HomeMy WebLinkAbout031324 ORD - 12/19/2017 CERTIFICATE OF CITY SECRETARY
THE STATE OF TEXAS §
§
COUNTIES OF NUECES,ARANSAS, §
KLEBERG,AND SAN PATRICIO §
CITY OF CORPUS CHRISTI §
THE UNDERSIGNED HEREBY CERTIFIES that:
L On the 19th day of December 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:
Joe McComb Mayor
Carolyn Vaughn Councilmember,District 1
Ben Molina Councilmember,District 2
Lucy Rubio Councilmember,District 3
Greg Smith Councilmember,District 4
Rudy Garza Jr. Councilmember, District 5
Paulette Guajardo Councilmember,At Large
Michael T. Hunter Councilmember, At Large
Debbie Lindsey-Opel Councilmember,At Large
and all of such persons were present at the Meeting, except the following: None ,
thus constituting a quorum. Among other business considered at the Meeting, the attached
Ordinance (the Ordinance)entitled:
AUTHORIZING THE ISSUANCE OF "CITY OF CORPUS CHRISTI, TEXAS
UTILITY SYSTEM SUBORDINATE LIEN REVENUE REFUNDING BONDS,
SERIES 2018" IN AN AMOUNT NOT TO EXCEED $34,835,000; MAKING
PROVISIONS FOR THE PAYMENT AND SECURITY THEREOF BY A
SUBORDINATE AND INFERIOR LIEN ON AND PLEDGE OF THE NET
REVENUES OF THE CITY'S UTILITY SYSTEM; 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 OF AN APPLICATION TO THE
TEXAS WATER DEVELOPMENT BOARD; AUTHORIZING THE
EXECUTION OF A PAYING AGENT/REGISTRAR AGREEMENT, A
FINANCING AGREEMENT, AND AN ESCROW AGREEMENT;
COMPLYING WITH THE REQUIREMENTS IMPOSED BY THE LETTER OF
REPRESENTATIONS PREVIOUSLY EXECUTED WITH THE DEPOSITORY
TRUST COMPANY; COMPLYING WITH THE REGULATIONS
PROMULGATED BY THE TEXAS WATER DEVELOPMENT BOARD;
82504913.2
INDEXED
DELEGATING THE AUTHORITY TO CERTAIN MEMBERS OF THE CITY
STAFF TO EXECUTE CERTAIN DOCUMENTS RELATING TO THE SALE
OF THE BONDS; ENACTING OTHER PROVISIONS INCIDENT AND
RELATED TO THE SUBJECT AND PURPOSE OF THIS ORDINANCE; 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 Lucy Rubio that the
Ordinance be finally passed and adopted in accordance with the City's Home Rule Charter. The
motion was seconded by Councilmember Debbie Lindsey-Opel and carried by the following
vote:
9 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.
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82504913.2 2
IN WITNESS WHEREOF, I have signed my name officially and affixed the seal of the
City,this 19th day of December 2017, 1)
City ecretary
City of Corpus Christi,Texas
(SEAL)
82504913.2 S-1
FINAL
ORDINANCE NO.031324
AUTHORIZING THE ISSUANCE OF "CITY OF CORPUS CHRISTI,
TEXAS UTILITY SYSTEM SUBORDINATE LIEN REVENUE
REFUNDING BONDS, SERIES 2018"IN AN AMOUNT NOT TO EXCEED
$34,835,000; MAKING PROVISIONS FOR THE PAYMENT AND
SECURITY THEREOF BY A SUBORDINATE AND INFERIOR LIEN ON
AND PLEDGE OF THE NET REVENUES OF THE CITY'S UTILITY
SYSTEM; 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 OF AN APPLICATION TO THE TEXAS WATER
DEVELOPMENT BOARD; AUTHORIZING THE EXECUTION OF A
PAYING AGENT/REGISTRAR AGREEMENT, A FINANCING
AGREEMENT, AND AN ESCROW AGREEMENT; COMPLYING WITH
THE REQUIREMENTS IMPOSED BY THE LETTER OF
REPRESENTATIONS PREVIOUSLY EXECUTED WITH THE
DEPOSITORY TRUST COMPANY; COMPLYING WITH THE
REGULATIONS PROMULGATED BY THE TEXAS WATER
DEVELOPMENT BOARD; DELEGATING THE AUTHORITY TO
CERTAIN MEMBERS OF THE CITY STAFF TO EXECUTE CERTAIN
DOCUMENTS RELATING TO THE SALE OF THE BONDS; ENACTING
OTHER PROVISIONS INCIDENT AND RELATED TO THE SUBJECT
AND PURPOSE OF THIS ORDINANCE; AND PROVIDING AN
EFFECTIVE DATE
82504375.15
TABLE OF CONTENTS
Page
SECTION I. Authorization—Designation—Principal Amount—Purpose 3
SECTION 2. Fully Registered Obligations—Authorized Denominations—Stated Maturities
—Interest Rates—Dated Date 3
SECTION 3. Payment of Bonds—Interest Payments—Paying Agent/Registrar 4
SECTION 4. Redemption 6
SECTION 5. Execution—Registration 7
SECTION 6. Registration—Transfer—Exchange of Bonds—Predecessor Bonds 7
SECTION 7. Initial Bond 8
SECTION 8. Forms 9
SECTION 9. Definitions 18
SECTION 10. Pledge of Subordinate Lien Pledged Revenues 27
SECTION 11. Rates and Charges 27
SECTION 12. System Fund 28
SECTION 13. Bond Fund -Excess Funds 29
SECTION 14. Reserve Fund 30
SECTION 15. Deficiencies—Excess Subordinate Lien Pledged Revenues 32
SECTION 16. Payment of Bonds 32
SECTION 17. Investments 32
SECTION 18. Covenants 33
SECTION 19. Issuance of Additional Priority Bonds, Additional Junior Lien Obligations,
Additional Subordinate Lien Obligations,and Additional Inferior Lien
Obligations 36
SECTION 20. Refunding Bonds 39
SECTION 21. Issuance of Special Project Bonds 39
SECTION 22. Security of Funds 39
SECTION 23. Remedies in Event of Default 39
SECTION 24. Notices to Holders Waiver 40
SECTION 25. Bonds Are Negotiable Instruments 40
SECTION 26. Cancellation 40
SECTION 27. Mutilated, Destroyed, Lost,and Stolen Bonds 40
SECTION 28. Confirmation of Sale; Approval of Private Placement Memorandum 41
SECTION 29. Compliance with Purchaser's Rules and Regulations 41
