HomeMy WebLinkAbout027009 ORD - 09/26/2006CERTIFICATE FOR R INANC
THE STATE OF TEXAS
COUNTIES OF ACES AND SAN ATRICIO
CITY OF CORPUS CHRISTI
On this the 26th day of September, 200 6, the City Council of the City of Corpus Christi,
Texas convened in Regular Meeting, at City Hall, with the following members of said Council
present, to-wit:
Henry Garrett
Brent Chesney,
Melody Cooper,
Jerry Garcia,
Bill Kelly,
Rex A. Kinnison,
John Mare z,
Jesse Noyola,
Mark Scott
George K. Noe,
Mary Kay Fischer,
Cindy O'Brien,
Armando Chapa,
Mayor
Councilmembers
City Manager,
City Attorney,
Director of Financial Services,
City Secretary
with the following absentees, p 0 p , constituting a quorum, at which time the following
among other business was transacted:
The City Manager presented for the consideration of the Council an ordinance authorizing
the City Manager to effect the sale. of Utility System Revenue Refunding and Improvement Bonds.
The ordinance was read by the City Secretary. The motion was carried by the following vote:
AYES: All members of the City Council shown present above
Voted "Aye".
NAYS: None,
ABSENT WREN VOTING: None
The Mayor announced that the ordinance had been passed. The ordinance is as follows:
027009
i27OO9
ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF
CITY OF CORPUS CHRISTI, TEXAS UTILITY SYSTEM
REVENUE REFUNDING AND IMPROVEMENT BONDS, SERIES 2006,
Di AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $95,000,000
THE STATE OF TEXAS
COUNTIES OF FECES AND SAN PATRICIO
CITY OF CORPUS CHRISTI
WHEREAS, the City of Corpus Christi, Texas (the i "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 ofin excess of5 ,00 ,
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 ent Bonds, Series 1999 (the "Series 1999 Bonds"), its City of
Corpus Christi, Texas Utility System Revenue Refunding and Improvement Bonds, Series 1999 -A
(the "Series 1999 -A Bonds"), its City of Corpus Christi, Texas Utility System Revenue Refunding
Bonds, Series 2000 (the "Series 2000 Bonds"), its City of Corpus Christi, Texas Utility System
Revenue Refunding Bonds, Series 2000 -A (the "Series 2000 -A Bonds"), its City of Corpus Christi,
Texas Utility System Revenue Refunding and Improvement Bonds, Series 2002 (the "Series 2002
Bonds"), its City of Corpus Christi, Texas Utility System Revenue Refunding Bonds, Series 2003 (the
"Series 2003 Bonds"), its City of Corpus Christi, Texas Utility System Revenue Refunding and
Improvement Bonds, Series 2004 (the "Series 2004 Bonds"), its City of Corpus Christi, Texas Utility
System Revenue Refunding Bonds, Series 2005 (the "Series 2005 Bonds"), and its City of Corpus
Christi, Texas Utility System Revenue Refunding Bonds, Series 2005A (the "Series 2005A Bonds");
and
WHEREAS, the Series 1990 Bonds, the Series 1994 Bonds, the Series 1994 -A Bonds, the
Series 1995 Bonds and the Series 1995 -A Bonds are no longer outstanding; and
WHEREAS, the Series 1999 Bonds, the Series 1999 -A Bonds, the Series 2000 Bonds, the
Series 2000 -A Bonds, the Series 2002 Bonds, the Series 2003 Bonds, the Series 2004 Bonds, the
Series 2005 Bonds and the Series 2005A 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 authorized the issuance of commercial paper notes designated "City of Corpus Christi, Texas
Utility System Commercial Paper Notes, Series B", to be issued from time to time in an aggregate
principal amount not to exceed $75,000,000 at any one time outstanding (the "Series B Commercial
Paper Notes"), of which $17,000,000 in principal amount currently is outstanding; and
WHEREAS, the City deems it appropriate and in its best interest to authorize the issuance
of the hereinafter authorized bonds in part for the purpose of refunding up to $17,000,000 in
aggregate principal amount of the outstanding Series B Commercial Paper Notes and funding the
interest due thereon at maturity; and
WHEREAS, in addition, the City Council has determined to authorize the refunding of all or
a portion of the Previously Issued Parity Bonds described in Schedule attached to this Ordinance
(the "Refundable Bonds") to achieve a debt service savings with respect to the Refundable Bonds;
and
WHEREAS, in addition, the City deems it appropriate and in its best interest to issue the
hereinafter authorized bonds in part for the purpose of extending and improving the City's combined
waterworks system, wastewater disposal system and gas system (the "System"); 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, because offluctuating conditions in the municipal bond market, the City Council
has determined to delegate to the City Manager the authority to effect the sale of the bonds
hereinafter authorized for the purposes set forth in this Ordinance, subject to the parameters
hereinafter described; and
WHEREAS, the bonds hereinafter authorized are to be issued and delivered pursuant to the
laws ofthe State of Texas, including specifically Chapters 1207, 1371 and 1502, Texas Government
Code, as amended, and the terms ofthe Base Ordinance and this Ordinance, for the purposes set forth
in this Ordinance; and
WHEREAS, defined terms used in this Ordinance shall have the meaning given said terms in
Section 7 of this Ordinance, unless otherwise indicated herein.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL THE CITY
OF CORPUS CHRISTI, TEXAS:
Section 1. BONDS AUTHORIZED. That there shall be authorized to be issued, sold, and
delivered hereunder fully registered bonds, without interest coupons (the "Bonds"), numbered
consecutively from R-1 upward, payable to the respective initial registered owners thereof, or to the
registered assignee or assignees ofthe Bonds or any portion or portions thereof, in the denomination
of $5,000 or any integral multiple thereof an "Authorized Denomination"), maturing not later than
July 15, 2041, payable serially or otherwise on the dates, in the years and in the principal amounts,
respectively, and dated, all as set forth in the Purchase Agreement. The Bonds are hereby authorized
to be issued for the purpose of i refunding outstanding Series B Comr ercial Paper Notes and
paying the interest due at maturity, (ii) refunding all or a portion of the Refundable Bonds, (iii)
financing improvements and extensions to the System, and (iv) paying the costs ofissuing the Bonds.
