HomeMy WebLinkAbout030201 ORD - 06/17/2014 CERTIFICATE FOR ORDINANCE
THE STATE OF TEXAS §
COUNTIES OF NUECES, ARANSAS, §
KLEBERG, AND SAN PATRICIO §
CITY OF CORPUS CHRISTI §
THE UNDERSIGNED HEREBY CERTIFIES that:
1. The City Council (the City Council) of the City of Corpus Christi, Texas (the
City), convened on the 17th day of June, 2014 in regular session in the regular meeting place of
the City at the City Hall (the Meeting), which Meeting was at all times open to the public, the
duly constituted officers and members of the City Council being as follows:
Nelda Martinez Mayor
Kelley Allen Councilmember,District 1
Chad Magill Councilmember, District 2
Priscilla Leal Councilmember, District 3
Colleen McIntyre Councilmember, District 4
Rudy Garza Jr. Councilmember, District 5
David Loeb Councilmember,At Large
Lillian Riojas Councilmember,At Large
Mark Scott Councilmember, At Large
with the following being absent: Priscilla Leal and Mark Scott , constituting a quorum, at
which time among other business considered at the Meeting the attached ordinance (the
"Ordinance") entitled:
AN ORDINANCE AUTHORIZING THE ISSUANCE OF "CITY OF CORPUS
CHRISTI, TEXAS UTILITY SYSTEM JUNIOR LIEN REVENUE
IMPROVEMENT BONDS, SERIES 2015A" IN AN AMOUNT, WHEN
COMBINED WITH OTHER CITY UTILITY SYSTEM REVENUE
OBLIGATIONS AUTHORIZED ON THE DATE HEREOF, NOT TO EXCEED
$155,000,000; MAKING PROVISIONS FOR THE PAYMENT AND
SECURITY THEREOF BY A JUNIOR AND INFERIOR LIEN ON AND
PLEDGE OF THE NET REVENUES OF THE CITY'S UTILITY SYSTEM;
PRESCRIBING THE FORM, TERMS, CONDITIONS, AND RESOLVING
OTHER MATTERS INCIDENT AND RELATED TO THE ISSUANCE, SALE,
AND DELIVERY OF THE BONDS; INCLUDING THE APPROVAL AND
DISTRIBUTION OF AN OFFICIAL STATEMENT PERTAINING THERETO;
AUTHORIZING THE EXECUTION OF A PAYING AGENT/REGISTRAR
AGREEMENT AND A PURCHASE CONTRACT; COMPLYING WITH THE
REQUIREMENTS IMPOSED BY THE LETTER OF REPRESENTATIONS
PREVIOUSLY EXECUTED WITH THE DEPOSITORY TRUST COMPANY;
DELEGATING THE AUTHORITY TO THE MAYOR AND CERTAIN
MEMBERS OF THE CITY STAFF TO EXECUTE CERTAIN DOCUMENTS
57741409.1
030201
INDEXED
RELATING TO THE SALE OF THE BONDS; AND PROVIDING AN
EFFECTIVE DATE
was duly introduced and submitted to the City Council for passage and adoption. After
presentation and due consideration of the Ordinance, the Ordinance was passed and adopted in
accordance with the City's Home Rule Charter, and carried by therefollowing vote:
Ivoted "For" a voted"Against" v abstained
all as shown in the official Minutes of the Board for the Meeting.
2. The attached Ordinance is a true and correct copy of the original on file in the
official records of the City; the duly qualified and acting members of the Council of the City on
the date of the Meeting are those persons shown above, and, according to the records of my
office, each member of the Council was given actual notice of the time, place, and purpose of the
Meeting and had actual notice that the Ordinance would be considered; and the Meeting and
deliberation of the aforesaid public business, was open to the public and written notice of said
meeting, including the subject of the Ordinance, was posted and given in advance thereof in
compliance with the provisions of Chapter 551, as amended,Texas Government Code.
IN WITNESS WHEREOF, I have signed my name officially and affixed the seal of the
City, this 17th day of June, 2014.
TZe-10“,&g.ite, 14/1/4047"
City Secretary
City of Corpus Christi, Texas
(SEAL)
-2-
57741409.1
ORDINANCE NO. 030201
AN ORDINANCE AUTHORIZING THE ISSUANCE OF "CITY OF
CORPUS CHRISTI, TEXAS UTILITY SYSTEM JUNIOR LIEN
REVENUE IMPROVEMENT BONDS, SERIES 2015A" IN AN AMOUNT,
WHEN COMBINED WITH OTHER CITY UTILITY SYSTEM REVENUE
OBLIGATIONS AUTHORIZED ON THE DATE HEREOF, NOT TO
EXCEED $155,000,000; MAKING PROVISIONS FOR THE PAYMENT
AND SECURITY THEREOF BY A JUNIOR AND INFERIOR LIEN ON
AND PLEDGE OF THE NET REVENUES OF THE CITY'S UTILITY
SYSTEM; PRESCRIBING THE FORM, TERMS, CONDITIONS, AND
RESOLVING OTHER MATTERS INCIDENT AND RELATED TO THE
ISSUANCE, SALE, AND DELIVERY OF THE BONDS; INCLUDING THE
APPROVAL AND DISTRIBUTION OF AN OFFICIAL STATEMENT
PERTAINING THERETO; AUTHORIZING THE EXECUTION OF A
PAYING AGENT/REGISTRAR AGREEMENT AND A PURCHASE
CONTRACT; COMPLYING WITH THE REQUIREMENTS IMPOSED
BY THE LETTER OF REPRESENTATIONS PREVIOUSLY EXECUTED
WITH THE DEPOSITORY TRUST COMPANY; DELEGATING THE
AUTHORITY TO THE MAYOR AND CERTAIN MEMBERS OF THE
CITY STAFF TO EXECUTE CERTAIN DOCUMENTS RELATING TO
THE SALE OF THE BONDS; AND PROVIDING AN EFFECTIVE DATE
WHEREAS,the City Council (the City Council) of the City of Corpus Christi, Texas (the
City) has heretofore issued, and there are currently Outstanding, revenue bonds (the Previously
Issued Priority Bonds) secured by a first and prior lien on and pledge of the Net Revenues (as
hereinafter defined) of the City's combined utility systems (as further described and defined
herein, the System); and
WHEREAS, in the City ordinances authorizing the issuance of the Previously Issued
Priority Bonds, the City reserved the right to issue revenue bonds on parity with the Priority
Bonds (as hereinafter defined); and
WHEREAS, the City Council has heretofore issued, and there are currently outstanding,
revenue bonds (the Previously Issued Junior Lien Obligations) secured by a lien on and pledge
of Net Revenues that is junior and inferior to the lien thereon and pledge thereof securing the
repayment of the Priority Bonds; and
WHEREAS, in the City ordinances authorizing the issuance of the Previously Issued
Junior Lien Obligations, the City reserved the right to issue revenue bonds on a parity with the
Junior Lien Obligations (as hereinafter defined) from time to time outstanding; and
WHEREAS, the City Council has heretofore issued, and there are currently outstanding,
obligations supported by a lien on and pledge of the Net Revenues of the System that are inferior
to the lien thereon and pledge thereof securing the Priority Bonds and the Junior Lien
Obligations but superior to the lien thereon and pledge thereof securing the hereinafter-defined
57774941.4 030201
Previously Issued Inferior Lien Obligations (the Previously Issued Subordinate Lien
obligations); and
WHEREAS, the City Council has heretofore entered into a certain Federal Contract (as
hereinafter defined) supported by a lien on and pledge of the Net Revenues of the System
inferior to the lien thereon and pledge thereof securing the Priority Bonds, the Junior Lien
Obligations, and the Previously Issued Subordinate Lien Obligations (such Federal Contract, the
Previously Issued Inferior Lien Obligations); and
WHEREAS, the City Council has determined for the purpose of improving the credit
quality of its Junior Lien Obligations, which has become its primary lien for issuing System debt,
that it will no longer issue obligations secured by a first and prior lien on and pledge of the Net
Revenues of the System referred to herein as "Priority Bonds", on parity with the lien thereon
and pledge thereof securing the Previously Issued Priority Bonds, for new money purposes and,
at such time as no Priority Bonds remain outstanding, all System revenue obligations now
subordinate and inferior to the Priority Bonds in priority of lien on and pledge of Net Revenues
shall be elevated in kind in priority of lien and payment so that when there are no longer any
Priority Bonds outstanding, the Junior Lien Obligations (defined herein) will enjoy a first and
prior lien on and pledge of the Net Revenues of the System; and
WHEREAS, the City Council deems it appropriate and in its best interest to issue the
hereinafter authorized revenue bonds, in one or more series, for the primary purpose of
acquiring, purchasing, constructing, improving, repairing, extending, enlarging, equipping and
renovating the System; and
WHEREAS, the City Council hereby finds and determines that, pursuant to the authority
provided by Chapter 1371, as amended, Texas Government Code (Chapter 1371), the delegation
to each Authorized Official (as hereinafter defined) of the authority to execute an Approval
Certificate (as hereinafter defined) relating to each series of bonds issued hereunder (a form of
which Approval Certificate is attached hereto as Schedule I) to establish and approve the final
terms of sale of any such series of bonds (within the parameters specified herein) is in the best
interest of the City; and
WHEREAS, the City is empowered by the provisions of Chapter 1371 and Chapter 1502,
as amended, Texas Government Code (together, the Act) and the City's Home Rule Charter to
issue revenue bonds in the manner herein contemplated; and
WHEREAS, prior to the issuance of a series of bonds hereunder, the City may elect to
initially utilize other lawfully available funds to enter into various contracts to finance some or
all of the capital costs associated with the System improvements for which bonds are to be issued
hereunder; and
WHEREAS, the provisions of Section 1201.042, as amended, Texas Government Code
(Section 1201.042) provide that the proceeds from the sale of obligations issued to finance the
acquisition, construction, equipping, or furnishing of any project or facilities, such as the System
improvements for which bonds are issued hereunder, may be used to reimburse the City for costs
attributable to such project or facilities paid or incurred before the date of issuance of such
bonds; and
57774941.4 -2-
WHEREAS, the City Council hereby finds and determines that the actions authorized
hereby and the adoption of this Ordinance are in the best interest of the residents of the City; and
now,therefore,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CORPUS CHRISTI,
TEXAS THAT:
SECTION 1: Authorization - Designation - Principal Amount- Purpose. Revenue
bonds of the City shall be and are hereby authorized to be issued in the aggregate principal
amount of NINETY THREE MILLION SIX HUNDRED THOUSAND AND NO/100
DOLLARS ($93,600,000), to be designated and bear the title of CITY OF CORPUS CHRISTI,
TEXAS UTILITY SYSTEM JUNIOR LIEN REVENUE IMPROVEMENT BONDS, SERIES
2015A (the Bonds), pursuant to this ordinance adopted by the City Council (the Ordinance) for
the purpose of (i) acquiring, purchasing, constructing, improving, repairing, extending,
enlarging, equipping and renovating the System and (ii) paying the costs of issuing the Bonds.
The Bonds shall be payable from and equally and ratably secured solely by a lien on and pledge
of the Junior Lien Pledged Revenues, which includes a lien on and pledge of Net Revenues that
is junior and inferior to the lien thereon and pledge thereof securing the repayment of the Priority
Bonds, but senior and superior to the lien thereon and pledge thereof securing the repayment of
the Subordinate Lien Obligations and the Inferior Lien Obligations. The Bonds are authorized to
be issued pursuant to the authority conferred by and in conformity with the laws of the State of
Texas,particularly,the Act,the City's Home Rule Charter, and this Ordinance.
As authorized by Chapter 1371, each Authorized Official is hereby authorized, appointed,
and designated as the officers of the City authorized to individually act on behalf of the City in
selling and delivering the Bonds authorized herein and carrying out the procedures specified in
this Ordinance, including approval of the aggregate principal amount of each maturity of the
Bonds, the redemption provisions therefor, the Dated Date therefor, further designation of the
Bonds by year issued and number of similarly-secured series of bonds issued during the then-
current calendar year, the identity of the Purchasers (which may include a syndicate of
underwriters and the identification by an Authorized Official of the duties of such syndicate
members) selected from the City's pool of approved underwriters, and the rate of interest to be
borne on the principal amount of each such maturity. Each Authorized Official, acting for and
on behalf of the City, is authorized to execute the Approval Certificate attached hereto as
Schedule I. The Bonds shall be issued in the principal amount, when combined with the
principal amount of the Series 2015B Bonds, not to exceed $155,000,000; the maximum
maturity of the Bonds will be July 15, 2054; and the true interest rate (federal arbitrage yield)
shall not exceed 7.00%. Lastly, each Authorized Official is authorized to select the bond insurer,
if any, with respect to the Bonds. The execution of the Approval Certificate shall evidence the
sale date of the Bonds by the City to the Purchasers in accordance with the provisions of Chapter
1371. It is further provided, however, that notwithstanding the foregoing provisions, the Bonds
shall not be delivered unless prior to their initial delivery, the Bonds have been rated by a
nationally recognized rating agency for municipal securities in one of the four highest rating
categories for long term obligations, as required by Chapter 1371. Upon execution of the
Approval Certificate, Bond Counsel is authorized to complete this Ordinance to reflect such final
terms.
57774941.4 -3-
SECTION 2: Fully Registered Obligations - Authorized Denominations - Stated
Maturities - Interest Rates - Dated Date. The Bonds are issuable in fully registered form only;
shall be dated March 1, 2015 (the Dated Date) shall be in denominations of $5,000 or any
integral multiple thereof, shall be lettered "R-" and numbered consecutively from One (1)
upward and principal shall become due and payable on July 15 in each of the years and in
principal amounts (the Stated Maturities) and bear interest on the unpaid principal amounts from
the Dated Date, or the most recent Interest Payment Date to which interest has been paid or duly
provided for, to the earlier of redemption or Stated Maturity, at the rates per annum in
accordance with the following schedule:
Years of Principal Interest
Stated Maturity Amounts ($) Rates(%)
2016 1,515,000 3.000
2017 1,565,000 3.000
2018 1,610,000 4.000
2019 1,675,000 4.000
2020 1,740,000 5.000
2021 1,830,000 5.000
2022 1,920,000 5.000
2023 2,015,000 5.000
2024 2,115,000 5.000
2025 2,220,000 5.000
2026 2,335,000 5.000
2027 2,450,000 5.000
2028 2,570,000 5.000
2029 2,700,000 5.000
2030 2,835,000 5.000
2031 2,980,000 5.000
2032 3,125,000 3.375
2033 3,230,000 3.375
2034 3,340,000 5.000
2035 3,510,000 5.000
**** **** ****
2040 20,350,000 5.000
**** **** ****
2045 25,970,000 5.000
SECTION 3: Payment of Bonds - Interest Payments - Paying Agent/Registrar.
The principal of, premium, if any, and interest on the Bonds, due and payable by reason of Stated
Maturity, redemption, or otherwise, shall be payable in any coin or currency of the United States
of America which at the time of payment is legal tender for the payment of public and private
57774941.4 -4-
debts, and such payment of principal of and interest on the Bonds shall be without exchange or
collection charges to the Holder(as hereinafter defined)of the Bonds.
The Bonds shall bear interest on the unpaid principal amount thereof at the per annum
rates shown above in Section 2, computed on the basis of a 360-day year of twelve 30-day
months, and interest thereon shall be payable semiannually on January 15 and July 15 of each
year(the Interest Payment Date), commencing July 15, 2015, while the Bonds are Outstanding.
The selection and appointment of The Bank of New York Mellon Trust Company, N.A.,
Dallas, Texas to serve as the initial Paying Agent/Registrar (the Paying Agent/Registrar) for the
Bonds is hereby approved and confirmed, and the City agrees and covenants to cause to be kept
and maintained at the corporate trust office of the Paying Agent/Registrar books and records (the
Security Register) for the registration, payment, and transfer of the Bonds, all as provided herein,
in accordance with the terms and provisions of a Paying Agent/Registrar Agreement, attached, in
substantially final form, as Exhibit A hereto, and such reasonable rules and regulations as the
Paying Agent/Registrar and the City may prescribe. The City covenants to maintain and provide
a Paying Agent/Registrar at all times while the Bonds are Outstanding, and any successor Paying
Agent/Registrar shall be (i) a national or state banking institution or (ii)an association or a
corporation organized and doing business under the laws of the United States of America or of
any state, authorized under such laws to exercise trust powers. Such Paying Agent/Registrar
shall be subject to supervision or examination by federal or state authority and authorized by law
to serve as a Paying Agent/Registrar.
The City reserves the right to appoint a successor Paying Agent/Registrar upon providing
the previous Paying Agent/Registrar with a certified copy of a resolution or ordinance
terminating such agency. Additionally,the City agrees to promptly cause a written notice of this
substitution to be sent to each Holder of the Bonds by United States mail, first-class postage
prepaid, which notice shall also give the address of the new Paying Agent/Registrar.
Both principal of, premium, if any, and interest on the Bonds, due and payable by reason
of Stated Maturity, redemption or otherwise, shall be payable only to the registered owner of the
Bonds appearing on the Security Register (the Holder or Holders) maintained on behalf of the
City by the Paying Agent/Registrar as hereinafter provided (i) on the Record Date (defined
herein) for purposes of payment of interest thereon and (ii) on the date of surrender of the Bonds
for purposes of receiving payment of principal thereof at the Bonds' Stated Maturity or upon
prior redemption of the Bonds. The City and the Paying Agent/Registrar, and any agent of
either, shall treat the Holder as the owner of a Bond for purposes of receiving payment and all
other purposes whatsoever, and neither the City nor the Paying Agent/Registrar, or any agent of
either, shall be affected by notice to the contrary.
Principal of, and premium, if any, on the Bonds shall be payable only upon presentation
and surrender of the Bonds to the Paying Agent/Registrar at its corporate trust office. Interest on
the Bonds shall be paid to the Holder whose name appears in the Security Register at the close of
business on the last business day of the month next preceding an Interest Payment Date for the
Bonds (the Record Date) and shall be paid (i) by check sent by United States mail, first-class
postage prepaid, by the Paying Agent/Registrar, to the address of the Holder appearing in the
57774941.4 -5-
Security Register or (ii)by such other method, acceptable to the Paying Agent/Registrar,
requested in writing by the Holder at the Holder's risk and expense.
If the date for the payment of the principal of, premium, if any, or interest on the Bonds
shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the city
where the corporate trust office of the Paying Agent/Registrar is located are authorized by law or
executive order to close, then the date for such payment shall be the next succeeding day which
is not such a day. The payment on such date shall have the same force and effect as if made on
the original date any such payment on the Bonds was due.
In the event of a non-payment of interest on a scheduled payment date, and for thirty (30)
days thereafter, a new record date for such interest payment (a Special Record Date) will be
established by the Paying Agent/Registrar, if and when funds for the payment of such interest
have been received from the City. Notice of the Special Record Date and of the scheduled
payment date of the past due interest (the Special Payment Date - which shall be fifteen (15)
days after the Special Record Date) shall be sent at least five (5) business days prior to the
Special Record Date by United States Mail, first-class postage prepaid, to the address of each
Holder appearing on the Security Register at the close of business on the last business day next
preceding the date of mailing of such notice.
