HomeMy WebLinkAbout031106 ORD - 03/28/2017 CERTIFICATE OF CITY SECRETARY
THE ST'A F OF TEXAS §
COUNFIPS OF NUEC'ES,ARANSAS, §
KLEBERG AND SAN PATRICIO §
CITY OF CORPUS CHRISTI §
THE UNDERSIGNED HEREBY CERTIFIES that:
I. On the 28'h day of March, 2017, the City Council (the Council) of the City of
Corpus Christi, Texas (the City) convened in regular session at its regular meeting place at the
City Hall (the Meeting), the duly constituted members of the Council being as follows:
Vacant Mayor
Lucy Rubio Mayor Pro Tem, District 3
Carolyn Vaughn Councilmember, District I
Ben Molina Councilmember, District 2
Greg Smith Councilmember, District 4
Rudy Garza Jr. • Councilmember, District 5 •
Paulette Guajardo Councilmember,At Large
Michael T. Hunter Councilmember,At Large
Joe McComb Councilmember, At large
and ull of such persons were present at the Meeting, except the following: Carolyn Vaughn,
thus constituting a quorum. Among other business considered at the Meeting, the attached
Ordinance (the Ordinance) entitled:
ORDINANCE AUTHORIZING THE ISSUANCE OF "CITY OF CORPUS
CHRISTI, TEXAS UTILITY SYSTEM REVENUE REFUNDING BONDS, AS
FURTHER DESIGNATED BY SERIES AND LIEN PRIORITY OF REVENUE
PLEDGEE", IN AN AMOUNT NOT TO EXCEED $77,520,000; 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 ON A PARITY WITH CERTAIN
CURRENTLY OUTSTANDING UTILITY SYSTEM REVENUE
OBLIGATIONS; STIPULATING TIIE TERMS AND CONDITIONS FOR TIIE
ISSUANCE OF ADDITIONAL REVENUE BONDS ON A PARITY
THEREWITH; 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, AN ESCROW AGREEMENT, AND A
PURCHASE CONTRACT; COMPLYING WITH THE REQUIREMENTS
IMPOSED BY THE I IATER OF REPRESENTATIONS PREVIOUSLY
276362991
INDEXED
DELEGATING THE AUTHORITY TO CERTAIN MEMBERS OF T11E CITY
STAFF TO EXECUTE CERTAIN DOCUMENTS RELATING To THE SALE
OF THIS BONDS; AND PROVIDING AN EFFECTIVE DATE
was introduced and submitted to the Council for passage and adoption. After presentation and
due consideration of the Ordinance, a motion was made by Councilmember Rudy Garza
Jr. that the Ordinance be finally passed and adopted in accordance with the City's Home Rule
Charter. The motion was seconded by Councilmember Ben Molina and carried by the
following vote:
7 voted"For" 0 voted "Against" 0 abstained
all as shown in the official Minutes of the Council 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.
/77m remainder al this page intentionally left blank I
27636299/ 2
IN WITNESS WHEREOF, I have signed my name officially and affixed the seal of the
City, this 28' day of March, 2017.
i1) (
e Lie CSC C^. d 1 _Le1'_L(
City Secretary, City of Corpus Christi, Texas
(SEAL.)
23631)299.I S-1
FINAL
ORDINANCE NO. 031 106
AUTHORIZING THE ISSUANCE OF "CITY OF CORPUS CHRISTI,
TEXAS UTILITY SYSTEM REVENUE REFUNDING BONDS" AS
FURTHER DESIGNATED BY LIEN PRIORITY OF REVENUE PLEDGE,
IN AN AMOUNT NOT TO EXCEED $77,520,000; MAKING PROVISIONS
FOR THE PAYMENT AND SECURITY THEREOF BY A LIEN ON AND
PLEDGE OF THE NET REVENUES OF THE CITY'S UTILITY SYSTEM
WHICH MAY BE ON A PARITY WITH CERTAIN CURRENTLY
OUTSTANDING UTILITY SYSTEM REVENUE OBLIGATIONS;
STIPULATING THE TERMS AND CONDITIONS FOR THE ISSUANCE
OF ADDITIONAL REVENUE BONDS ON A PARITY THEREWITH;
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, AN ESCROW
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 CERTAIN MEMBERS OF THE CITY STAFF TO EXECUTE
CERTAIN DOCUMENTS RELATING TO THE SALE OF THE BONUS;
AND PROVIDING AN EFFECTIVE DATE
W HFREAS, the City Council (the City Council) of the City of Corpus Christi, Texas (the
City) has heretofore issued and there arc currently outstanding revenue bonds secured by liens on
and pledges of the Net Revenues (as hereinafter defined) of the City's combined utility systems
(as further described and defined herein, the System); and
WHEREAS, the Refunded Obligations, as defined herein and further described in
Schedule I hereto, are currently outstanding in the aggregate principal amount of$27,520,000;
and
WI IEREAS, 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 (as hereinafter defned); 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
27efn142 is
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, pursuant to the provisions of Chapter 1207, as amended, Texas Government
Code, as amended(the Acl), the City Council is authorized to issue revenue refunding bonds and
deposit the proceeds of sale under an escrow agreement to provide for the payment of the
Refunded Obligations, and such deposit, when made in accordance with the Act, shall constitute
the making of firm banking and financial arrangements for the discharge and final payment of
the Refunded Obligations; and
WI IEREAS, the Act requires that the deposit of the proeeeds from the sale of the revenue
refunding bonds be deposited directly with any designated escrow agent for the Refunded
Obligations that is not the depository bank of the City; and
WHEREAS, Frost Bank, San Antonio, which is not a depository bank of the City, is
appointed and will serve as the Paying Agent/Registrar (hereinafter defined) for the revenue
refunding bonds; and
WHEREAS, The Bank of New York Mellon Trust Company, N.A., Dallas, Texas, which