SECTION 30. Escrow Deposit Letter- Approval and Execution 43
SECTION 31. Proceeds of Sale; Contribution from the City 43
82504375 15 -i_
TABLE OF CONTENTS
(continued)
Page
SECTION 32. Payment of Refunded Obligations 43
SECTION 33. Covenants to Maintain Tax-Exempt Status 44
SECTION 34. Control and Custody of Bonds 47
SECTION 35. Satisfaction of Obligation of City 48
SECTION 36. Ordinance a Contract;Amendments—Outstanding Bonds 49
SECTION 37. Printed Opinion 49
SECTION 38. CUSIP Numbers 49
SECTION 39. Effect of Headings 49
SECTION 40. Benefits of Ordinance 49
SECTION 41. Inconsistent Provisions 50
SECTION 42. Governing Law 50
SECTION 43. Severability 50
SECTION 44. Incorporation of Preamble Recitals 50
SECTION 45. Authorization of Paying Agent/Registrar Agreement.... 50
SECTION 46. Authorization of Financing Agreement 50
SECTION 47. Application to Texas Water Development Board 50
SECTION 48. Public Meeting 50
SECTION 49. Continuing Disclosure of Information 51
SECTION 50. Book-Entry Only System 54
SECTION 51. Further Procedures 55
SECTION 52. Unavailability of Authorized Publication 55
SECTION 53. No Recourse Against City Officials 56
SECTION 54. Automatic Budget Amendments to Reflect Final Debt Service Payments 56
SECTION 55. Covenants of Compliance 56
SECTION 56. Construction of Terms 56
SECTION 57. City's Consent to Provide Information and Documentation to the Texas MAC
56
SECTION 58. Effective Date 56
Schedule I Schedule of Refunded Obligations
Schedule II Approval Certificate
Exhibit A Paying Agent/Registrar Agreement
Exhibit B Agreement
Exhibit C Holder Consent
Exhibit D Description of Annual Financial Information
Exhibit E DTC Letter of Representations
82504375 15 -ii-
ORDINANCE NO.031324
AUTHORIZING THE ISSUANCE OF "CITY OF CORPUS CHRISTI,
TEXAS UTILITY SYSTEM SUBORDINATE LIEN REVENUE
REFUNDING BONDS,SERIES 2018"IN AN AMOUNT NOT TO EXCEED
$34,835,000; MAKING PROVISIONS FOR THE PAYMENT AND
SECURITY THEREOF BY A SUBORDINATE AND INFERIOR LIEN ON
AND PLEDGE OF THE NET REVENUES OF THE CITY'S UTILITY
SYSTEM; 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 OF AN APPLICATION TO THE TEXAS WATER
DEVELOPMENT BOARD; AUTHORIZING THE EXECUTION OF A
PAYING AGENT/REGISTRAR AGREEMENT, A FINANCING
AGREEMENT, AND AN ESCROW AGREEMENT; COMPLYING WITH
THE REQUIREMENTS IMPOSED BY THE LETTER OF
REPRESENTATIONS PREVIOUSLY EXECUTED WITH THE
DEPOSITORY TRUST COMPANY; COMPLYING WITH THE
REGULATIONS PROMULGATED BY THE TEXAS WATER
DEVELOPMENT BOARD; DELEGATING THE AUTHORITY TO
CERTAIN MEMBERS OF THE CITY STAFF TO EXECUTE CERTAIN
DOCUMENTS RELATING TO THE SALE OF THE BONDS; ENACTING
OTHER PROVISIONS INCIDENT AND RELATED TO THE SUBJECT
AND PURPOSE OF THIS ORDINANCE; AND PROVIDING AN
EFFECTIVE DATE
WHEREAS, the City Council (the City Council) of the City of Corpus Christi,Texas(the
City) has heretofore issued, and there are currently Outstanding, revenue bonds (the Previously
Issued Priority Bonds) secured by a first and prior lien on and pledge of the Net Revenues (as
hereinafter defined) of the City's combined utility systems (as further described and defined
herein,the System); and
WHEREAS, in the City ordinances authorizing the issuance of the Previously Issued
Priority Bonds,the City reserved the right to issue revenue bonds on parity with the Priority Bonds
(as hereinafter defined); and
WHEREAS, the City Council has heretofore issued, and there are currently outstanding
revenue bonds(the Previously Issued Junior Lien Obligations)secured by a lien on and pledge of
Net Revenues that is junior and inferior to the lien thereon and pledge thereof securing the
repayment of the Priority Bonds; and
WHEREAS,in the City ordinances authorizing the issuance of the Previously Issued Junior
Lien Obligations, the City reserved the right to issue revenue bonds (the hereinafter defined
Subordinate Lien Obligations)secured by a lien on and pledge of Net Revenues that is subordinate
82504375 15
and inferior to the lien thereon and pledge thereof securing repayment of the Priority Bonds and
Junior Lien Obligations (as hereinafter defined)from time to time outstanding; and
WHEREAS,the City Council has heretofore entered into a certain Federal Contract No. 6-
07-01-X0675 (the Federal Contract)evidencing a contractual financial obligation to be paid to the
United States of America from the proceeds of a lien on and pledge of the Net Revenues of the
System inferior to the lien thereon and pledge thereof securing the Priority Bonds,the Junior Lien
Obligations, and any Subordinate Lien Obligations (such monetary contractual obligation, the
Refunded Obligations); and
WHEREAS, the Refunded Obligations are currently outstanding obligations in the
combined principal and interest amount of $42,168,828.64 as further described on Schedule I
hereto which is incorporated by reference for all purposes to this ordinance; and
WHEREAS, pursuant to the provisions of Chapter 1207, as amended, Texas Government