SECTION 4: Redemption.
A. Mandatory Redemption of Bonds. The Bonds stated to mature on July 15, 2040
and July 15, 2045, respectively, are referred to herein as the "Term Bonds". The Term Bonds
are subject to mandatory sinking fund redemption prior to their stated maturities from money
required to be deposited in the Bond Fund (but not the Reserve Fund) for such purpose and shall
be redeemed in part, by lot or other customary method, at the principal amount thereof plus
accrued interest to the date of redemption in the following principal amounts on July 15 in each
of the years as set forth below:
Term Bonds Stated to Term Bonds Stated to
Mature on July 15, 2040 Mature on July 15, 2045
Principal Principal
Year Amount($) Year Amount($)
2036 3,685,000 2041 4,700,000
2037 3,865,000 2042 4,935,000
2038 4,060,000 2043 5,180,000
2039 4,265,000 2044 5,440,000
2040 4,475,000 2045 5,715,000
*Payable at stated maturity
The principal amount of a Term Bond required to be redeemed pursuant to the operation
of such mandatory redemption provisions shall be reduced, at the option of the City, by the
principal amount of any Term Bonds of such stated maturity which, at least 50 days prior to the
57774941.4 -6-
mandatory redemption date (1) shall have been defeased or acquired by the City and delivered to
the Paying Agent/Registrar for cancellation, (2) shall have been purchased and canceled by the
Paying Agent/Registrar at the request of the City with money in the Bond Fund (but not the
Reserve Fund), or (3) shall have been redeemed pursuant to the optional redemption provisions
set forth below and not theretofore credited against a mandatory redemption requirement.
B. Optional Redemption. The Bonds having Stated Maturities on and after July 15,
2026 shall be subject to redemption prior to Stated Maturity, at the option of the City, on July 15,
2025, or any date thereafter, as a whole or in part, in principal amounts of$5,000 or any integral
multiple thereof(and if within a Stated Maturity selected at random and by lot by the Paying
Agent/Registrar), at the redemption price of par plus accrued interest to the date of redemption.
C. Exercise of Redemption Option. At least forty-five (45) days prior to a date set
for the redemption of Bonds (unless a shorter notification period shall be satisfactory to the
Paying Agent/Registrar), the City shall notify the Paying Agent/Registrar of its decision to
exercise the right to redeem Bonds,the principal amount of each Stated Maturity to be redeemed,
and the date set for the redemption thereof. The decision of the City to exercise the right to
redeem Bonds shall be entered in the minutes of the City Council.
D. Selection of Bonds for Redemption. If less than all Outstanding Bonds of the
same Stated Maturity are to be redeemed on a redemption date, the Paying Agent/Registrar shall
select at random and by lot the Bonds to be redeemed, provided that if less than the entire
principal amount of a Bond is to be redeemed, the Paying Agent/Registrar shall treat such Bond
then subject to redemption as representing the number of Bonds Outstanding which is obtained
by dividing the principal amount of such Bond by $5,000.
E. Notice of Redemption. Not less than thirty (30) days prior to a redemption date
for the Bonds, a notice of redemption shall be sent by United States Mail, first-class postage
prepaid, in the name of the City and at the City's expense, by the Paying Agent/Registrar to each
Holder of a Bond to be redeemed, in whole or in part, at the address of the Holder appearing on
the Security Register at the close of business on the business day next preceding the date of
mailing such notice, and any notice of redemption so mailed shall be conclusively presumed to
have been duly given irrespective of whether received by the Holder.
All notices of redemption shall (i) specify the date of redemption for the Bonds,
(ii) identify the Bonds to be redeemed and, in the case of a portion of the principal amount to be
redeemed, the principal amount thereof to be redeemed, (iii) state the redemption price, (iv) state
that the Bonds, or the portion of the principal amount thereof to be redeemed, shall become due
and payable on the redemption date specified, and the interest thereon, or on the portion of the
principal amount thereof to be redeemed, shall cease to accrue from and after the redemption
date, and (v) specify that payment of the redemption price for the Bonds, or the principal amount
thereof to be redeemed, shall be made at the corporate trust office of the Paying Agent/Registrar
only upon presentation and surrender thereof by the Holder. If a Bond is subject by its terms to
redemption and has been called for redemption and notice of redemption thereof has been duly
given or waived as herein provided, such Bond (or the principal amount thereof to be redeemed)
so called for redemption shall become due and payable, and if money sufficient for the payment
of such Bonds (or of the principal amount thereof to be redeemed) at the then applicable
57774941.4 -7-
redemption price is held for the purpose of such payment by the Paying Agent/Registrar, then on
the redemption date designated in such notice, interest on said Bonds (or the principal amount
thereof to be redeemed) called for redemption shall cease to accrue, and such Bonds shall not be
deemed to be Outstanding in accordance with the provisions of this Ordinance. This notice may
also be published once in a financial publication, journal, or reporter of general circulation
among securities dealers in the City of New York, New York (including, but not limited to, The
Bond Buyer and The Wall Street Journal), or in the State of Texas (including, but not limited to,
The Texas Bond Reporter).
F. Transfer/Exchange. Neither the City nor the Paying Agent/Registrar shall be
required (i)to transfer or exchange any Bond during a period beginning forty-five(45) days prior
to the date fixed for redemption of the Bonds or (ii)to transfer or exchange any Bond selected
for redemption, provided; however, such limitation of transfer shall not be applicable to an
exchange by the Holder of the unredeemed balance of a Bond which is subject to redemption in
part.
SECTION 5: Execution - Registration. The Bonds shall be executed on behalf of
the City by its Mayor, its seal reproduced or impressed thereon, and attested by the City
Secretary. The signature of either officer on the Bonds may be manual or facsimile. Bonds
bearing the manual or facsimile signatures of individuals who were, at the time of the Dated
Date, the proper officers of the City shall bind the City, notwithstanding that such individuals or
either of them shall cease to hold such offices prior to the delivery of the Bonds to the Purchasers
(defined herein), all as authorized and provided in Chapter 1201, as amended, Texas Government
Code.
No Bond shall be entitled to any right or benefit under this Ordinance, or be valid or
obligatory for any purpose, unless there appears on such Bond either a certificate of registration
substantially in the form provided in Section 8C, executed by the Comptroller of Public
Accounts of the State of Texas or his duly authorized agent by manual signature, or a certificate
of registration substantially in the form provided in Section 8D, executed by the Paying
Agent/Registrar by manual signature, and either such certificate upon any Bond shall be
conclusive evidence, and the only evidence, that such Bond has been duly certified or registered
and delivered.
SECTION 6: Registration - Transfer - Exchange of Bonds - Predecessor Bonds.
The Paying Agent/Registrar shall obtain, record, and maintain in the Security Register the name
and address of every owner of the Bonds, or, if appropriate, the nominee thereof. Any Bond
may, in accordance with its terms and the terms hereof, be transferred or exchanged for Bonds of
other authorized denominations upon the Security Register by the Holder, in person or by his
duly authorized agent, upon surrender of such Bond to the Paying Agent/Registrar for
cancellation, accompanied by a written instrument of transfer or request for exchange duly
executed by the Holder or by his duly authorized agent, in form satisfactory to the Paying
Agent/Registrar.
Upon surrender for transfer of any Bond at the corporate trust office of the Paying
Agent/Registrar, the City shall execute and the Paying Agent/Registrar shall register and deliver,
in the name of the designated transferee or transferees, one or more new Bonds of authorized
57774941.4 -8-
denomination and having the same Stated Maturity and of a like interest rate and aggregate
principal amount as the Bond or Bonds surrendered for transfer.
At the option of the Holder, Bonds may be exchanged for other Bonds of the same series
and of authorized denominations and having the same Stated Maturity, bearing the same rate of
interest and of like aggregate principal amount as the Bonds surrendered for exchange upon
surrender of the Bonds to be exchanged at the corporate trust office of the Paying
Agent/Registrar. Whenever any Bonds are so surrendered for exchange, the City shall execute,
and the Paying Agent/Registrar shall register and deliver,the Bonds, to the Holder requesting the
exchange.
All Bonds issued upon any transfer or exchange of Bonds shall be delivered at the
corporate trust office of the Paying Agent/Registrar, or be sent by registered mail to the Holder at
his request, risk, and expense, and upon the delivery thereof, the same shall be the valid and
binding obligations of the City, evidencing the same obligation to pay, and entitled to the same
benefits under this Ordinance, as the Bonds surrendered upon such transfer or exchange.
All transfers or exchanges of Bonds pursuant to this Section shall be made without
expense or service charge to the Holder, except as otherwise herein provided, and except that the
Paying Agent/Registrar shall require payment by the Holder requesting such transfer or exchange
of any fee, tax or other governmental charges required to be paid with respect to such transfer or
exchange.
Bonds canceled by reason of an exchange or transfer pursuant to the provisions hereof are
hereby defined to be Predecessor Bonds, evidencing all or a portion, as the case may be, of the
same debt evidenced by the new Bond or Bonds registered and delivered in the exchange or
transfer therefor. Additionally, the term Predecessor Bonds shall include any Bond registered
and delivered pursuant to Section 27 in lieu of a mutilated, lost, destroyed, or stolen Bond which
shall be deemed to evidence the same obligation as the mutilated, lost, destroyed, or stolen Bond.
SECTION 7: Initial Bond. The Bonds herein authorized shall be issued initially
either (i) as a single fully-registered Bond in the total principal amount of $93,600,000 with
principal installments to become due and payable as provided in Section 2 and numbered T-1, or
(ii) as one (1) fully-registered Bond for each year of Stated Maturity in the applicable principal
amount and denomination and to be numbered consecutively from T-1 and upward (the Initial
Bond) and, in either case, the Initial Bond shall be registered in the name of the initial purchasers
or the designee thereof. The Initial Bond shall be the Bonds submitted to the Office of the
Attorney General of the State of Texas for approval, certified and registered by the Office of the
Comptroller of Public Accounts of the State of Texas and delivered to the initial purchasers.
Any time after the delivery of the Initial Bond, the Paying Agent/Registrar shall cancel the Initial
Bond delivered hereunder and exchange therefor definitive Bonds of authorized denominations,
Stated Maturities, principal amounts and bearing applicable interest rates for transfer and
delivery to the Holders named at the addresses identified therefor; all pursuant to and in
accordance with such written instructions from the initial purchasers, or the designee thereof, and
such other information and documentation as the Paying Agent/Registrar may reasonably
require.
57774941.4 -9-
SECTION 8: Forms.
A. Forms Generally. The Bonds, the Registration Certificate of the Comptroller of
Public Accounts of the State of Texas, the Certificate of Paying Agent/Registrar, and the form of
Assignment to be printed on each of the Bonds shall be substantially in the forms set forth in this
Section with such appropriate insertions, omissions, substitutions, and other variations as are
permitted or required by this Ordinance and may have such letters, numbers, or other marks of
identification (including insurance legends in the event the Bonds, or any Stated Maturities
thereof, are insured and identifying numbers and letters of the Committee on Uniform Securities
Identification Procedures of the American Bankers Association) and such legends and
endorsements (including any reproduction of an opinion of counsel) thereon as may, consistent
herewith, be established by the City or determined by the officers executing the Bonds as
evidenced by their execution thereof. Any portion of the text of any Bond may be set forth on
the reverse thereof, with an appropriate reference thereto on the face of the Bond.
The definitive Bonds shall be printed, lithographed, or engraved, produced by any
combination of these methods, or produced in any other similar manner, all as determined by the
officers executing the Bonds as evidenced by their execution thereof, but the Initial Bond
submitted to the Attorney General of Texas may be typewritten or photocopied or otherwise
reproduced.
[The remainder of this page intentionally left blank]
57774941.4 -10-
B. Form of Definitive Bond.
REGISTERED
REGISTERED PRINCIPAL AMOUNT
NO. $
United States of America
State of Texas
Counties of Nueces, Aransas, Kleberg, and San Patricio
CITY OF CORPUS CHRISTI, TEXAS UTILITY SYSTEM
JUNIOR LIEN REVENUE IMPROVEMENT BONDS,
SERIES 2015A
Dated Date: Interest Rate: Stated Maturity: CUSIP NO:
March 1, 2015
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
The City of Corpus Christi, Texas (the City), a body corporate and a municipal
corporation located in the Counties of Nueces, Aransas, Kleberg, and San Patricio, State of
Texas, for value received, hereby promises to pay to the order of the Registered Owner specified
above, or the registered assigns thereof, on the Stated Maturity date specified above, the
Principal Amount specified above (or so much thereof as shall not have been paid upon prior
redemption), and to pay interest on the unpaid Principal Amount hereof from the Dated Date or
from the most recent interest payment date to which interest has been paid or duly provided for,
to the earlier of redemption or Stated Maturity, at the per annum rate of interest specified above
computed on the basis of a 360-day year of 30-day months; such interest being payable on
January 15 and July 15 of each year commencing July 15, 2015.
Principal and premium, if any, of the Bond shall be payable to the Registered Owner
hereof(the Holder) upon presentation and surrender, at the corporate trust office of the Paying
Agent/Registrar executing the registration certificate appearing hereon or a successor thereof.
Interest shall be payable to the Holder of this Bond (or one or more Predecessor Bonds, as
defined in the Ordinance hereinafter referenced) whose name appears on the Security Register
maintained by the Paying Agent/Registrar at the close of business on the Record Date, which is
the last business day of the month next preceding each interest payment date. All payments of
principal of and interest on this Bond shall be in any coin or currency of the United States of
America which at the time of payment is legal tender for the payment of public and private debts.
Interest shall be paid by the Paying Agent/Registrar by check sent on the appropriate date of
payment by United States Mail, first-class postage prepaid, to the Holder hereof at the address
appearing in the Security Register or by such other method, acceptable to the Paying
Agent/Registrar,requested by the Holder hereof at the Holder's risk and expense.
This Bond is one of the series specified in its title issued in the aggregate principal
amount of$93,600,000 (the Bonds) pursuant to an ordinance adopted by the governing body of
57774941.4 -I I-
the City (the Ordinance), for the purpose of(i) acquiring, purchasing, constructing, improving,
repairing, extending, enlarging, equipping and renovating the System and (ii)paying the costs of
issuance relating thereto. The Bonds are authorized to be issued pursuant to the authority
conferred by and in conformity with the Constitution and laws of the State of Texas, particularly
Chapters 1371 and 1502, as amended, Texas Government Code, the City's Home Rule Charter,
and the Ordinance. The Bonds shall be payable from and equally and ratably secured solely by a
lien on and pledge of the Junior Lien Pledged Revenues, which includes a lien on and pledge of
Net Revenues that is junior and inferior to the lien thereon and pledge thereof securing the
repayment of the Priority Bonds, but senior and superior to the lien thereon and pledge thereof
securing the repayment of the Subordinate Lien Obligations and the Inferior Lien Obligations.
The Bonds stated to mature on July 15, 2040 and July 15, 2045, respectively, are referred
to herein as the "Term Bonds". The Term Bonds are subject to mandatory sinking fund
redemption prior to their stated maturities from money required to be deposited in the Bond Fund
(but not the Reserve Fund) for such purpose and shall be redeemed in part, by lot or other
customary method, at the principal amount thereof plus accrued interest to the date of
redemption in the following principal amounts on July 15 in each of the years as set forth below:
Term Bonds Stated to Term Bonds Stated to
Mature on July 15, 2040 Mature on July 15, 2045
Principal Principal
Year Amount($) Year Amount($)
2036 3,685,000 2041 4,700,000
2037 3,865,000 2042 4,935,000
2038 4,060,000 2043 5,180,000
2039 4,265,000 2044 5,440,000
2040 4,475,000 2045 5,715,000
*Payable at stated maturity
The principal amount of a Term Bond required to be redeemed pursuant to the operation
of such mandatory redemption provisions shall be reduced, at the option of the City, by the
principal amount of any Term Bonds of such stated maturity which, at least 50 days prior to the
mandatory redemption date (1) shall have been defeased or acquired by the City and delivered to
the Paying Agent/Registrar for cancellation, (2) shall have been purchased and canceled by the
Paying Agent/Registrar at the request of the City with money in the Bond Fund (but not the
Reserve Fund), or (3) shall have been redeemed pursuant to the optional redemption provisions
set forth below and not theretofore credited against a mandatory redemption requirement.
The Bonds stated to mature on and after July 15, 2026 may be redeemed prior to their
Stated Maturities, at the option of the City, on July 15, 2025 or on any date, in whole or in part in
principal amounts of $5,000 or any integral multiple thereof (and if within a Stated Maturity
selected at random and by lot by the Paying Agent/Registrar) at the redemption price of par,
together with accrued interest to the date of redemption, and upon thirty (30) days prior written
notice being given by United States mail, first-class postage prepaid, to Holders of the Bonds to
57774941.4 -12-
be redeemed, and subject to the terms and provisions relating thereto contained in the Ordinance.
If this Bond is subject to redemption prior to Stated Maturity and is in a denomination in excess
of$5,000, portions of the principal sum hereof in installments of$5,000 or any integral multiple
thereof may be redeemed, and, if less than all of the principal sum hereof is to be redeemed,
there shall be issued, without charge therefor, to the Holder hereof, upon the surrender of this
Bond to the Paying Agent/Registrar at its corporate trust office, a new Bond or Bonds of like
Stated Maturity and interest rate in any authorized denominations provided in the Ordinance for
the then unredeemed balance of the principal sum hereof.
If this Bond (or any portion of the principal sum hereof) shall have been duly called for
redemption and notice of such redemption duly given, then upon such redemption date this Bond
(or the portion of the principal sum hereof to be redeemed) shall become due and payable, and, if
money for the payment of the redemption price and the interest accrued on the principal amount
to be redeemed to the date of redemption is held for the purpose of such payment by the Paying
Agent/Registrar, interest shall cease to accrue and be payable hereon from and after the
redemption date on the principal amount hereof to be redeemed. In the event of a partial
redemption of the principal amount of this Bond, payment of the redemption price of such
principal amount shall be made to the registered owner only upon presentation and surrender of
this Bond to the corporate trust office of the Paying Agent/Registrar and, there shall be issued to
the registered owner hereof, without charge, a new Bond or Bonds of like maturity and interest
rate in any authorized denominations provided in the Ordinance for the then unredeemed balance
of the principal sum hereof. If this Bond is called for redemption, in whole or in part,the City or
the Paying Agent/Registrar shall not be required to issue, transfer, or exchange this Bond within
forty-five (45) days of the date fixed for redemption; provided, however, such limitation of
transfer shall not be applicable to an exchange by the Holder of the unredeemed balance hereof
in the event of its redemption in part.
