered as expenses of operation and
maintenance.
The term "Paying Agent/Registrar" shall mean the financial institution specified in Section
5(a) of this Ordinance, or its herein permitted successors and assigns.
The term "Pledged Revenues" shall mean
( 1 ) the Net Revenues, plus
(2) any additional revenues, income, receipts, or other resources, including,
without limitation, any grants, donations, or income received or to be received from the
United States Government, or any other public or private source, whether pursuant to an
agreement or otherwise, which hereafter are pledged to the payment of the Priority Bonds.
The term "Previously Issued Priority Bonds" shall mean the Series 1990 Bonds, the Series
1994 Bonds, the Series 1994-A Bonds, the Series 1995 Bonds, the Series 1995-A Bonds, the Series
1999 Bonds, the Series 1999-A Bonds and the Series 2000 Bonds.
The term "Priority Bonds" shall mean the Previously Issued Priority Bonds, the Bonds and
any Additional Priority Bonds.
The term "Prudent Utility Practice*' shall mean any of the practices, methods and acts, in the
exercise of reasonable judgment, in the light of the facts, including but not limited to the practices,
methods and acts engaged in or approved by a significant portion of the public utility industry prior
thereto, known at the time the decision was made, would have been expected to accomplish the
desired result at the lowest reasonable cost consistent with reliability, safety and expedition. It is
recognized that Prudent Utility Practice is not intended to be limited to the optimum practice, method
or act at the exclusion of all others, but rather is a spectrum of possible practices, methods or acts
which could have been expected to accomplish the desired result at the lowest reasonable cost
consistent with reliability, safety and expedition In the case of any facility included in the System
which is owned in common with one or more other entities, the term "Prudent Utility Practice", as
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applied to such facility, shall have the meaning set forth in the agreement governing the operation of
such facility.
The term".Purchase Agreement" shall mean the bond purchase agreement between the City
and the Underwriters pertaining to the purchase of the Bonds by the Underwriters.
The term "RatingAgency" shall mean any nationally recognized securities rating agency which
has assigned a rating to the Priority Bonds.
The term "Required Amount" shall have the meaning given such term in Section 11 of this
Ordinance.
The term "Reserve Fund' shall have the meaning given such term in Section 11 of this
Ordinance.
The term "Reserve Fund Obligations" shall mean cash, Eligible Investments, any Credit
Facility, or any combination of the foregoing.
The term "Rule" means SEC Rule 15c2-12, as amended from time to time.
The term "SEC" means the United States Securities and Exchange Commission.
The term "Series 1990 Bonds" shall mean the $64,660,000 City of Corpus Christi, Texas
Utility System Revenue Refunding Bonds, Series 1990, authorized by the ordinance adopted by the
City on November 15, 1990; the term "Series 1994 Bonds" shall mean the $11,140,000 City of
Corpus Christi, Texas Utility System Revenue Bonds, Series 1994, authorized by the ordinance
adopted by the City on April 26, 1994; the term "Series 1994-A Bonds" shall mean the $8,520,000
City of Corpus Christi, Texas Utility System Revenue Bonds, Series 1994-A, authorized by the
ordinance adopted by the City on June 14, 1994; the term "Series 1995 Bonds" shall mean the
$14, 730,000 City of Corpus Christi, Texas Utility System Revenue Bonds, Series 1995, authorized
by the ordinance adopted by the City on June 20, 1995; the term "Series 1995-A Bonds" shall mean
the $27,640,000 City of Corpus Christi, Texas Utility System Revenue Bonds, Series 1995-A,
authorized by the ordinance adopted by the City on July 25, 1995; the term "Series 1999 Bonds" shall
mean the $47,740,000 City of Corpus Christi, Texas Utility System Revenue Refunding and
Improvement Bonds Series 1999,. authorized by the ordinance adopted by the City on May 11, 1999;
the term "Series 1999-A Bonds" shall mean the $15,750,000 City of Corpus Christi, Texas Utility
System Revenue Refunding and Improvement Bonds Series 1999~A, authorized by the ordinance
adopted by the City on April 20, 1999; and the term "Series 2000 Bonds" shall mean the $34,740,000
City of Corpus Christi, Texas Utility System Revenue Refunding Bonds, Series 2000, authorized by
the ordinance adopted by the City on May l 1, 1999.
The term "Series 2000-A Bonds" shall mean the City of Corpus Christi, Texas Utility System
Revenue Refunding Bonds, Series 2000, authorized by this Ordinance.
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The term "SID" means any person designated by the State of Texas or an authorized
department, officer, or agency thereof as, and determined by the SEC or its staff to be, a state
information depository within the meaning of the Rule from time to time.
The term "SubordinatedObligations" shall mean any bonds, notes, or other obligations issued
pursuant to law payable in whole or in part from the Pledged Revenues and subordinate to the
Priority Bonds.
The term "System" shall mean and include the City's existing combined waterworks system,
wastewater disposal system and gas system, together with all future extensions, improvements,
enlargements, and additions thereto, including, to the extent permitted by law, storm sewer and
drainage within the waterworks system, and all replacements thereof; provided that, notwithstanding
the foregoing, and to the extent now or hereafter authorized or permitted by law, the term System
shall not include any waterworks, wastewater or gas facilities which are declared by the City not to
be a part of the System and which are hereafter acquired or constructed by the City with the proceeds
from the issuance of "Special Facilities Bonds", which are hereby defined as being special revenue
obligations of the City which are not secured by or payable from the Pledged Revenues, but which
are secured by and payable solely from special contract revenues, or payments received from the City
or any other legal entity, or any combination thereof, in connection with such facilities; and such
revenues or payments shall not be considered as or constitute Gross Revenues of the System, unless
and to the extent otherwise provided in the ordinance or ordinances authorizing the issuance of such
"Special Facilities Bonds".
The term "System Fund' shall have the meaning given such term in Section 9 of this
Ordinance.
The term "Term Bonds" shall mean those Series 1990 Bonds so designated in the ordinance
authorizing their issuance and those Additional Priority Bonds designated by the ordinance
authorizing the issuance thereof which shall be subject to retirement of the Mandatory Redemption
Account
The term "Underwriters" shall mean the investment banking firm or syndicate of investment
banking firms which contract to purchase the Bonds in accordance with the terms and conditions of
the Purchase Agreement.
The term "Value of Investment Securities" and words of like import shall mean the amortized
value thereof, provided, however, that all United States of America, United States Treasury
Obligations--State and Local Government Series shall be valued at par and those obligations which
are redeemable at the option of the holder shall be valued at the price at which such obligations are
then redeemable. The computations made under this paragraph shall include accrued interest on the
investment securities pald as a pan ofthe purchase price thereofand not collected. For the purposes
of this definition "amortized value", when used with respect to a security purchased at par means the
purchase price of such security.
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The term "Year" shall mean the regular fiscal year used by the City in connection with the
operation of the System, which may be any twelve consecutive months period established by the City.
Section 8. PLEDGE. That the Priority Bonds are and shall be secured by and payable from
a first lien on and pledge of the Pledged Revenues including such revenues within the System Fund
and the Funds hereina~er created in this Ordinance; and the Pledged Revenues are further pledged
to the establishmere and maintenance of the Debt Service Fund and the Reserve Fund as hereinafter
provided. The Priority Bonds are and will be secured by and payable only from the Pledged
Revenues, and are not secured by or payable from a mortgage or deed of trust on any properties,
whether real, personal, or mixed, constituting the System.
Section 9. SYSTEM FUND. That there has heretofore been created and established and
there shall be maintained on the books of the City, and accounted for separate and apart from all other
funds of the City, a special fund entitled the "City of Corpus Christi Utility System Fund" (the
"System Fund"). All Gross Revenues shall be credited to the System Fund immediately upon receipt.
All Operating Expenses shall be paid from such Gross Revenues credited to the System Fund as a first
charge against same.
Section 10. DEBT SERVICE FUND. (a) That for the sole purpose of paying the principal
amount of, premium, if any, Amortization Installments, if any, and interest on all Priority Bonds, there
has heretofore been created and established and there shall be maintained on the books of the City
a separate fund entitled the "City of Corpus Christi Utility System Revenue Bonds Debt Service
Fund" (hereinafter called the "Debt Service Fund"). Monies in the Debt Service Fund shall be depos-
ited and maintained in an official depository bank of the City.