Code, as amended(the Act),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
WHEREAS,the Act requires that the deposit of the proceeds 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,UMB Bank,N.A.,Dallas, Texas,which is not a depository bank of the City,
is appointed and will serve as the Paying Agent/Registrar (hereinafter defined) and the Escrow
Agent(hereinafter defined)for the revenue refunding bonds; and
WHEREAS,the Texas Water Development Board(the Purchaser)has agreed to purchase
the revenue refunding bonds herein authorized thereby making a loan to the City at an interest rate
that is substantially below the current market rate for similar forms of indebtedness;and
WHEREAS, the City Council also hereby finds and determines that the Refunded
Obligations are scheduled to be paid not more than twenty(20)years from the date of the revenue
refunding bonds herein authorized and such refunding will result in a net present value benefit of
approximately $4,813,324.67 (13.817%) to the City and a gross savings of $15,761,847.31,
including the cash contribution of$7,563,000.00; and
WHEREAS, the revenue refunding bonds hereinafter authorized are to be issued and
delivered pursuant to the laws of the State of Texas, including the Act, and the terms of this
Ordinance(as hereinafter defined), for the purposes set forth in this Ordinance;and
WHEREAS,the City Council hereby finds and determines that the issuance of the revenue
refunding bonds authorized herein and the adoption of this Ordinance is in the best interests of the
citizens of the City; now, therefore,
82504375.15 -2-
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CORPUS CHRISTI,
TEXAS:
SECTION 1. 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 THIRTY-FOUR MILLION EIGHT HUNDRED THIRTY-FIVE AND
NO/100 DOLLARS ($34,835,000), to be designated and bear the title of CITY OF CORPUS
CHRISTI, TEXAS UTILITY SYSTEM SUBORDINATE LIEN REVENUE REFUNDING
BONDS, SERIES 2018 (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 Subordinate Lien
Pledged Revenues, which includes a lien on and pledge of Net Revenues that is subordinate and
inferior to the liens thereon and pledge thereof securing the repayment of the Priority Bonds and
the Junior Lien Obligations, respectively, but senior and superior to any lien thereon and pledge
thereof securing the repayment of any Inferior Lien Obligations hereafter issued. The Bonds are
authorized to be issued pursuant to the authority conferred by and in conformity with the laws of
the State of Texas including,particularly,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,
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, selection of the
provider of a policy of municipal bond insurance securing the repayment of principal of and
interest on the Bonds (if any), and selection of a Credit Provider to provide a Credit Facility to
satisfy any debt service reserve fund requirement relating to the Bonds, if any. Each Authorized
Official, acting for and on behalf of the City, is authorized to execute the Approval Certificate
(defined herein)attached hereto as Schedule H. The Bonds shall be issued in the principal amount
not to exceed $34,835,000; the maximum maturity of the Bonds will be July 15, 2058, 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; and the refunding of the Refunded Obligations shall provide at least 3.00%in
net present value benefit to the City. 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 February 15, 2018 (the Dated Date); shall be in denominations of$5,000 or any
integral multiple thereof, shall be lettered"R-"and numbered consecutively from One(1)upward
and principal shall become due and payable on July 15 in each of the years and in principal amounts
(the Stated Maturities) and bear interest on the unpaid principal amounts from the Closing Date,
or the most recent Interest Payment Date to which interest has been paid or duly provided for, to
82504375.15 _3_
the earlier of redemption or Stated Maturity, at the rates per annum in accordance with the
following schedule:
Years of Stated Maturity Principal Interest
(July 15) Amounts($) Rates (%)
2018 3,005,000 1.730
2019 2,555,000 1.900
2020 2,620,000 1.970
2021 2,685,000 2.030
2022 2,750,000 2.120
2023 2,815,000 2.200
2024 2,885,000 2.300
2025 2,955,000 2.390
2026 3,030,000 2.740
2027 3,100,000 3.000
2028 3,180,000 3.220
2029 3,255,000 3.400
SECTION 3. Payment of Bonds — Interest Payments — Paying Agent/Registrar. The
principal of, premium, if any, and interest on the Bonds, due and payable by reason of Stated
Maturity, redemption, or otherwise, shall be payable in any coin or currency of the United States
of America which at the time of payment is legal tender for the payment of public and private
debts, and such payment of principal of and interest on the Bonds shall be without exchange or
collection charges to the Holder(as hereinafter defined)of the Bonds.