is not a depository bank of the City, is appointed and will serve as the Escrow Agent (hereinafter
defined) for the revenue refunding bonds; and
WHEREAS, the City Council also hereby finds and determines that the Refunded
Obligations are scheduled to mature or arc subject to being redeemed, not more than twenty (20)
years 0rom the date of the Bonds herein authorized and such refunding will result in a net present
value benefit of approximately $2,089,333.26 (7.592%) to the City and a gross savings of
$2,140,959.05, including the cash contribution of$0.00;
WHEREAS, the revenue refunding bonds hereinafter authorized are to be issued and
delivered pursuant to the laws of the Stale of Texas, including the Act (defined herein), and the
terms of this Ordinance(as hereinafter defined), for the purposes set forth in this Ordinance; and
now therefore,
BE PP ORDAINED BY TIlE CITY COUNCIL OF THE CITY OP CORPUS CHRISTI,
TEXAS:
SECTION I: Authorization - Designation - Principal Amount - Purpose. Revenue
refunding bonds of the City shall be and are hereby authorized to be issued in the aggregate
principal amount of TWENTY SEVEN MILLION SIX HUNDRED SEVENTY THOUSAND
AND NO/100 DOLLARS ($27,670,000), to be designated and bear the title of CITY OF
27638[42 13 -2-
CORPUS CIIRISTI, TEXAS UTILITY SYSTEM JUNIOR LIEN REVENUE REFUNDING
BONDS, SERIES 2017A (the Bonds), pursuant to this ordinance adopted by the City Council
(the Ordinance) for the purpose of (i) discharging and making final payment of the Refunded
Obligations, and (ii) paying the costs of issuance relating thereto, 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"fexas, including, the
Act.
As authorized by the Act, 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 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
(referenced to and defined herein as the Purchasers), the redemption provisions therefor, the rate
of interest to be borne on the principal amount of each such maturity, the identification of a
purchaser or purchasers for the Bonds, the priority of the lien on and pledge of the Net Revenues
securing the Bonds (whether issued as Additional Junior Lien Obligations or Subordinate Lien
Obligations), selection of the provider of a policy of municipal bond insurance securing the
repayment of principal of and interest on the Bonds (if any), selection of a Credit Provider to
provide a Credit Facility to satisfy any debt service reserve fund requirement relating to the
Bands, if any, and authority to finalize, enter into, and execute a Credit Agreement, in
substantially the form attached hereto as Exhibit E, in connection therewith, and selection from
the Refunding Candidates of the Refunded Obligations to be refunded from the proceeds of the
Bonds. Each Authorized Official, acting for and on behalf of the City, is authorized to execute
the Approval Certificate (defined herein) attached hereto as Schedule I. The Bonds shall he
issued in the principal amount not to exceed $77,520,000; the maximum maturity of the Bonds
will be July 15, 2045, the refunding will result in a net present value savings of at least 3.00%,
and the true interest rate (federal arbitrage yield) shall not exceed a rate greater than 6.00% per
annum calculated in a manner consistent with the provisions of Chapter 1204, as amended,Texas
Government Code. The execution of an Approval Certificate relating to the Bonds issued
hereunder shall evidence the sale date of the Bonds by the City to the purchaser or purchasers in
accordance with the provisions of the Act. Upon execution of the Approval Certificate, Bond
Counsel is authorized to complete this Ordinance to reflect such final terms.
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 May I, 2017 (the Dated Date); shall be in denominations of SI00.000 or any
integral multiple of$5,000 in excess thereof, shall be lettered "R-' and numbered consecutively
from One (I) upward and principal shall become due and payable on July 15 in each of the years
and in principal amounts (the Stated Maturities) and bear interest on the unpaid principal
amounts from the Closing Date (anticipated to occur on or about July 17, 2017), or the most
recent Interest Payment Date to which interest has been paid or duly provided for, to Staled
Maturity, at the rates per annum in accordance with the following schedule:
17(338142 13 -3-
Years of Stated Maturity Principal Interest
(July 15) Amounts($) Rates(%)
2018 9,1 15,000 1.170
2019 9,220,000 1.170
2020 9,335,000 1.170
SECTION 3: Payment of Bonds - Interest Payments - Paving Agent/Registrar. The
principal of, premium, if any, and interest on the Bonds, due and payable by reason of Stated
Maturity or otherwise, shall be payable in any coin or currency of the United States of America
which at the lime of payment is legal tender for the payment of public and private 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
rales shown above in Section 2, computed on the basis of a 360-day year of twelve 30-day
months, and interest thereon shall he payable semiannually on January 15 and July 15 of each
year (each, an Interest Payment Date), commencing January 15, 2018; while the Bonds are
Outstanding.