The Bonds of this series are special obligations of the City, issued as Junior Lien
Obligations, payable from and equally and ratably secured by a lien on and pledge of the Junior
Lien Pledged Revenues, being (primarily) a lien on and pledge of the Net Revenues derived from
the operation of the City's utility system (as further described in the Ordinance, the System), that
is junior and inferior to the lien thereon and pledge thereof securing the repayment of the Priority
Bonds, but senior and superior to the lien thereon and pledge thereof securing the repayment of
the Subordinate Lien Obligations and the Inferior Lien Obligations. In the Ordinance, the City
reserves and retains the right to issue Additional Priority Bonds, Additional Junior Lien
Obligations, Additional Subordinate Lien Obligations, and Additional Inferior Lien Obligations
without limitation as to principal amount but subject to any terms, conditions, or restrictions set
forth in the Ordinance or as may be applicable thereto under law or otherwise. The Bonds do not
constitute a legal or equitable pledge, charge, lien, or encumbrance upon any property of the City
or System, except with respect to the Junior Lien Pledged Revenues.
The Holder hereof shall never have the right to demand payment of this obligation out of
any funds raised or to be raised by taxation.
Reference is hereby made to the Ordinance, a copy of which is on file in the corporate
trust office of the Paying Agent/Registrar, and to all of the provisions of which the Holder by his
acceptance hereof hereby assents, for definitions of terms; the description and nature of the
57774941.4 -13-
Junior Lien Pledged Revenues pledged for the payment of the Bonds; the terms and conditions
under which the City may issue Additional Priority Bonds, Additional Junior Lien Obligations,
Additional Subordinate Lien Obligations, and Additional Inferior Lien Obligations; the terms
and conditions relating to the transfer or exchange of the Bonds; the conditions upon which the
Ordinance may be amended or supplemented with or without the consent of the Holders; the
rights, duties, and obligations of the City and the Paying Agent/Registrar; the terms and
provisions upon which this Bond may be redeemed or discharged at or prior to the Stated
Maturity thereof, and deemed to be no longer Outstanding thereunder; and for the other terms
and provisions specified in the Ordinance. Capitalized terms used herein have the same
meanings assigned in the Ordinance.
This Bond, subject to certain limitations contained in the Ordinance, may be transferred
on the Security Register upon presentation and surrender at the corporate trust office of the
Paying Agent/Registrar, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Paying Agent/Registrar duly executed by the Holder hereof, or his duly
authorized agent, and thereupon one or more new fully registered Bonds of the same Stated
Maturity, of authorized denominations, bearing the same rate of interest, and of the same
aggregate principal amount will be issued to the designated transferee or transferees.
The City and the Paying Agent/Registrar, and any agent of either, shall treat the Holder
hereof whose name appears on the Security Register (i)on the Record Date as the owner hereof
for purposes of receiving payment of interest hereon, (ii) on the date of surrender of this Bond as
the owner hereof for purposes of receiving payment of principal hereof at its Stated Maturity, or
its redemption, in whole or in part, and (iii) on any other date as the owner hereof for all other
purposes, and neither the City nor the Paying Agent/Registrar, or any such agent of either, shall
be affected by notice to the contrary. In the event of a non-payment of interest on a scheduled
payment date, and for thirty (30) days thereafter, a new record date for such interest payment (a
Special Record Date) will be established by the Paying Agent/Registrar, if and when funds for
the payment of such interest have been received from the City. Notice of the Special Record
Date and of the scheduled payment date of the past due interest (the Special Payment Date -
which shall be fifteen (15) days after the Special Record Date) shall be sent at least five (5)
business days prior to the Special Record Date by United States mail, first-class postage prepaid,
to the address of each Holder appearing on the Security Register at the close of business on the
last business day next preceding the date of mailing of such notice.
It is hereby certified, covenanted, and represented that all acts, conditions, and things
required to be performed, exist, and be done precedent to the issuance of this Bond in order to
render the same a legal, valid, and binding special obligation of the City have been performed,
exist, and have been done, in regular and due time, form, and manner, as required by law, and
that issuance of the Bonds does not exceed any constitutional or statutory limitation; and that due
provision has been made for the payment of the principal of and interest on the Bonds by a
pledge of and lien on the Junior Lien Pledged Revenues. In case any provision in this Bond or
any application thereof shall be deemed invalid, illegal, or unenforceable, the validity, legality,
and enforceability of the remaining provisions and applications shall not in any way be affected
or impaired thereby. The terms and provisions of this Bond and the Ordinance shall be
construed in accordance with and shall be governed by the laws of the State of Texas.
57774941.4 -14-
IN WITNESS WHEREOF, this Bond has been signed with the imprinted or lithographed
facsimile signature of the Mayor of the City, attested by the imprinted or lithographed facsimile
signature of the City Secretary, and the official seal of the City has been duly affixed to, printed,
lithographed or impressed on this Bond.
CITY OF CORPUS CHRISTI,TEXAS
Mayor
ATTEST:
City Secretary
(SEAL)
57774941.4 -15-
C. *Form of Registration Certificate of Comptroller of Public Accounts to Appear on
Initial Bond Only.
REGISTRATION CERTIFICATE OF
COMPTROLLER OF PUBLIC ACCOUNTS
OFFICE OF THE COMPTROLLER OF §
PUBLIC ACCOUNTS §
§ REGISTER NO.
THE STATE OF TEXAS §
I HEREBY CERTIFY that this Bond has been examined, certified as to validity and
approved by the Attorney General of the State of Texas, and duly registered by the Comptroller
of Public Accounts of the State of Texas.
WITNESS my signature and seal of office this
Comptroller of Public Accounts
of the State of Texas
(SEAL)
* Bond to Printer: Not to appear on printed Bonds
57774941.4 -16-
E. *Form of Certificate of Paying Agent/Registrar to Appear on Definitive Bonds
Only.
CERTIFICATE OF PAYING AGENT/REGISTRAR
This Bond has been duly issued under the provisions of the within-mentioned Ordinance;
the Bond or Bonds of the above-entitled and designated series originally delivered having been
approved by the Attorney General of the State of Texas and registered by the Comptroller of
Public Accounts, as shown by the records of the Paying Agent/Registrar.
Registered this date: THE BANK OF NEW YORK MELLON
TRUST COMPANY,N.A., as Paying
Agent/Registrar
By:
Authorized Signature
* Bond to Printer: to appear on printed Bonds
F. Form of Assignment.
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns, and transfers unto (Print
or typewrite name, address, and zip code of transferee):
(Social Security or other identifying number):
the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints
attorney to transfer the within Bond on the books kept for registration
thereof, with full power of substitution in the premises.
DATED:
NOTICE: The signature on this assignment must
correspond with the name of the registered owner as it
appears on the face of the within Bond in every particular.
Signature guaranteed:
57774941.4 -17-
G. Form of Initial Bond. The Initial Bond shall be in the form set forth in paragraph
B of this Section, except that the form of a single fully registered Initial Bond shall be modified
as follows:
(1) immediately under the name of the Bond(s) the headings "Interest Rate"
and "Stated Maturity" shall both be completed"as shown below";
(2) the first two paragraphs shall read as follows:
REGISTERED OWNER:
PRINCIPAL AMOUNT:
The City of Corpus Christi, Texas (the City), a body corporate and a municipal
corporation located in the Counties of Nueces, Aransas, Kleberg, and San Patricio, State of
Texas, for value received, hereby promises to pay to the order of the Registered Owner named
above, or the registered assigns thereof, the Principal 'Amount specified above on the fifteenth
day of July in each of the years and in principal amounts and bearing interest at per annum rates
in accordance with the following schedule:
Years of Principal Interest
Stated Maturity Amounts ($) Rates (%)
(Information to be inserted from
schedule in Section 2 hereof).
(or so much thereof as shall not have been paid upon prior redemption) and to pay interest on the
unpaid Principal Amount hereof from the Dated Date, or from the most recent interest payment
date to which interest has been paid or duly provided for, to the earlier of redemption or Stated
Maturity, at the per annum rate of interest specified above computed on the basis of a 360-day
year of 30-day months; such interest being payable on January 15 and July 15 of each year,
commencing July 15, 2015.
Principal of this Bond shall be payable to the Registered Owner hereof (the Holder),
upon its presentation and surrender, at the corporate trust office of The Bank of New York
Mellon Trust Company, N.A., Dallas, Texas (the Paying Agent/Registrar). Interest shall be
payable to the Holder of this Bond whose name appears on the Security Register maintained by
the Paying Agent/Registrar at the close of business on the Record Date,which is the last business
day of the month next preceding each interest payment date. All payments of principal of and
interest on this Bond shall be in any coin or currency of the United States of America which at
the time of payment is legal tender for the payment of public and private debts. Interest shall be
paid by the Paying Agent/Registrar by check sent on or prior to the appropriate date of payment
by United States mail, first-class postage prepaid, to the Holder hereof at the address appearing
in the Security Register or by such other method, acceptable to the Paying Agent/Registrar,
requested by, and at the risk and expense of,the Holder hereof.
57774941.4 -18-
H. Insurance Legend. If bond insurance is obtained by the Purchasers or the City for
the Bonds, the definitive Bonds and the Initial Bond shall bear an appropriate legend as provided
by the insurer.
SECTION 9: Definitions. For all purposes of this Ordinance (as defined below),
except as otherwise expressly provided or unless the context otherwise requires: (i)the terms
defined in this Section have the meanings assigned to them in this Section, and certain terms
used in Sections 29 and 43 of this Ordinance have the meanings assigned to them in such
Sections, and all such terms include the plural as well as the singular; (ii) all references in this
Ordinance to designated "Sections" and other subdivisions are to the designated Sections and
other subdivisions of this Ordinance as originally adopted; and (iii)the words "herein", "hereof",
and "hereunder" and other words of similar import refer to this Ordinance as a whole and not to
any particular Section or other subdivision.
A. The term Accountant shall mean a nationally recognized independent certified
public accountant, or an independent firm of certified public accountants.
B. The term Additional Inferior Lien Obligations shall mean (i) any bonds, notes,
warrants, or any similar obligations hereafter issued by the City that are payable wholly or in part
from and equally and ratably secured by a lien and pledge of the Net Revenues, which pledge is
subordinate and inferior to the lien on and pledge of the Net Revenues that is or will be pledged
to the payment of the Priority Bonds, that is included in Junior Lien Pledged Revenues, that is or
will be pledged to the payment of the Subordinate Lien Obligations, and that is on parity with the
lien on and pledge of the Net Revenues securing the payment of the then-Outstanding Inferior
Lien Obligations and (ii) obligations hereafter issued to refund any of the foregoing that are
payable from and equally and ratably secured by such subordinate and inferior lien on and
pledge of the Net Revenues as determined by the City Council in accordance with applicable
law.
C. The term Additional Junior Lien Obligations shall mean (i) any bonds, notes,
warrants, or any similar obligations hereafter issued by the City that are payable wholly or in part
from and equally and ratably secured by a lien and pledge of the Junior Lien Pledged Revenues,
such pledge to include a pledge of Net Revenues that is junior and inferior to the lien on and
pledge of the Net Revenues that are or will be pledged to the payment of the Priority Bonds now
Outstanding or hereafter issued by the City but senior and superior to the lien thereon and pledge
thereof that is or will be pledged to the payment of the Subordinate Lien Obligations and the
Inferior Lien Obligations now Outstanding or hereafter issued by the City, and (ii) obligations
hereafter issued to refund any of the foregoing that are payable from and equally and ratably
secured solely by a lien on and pledge of the Junior Lien Pledged Revenues, as determined by
the City Council in accordance with applicable law.
D. The term Additional Priority Bonds shall mean obligations hereafter issued to
refund any of the Previously Issued Priority Bonds if issued in a manner so as to be payable from
and equally and ratably secured by a first and prior lien on and pledge of the Net Revenues as
determined by the City Council in accordance with applicable law and under the terms and
conditions provided in Section 19 of this Ordinance.
57774941.4 -19-
E. The term Additional Subordinate Lien Obligations shall mean (i)any bonds,
notes, warrants, or any similar obligations hereafter issued by the City that are payable wholly or
in part from and equally and ratably secured by a lien and pledge of the Net Revenues, such
pledge being subordinate and inferior to the lien on and pledge of the Net Revenues that is or
will be pledged to the payment of the Priority Bonds or that is included in Junior Lien Pledged
Revenues, but senior and superior to the lien thereon and pledge thereof that is or will be pledged
to the payment of the Inferior Lien Obligations now Outstanding or hereafter issued by the City,
and on parity with the lien on and pledge of the Net Revenues securing the payment of the then-
Outstanding Subordinate Lien Obligations and (ii) obligations hereafter issued to refund any of
the foregoing that are payable from and equally and ratably secured by such subordinate and
inferior lien on and pledge of the Net Revenues as determined by the City Council in accordance
with applicable law.
F. The term Authorized Official shall mean the City Manager of the City, the Deputy
City Manager of the City, the Assistant City Manager for General Government and Operations
Support of the City, and the City's Director of Financial Services.
G. The term Average Annual Debt Service Requirements shall mean that average
amount which, at the time of computation, will be required to pay the Debt Service
Requirements of obligations when due and derived by dividing the total of such Debt Service
Requirements by the number of years then remaining before final Stated Maturity. The
calculation of Average Annual Debt Service Requirements shall be net of(1) capitalized interest
from bond proceeds and (2) the receipt or anticipated receipt of a refundable tax credit or similar
payment relating to a series of Junior Lien Obligations irrevocably designated as refundable tax
credit bonds, which payment shall be treated as one offset to regularly scheduled debt service of
the series of Junior Lien Obligations to which it relates.
H. The term Bonds shall mean the $93,600,000 "CITY OF CORPUS CHRISTI,
TEXAS UTILITY SYSTEM JUNIOR LIEN REVENUE IMPROVEMENT BONDS, SERIES
2015A", dated March 1, 2015, authorized by this Ordinance.
I. The term Bond Fund shall mean the special Fund or account created and
established by the provisions of Section 13 of this Ordinance.
J. The term Capital Additions shall mean a reservoir or other water storage facilities,
a water or wastewater treatment plant or an interest therein, an electric generation facility and/or
distribution system 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.
K. The term Capital Improvements shall mean any capital extensions, improvements
and betterments to the System other than Capital Additions.
L. The term City shall mean the City of Corpus Christi, Texas and, where
appropriate, the City Council of the City.
M. The term Closing Date shall mean the date of physical delivery of the Initial Bond
in exchange for the payment in full by the Purchasers.
57774941.4 -20-
N. The term Credit Agreement shall mean a loan agreement, revolving credit
agreement, agreement establishing a line of credit, letter of credit, reimbursement agreement,
insurance contract, commitments to purchase Debt, purchase or sale agreements, interest rate
swap agreements, or commitments or other contracts or agreements authorized, recognized, and
approved by the City as a Credit Agreement in connection with the authorization, issuance,
security, or payment of any obligation authorized by Chapter 1371, and which includes any
Credit Facility.
0. The term Credit Facility shall mean (i) a policy of insurance or a surety bond,
issued by an issuer of policies of insurance insuring the timely payment of debt service on
governmental obligations, or(ii) a letter or line of credit issued by any financial institution.
P. The term Credit Provider shall mean any bank, financial institution, insurance
company, surety bond provider, or other institution which provides, executes, issues, or
otherwise is a party to or provider of a Credit Agreement or Credit Facility.
Q. The term Debt shall mean
(1) all indebtedness payable from Net Revenues and/or Junior Lien Pledged
Revenues incurred or assumed by the City for borrowed money (including indebtedness
payable from Net Revenues and/or Junior Lien Pledged Revenues arising under Credit
Agreements) and all other financing obligations of the System payable from Net
Revenues and/or Junior Lien Pledged Revenues that, in accordance with generally
accepted accounting principles, are shown on the liability side of a balance sheet; and
(2) all other indebtedness payable from Junior Lien Pledged Revenues and/or
Net Revenues (other than indebtedness otherwise treated as Debt hereunder) for
borrowed money or for the acquisition, construction, or improvement of property or
capitalized lease obligations pertaining to the System that is guaranteed, directly or
indirectly, in any manner by the City, or that is in effect guaranteed, directly or indirectly,
by the City through an agreement, contingent or otherwise, to purchase any such
indebtedness or to advance or supply funds for the payment or purchase of any such
indebtedness or to purchase property or services primarily for the purpose of enabling the
debtor or seller to make payment of such indebtedness, or to assure the owner of the
indebtedness against loss, or to supply funds to or in any other manner invest in the
debtor(including any agreement to pay for property or services irrespective of whether or
not such property is delivered or such services are rendered), or otherwise.
For the purpose of determining Debt, there shall be excluded any particular Debt if, upon
or prior to the maturity thereof, there shall have been deposited with the proper depository (a) in
trust the necessary funds (or investments that will provide sufficient funds, if permitted by the
instrument creating such Debt) for the payment, redemption, or satisfaction of such Debt or (b)
evidence of such Debt deposited for cancellation; and thereafter it shall not be considered Debt.
No item shall be considered Debt unless such item constitutes indebtedness under generally
accepted accounting principles applied on a basis consistent with the financial statements of the
System in prior Fiscal Years.
57774941.4 -21-
R. The term Debt Service Requirements shall mean, as of any particular date of
computation, with respect to any obligations and with respect to any period, the aggregate of the
amounts to be paid or set aside by the City as of such date or in such period for the payment of
the principal of, premium, if any, and interest (to the extent not capitalized) on such obligations;
assuming, in the case of obligations without a fixed numerical rate, that such obligations bear
interest calculated by assuming (i) that the interest rate for every 12-month period on such bonds
is equal to the rate of interest reported in the most recently published edition of The Bond Buyer
(or its successor) at the time of calculation as the "Revenue Bond Index" or, if such Revenue
Bond Index is no longer being maintained by The Bond Buyer (or its successor) at the time of
calculation, such interest rate shall be assumed to be 80% of the rate of interest then being paid
on United States Treasury obligations of like maturity and (ii)that, in the case of bonds not
subject to fixed scheduled mandatory sinking fund redemptions, that the principal of such bonds
is amortized such that annual debt service is substantially level over the remaining stated life of
such bonds or in the manner permitted under Section 1371.057(c), as amended, Texas
Government Code as the same relates to interim or non—permanent indebtedness, and in the case
of obligations required to be redeemed or prepaid as to principal prior to Stated Maturity
according to a fixed schedule, the principal amounts thereof will be redeemed prior to Stated
Maturity in accordance with the mandatory redemption provisions applicable thereto (in each
case notwithstanding any contingent obligation to redeem bonds more rapidly). For the term of
any Credit Agreement in the form of an interest rate hedge agreement entered into in connection
with any such obligations, Debt Service Requirements shall be computed by netting the amounts
payable to the City under such hedge agreement from the amounts payable by the City under
such hedge agreement and such obligations.
S. The term Depository shall mean an official depository bank of the City.
T. The term Engineer shall mean an individual, firm, or corporation engaged in the
engineering profession, being a registered professional engineer under the laws of the State of
Texas, having specific experience with respect to a combined municipal utility system similar to
the System and such individual, firm, or corporation may be employed by, or may be an
employee of,the City.