(b) That within the Debt Service Fund there may hereafter be established a Capitalized
Interest Account. The proceeds of priority Bonds representing capitalized interest may be deposited
into the Capitalized Interest Account. On or before the day next preceding any interest payment date
of bonds or other obligations for which any iracrest has been capitalized, the City shall use the monies
in the Capitalized Interest Account to pay such interest on such bonds or other obligations to the
extent of the amounts therein representing such capitalized interest.
(c) That within the Debt Service Fund there has heretofore been established the Mandatory
Redemption Account. Amortization Installments shall be deposited to the credit ofthe Mandatory
Redemption Account and be used to retire the principal amount of Term Bonds in the manner
described in any ordinance authorizing the issuance of Term Bonds.
Section l 1. RESERVE FUND. (a) That there has heretofore been created and established
and there shall be maintained on the books of the City a separate fund entitled the "City of Corpus
Christi Utility System Revenue Bonds Reserve Fund" (hereinafter called the "Reserve Fund"). There
shall be deposited into the Reserve Fund any Reserve Fund Obligations so designated by the City.
Reserve Fund Obligations in the Reserve Fund shall be deposited and maintained in an official deposi-
tory bank of the City. Reserve Fund Obligations in the Reserve Fund shall be used solely for the
purpose of retiring the last of any Priority Bonds as they become due or paying principal of and
interest on any Priority Bonds when and to the extent the amounts in the Debt Service Fund are
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insufficient for such purpose. The Reserve Fund shall be maintained in an amount equal to the
Average Annual Principal and Interest Requirements of the outstanding Priority Bonds (the "Required
Amount"). The City may, at its option, withdraw and transfer to the System Fund, all surplus in the
Reserve Fund over the Required Amount.
(b) The City may replace or substitute a Credit Facility for cash or Eligible Investments on
deposit in the Reserve Fund or in substitution for or replacement of any existing Credit Facility.
Upon such replacement or substitution, cash or Eligible Investments on deposit in the Reserve Fund
which, taken together with the face amount of any existing Credit Facilities, are in excess of the
Required Amount may be withdrawn by the City, at its option, and transferred to the System Fund;
provided that the face amount of any Credit Facility may be reduced at the option of the City in lieu
of such transfer.
(c) If the City is required to make a withdrawal from the Reserve Fund for any of the
purposes described in this Section, the City shall promptly notify any applicable Credit Facility
Provider of the necessity for a withdrawal from the Reserve Fund for any such purposes, and shall
make such withdrawal FIRST from available moneys or Eligible Investments then on deposit in the
Reserve Fund, and NEXT from a drawing under any Credit Facility to the extent of such deficiency.
(d) In the event of a deficiency in the Reserve Fund, or in the event that on the date of
termination or expiration of any Credit Facility there is not on deposit in the Reserve Fund sufficient
Reserve Fund Obligations, all in an aggregate amount at least equal to the Required Amount, then
the City shall satisfy the Required Amount by depositing Reserve Fund Obligations into the Reserve
Fund in monthly installments of not less than 1/60 of the Required Amount made on or before the
10th day of each month following such termination or expiration.
(e) In the event of the redemption or defeasance of any Priority Bonds, any Reserve Fund
Obligations on deposit in the Reserve Fund in excess of the Required Amount may be withdrawn and
transferred, at the option of the City, to the System Fund, as a result of (i) the redemption of any
Priority Bonds, or (ii) funds for the payment of any Priority Bonds having been deposited irrevocably
with the paying agent or place of payment therefor in the manner described in any ordinance
authorizing the issuance of Priority Bonds, the result of such deposit being that such Priority Bonds
no longer are deemed to be outstanding under the terms of any such ordinance.
(f) In the event there is a draw upon the Credit Facility, the City shall reimburse the Credit
Facility Provider for such draw, in accordance with the terms of any agreement pursuant to which the
Credit Facility is issued, from Pledged Revenues, however, such reimbursement from Pledged
Revenues shall be subordinate and junior in right of payment to the payment of principal of and
premium, if any, and interest on the Priority Bonds.
(g) Upon the issuance of Additional Priority Bonds the monies in the Reserve Fund shall be
increased to the newly-established Required Amount in accordance with the provisions of Section
20(b) of this Ordinance.
Section 12. SUBORDINATED OBLIGATIONS FUNDS AND ACCOUNTS. That the
City hereafter may create, establish and maintain on the books of the City separate funds and accounts
from which moneys can be withdrawn to pay the principal of and interest on Subordinated
Obligations which hereafter may be issued.
Section 13. CONSTRUCTION FUND. That it shall not be necessary in connection with
the delivery of the Bonds to establish a construction fund, since the proceeds of the Bonds are to be
used to refund outstanding Commercial Paper Notes.
Section 14. INVESTMENTS. That money in any Fund established pursuant to this
Ordinance may, at the option of the City, be placed or invested in Eligible Investments. Money in the
Reserve Fund shall not be invested in securities with an average aggregate weighted maturity of
greater than seven years. If monies in a Fund herein established are permitted to be invested the value
of any such Fund shall be established by adding the monies therein to the Value of Investment
Securities. The value ofeach such Fund shall be established annually during the last month ofeach
Year and in addition thereto, with respect to the Reserve Fund, value shall be established within thirty
days prior to the issuance of Priority Bonds and at the time or times withdrawals are made therefrom.
Such investments shall be sold promptly when necessary to prevent any default in connection with
the Priority Bonds. Earnings derived from the investment of moneys on deposit in the various Funds
and Accounts created hereunder shall be credited to the Fund or Account from which moneys used
to acquire such investment shall have come.
Section 15. FUNDS SECURED. That monies in the System Fund and all Funds created by
this Ordinance, to the extent not invested, shall be secured in the manner prescribed by law for
securing funds of the City.
Section l6. FLOWOFFUNDS. ThatallmoniesintheSystemFundnotrequiredforpaying
Operating Expenses during each month shall be applied by the City, on or before the 10th day of the
following month, commencing during the months and in the order of priority with respect to the
Funds and Accounts that such applications are hereinafter set forth in this Section.
(a) Debt Service Fund - To the credit of the Debt Service Fund, in the following order of
priority, to-wit:
(1) such amounts, deposited in approximately equal monthly installments,
commencing during the month in which the Priority Bonds are delivered, or the month
thereafter if delivery is made after the 10th day thereof, as will be sufficient, together with
other amounts, if any, in the Debt Service Fund available for such purpose (including
specifically moneys on deposit in the Capitalized Interest Account dedicated thereto), to pay
the interest scheduled to come due on Priority Bonds on the next succeeding interest payment
date;
(2) such amounts, deposited in approximately equal monthly installments,
commencing during the month which shall be the later to occur of, (i) the twelfth month
before the first maturity date of Priority Bonds, or (ii) the month in which Priority Bonds are
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delivered, or the month thereafter if delivery is made after the 10th day thereof, as will be
sufficient, together with other amounts, if any, in the Debt Service Fund available for such
purpose, to pay the principal scheduled to mature on Priority Bonds on the next succeeding
principal payment date; and
(3) Amortization Installments, in such amounts and on such dates as set forth in any
ordinance authorizing a series of Priority Bonds which contain Term Bonds within such
Series, to pay scheduled principal amounts of Priority Bonds which constitute Term Bonds
to be redeemed in accordance with the terms of said ordinance.
(b) Reserve Fund. To the credit of the Reserve Fund, such amounts, deposited in
approximately equal monthly installments, commencing during the month in which the Priority Bonds
are delivered, or the month thereafter if delivery is made after the 10th day thereof, equal to not less
than 1/60 of the Required Amount, until such time as such amounts together with other amounts, if
any, in the Reserve Fund, equal the Required Amount. When and so long as the Reserve Fund
Obligations in the Reserve Fund are not less than the Required Amount, no deposits need be made
to the credit of the Reserve Fund. When and if the Reserve Fund at any time contains less than the
Required Amount due to any cause or condition other than the issuance of Additional Priority Bonds
then, subject and subordinate to making the required deposits to the credit of the Debt Service Fund,
commencing with the month during which such deficiency occurs, such deficiency shall be made up
from the next available Pledged Revenues or from any other sources available for such purpose.