'The selection and appointment of Frost Bank, San Antonio, 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 he (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 AgenURegistrar 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 he 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, shall be payable only to the registered owner of the Bonds appearing on the
Security Register (the /!older 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. The City and the Paying
2763/11,12 13 -d-
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 the Bonds shall be payable only upon presentation and surrender of the
Bonds to the Paying Agent/Registrar at its corporate trust office; provided, however, with respect
to the principal payments prior to the final Stated Maturity, the Bonds need not be surrendered to
the Paying Agent/Registrar, who will merely document this payment on an internal ledger
maintained by the Paying Agent/Registrar. 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 Dale) 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 I lolder appearing in the Security Register or (ii) by such
other method, acceptable to the Paying Agent/Registrar, requested in writing by the Ifolder 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 he
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 Dale - which shall be fifteen (15)
days after the Special Record Date) shall he 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. The Bonds are not subject to redemption prior to stated
maturity.
SECTION 5: Execution - Registration. The Bonds shall he executed on behalf of the
City by its Mayor or Mayor Pro Tem, 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 he 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
2763)1142 11 -5-
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 heen 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
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 I lolder, 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
Raying 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
nos I42 13 -6-
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 he issued initially either
(i)as a single fully-registered Bond in the total principal amount of$27,670,000 with principal
installments to become due and payable as provided in Section 2 and numbered 'F-I, 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 he 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.
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 he 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, arc 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 Bond Counsel (hereinafter
referenced)) 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 he set forth on the reverse thereof, with an appropriate reference thereto on the
face o f 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 he typewritten or photocopied or otherwise
reproduced.
[The remainder of this page intentionally hell blank.J
2763S]42 13 -7-
B. Form of Definitive Bond.
REGISTERED
REGISTERED PRINCIPAL AMOUNT
NO. S
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 REFUNDING BONDS,
SERIES 2017A
Dated Date: Interest Rate: Stated Maturity: CUSIP NO:
May 1,2017
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, and to pay interest on the unpaid Principal Amount hereof
from the Closing Date (anticipated to occur on or about July 17, 2017), or from the most recent
interest payment date to which interest has been paid or duly provided for, to 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 (each, an Interest
Payment Date), commencing January I5, 2018.
Principal 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; provided, however, with
respect to the principal payments prior to the final Stated Maturity, the Bonds need not be
surrendered to the Paying Agent/Registrar, who will merely document this payment on an
internal ledger maintained by the Paying Agent/Registrar. 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
Agenl/Regislrar 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 he 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 I folder 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.
270384? 13 -8-
This Bond is one of the series specified in its title issued in the aggregate principal
amount of$27,670,000 (the Bonds) pursuant to an ordinance adopted by the governing body of
the City (the Ordinance), for the purpose of(i) discharging and making final payment of the
Refunded Obligations, and (ii) paying the costs of issuance relating thereto, all in conformity
with the laws of the State of Texas, particularly the City's Home Rule Charter and the Act, 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 are not subject to redemption prior to stated maturity.
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 (but not for "new money"
purposes), Additional Junior Lien Obligations, Subordinate Lien Obligations, and 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
Junior Lien Pledged Revenues pledged for the payment of the Bonds; the terms and conditions
under which the City may issue Additional Priority Bonds (but not for "new money" purposes),
Additional Junior Lien Obligations, Subordinate Lien Obligations,and 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
2763X142.13 -9-
form satisfactory to the Paying Agent/Registrar duly executed by the I bolder 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,
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.
IThe remainder of this page intentionally left blank)
27638142 13 -10-
IN WITNESS WI IEREOF, 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 CHRIST], TEXAS
Mayor Pro Tem
ATTEST:
City Secretary
(SEAL)
/The remainder of this page intentionally left blank,f
291)38142.0 -I I-
C. Form of Registration Certificate of Comptroller of Public Accounts to Appear on
Initial Bond Only.
REGISTRATION CERTIFICATE OF
COMPTROLLER OF PUI31-IC 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 Stale of Texas, and duly registered by the Comptroller
of Public Accounts of the State of Texas.
W f I NESS 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
D. 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: FROST BANK, San Antonio. Texas
as Paying Agent/Registrar
By:
Authorized Signature
* Bond to Printer: to appear on printed Bonds
27638IV '3 _)?_
E. 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 Dee of the within Bond in every particular.
Signature guaranteed:
[The remainder of this page intentionally lefi blank'
2763HI42IT -13-
F. Form of Initial Bond. The Initial Bond shall be in the form set forth in paragraph
13 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 Patrick), 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 IS) Rates(%)
(Information to be inserted from
schedule in Section 2 hereof).
and to pay interest on the unpaid Principal Amount hereof from the Closing Date (anticipated to
occur on or about July 17,2017), or from the most recent interest payment date to which interest
has been paid or duly provided for, to 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 IS of each year (each, an Interest Payment Date), commencing January 15,
2018.