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The Bonds authorized by this Ordinance to be issued, sold and delivered may not be sold in an
aggregate principal amount in excess of $95,000,000.
Section 2. SALE OF BONDS. (a) Negotiated Sale. That the Bonds will be sold through
a negotiated sale pursuant to the procedures set forth herein. Morgan Stanley & Co. Incorporated
is hereby designated to be the senior managing underwriter for the Bonds. The City Manager, acting
for and on behalf of the City, is authorized to enter into and carry out the Purchase Agreement with
the Underwriters, in substantially the form attached hereto and made a part hereof for all purposes,
with such changes as may be necessary to effect the sale of the Bonds to the Underwriters. The
Bonds shall be sold to the Underwriters at such price, and subject to such terms and conditions, as
set forth in the Purchase Agreement, as shall be determined by the City Manager pursuant to
subsection (b) below. The authority of the City Manager to execute the Purchase Agreement shall
expire if the Purchase Agreement has not been executed by the City and by the Underwriters (acting
through their duly designated representative) by 5:00 p.m., Thursday, November 30, 2006. Any
finding or determination made by the City Manager relating to the issuance and sale ofthe Bonds and
the execution ofthe Purchase Agreement in connection therewith shall have the same force and effect
as a finding or determination made by the City Council.
(b) Delegation o City Manager. As authorized by Chapter 1371, Texas Government Code,
the City Manager is hereby appointed, authorized, and designated to act on behalf of the City in
selling and delivering the Bonds and carrying out the other procedures specified in this Ordinance,
including determining and fixing the date of the Bonds, the designation or title by which the Bonds
shall be known, the aggregate principal amount of the Bonds, the date of delivery ofthe Bonds, the
principal amount of the Bonds, if any, to be sold to refund all or a portion of the Refunded
Commercial Paper Notes, the principal amount of the Bonds, if any, to be sold to refund all or a
portion of the Refundable Bonds, the principal amount of the Bonds, if any, to be sold to fund
improvements and extensions to the System, the price at which the Bonds will be sold, the years in
which the Bonds will mature, the principal amount of B Inds to mature in each of such years, the rate
or rates of interest to be borne by each such maturity, the interest payment periods, the dates, price,
and terms upon and at which the Bonds shall be subject to redemption prior to maturity at the option
of the City, as well as any mandatory sinking fund redemption provisions, and all other matters
relating to the issuance, sale, and delivery ofthe Bonds, and the refunding ofthe Refunded Bonds and
the Refunded Commercial Paper Notes, including, without limitation, obtaining a municipal bond
insurance policy and a debt service reserve fund surety bond in support of the Bonds, all of which
shall be specified in the Purchase Agreement; provided, that (i) the price to be paid for the Bonds
shall not less than 95% of the aggregate original principal amount thereof, plus accrued interest
thereon from the date of their delivery, and (ii) none of the Bonds shall bear interest at a rate greater
than 10% per annum.
(c) , f# cial Statement. The City Manager and the Director of Financial Services are
authorized and directed to provide for and oversee the preparation of a final official statement in
connection with the issuance ofthe Bonds, and to approve such final official statement and deem the
preliminary official statement prepared in connection with the sale of the Bonds final in compliance
with the Rule and to provide it to the Underwriters of the Bonds in compliance with the Rule. The
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use ofthe preliminary official statement prepared in connection with the sale ofthe Bonds is hereby
approved.
Section 3. REDEMPTION OF THE BONDS. (a) Redemption. That to the extent so
provided for in the Purchase Agreement, the Bonds may be subject to redemption prior to their
scheduled maturities. Should the Purchase Agreement provide for the redemption ofthe Bonds prior
to their scheduled maturities at the option ofthe City, ifless than all ofthe Bonds are to be redeemed
by the City, the City shall determine the maturity or maturities and the amounts thereof to be
redeemed and shall direct the Paying Agent/Registrar to call by lot Bonds, or portions thereof, within
such maturity or maturities and in such principal amounts, for redemption; provided, that during any
period in which ownership ofthe Bonds is determined only by a book entry at a securities depository
for the Bonds, if fewer than all ofthe 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 City and the securities depository. Should
the Purchase Agreement provide for the mandatory sinking fund redemption ofBonds, the terms and
conditions governing any such mandatory sinking fund redemption and the payment of Amortization
Installments relating thereto shall be as set forth in the Purchase Agreement.
(b) Notice to Registered Owners. Notice of any such redemption of Bonds shall be given in
the following manner: (0 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 (hereinafter 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 publication of general circulation in the United States of America or the State ofTexas
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.
If such notice of redemption 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 ofthe 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 AgentfRegistrar
shall record in the Registration Books all such redemptions of principal ofthe Bonds or any portion
thereof. 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 City, all as provided in this Ordinance. The maturities ofBonds 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 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). 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/Regis-
trar) prior to such redemption.
(c) Additional Notice. 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 of Bonds by
either United States mail, first -class postage prepaid, or electronic mail, at least 30 days prior to a
redemption date to each NRMSIR R and the SID. 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 30 days but not
more than 90 days prior to the actual redemption date. Any notice sent to each NRMS1R and the
SID shall be sent so that they are received at least two 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 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 of issue, the interest rate, the maturity date, the CUSIP number, if any,
the amounts called of for redemption, 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.
ii 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 shall bear interest calculated on the basis ofa 360-
day year composed of twelve 30-day months from the dates specified in the FORM OF BOND to
their respective dates of maturity at the rates set forth in the Purchase Agreement. Interest on the
Bonds shall be payable on the dates as set forth in the Purchase Agreement, until the maturity or prior
redemption of the Bonds.