The Bonds shall bear interest on the unpaid principal amount thereof at the per annum rates
shown above in Section 2,computed on the basis of a 360-day year of twelve 30-day months, and
interest thereon shall be payable semiannually on January 15 and July 15 of each year (each, an
Interest Payment Date),commencing July 15,2018,while the Bonds are Outstanding. Interest on
each Bond issued and delivered to a Holder shall accrue from the Closing Date (anticipated to
occur on or about March 1, 2018) or from the latest Interest Payment Date that interest on such
Bond(or its Predecessor Bond)has been paid that precedes the registration date appearing on such
Bond in the"Registration Certificate of Paying Agent/Registrar" (Section 8D hereof), unless the
registration date appearing thereon is an Interest Payment Date for which interest is being paid,in
which case interest on such Bond shall accrue from the registration date appearing thereon and
provided further that with respect to the initial payment of interest on a Bond.
The selection and appointment of UMB Bank, N.A., Dallas, Texas to serve as the initial
Paying Agent/Registrar (the Paying Agent/Registrar) for the Bonds is hereby approved and
confirmed, and the City agrees and covenants to cause to be kept and maintained at the corporate
trust office of the Paying Agent/Registrar books and records (the Security Register) for the
registration, payment, and transfer of the Bonds, all as provided herein, in accordance with the
terms and provisions of a Paying Agent/Registrar Agreement,attached,in substantially final form,
as Exhibit A hereto,and such reasonable rules and regulations as the Paying Agent/Registrar and
82504375 15 --4-
the City may prescribe. The City covenants to maintain and provide a Paying Agent/Registrar at
all times while the Bonds are Outstanding,and any successor Paying Agent/Registrar shall be(i) a
national or state banking institution or (ii)an association or a corporation organized and doing
business under the laws of the United States of America or of any state, authorized under such
laws to exercise trust powers. Such Paying Agent/Registrar shall be subject to supervision or
examination by federal or state authority and authorized by law to serve as a Paying
Agent/Registrar.
The City reserves the right to appoint a successor Paying Agent/Registrar upon providing
the previous Paying Agent/Registrar with a certified copy of a resolution or ordinance terminating
such agency. Additionally,the City agrees to promptly cause a written notice of this substitution
to be sent to each Holder of the Bonds by United States mail, first-class postage prepaid, which
notice shall also give the address of the new Paying Agent/Registrar.
Both principal of,premium, if any, and interest on the Bonds, due and payable by reason
of Stated Maturity, redemption, or otherwise, shall be payable only to the registered owner of the
Bonds appearing on the Security Register(the Holder or Holders)maintained on behalf of the City
by the Paying Agent/Registrar as hereinafter provided (i)on the Record Date(defined herein)for
purposes of payment of interest thereon and(ii)on the date of surrender of the Bonds for purposes
of receiving payment of principal thereof at the Bonds' Stated Maturity or upon prior redemption
of the Bonds. The City and the Paying Agent/Registrar, and any agent of either, shall treat the
Holder as the owner of a Bond for purposes of receiving payment and all other purposes
whatsoever, and neither the City nor the Paying Agent/Registrar, or any agent of either, shall be
affected by notice to the contrary.
Principal of, and premium, if any, on the Bonds shall be payable only upon presentation
and surrender of the Bonds to the Paying Agent/Registrar at its corporate trust office. Interest on
the Bonds shall be paid to the Holder whose name appears in the Security Register at the close of
business on the last business day of the month next preceding an Interest Payment Date for the
Bonds (the Record Date) and shall be paid (i)by check sent by United States mail, first-class
postage prepaid, by the Paying Agent/Registrar, to the address of the Holder appearing in the
Security Register or(ii)by such other method,acceptable to the Paying Agent/Registrar,requested
in writing by the Holder at the Holder's risk and expense. While the Bonds are held by the
Purchaser, payment of principal of, premium, if any, and interest on the Bonds shall be made by
federal funds wire transfer, at no cost to the Purchaser, to an account at a financial institution
located in the United States designated by the Purchaser.
If the date for the payment of the principal of, premium, if any, or interest on the Bonds
shallbe a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the city
where the corporate trust office of the Paying Agent/Registrar is located are authorized by law or
executive order to close, then the date for such payment shall be the next succeeding day which is
not such a day. The payment on such date shall have the same force and effect as if made on the
original date any such payment on the Bonds was due.
In the event of a non-payment of interest on a scheduled payment date, and for thirty(30)
days thereafter, a new record date for such interest payment (a Special Record Date) will be
established by the Paying Agent/Registrar,if and when funds for the payment of such interest have
82504375.15 _5_
been received from the City. Notice of the Special Record Date and of the scheduled payment
date of the past due interest(the Special Payment Date- which shall be fifteen(15)days after the
Special Record Date) shall be sent at least five(5)business days prior to the Special Record Date
by United States Mail, first-class postage prepaid,to the address of each Holder appearing on the
Security Register at the close of business on the last business day next preceding the date of mailing
of such notice.
SECTION 4. Redemption.
A. Optional Redemption. The Bonds having a Stated Maturity of July 15, 2029 shall
be subject to redemption prior to Stated Maturity,in inverse order of Stated Maturity,at the option
of the City, on July 15, 2028, or on any date thereafter,as a whole or in part, in principal amounts
of$5,000 or any integral multiple thereof(and if within a Stated Maturity selected at random and
by lot by the Paying Agent/Registrar), at the redemption price of par plus accrued interest to the
date of redemption.