U. The term Federal Contract shall mean Contract No. 6-07-01-X0675 entered into
by an among the United States of America, the City and the Nueces River Authority, dated June
30, 1976, and amended on June 16, 1980, with respect to the Nueces River Reclamation Project,
pursuant to which the City has pledged the revenues of its waterworks system in support of the
payment obligations of the City under the Federal Contract, subordinate and inferior to the
pledge of and lien on the Net Revenues securing the payment of the Priority Bonds, the lien
thereon and pledge thereof securing the payment of the Junior Lien Obligations, as a result of
such Net Revenues being included as Junior Lien Pledged Revenues, and the lien thereon and
pledge thereof securing the payment of the Subordinate Lien Obligations.
V. The term Fiscal Year shall mean the twelve month accounting period used by the
City in connection with the operation of the System which may be any twelve consecutive month
period established by the City, presently being that period commencing on October 1 of each
year and ending on the following September 30.
57774941.4 -22-
W. The term Government Securities as used herein, shall mean (i)direct noncallable
obligations of the United States, including obligations that are unconditionally guaranteed by,the
United States of America; (ii)noncallable obligations of an agency or instrumentality of the
United States, including obligations that are unconditionally guaranteed or insured by the agency
or instrumentality and that, on the date the governing body of the issuer adopts or approves the
proceedings authorizing the issuance of refunding bonds, are rated as to investment quality by a
nationally recognized investment rating firm not less than AAA or its equivalent;
(iii)noncallable obligations of a state or an agency or a county, municipality, or other political
subdivision of a state that have been refunded and that, on the date the governing body of the
issuer adopts or approves the proceedings authorizing the issuance of refunding bonds, are rated
as to investment quality by a nationally recognized investment rating firm not less than AAA or
its equivalent; and (iv)any additional securities and obligations hereafter authorized by the laws
of the State of Texas as eligible for use to accomplish the discharge of obligations such as the
Bonds.
X. The term Gross 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 or confirmed 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.
Y. The term Holder or Holders shall mean the registered owner, whose name
appears in the Security Register, for any Bond.
Z. The term Inferior Lien Obligations shall mean (i) the Previously Issued Inferior
Lien Obligations, (ii) any Additional Inferior Lien Obligations, and (iii) any obligations issued to
refund the foregoing payable from and equally and ratably secured by a subordinate and inferior
lien on and pledge of the Net Revenues, as determined by the City Council in accordance with
any applicable law.
AA. The term Interest Payment Date shall mean the date semiannual interest is
payable on the Bonds, being January 15 and July 15 of each year, commencing July 15, 2015,
while any of the Bonds remain Outstanding.
BB. The term Junior Lien Obligations shall mean (i) the Previously Issued Junior Lien
Obligations, (ii) any Additional Junior Lien Obligations, and (iii) obligations hereafter issued to
refund any of the foregoing that are payable from and equally and ratably secured solely by a
lien on and pledge of the Junior Lien Pledged Revenues, which includes a lien on and pledge of
Net Revenues that is junior and inferior to the lien thereon and pledge thereof securing the
repayment of the Priority Bonds, but senior and superior to the lien thereon and pledge thereof
securing the repayment of the Subordinate Lien Obligations and the Inferior Lien Obligations, as
determined by the City Council in accordance with applicable law.
CC. The term Junior Lien Pledged Revenues means (1) the Net Revenues that remain
after payment of all amounts, and funding of all funds, relating to any Priority Bonds, 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
57774941.4 -23-
hereafter are pledged by the City to the payment of the Bonds, and at the City's discretion, any
Additional Junior Lien Obligations, and excluding those revenues excluded from Gross
Revenues.
DD. The term Net Revenues shall mean all Gross Revenues less Operating Expenses.
EE. The term Operating Expenses shall mean the expenses of operation and
maintenance of the System, including all salaries, labor, materials, repairs, and extensions
necessary to render efficient service; provided, however,that only such repairs and extensions, as
in the judgment of the City, reasonably and fairly exercised by the passage of appropriate
ordinances, are necessary to render adequate service, or such as might be necessary to meet some
physical accident or condition which would otherwise impair any Priority Bonds, Junior Lien
Obligations, Subordinate Lien Obligations, Inferior Lien Obligations, or other Debt of the
System. 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 a
change in law(and receipt of an opinion as to legality from a firm of nationally-recognized bond
counsel), Operating Expenses may include payments made on or in respect of obtaining and
maintaining any Credit Facility. Operating Expenses shall never include any allowance for
depreciation, property retirement, depletion, obsolescence, and other items not requiring an
outlay of cash and any interest on the Bonds or any Debt.
FF. The term Ordinance shall mean this Ordinance adopted by the City Council on
June 17, 2014 authorizing the issuance of the Bonds.
GG. The term Outstanding shall mean when used in this Ordinance with respect to all
Debt means, as of the date of determination, all Debt except:
(1) those Priority Bonds, Junior Lien Obligations, Subordinate Lien
Obligations, and Inferior Lien Obligations canceled by the Paying Agent/Registrar or
delivered to the Paying Agent/Registrar for cancellation;
(2) those Priority Bonds, Junior Lien Obligations, Subordinate Lien
Obligations, and Inferior Lien Obligations for which payment has been duly provided by
the City in accordance with the provisions of Section 32 of this Ordinance; and
(3) those Priority Bonds, Junior Lien Obligations, Subordinate Lien
Obligations, and Inferior Lien Obligations that have been mutilated, destroyed, lost, or
stolen and replacement Bonds have been registered and delivered in lieu thereof as
provided in Section 27 of this Ordinance.
IIH. The term Previously Issued Inferior Lien Obligations shall mean the Federal
Contract.
II. The term Previously Issued Junior Lien Obligations shall mean, as of the Closing
Date (i) the Outstanding and unpaid obligations of the City that are payable solely from and
equally and ratably secured by a lien on and pledge of the Junior Lien Pledged Revenues which
includes a lien on and pledge of Net Revenues of the System that is junior and inferior to the lien
thereon and pledge thereof securing the Priority Bonds but superior to the lien thereon and
57774941.4 -24-
pledge thereof securing the Subordinate Lien Obligations and Inferior Lien Obligations,
identified as follows:
(1) "City of Corpus Christi, Texas Utility System Junior Lien Revenue
Improvement Bonds, Series 2012", dated November 15, 2012, in the original principal
amount of$69,085,000;
(2) "City of Corpus Christi, Texas Utility System Junior Lien Revenue and
Refunding Bonds, Series 2012", dated November 15, 2012, in the original principal
amount of$155,660,000;
(3) "City of Corpus Christi, Texas Utility System Junior Lien Revenue
Improvement Bonds, Series 2013", dated November 1, 2013, in the original principal
amount of$97,930,000;
(4) Upon issuance, the Bonds; and
(5) Upon issuance, the Series 2015B Bonds.
JJ. The term Previously Issued Priority Bonds shall mean, as of the Closing Date (i)
the Outstanding and unpaid obligations of the City that arc payable solely from and equally and
ratably secured by a prior and first lien on and pledge of the Net Revenues of the System,
identified as follows:
(1) "City of Corpus Christi, Texas Utility System Revenue Refunding Bonds,
Series 2003", dated May 15, 2003, in the original principal amount of$28,870,000;
(2) "City of Corpus Christi, Texas Utility System Revenue Refunding Bonds,
Series 2005", dated January 1, 2005, in the original principal amount of$70,390,000;
(3) "City of Corpus Christi, Texas Utility System Revenue Refunding Bonds,
Series 2005A", dated October 1, 2005, in the original principal amount of$68,325,000;
(4) "City of Corpus Christi, Texas Utility System Revenue Refunding and
Improvement Bonds, Series 2006", dated October 1, 2006, in the original principal
amount of$84,415,000;
(5) "City of Corpus Christi, Texas Utility System Revenue Improvement
Bonds, Series 2009", dated March 1, 2009, in the original principal amount of
$96,490,000;
(6) "City of Corpus Christi, Texas Utility System Revenue Improvement
Bonds, Series 2010", dated March 1, 2010, in the original principal amount of
$8,000,000;
(7) "City of Corpus Christi, Texas Utility System Revenue Improvement
Bonds, Taxable Series 2010 (Direct Subsidy-Build America Bonds)", dated July 1, 2010,
in the original principal amount of$60,625,000;
57774941.4 -25-
(8) "City of Corpus Christi, Texas Utility System Revenue Improvement
Bonds, Series 2010A", dated July 1, 2010, in the original principal amount of
$14,375,000; and
(9) "City of Corpus Christi, Texas Utility System Revenue Improvement
Bonds, Series 2012", dated April 1, 2012, in the original principal amount of
$52,500,000.
KK. The term Previously Issued Subordinate Lien Obligations shall mean the Series
2007 Certificates of Obligation.
LL. The term Priority Bonds shall mean the Previously Issued Priority Bonds and any
Additional Priority Bonds hereafter issued to refund any of the foregoing if issued in a manner so
as to be payable from and equally and ratably secured by a first and prior lien on and pledge of
the Net Revenues of the System, as determined by the City Council in accordance with any
applicable law.
MM. The term Prudent Utility Practice shall mean any of the practices, methods and
acts, in the exercise of reasonable judgment, in the light of the facts, including but not limited to
the practices, methods and acts engaged in or approved by a significant portion of the public
utility industry prior thereto, known at the time the decision was made, would have been
expected to accomplish the desired result at the lowest reasonable cost consistent with reliability,
safety and expedition. It is recognized that Prudent Utility Practice is not intended to be limited
to the optimum practice, method or act at the exclusion of all others, but rather is a spectrum of
possible practices, methods or acts which could have been expected to accomplish the desired
result at the lowest reasonable cost consistent with reliability, safety and expedition. In the case
of any facility included in the System which is owned in common with one or more other
entities, the term "Prudent Utility Practice", as applied to such facility, shall have the meaning
set forth in the agreement governing the operation of such facility.
NN. The tern Purchasers shall mean the initial purchaser or purchasers of the Bonds
named in Section 27 of this Ordinance.
00. The term Required Reserve Amount shall have the meaning given such term in
Section 14 of this Ordinance.
PP. The term Reserve Fund shall have the meaning given such term in Section 14 of
this Ordinance.
QQ. The term Reserve Fund Deposits shall have the meaning given such term in
Section 14 of this Ordinance.
RR. The term Series 2007 Certificates of Obligation shall mean the City's
"Combination Tax and Utility System Revenue Certificates of Obligation, Series 2007", dated
March 1, 2007, in the original principal amount of $6,985,000, being the only series of
Subordinate Lien Obligations currently Outstanding.
57774941.4 -26-
SS. The term Series 2015B Bonds shall mean the "City of Corpus Christi, Texas
Utility System Variable Rate Junior Lien Revenue Improvement Bonds, Series 2015B" issued by
the City concurrently with its issuance of the Bonds but pursuant to a separate City ordinance
adopted on June 17, 2014, in an aggregate principal amount (when combined with the principal
amount of the Bonds) not to exceed $155,000,000.
TT. The term Special Project shall mean, to the extent permitted by law, any water,
sewer, wastewater reuse, or municipal drainage system property, improvement, or facility
declared by the City, upon the recommendation of the City Council,not to be part of the System,
for which the costs of acquisition, construction, and installation are paid from proceeds of
Special Project Bonds (as hereinafter defined) being a financing transaction other than the
issuance of bonds payable from ad valorem taxes, Net Revenues, or Junior Lien Pledged
Revenues, and for which all maintenance and operation expenses are payable from sources other
than ad valorem taxes, Net Revenues, or Junior Lien Pledged Revenues, but only to the extent
that and for so long as all or any part of the revenues or proceeds of which are or will be pledged
to secure the payment or repayment of such costs of acquisition, construction, and installation
under such Special Project Bonds.
UU. The term Stated Maturity shall mean the annual principal payments of the Bonds
payable on July 15 of each year, as set forth in Section 2 of this Ordinance.
VV. The term Subordinate Lien Obligations shall mean (i) the Previously Issued
Subordinate Lien Obligations, (ii) any Additional Subordinate Lien Obligations, and (iii) any
obligations issued to refund the foregoing payable and equally and ratably secured from a lien on
and pledge of the Net Revenues that is subordinate and inferior to the lien thereon and pledge
thereof securing the payment of the Priority Bonds and the Junior Lien Obligations but superior
to the lien thereon and pledge thereof securing the payment of the Inferior Lien Obligations, as
determined by the City Council in accordance with any applicable law.
WW. The term System shall mean and include, whether now existing or hereinafter
added (including additions made from time to time in accordance with the provisions of the City
ordinances authorizing the issuance of the Outstanding Priority Bonds), 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 (and to be added at the sole discretion of the City), storm sewer and drainage
within the waterworks system, solid waste disposal system, additional utility (including
electricity), telecommunications, technology, and any other similar enterprise services, and all
replacements, additions, and improvements to any of the foregoing, within or without the City
limits; 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 to be a Special Project and not a part of the System
and which are hereafter acquired or constructed by the City with the proceeds from the issuance
of"Special Project Bonds", which are hereby defined as being special revenue obligations of the
City which are not secured by or payable from all or part of the Net Revenues and/or Junior Lien
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
57774941.4 -27-
constitute Gross Revenues of the System, unless and to the extent otherwise provided in the
ordinance or ordinances authorizing the issuance of such"Special Project Bonds".
XX. The term System Fund shall have the meaning given such term in Section 12 of
this Ordinance.
SECTION 10: Pledge of Junior Lien Pledged Revenues.
A. The City hereby covenants and agrees that the Junior Lien Pledged Revenues of
the System are hereby irrevocably pledged to the payment and security of the Junior Lien
Obligations, including the establishment and maintenance of the special funds or accounts
created for the payment and security thereof, all as hereinafter provided; and it is hereby resolved
that the Junior Lien Obligations, and the interest thereon, shall constitute a lien on and pledge of
the Junior Lien Pledged Revenues and be valid and binding without any physical delivery thereof
or further act by the City, and the lien created hereby on the Junior Lien Pledged Revenues for
the payment and security of the Junior Lien Obligations, shall be, subject to the subordinate lien
nature of the Junior Lien Pledged Revenues as herein described otherwise, prior in right and
claim as to any other indebtedness, liability, or obligation of the City or the System. The Junior
Lien Obligations are and will be secured by and payable only from the Junior Lien 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. Chapter 1208, as amended, Texas Government Code, applies to the issuance of
the Bonds and the pledge of Junior Lien 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 Junior Lien Obligations are Outstanding and unpaid such that the
pledge of the Junior Lien 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 Junior Lien Obligations the perfection of the security interest in this
pledge, the City Council agrees to take such measures as it determines are reasonable and
necessary under Texas law to comply with the applicable provisions of Chapter 9, as amended,
Texas Business & Commerce Code and enable a filing to perfect the security interest in this
pledge to occur.
SECTION 11: Rates and Charges. For the benefit of the Holders of the Bonds and
in addition to all provisions and covenants in the laws of the State of Texas and in this
Ordinance, the City hereby expressly stipulates and agrees, while any of the Junior Lien
Obligations are Outstanding, to establish and maintain rates and charges for facilities and
services afforded by the System that are reasonably expected, on the basis of available
information and experience and with due allowance for contingencies, to produce Gross
Revenues in each Fiscal Year sufficient:
A. To pay all Operating Expenses, or any expenses required by statute to be a first
claim on and charge against the Gross Revenues of the System.
B. To produce Net Revenues, together with any other lawfully available funds,
sufficient to satisfy the rate covenant contained in the ordinances authorizing the issuance of the
57774941.4 -28-
Priority Bonds and to pay the principal of and interest on the Priority Bonds and the amounts
required to be deposited in any reserve or contingency fund or account created for the payment
and security of the Priority Bonds, and any other obligations or evidences of indebtedness issued
or incurred that are payable from and secured solely by a prior and first lien on an pledge of the
Net Revenues of the System;
C. To produce Net Revenues, together with any other lawfully available funds, equal
to at least 1.15 times Average Annual Debt Service Requirements on the then-Outstanding Junior
Lien Obligations and to deposit the amounts required to be deposited in any reserve or
contingency fund or account created for the payment and security of the Junior Lien Obligations,
and any other obligations or evidences of indebtedness issued or incurred that are payable from
and secured solely by a lien on and pledge of the Net Revenues, including the Junior Lien
Pledged Revenues, that is junior and inferior to the lien thereon and pledge thereof securing the
repayment of the Priority Bonds but senior and superior to the lien thereon and pledge thereof
securing the repayment of the Subordinate Lien Obligations and the Inferior Lien Obligations;
D. To produce Net Revenues, together with any other lawfully available funds,
sufficient to pay the amounts that may be deposited in the special funds established for the
payment of the Subordinate Lien Obligations;
E. To produce Net Revenues, together with any other lawfully available funds,
sufficient to pay the principal of and interest on the Inferior Lien Obligations as the same become
due and payable and to deposit the amounts required to be deposited in any reserve or
contingency fund or account created for the payment and security of the Inferior Lien
Obligations, and any other obligations or evidences of indebtedness issued or incurred that are
payable from and secured solely by a lien on and pledge of the Net Revenues that is subordinate
and inferior to the lien thereon and pledge thereof securing the repayment of the Priority Bonds,
the Junior Lien Obligations, and the Subordinate Lien Obligations; and
F. To pay, together with any other lawfully available funds, any other legally
incurred Debt payable from the Net Revenues of the System and/or secured by a lien on any part
of the System.
The determination of the amount of principal of and interest on any obligations identified
in this Section for the purpose of confirming the sufficiency of System rates and charges shall be
made after giving consideration as an offset to debt service the receipt or anticipated receipt of a
refundable tax credit or similar payment relating to any series of obligations irrevocably
designated as refundable tax credit bonds pursuant to the City ordinance authorizing their
issuance or otherwise relating thereto.
SECTION 12: System Fund. The City hereby covenants, agrees, and ratifies its
prior covenants and agreements that the Gross Revenues of the System shall be deposited, as
collected and received, into a separate Fund or account (previously created and established and
to be maintained with the Depository) known as the "City of Corpus Christi, Texas Utility
System Revenue Fund" (the System Fund) and that the Gross Revenues of the System shall be
kept separate and apart from all other funds of the City. All Gross Revenues deposited into the
57774941.4 -29-
System Fund shall be pledged and appropriated to the extent required for the following uses and
in the order of priority shown:
A. First: To the payment of all necessary and reasonable Operating Expenses or
other expenses required by statute to be a first charge on and claim against the revenues of the
System.
B. Second: To the payment of the amounts required to be deposited into the special
funds and accounts created and established for the payment, security and benefit of the
Previously Issued Priority Bonds and any Additional Priority Bonds hereafter issued by the City.
C. Third: To the payment of the amounts required to be deposited into the special
funds and accounts created and established for the payment, security and benefit of the Junior
Lien Obligations and any Additional Junior Lien Obligations hereafter issued by the City.