Section 5. CHARACTERISTICS OF THE BONDS. (a) Transfer,
Conversion and Exchange; Authentication. That the City shall keep or cause to be kept at the
designated trust office in Dallas, Texas (the "Designated Trust Office") of The Bank of Ne w York
Trust Company, N.A. (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 AgentlRegistrar as its registrar and transfer agent to keep such books or records
and make such registrations of transfers, conversions and exchanges under such reasonable regula-
tions as the City and the Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall
make such registrations, transfers, conversions and exchanges as herein provided. The execution of
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a "Paying Agent/Registrar Agreement", in substantially the form attached to this Ordinance, 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/Registrar 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. Each substitute Bond shall bear a letter and/or
number to distinguish it from each other Bond.
Each Bond may be exchanged for fully registered bonds in the manner set forth herein. Each
Bond issued and delivered pursuant to this Ordinance, to the extent of the unredeemed principal
amount thereof, may, upon surrender thereof at the Designated Trust Office of the Paying
Agent/Registrar, together with a written request therefor duly executed by the registered owner or
the assignee or assignees thereof, or its or their duly authorized attorneys or representatives, with
guarantee of signatures satisfactory to the Paying Agent/Registrar, at the option of the registered
owner or such assignee or assignees, as appropriate, be exchanged for fully registered bonds, without
interest coupons, in the form prescribed in the FORM OF BOND, in any Authorized Denomination
(subject to the requirement hereinafter stated that each substitute bond shall have a single stated
maturity date), as requested in writing by such registered owner or such assignee or assignees, in an
aggregate principal amount equal to the unredeemed principal amount of any Bond or Bonds so sur-
rendered, and payable to the appropriate registered owner, assignee, or assignees, as the case may
be. If a portion of any Bond shall be redeemed prior to its scheduled maturity as provided herein, a
substitute bond or bonds having the same maturity date, bearing interest at the same rate, in any
Authorized Denomination at the 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 sur-
render thereof for cancellation. If any Bond or portion thereofis assigned and transferred, each Bond
issued in exchange therefor shall have the same principal maturity date and bear interest at the same
rate as the Bond for which it is being exchanged. Each substitute bond shall bear a letter and/or
number to distinguish it from each other bond. The Paying Agent/Registrar shall exchange or replace
Bonds as provided herein, and each fully registered substitute bond or bonds delivered in exchange
for or replacement of any Bond or portion thereof as permitted or required by any provision of this
Ordinance shall constitute one of the Bonds for all purposes of this Ordinance, and may again be
exchanged or replaced. It is specifically provided, however, that any Bond delivered in exchange for
or replacement of another Bond prior to the first scheduled interest payment date on the Bonds (as
stated on the face thereof) shall be dated the same date as such Bond, but each substitute bond so
delivered on or after such first scheduled interest payment date shall be dated as of the interest
payment date preceding the date on which such substitute bond is delivered, unless such substitute
bond is delivered on an interest payment date, in which case it shall be dated as of such date of
delivery; provided, however, that if at the time of delivery of any substitute bond the interest on the
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bond for which it is being exchanged has not been paid, then such substitute bond shall be dated as
of the date to which such interest has been paid in full. On each substitute bond issued in exchange
for or replacement of any Bond or Bonds issued under this Ordinance there shall be printed thereon
a Paying Agent Registrar's Authentication Certificate, in the form set forth in the FORM OF ND
(the "Authentication Certificate"). An authorized representative ofthe Paying Agent/Registrar shall,
before the delivery of any such Bond, date and manually sign the Authentication Certificate, and no
such Bond shall be deemed to be issued or outstanding unless the Authentication Certificate is so ex-
ecuted. 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 1 206, 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
ofthe Authentication 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 f Bonds and Interest. The City hereby further appoints ints 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, viii) 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. The Bonds initially issued and delivered
pursuant to this Ordinance are not required to be, and shall not be, authenticated by the Paying
AgntRgistrar, 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 Authentication
Certificate.
(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
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
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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 AgentlRegistrar 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 thereofto be sent by the new Paying Agent/Registrar to each registered owner ofthe
Bonds, by United States mail, 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 Eny Only System. The Bonds issued in exchange for the Bonds initially issued
to the purchaser specified herein shall be initially issued in the form of a separate single fully
registered Bond for each ofthe 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
ofNew York ("DTC"), and except as provided in subsection (f) hereof, all ofthe outstanding Bonds
shall be registered in the name of Cede & Co., as nominee of TC .
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 ("DTC Participant's) 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 ofthe 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 ofprincipal 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
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 ofthe Issuer to make payments ofprincipal 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.,
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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.
(0 Successor Securities 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
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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) D of ra'. Notwithstanding any other provision of this Ordinance
to the contrary, so long as any Bond is registered in the name of Cede & Co., as nominee of DTC,
all payments with respect to principal of 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. That the form of all Bonds, including the form of the
Authentication 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 in the form attached hereto as Exhibit A, with such appropriate
variations, omissions, or insertions as are permitted or required by this Ordinance.
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 "Additional Pri ity Bonds" 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).
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The term "Authorized D n m n ion shall mean $5,000 or any integral multiple thereof.
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 2006 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 " C p i din eyes u " 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 Internal Revenue Code of1986, and any amendments thereto.
The term "Construction Fund" shall mean the fund so designated in Section 13 of this
Ordinance.
The term "Credit FaciliV 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 terra "Credit Facility Provider " shall mean (i) with respect to any Credit Facility
consisting of a policy of muniipal bond insurance or a surety bond, an issuer of licies of insurance
insuring the timely payment of debt service on governmental obligations such as the Priority Bonds,
4 _
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 (i.i ) with respect to any Credit Facility consisting of a letter or line
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 ofthe 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 "D TC " shall have the meaning given such term in Section 5 to this Ordinance.
The term "Eligible Investments " 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 p roeeds 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 "Escrow Agreement" shall mean the Escrow Agreement between the City and the
escrow agent named therein, executed and delivered in connection with the refunding ofthe Refunded
Bonds.
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 "Government b igatio ns " 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 " Gr ss Revenues" 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 "MAC" shall mean the Municipal Advisory Council of Texas.
The term "Mandatory y d mpt n 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 "MSS " shall mean the Municipal Securities Rulemaldng Board.