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 Frost Bank, San Antonio,
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 I lolder 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
2"/615102 11 -14-
O. 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 31 and 46 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 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 any 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.
276111142 13 -15-
F:. The term Approval Certificate shall mean a written instrument from time to time
executed by an Authorized Official in accordance with Section I of this Ordinance.
F. The term Authorized Official shall mean the City Manager of the City, the
Assistant City Manager of the City, and the City's Director of Financial Services (which shall
include any person serving in any of the foregoing capacities on an interim or non-permanent
basis).
(i. 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(i) capitalized interest
from bond proceeds and (ii) 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.
❑. The term Bonds shall mean the $27.670,000 "CITY OF CORPUS CHRISTI,
"tEXAS UTILITY SYSTEM JUNIOR LIEN REVENUE REFUNDING BONDS, SERIES
2017A", dated May 1,2017, authorized by this Ordinance.
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
Bonds in exchange for the payment in full by the Purchasers.
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, as amended, Texas
Government Code, and which includes any Credit Facility.
17635142 14 -16-
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, arc 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 (h)
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.
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
2761814213 -17-
Bond Index is no longer being maintained by 71w 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 ally 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 hank 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 ot, 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 I of each
year and ending on the following September 30.
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, and (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. When the
Previously Issued Junior Lien Obligations issued on or before August 25, 2016, are no longer
2763%142 13 -18-
Outstanding, 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 Slates 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, arc rated as to investment quality by a
nationally recognized investment rating lirm 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; or (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 Federal Contract, (ii) any
Additional Inferior Lien Obligations, and (iii) obligations hereafter issued to refund any of the
foregoing that arc payable from and equally and ratably secured solely by a lien on and pledge of
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 any Subordinate Lien
Obligations, as determined by the City Council in accordance with applicable law;
AA. The term Interest Payment Dale shalt mean the date semiannual interest is
payable on the Bonds,being January 15 and July 15 of each year, commencing January 15, 2018,
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 payahle from and equally and ratably secured solely by a
lien on and pledge of the Junior Lien Pledged Revenues, which includes a hen 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 (i) the Net Revenues that remain
after payment of all amounts, and funding of all funds, relating to any Priority Bonds, plus (ii)
any additional revenues. income, receipts, or other resources, including, without limitation, any
21e38142.13 -19-
grants, donations, or income received or to be received from the United States Government, or
any other public or private source, whether pursuant to an agreement or otherwise, which
hereafter are pledged 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.
1)1). 'fhe term Net Revenues shall mean all Gross Revenues less Operating Expenses.
FE. 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
March 28, 2017 authorizing the issuance of the Bonds.
(1(3. 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:
(I) those Priority Bonds, Junior Lien Obligations, Subordinate Lien
Obligations, and Inferior Lien Obligations canceled by the Paying AgentlRegistrar 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 34 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.
Illi. The term Paying Agent/Registrar shall mean the financial institution specified in
Section 3 of this Ordinance, or its herein-permitted successors and assigns.
II. the term Previously Issued Junior Lien Obligations shall mean, as of the Closing
Date 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
776,e142 13 -20-
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 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) "City of Corpus Christi, Texas Utility System Junior Lien Revenue
Improvement Bonds, Series.2015", dated July I, 2015, in the original principal amount of
$46,990,000;
•
(5) "City of Corpus Christi, Texas Utility System Junior Lien Revenue
Improvement Bonds, Series 2015A", dated March I, 2015, in the original principal
amount of$93,600,000;
(6) "City of Corpus Christi, Texas Utility System Variable Rate Junior Lien
Revenue Improvement Bonds,Series 2015C", dated July 1, 2015, in the original principal
amount of$101385,000;
(7) "City of Corpus Christi, Texas Utility System Junior Lien Revenue
Refunding Bonds, Series 2016", dated August I, 2016, in the original principal amount of
$80,415,000;
(8) "City of Corpus Christi, Texas Utility System Junior Lien Revenue
Refunding Bonds, Series 2017", dated March 15, 2017, in the original principal amount
of$51,215,000; and
(9) Upon issuance, the Bonds.
JJ. The teen Previously Issued J'riority Bonds 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 prior and first lien on and pledge of the Net Revenues of the System,
identified as follows:
(I) "City of Corpus Christi, Texas Utility System Revenue Improvement
Bonds, Series 2009", dated March I, 2009, in the original principal amount of
$96,490,000;
2763S[42 13 -21-
(2) "City of Corpus Christi, Texas Utility System Revenue Improvement
Bonds, Series 2010", dated March I, 2010, in the original principal amount of
$8,000,000;
(3) "City of Corpus Christi, Texas Utility System Revenue Improvement
Bonds, Taxable Series 2010 (Direct Subsidy-Build America Bonds)", dated July I, 2010,
in the original principal amount of$60,625,000;
(4) "City of Corpus Christi, Texas Utility System Revenue Improvement
Bonds, Series 2010A", dated July I, 2010, in the original principal amount of
$14,375,000; and
(5) `City of Corpus Christi, Texas Utility System Revenue Improvement
Bonds, Series 2012", dated April I, 2012, in the original principal amount of
$52,500,000.