B. Exercise of Redemption Option. At least forty-five(45)days prior to a date set for
the redemption of Bonds (unless a shorter notification period shall be satisfactory to the Paying
Agent/Registrar), the City shall notify the Paying Agent/Registrar of its decision to exercise the
right or of the requirement, as applicable, to redeem Bonds, the principal amount of each Stated
Maturity to be redeemed, and the date set for the redemption thereof. The decision of the City to
exercise the right to redeem Bonds shall be entered in the minutes of the City Council.
_._..._C. Selection of Bonds for Redemption. If less than all Outstanding Bonds of the same
Stated Maturity are to be redeemed on a redemption date, the Paying Agent/Registrar shall select
at random and by lot the Bonds to be redeemed, provided that if less than the entire principal
amount of a Bond is to be redeemed,the Paying Agent/Registrar shall treat such Bond then subject
to redemption as representing the number of Bonds Outstanding which is obtained by dividing the
principal amount of such Bond by$5,000.
D. Notice of Redem tP ion. Not less than thirty(30)days prior to a redemption date for
the Bonds, a notice of redemption shall be sent by United States Mail, first-class postage prepaid,
in the name of the City and at the City's expense, by the Paying Agent/Registrar to each Holder of
a Bond to be redeemed, in whole or in part,at the address of the Holder appearing on the Security
Register at the close of business on the business day next preceding the date of mailing such notice,
and any notice of redemption so mailed shall be conclusively presumed to have been duly given
irrespective of whether received by the Holder. This notice may also be published once in a
financial publication,journal,or reporter of general circulation among securities dealers in the City
of New York, New York (including, but not limited to, The Bond Buyer and The Wall Street
Journal),or in the State of Texas(including, but not limited to, The Texas Bond Reporter).
All notices of redemption shall(i)specify the date of redemption for the Bonds,(ii)identify
the Bonds to be redeemed and,in the case of a portion of the principal amount to be redeemed,the
principal amount thereof to be redeemed, (iii)state the redemption price,(iv) state that the Bonds,
or the portion of the principal amount thereof to be redeemed, shall become due and payable on
the redemption date specified, and the interest thereon, or on the portion of the principal amount
thereof to be redeemed, shall cease to accrue from and after the redemption date, and(v) specify
82504375.15 -6-
that payment of the redemption price for the Bonds, or the principal amount thereof to be
redeemed, shall be made at the corporate trust office of the Paying Agent/Registrar only upon
presentation and surrender thereof by the Holder. If a Bond is subject by its terms to redemption
and has been called for redemption and notice of redemption thereof has been duly given or waived
as herein provided, such Bond (or the principal amount thereof to be redeemed) so called for
redemption shall become due and payable, and if money sufficient for the payment of such Bonds
(or of the principal amount thereof to be redeemed)at the then applicable redemption price is held
for the purpose of such payment by the Paying Agent/Registrar, then on the redemption date
designated in such notice, interest on said Bonds(or the principal amount thereof to be redeemed)
called for redemption shall cease to accrue,and such Bonds shall not be deemed to be Outstanding
in accordance with the provisions of this Ordinance.
E. Transfer/Exchange. Neither the City nor the Paying Agent/Registrar shall be
required (i) to transfer or exchange any Bond during a period beginning forty-five(45)days prior
to the date fixed for redemption of the Bonds or(ii)to transfer or exchange any Bond selected for
redemption,provided; however, such limitation of transfer shall not be applicable to an exchange
by the Holder of the unredeemed balance of a Bond which is subject to redemption in part.
SECTION 5. Execution — Registration. The Bonds shall be executed on behalf of the
City by its Mayor 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 Purchaser, all as
authorized and provided in Chapter 1201,as amended,Texas Government Code.
No Holder of a Bond shall be entitled to any right or benefit under this Ordinance, or be
valid or obligatory for any purpose, unless there appears on such Bond either a certificate of
registration substantially in the form provided in Section 8C,executed by the Comptroller of Public
Accounts of the State of Texas or his duly authorized agent by manual signature for the Initial
Bond only, or a certificate of registration substantially in the form provided in Section 8D for
Bonds other than the Initial Bond, executed by the Paying Agent/Registrar by manual signature,
and either such certificate upon any Bond shall be conclusive evidence,and the only evidence,that
such Bond has been duly certified or registered and delivered.
SECTION 6. Registration — Transfer— Exchange of Bonds — Predecessor Bonds. The
Paying Agent/Registrar shall obtain, record, and maintain in the Security Register the name and
address of every owner of the Bonds, or, if appropriate, the nominee thereof. Any Bond may, in
accordance with its terms and the terms hereof, be transferred or exchanged for Bonds of other
authorized denominations upon the Security Register by the Holder, in person or by his duly
authorized agent, upon surrender of such Bond to the Paying Agent/Registrar for cancellation,
accompanied by a written instrument of transfer or request for exchange duly executed by the
Holder or by his duly authorized agent, in form satisfactory to the Paying Agent/Registrar.
Upon surrender for transfer of any Bond at the corporate trust office of the Paying
Agent/Registrar, the City shall execute and the Paying Agent/Registrar shall register and deliver,
in the name of the designated transferee or transferees,one or more new Bonds of the same series
82504375 15 _�_
and 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 Holder, Bonds may be exchanged for other Bonds of the same series
and of authorized denominations and having the same Stated Maturity, bearing the same rate of
interest and of like aggregate principal amount as the Bonds surrendered for exchange upon
surrender of the Bonds to be exchanged at the corporate trust office of the Paying Agent/Registrar.