The terms "Net Revenues , f the Sys m " and "Net s" shall mean all Gross Revenues
less Operating Expenses.
The term "NHS." shall mean 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 "Operating x er e " shall mean the expenses of operation and maintenance ofthe
System, including all salaries, labor, materials, repairs, and extensions necessary to render efficient
nt
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 Ponds" shall have the meaning given said term in the
preamble to this Ordinance.
The term ".Prir^ity 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,
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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
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 contract between the City and
the Underwriters pertaining to the purchase of the Bonds by the Underwriters.
The term "Ra g y" shall mean any nationally recognized securities rating agency which
has assigned a rating to the Priority Bonds.
The term "Refundable Bonds " shall mean those bonds identified in Schedule I attached to this
Ordinance that are eligible to be refunded in accordance with Section 36(b) of this Ordinance.
The term "Refunded Bonds " shall mean those Refundable Bonds selected by the City Manager
to be refunded with the proceeds of the Bonds, as identified in the Purchase Agreement.
The term "Refunded Commercial Paper Notes" shall mean those Series B Commercial Paper
Notes designated by the Director of Financial Services as provided in Section 36(a) ofthis Ordinance.
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" shall mean SEC Rule 15c2-12, as amended from time to time.
The term "SC" shall mean 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 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"
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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; the term "Series 2000 Bonds" shall mean the $34,740,000 City of Corpu Christi, Texas Utility
System Revenue Refunding Bonds, Series 2000, authorized by the ordinance adopted by the City on
May 11, 1999; the term "Series 2000-A Bonds " shall mean the $42,520,000 City of Corpus Christi,
Texas Utility System Revenue Refunding Bonds, Series 200 0-& authorized by the ordinance adopted
by the City on September 19, 2000; the term "Series 2002 Bonds " shall mean the $92,330,000 City
of Corpus Christi, Texas Utility System Revenue Refunding and Improvement Bonds, Series 2002,
authorized by the ordinance adopted by the City on August 20, 2002; the term "Series 2003 Bonds"
shall mean the $28,870,000 City of Corpus Christi, Texas Utility System Revenue Refunding Bonds,
Series 200 3, authorized by the ordinance adopted by the City on March 25, 200 3; the term "Series
2004 Bonds." shall mean the $50,000,000 City of Corpus Christi, Texas Utility System Revenue
Refunding and Improvement Bonds, Series 2004, authorized by the ordinance adopted by the City
on July 13, 2004; the term "Series 2005 Bonds" shall mean the $70,390,000 City of Corpus Christi,
Texas Utility System Revenue Refunding Bonds, Series 2005, authorized by the ordinance adopted
by the City on December 21, 2004; and the term "Series 2005A Bonds " shall mean the $68,325,000
City of Corpus Christi, Texas Utility System Revenue Bonds, Series 2005A, authorized by the
ordinance adopted by the City on August 30, 2005.
The term "Series 2006 Bonds" shall mean the bonds authorized to be sold pursuant to the
terms of this Ordinance.
The term "SID" shall mean 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 MAC currently acts
as the SID for the State of Texas.
The term "S b r d a i i ons " 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 ofthe 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 ofthe System, unless
and to the extent otherwise provided in the ordinance or ordinances authorizing the issuance of such
"Special Facilities Bonds ".
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The term "System Fund' ' shall have the meaning given such term in Section 9 of this
Ordinance.
The term "Term Bonds " shall mean those Bonds, if any, so designated in the Purchase
Agreement 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 " r rwri rs " 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 oflike import shall mean the amortized
value thereof, provided, however, that all United States of America, United States Treasuly
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 paid as a part ofthe purchase price thereof and not collected. For the purposes
ofthis definition "amortized value ", when used with respect to a security purchased at par means the
purchase price of such security.
The term "Y ear" shall mean the regular fiscal year used by the City in connection with the
operation ofthe System, which may be any twelve consecutive months period established by the City.
Section 8. PLEDGE. (a) d Remnues. 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 hereinafter created in this Ordinance; and the Pledged
Revenues are further pledged to the establishment and maintenance ofthe 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.
(b) Security Interest. Chapter 1208, Texas Government Code, applies to the issuance ofthe
Bonds and the pledge of the Pledged Revenues granted by the City under subsection (a) of this
Section, and such pledge is therefore valid, effective, and perfected. If Texas law is amended at any
time while the Bonds are outstanding and unpaid such that the pledge of the Pledged Revenues
granted by the City is to be subject to the filing requirements of Chapter 9, Texas Business
Commerce Code, then in order to preserve to the registered owners of the Bonds the perfection of
the security interest in said pledge, the City agrees to take such measures as it determines are
reasonable and necessary under Texas law to comply with the applicable provisions of Chapter 9,
Texas Business & Commerce Code and enable a filing to perfect the security interest in said pledge
to occur.
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Section 9. SYSTEM FUND: That there has heretofore been created and established and
there shall be maintained on the books ofthe 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) Debt Service ' d Established, 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 deposited and maintained in an official depository bank ofthe City.
Capitalized Interest 1 ur . 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 ofbonds or other obligations for which any interest 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) Mandatory Red pt n Account. That within the Debt Service Fund there has
heretofore been established the Mandatory Redemption Account. Amortization Installments shall be
deposited to the credit of the 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 11. RESERVE FUND. (a) Reserve Fund Established. That there has heretofore
been created and established and there shall be maintained on the books ofthe 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 depository bank ofthe 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 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) Credit Facility. 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
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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) Withdrawals. Ifthe City is required to make a withdrawal from the Reserve Fund for any
ofthe 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.