KK. 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.
LL. 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.
MM. The term Purchasers shall mean the initial purchaser or purchasers of the Bonds
named in Section 28 of this Ordinance.
NN. The term Refunding Candidates shall mean the following obligations of the City
from which the Refunded Obligations are selected by an Authorized Official:
(1) Federal Contract No. 6-07-01-X0675 entered into by an among the United
States of America, the City and the Nucces River Authority, dated June 30, 1976, and
amended on June 16, 1980. with respect to the Nueces River Reclamation Project; and
(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 and
27638142.11 -22-
maturing on July 15 in each of the years 2018 through 2020 in the aggregate principal
amount of$27,520,000.
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 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.
SS. 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.
Tf. The term 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.
UU. 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
27638142.n -7}_
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
linins; 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 arc 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
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.
VV. 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 ien 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 II: 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,
27038142 13 -24-
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
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 o&Yset to debt service the receipt or anticipated receipt of a
276.111142 13 -25-
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 he deposited, as collected
and received, into a separate Fund or account (previously created and established and to he
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
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
Previously Issued Junior Hen Obligations and any Additional Junior Lien Obligations hereafter
issued by the City.
D. Fourth: to the payment of the amounts required to he deposited into the special
funds and accounts created and established for the payment, security and benefit of any
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 any 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 purposes
other than for payment of obligations of the System shall be made only at the end of the Fiscal
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 he created and known as the "City of Corpus Christi, Texas Utility System
Junior Lion Revenue Refunding 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
276381312 13 26-
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 he made in substantially equal monthly installments on or before the 1001 day of
each month, beginning on or before the le 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
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 Refunding Bonds Reserve Fund"(the Reserve
Fund). Earnings and income derived from the investment of amounts held for the credit of the
Reserve Fund shall he 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 he 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 he lowered and
27638142 13 -27-
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
(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 $38,295,593 (inclusive of the Bonds). Of this amount, $976,492, represents the
increase in the Required Reserve Amount attributable to the issuance of 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 10th 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 I/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 I/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 l0"' 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
27(39142.13 -28-
Revenues shall be applied and appropriated and used to establish and maintain the Required
Reserve Amount and to cure ally 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
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 hind the Reserve Fund in the amount of the Required Reserve Amount shall he
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).
27o3S142.13 -29-
SECTION 16: Payment of Bonds. While any of the Bonds arc 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
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 I tome Administration, Federal Home Loan Mortgage
Association, or Federal Housing Association; provided that all such deposits and investments
shalt he 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 horn deposits and investments in the Bond Fund
immediately shall be credited to, and any losses debited to, the Bond Fund. All such investments
shall he 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,
Subordinate Lien Obligations, or 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.
27638L42 13 -30-
A. Per/ormance. 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
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. (I) 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 he 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
2761814213 -31-
might or could be impaired; provided however, that no such tax, assessment or charge, and that
no such claims which might he 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.
P. No Free Service. No free service or service otherwise than in accordance with the
established rate schedule shall he 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 he 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 he 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 Properly No part of the System shall be sold, leased,
mortgaged, demolished, removed or otherwise disposed of,except as follows:
(I) 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)
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 slating (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) he 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) lo 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
27611114211 -32-
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
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.
(I) Except as otherwise permitted in clause (2) below, it shall cause to be
insured such parts of the System as would usually he 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 he
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 he 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(I)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. Alter the close of each Fiscal Year while any Debt is Outstanding, an
audit will he made of the books and accounts relating to the System and the Net Revenues by the
Accountant. Such annual audit reports shall he 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
27630147.❑ -33-
System, and which have been obtained from any governmental agency; and the City has or will
obtain and keep in lull 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.
NI. 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 Bords,Additional Junior Lien Obligations
Subordinate Lien Obligations, and 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 Interior Lien Obligations, upon satisfying each of the
following conditions precedent:
(I) 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
27638142 17 -34-
certificate shall be dated tm 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.
(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) of this Section and Section 21 hereof,
respectively) unless and until the conditions precedent in Subsection (I) 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 (cast 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 (I) 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 he 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, arc 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 (I) above have been satisfied and,
in addition thereto, either the relevant conditions precedent specified in Subsection (I)
27635142 13 -35-
above are satisfied or, in the alternative, the City shall have obtained: (i) from an
Engineer a comprehensive engineering report I'or each Capital Addition to be financed,
which report shall (A)contain (I)detailed estimates of the cost of acquiring and
constructing the Capitol Addition, (2)the estimated date the acquisition and construction
of the Capital Addition will be completed and commercially operative, and (3)a detailed
analysis of the impact of the Capital Addition on the financial operations of the system
for which the Capital Addition is to he 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 (I)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 ally, 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 he 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)0) 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 he 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 he sufficient to complete such acquisition and
construction.