D. Fourth: To the payment of the amounts required to be deposited into the special
funds and accounts created and established for the payment, security and benefit of the
Previously Issued Subordinate Lien Obligations and any Additional Subordinate Lien
Obligations hereafter issued by the City.
E. Fifth: To the payment of the amounts that must be deposited in any special funds
and accounts created and established for the payment, security, and benefit of the Previously
Issued Inferior Lien Obligations and any Additional Inferior Lien Obligations hereafter issued by
the City.
Any Net Revenues remaining in the System Fund following such transfers may be used
by the City for payment of other obligations of the System, and for any other lawful purpose;
provided, however, that for so long as any Priority Bonds remain Outstanding,transfers made for
Fiscal purposes other than for payment of obligations of the System shall be made only at the
end of the Year (if such limitation is imposed, and then, only to the extent imposed in the City
ordinances authorizing the issuance of the Priority Bonds.
SECTION 13: Bond Fund - Excess Funds. For purposes of providing funds to pay
the principal of and interest on the currently Outstanding Junior Lien Obligations as the same
become due and payable, the City agrees to maintain, at the Depository, a separate and special
Fund or account to be created and known as the "City of Corpus Christi, Texas Utility System
Junior Lien Revenue Improvement Bonds Interest and Sinking Fund" (the Bond Fund). The City
covenants that there shall be deposited by an Authorized Official into the Bond Fund prior to
each principal and interest payment date from the available Net Revenues an amount equal to
one hundred per cent(100%) of the amount required to fully pay the interest on and the principal
of the currently Outstanding Junior Lien Obligations then falling due and payable, such deposits
to pay maturing principal and accrued interest on the currently Outstanding Junior Lien
Obligations to be made in substantially equal monthly installments on or before the 10`h day of
each month, beginning on or before the 10th day of the month next following the delivery of the
Bonds to the Purchasers. As described further in Section 15 hereof, if the Junior Lien Pledged
Revenues in any month are insufficient to make the required payments into the Bond Fund, then
57774941.4 -30-
the amount of any deficiency in such payment shall be added to the amount otherwise required to
be paid into the Bond Fund in the next month.
The required monthly deposits to the Bond Fund for the payment of principal of and
interest on the currently Outstanding Junior Lien Obligations shall continue to be made as
hereinabove provided until such time as (i)the total amount on deposit in the Bond Fund and
Reserve Fund is equal to the amount required to fully pay and discharge all Outstanding Junior
Lien Obligations (principal and interest) or (ii)the Junior Lien Obligations are no longer
Outstanding.
Any proceeds of the Bonds, and investment income thereon, not expended for authorized
purposes shall be deposited into the Bond Fund and shall be taken into consideration and reduce
the amount of monthly deposits required to be deposited into the Bond Fund from the Net
Revenues of the System.
Any surplus proceeds from the sale of the Bonds, including investment income thereon,
not expended for authorized purposes shall be deposited in the Bond Fund, and such amounts so
deposited shall reduce the sums otherwise required to be deposited in such Fund from the Junior
Lien Pledged Revenues.
SECTION 14: Reserve Fund. To accumulate and maintain a reserve for the
payment of the Bonds equal to 100% of the Average Annual Debt Service Requirements or such
lesser amount as restricted by the Code (calculated by the City Council at the beginning of each
Fiscal Year and as of the date of issuance of the Bonds and each series of Additional Junior Lien
Obligations) for the Bonds (the Required Reserve Amount), the City hereby creates and
establishes, and shall maintain at a Depository a separate and special fund known as the "Corpus
Christi, Texas Utility System Junior Lien Revenue Improvement Bonds Reserve Fund" (the
Reserve Fund). Earnings and income derived from the investment of amounts held for the credit
of the Reserve Fund shall be retained in the Reserve Fund until the Reserve Fund contains the
Required Reserve Amount; thereafter, such earnings and income shall be deposited to the credit
of the System Fund. All funds deposited into the Reserve Fund shall be used solely for the
payment of the principal of and interest on the Bonds, when and to the extent other funds
available for such purposes are insufficient, and, in addition, may be used to retire the last Stated
Maturity or Stated Maturities of or interest on the Bonds.
The City may acquire a Credit Facility or Facilities issued by a Credit Provider in
amounts equal to all or part of the Required Reserve Amount for the Bonds in lieu of depositing
cash into the Reserve Fund; provided, however, that no such Credit Facility may be so
substituted unless the substitution of the Credit Facility will not, in and of itself, cause any
ratings then assigned to the Bonds by any nationally recognized rating agency to be lowered and
the resolution authorizing the substitution of the Credit Facility for all or part of the Required
Reserve Amount for the Bonds contains (i) a finding that such substitution is cost effective and
(ii) a provision that the interest due on any repayment obligation of the City by reason of
payments made under such Credit Facility does not exceed the highest lawful rate of interest
which may be paid by the City at the time of the delivery of the Credit Facility. The City
reserves the right to use Junior Lien Pledged Revenues to fund the payment of (1) periodic
premiums on the Credit Facility as a part of the payment of the City's Operating Expenses, and
57774941.4 -31-
(2) any repayment obligation incurred by the City (including interest) to the Credit Provider, the
payment of which will result in the reinstatement of such Credit Facility, prior to making
payments required to be made to the Reserve Fund pursuant to the provisions of this Section to
restore the balance in such fund the Required Reserve Amount for the Bonds.
Until the issuance of any Additional Junior Lien Obligations (or as from time to time
recalculated by the City as provided in the first paragraph of this Section), the Required Reserve
Amount is $28,704,360 (inclusive of the Bonds and the Series 2015B Bonds). Of this amount,
$6,363,975, representing the portion of the Required Reserve Amount attributable to the Bonds,
shall be deposited to the Reserve Fund at such time as may be required pursuant to the provisions
of this Section from Revenues, paid from the System Fund at such level of priority as specified
in Section 12, by the deposit of monthly installments, made on or before the let day of each
month following the month in which such obligation to fund the Reserve Fund arises, of not less
than 1/60th of the amount to be maintained in the Reserve Fund.
As and when Additional Junior Lien Obligations are delivered or incurred, the Required
Reserve Amount shall be increased, if required, to an amount calculated in the manner provided
in the first paragraph of this Section. Any additional amount required to be maintained in the
Reserve Fund shall be so accumulated by the deposit of all or a portion of the necessary amount
from the proceeds of the issue or other lawfully available funds in the Reserve Fund immediately
after the delivery of the then proposed Additional Junior Lien Obligations, or, at the option of the
City, by the deposit of monthly installments, made on or before the business day before the 10th
day of each month following the month of delivery of the then proposed Additional Junior Lien
Obligations, of not less than 1/60th of the additional amount to be maintained in the Reserve
Fund by reason of the issuance of the Additional Junior Lien Obligations then being issued (or
1/60th of the balance of the additional amount not deposited immediately in cash) (such deposits,
the Required Reserve Fund Deposits), thereby ensuring the accumulation in the Reserve Fund of
the appropriate Required Reserve Amount.
When and for so long as the cash and investments in the Reserve Fund equal the
Required Reserve Amount, no deposits need be made to the credit of the Reserve Fund; but, if
and when the Reserve Fund at any time contains less than the Required Reserve Amount (other
than as the result of the issuance of Additional Junior Lien Obligations as provided in the
preceding paragraph), the City covenants and agrees to cure the deficiency in the Required
Reserve Amount by resuming the Required Reserve Fund Deposits to the Reserve Fund from the
Junior Lien Pledged Revenues in monthly deposit amounts equal to not less than 1/60th of the
Required Reserve Amount covenanted by the City to be maintained in the Reserve Fund. Any
such deficiency payments shall be made on or before the 10th day of each month until the
Required Reserve Amount has been fully restored. The City further covenants and agrees that,
subject only to the prior payments to be made to the Bond Fund, the Junior Lien Pledged
Revenues shall be applied and appropriated and used to establish and maintain the Required
Reserve Amount and to cure any deficiency in such amounts as required by the terms of this
Ordinance, any City ordinance authorizing the issuance of the Priority Bonds, and any other
ordinance pertaining to the issuance of Additional Junior Lien Obligations.
During such time as the Reserve Fund contains the Required Reserve Amount, the City
Council may, at its option, withdraw all surplus funds in the Reserve Fund in excess of the
57774941.4 -32-
Required Reserve Amount. Any such withdrawn surplus shall be deposited to the Bond Fund or
used by the City for any other lawful purpose; provided, however, to the extent that such excess
amount represents Bond proceeds, then such amount must be transferred to the Bond Fund or be
otherwise used in accordance with then-applicable State law.
In the event a Credit Facility issued to satisfy all or a part of the City's obligation with
respect to the Reserve Fund causes the amount then on deposit in the Reserve Fund to exceed the
Required Reserve Amount for the Bonds, the City may transfer such excess amount to any fund
or funds established for the payment of or security for the Bonds (including any escrow
established for the final payment of any such obligations pursuant to the provisions of Chapter
1207), or be used for any lawful purposes; provided, however, to the extent that such excess
amount represents Bond proceeds, then such amount must be transferred to the Bond Fund or be
otherwise used in accordance with then-applicable State law.
Notwithstanding anything to the contrary contained in this Section, the requirements set
forth above to fund the Reserve Fund in the amount of the Required Reserve Amount shall be
suspended for such time as the Junior Lien Pledged Revenues for each Fiscal Year are equal to at
least 110% of the Average Annual Debt Service Requirements. In the event that the Junior Lien
Pledged Revenues for any two consecutive Fiscal Years are less than 110% (unless such
percentage is below 100% in any Fiscal Year, in which case the hereinafter—specified
requirements will commence after such Fiscal Year) of the Average Annual Debt Service
Requirements, the City will be required to commence making the deposits to the Reserve Fund,
as provided above, and to continue making such deposits until the earlier of(i) such time as the
Reserve Fund contains the Required Reserve Amount or (ii) the Junior Lien Pledged Revenues
for a Fiscal Year have been equal to not less than 110% of the Average Annual Debt Service
Requirements.
SECTION 15: Deficiencies-Excess Junior Lien Pledged Revenues.
A. If on any occasion there shall not be sufficient Junior Lien Pledged Revenues to
make the required deposits into the Bond Fund, then such deficiency shall be cured as soon as
possible from the next available unallocated Junior Lien Pledged Revenues, or from any other
sources available for such purpose, and such payments shall be in addition to the amounts
required to be paid into these Funds or accounts during such month or months.
B. Subject to making the required deposits to the Bond Fund when and as required
by any ordinance or resolution authorizing the issuance of the currently Outstanding Priority
Bonds, the Junior Lien Obligations, the Subordinate Lien Obligations, and the Inferior Lien
Obligations, the excess Net Revenues of the System may be used by the City for any lawful
purpose(as further provided in Section 12 hereof).
SECTION 16: Payment of Bonds. While any of the Bonds are Outstanding, an
Authorized Official shall cause to be transferred to the Paying Agent/Registrar therefor, from
funds on deposit in the Bond Fund, amounts sufficient to fully pay and discharge promptly each
installment of interest on and principal of the Bonds as such installment accrues or matures; such
transfer of funds must be made in such manner as will cause immediately available funds to be
57774941 4 -33-
deposited with the Paying Agent/Registrar for the Bonds at the close of the business day next
preceding the date a debt service payment is due on the Bonds.
SECTION 17: Investments. Funds held in any Fund or account created,
established, or maintained pursuant to this Ordinance shall, at the option of the City, be placed in
time deposits, certificates of deposit, guaranteed investment contracts or similar contractual
agreements as permitted by the provisions of the Public Funds Investment Act, as amended,
Chapter 2256, Texas Government Code, or any other law, and secured (to the extent not insured
by the Federal Deposit Insurance Corporation) by obligations of the type hereinafter described,
including investments held in book-entry form, in securities including, but not limited to, direct
obligations of the United States of America, obligations guaranteed or insured by the United
States of America, which, in the opinion of the Attorney General of the United States, are backed
by its full faith and credit or represent its general obligations, or invested in indirect obligations
of the United States of America, including, but not limited to, evidences of indebtedness issued,
insured, or guaranteed by such governmental agencies as the Federal Land Banks, Federal
Intermediate Credit Banks, Banks for Cooperatives, Federal Home Loan Banks, Government
National Mortgage Association, Farmers Home Administration, Federal Home Loan Mortgage
Association, or Federal Housing Association; provided that all such deposits and investments
shall be made in such a manner that the money required to be expended from any Fund or
account will be available at the proper time or times. Such investments (except State and Local
Government Series investments held in book entry form, which shall at all times be valued at
cost) shall be valued in terms of current market value within 45 days of the close of each Fiscal
Year. All interest and income derived from deposits and investments in the Bond Fund
immediately shall be credited to, and any losses debited to, the Bond Fund. All such investments
shall be sold promptly when necessary to prevent any default in connection with the Bonds.
SECTION 18: Covenants. It is the intention of the City Council and accordingly
hereby recognized and stipulated that the provisions, agreements, and covenants contained herein
bearing upon the management and operations of the System, and the administering and
application of Gross Revenues derived from the operation thereof, shall to the extent possible be
harmonized with like provisions, agreements, and covenants contained in the City ordinances
authorizing the issuance of the Priority Bonds now or hereafter Outstanding, and to the extent of
any irreconcilable conflict between the provisions contained herein and in the City ordinances
authorizing the issuance of the Priority Bonds now or hereafter Outstanding, the provisions,
agreements and covenants contained therein shall prevail to the extent of such conflict and be
applicable to this Ordinance, especially the priority of rights and benefits conferred thereby to
the holders of the Priority Bonds now or hereafter Outstanding; provided, however, that the
provisions of this Ordinance concerning the issuance of Additional Priority Bonds shall control.
It is expressly recognized that prior to the issuance of any Additional Junior Lien Obligations,
Additional Subordinate Lien Obligations, or Additional Inferior Lien Obligations, that the City
must comply with each of the conditions precedent contained in this Ordinance and the City
ordinances authorizing the issuance of the then-Outstanding Priority Bonds, as appropriate.
A. Performance. It will faithfully perform at all times any and all covenants,
undertakings, stipulations, and provisions contained in this Ordinance, and each ordinance
authorizing the issuance of Junior Lien Obligations; it will promptly pay or cause to be paid the
principal amount of and interest on all Debt, on the dates and in the places and manner
57774941.4 -34-
prescribed in such ordinances and such Debt; 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 Debt 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 Debt, 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 Authority. 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 Junior Lien Obligations, against the claims and
demands of all persons whomsoever, that it is lawfully qualified to pledge the Junior Lien
Pledged Revenues to the payment of the Junior Lien Obligations in the manner prescribed
herein, and has lawfully exercised such rights.
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 priority of the liens granted
hereunder shall be fully preserved in the manner provided herein, and it will not create or suffer
to be created any mechanic's, laborer's, materialman's or other lien or charge which might or
could be prior to the liens hereof, or do or suffer any matter or thing whereby the liens hereof
might or could be impaired; provided however, that no such tax, assessment or charge, and that
no such claims which might be used as the basis of a mechanic's, laborer's, materialman's or
other lien or charge, shall be required to be paid so long as the validity of the same shall be
contested in good faith by the City.
57774941.4 -3 5-
F. No Free Service. No 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 Junior Lien Pledged Revenues unless
and only to the extent the duties and performances of such official or employee or his
replacement appertain directly to the System. To the extent the City receives the services of the
System, such services shall be accounted for according to the established rate schedule.
G. Further Encumbrance. It will not additionally encumber the Net Revenues of the
System in any manner, except as permitted in the City ordinances authorizing the Previously
Issued Priority Bonds and in this Ordinance (which provisions are also included in other City
ordinances authorizing other series of Junior Lien Obligations).
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 of the System only if(A)
it shall determine such property or facilities are not useful in the operation of the System,
or(B) the proceeds of such sale are $250,000 or less, or it shall have received a certificate
executed by an Engineer 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 an Engineer 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 Fiscal Year with the provisions of Subsection K
of this 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 Debt, or
(ii) otherwise be used to provide for the payment of Debt. The foregoing
notwithstanding, if such property or facilities sold or exchanged constituted property or
facilities comprising all or a part of a system within the System, the acquisition,
improvement or extension of such system having not been financed by the City in any
manner with the proceeds of Debt, or with the proceeds of obligations which were
refunded in whole or in part with the proceeds of Debt, then the City may utilize the
proceeds of such sale or exchange for any lawful purpose; and
(2) To the extent permitted by law, the City may lease or make contracts or
grant licenses for the operation of, or make arrangements for the use of, or grant
easements or other rights with respect to, any part of the System, provided that any such
lease, contract, license, arrangement, easement or right(A) does not impede the operation
by the City of the System and (B) does not in any manner impair or adversely affect the
rights or security of the owners of the Debt under this Ordinance; and provided, further,
that if the depreciated 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 an Engineer and the City Manager that the action of the
57774941.4 -36-
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 Accounts. 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 Fiscal 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.
(3) The annual audit hereinafter required shall contain a section commenting
on whether or not the City has complied with the requirements of this Section with
respect to the maintenance of insurance, and listing the areas of insurance for which the
City is self-insuring, all policies carried, and whether or not all insurance premiums upon
the insurance policies to which reference is hereinbefore made have been paid.
K. Audits. After the close of each Fiscal Year while any Debt is Outstanding, an
audit will be made of the books and accounts relating to the System and the Net Revenues by the
Accountant. Such annual audit reports shall be open to the inspection of the registered owners of
Debt and their agents and representatives at all reasonable times.
L. 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 of the System.
57774941.4 -37-
M. No Competition. To the extent it legally may, it will not grant any franchise or
permit for the acquisition, construction or operation of any competing facilities which might be
used as a substitute for the System's facilities, and, to the extent that it legally may, the City will
prohibit any such competing facilities.
N. Rights of Inspection. The Engineer or any registered owner of $100,000 in
aggregate principal amount of the Debt then Outstanding shall have the right at all reasonable
times to inspect the System and all records, accounts and data of the City relating thereto, and
upon request the City shall furnish to an Engineer or such registered owner, as the case may be,
such financial statements, reports and other information relating to the City and the System as an
Engineer or such registered owner may from time to time reasonably request.
SECTION 19: Issuance of Additional Priority Bonds, Additional Junior Lien
Obligations, Additional Subordinate Lien Obligations, and Additional Inferior Lien Obligations.
The City hereby expressly reserves the right to hereafter issue bonds, notes, warrants, certificates
of obligation, or similar obligations, payable, wholly or in part, as appropriate, from and secured
by a pledge of and lien on the Net Revenues of the System with the following priorities, without
limitation as to principal amount, but subject to any terms, conditions, or restrictions applicable
thereto under existing ordinances, laws, or otherwise:
A. Additional Priority Bonds payable from and equally and ratably secured by a first
and prior lien on and pledge of the Net Revenues of the System upon satisfying each of the
conditions precedent contained in the City ordinances authorizing the Previously Issued Priority
Bonds concerning the issuance of Additional Priority Bonds to realize debt service savings by
refunding any Priority Bonds at such time outstanding. For the avoidance of doubt, the City
hereby covenants to no longer issue Priority Bonds for"new money"purposes.