(cI) Deficiencies. In the event ofa 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
Axount, 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) Redetion; , frsa. 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 (0 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) Reimbursement of Credit Facility Provider. 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) Additional Priority Bonds. s. 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. SUBORDD1ATED OBLIGATIONS FUNDS AND ACCOUNTS. That the
City hereafter may create, establish and maintain on the books ofthe 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 the City hereby creates and establishes and
shall maintain on the books of the City a separate fund to be entitled the "Series 2006 Utility System
Revenue Bonds Construction Fund" (the "Construction Fund") for use by the City for payment of all
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lawful costs associated with the acquisition, improvement and extension ofthe System as hereinbefore
provided. There shall be deposited to the Construction Fund those proceeds from the sale of the
Bonds specified in the letter of instructions described in Section 2 ofthis Ordinance. Upon payment
of all such costs, any moneys remaining on deposit in said Fund shall be transferred FIRST to the
"Rebate Fund" established pursuant to Section 23 of this Ordinance, to the extent the City is liable
to pay rebate amounts to the United States of America pursuant to the terms ofthe Code and NEXT
to the Debt Service Fund. Amounts so deposited to the Debt Service Fund shall be used in the
manner described in Section 22(p) of this Ordinance.
Section 14. INVESTMENTS. That money in any Fund established pursuant to this
Ordinance may, at the option ofthe 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. Ifmonies 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 of each such Fund shall be established annually during the last month of each
Year and in addition thereto, with respect to the Reserve Fund, value shall be established within thirty
days prior to the issuance ofPriority 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 16. FLOW OF FUNDS. That all monies in the System Fund not required for paying
Operating Expenses during each month shall be applied by the City, on or before the lOth 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 ofPriority Bonds, or (ii) the month in which Priority Bonds are
delivered, or the month thereafter if delivery is made after the 10th day thereof, as will be
1
sufficient, together with other amounts, i
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 ofthis Ordinance when payment ofthe 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(b) 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.
Government ia'ns. 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.
(c) Payment of Priority Bonds. 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
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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) Reservation of
Right to Issue Additional Priority Bonds. 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) Funding Reserve 'und. 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 ofthe City, (0 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 instalments, 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 ofthe 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 (0 above, is sufficient to satisfy the required additional amount to be on deposit
in the Reserve Fund.
(c) Calculations. That all calculations ofAverage 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 THER R Q IREMENTS FOR ADDITIONAL PRIORITY BONDS.
(a) Conditions pn t, 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 ofthe
City then having the responsibility for the financial affairs ofthe 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 ofthe City payable from and secured
by a lien on and pledge ofthe 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 of delivery 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.
(b) Conditions Precedent for Issuance of Additional Priority Bonds - Capital
Improvements and for any other lawful purpose except or Capital Additions ori for � ef unding.
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 wi
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 (OW 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 thereofand make the same commercially operative without satisfaction of any condition
precedent under clauses (OW and (c )(ii) or clause (b) ofthis Section but subject to satisfaction ofthe
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
ofthe System to be outstanding after the issuance ofthe 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 right to issue refunding bonds to refund all or
any part ofthe 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 ifless 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 Accountant's certificate or
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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 Financial Services (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 i above, the Engineer ofRecord 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
Financial Services 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 from 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) D 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.
Determination of Net Earnings. In making a determination ofNet Earnings for any of
the purposes described in this Section, the Accountant may take into consideration a change in the
rates and charges for services and facilities afforded by the System that became effective at least
days prior to the last day of the period for which Net Earnings are determined and, for purposes of
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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) 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 Legal utrit. 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
whomsoever, that it is lawfully qualified to pledge the Pledged Revenues to the payment of the
Priority Bonds in the manner prescribed herein, and has lawfully exercised such rights.
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(e) Liens. It will from 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 riori of the liens granted hereunder shall b fully preserved in the
p ty
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.
0 No Free Service. Io free 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 ofthe 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 part ofthe 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 ofthis Section. The proceeds
of any such sale or exchange not used to acquire other property necessary or desirable for the
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
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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 part with the proceeds ofPriority 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 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 and t . 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 parts 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.
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
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whether or not all insurance premiums upon the insurance policies to which reference is hereinbefore
made have been paid.
Rate Covenant. It will fix, establish, maintain and collect such rates, charges and fees
for the use and availability ofthe 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) to pay all current Operating Expenses ofthe System,
and (B) tto 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 e 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) 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 ofthe registered owners ofthe Priority Bonds and their
agents and representatives at all reasonable times.
(m) Governmental Agencies. 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 ofthe
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 Systems facilities, and, to the extent that it legally may, the City will prohibit any
such competing facilities.
(0) of Inspection. 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
reasonable times to inspect the System and all records, accounts and data ofthe 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
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System as the Engineer of Record or such registered owner may from time to time reasonably
request.
Surplus Bond Proceeds. 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 amounts deposited to a reserve fund, if any)
are used for any "private business use", as defined in section 1 1(b)(6) ofthe Code or, if more
than 10 percent of the proceeds are so used, that amounts, 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 ofthe debt service on the Bonds, in contravention of section 141(b)(2)
ofthe Code;
(b) to take any action to assure that in the event that the "private business user"
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) ofthe 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 ofthe proceeds of the Bonds (less amounts deposited into a reserve
fund, if any) is directly or indirectly used to finance loans to persons, other than state or local
governmental units, in contravention of section 141(c) of the Code;
(d) to refrain from taking any action which would otherwise result in the Bonds
being treated as "private activity bonds" within the meaning of section 141(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) dale Code;
(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
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investment property (as defined in section 148(b)(2) ofthe Code) which produces a materially
higher yield over the term of the Bonds, other than investment property acquired with —
(1) proceeds ofthe Bonds invested for a reasonable temporary period 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 of the Treasury Regulations, and
(3) amounts deposited in any reasonably required reserve or replacement
find to the extent such amounts do not exceed 10 percent of the proceeds of the
Bonds;
(g) to otherwise restrict the use ofthe proceeds ofthe Bonds or amounts treated
as proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwise
contravene the requirements of section 148 of the Code (relating to arbitrage) and, to the
extent applicable, section 149(d) of the Code (relating to advance refundings); 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 onds ) an amount that is at least equal to 90
percent ofthe "Excess Earnings", within the meaning of section 14 8(0 ofthe 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(0 of the Code.
The Issuer understands that the term "proceeds " includes 'disposition proceeds " as defined in the
Treasury Regulations and, in the case of a refunding bond, transferred proceeds (if any) and proceeds
ofthe refunded bonds expended prior to the date ofthe issuance ofthe Bonds. It is the understandi
shall not be subject to the claim of any other person, including without limitation the registered
owners ofthe 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 f 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) ofthe 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) Approval b,y Registered Owners.