Whenever any Bonds are so surrendered for exchange, the City shall execute, and the Paying
Agent/Registrar shall register and deliver,the Bonds,to the Holder requesting the exchange.
All Bonds issued upon any transfer or exchange of Bonds shall be delivered at the corporate
trust office of the Paying Agent/Registrar,or be sent by registered mail to the Holder at his request,
risk,and expense,and upon the delivery thereof;the same shall be the valid and binding obligations
of the City, evidencing the same obligation to pay, and entitled to the same benefits under this
Ordinance,as the Bonds surrendered upon such transfer or exchange.
All transfers or exchanges of Bonds pursuant to this Section shall be made without expense
or service charge to the Holder, except as otherwise herein provided, and except that the Paying
Agent/Registrar shall require payment by the Holder requesting such transfer or exchange of any
fee, tax or other governmental charges required to be paid with respect to such transfer or
exchange.
Bonds canceled by reason of an exchange or transfer pursuant to the provisions hereof are
hereby-defined to be Predecessor Bonds, evidencing all or a portion, as the case may be, of the
same debt evidenced by the new Bond or Bonds registered and delivered in the exchange or
transfer therefor. Additionally,the term Predecessor Bonds shall include any Bond registered and
delivered pursuant to Section 27 in lieu of a mutilated, lost,destroyed, or stolen Bond which shall
be deemed to evidence the same obligation as the mutilated, lost,destroyed,or stolen Bond.
SECTION 7. Initial Bond. The Bonds herein authorized shall be issued initially either
(i)as a single fully-registered Bond in the total principal amount of$34,835,000 with principal
installments to become due and payable as provided in Section 2 and numbered T-1,or(ii)as one
(1) fully-registered Bond for each year of Stated Maturity in the applicable principal amount and
denomination and to be numbered consecutively from T-1 and upward (the Initial Bond) and, in
either case,the Initial Bond shall be registered in the name of the Purchaser or the designee thereof.
The Initial Bond shall be the Bonds submitted to the Office of the Attorney General of the State
of Texas for approval,certified and registered by the Office of the Comptroller of Public Accounts
of the State of Texas and delivered to the Purchaser. Any time after the delivery of the Initial
Bonkthe 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
Purchaser, or the designee thereof, and such other information and documentation as the Paying
Agent/Registrar may reasonably require.
82504375/5 -g-
SECTION 8. Forms.
A. Forms Generally. The Bonds, the Registration Certificate of the Comptroller of
Public Accounts of the State of Texas,the Certificate of Paying Agent/Registrar, and the form of
Assignment to be printed on each of the Bonds shall be substantially in the forms set forth in this
Section with such appropriate insertions, omissions, substitutions, and other variations as are
permitted or required by this Ordinance and may have such letters, numbers, or other marks of
identification(including insurance legends in the event the Bonds,or any Stated Maturities thereof,
are insured and identifying numbers and letters of the Committee on Uniform Securities
Identification Procedures of the American Bankers Association) and such legends and
endorsements(including any reproduction of an opinion of 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 be set forth on the reverse thereof, with an appropriate reference thereto on the face of the
Bond.
The definitive Bonds shall be printed, lithographed, or engraved, produced by any
combination of these methods, or produced in any other similar manner, all as determined by the
officers executing the Bonds as evidenced by their execution thereof, but the Initial Bond
submitted to the Attorney General of Texas may be typewritten or photocopied or otherwise
reproduced.
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82504375.15 _9_
B. Form of Definitive Bond.
REGISTERED
REGISTERED PRINCIPAL AMOUNT
NO. $
United States of America
State of Texas
Counties of Nueces,Aransas, Kleberg,and San Patricia
CITY OF CORPUS CHRISTI,TEXAS UTILITY SYSTEM
SUBORDINATE LIEN REVENUE REFUNDING BONDS,
SERIES 2018
Dated Date: Interest Rate: Stated Maturity: CUSIP NO:
February 15, 2018
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
The City of Corpus Christi,Texas(the City), a body corporate and a municipal corporation
located in the Counties of Nueces, Aransas, Kleberg, and San Patricio, State of Texas,for value
received, hereby promises to pay to the order of the Registered Owner specified above, or the
registered assigns thereof, on the Stated Maturity date specified above, the Principal Amount
specified above (or so much thereof as shall not have been paid upon prior redemption), and to
pay interest on the unpaid Principal Amount hereof from the Closing Date(anticipated to occur on
or about March I, 2018) or from the most recent Interest Payment Date (hereinafter defined) to
which interest has been paid or duly provided for,to the earlier of redemption or Stated Maturity,
at the per annum rate of interest specified above computed on the basis of a 360-day year of 30-
day months; such interest being payable on January 15 and July 15 of each year(each,an Interest
Payment Date), commencing July 15,2018.
Principal and premium,if any,of the Bond shall be payable to the Registered Owner hereof
(the Holder) upon presentation and surrender, at the corporate trust office of the Paying
Agent/Registrar executing the registration certificate appearing hereon or a successor thereof.