Reimbursements to a Credit Facility Provider made in accordance with the terms of Section 11 (f) of
this Ordinance shall constitute the making up of a deficiency to the extent that such reimbursements
result in the reinstatement, in whole or in part, as the case may be, of the mount of the Credit
Facility. If the Reserve Fund contains less than the Required Amount due to the issuance of
Additional Priority Bonds deposits shall be made to the Reserve Fund commencing during the month
and in the amounts required by Section 20(b) of this Ordinance, unless a Credit Facility is deposited
in the Reserve Fund in an amount necessary to cause the sum of money and the value of Investment
Securities and any other Credit Facilities in the Reserve Fund to equal the Required Amount.
(c) Surplus. The balance of any monies remaining in the System Fund following such
transfers may be used by the City for payment of other obligations of the System, including, but not
limited to, Subordinated Obligations, and for any other lawful purpose; provided that transfers made
for purposes other than for payment of obligations of the System shall be made only at the end of the
Year.
Section 17. DEFICIENCIES. That if on any occasion there shall not be sufficient Pledged
Revenues to make the deposits and other applications of monies required by Section 16 with respect
to the various Funds as provided therein, any such deficiencies shall be made up (in the order that
each such Fund is provided for in Section 16) as soon as possible from the next available Pledged
Revenues, or from any other sources available for such purpose. The foregoing notwithstanding,
however, if any deficiency in the Reserve Fund occurs as a result of withdrawals therefrom or
decreases in the market value of EIigible Investments on deposit therein, such deficiency will be made
up from the next available Pledged Revenues within twelve months from the date of such deficiency
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is determined, with such deposits to the Reserve Fund to be made in not more than twelve
substantially equal monthly payments.
Section 18. PAYMENT OF BONDS. That on or before the first scheduled interest payment
date, and on or before each interest payment date and principal payment date thereafter while any of
the Priority Bonds are outstanding and unpaid, the City shall make available to the paying agent
therefor, out of the Debt Service Fund (and the other Funds, if necessary, in the order of priority set
forth herein) monies sufficient to pay such interest on and such principal amount of the Priority
Bonds, as shall become due and mature on such dates, respectively, at maturity or by redemption
prior to maturity. The bond registrar for each series of priority Bonds shall destroy all paid Priority
Bonds and furnish the City with an appropriate certificate of cancellation or destruction.
Section 19. FINAL DEPOSITS; GOVERNMENT OBLIGATIONS. (a) That any
Priority Bond shall be deemed to be paid, retired and no longer outstanding within the meaning of
this Ordinance when payment of the principal amount of, redemption premium, if any, on such
Priority Bond, plus interest thereon to the due date thereof (whether such due date be by reason of
maturity, upon redemption, or otherwise) either (i) shall have been made in accordance with the terms
thereof or (ii) shall have been provided for by irrevocably depositing with, or making available to, a
paying agent (or escrow agent) therefor, in trust and irrevocably set aside exclusively for such
payment, in accordance with the terms and conditions of an agreement between the City and said
paying agent (or escrow agent), (1) money sufficient to make such payment or (2) Government
Obligations, certified by an independent public accounting firm of national reputation, to mature as
to principal and interest in such amounts and at such times as will insure the availability, without rein-
vestment, of sufficient money to make such payment, and all necessary and proper fees,
compensation, and expenses of such paying agent pertaining to the Priority Bonds with respect to
which such deposit is made shall have been paid or the payment thereof provided for (and irrevocable
instructions shall have been given by the City to such paying agent of such bonds to give notice of
such redemption in the manner required by the ordinance or ordinances authorizing the issuance of
such bonds) to the satisfaction of such paying agent. Such paying agent shall give notice to each
registered owner of any Priority Bond that such deposit as described above has been made, in the
same manner as described in Section 3 of this Ordinance. In addition, in connection with a
defeasance, such paying agent shall give notice of redemption, if necessary, to the registered owners
of any Priority Bonds in the manner described in such Priority Bonds and as directed in the
redemption instructions delivered by the City to such paying agent. At such time as a Priority Bond
shall be deemed to be paid hereunder, as aforesaid, it shall no longer be secured by or entitled to the
benefit of this Ordinance or a lien on and pledge of the Pledged Revenues, and shall be entitled to
payment solely from such money or Government Obligations.
(b) That any moneys so deposited with a paying agent (or escrow agent) may, at the direction
of the City, also be invested in Government Obligations, maturing in the amounts and times as
hereinbefore set forth, and all income from all Government Obligations in the hands of the paying
agent pursuant to this Section which is not required for the payment of the Priority Bonds, the
redemption premium, if any, and interest thereon, with respect to which such money has been so
deposited, shall be remitted to the City for deposit into the System Fund.
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(c) Except as provided in clause (b) of this Section, all money or Government Obligations
set aside and held in trust pursuant to the provisions of this Section for the payment of Priority
Bonds, the redemption premium, if any, and interest thereon, shall be applied solely to and used solely
for the payment of such Priority Bonds, the redemption premium, if any, and interest thereon.
Section 20. ISSUANCE OF ADDITIONAL PRIORITY BONDS. (a) That subject to the
provisions hereinafter appearing as conditions precedent which must first be satisfied, the City
reserves the right to issue, from time to time as needed, Additional Priority Bonds for any lawful
purpose relating to the System. Such Additional Priority Bonds may be issued in such form and
manner as now or hereafter authorized by the laws of the State of Texas for the issuance of evidences
of indebtedness or other instruments, and should new methods or financing techniques be developed
that differ from those now available and in normal use, the City reserves the right to employ the same
in its financing arrangements provided only that the same conditions precedent herein required for
the authorization and issuance of Additional Priority Bonds are satisfied.
(b) That the Debt Service Fund and the Reserve Fund established by this Ordinance shall
secure and be used to pay all Additional Priority Bonds hereafter issued. Upon the issuance and
delivery of Additional Priority Bonds, the additional amount required to be deposited in the Reserve
Fund shall be so accumulated by the deposit in the Reserve Fund of all or any part of said required
additional amount in cash immediately after the delivery of such Additional Priority Bonds, or, at the
option of the City, (i) by the deposit of said required additional amount (or any balance of said
required additional amount not deposited in cash as permitted above) in approximately equal monthly
installments, made on or before the 10th day of each month following the delivery of such Additional
Priority Bonds, of not less than 1/60 of said required additional amount (or 1/60 of the balance of said
required additional amount not deposited in cash as permitted above) or (ii) by the deposit of a Credit
Facility which, in whole or in combination with deposits described in clause (i) above, is sufficient to
satisfy the required additional amount to be on deposit in the Reserve Fund.
(c) That all calculations of Average Annual Principal and Interest Requirements made
pursuant to this Section shall be made as of and from the date of the Additional Priority Bonds then
proposed to be issued.
Section 21. FURTHER REQUIREMENTS FOR ADDITIONAL PRIORITY BONDS.
(a) Conditions precedent for Issuance of Additional Priority Bonds - General. That as a condition
precedent to the issuance of any Additional Priority Bonds, the City Manager (or other officer of the
City then having the responsibility for the financial affairs of the City) shall have executed a certificate
stating (i) that the City is not then in default as to any covenant, obligation or agreement contained
in any ordinance or other proceeding relating to any obligations of the City payable from and secured
by a lien on and pledge of the Pledged Revenues, and (ii) that the amounts on deposit in all Funds
or Accounts created and established for the payment and security of all outstanding obligations
payable from and secured by a lien on and pledge of the Pledged Revenues are the amounts then
required to be deposited therein. Such certificate shall be dated on or before the date ofdelivery of
such Additional Priority Bonds, but such certificate shall not be dated prior to the date an ordinance
is passed authorizing the issuance of such Additional Priority Bonds.
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(b) Conditions Precedent for Issuance of Additional Priority Bonds - Capital
Improvements and for any other lawful purpose except for Capital Additions or for refunding.
The City covenants and agrees that Additional Priority Bonds will not be issued for the purpose of
financing Capital Improvements, or for any other lawful purpose (except for Capital Additions or for
refunding, which are to be issued in accordance with the provisions of clauses (c), (d) or (e) of this
Section) unless and until the conditions precedent in clause (a) above have been satisfied and, in
addition thereto, the City has secured a certificate or opinion of the Accountant to the effect that,
according to the books and records of the City, the Net Earnings (hereinafter defined) for the
preceding Year or for 12 consecutive months out of the 15 months immediately preceding the month
the ordinance authorizing the Additional Priority Bonds is adopted are at least equal to 1.25 times
the Average Annual Principal and Interest Requirements for all outstanding Priority Bonds after
giving effect to the Additional Priority Bonds then proposed.