That the registered owners of a majority in aggregate principal 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 of all 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 parable 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;
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 ofthe principal amount ofPriority 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.
(s)
(b) Notice. 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 principal office of the Pai. g AgentRgistrar for inspection by all holders of
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Priority Bonds. Such publication is not required, however, if notice in writing is given to each
registered owner of Priority Bonds.
Consent Obtained. 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 principal 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 ofthe City may pass the amendatory ordinance in substantially
the same form.
(d) Amendatory Ordinance. 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 ofthen outstanding Priority Bonds and all future Priority Bonds
shall thereafter be determined, exercised and enforced hereunder, subject in all respects to such
amendments.
(e) Consent Irrevocable, for Six Months. 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.
0) Amendments without Consent. The foregoing provisions ofthis Section notwithstanding,
the City by action ofthe City Council may amend this Ordinance for any one or more ofthe 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 urrencer, 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;
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To modify any ofthe provisions ofthis 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 ttandin at the date of the adoption
of such modification shall cease to be outstanding, and (ii) such modification shall be
specifically referred to in the text of all Priority Bonds issued after the date of the adoption
of such modification;
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;
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 ofthis Ordinance and which shall not adversely affect the interests ofthe owners
of the Priority Bonds;
(6) To make such changes, modifications or amendments as are permitted by Section
33v of this Ordinance;
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 Attorney General; and
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, ORDESTROYED BONDS.
(a) Substitute Bonds. 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
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bond ofthe 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) Replacement. Application for replacement of damaged, mutilated, lost,
stolen, or destroyed Bonds shall be made to the Paying Agent/Registrar. In every case ofloss, 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 AgentlRegistrar
evidence to their satisfaction of 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/Registrar for cancellation the Bond so damaged or mutilated.
Payment upon Maury. 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 ofthe 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 indetnnity is furnished
as above provided in this Section.
(d) Cost of mn n. 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)AuthorityforReplacementBonds. In accordance with Chapter 1206, Texas Government
Code, 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 ofthe 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 ofsaid Comptroller shall
be impressed, or placed in facsimile, on each such certificate.
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Section 28. DELIVERY OF BONDS TO THE UNDERWRITERS. That should the City
Manager effect the sale ofthe Bonds to the Underwriters by executing the Purchase Agreement, one
Bond in the principal amount maturing on each maturity date as set forth in the Purchase Agreement
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.
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 executed by or on behalf of the City. The
foregoing notwithstanding, proceeds representing accrued interest on the Bonds shall be deposited
to the credit ofthe Debt Service Fund and proceeds representing premium on the Bonds shall be used
in a manner consistent with the provisions of Section 1201 .041 d , Texas Government Code.
Section 30. DEFAULT AND REMEDIES. (a) Events of , fault. That each of the
following occurrences or events for the purpose ofthis Ordinance is hereby declared to be an "Event
of Default":
(i) the failure to make payment of the principal of or interest on any of the Bonds
when the same becomes due and payable; or
(ii) default in the performance or observance of any other covenant, agreement or
obligation ofthe City, the failure to perform which materially, adversely affects the rights of
the registered owners ofthe Bonds, including, but not limited to, their prospect or ability to
be repaid in accordance with this Ordinance, and the continuation thereof for a period of
days after notice of such default is given by any registered owner to the City.
(h) Remedies for Default.
(i) Upon the happening of any Event ofDefault, then and in every case, any registered
owner or an authorized representative thereof, including, but not limited to, a trustee or
trustees therefor, may proceed against the City, or any official, officer or employee ofthe City
in their official capacity, for the purpose of protecting and enforcing the rights of the
registered owners under this Ordinance, by mandamus or other suit, action or special
proceeding in equity or at law, in any court of competent jurisdiction, for any relief permitted
by law, including the specific performance of any covenant or agreement contained herein,
or thereby to enjoin any act or thing that may be unlawful or in violation of any right of the
registered owners hereunder or any combination of such remedies.
(ii) It is provided that all such proceedings shall be instituted and maintained for the
equal benefit of all registered owners of Bonds then outstanding.
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(c) Remedies Not Exclusive.
(i) No remedy herein conferred or resented is intended to be exclusive of any other
available remedy or remedies, but each and every such remedy shall be cumulative and shall
be in addition to every other remedy given hereunder or under the Bonds or now or hereafter
existing at law or in equity; provided, however, that notwithstanding any other provision of
this Ordinance, the right to accelerate the debt evidenced by the Bonds shall not be available
as a remedy under this Ordinance.
(ii) The exercise of any remedy herein conferred or reserved shall not be deemed a
waiver of any other available remedy.
(iii) By accepting the delivery of a Bond authorized under this Ordinance, such
registered owner agrees that the certifications required to effectuate any covenants or
representations contained in this Ordinance do not and shall never constitute or give rise to
a personal or pecuniary liability or charge against the officers, employees or trustees of the
City or the City Council.
(iv) None ofthe members ofthe City Council, nor any other official or officer, agent,
or employee of the City, shall be charged personally by the registered owners with any
liability, or be held personally liable to the registered owners under any term or provision of
this Ordinance, or because of any Event of Default or alleged Event of Default under this
Ordinance.
Section 31. FURTHERPROCEEDINGS. That the Mayor, the City Manager, any Assistant
City Manager, the City Secretary, and the Director of Financial Services, 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 oche City all such instrument s, 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, conforming documents to receive the approval of the Texas Attorney General and to
receive ratings from municipal bond rating agencies, the printing of a statement relating to the
insuring of the Bonds by a municipal bond insurance company, and, if necessary, executing and
delivering a guaranty agreement ofthe type referred to in Section 32 hereof and a "Blanket Letter of
Representations" in the form provided by DTC.