Interest shall be payable to the Holder of this Bond(or one or more Predecessor Bonds,as defined
in the Ordinance hereinafter referenced)whose name appears on the Security Register maintained
by the Paying Agent/Registrar at the close of business on the Record Date, which is the last
business day of the month next preceding each Interest Payment Date. All payments of principal
of,premium,if any,and interest on this Bond shall be in any coin or currency of the United States
of America which at the time of payment is legal tender for the payment of public and private
debts. Interest shall be paid by the Paying Agent/Registrar by check sent on the appropriate date
of payment by United States Mail, first-class postage prepaid, to the Holder hereof at the address
appearing in the Security Register or by such other method, acceptable to the Paying
Agent/Registrar,requested by the Holder hereof at the Holder's risk and expense. While the Bonds
are held by the Purchaser,payment of principal of,premium,if any,and interest on the Bonds shall
02504375.15 -10-
be made by federal funds wire transfer, at no cost to the Purchaser, to an account at a financial
institution located in the United States designated by the Purchaser.
This Bond is one of the series specified in its title issued in the aggregate principal amount
of$34,835,000 (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 Subordinate Lien Pledged Revenues, which includes a lien on and pledge of Net Revenues
that is subordinate and inferior to the respective liens thereon and pledges thereof securing the
repayment of the Priority Bonds and the Junior Lien Obligations, respectively, but senior and
superior to the lien thereon and pledge thereof securing the repayment of any Inferior Lien
Obligations hereafter issued.
The Bonds stated to mature July 15,2029 may be redeemed prior to their Stated Maturities,
in inverse order of Stated Maturity, at the option of the City, on July 15, 2028 or on any date
thereafter, in whole or in part in principal amounts of$5,000 or any integral multiple thereof(and
if within a Stated Maturity selected at random and by lot by the Paying Agent/Registrar) at the
redemption price of par, together with accrued interest to the date of redemption, and upon thirty
(30) days prior written notice being given by United States mail, first-class postage prepaid, to
Holders of the Bonds to be redeemed, and subject to the terms and provisions relating thereto
contained in the Ordinance. If this Bond is subject to redemption prior to Stated Maturity and is
in-a-denomination in excess of$5,000, portions of the principal sum hereof in installments of
$5,000 or any integral multiple thereof may be redeemed, and, if less than all of the principal sum
hereof is to be redeemed,there shall be issued,without charge therefor,to the Holder hereof,upon
the surrender of this Bond to the Paying Agent/Registrar at its corporate trust office, a new Bond
or Bonds of like Stated Maturity and interest rate in any authorized denominations provided in the
Ordinance for the then unredeemed balance of the principal sum hereof.
If this Bond (or any portion of the principal sum hereof) shall have been duly called for
redemption and notice of such redemption duly given, then upon such redemption date this Bond
(or the portion of the principal sum hereof to be redeemed) shall become due and payable,and,if
money for the payment of the redemption price and the interest accrued on the principal amount
to be redeemed to the date of redemption is held for the purpose of such payment by the Paying
Agent/Registrar,interest shall cease to accrue and be payable hereon from and after the redemption
date on the principal amount hereof to be redeemed. In the event of a partial redemption of the
principal amount of this Bond,payment of the redemption price of such principal amount shall be
made to the registered owner only upon presentation and surrender of this Bond to the corporate
trust office of the Paying Agent/Registrar and,there shall be issued to the registered owner hereof,
without charge, a new Bond or Bonds of like maturity and interest rate in any authorized
denominations provided in the Ordinance for the then unredeemed balance of the principal sum
hereof. If this Bond is called for redemption, in whole or in part, the City or the Paying
Agent/Registrar shall not be required to issue, transfer, or exchange this Bond within forty-five
(45)days of the date fixed for redemption;provided,however,such limitation of transfer shall not
be applicable to an exchange by the Holder of the unredeemed balance hereof in the event of its
redemption in part.
8250437515 -I I-
The Bonds of this series are special obligations of the City, issued as Subordinate Lien
Obligations, payable from and equally and ratably secured by a lien on and pledge of the
Subordinate 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 subordinate and inferior to the liens thereon and pledges thereof securing the
repayment of the Priority Bonds and the Junior Lien Obligations, respectively, but senior and
superior to the lien thereon and pledge thereof securing the repayment of any Inferior Lien
Obligations hereafter issued. In the Ordinance, the City reserves and retains the right to issue
Additional Priority Bonds, Additional Junior Lien Obligations, Additional 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 Subordinate 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
Subordinate Lien Pledged Revenues pledged for the payment of the Bonds; the terms and
conditions under which the City may issue Additional Priority Bonds, Additional Junior Lien
Obligations, Additional Subordinate Lien Obligations, and Inferior Lien Obligations; the terms
and conditions relating to the transfer or exchange of the Bonds; the conditions upon which the
Ordinance may be amended or supplemented with or without the consent of the Holders;the rights,
duties,and obligations of the City and the Paying Agent/Registrar; the terms and provisions upon
which this Bond may be redeemed or discharged at or prior to the Stated Maturity thereof, and
deemed to be no longer Outstanding thereunder; and for the other terms and provisions specified
in the Ordinance. Capitalized terms used herein have the same meanings assigned in the
Ordinance.
This Bond,subject to certain limitations contained in the Ordinance,may be transferred on
the Security Register upon presentation and surrender at the corporate trust office of the Paying
Agent/Registrar, duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Paying Agent/Registrar duly executed by the Holder hereof, or his duly
authorized agent, and thereupon one or more new fully registered Bonds of the same Stated
Maturity,of authorized denominations,bearing the same rate of interest,and of the same aggregate
principal amount will be issued to the designated transferee or transferees.