B. Additional Junior Lien Obligations, secured by and payable from the Junior Lien
Pledged Revenues, which includes (primarily) a lien on and pledge of Net Revenues that is
junior and inferior to the lien thereon and pledge thereof securing the repayment of the Priority
Bonds but senior and superior to the lien there on and pledge thereof securing the repayment of
the Subordinate Lien Obligations and the Inferior Lien Obligations, upon satisfying each of the
following conditions precedent:
(1) The City Manager (or other officer of the City then having the
responsibility for the financial affairs of the City) shall have executed a certificate stating
(i)that the City is not then in default as to any covenant, obligation or agreement
contained in any ordinance or other proceeding relating to any obligations of the City
payable from and secured by a lien on and pledge of the Net 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 Net 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 Junior Lien
Obligations, but such certificate shall not be dated prior to the date an ordinance is passed
authorizing the issuance of such Additional Junior Lien Obligations.
57774941.4 -38-
(2) Conditions Precedent for Issuance of Additional Junior Lien Obligations -
Capital Improvements and for any other Lawful Purpose except for Capital Additions or
for Refunding. The City covenants and agrees that Additional Junior Lien Obligations
will not be issued for the purpose of financing Capital Improvements, or for any other
lawful purpose (except for Capital Additions or for refunding, which are to be issued in
accordance with the provisions of Subsection (3) this Section and Section 19 hereof,
respectively) unless and until the conditions precedent in Subsection(1) above have been
satisfied and, in addition thereto, the City has secured a certification of the City Manager
to the effect that, according to the books and records of the City, the Net Earnings (as
hereinafter defined) for the preceding Fiscal Year or for 12 consecutive months out of the
15 months immediately preceding the month the ordinance authorizing the Additional
Junior Lien Obligations is adopted are at least equal to 1.15 times the Average Annual
Debt Service Requirements for all then-Outstanding Priority Bonds and Junior Lien
Obligations after giving effect to the Additional Junior Lien Obligations then proposed.
The foregoing notwithstanding, the City covenants and agrees that Additional Junior Lien
Obligations may not be issued for the purpose of financing Capital Improvements when
other Outstanding Junior Lien Obligations which have been issued for the purpose of
financing Capital Additions and for which capitalized interest for such other Junior Lien
Obligations has been provided for at least the twelve months subsequent to the date of
issuance of the Additional Junior Lien Obligations then proposed to be issued, unless the
conditions precedent in Subsection(1) above have been satisfied and, in addition thereto,
the City has either (1) complied with the relevant conditions in this Subsection as set
forth above, or (2) if the relevant conditions of this Subsection(2) as set forth above
cannot be satisfied, the City has satisfied the conditions precedent in Subsection(3)(i)
and (ii) of this Section (but, for purposes of such clauses, the term Capital Improvements
shall be substituted for the term Capital Additions where the term Capital Additions
appears therein to the extent necessary to give recognition to the fact that Capital
Improvements, rather than Capital Additions, are then to be financed) and has secured a
certification of the City Manager to the effect that, according to the books and records of
the City, the Net Earnings for the preceding Fiscal Year or for 12 consecutive months out
of the 15 months immediately preceding the month the ordinance authorizing the
Additional Junior Lien Obligations is adopted are at least equal to 1.15 times the Average
Annual Debt Service Requirements for all then-Outstanding Priority Bonds and Junior
Lien Obligations (other than Junior Lien Obligations issued for Capital Additions for
which capitalized interest has been provided for at least the twelve months subsequent to
the date of issuance of the Additional Junior Lien Obligations proposed to be issued)after
giving effect to the Additional Junior Lien Obligations then proposed to be issued.
(3) Conditions Precedent for Issuance of Additional Junior Lien Obligations -
Capital Additions: Initial Issue. The City covenants and agrees that Additional Junior
Lien Obligations will not be issued for the purpose of financing Capital Additions, unless
the same conditions precedent specified in Subsection (1) above have been satisfied and,
in addition thereto, either the relevant conditions precedent specified in Subsection(1)
above are satisfied or, in the alternative, the City shall have obtained: (i)from an
Engineer a comprehensive engineering report for each Capital Addition to be financed,
which report shall (A) contain (1) detailed estimates of the cost of acquiring and
constructing the Capital Addition, (2)the estimated date the acquisition and construction
57774941.4 -39-
of the Capital Addition will be completed and commercially operative, and (3) a detailed
analysis of the impact of the Capital Addition on the financial operations of the system
for which the Capital Addition is to be integrated and to the System as a whole during the
construction thereof and for at least five Fiscal 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 an
Engineer to the effect that, based on an engineering report prepared thereby for each
Capital Addition, the projected Net Earnings for each of the five Fiscal Years subsequent
to the date the Capital Addition becomes commercially operative (as estimated in the
engineering report) will be equal to at least 1.15 times the Average Annual Debt Service
Requirements for the currently Outstanding Junior Lien Obligations or incurred and all
Additional Junior Lien Obligations 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 Fiscal Year subsequent to the date the Capital Addition
is estimated to become commercially operative.
(4) Completion Issues. Once a Capital Addition has been initiated by meeting
the conditions precedent specified in Subsection(3)(i)and (ii) above and the initial Junior
Lien Obligations issued therefor are delivered, the City reserves the right to issue
Additional Junior Lien Obligations to finance the remaining costs of such Capital
Addition in such amounts as may be necessary to complete the acquisition and
construction thereof and make the same commercially operative without satisfaction of
any condition precedent under Subsection (3)(i) and (ii) or Subsection(1) of this Section
but subject to satisfaction of the following conditions precedent: (i)the City makes a
forecast(the Forecast) of the operations of the System demonstrating the System's ability
to pay all obligations, payable from the Net Revenues of the System to be Outstanding
after the issuance of the Additional Junior Lien Obligations then being issued for the
period (the Forecast Period) of each ensuing Fiscal Year through the fifth Fiscal Year
subsequent to the latest estimated date such Capital Addition is expected to be
commercially operative; and (ii) an Engineer 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 Net Revenues of the System will be adequate to
pay all the obligations, payable from the Junior Lien Pledged Revenues of the System to
be Outstanding after the issuance of the Additional Junior Lien Obligations then being
issued for the Forecast Period and (B)the proceeds from the sale of such Additional
Junior Lien Obligations are estimated to be sufficient to complete such acquisition and
construction.
(5) Computations; Reports. With reference to Junior Lien Obligations
anticipated and estimated to be issued or incurred, the Average Annual Debt Service
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
57774941.4 -40-
responsibility for the financial affairs of the City) after giving effect to the receipt or
anticipated receipt of a refundable tax credit or similar payment relating to any series of
Junior Lien Obligations irrevocably designated as refundable tax credit bonds, which
payment shall be treated as an offset to regularly scheduled debt service of the series of
Junior Lien Obligations to which it relates. In the preparation of the engineering report
required in Subsection (3)(i) above, an Engineer 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 Junior Lien Obligations for Capital Additions, the
certification of the City Manager and an Engineer, 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.
(6) Combination Issues. Junior Lien Obligations for Capital Additions may be
combined in a single issue with Junior Lien Obligations for Capital Improvements or for
any lawful purpose provided the conditions precedent set forth in Subsection (2) through
(4) are complied with as the same relate to the appropriate purpose.
(7) Definition of Net Earnings. As used in this Section,the term Net Earnings
shall mean the Gross Revenues of the System after deducting the Operating Expenses of
the System and those items identified in the SECOND level of priority in Section 12
hereof, but not expenditures which, under standard accounting practice, should be
charged to capital expenditures.
(8) Determination of Net Earnings. In making a determination of Net
Earnings for any of the purposes described in this Section, the City Manager may take
into consideration a change in the rates and charges for services and facilities afforded by
the System that became effective at least 60 days prior to the last day of the period for
which Net Earnings are determined and, for purposes of satisfying any of the Net
Earnings test described above, make a pro forma determination of the Net Earnings of the
System for the period of time covered by the City Manager's certification or opinion
based on such change in rates and charges being in effect for the entire period covered by
the City Manager's certificate or opinion.
C. The City may issue Additional Subordinate Lien Obligations secured by a lien on
and pledge of the Net Revenues of the System subordinate and inferior to the lien thereon and
pledge thereof securing the Priority Bonds and that is included in the Junior Lien Pledged
Revenues, respectively, but senior and superior to the lien there on and pledge thereof securing
the repayment of the Inferior Lien Obligations, on the terms and conditions desired by the City,
subject only to the limitations imposed by applicable law and upon satisfying each of the
conditions precedent contained in the ordinances authorizing the issuance of the currently-
Outstanding Priority Bonds, this Ordinance, and the Previously Issued Subordinate Lien
Obligations.
D. The City may issue Additional Inferior Lien Obligations secured by a lien on and
pledge of the Net Revenues of the System subordinate and inferior to the lien thereon and pledge
57774941.4 -41-
thereof securing the Priority Bonds and that is included in the Junior Lien Pledged Revenues,
respectively, on the terms and conditions desired by the City, subject only to the limitations
imposed by applicable law and upon satisfying each of the conditions precedent contained in the
ordinances authorizing the issuance of the currently-Outstanding Priority Bonds, this Ordinance,
and, to the extent applicable, the Federal Contract.
SECTION 20: Refunding Bonds. The City reserves the right to issue refunding
bonds to refund all or any part of the currently Outstanding Debt, pursuant to any applicable law
then available, upon such terms and conditions as the City Council may deem to be in the best
interest of the City, and if less than all such currently Outstanding Debt are refunded, the
conditions precedent prescribed for the issuance of Additional Junior Lien Obligations set forth
in Section 19 of this Ordinance shall be satisfied and the City Managers' certification required in
Section 19 shall give effect to the Debt Service Requirements of the proposed refunding bonds
(but shall not give effect to the Debt Service Requirements of the obligations being refunded
following their cancellation or provision being made for their payment).
SECTION 21: Issuance of Special Project Bonds. Nothing in this Ordinance shall
be construed to deny the City the right and it shall retain the right to issue Special Project Bonds,
provided, however, the City will not issue Special Project Bonds unless the City concludes, upon
recommendation of the City Council, that (i) the plan for developing the Special Project is
consistent with sound planning, (ii) the Special Project would not materially and adversely
interfere with the operation of the System, (iii) the Special Project can be economically and
efficiently operated and maintained, and (iv) the Special Project can be economically and
efficiently utilized by the City to meet combined utility system requirements and the cost of such
will be reasonable.
SECTION 22: Security of Funds. All money on deposit in the funds or accounts for
which this Ordinance makes provision (except any portion thereof as may be at any time
properly invested as provided herein) shall be secured in the manner and to the fullest extent
required by the laws of Texas for the security of public funds, and money on deposit in such
Funds or accounts shall be used only for the purposes permitted by this Ordinance.
SECTION 23: Remedies in Event of Default. In addition to all the rights and
remedies provided by the laws of the State of Texas, the City covenants and agrees particularly
that in the event the City (a) defaults in the payments to be made to the Bond Fund, or
(b)defaults in the observance or performance of any other of the covenants, conditions, or
obligations set forth in this Ordinance, the Holders of any of the Bonds shall be entitled to seek a
writ of mandamus issued by a court of proper jurisdiction compelling and requiring the
governing body of the City and other officers of the City to observe and perform any covenant,
condition, or obligation prescribed in this Ordinance.
No delay or omission to exercise any right or power accruing upon any default shall
impair any such right or power or shall be construed to be a waiver of any such default or
acquiescence therein, and every such right and power may be exercised from time to time and as
often as may be deemed expedient. The specific remedy herein provided shall be cumulative of
all other existing remedies and the specification of such remedy shall not be deemed to be
exclusive.
57774941.4 -42-
For the avoidance of doubt, no default with respect to any obligation that is secured by
and payable from a lien on and pledge of Net Revenues that is junior and subordinate to the lien
thereon and pledge thereof securing the Priority Bonds shall ever be deemed to be a default with
respect to the Priority Bonds.
SECTION 24: Notices to Holders Waiver. Wherever this Ordinance provides for
notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and sent by United States Mail, first-class postage prepaid, to
the address of each Holder as it appears in the Security Register.
In any case where notice to Holders is given by mail, neither the failure to mail such
notice to any particular Holders, nor any defect in any notice so mailed, shall affect the
sufficiency of such notice with respect to all other Holders. Where this Ordinance provides for
notice in any manner, such notice may be waived in writing by the Holder entitled to receive
such notice, either before or after the event with respect to which such notice is given, and such
waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Paying Agent/Registrar, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
SECTION 25: Bonds Are Negotiable Instruments. Each of the Bonds authorized
herein shall be deemed and construed to be a"security" and as such a negotiable instrument with
the meaning of the Chapter 8 of the Texas Uniform Commercial Code.
SECTION 26: Cancellation. All Bonds surrendered for payment, transfer,
redemption, exchange, or replacement, if surrendered to the Paying Agent/Registrar, shall be
promptly canceled by it and, if surrendered to the City, shall be delivered to the Paying
Agent/Registrar and, if not already canceled, shall be promptly canceled by the Paying
Agent/Registrar. The City may at any time deliver to the Paying Agent/Registrar for
cancellation any Bonds previously certified or registered and delivered which the City may have
acquired in any manner whatsoever, and all Bonds so delivered shall be promptly canceled by
the Paying Agent/Registrar. All canceled Bonds held by the Paying Agent/Registrar shall be
destroyed as directed by the City.
SECTION 27: Mutilated, Destroyed, Lost, and Stolen Bonds. If(1) any mutilated
Bond is surrendered to the Paying Agent/Registrar, or the City and the Paying Agent/Registrar
receive evidence to their satisfaction of the destruction, loss, or theft of any Bond, and.(2)there
is delivered to the City and the Paying Agent/Registrar such security or indemnity as may be
required to save each of them harmless, then, in the absence of notice to the City or the Paying
Agent/Registrar that such Bond has been acquired by a bona fide purchaser, the City shall
execute and, upon its request, the Paying Agent/Registrar shall register and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost, or stolen Bond, a new Bond of the same
Stated Maturity and interest rate and of like tenor and principal amount, bearing a number not
contemporaneously Outstanding.
In case any such mutilated, destroyed, lost, or stolen Bond has become or is about to
become due and payable, the City in its discretion may, instead of issuing a new Bond, pay such
Bond.
57774941.4 -43-
Upon the issuance of any new Bond or payment in lieu thereof, under this Section, the
City may require payment by the Holder of a sum sufficient to cover any tax or other
governmental charge imposed in relation thereto and any other expenses (including attorney's
fees and the fees and expenses of the Paying Agent/Registrar) connected therewith.
Every new Bond issued pursuant to this Section in lieu of any mutilated, destroyed, lost,
or stolen Bond shall constitute a replacement of the prior obligation of the City, whether or not
the mutilated, destroyed, lost, or stolen Bond shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Ordinance equally and ratably with all other
Outstanding Bonds.
The provisions of this Section are exclusive and shall preclude (to the extent lawful) all
other rights and remedies with respect to the replacement and payment of mutilated, destroyed,
lost, or stolen Bonds.
SECTION 28: Sale of Bonds- Official Statement Approval — Approval of Purchase
Contract. The Bonds authorized by this Ordinance are hereby sold by the City to Morgan Stanley
& Co. LLC, San Antonio, Texas, as the authorized representative of a group of underwriters (the
Purchasers, and having all the rights, benefits, and obligations of a Holder) in accordance with
the provisions of a Purchase Contract dated March 27, 2015 (the Purchase Contract) attached
hereto as Exhibit B and incorporated herein by reference as a part of this Ordinance for all
purposes. The pricing terms of the sale of the Bonds are hereby found and determined to be the
most advantageous reasonably obtainable by the City. The Initial Bond shall be registered in the
name of Morgan Stanley & Co. LLC. Any Authorized Official is hereby authorized and directed
to execute the Purchase Contract for and on behalf of the City and as the act and deed of the City
Council, and in regard to the approval and execution of the Purchase Contract, the City Council
hereby finds, determines and declares that the representations, warranties, and agreements of the
City contained in the Purchase Contract are true and correct in all material respects and shall be
honored by the City. Delivery of the Bonds to the Purchasers shall occur as soon as practicable
after the adoption of this Ordinance, upon payment therefor in accordance with the terms of the
Purchase Contract.
Furthermore, the City hereby ratifies, confirms, and approves in all respects (i)the City's
prior determination that the Preliminary Official Statement was, as of its date, "deemed final" in
accordance with the Rule(hereinafter defined) and (ii)the use and distribution of the Preliminary
Official Statement by the Purchasers in connection with the public offering and sale of the
Bonds. The final Official Statement, being a modification and amendment of the Preliminary
Official Statement to reflect the terms of sale (together with such changes approved by an
Authorized Official), shall be and is hereby in all respects approved and the Purchasers are
hereby authorized to use and distribute the final Official Statement, dated March 27, 2015, in the
reoffering, sale and delivery of the Bonds to the public. The Mayor and/or City Secretary are
further authorized and directed to manually execute and deliver for and on behalf of the City
copies of the Official Statement in final form as may be required by the Purchasers, and such
final Official Statement in the form and content manually executed by said officials shall be
deemed to be approved by the City Council and constitute the Official Statement authorized for
distribution and use by the Purchasers.
57774941.4 -44-
SECTION 29: Proceeds from Sale of Bonds. Proceeds from the sale of the Bonds
shall be applied as follows:
A. Accrued interest, if any, received from the Purchasers shall be deposited into the
Bond Fund.
B. The City received a net original issue reoffering premium from the Sale of the
Bonds of$12,377,906.70, $977,906.70 of which is hereby allocated by the City to pay certain
costs of issuance and rounding amount and the balance allocated by the City in the manner
described in Subsection C below.
C. The balance of the proceeds derived from the sale of the Bonds (after paying other
costs of issuance and other deposits referred to in Paragraphs A and B above) shall be deposited
into the special construction account or accounts created for the projects to be constructed with
the proceeds of the Bonds. This special construction account shall be established and maintained
at the Depository and shall be invested in accordance with the provisions of Section 17 of this
Ordinance. Interest earned on the proceeds of the Bonds pending completion of the projects
financed with such proceeds shall be accounted for, maintained, deposited, and expended as
permitted by the provisions of Chapter 1201, as amended, Texas Government Code, or as
required by any other applicable law. Thereafter, such amounts shall be deposited into the Bond
Fund and expended in accordance with Section 13.
SECTION 30: Covenants to Maintain Tax-Exempt Status.
A. Definitions. When used in this Section, the following terms have the following
meanings:
Code means the Internal Revenue Code of 1986, as amended by all legislation, if
any, effective on or before the Closing Date.
Computation Date has the meaning set forth in Section 1.148-1(b) of the
Regulations.