The foregoing notwithstanding, the City covenants and agrees that Additional Priority Bonds
may not be issued for the purpose of financing Capital Improvements when other outstanding Priority
Bonds which have been issued for the purpose of financing Capital Additions and for which
capitalized interest for such other Priority Bonds has been provided for at least the twelve months
subsequent to the date of issUance of the Additional Priority Bonds then proposed to be issued, unless
the conditions precedent in clause (a) above have been satisfied and, in addition thereto, the City has
either (1) complied with the relevant conditions in this clause as set forth above, or (2) if the relevant
conditions of this clause (b) as set forth above cannot be satisfied, the City has satisfied the conditions
precedent in clauses (c)(i) and (c)(ii) of this Section (but, for purposes of such clauses, the term
Capital Improvements shall be substituted for the term Capital Additions where the term Capital
Additions appears therein to the extent necessary to give recognition to the fact that Capital
Improvements, rather than Capital Additions, are then to be financed) and has secured a certificate
or opinion of the Accountant to the effect that, according to the books and records of the City, the
Net Earnings for the preceding Year or for 12 consecutive months out of the 15 months immediately
preceding the month the ordinance authorizing the Additional Priority Bonds is adopted are at least
equal to 1.25 times the Average Annual Principal and Interest Requirements for all outstanding
Priority Bonds (other than any Priority Bonds issued for Capital Additions for which capitalized
interest has been provided for at least the twelve months subsequent to the date of issuance of the
Additional Priority Bonds proposed to be issued) after giving effect to the Priority Bonds then
proposed.
(c) Conditions Precedent for Issuance of Additional Priority Bonds - Capital Additions:
Initial Issue. The City covenants and agrees that Additional Priority Bonds will not be issued for the
purpose of financing Capital Additions, unless the same conditions precedent specified in clause (a)
above have been satisfied and, in addition thereto, either the relevant conditions precedent specified
in clause (b) above are satisfied or, in the alternative, the City shall have obtained:
(i) from the Engineer of Record a comprehensive Engineering Report for each Capital
Addition to be financed, which report shall (A) contain (1) detailed estimates of the cost of
acquiring and constructing the Capital Addition, (2) the estimated date the acquisition and
construction of the Capital Addition will be completed and commercially operative, and (3)
a detailed analysis of the impact of the Capital Addition on the financial operations of the
system for which the Capital Addition is to be integrated and to the System as a whole during
the construction thereof and for at least five Years after the date the Capital Addition
becomes commercially operative, and (B) conclude that (1) the Capital Addition is necessary
and will substantially increase the capacity, or is needed to replace existing facilities, to meet
current and projected demands for the service or product to be provided thereby, and (2) the
estimated cost of providing the service or product from the Capital Addition will be
reasonable in comparison with projected costs for furnishing such service or product from
other reasonably available sources; and
(ii) a certificate of the Engineer of Record to the effect that, based on the Engineering
Report prepared for each Capital Addition, the projected Net Earnings for each of the five
years subsequent to the date the Capital Addition becomes commercially operative (as
estimated in the Engineering Report) will be equal to at least 1.25 times the Average Annual
Principal and Interest Requirements for Priority Bonds then outstanding or incurred and all
Priority Bonds estimated to be issued, if any, for all Capital Improvements and for all Capital
Additions then in progress or then being initiated, during the period from the date the first
series of obligations for the Capital Additions is to be delivered through the fifth year
subsequent to the date the Capital Addition is estimated to become commercially operative.
(d) Completion Issues. Once a Capital Addition has been initiated by meeting the conditions
precedent specified in clauses (c)(i) and (c)(ii) above and the initial Priority Bonds issued therefor are
delivered, the City reserves the right to issue Additional Priority Bonds to finance the remaining costs
of such Capital Addition in such amounts as may be necessary to complete the acquisition and
construction thereof and make the same commercially operative without satisfaction of any condition
precedent under clauses (c)(i) and (c)(ii) or clause Co) of this Section but subject to satisfaction of the
following conditions precedent:
(i) the City makes a forecast (the "Forecast") of the operations of the System
demonstrating the System's ability to pay all obligations, payable from the Pledged Revenues
of the System to be outstanding after the issuance of the Additional Priority Bonds then being
issued for the period (the "Forecast Period") of each ensuing year through the fifth year
subsequent to the latest estimated date such Capital Addition is expected to be commercially
operative; and
(ii) the Engineer of Record reviews such Forecast and executes a certificate to the
effect that (A) such Forecast is reasonable, and based thereon (and such other factors deemed
to be relevant), the Pledged Revenues of the System will be adequate to pay all the
obligations, payable from the Pledged Revenues of the System to be outstanding after the
issuance of the Additional Priority Bonds then being issued for the Forecast Period and (B)
the proceeds from the sale of such Additional Priority Bonds are estimated to be sufficient to
complete such acquisition and construction.
(e) Refunding Issues. The City reserves the fight to issue refunding bonds to refund all or
any pan of the outstanding Priority Bonds (pursuant to any law then available), upon such terms and
conditions as the governing body of the City may deem to be in the best interest of the City and its
inhabitants, and if less than all such outstanding Priority Bonds are refunded, the conditions precedent
prescribed in clauses (a) and (b) of this Section shall be satisfied and the Accountanfs certificate or
opinion required by clause (b) shall give effect to the issuance of the proposed refunding bonds (and
shall not give effect to the Priority Bonds being refunded following their cancellation or provision
being made for their payment). In addition, the City reserves the right to refund all or any part of any
other obligations of the System, upon such terms and conditions as the governing body of the City
may deem to be in the best interest of the City and its inhabitants, provided that the conditions
prescribed in clauses (a) and (b) of this Section shall be satisfied. No Accountant's certificate
otherwise required by clause (b) will be required for refunding bonds, after giving effect to such
proposed refunding, if there is no increase in debt service for any Year in which there will be debt
service on Priority Bonds outstanding both before and after such refunding.
(0 Computations; Reports. With reference to Priority Bonds anticipated and estimated to
be issued or incurred, the Average Annual Principal and Interest Requirements therefor shall be those
reasonably estimated and computed by the City's Director of Finance (or other officer of the City then
having the primary responsibility for the financial affairs of the City). In the preparation of the
Engineering Report required in clause (c)(i) above, the Engineer of Record may rely on other experts
or professionals, including those in the employment of the City, provided such Engineering Report
discloses the extent of such reliance and concludes it is reasonable so to rely. In connection with the
issuance of Priority Bonds for Capital Additions, the certificate of the City's Director of Finance and
Engineer of Record, together with the Engineering Report for the initial issue and the Forecast for
a subsequent issue, shall be conclusive evidence and the only evidence required to show compliance
with the provisions and requirements and this clause of this Section.
(g) Combination Issues. Priority Bonds for Capital Additions may be combined in a single
issue with Priority Bonds for Capital Improvements or for any lawful purpose provided the conditions
precedent set forth in clauses (b) through (e) are complied with as the same relate to the appropriate
purpose.
(h) Subordinated Obligations. The City may, at any time and fi-om time to time, for any
lawful purpose, issue Subordinated Obligations, the principal of and redemption premium, if any, and
interest on which is payable from and secured by a pledge of and lien on the Pledged Revenues junior
and subordinate to the lien and pledge created hereby for the security of the Priority Bonds and the
payments required to be made hereunder into the Debt Service Fund and the Reserve Fund; provided,
however, that any such pledge and lien securing the Subordinated Obligations shall be, and shall be
expressed to be, subordinate in all respects to the pledge of and lien on the Pledged Revenues as
security for the Priority Bonds; and provided further that any default with respect to the issuance of
Subordinated Obligations will not be deemed a default with respect to the Priority Bonds.
(i) Definition of Net Earnings. As used in this Section, the term "Net Earnings" shall mean
the Gross Revenues of the System after deducting the Operating Expenses of the System, but not
expenditures which, under standard accounting practice, should be charged to capital expenditures.