2768142 13 -36-
(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 he those reasonably estimated and computed by the City's
Director of Financial Services (or other officer of the City then having the primary
responsibility for the financial affairs of the City) 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 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, and this Ordinance.
1)638142/3 -37-
D. The City may issue 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 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 and this
Ordinance.
SECTION20: 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 he 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
(hut 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 he
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 he 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 (h)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 he 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
27636142.11 -38-
all other existing remedies and the specification of such remedy shall not he deemed to be
exclusive.
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 I lolders 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.
En 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 he 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
ine-ani g of the Chapter 8 of the Texas Uniform Commercial Code.
SECTION 26: Cancellation. All Bonds surrendered for payment, transfer, exchange, or
replacement, if surrendered 10 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 he destroyed as directed by the City.
SECTION 27: Mutilated, Destroyed, Lost,and Stolen Bonds. If(I) any mutilated Bond
is surrendered to the Paying AgenURegistrar, 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, hearing a number not
contemporaneously Outstanding.
27638142 13 -39-
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.
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 — Purchase and Investment Letter Approval — Use of
Proceeds. The Bonds authorized by this Ordinance are hereby sold by the City to Frost Bank,
San Antonio, Texas, (the Purchasers, and having all the rights, benefits, and obligations of a
Holder) in accordance with the provisions of a Purchase and Investment Letter dated June 13,
2017 (the Purchase Contract) attached hereto as Exhibit B and incorporated herein by reference
as a part of this Ordinance for all purposes. The Initial Bond shall be registered in the name of
Frost Bank. 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. Each 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 and performed 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.
Escrow Deposit Letter- Approval and Execution. The Escrow Deposit Letter dated as of
March 28, 2017 (the Agreement) by and between the City and The Bank of New York Mellon
Trust Company, N.A., Dallas, Texas (the Escrow Agent), attached hereto as Exhibit C and
incorporated herein by reference as a part of this Order for all purposes, is hereby approved as to
form and content, and such Agreement in substantially the form and substance attached hereto,
together with such changes or revisions as may be necessary to accomplish the refunding or
benefit the City, is hereby authorized to be executed by an Authorized Official for and on behalf
of the City and as the act and deed of this City Council; and such Agreement as executed by said
officials shall be deemed approved by the City Council and constitute the Agreement herein
approved.
2708142.13 -40-
Furthermore, any Authorized Official and Bond Counsel in cooperation with the Escrow
Agent, are hereby authorized and directed to make the necessary arrangements for the purchase
of the Escrowed Securities, if any, referenced in the Agreement and the delivery thereof to the
Escrow Agent on the day of delivery of the Bonds to the Purchasers for deposit to the credit of
the"CITY OF CORPUS CHRISTI, TEXAS JUNIOR LIEN REVENUE REFUNDING BONDS,
SERIES 2017A ESCROW FUND" (the Escrow hind), including the execution of the
subscription forms, if any, for the purchase and issuance of the "United States Treasury
Securities - State and Local Government Series" for deposit to the Escrow Fund; all as
contemplated and provided by the provisions of the Act, this Ordinance, and the Agreement.
SECTION 29: Proceeds of Sale; Contribution from the City. Immediately following the
delivery of the Bonds, certain proceeds of sale along with a cash contribution, if any, from the
City (less certain costs of issuance and accrued interest, if any, received from the Purchasers of
the Bonds) shall he deposited with the Escrow Agent for application and disbursement in
accordance with the provisions of the Agreement. The proceeds of sale of the Bonds not so
deposited with the Escrow Agent for the refunding of the Refunded Obligations shall be
disbursed for payment of costs of issuance or deposited in the Bond Fund for the Bonds, all in
accordance with written instructions from an Authorized Official. Amounts held in the interest
and sinking fund for the Refunded Obligations and not used as part of the City's contribution to
the Escrow Fund, if any, shall he deposited into the Bond Fund and used to pay principal on the
Bonds.
SECTION 30: Redemption of Refunded Obligations. The Refunded Obligations
referenced in the preamble hereof become subject to redemption prior to their stated maturities at
the price of par and accrued interest to their respective date of redemption. The City shall give
written notice to the paying agent/registrar for the Refunded Obligations that the Refunded
Obligations have been called for redemption, and the City Council orders that such obligations
are called for redemption on the redemption dates set forth on Schedule I attached hereto, and
such order to redeem the Refunded Obligations on such date shall be irrevocable upon the
delivery of the Bonds. A copy of the notice of redemption pertaining to the Refunded
Obligations is attached to this Ordinance as Exhibit D and is incorporated herein by reference for
all purposes. The paying agent/registrar for the Refunded Obligations is authorized and
instructed to provide notice of these redemptions to the holders of the Refunded Obligations in
the form and manner described in the City ordinance authorizing the issuance of Refunded
Obligations.
SECTION 31: 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.
271111142 0 -41-
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(e) 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(h) 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
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 'lax
Regulation designed to supplement, amend or replace the specific Regulation referenced.
Yield of
•
(a) any Investment has the meaning set forth in Section I.148-5 of the
Regulations; and
(b) the Bonds means the yield on the Bonds, calculated in the manner
set forth in Section 1.148-4 of the Regulations.