Gross Proceeds means any proceeds as defined in Section 1.148-1(b) of the
Regulations, and any replacement proceeds as defined in Section 1.148-1(c) of the
Regulations, of the Bonds.
Investment has the meaning set forth in Section 1.148-1(b) of the Regulations.
Nonpurpose Investment means any investment property, as defined in section
148(b) of the Code, in which Gross Proceeds of the Bonds are invested and which is not
acquired to carry out the governmental purposes of the Bonds.
Rebate Amount has the meaning set forth in Section 1.148-1(b) of the
Regulations.
Regulations means any proposed, temporary, or final Income Tax Regulations
issued pursuant to sections 103 and 141 through 150 of the Code, and 103 of the Internal
57774941.4 -45-
Revenue Code of 1954, which are applicable to the Bonds. Any reference to any specific
Regulation shall also mean, as appropriate, any proposed, temporary or final Income Tax
Regulation designed to supplement, amend or replace the specific Regulation referenced.
Yield of
(a) any Investment has the meaning set forth in Section 1.148-5 of the
Regulations; and
(b) the Bonds, being the combined yield of the Bonds and the Series
2015B Bonds, treated as a single issue, calculated in the manner set forth in
Section 1.148-4 of the Regulations.
B. Not to Cause Interest to Become Taxable. The City shall not use, permit the use
of, or omit to use Gross Proceeds or any other amounts (or any property the acquisition,
construction or improvement of which is to be financed or refinanced directly or indirectly with
Gross Proceeds) in a manner which if made or omitted, respectively, would cause the interest on
any Bond to become includable in the gross income, as defined in section 61 of the Code, of the
owner thereof for federal income tax purposes. Without limiting the generality of the foregoing,
unless and until the City receives a written opinion of counsel nationally recognized in the field
of municipal bond law to the effect that failure to comply with such covenant will not adversely
affect the exemption from federal income tax of the interest on any Bond, the City shall comply
with each of the specific covenants in this Section.
C. No Private Use or Private Payments. Except as would not cause the Bonds to
become "private activity bonds" within the meaning of section 141 of the Code and the
Regulations and rulings thereunder, the City shall at all times prior to the last Stated Maturity of
Bonds:
(1) exclusively own, operate and possess all property the acquisition,
construction or improvement of which is to be financed or refinanced directly or
indirectly with Gross Proceeds of the Bonds, and not use or permit the use of such Gross
Proceeds (including all contractual arrangements with terms different than those
applicable to the general public) or any property acquired, constructed or improved with
such Gross Proceeds in any activity carried on by any person or entity (including the
United States or any agency, department and instrumentality thereof) other than a state or
local government,unless such use is solely as a member of the general public; and
(2) not directly or indirectly impose or accept any charge or other payment by
any person or entity who is treated as using Gross Proceeds of the Bonds or any property
the acquisition, construction or improvement of which is to be financed or refinanced
directly or indirectly with such Gross Proceeds, other than taxes of general application
within the City or interest earned on investments acquired with such Gross Proceeds
pending application for their intended purposes.
D. No Private Loan. Except as would not cause the Bonds to become "private
activity bonds" within the meaning of section 141 of the Code and the Regulations and rulings
thereunder, the City shall not use Gross Proceeds of the Bonds, to make or finance loans to any
57774941.4 -46-
person or entity other than a state or local government. For purposes of the foregoing covenant,
such Gross Proceeds are considered to be "loaned"to a person or entity if: (1) property acquired,
constructed or improved with such Gross Proceeds is sold or leased to such person or entity in a
transaction which creates a debt for federal income tax purposes; (2) capacity in or service from
such property is committed to such person or entity under a take-or-pay, output or similar
contract or arrangement; or (3) indirect benefits, or burdens and benefits of ownership, of such
Gross Proceeds or any property acquired, constructed or improved with such Gross Proceeds are
otherwise transferred in a transaction which is the economic equivalent of a loan.
E. Not to Invest at Higher Yield. Except as would not cause the Bonds to become
"arbitrage bonds" within the meaning of section 148 of the Code and the Regulations and rulings
thereunder, the City shall not at any time prior to the final Stated Maturity of the Bonds directly
or indirectly invest Gross Proceeds in any Investment, if as a result of such investment the Yield
of any Investment acquired with Gross Proceeds, whether then held or previously disposed of,
materially exceeds the Yield of the Bonds.
F. Not Federally Guaranteed. Except to the extent permitted by section 149(b)of the
Code and the Regulations and rulings thereunder, the City shall not take or omit to take any
action which would cause the Bonds to be federally guaranteed within the meaning of section
149(b) of the Code and the Regulations and rulings thereunder.
G. Information Report. The City shall timely file the information required by section
149(e) of the Code with the Secretary of the Treasury on Form 8038-G or such other form and in
such place as the Secretary may prescribe.
H. Rebate of Arbitrage Profits. Except to the extent otherwise provided in
section 148(f)of the Code and the Regulations and rulings thereunder:
(1) The City shall account for all Gross Proceeds (including all receipts,
expenditures and investments thereof) on its books of account separately and apart from
all other funds (and receipts, expenditures and investments thereof) and shall retain all
records of accounting for at least six years after the day on which the last Outstanding
Bond is discharged. However, to the extent permitted by law, the City may commingle
Gross Proceeds of the Bonds with other money of the City, provided that the City
separately accounts for each receipt and expenditure of Gross Proceeds and the
obligations acquired therewith.
(2) Not less frequently than each Computation Date, the City shall calculate
the.Rebate Amount in accordance with rules set forth in section 148(f) of the Code and
the Regulations and rulings thereunder. The City shall maintain such calculations with its
official transcript of proceedings relating to the issuance of the Bonds until six years after
the final Computation Date.
(3) As additional consideration for the purchase of the Bonds by the
Purchasers and the loan of the money represented thereby and in order to induce such
purchase by measures designed to insure the excludability of the interest thereon from the
gross income of the owners thereof for federal income tax purposes, the City shall pay to
57774941.4 -47-
the United States out of the Bond Fund or its general fund, as permitted by applicable
Texas statute, regulation or opinion of the Attorney General of the State of Texas, the
amount that when added to the future value of previous rebate payments made for the
Bonds equals (i) in the case of a Final Computation Date as defined in Section 1.148-
3(e)(2) of the Regulations, one hundred percent (100%) of the Rebate Amount on such
date; and (ii) in the case of any other Computation Date, ninety percent (90%) of the
Rebate Amount on such date. In all cases, the rebate payments shall be made at the
times, in the installments, to the place and in the manner as is or may be required by
section 148(f) of the Code and the Regulations and rulings thereunder, and shall be
accompanied by Form 8038-T or such other forms and information as is or may be
required by section 148(f) of the Code and the Regulations and rulings thereunder.
(4) The City shall exercise reasonable diligence to assure that no errors are
made in the calculations and payments required by paragraphs (2) and(3), and if an error
is made, to discover and promptly correct such error within a reasonable amount of time
thereafter (and in all events within one hundred eighty (180) days after discovery of the
error), including payment to the United States of any additional Rebate Amount owed to
it, interest thereon, and any penalty imposed under Section 1.148-3(h) of the Regulations.
I. Not to Divert Arbitrage Profits. Except to the extent permitted by section 148 of
the Code and the Regulations and rulings thereunder, the City shall not, at any time prior to the
earlier of the Stated Maturity or final payment of the Bonds, enter into any transaction that
reduces the amount required to be paid to the United States pursuant to Subsection H of this
Section because such transaction results in a smaller profit or a larger loss than would have
resulted if the transaction had been at arm's length and had the Yield of the Bonds not been
relevant to either party.
J. Bonds Not Hedge Bonds.
(1) The City reasonably expects to spend at least 85% of the spendable
proceeds of the Bonds within three years after such Bonds are issued.
(2) Not more than 50% of the proceeds of the Bonds will be invested in
Nonpurpose Investments having a substantially guaranteed Yield for a period of four (4)
years or more.
K. Elections. The City hereby directs and authorizes each Authorized Official, or
any combination of them, to make elections permitted or required pursuant to the provisions of
the Code or the Regulations, as they deem necessary or appropriate in connection with the
Bonds, in the Certificate as to Tax Exemption or similar or other appropriate certificate, form or
document. Such elections shall be deemed to be made on the Closing Date.
SECTION 31: Control and Custody of Bonds. The Mayor shall be and is hereby
authorized to take and have charge of all necessary orders and records pending investigation by
the Attorney General of the State of Texas and shall take and have charge and control of the
Bonds pending their approval by the Attorney General of the State of Texas, the registration
57774941.4 -48-
thereof by the Comptroller of Public Accounts of the State of Texas and the delivery of the
Bonds to the Purchasers.
Furthermore, any Authorized Official or any combination of them are hereby authorized
and directed to furnish and execute such documents relating to the City and its financial affairs as
may be necessary for the issuance of the Bonds, the approval of the Attorney General and their
registration by the Comptroller of Public Accounts and, together with the City's Bond Counsel
and the Paying Agent/Registrar, make the necessary arrangements for the delivery of the Initial
Bond to the Purchasers.
SECTION 32: Satisfaction of Obligation of City. If the City shall pay or cause to be
paid, or there shall otherwise be paid to the Holders, the principal of, premium, if any, and
interest on the Bonds, at the times and in the manner stipulated in this Ordinance,then the lien on
and pledge of Junior Lien Pledged Revenues made under this Ordinance and all covenants,
agreements, and other obligations of the City to the Holders shall thereupon cease, terminate, and
be discharged and satisfied.
The Bonds, or any principal amount(s) thereof, shall be deemed to have been paid within
the meaning and with the effect expressed above in this Section when (i) money sufficient to pay
in full such Bonds or the principal amount(s) thereof at Stated Maturity or to the redemption date
therefor, together with all interest due thereon, shall have been irrevocably deposited with and
held in trust by the Paying Agent/Registrar or an authorized escrow agent, or (ii) Government
Securities shall have been irrevocably deposited in trust with the Paying Agent/Registrar, or an
authorized escrow agent, which Government Securities have, in the case of a net defeasance,
been certified by an independent accounting firm to mature as to principal and interest in such
amounts and at such times as will insure the availability, without reinvestment, of sufficient
money, together with any money deposited therewith, if any, to pay when due the principal of
and interest on such Bonds, or the principal amount(s) thereof, on and prior to the Stated
Maturity thereof or (if notice of redemption has been duly given or waived or if irrevocable
arrangements therefor acceptable to the Paying Agent/Registrar have been made) the redemption
date thereof for the Bonds. In the event of a gross defeasance of the Bonds, the City shall deliver
a certificate from its financial advisor, the Paying Agent/Registrar, or another qualified third
party concerning the deposit of cash and/or Government Securities to pay, when due, the
principal of, redemption premium (if any), and interest due on any defeased Bonds. The City
covenants that no deposit of money or Government Securities will be made under this Section
and no use made of any such deposit which would cause the Bonds to be treated as arbitrage
bonds within the meaning of section 148 of the Code (as defined in Section 29 hereof).
Any money so deposited with the Paying Agent/Registrar, and all income from
Government Securities held in trust by the Paying Agent/Registrar, or an authorized escrow
agent, pursuant to this Section which is not required for the payment of the Bonds, or any
principal amount(s) thereof, or interest thereon with respect to which such money has been so
deposited shall be remitted to the City or deposited as directed by the City. Furthermore, any
money held by the Paying Agent/Registrar for the payment of the principal of and interest on the
Bonds and remaining unclaimed for a period of three (3) years after the Stated Maturity, or
applicable redemption date, of the Bonds such money was deposited and is held in trust to pay
57774941.4 -49-
shall upon the request of the City be remitted to the City against a written receipt therefor,
subject to the unclaimed property laws of the State of Texas.
Notwithstanding any other provision of this Ordinance to the contrary, it is hereby
provided that any determination not to redeem defeased Bonds that is made in conjunction with
the payment arrangements specified in subsection (i) or (ii) above shall not be irrevocable,
provided that: (I) in the proceedings providing for such defeasance, the City expressly reserves
the right to call the defeased Bonds for redemption; (2) gives notice of the reservation of that
right to the owners of the defeased Bonds immediately following the defeasance; (3) directs that
notice of the reservation be included in any redemption notices that it authorizes; and (4) at the
time of the redemption, satisfies the conditions of(i) or (ii) above with respect to such defeased
debt as though it was being defeased at the time of the exercise of the option to redeem the
defeased Bonds, after taking the redemption into account in determining the sufficiency of the
provisions made for the payment of the defeased Bonds.
SECTION 33: Ordinance a Contract; Amendments - Outstanding Bonds. The City
acknowledges that the covenants and obligations of the City herein contained are a material
inducement to the purchase of the Bonds. This Ordinance shall constitute a contract with the
Holders from time to time, binding on the City and its successors and assigns, and it shall not be
amended or repealed by the City so long as any Bond remains Outstanding except as permitted in
this Section. The City may, without the consent of or notice to any Holders, from time to time
and at any time, amend this Ordinance in any manner not detrimental to the interests of the
Holders, including the curing of any ambiguity, inconsistency, or formal defect or omission
herein. In addition, the City may, with the written consent of Holders holding a majority in
aggregate principal amount of the Bonds then Outstanding affected thereby, amend, add to, or
rescind any of the provisions of this Ordinance; provided that, without the consent of all Holders
of Outstanding Bonds, no such amendment, addition, or rescission shall (I)extend the time or
times of payment of the principal of and interest on the Bonds, reduce the principal amount
thereof, the redemption price therefor, or the rate of interest thereon, or in any other way modify
the terms of payment of the principal of or interest on the Bonds, (2) give any preference to any
Bond over any other Bond, or (3) reduce the aggregate principal amount of Bonds required for
consent to any such amendment, addition, or rescission.
SECTION 34: Printed Opinion. The Purchasers' obligation to accept delivery of
the Bonds is subject to their being furnished a final opinion of Norton Rose Fulbright US LLP, as
Bond Counsel, approving certain legal matters as to the Bonds, said opinion to be dated and
delivered as of the date of initial delivery and payment for such Bonds. Printing of a true and
correct copy of said opinion on the reverse side of each of said Bonds, with appropriate
certificate pertaining thereto executed by facsimile signature of the City's Secretary is hereby
approved and authorized.
SECTION 35: CUSIP Numbers. CUSIP numbers may be printed or typed on the
definitive Bonds. It is expressly provided, however, that the presence or absence of CUSIP
numbers on the definitive Bonds shall be of no significance or effect as regards the legality
thereof, and neither the City nor attorneys approving said Bonds as to legality are to be held
responsible for CUSIP numbers incorrectly printed or typed on the definitive Bonds.
57774941.4 -50-
SECTION 36: Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction hereof.
SECTION 37: Benefits of Ordinance. Nothing in this Ordinance, expressed or
implied, is intended or shall be construed to confer upon any person other than the City, Bond
Counsel, Paying Agent/Registrar, and the Holders, any right, remedy, or claim, legal or
equitable, under or by reason of this Ordinance or any provision hereof,this Ordinance and all its
provisions being intended to be and being for the sole and exclusive benefit of the City, Bond
Counsel, Financial Advisors, the Paying Agent/Registrar, and the Holders.
SECTION 38: Inconsistent Provisions. All resolutions and ordinances, or parts
thereof, which are in conflict or inconsistent with any provision of this Ordinance are hereby
repealed to the extent of such conflict, and the provisions of this Ordinance shall be and remain
controlling as to the matters resolved herein.
SECTION 39: Governing Law. This Ordinance shall be construed and enforced in
accordance with the laws of the State of Texas and the United States of America.
SECTION 40: Severability. If any provision of this Ordinance or the application
thereof to any person or circumstance shall be held to be invalid, the remainder of this Ordinance
and the application of such provision to other persons and circumstances shall nevertheless be
valid, and the City Council hereby declares that this Ordinance would have been enacted without
such invalid provision.
SECTION 41: Incorporation of Preamble Recitals. The recitals contained in the
preamble hereof are hereby found to be true, and such recitals are hereby made a part of this
Ordinance for all purposes and are adopted as a part of the judgment and findings of the City
Council.
SECTION 42: Authorization of Paying Agent/Registrar Agreement. The City
Council hereby finds and determines that it is in the best interest of the City to authorize the
execution of a Paying Agent/Registrar Agreement concerning the payment, exchange, and
transferability of the Bonds. A copy of the Paying Agent/Registrar Agreement is attached
hereto, in substantially final form, as Exhibit A and is incorporated by reference to the provisions
of this Ordinance.
SECTION 43: Public Meeting. It is officially found, determined, and declared that
the meeting at which this Ordinance is adopted was open to the public and public notice of the
time, place, and subject matter of the public business to be considered at such meeting, including
this Ordinance, was given, all as required by Chapter 551, as amended, Texas Government Code.
SECTION 44: Continuing Disclosure of Information.
A. Definitions. As used in this Section, the following terms have the meanings
ascribed to such terms below:
57774941.4 -51-
EMMA means the MSRB's Electronic Municipal Market Access system, accessible by
the general public, without charge, on the internet through the uniform resource locator (URL)
http://www.emma.msrb.org.
MSRB means the Municipal Securities Rulemaking Board.
Rule means SEC Rule 15c2-12, as amended from time to time.
SEC means the United States Securities and Exchange Commission.
B. Annual Reports. The City shall file annually with the MSRB, (1) within six
months after the end of each Fiscal Year of the City ending in or after 2014, financial
information and operating data with respect to the System of the general type included in the
final Official Statement authorized by Section 28 of this Ordinance, being the information
described in Exhibit C hereto, and (2) if not provided as part such financial information and
operating data, audited financial statements of the City, when and if available. Any financial
statements so to be provided shall be (i) prepared in accordance with the accounting principles
described in Exhibit C hereto, or such other accounting principles as the City may be required to
employ from time to time pursuant to state law or regulation, and (ii) audited, if the City
commissions an audit of such financial 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 file unaudited financial statements within such period and
audited financial statements for the applicable Fiscal Year to the MSRB, when and if the audit
report on such statements becomes available.
If the City changes its Fiscal Year, it will file notice thereof with the MSRB of the change
(and of the date of the new Fiscal Year end) prior to the next date by which the City otherwise
would be required to provide financial information and operating data pursuant to this Section.
C. Notice of Certain Events. The City shall file notice of any of the following events
with respect to the Bonds to the MSRB in a timely manner and not more than 10 business days
after occurrence of the event:
(1) Principal and interest payment delinquencies;
(2) Non-payment related defaults, if material;
(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, the issuance by the Internal Revenue Service of
proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form
57774941 4 -52-
5701-TEB), or other material notices or determinations with respect to the tax status of
the Bonds, or other material events affecting the tax status of the Bonds;
(7) Modifications to rights of Holders of the Bonds, if material;
(8) Bond calls, if material, and tender offers;
(9) Defeasances;
(10) Release, substitution, or sale of property securing repayment of the Bonds,
if material;
(11) Rating changes;
(12) Bankruptcy, insolvency, receivership, or similar event of the City, which
shall occur as described below;
(13) The consummation of a merger, consolidation, or acquisition involving the
City or the sale of all or substantially all of its assets, other than in the ordinary course of
business, the entry into of a definitive agreement to undertake such an action or the
termination of a definitive agreement relating to any such actions, other than pursuant to
its terms, if material; and
(14) Appointment of a successor or additional Paying Agent/Registrar or the
change of name of a Paying Agent/Registrar, if material.