(j) Determination of Net Earnings. In making a determination of Net Earnings for any of
the purposes described in this Section, the Accountant may take into consideration a change in the
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rates and charges for services and facilities afforded by the System that became effective at least 60
days prior to the last day of the period for which Net Earnings are determined and, for purposes of
satisfying any of the Net Earnings test described above, make a pro forma determination of the Net
Earnings of the System for the period of time covered by the Accountant's certification or opinion
based on such change in rates and charges being in effect for the entire period covered by the
Accountant's certificate or opinion.
Section 22 GENERAL COVENANTS. That the City further covenants and agrees that
in accordance with and to the extent required or permitted by law:
(a) Performance. It will faithfully perform at all times any and all covenants, undertakings,
stipulations, and provisions contained in this Ordinance, and each ordinance authorizing the issuance
of Additional Priority Bonds; it will promptly pay or cause to be paid the principal amount of and
interest on every Priority Bond, on the dates and in the places and manner prescribed in such
ordinances and such Priority Bonds; and it will, at the time and in the manner prescribed, deposit or
cause to be deposited the amounts required to be deposited into the System Fund and the Funds
herein created; and any registered owner of any Priority Bond may require the City, its officials and
employees to carry out, respect or enforce the covenants and obligations of this Ordinance, or any
ordinance authorizing the issuance of Priority Bonds, by all legal and equitable means, including
specifically, but without limitation, the use and filing of mandamus proceedings, in any court of
competent jurisdiction, against the City, its officials and employees.
(b) City's LegalAuthority. It is a duly created and existing home rule city of the State of
Texas, and is duly authorized under the laws of the State of Texas to issue the Bonds; that all action
on its part for the issuance of the Bonds has been duly and effectively taken, and that the Bonds in
the hands of the owners thereof are and will be valid and enforceable special obligations of the City
in accordance with their terms.
(c) Acquisition and Construction; Operation and Maintenance. (1) It shall use its best
efforts in accordance with Prudent Utility Practice to acquire and construct, or cause to be acquired
and constructed, any Capital Additions or Capital Improvements, in accordance with the plans and
specifications therefor, as modified from time to time with due diligence and in a sound and
economical manner; and (2) it shall at all times use its best efforts to operate or cause to be operated
the System properly and in an efficient manner, consistent with Prudent Utility Practice, and shall use
its best efforts to maintain, preserve, reconstruct and keep the same or cause the same to be so
maintained, preserved, reconstructed and kept, with the appurtenances and every part and parcel
thereof, in good repair, working order and condition, and shall from time to time make, or use its best
efforts to cause to be made, all necessary and proper repairs, replacement and renewals so that at all
times the operation of the System may be properly and advantageously conducted.
(d) Title. It has or will obtain lawful title, whether such title is in fee or lesser interest, to the
lands, buildings, structures and facilities constituting the System, that it warrants that it will defend
the title to all the aforesaid lands, buildings, structures and facilities, and every part thereof, for the
benefit of the owners of the Priority Bonds, against the claims and demands of all persons
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whomsoever, that it is lawfully qualified to pledge the Pledged Rgvenues to the payment of the
Priority Bonds in the manner prescribed herein, and has lawfully exercised such fights.
(e) Liens. It will fi'om time to time and before the same become delinquent pay and discharge
all taxes, assessments and governmental charges, if any, which shall be lawfully imposed upon it, or
the System; it will pay all lawful claims for rents, royalties, labor, materials and supplies which if
unpaid might by law become a lien or charge thereon, the lien of which would be prior to or interfere
with the liens hereof, so that the priority of the liens granted hereunder shall be fully preserved in the
manner provided herein, and it will not create or suffer to be created any mechanic's, laborer's,
materialman's or other lien or charge which might or could be prior to the liens hereof, or do or suffer
any matter or thing whereby the liens hereof might or could be impaired; provided however, that no
such tax, assessment or charge, and that no such claims which might be used as the basis of a
mechanic's, laborer's, materialman's or other lien or charge, shall be required to be paid so long as the
validity of the same shall be contested in good faith by the City.
(f) No Free Service. No flee service or service otherwise than in accordance with the
established rate schedule shall be furnished, directly or indirectly, by the System to any person, firm,
corporation or other entity, other than the City. No part of the salary of any official or employee of
the City or his replacement shall be paid from Pledged Revenues unless and only to the extent the
duties and performances of such official or employee or his replacement appertain directly to the
System. To the extent the City receives the services of the System, such services shall be accounted
for according to the established rate schedule.
(g) Further Encumbrance. It will not additionally encumber the Pledged Revenues in any
manner, except as permitted in this Ordinance in connection with Priority Bonds, unless said
encumbrance is made junior and subordinate in all respects to the liens, pledges, covenants and
agreements of this Ordinance; but the right of the City to issue Subordinated Obligations payable in
whole or in part from a subordinate lien on the Pledged Revenues is specifically recognized and
retained.
(h) Sale, Lease or Disposal of Property. No part of the System shall be sold, leased,
mortgaged, demolished, removed or otherwise disposed of, except as follows:
(1) To the extent permitted by law, the City may sell or exchange at any time and
from time to time any property or facilities constituting pan of the System only if(A) it shall
determine such property or facilities are not useful in the operation of the System, or (B) the
proceeds of such sale are $250,000 or less, or it shall have received a certificate executed by
the Engineer of Record and the City Manager stating, in their opinion, that the fair market
value of the property or facilities exchanged is $250,000 or less, or (C) if such proceeds or
fair market value exceeds $250,000 it shall have received a certificate executed by the
Engineer of Record and the City Manager stating (i) that system within the System of which
the property or facilities comprises a part thereof and (ii) in their opinion, that the sale or
exchange of such property or facilities will not impair the ability of the City to comply during
the current or any future Year with the provisions of clause (k) of this Section. The proceeds
of any such sale or exchange not used to acquire other property necessary or desirable for the
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safe or efficient operation of the System shall forthwith, at the option of the City (i) be used
to redeem or purchase Priority Bonds, or (ii) otherwise be used to provide for the payment
of Priority Bonds. The foregoing notwithstanding, if such property or facilities sold or
exchanged constituted property or facilities comprising all or a part of a system within the
System, the acquisition, improvement or extension of such system having not been financed
by the City in any manner with the proceeds of Priority Bonds, or with the proceeds of
obligations which were refunded in whole or in pan with the proceeds of Priority Bonds, then
the City may utilize the proceeds of such sale or exchange for any lawful purpose;
(2) To the extent permitted by law, the City may lease or make contracts or grant
licenses for the operation of, or make arrangements for the use of, or grant easements or
other rights with respect to, any part of the System, provided that any such lease, contract,
license, arrangement, easement or right (A) does not impede the operation by the City of the
System and (B) does not in any manner impair or adversely affect the rights or security of the
owners of the Priority Bonds under this Ordinance; and provided, further, that if the depre-
ciated cost of the property to be covered by any such lease, contract, license, arrangement,
easement or other right is in excess of $500,000, the City shall have received a certificate
executed by the Engineer of Record and the City Manager that the action of the City with
respect thereto does not result in a breach of the conditions under this clause (2). Any
payments received by the City under or in connection with any such lease, contract, license,
arrangement, easement or right in respect of the System or any part thereof shall constitute
Gross Revenues.
(i) Books, Records andAccounts. It shall keep proper books, records and accounts separate
and apart from all other records and accounts, in which complete and correct entries shall be made
of all transactions relating to the System and the City shall cause said books and accounts to be
audited annually as of the close of each Year by the Accountant.
(j) Insurance. (1) Except as otherwise permitted in clause (2) below, it shall cause to be
insured such pans of the System as would usually be insured by corporations operating like
properties, with a responsible insurance company or companies, against risks, accidents or casualties
against which and to the extent insurance is usually carried by corporations operating like properties,
including, to the extent reasonably obtainable, fire and extended coverage insurance, insurance against
damage by floods, and use and occupancy insurance. Public liability and property damage insurance
shall also be carried unless the City Attorney gives a written opinion to the effect that the City is not
liable for claims which would be protected by such insurance. At any time while any contractor
engaged in construction work shall be fully responsible therefor, the City shall not be required to carry
insurance on the work being constructed if the contractor is required to carry appropriate insurance.
All such policies shall be open to the inspection of the bondholders and their representatives at all
reasonable times.
(2) In lieu of obtaining policies for insurance as provided above, the City may self-insure
against risks, accidents, claims or casualties described in clause (1) above.