13. 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 mariner 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 (including property financed with Gross
Proceeds of the Refunded Obligations), and not use or permit the use of such Gross
Proceeds (including all contractual arrangements with terms different than those
2103814213 -42-
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 Cross 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 (including property financed with
Gross Proceeds of the Refunded Obligations), to make or finance loans to any 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: (I) 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 arc
otherwise transferred in a transaction which is the economic equivalent of a loan.
F. 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(6)of the Code and the Regulations and rulings thereunder.
Ci. 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(1) of the Code and the Regulations and rulings thereunder:
(1) 'lime 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
27(1_38142 13 -43-
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 1480) 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 Bands 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
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(1) 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(1) 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 penally imposed under Section LI48-3(h) of the Regulations.
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.
]763x14213 -44-
J. Bonds Not Hedge Bonds.
(1) At the time the original bonds refunded by the Bonds were issued, the City
reasonably expected to spend at least 85% of the spendable proceeds of such bonds
within three years after such bonds were issued.
(2) Not more than 50% of the proceeds of the original bonds refunded by the
Bonds were invested in Nonpurpose Investments having a substantially guaranteed Yield
for a period of four(4)years or more.
(3) The District reasonably expects to spend 85% of the spendable years after
the date of issuance thereof.
K. Current Refunding of the Refunded Obligations. The Bonds are issued to refund
the Refunded Obligations set forth on Schedule I hereto and the Bonds will he issued, and the
proceeds thereof used, within 90 days after the Closing Date for the payment of the Refunded
Obligations at their date of prior redemption. In the issuance of the Bonds, the City has
employed no "device" to obtain a material financial advantage (based on arbitrage), within the
meaning of section I 49(d)(4) of the Code, apart from savings attributable to lower interest rates.
The City has complied with the covenants, representations, and warranties contained in the
documents executed in connection with the issuance of the Refunded Obligations
h. 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 32: 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 lake and have charge and control of the
Bonds pending their approval by the Attorney General of the State of Texas, the registration
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 33: atisfaq i[ion 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.
2763A142ii -45-
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, 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 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 32 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 of the
Bonds such money was deposited and is held in trust to pay 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.
SECTION 34: 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
I folders 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 (1)extend the time or
times of payment of the principal of and interest on the Bonds, reduce the principal amount
thereof, 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.
2703g,42 13 -46-
SECTION 35: Printed Opinion. The Purchasers' obligation to accept delivery of the
Bonds is subject to their being furnished a final opinion of Norton Rose Fu'bright US LIP, 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 36: 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.
SECTION 37: Effect of Headings. The Section headings herein are for convenience only
and shall not affect the construction hereof.
SECTION 38: 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 39: 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 40: Accounting Reports. The City shall provide annually to the Purchasers, for
so long as they are the holders of the Bonds, within 210 days after the end of each fiscal year
ending in or after 2017, financial information and operating date with respect to the City;
provided that such financial statements so to be provided shall be (1) prepared in accordance
with the generally accepted accounting principles, or such other accounting principles as the City
may be required to employ from time to time pursuant to Texas law or regulations, and (2)
audited, if the City commissions an audit of such statements and the audit is completed within
the period during which they must be provided. If the audit of such financial statements is not
complete within such period, then the City shall provide (1) unaudited financial statements for
the applicable fiscal year within 210 days after the end of such year, and (2) audited financial
statements for the applicable fiscal year to the Purchasers when and if the audit report on such
statements become available.
SECTION 41: 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 42: 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
2761N147 13 -47-
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 43: Inamporation of Preamble Recitals. The recitals contained in the
preamble hereof arc 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 44: 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 45: 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 46: Continuing 12isclosure of Information.
A. Definitions.
As used in this Section, the following terms have the meanings ascribed to such terms
below:
Rule means SEC Rule 15c2-12,as amended from time to time.
SEC means the United States Securities and Exchange Commission.
The Bonds are being sold pursuant to a private placement with the Purchasers, in
denominations of $100,000 or any integral multiple of $5,000 in excess thereof, to less than
thirty-five sophisticated investors, and therefore the Rule is not applicable to the offering of the
Bonds. Accordingly, no contract to provide continuing disclosure information after the issuance
of the Bonds has been made by the City with investors.
SECTION 47: Book-Entry Only System. The Bonds may be 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 DIC. 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 F
(the Representation Lefler).
276Je]42.13 -48-
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, 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
(he 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 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 DT(' 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 I folders 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 48: 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
27638142 13 -49-
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 49: 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 he made meeting any requirements herein established, any notice
required to he 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 such
manner shall for all purposes of this Ordinance be deemed to he in compliance with the
requirements for publication thereof
SECTION 50: 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 51: Automatic Budget Amendments to Reflect Final Debt Service Payments.