For these purposes, any event described in the immediately preceding paragraph (12) is
considered to occur when any of the following occur: the appointment of a receiver, fiscal agent,
or similar officer for the City in a proceeding under the United States Bankruptcy Code or in any
other proceeding under state or federal law in which a court or governmental authority has
assumed jurisdiction over substantially all of the assets or business of the City, or if such
jurisdiction has been assumed by leaving the existing governing body and officials or officers in
possession but subject to the supervision and orders of a court or governmental authority, or the
entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or
governmental authority having supervision or jurisdiction over substantially all of the assets or
business of the City.
The City shall file notice with the MSRB, in a timely manner, of any failure by the City
to provide financial information or operating data in accordance with this Section by the time
required by this Section.
D. Limitations, Disclaimers, and Amendments. The City shall be obligated to
observe and perform the covenants specified in this Section 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 that causes the Bonds to be
no longer Outstanding.
57774941.4 -53-
The provisions of this Section are for the sole benefit of the Holders and beneficial
owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or
any legal or equitable right, remedy, or claim hereunder to any other person. The City
undertakes to provide only the financial information, operating data, financial statements, and
notices which it has expressly agreed to provide pursuant to this Section and does not hereby
undertake to provide any other information that may be relevant or material to a complete
presentation of the City's financial results, condition, or prospects or hereby undertake to update
any information provided in accordance with this Section or otherwise, except as expressly
provided herein. The City does not make any representation or warranty concerning such
information or its usefulness to a decision to invest in or sell Bonds at any future date.
UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER
OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR
TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY
THE CITY, WHETHER NEGLIGENT OR WITH OR WITHOUT FAULT ON ITS PART, OF
ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY
OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY
SUCH BREACH SI-TALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC
PERFORMANCE.
No default by the City in observing or performing its obligations under this Section shall
constitute 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.
The provisions of this Section may be amended by the City from time to time to adapt to
changed circumstances that arise from a change in legal requirements, a change in law, or a
change in the identity, nature, status, or type of operations of the City, but only if (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 to the date of such amendment, as well as such
changed circumstances, and (2) either (a)the Holders of a majority in aggregate principal
amount (or any greater amount required by any other provision of this Ordinance that authorizes
such an amendment) of the Outstanding Bonds consent to such amendment or(b) a person that is
unaffiliated with the City (such as nationally recognized bond counsel) determines that such
amendment will not materially impair the interests of the Molders and beneficial owners of the
Bonds. The City may also repeal or amend the provisions of this Section if the SEC amends or
repeals the applicable provisions of the Rule or any court of final jurisdiction enters judgment
that such provisions of the Rule are invalid, and the City also may amend the provisions of this
Section in its discretion in any other manner or circumstance, but in either case only if and to the
extent that the provisions of this sentence would not have prevented an underwriter from
lawfully purchasing or selling Bonds in the primary offering of the Bonds, giving effect to (a)
such provisions as so amended and (b) any amendments or interpretations of the Rule. If the
City so amends the provisions of this Section, the City shall include with any amended financial
information or operating data next provided in accordance with this Section an explanation, in
57774941.4 -54-
narrative form, of the reasons for the amendment and of the impact of any change in the type of
financial information or operating data so provided.
E. Information Format—Incorporation by Reference. The City information required
under this Section shall be filed with the MSRB through EMMA in such format and
accompanied by such identifying information as may be specified from time to time thereby.
Under the current rules of the MSRB, continuing disclosure documents submitted to EMMA
must be in word-searchable portable document format(PDF) files that permit the document to be
saved, viewed, printed, and retransmitted by electronic means and the series of obligations to
which such continuing disclosure documents relate must be identified by CUSIP number or
numbers.
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) available to the public
through EMMA or filed with the United States Securities and Exchange Commission.
SECTION 45: Book-Entry Only System.
The Bonds are initially registered so as to participate in a securities depository system
(the DTC System) with the Depository Trust Company, New York, New York, or any successor
entity thereto (DTC), as set forth herein. Each Stated Maturity of the Bonds shall be issued
(following cancellation of the Initial Bond described in Section 7) in the form of a separate single
definitive Bond. Upon issuance, the ownership of each such Bond shall be registered in the
name of Cede & Co., as the nominee of DTC, and all of the Outstanding Bonds shall be
registered in the name of Cede & Co., as the nominee of DTC. The City and the Paying
Agent/Registrar are authorized to execute, deliver, and take the actions set forth in such letters to
or agreements with DTC as shall be necessary to effectuate the DTC System, including the Letter
of Representations attached hereto as Exhibit D (the Representation Letter).
With respect to the Bonds registered in the name of Cede & Co., as nominee of DTC, the
City and the Paying Agent/Registrar shall have no responsibility or obligation to any
broker-dealer, bank, or other financial institution for which DTC holds the Bonds from time to
time as securities depository (a Depository Participant) or to any person on behalf of whom such
a Depository Participant holds an interest in the Bonds (an Indirect Participant). Without
limiting the immediately preceding sentence, the City and the Paying Agent/Registrar shall have
no responsibility or obligation with respect to (i)the accuracy of the records of DTC, Cede &
Co., or any Depository Participant with respect to any ownership interest in the Bonds, (ii)the
delivery to any Depository Participant or any other person, other than a registered owner of the
Bonds, as shown on the Security Register, of any notice with respect to the Bonds, including any
notice of redemption, or (iii)the delivery to any Depository Participant or any Indirect
Participant or any other Person, other than a Holder of a Bond, of any amount with respect to
principal of, premium, if any, or interest on the Bonds. While in the DTC System, no person
other than Cede & Co., or any successor thereto, as nominee for DTC, shall receive a bond
certificate evidencing the obligation of the City to make payments of principal, premium, if any,
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
57774941.4 -55-
Cede & Co., and subject to the provisions in this Ordinance with respect to interest checks or
drafts being mailed to the Holder, the word "Cede & Co." in this Ordinance shall refer to such
new nominee of DTC.
In the event that (a)the City determines that DTC is incapable of discharging its
responsibilities described herein and in the Representation Letter, (b) the Representation Letter
shall be terminated for any reason, or (c) DTC or the City determines that it is in the best interest
of the beneficial owners of the Bonds that they be able to obtain certificated Bonds,the City shall
notify the Paying Agent/Registrar, DTC, and the Depository Participants of the availability
within a reasonable period of time through DTC of bond certificates, and the Bonds shall no
longer be restricted to being registered in the name of Cede & Co., as nominee of DTC. At that
time, the City may determine that the Bonds shall be registered in the name of and deposited
with a successor depository operating a securities depository system, as may be acceptable to the
City, or such depository's agent or designee, and if the City and the Paying Agent/Registrar do
not select such alternate securities depository system then the Bonds may be registered in
whatever name or names the Holders of Bonds transferring or exchanging the Bonds shall
designate, in accordance with the provisions hereof.
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, premium, if any, and interest on such Bond and all notices with respect to such
Bond shall be made and given,respectively, in the manner provided in the Representation Letter.
SECTION 46: Further Procedures. The officers and employees of the City are
hereby authorized, empowered and directed from time to time and at any time to do and perform
all such acts and things and to execute, acknowledge and deliver in the name and under the
corporate seal and on behalf of the City all such instruments, whether or not herein mentioned, as
may be necessary or desirable in order to carry out the terms and provisions of this Ordinance,
the initial sale and delivery of the Bonds,the Agreement, the Paying Agent/Registrar Agreement,
and the Purchase Contract. In addition, prior to the initial delivery of the Bonds, each
Authorized Official and Bond Counsel are hereby authorized and directed to approve any
technical changes or corrections to this Ordinance or to any of the instruments authorized and
approved by this Ordinance necessary in order to (i) correct any ambiguity or mistake or
properly or more completely document the transactions contemplated and approved by this
Ordinance and as described in the Official Statement, (ii) obtain a rating from any of the national
bond rating agencies, or (iii) obtain the approval of the Bonds by the Texas Attorney General's
office. In case any officer of the City whose signature shall appear on any certificate shall cease
to be such officer before the delivery of such certificate, such signature shall nevertheless be
valid and sufficient for all purposes the same as if such officer had remained in office until such
delivery.
SECTION 47: Unavailability of Authorized Publication. If, because of the
temporary or permanent suspension of any newspaper,journal, or other publication, or, for any
reason, publication of notice cannot be made meeting any requirements herein established, any
notice required to be published by the provisions of this Ordinance shall be given in such other
manner and at such time or times as in the judgment of the City or of the Paying Agent/Registrar
shall most effectively approximate such required publication and the giving of such notice in
57774941.4 -56-
such manner shall for all purposes of this Ordinance be deemed to be in compliance with the
requirements for publication thereof.
SECTION 48: No Recourse Against City Officials. No recourse shall be had for
the payment of principal of, premium, if any, or interest on any Bond or for any claim based
thereon or on this Ordinance against any official of the City or any person executing any Bond.
SECTION 49: Automatic Budget Amendments to Reflect Final Debt Service
Payments. To the extent that the City Council has adopted an annual budget that includes
payment of debt service on any Bonds issued (or to be issued) pursuant to this Ordinance based
on the City's reasonable expectations and projections relative to those Bonds, such budget entries
shall, upon the issuance of Bonds, be automatically adjusted to reflect actual debt service
payments on those Bonds coming due during the period of time covered by such budget. Each
Authorized Official, or the designee thereof, is authorized to make such necessary budget entries
and/or adjustments to reflect these final debt service amounts.
SECTION 50: Covenants of Compliance. The City shall faithfully and punctually
perform all duties with reference to the System required by the Act, all other applicable laws of
the State of Texas, and the provisions of this Ordinance and that the City shall render no free
service to any customers or other persons.
SECTION 51: Construction of Terms. If appropriate in the context of this
Ordinance, words of the singular number shall be considered to include the plural, words of the
plural number shall be considered to include the singular, and words of the masculine, feminine,
or neuter gender shall be considered to include the other genders.
SECTION 52: Effective Date. This Ordinance shall be in force and effect from and
after its final passage, and it is so resolved.
[The remainder of this page intentionally left blank]
57774941.4 -57-
PASSED AND ADOPTED on the 17th day of June, 2014.
CITY OF CORPUS CHRISTI, TEXAS
Mayor
ATTEST:
City Secretary
(SEAL)
APPROVED THIS 17th DAY OF JUNE,2014:
Barney L. Knight, Interim City Attorney
SCHEDULE I— Approval Certificate
EXHIBIT A— Paying Agent/Registrar Agreement
EXHIBIT B— Purchase Contract
EXHIBIT C— Description of Annual Financial Information
EXHIBIT D— DTC Letter of Representations
57774941 4 5-1
THE STATE OF TEXAS §
COUNTY OF NUECES §
CITY OF CORPUS CHRISTI §
I, the undersigned, City Secretary of the City of Corpus 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 17th
day of June, 2014, authorizing the issuance of one or more series of the City's Utility System
Junior Lien Revenue Improvement Bonds, Series 2015A, which ordinance is duly of record in
the minutes of said City Council, and said meeting was open to the public, and public notice of
the 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 17th day of June, 2014.
TZL/4-€4,
City Secretary
(CITY SEAL)
57774941.4 S-2
Thathe foregoing or inance was read for the first time and passed to its second reading on this
the [0 ay of ,f" -Q', O (,,y the following vote:
Nelda Martinez Chad Magill
Kelley Allen Colleen McIntyre
Rudy Garza i, Lillian Riojas
L- - -Il 1
frtPriscilla Leal Mark Scott ___01
David Loeb _( f_
ikd
That the fo egoing ordinance as ad for the second time and passed finally on this the I"1
w --
day of 1r , by the following vote:
Nelda Martinez ____*_ Chad Magill AA&
Kelley Allen _4Colleen McIntyre
Rudy Garza t Lillian Riojas
Priscilla Leal 6.4! Mark Scott 0)0AeAk
David Loeb
-----42-T"
PASSED AND APPROVED, this the I I day of ,( -.`I , 1+
ATTEST: `
Hi
Re_g_ _411"-e--"\-/7--,
ebecca Huerta Nelda Martinez
City Secretary Mayor
03201
57774941.3 S-3
SCHEDULE I
APPROVAL CERTIFICATE
See Tab No. 2
57774941.4 Schedule I-1
EXHIBIT A
PAYING AGENT/REGISTRAR AGREEMENT
See Tab No. 4
57774941.4 A-I
EXHIBIT B
PURCHASE CONTRACT
See Tab No. 8
57774941.4 B-1
EXHIBIT C
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION
The following information is referred to in Section 43 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 are as specified (and included in the Appendix or
under the headings of the Official Statement referred to)below:
1. The City's audited financial statements for the most recently concluded fiscal year or
to the extent these audited financial statements are not available, unaudited financial
statements of the City for the most recently concluded fiscal year.
2. Tables 1 through 23 contained in the Official Statement; and the Audited Financial
Statements 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.
57774941.4 C-1
EXHIBIT D
DTC LETTER OF REPRESENTATIONS
See Tab No. 5
577749414 D-1
APPROVAL CERTIFICATE
I, the undersigned, Director of Financial Services, and an Authorized Official under the
hereinafter-defined Ordinance, for the City of Corpus Christi, Texas (the City), pursuant to
Section 2 of the Ordinance authorizing the issuance of obligations designated as "City of Corpus
Christi, Texas Utility System Junior Lien Revenue Improvement Bonds, Series 2015A" (the
Bonds) do hereby approve the following terms of the Bonds:
A. The Bonds were sold based on the following method of sale and the applicable
provisions and terms related to the method of sale are as follows:
(i) the total principal amount of the Bonds and the Series 2015B Bonds is
$93,600,000.00 and $49,585,000.00, respectively, for a combined principal amount of both
such series of$143,185,000.00, and their Dated Date is March 1, 2015;
(ii) the purchase price for the Bonds is $105,468,171.66 (representing the par
amount of the Bonds, plus a net original reoffering premium of $12,377,906.70, less the
Underwriters' discount of$509,735.04),plus accrued interest on the Bonds of$647,440.63;
(iii) the true interest rate (federal arbitrage yield) on the Bonds is 3.876796%;
(iv) the interest rates, yields, and maturity schedule for the Bonds are as set forth
below:
Stated Maturities
(July 15) Principal Amounts ($) Interest Rates (%) Yields C%)
2016 1,515,000 3.000 0.400
2017 1,565,000 3.000 0.770
2018 1,610,000 4.000 1.090
2019 1,675,000 4.000 1.380
2020 1,740,000 5.000 1.610
2021 1,830,000 5.000 1.810
2022 1,920,000 5.000 2.070
2023 2,015,000 5.000 2.230
2024 2,115,000 5.000 2.400
2025 2,220,000 5.000 2.530
2026 2,335,000 5.000 2.680
2027 2,450,000 5.000 2.840
2028 2,570,000 5.000 2.980
2029 2,700,000 5.000 3.050
2030 2,835,000 5.000 3.120
2031 2,980,000 5.000 3.180
2032 3,125,000 3.375 3.700
2033 3,230,000 3.375 3.740
2034 3,340,000 5.000 3.330
2035 3,510,000 5.000 3.360
**** **** **** ****
57741405.2
Stated Maturities
(July 15) Principal Amounts ($) Interest Rates(%) Yields(%)
2040 20,350,000 5.000 3.440
**** **** **** ****
2045 25,970,000 5.000 3.490
(v) no bond insurance will be purchased for the Bonds;
(vi) the Bonds are subject to redemption prior to Stated Maturity as set forth in the
Ordinance, and the redemption provisions relating to the Bonds remain unchanged, except
as hereinafter provided, from those provisions included in the Ordinance as adopted by the
City Council of the City:
(vii) Sections 5A and 5B of the Ordinance are replaced in their entirety as follows:
A. Mandatory Redemption of Bonds. The Bonds stated to mature on July 15,
2040 and July 15, 2045, respectively, are referred to herein as the "Term Bonds". The
Term Bonds are subject to mandatory sinking fund redemption prior to their stated
maturities from money required to be deposited in the Bond Fund (but not the Reserve
Fund) for such purpose and shall be redeemed in part, by lot or other customary method,
at the principal amount thereof plus accrued interest to the date of redemption in the
following principal amounts on July 15 in each of the years as set forth below:
Term Bonds Stated to Term Bonds Stated to
Mature on July 15, 2040 Mature on July 15, 2045
Principal Principal
Year Amount($) Year Amount($)
2036 3,685,000 2041 4,700,000
2037 3,865,000 2042 4,935,000
2038 4,060,000 2043 5,180,000
2039 4,265,000 2044 5,440,000
2040 4,475,000 2045 5,715,000
*Payable at stated maturity
The principal amount of a Term Bond required to be redeemed pursuant to the
operation of such mandatory redemption provisions shall be reduced, at the option of the
City, by the principal amount of any Term Bonds of such stated maturity which, at least
50 days prior to the mandatory redemption date (1) shall have been defeased or acquired
by the City and delivered to the Paying Agent/Registrar for cancellation, (2) shall have
been purchased and canceled by the Paying Agent/Registrar at the request of the City
with money in the Bond Fund (but not the Reserve Fund), or (3) shall have been
redeemed pursuant to the optional redemption provisions set forth below and not
theretofore credited against a mandatory redemption requirement.
57741405.2 -2-
B. Optional Redemption. The Bonds having Stated Maturities on and after
July 15, 2026 shall be subject to redemption prior to Stated Maturity, at the option of the
City, on July 15, 2025, or on any date thereafter, as a whole or in part, in principal
amounts of $5,000 or any integral multiple thereof (and if within a Stated Maturity
selected at random and by lot by the Paying Agent/Registrar), at the redemption price of
par plus accrued interest to the date of redemption;
(viii) the Purchaser of the Bonds is Morgan Stanley & Co. LLC, San Antonio,
Texas, as the authorized representative of a group of underwriters (being those underwriters
identified on the cover of the Official Statement), pursuant to a negotiated sale; and
(ix) the pricing and terms of the sale of the Bonds are hereby found and determined
to be the most advantageous reasonably obtainable by the City.
B. Capitalized terms utilized herein and not defined shall have the meanings ascribed
in the ordinance adopted by the City Council of the City on June 17, 2014 authorizing the
issuance of the Bonds (the Ordinance).
[The remainder of this page intentionally left blank.]
57741405.2 -3-
EXECUTED AND DELIVERED March 27, 2015.
CITY OF CORPUS CHRISTI, TEXAS
Director of Financial Services
Signature Page to the Approval Certificate pertaining to"City of Corpus Christi,Texas
Utility System Junior Lien Revenue Improvement Bonds, Series 2015A"
57741405.2 S-1