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(3) The annual audit hereinafter required shall contain a section commenting on whether or
not the City has complied with the requirements of this Section with respect to the maintenance of
insurance, and listing the areas of insurance for which the City is self-insuring, all policies carried, and
whether or not all insurance premiums upon the insurance policies to which reference is hereinbefore
made have been paid.
(k) Rate Covenant. It will fix, establish, maintain and collect such rates, charges and fees
for the use and availability of the System at all times as are necessary to produce Gross Revenues and
other Pledged Revenues equal to the greater of amounts determined in accordance with clauses (1)
or (2) below, to-wit, amounts sufficient (1) (A) to pay all current Operating Expenses of the System,
and (13) to produce Net Revenues for each Year at least equal to 1.25 times the Average Annual
Principal and Interest Requirements of all then outstanding Priority Bonds; or (2) to pay the sum of
(A) all current Operating Expenses, (B) the Average Annual Principal and Interest Requirements on
the then outstanding Priority Bonds, (C) required deposits to the Reserve Fund required for the
Priority Bonds, and (D) amounts required to pay all other obligations of the System reasonably
anticipated to be paid from Gross Revenues during the current Year. The calculation of Average
Annual Principal and Interest Requirements on all outstanding Priority Bonds shall be net of
capitalized interest for such Priority Bonds only if the moneys in the Capitalized Interest Account
received from proceeds of such Priority Bonds are invested in Government Obligations. The
foregoing notwithstanding, such rates, charges and fees shall be fixed, established, maintained and
collected at a level sufficient to enable the City to pay debt service on Priority Bonds during the
current Year.
(1) Audits. After the close of each year while any Priority Bonds are outstanding, an audit
will be made of the books and accounts relating to the System and the Pledged Revenues by the
Accountant. As soon as practicable after the close of each such year, and when said audit has been
completed and made available to the City, a copy of such audit for the preceding year shall be mailed
to any holder of the then outstanding Priority Bonds who shall so request in writing. Such annual
audit reports shall be open to the inspection of the registered owners of the Priority Bonds and their
agents and representatives at all reasonable times.
(m) GovernmentalAgencies. It will comply with all of the terms and conditions of any and
all franchises, permits and authorizations applicable to or necessary with respect to the System, and
which have been obtained from any governmental agency; and the City has or will obtain and keep
in full force and effect all franchises, permits, authorization and other requirements applicable to or
necessary with respect to the acquisition, construction, equipment, operation and maintenance of the
System.
(n) No Competition. To the extent it legally may, it will not grant any franchise or permit
for the acquisition, construction or operation of any competing facilities which might be used as a
substitute for the System's facilities, and, to the extent that it legally may, the City will prohibit any
such competing facilities.
(o) Rights oflnspection. The Engineer of Record or any registered owner of $1 00,000 in
aggregate principal amount of the Priority Bonds then outstanding shall have the right at all
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reasonable times to inspect the System and all records, accounts and data of the City relating thereto,
and upon request the City shall furnish to the Engineer of Record or such registered owner, as the
case may be, such financial statements, reports and other information relating to the City and the
System as the Engineer of Record or such registered owner may from time to time reasonably
request.
(p) SurplusBondProceeds. It shall deposit any surplus proceeds from the Bonds remaining
after the acquisition and completion of the System improvements to the credit of the Debt Service
Fund, to the extent any such surplus proceeds are not otherwise required to be rebated to the United
States of America in accordance with the provisions of Section 23 hereof, to pay debt service on the
Bonds.
Section 23. COVENANTS REGARDING TAX-EXEMPTION. That the Issuer
covenants to refrain from any action which would adversely affect, or to take such action as 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 Issuer 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 mounts 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 are so used, that mounts, whether or not received by the
Issuer, with respect to such private business use, do not, under the terms of this Ordinance
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;
(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 excess of 5 percent is used for a "private business use" which is "related" and not
"disproportionate", within the meaning of section 141 (b)(3) of the 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 "specified private activity bonds" within the meaning of section 141 (a) 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;
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(f) to refrain from using any portion of the proceeds of the Bonds, directly or
indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire
investment property (as defined in section 148(b)(2) of the Code) which produces a materially
higher yield over the term of the Bonds, other than investment property acquired with --
(1) proceeds of the Bonds invested for a reasonable temporary period of
3 years 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 mounts 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); and
(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(f) of 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.
The Issuer understands that the term "proceeds" included "disposition proceeds" as defined in the
Treasury Regulations and, in the case of a refunding bond, transferred proceeds (if any) and proceeds
of the refunded bonds experttied prior to the date of the issuance of the Bonds. It is the understanding
of the Issuer 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 modi& or expand provisions
of the Code, as applicable to the Bonds, the Issuer 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 Issuer
agrees to comply with the additional requirements to the extent necessary, in the opinion of
nationally-recognized bond counsel, to preserve the exemption from federal income taxation of
interest on the Bonds under section 103 of the Code. In furtherance of the foregoing, the Mayor,
the City Manager, any Assistant City Manager and the Director of Finance may execute any
certificates or other reports required by the Code and to make such elections, on behalf of the City,
which may be permitted by the Code as are consistent with the purpose for the issuance of the Bonds.
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In order to facilitate compliance with the above clause (h), a "Rebate Fund" is hereby established by
the City for the sole benefit of the United States of America, and such Kebate Fund shall not be
subject to the claim of any other person, including without limitation the registered owners of the
Bonds. The Rebate Fund is established for the additional purpose of compliance with section 148
of the Code.
Section 24. TAXABLE OBLIGATIONS. That the provisions of Section 23 of this
Ordinance notwithstanding, the City reserves the ability to issue Additional Priority Bonds in a
manner such that such obligations are not obligations described in section 103(a) of the Code or are
obligations which constitute "private activity bonds" within the meaning of section 141 (b) of the
Code.
Section 25. AMENDMENT OF ORDINANCE. (a) That the registered owners of a
majority in aggregate princ!pal amount of the Priority Bonds then outstanding shall have the right
from time to time to approve any amendment to this Ordinance which may be deemed necessary or
desirable by the City, provided, however, that without the consent of the registered owners ofail of
the Priority Bonds at the time outstanding, nothing herein contained shall permit or be construed to
permit the amendment of the terms and conditions in this Ordinance or in the Priority Bonds so as
to:
(1) Make any change in the maturity of any of the outstanding Priority Bonds;
(2) Reduce the rate of interest borne by any of the outstanding Priority Bonds;
(3) Reduce the amount of the principal payable on the outstanding Priority Bonds;
(4)
Modify the terms of payment of principal of, premium, if any, or interest on the
outstanding Priority Bonds or impose any conditions with respect to such payment;
(5)
Affect the rights of the registered owners of less than all of the Priority Bonds then
outstanding;
(6) Amend this clause (a) of this Section; or
(7)
Change the minimum percentage of the principal amount of Priority Bonds necessary
for consent to any amendment;
unless such amendment or amendments be approved by the registered owners of all of the Priority
Bonds then outstanding.
(b) That if at any time the City shall desire to amend the Ordinance under this Section, the
City shall cause notice of the proposed amendment to be published in a financial newspaper or journal
published in The City of New York, New York, and a newspaper of general circulation in the City,
once during each calendar week for at least two 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
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principal office of the Paying Agent/Registrar for inspection by all holders of Priority Bonds. Such
publication is not required, however, if notice in writing is given to each registered owner of Priority
Bonds.
(c) That whenever at any time not less than 30 days, and within one year, from the date of
the first publication of said notice or other service of written notice the City shall receive an
instrument or instruments executed by the registered owners of at least a majority in aggregate prin-
cipal amount of the Priority 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 Paying Agent/Registrar, the
governing body of the City may pass the amendatory ordinance in substantially the same form.
(d) That upon the passage of any amendatory ordinance pursuant to the provisions of this
Section, this Ordinance shall be deemed to be amended in accordance with such amendatory
ordinance, and the respective rights, duties and obligations under this Ordinance of the City and all
the registered owners of then outstanding Priority Bonds and all future Priority Bonds shall thereafter
be determined, exercised and enforced hereunder, subject in all respects to such amendments.
(e) That any consent given by the registered owner of a Priority 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 registered owners of the same Priority 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 registered
owner who gave such consent, or by a successor in title, by filing notice thereof with the Paying
Agent/Registrar and the City, but such revocation shall not be effective if the registered owners of
at least a majority in aggregate principal amount of the then outstanding Priority Bonds as in this
Section defined have, prior to the attempted revocation, consented to and approved the amendment.