Section 32. BOND INSURANCE AND DEBT SERVICE RESERVE FUND
INSURANCE POLICIES. That the City Manager is authorized, in connection with effecting the
sale ofthe Bonds, to obtain from a municipal bond insurance company so designated in the Purchase
Agreement (the "Insurer") a municipal bond insurance policy and a debt service reserve fund policy
(together, the "Policies") in support of the Bonds. To that end, should the City Manager exercise
such authority and commit the City to obtain either a municipal bond insurance policy and a debt
service reserve fund policy, or both, for so long as either or both Policies are in effect, the
requirements ofthe Insurer relating to the issuance of said policies are incorporated by reference into
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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. 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, any agreement to be
delivered in connection with either or both of the Policies in substantially the form previously
approved by the City Council in connection with Previously Issued Priority Bonds,
Section 33. COMPLIANCE WITH RULE 15c2 -12. (a) Annual Reports. i That 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 2(c) of this Ordinance, being the information described in Exhibit B attached to this
Ordinance. Any financial statements to be so provided shall be (1) prepared in accordance with the
accounting principles described in Exhibit B attached hereto, or such other accounting principles as
the Cit y 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 ofthe date ofthe 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 ofthe federal securities laws:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions or events affecting the tax - exempt status of the Bonds;
7. Modifications to rights of holders of the Bonds;
8. Bond calls;
9, Defeasances;
10. Release, substitution, or sale of property securing repayment of the Bonds;
and
11. Rating changes.
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The City shall notify any SID and either each NRMSIR or the MSRB, 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. Any filing under this Section may be
made solely by transmitting such filing to the MAC as provided at http :vrr.dislsureusa.rg,
unless the SEC has withdrawn the interpretive advice stated in its letter to the MAC dated September
7, 2004.
(c) Disclaimers, and Amendments. 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.
(ii) The provisions of this Section are for the sole benefit of the registered owners and
beneficial owners of th 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 'rES RESULTING IN WHOLE OR IN PART
FROM ANY BREACH BY THE CITY, WHETHER NEGLIGENT OR WITHOUT FAULT ON
ITS PART, OF ANY COVENANT AI T SPECIFIED IN TBIS 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 MANDAMUS 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 ofthis 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 1 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
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Bonds consent to such amendment orb 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, oft he 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 ofthe 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.
Section 34. 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 35 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 ofthe date of delivery ofthe 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 of this 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 35. 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 ofnationally- 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 36. REASONS FOR REFUNDING. (a) Refunded Commercial Paper Notes.
That the City hereby finds that the issuance ofthe Bonds for the purpose of refunding the Refunded
Commercial Paper Notes is a public purpose. Concurrently with the delivery ofthe Bonds, proceeds
in the amount of the principal amount of and interest due at maturity on the Refunded Commercial
Paper Notes shall be deposited under the terms of the Escrow Agreement to refund the Refunded
Commercial Paper Notes. The Refunded Commercial Paper Notes to be refunded and retired with
proceeds of the Bonds shall be designated by the Director of Financial Services. The Series
Commercial Paper Notes are being refunded to convert interim financing into long -term fixed rate
financing, as contemplated by the City in the operation of the interim financing program for the
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System. Therefore, the manner in which the refunding of the Series B Commercial Paper Notes is
being executed by the City does not make it practicable to make the determinations required by
subsection (a) of Section 1207 008, Texas Government Code.
(b) Refunded Bonds. That the City hereby finds that the issuance of the Bonds for the
purpose of refunding the Refunded Bonds to realize a net present value savings is a public purpose.
As a condition to the issuance of the Bonds, the refunding ofthe aggregate principal amount ofthe
Refunded Bonds must produce i a net present value savings, calculated in accordance with GASH
Statement No. 7, of at least 3.00 %, and (ii) a positive gross savings. The City Manager may elect
not to refund any or all ofthe Refundable Bonds listed in Schedule 1, but in no event shall the Bonds
be issued for the purpose of refunding Refunded Bonds if the refunding of the aggregate principal
amount of the obligations selected for refunding does not result in the minimum savings threshold
established in this Section being realized. On or before the date of delivery of the Bonds, the irect r
of inan ial Services shall execute and deliver to the City Council a certificate stating that the savings
thresholds herein established have been realized. This certificate shall specifically state both the net
present value savings and the gross savings realized by the City as a result of refunding the Refunded
Bonds. In addition, the City hereby determines that, subject to the execution of the Purchase
Agreement wi
adopted by the City and any future amendments thereto or successor provisions thereof. Any
reference to the payment ofprincipai in this Ordinance shall be deemed to include the payment of any
mandatory sinking fund redemption payments as may be described herein. Any reference to FORM
OF BOND shall refer to the form attached to this Ordinance as Exhibit A.
Inconsistent Provisions. All orders and resolutions, or parts thereof, which are in conflict
or inconsistent with any provision of this Ordinance are hereby repealed and declared to be
inapplicable, and the provisions of this Ordinance shall be and remain controlling as to the matters
prescribed herein.
0) Payment + f Attorney General Fee. The City Council hereby authorizes the payment of
the fee of the Office of the Attorney General for the examination of the proceedings relating to the
issuance of the Bonds, in the amount determined in accordance with the provisions of Section
1202.004, Texas Government Code.
SIGNED AND SEALED THIS 26TH DAY OF SEPTEMBER, 2006.
City Secretary
Ma
City of Cor Christi, Texas
APPROVED THI0‘ If' DAY OF SEPTEMBER, 2006:
MARY KAY FISCHER, CITY ATTORNEY
(SEAL)
SCHEDULE 1
CITY OF CORPUS CHRISTI, TEXAS UTILITY SYSTEM REVENUE REFUNDING
AND IMPROVEMENT BONDS, SERIES 1999, dated May 1, 1999, bonds maturing on July
15 in each of the years 2010 and 2019, inclusive, in the following principal amounts:
2010 $1,900,000
2019 $5,810,000
aggregating $7,710,000 in principal amount; REDEMPTION DATE: July 15, 2009
EXHIBIT A
FORM OF BOND
NO.