To Me extent that the City Council has adopted an annual budget that includes payment of debt
service on any Bonds issued (or to he 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 52: 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 53: 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 54: Ancillary Bond Contracts. Though such parties may be identified, and the
entry into a particular form of contract may he authorized herein, the City Council hereby
delegates to each Authorized Official the authority to independently select the counterparty to
any agreement with any paying agent/registrar, rating agency, securities depository, escrow
agent, open market securities bidding agent, verification agent or any other contract that is
determined by an Authorized Official, the City's Financial Advisor, or the City's Bond Counsel
2163 8142 13 -50-
to be necessary or incidental to the issuance of the Bonds as long as each of such contracts has a
value of less than the amount referenced in Section 2252.908 of the Texas Government Code
(collectively, the Ancillary Bond Contracts); and, as necessary, to execute the Ancillary Bond
Contracts on behalf and as the act and deed of the City. The Governing Body has not
participated in the selection of any of the business entities which are counterparties to the
Ancillary Bond Contracts.
SECTION 55: City's Consent to Provide Information and Documentation to the Texas
MAC. The Municipal Advisory Council of Texas (the Texas MAC), a non-profit membership
corporation organized exclusively for non-profit purposes described in section 501(c)(6) of the
Interval Revenue Code and which serves as a comprehensive financial information repository
regarding municipal debt issuers in Texas, requires provision of written documentation regarding
the issuance of municipal debt by the issuers thereof. In support of the purpose of the Texas
MAC and in compliance with applicable law, the City hereby consents to and authorizes any
Authorized Official, the City's Bond Counsel, and/or the City's Financial Advisor to provide to
the Texas MAC information and documentation requested by the Texas MAC relating to the
Certificates; provided, however, that no such information and documentation shall be provided
prior to the Closing Date. This consent and authorization relates only to information and
documentation that is a part of the public record concerning the issuance of the Bonds.
SECTION 56: Effective Date. This Ordinance shall be in force and effect from and after
its final passage, and it is so resolved.
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29438142.13 -51-
SIGNED AND SEALED THIS 28th DAY OF MARCH,2017.
CITY OF CORPUS CHRISTI,TEXAS
\
Mayor Pro Tem
ATTEST:
I,te-r(,(1_
ity Secretary
(SEAL)
APPROVED THIS 28th DAY OF MARCH,2017:
2/ZLi
Miles Risley,City Attorney
27638142.12 S-1
THE STATE OF TEXAS §
COUNTIES OF NUECES, §
ARANSAS, KLEBERG, AND §
SAN PATRICIO §
§
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 28'h
day of March, 2017, authorizing the issuance of the City's Utility System Junior Lien Revenue
Refunding Bonds, Series 2017A, 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 28111day of March, 2017.
City Secretary
(CITY SEAL)
27638142 13 S-2
The foregoing ordinance was read for the first time and passed to its second reading on this the
21st day of March, 2017, by the following vote:
Ain( V a1 Rudy Garza d
-92-16
Carolyn Vaughn Paulette Guajardo ,
Ben Molina
0_1V_ Michael Hunter /"
Lucy Rubio •' ! Joe McComb /
$ 4,Greg Smith
4
That the foregoing ordinance was read for the second time and passed finally on this the 28`h day
of March, 2017,by the following vote:
I- !VICL,T1,7 v rl,!'.a/v, 4- Rudy Garza
i A
Carolyn Vaughn Paulette Guajardo
Ben MolinaI
Michael Hunter
Lucy Rubio I ° Joe McComb
I 11 i Greg Smith _at.
I
PASSED AND APPROVED, this the 28`h day of March, 2017.
ATTEST:
.
k 0_0 _ , L MI L' l,L- .t,..c.tiR�v:w
Rebecca Huerta Lucy Rubio`
City Secretary Mayor Pro Tern
27638142.12 S-3
ii31106
INDEX TO SCHEDULES AND EXHIBITS
Schedule I Schedule of Refunded Obligations
Schedule II Approval Certificate
Exhibit A Paying Agent/Registrar Agreement
Exhibit B Purchase Contract
Exhibit C Escrow Agreement
Exhibit D Notice of Redemption
Exhibit B Form of Reimbursement Agreement
Exhibit F DTC Letter of Representations
•
e7e1g142 13 S-4
SC11EMILE I
Schedule of Refunded Obligations
I. "City of Corpus Christi, Texas Utility System Revenue Refunding Bonds,
Series 2005", dated January I, 2005, in the original principal amount of
$70,390,000 and maturing on July 15 in each of the years 2018 through 2020 in
the aggregate principal amount of$27,520,000, to be redeemed on July 18, 2017.
276:181.12 11 Schedule 1-I
SCHEDULE H
Approval Certificate
See Tab No. 2
27638142 11 Schedule II-I
EXHIBIT A
Paying Agent/Registrar Agreement
See Tab No. 4
270441,12 14 A-1
EXHIBIT B
Purchase Contract
See Tab No. 7
2361/1142 13 B-I
EXHIBIT C
Escrow Agreement
Sec Tab No. 5
27636142 13 C-I
EXHIBIT H
Notice of Redemption
Sec Tab No. 21
17638142 13 1)-I
EXHIBIT E
form of Reimbursement Agreement
N/A
2(, H2a IbI
EXHIBIT F
DIC Letter of Representations
See Tab No. 6
27638142 13 F-1