(f) The foregoing provisions of this Section notwithstanding, the City by action of the City
Council may amend this Ordinance for any one or more of the following purposes:
(1) To add to the covenants and agreements of the City in this Ordinance contained,
other covenants and agreements thereafter to be observed, grant additional rights or remedies
to the registered owners of the Priority Bonds or to surrender, restrict or limit any right or
power herein reserved to or conferred upon the City;
(2) To make such provisions for the purpose of curing any ambiguity, or curing,
correcting or supplementing any defective provision contained in this Ordinance, or in regard
to clarifying matters or questions arising under this Ordinance, as are necessary or desirable
and not contrary to or inconsistent with this Ordinance and which shall not adversely affect
the interests of the registered owners of the Priority Bonds then outstanding;
(3) To modify any of the provisions of this Ordinance in any other respect whatever,
provided that (i) such modification shall be, and be expressed to be, effective only after all
Bonds and each series of Additional Priority Bonds outstanding at the date of the adoption
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of such modification shall cease to be outstanding, and (ii) such modification shall be
specifically referred to in the ten of all Priority Bonds issued after the date of the adoption
of such modification;
(4) To make such amendments to this Ordinance as may be required, in the opinion
of nationally recognized bond counsel acceptable to the City, to ensure compliance with
sections 103 and 141 through 150 of the Code and the regulations promulgated thereunder
and applicable thereto;
(5) To make such changes, modifications or amendments as may be necessary or
desirable in order to allow the owners of the Priority Bonds to thereafter avail themselves of
a book-entry system for payments, transfers and other matters relating to the Priority Bonds,
which changes, modifications or amendments are not contrary to or inconsistent with other
provisions of this Ordinance and which shall not adversely affect the interests of the owners
of the Priority Bonds;
(6) To make such changes, modifications or amendments as may be necessary or
desirable in order to obtain or maintain the granting of a rating on the Priority Bonds by a
Rating Agency or to obtain or maintain a Credit Facility, or to obtain the approval of the
Bonds from the Texas Attomey General; and
(7) To make such changes, modifications or amendments as may be necessary or
desirable, which shall not adversely affect the interests of the owners of the Priority Bonds,
in order, to the extent permitted by law, to facilitate the economic and practical utilization of
interest rate swap agreements, foreign currency exchange agreements, or similar type of
agreements with respect to the Priority Bonds.
Notice of any such amendment may be published by the City in the manner described in clause (b) of
this Section; provided, however, that the publication of such notice shall not constitute a condition
precedent to the adoption of such amendatory ordinance and the failure to publish such notice shall
not adversely affect the implementation of such amendment as adopted pursuant to such amendatory
ordinance.
Section 26. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS.
(a) That 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 of damaged, mutilated, lost, stolen, or destroyed Bonds shall
be made to the Paying Agent/Registrar. In every case of loss, theft, or destruction of a Bond, the
applicant for a replacement bond shall furnish to the City 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
applicant shall furnish to the City and to the Paying Agent/Registrar evidence to their satisfaction of
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the loss, theft, or destruction of such Bond, as the case may be. In every case of damage or
mutilation of a Bond, the applicant shall surrender to the Paying Agent/Kegistrar for cancellation the
Bond so damaged or mutilated.
(c) 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 City may authorize the payment of the
same (without surrender thereof 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) Prior to the issuance of any replacement bond, the Paying Agent/Registrar shall charge
the 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 City 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 Ordinance equally and proportionately with any and all other Bonds
duly issued under this Ordinance.
(e) In accordance with Section 6 of Article 717k-6, Texas Revised Civil Statutes, as
amended, this Section of this Ordinance shall constitute authority for the issuance of any such
replacement bond without necessity of further action by the governing body of the City or any other
body or person, and the duty of the replacement of such bonds is hereby authorized and imposed
upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such
bonds in the form and manner and with the effect, as provided in Section 5(d) of this Ordinance for
Bonds issued in exchange for other Bonds.
Section 27. APPROVAL AND REGISTRATION OF BONDS. That the City Manager
of the City is hereby authorized to have control of the Bonds and all necessary records and
proceedings pertaining to the Bonds pending their delivery and 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 Comptroller) shall manually sign the
Comptroller's Registration Certificate accompanying the Bonds, and the seal of said Comptroller shall
be impressed, or placed in facsimile, on each such certificate.
Section 28. SALE OF BONDS. (a) That the sale of the Bonds to the Underwriters, at the
purchase price described in the Purchase Agreement, is hereby authorized, ratified and confirmed.
One Bond in the principal amount maturing on each maturity date as set forth in Section 2 hereof
shall be delivered to the Underwriters, and the Underwriters shall have the right to exchange such
bonds as provided in Section 5 hereof without cost.
(b) That the Purchase Agreement setting forth the terms of the sale of the Bonds to the
Underwriters, in substantially the form attached to this Ordinance, is hereby accepted, approved and
authorized to be delivered in executed form to the Underwriters.
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(c) That the "Official Statement" prepared in connection with the sale of the Bonds, in
substantially the form attached to this Ordinance, are hereby accepted, approved and authorized to
be delivered in executed form to the Underwriters. The use of the "Preliminary Official Statement"
prepared in connection with the sale of the Bonds is hereby ratified.
Section 29. USE OF PROCEEDS. That the proceeds from the sale of the Bonds shall be
used in the manner described in the letter of instructions, as the Mayor, the City Manager, or the
Director of Finance of the City may execute on behalf of the City. The foregoing notwithstanding,
(i) proceeds representing accrued interest and premium on the Bonds shall be deposited to the credit
of the Debt Service Fund and (ii) $43,140,000 received as proceeds from the sale of the Bonds shall
be deposited to the credit of the "Series A Note Payment Fund", established in accordance with the
provisions of the ordinance of the City adopted November 18, 1997, to refund the Commercial Paper
Notes determined by the Director of Finance or the designee thereof to be refunded and retired with
proceeds received by the City from the sale of the Bonds.
Section 30. FURTHER PROCEEDINGS. That the Mayor, City Secretary, City Manager,
and the Director of Finance, and all other officers, employees and agents of the City, 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 City all such instruments, whether
herein mentioned, as may be necessary or desirable in order to carry out the terms and provisions of
this Ordinance and the Bonds, including, but not limited to, the printing of a statement relating to the
insuring of the Bonds by a municipal bond insurance company, and, if necessary, executing and
delivering an agreement of the type referred to in Section 13(b) hereof and a "Blanket Letter of
Representations" in the form provided by DTC
Section 31. BOND INSURANCE AND DEBT SERVICE RESERVE FUND
INSURANCE POLICIES. On the date of delivery of the Bonds, the City will obtain from Financial
Security Assurance Inc., a New York stock insurance company (the "Insurer") a municipal bond
insurance policy and a debt service reserve fund policy in support of the Bonds. To that end, for so
long as said policies are in effect, the ordinance requirements of the Insurer, as a condition to the
issuance of said policies, attached to this Ordinance are incorporated by reference into this Ordinance
and made a part hereof for all purposes, notwithstanding any other provision of this Ordinance to the
contrary. For purposes of this Ordinance, the Required Amount shall include the debt service on the
Bonds as well as the Outstanding Previously Issued Priority Bonds. No cash currently on deposit in
the Reserve Fund will be released as a result of the acquisition of the debt service reserve fund policy.
The City Manager and any Assistant City Manager shall have the authority to execute any documents
to effect the issuance of said policies by the Insurer including, without limitation, a guaranty
agreement to be delivered in connection with the debt service reserve fund policy.
Section 32 COMPLIANCE WITH RULE 15c2-12. (a) AnnualReports. (i) The City
shall provide annually to each NRMSIR and any SID, within six months after the end of each fiscal
year as described in an exhibit attached to this Ordinance, financial information and operating data
with respect to the City of the general type included in the final Official Statement authorized by
Section 28 of this Ordinance, being the information described in Exhibit A attached to this Ordinance.
Any financial statements to be so provided shall be (1) prepared in accordance with the accounting
principles described in Exhibit A attached hereto, or such other accounting principles as the City may
be required to employ from time to time thereafter pursuant to state law or regulation, and
(2) audited, if the City commissions an audit of such statements and the audit is completed within the
period during which they must be provided. If the audit of such financial statements is not complete
within such period, then the City shall provide unaudited financial statements within such period and
shall provide audited financial statements for the applicable fiscal year to each NRMSIR and any SID,
when and if the audit report on such statements become available.