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTIES TTIES F NUECES AND SAN PATRICIO
CITY OF CORPUS CHRISTI, TEXAS
UTILITY SYSTEM REVENUE REFUNDING AND IMPROVEMENT BOND
D
SERIES 2006
MATURITY INTEREST BOND
DATE RATE DATE
CUSIP
ON THE MATURITY DATE SPECIFIED ABOVE, THE CITY OF CORPUS CHRISTI,
IN NUECES AND SAN PATRICIO COUNTIES, TEXAS (the "Issuer"), hereby promises to pay
to , or to the registered assignee hereof (either being hereinafter called
the "registered owner") the principal amount of
DOLLARS
and to pay interest thereon from the Bond Date specified above, on January 15, 2007 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 ifthe Paying
Agent /Registrar's Authentication Certificate appearing on the face of this Bond is dated later than
January 15, 2007, 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 up n 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") oof The Bank f New York Trust Company, N.A., which is the
"Paying Agent/Registrar" for this Bond. The payment of interest on this Bond shall be made by the
Paying AgentlRegitrar 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 AgntlRegistrar on, and payable
solely fr xr , funds of the Issuer required by the ordinance authorizing the issuance of this Bond (the
"Bond Ordinance") to be on deposit with the Paying AgentlRegistrar 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 be paid to the registered owner upon presentation and surrender of
this Bond for redemption and payment at the Designated Trust Office ofthe Paying AgentRegistrar.
The Issuer covenants with the registered owner ofthis 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 AgentlRegistrar, from the "Debt Service Fund" created by the Bond Ordinance, the
amounts required to provide for the payment, in immediately available funds, of all principal of and
interest on the Bonds, when due.
IF THE DATE for the payment ofthe 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 ofa series ofbonds oflike 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 -__ _ (herein sometimes called the "Bonds"), issued for the purpose of
refunding outstanding Utility System Commercial Paper Notes, Series B, issued by the City initially
to finance improvements and extensions to the Utility System (the "System"), refunding the
"Refunded Bonds" (as defined in the Bond Ordinance), financing improvements and extensions to the
System, and to pay the costs of issuing the Bonds.
THE OUTSTANDING BONDS maturing on and after July 15, 201_ may be redeemed prior
to their scheduled maturities, at the option of the Issuer, in whole, or in part on July 15, 201_, 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.
THE BONDS are also subject to mandatory redemption in part by lot pursuant to the terms
ofthe Ordinance, on July 15 in each ofthe years 20_ through 20 with respect to Bonds maturing
July 15, 2 , in the following years and in the following amounts, at a price equal to the principal
amount thereof and accrued and unpaid interest to the date of redemption, without premium:
Year Principal Amount
Final Maturity
To the extent, however, that Bonds subject to sinking fund redemption have been previously
purchased or called for redemption in part and otherwise than from a sinking fund redemption
payment, each annual sinking fund payment for such Bond shall be reduced by the amount obtained
py � �
by multiplying the principal amount of Bonds so purchased or redeemed by the ratio which each
remaining annual sinking fund redemption payment for such Bonds bears to the total remaining
sinking fund payments, and by rounding each such payment to the nearest $ ,000 integral; 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, the particular Bonds to be called for mandatory redemption shall
be selected in accordance with the arrangements between the City 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 ofthe 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 ofredemption ofmunicipal 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 Issuer with the Paying Agent/Registrar 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 right ofthe 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 hereof 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 hereofin 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 ofassignment 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 converting 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
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 oftransfer shall not be applicable to an exchange by the registered
owner of an unredeemed balance of a Bond called for redemption in part.
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 Issuer 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
ofthis 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,
together with the currently outstanding Previously Issued Priority Bonds (as such term is defined in
the Bond Ordinance), by a first lien on and pledge ofthe "Pledged Revenues" (as such term is defined
in the Bond Ordinance) ofthe 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 ofthe Bonds, and other obligations ofthe 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 r in aggregate principal
amount of the outstanding Priority Bonds (as defined in the Bond Ordinance).
THE REGISTERED W HEREOF shall never have the right to demand payment oft is
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.
IN 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.
CITY OF CO ' US CHRISTI, TEXAS
By
Mayor, City
ATTEST:
City Secretary, City of Corpus Christi, Texas
(SEAL)
Corpus Christi, exas
FORM OF PANG AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE:
PAYING AGENT/REGISTRAR'S AUTHENTICATION C RTIFICAT
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 Bank of New York Trust Company, T.A.,
Paying AgentlRgitrar
By:
Authorized Signatory
FORM OF ASSIGNMENT:
ASSIGNMENT 1
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 rights thereunder, and hereby irrevocably constitutes and appoints
attorney to register the transfer of the within Bond on the books kept for registration
thereof, with Full power of substitution in the premises.
Dated:
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.
FORM OF COMPTROLLER'S 1 E rIST ATI N CERTIFICATE:
OFFICE OF COMPTROLLER :
REGISTER NO.
STATE OF TEXAS .
1 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)
The City hereby authorizes an appropriate statement of insurance furnished by a municipal bond
insurance company providing municipal bond insurance, if any, covering all or any part ofthe Bonds,
to accompany the Bonds.
Exhibit B
to
Ordinance
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION
The following information is referred to in Section 33 of this 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 for each Fiscal Year ending in and after 2006 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
The Audited Financial Statement of the City, 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.
TIE STATE OF TEXAS
COUNTY OF NUECES
CITY Y F CORPUS CHRISTI
1, the undersigned, City Secretary of the City of Corps Christi, Texas, do hereby certify that
the above and foregoing is a true, full and correct copy of an Ordinance passed by the City Council
of the City of Corpus Christi, Texas (and of the minutes pertaining thereto) on the 26th day of
September, 200 6, authorizing the issuance of Utility System ven a Refunding and Improvement
Bonds, Series 2006, which ordinance is duly of record in the minutes of said City Council, and said
meeting was open to the public, and public notice ofthe time, place and purpose of said meeting was
given, all as required by Texas Government Code, Chapter 551.
EXECUTED UNDER MY HAND AND SEAL of said City, this the 26th day of September,
2006.
City Secretary, City of Corpus
Christi, Texas
(SEAL)