(ii) If the City changes its fiscal year, it will notify each NRMSIR and any SID of the change
(and of the date of the new fiscal year end) prior to the next date by which the City otherwise would
be required to provide financial information and operating data pursuant to this Section. The financial
information and operating data to be provided pursuant to this Section may be set forth in full in one
or more documents or may be included by specific reference to any document (including an official
statement or other offering document, if it is available from the MSRB) that theretofore has been
provided to each NRMSIR and any SID or filed with the SEC.
(b) Material Event Notices. The City shall notify any SID and either each NRMSIR or the
MSRB, in a timely manner, of any of the following events with respect to the Bonds, if such event
is material within the meaning of the federal securities laws:
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Principal and interest payment delinquencies;
Non-payment related defaults;
Unscheduled draws on debt service reserves reflecting financial difficulties;
Unscheduled draws on credit enhancements reflecting financial difficulties;
Substitution of credit or liquidity providers, or their failure to perform;
Adverse tax opinions or events affecting the tax-exempt status of the Bonds;
Modifications to fights of holders of the Bonds;
Bond calls;
Defeasances;
Kelease, substitution, or sale of property securing repayment of the Bonds;
and
Rating changes.
The City shall notify any S1D and either each NRMSIR or the MSKB, in a timely manner, of any
failure by the City to provide financial information or operating data in accordance with subsection
(a) of this Section by the time required by such subsection.
(c) Limitations, Disclaimers, andAmendments. (i) The City shall be obligated to observe
and perform the covenants specified in this Article for so long as, but only for so long as, the City
remains an "obligated person" with respect to the Bonds within the meaning of the Rule, except that
the City in any event will give notice of any deposit made in accordance with this Ordinance or
applicable law that causes Bonds no longer to be outstanding.
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(ii) The provisions of this Section are for the sole benefit of the registered owners and
beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit
or any legal or equitable right, remedy, or claim hereunder to any other person. The City undertakes
to provide only the financial information, operating data, financial statements, and notices which it
has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide
any other information that may be relevant or material to a complete presentation of the City's
financial results, condition, or prospects or hereby undertake to update any information provided in
accordance with this Section or otherwise, except as expressly provided herein. The City does not
make any representation or warranty concerning such information or its usefulness to a decision to
invest in or sell Bonds at any future date.
(iii) UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE
REGISTERED OWNER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER
PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART
FROM ANY BEACH BY THE CITY, WHETHER NEGLIGENT OR WITHOUT FAULT ON
ITS PART, OF ANY COVENANT SPECIFIED IN THIS ARTICLE, BUT EVERY RIGHT AND
REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF
ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMU S OR SPECIFIC
PERFORMANCE.
(iv) No default by the City in observing or performing its obligations under this Section shall
comprise a breach of or default under this Ordinance for purposes of any other provision of this
Ordinance. Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the
duties of the City under federal and state securities laws.
(v) The provisions of this Section may be amended by the City from time to time to adapt to
changed circumstances that arise from a change in legal requirements, a change in law, or a change
in the identity, nature, status, or type of operations of the City, but only if(l) the provisions of this
Section, as so amended, would have permitted an underwriter to purchase or sell Bonds in the
primary offering of the Bonds in compliance with the Rule, taking into account any amendments or
interpretations of the Rule since such offering as well as such changed circumstances and (2) either
(a) the registered owners of a majority in aggregate principal amount (or any greater amount required
by any other provision of this Ordinance that authorizes such an amendment) of the outstanding
Bonds consent to such amendment or (b) a person that is unaffiliated with the City (such as nationally
recognized bond counsel) determined that such amendment will not materially impair the interest of
the registered owners and beneficial owners of the Bonds. If the City so amends the provisions of
this Section, it shall include with any amended financial information or operating data next provided
in accordance with subsection (a) of this Section an explanation, in narrative form, of the reason for
the amendment and of the impact of any change in the type of financial information or operating data
so provided. The City may also amend or repeal the provisions of this continuing disclosure
agreement if the SEC amends or repeals the applicable provision of the Rule or a court of final
jurisdiction enters judgment that such provisions of the Rule are invalid, but only if and to the extent
that the provisions of this sentence would not prevent an underwriter from lawfully purchasing or
selling Bonds in the primary offering of the Bonds.
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Section 3 3. ALLOCATION OF, AND LIMITATION ON, EXPENDITURES FOR THE
PROJECT. That the City covenants to account for on its books and records the expenditure of
proceeds from the sale of the Bonds and any investment earnings thereon to be used for the
improvement and extension of the System (referred to herein and Section 34 hereof as a "Project")
by allocating proceeds to expenditures within 18 months of the later of the date that (a) the
expenditure on a Project is made or (b) each such Project is completed. The foregoing
notwithstanding, the City shall not expend such proceeds or investment earnings more than 60 days
after the later of(a) the fifth anniversary of the date of delivery of the Bonds or (b) the date the Bonds
are retired, unless the City obtains an opinion of nationally-recognized bond counsel substantially to
the effect that such expenditure will not adversely affect the tax-exempt status of the Bonds. For
purposes oftMs Section, the City shall not be obligated to comply with this covenant if it obtains an
opinion of nationally-recognized bond counsel to the effect that such failure to comply will not
adversely affect the excludability for federal income tax purposes from gross income of the interest.
Section 34. DISPOSITION OF PROJECT. That the City covenants that the property
constituting a Project will not be sold or otherwise disposed in a transaction resulting in the receipt
by the City of cash or other compensation, unless the City obtains an opinion of nationally-recognized
bond counsel substantially to the effect that such sale or other disposition will not adversely affect
the tax-exempt status of the Bonds. For purposes of this Section, the portion of the property
comprising personal property and disposed of in the ordinary course of business shall not be treated
as a transaction resulting in the receipt of cash or other compensation. For purposes of this Section,
the Issuer shall not be obligated to comply with this covenant if it obtains an opinion of nationally-
recognized bond counsel to the effect that such failure to comply will not adversely affect the
excludability for federal income tax purposes from gross income of the interest.
Section 35. PREAMBLE. That the preamble to this Ordinance is hereby incorporated by
reference, and is to be considered a part of the operative text of this Ordinance.
Section 36. IMMEDIATE EFFECT. That on request of the Mayor to find and declare an
emergency due to the immediate need for the efficient and effective administration of City affairs by
authorizing the issuance of the above-mentioned Bonds, such finding of an emergency is hereby
specifically made and declared, requiring suspension of the Charter rule as to consideration and voting
upon ordinances or resolutions at two regular meetings so that this Ordinance be passed and take
effect upon first reading.
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SIGNED AND SEALED TH/S 19TH DAY OF SEPTEMBER, 2000.
Mayor,
City &Corpus Christi, Texas
(SEA )
APROVED AS TO FORM:
Ci e
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Corpus Christi, Texas
TO THE MEMBERS OF THE CITY COUNCIL
Corpus Christi, Texas
For the reasons set forth in the emergency clause of the foregoing ordinance an emergency exists
requiring suspension of the Charter rule as to consideration and voting upon ordinances at two
regular meetings: I/we, therefore, request that you suspend said Charter rule and pass this
ordinance finally on the date it is introduced, or at the present meeting of the City Council.
Respectfully,
Respectfully,
, Jr.
City of Corpus Cb/~sti
Council Members
The above ordinance was passed by the following vote:
Samuel L. Neal, Jr.
Javier D. Colmenero
Melody Cooper
Henry Garrett
Dr. Arnold Gonzales
Rex A. Kinnison
Betty Jean Longoria
John Longoria
Mark Scott
O24231
Exhibit A
to
Ordinance
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION
The following information is referred to in Section 32 oftMs Ordinance.
Annual Financial Statements and Operating Data
The financial information and operating data with respect to the City to be provided annually
in accordance with such Section are as specified (and included in the Appendix or under the headings
of the Official Statement referred to) below:
Tables 1 through 25 contained in the Official Statement;
and
"Certain Audited Financial Statement", as set forth in Appendix B to the Official Statement.
Accounting Principles
The accounting principles referred to in such Section are the accounting principles described
in the notes to the financial statements referred to above.