The City and the Paying Agent/Registrar, and any agent of either, shall treat the Holder
hereof whose name appears on the Security Register(i)on the Record Date as the owner hereof
for purposes of receiving payment of interest hereon, (ii)on the date of surrender of this Bond as
the owner hereof for purposes of receiving payment of principal hereof at its Stated Maturity, or
its redemption, in whole or in part, and (iii)on any other date as the owner hereof for all other
purposes,and neither the City nor the Paying Agent/Registrar,or any such agent of either,shall be
affected by notice to the contrary. In the event of a non-payment of interest on a scheduled
82504315.15 -12-
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 Subordinate 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.
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82504375.15 -13-
IN WITNESS WHEREOF, this Bond has been signed with the imprinted or lithographed
facsimile signature of the Mayor of the City, attested by the imprinted or lithographed facsimile
signature of the City Secretary, and the official seal of the City has been duly affixed to,printed,
lithographed or impressed on this Bond.
CITY OF CORPUS CHRISTI,TEXAS
Mayor
ATTEST:
City Secretary
(SEAL)
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82506375.15 _14_
C. Form of Registration Certificate of Comptroller of Public Accounts to Appear on
Initial Bond Only.
REGISTRATION CERTIFICATE OF
COMPTROLLER OF PUBLIC ACCOUNTS
OFFICE OF THE COMPTROLLER OF §
PUBLIC ACCOUNTS §
§ REGISTER NO.
THE STATE OF TEXAS §
I HEREBY CERTIFY that this Bond has been examined, certified as to validity and
approved by the Attorney General of the State of Texas,and duly registered by the Comptroller of
Public Accounts of the State of Texas.
WITNESS my signature and seal of office this
Comptroller of Public Accounts
of the State of Texas
(SEAL)
* Bond to Printer: Not to appear on printed Bonds
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: UMB BANK,N.A.,Dallas, Texas,
as Paying Agent/Registrar
By:
Authorized Signature
* Bond to Printer: to appear on printed Bonds
82504375.15 -15-
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
face of the within Bond in every particular.
Signature guaranteed:
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82504375/5 -16-
F. Form of Initial Bond. The Initial Bond shall be in the form set forth in paragraph
B of this Section, except that the form of a single fully registered Initial Bond shall be modified as
follows:
(1) immediately under the name of the Initial Bond the headings"Interest Rate"
and"Stated Maturity" shall both be completed"as shown below";
(2) the first two paragraphs shall read as follows:
REGISTERED OWNER:
PRINCIPAL AMOUNT:
The City of Corpus Christi,Texas(the City),a body corporate and a municipal corporation
located in the Counties of Nueces, Aransas, Kleberg, and San Patricio, State of Texas, for value
received, hereby promises to pay to the order of the Registered Owner named above, or the
registered assigns thereof, the Principal Amount specified above on the fifteenth day of July in
each of the years and in principal amounts and bearing interest at per annum rates in accordance
with the following schedule:
Years of Principal Interest
Stated Maturity Amounts($) Rates(%)
(Information to be inserted from
schedule in Section 2 hereof).
(or so much thereof as shall not have been paid upon prior redemption) and to pay interest on the
unpaid Principal Amount hereof from the Closing Date(anticipated to occur on or about March 1,
2018), or from the most recent Interest Payment Date(hereinafter defined) to which interest has
been paid or duly provided for, to the earlier of redemption or Stated Maturity, at the per annum
rate of interest specified above computed on the basis of a 360-day year of 30-day months; such
interest being payable on January 15 and July 15 of each year (each, an Interest Payment Date),
commencing July 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 UMB Bank,N.A.,Dallas,Texas(the
Paying Agent/Registrar). Interest shall be payable to the Holder of this Bond whose name appears
on the Security Register maintained by.the Paying Agent/Registrar at the close of business on the
Record Date, which is the last business day of the month next preceding each Interest Payment
Date. All payments of principal of and interest on this Bond shall be in any coin or currency of
the United States of America which at the time of payment is legal tender for the payment of public
and private debts. Interest shall be paid by the Paying Agent/Registrar by check sent on or prior
to the appropriate date of payment by United States mail,first-class postage prepaid,to the Holder
hereof at the address appearing in the Security Register or by such other method,acceptable to the
Paying Agent/Registrar, requested by, and at the risk and expense of, the Holder hereof While
the Bonds are held by the Purchaser,payment of principal of,premium,if any, and interest on the
Bonds shall be made by federal funds wire transfer,at no cost to the Purchaser,to an account at a
financial institution located in the United States designated by the Purchaser.
82504375.15 -17-
G. Insurance Legend. If bond insurance is obtained by the Purchaser or the City for
the Bonds,the definitive Bonds and the Initial Bond shall hear 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
33 and 49 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 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 any
Inferior Lien Obligations 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.
C. 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.
D. The term Additional Subordinate Lien Obligations shall mean(i) any bonds,notes,
warrants,or any similar obligations hereafter issued by the City that are payable wholly or in part
from and equally and ratably secured by a lien and pledge of the Subordinate Lien Pledged
Revenues, such pledge to include a pledge of Net Revenues that is subordinate 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 and Junior Lien Obligations 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 any
Inferior Lien Obligations 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 Subordinate Lien Pledged Revenues, as determined by the City Council in
accordance with applicable law.
82504375.15 -18-
E. 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).
F. The term Average Annual Debt Service Requirements shall mean that average
amount which,at the time of computation,will be required to pay the Debt Service Requirements
of obligations when due and derived by dividing the total of such Debt Service Requirements by
the number of years then remaining before final Stated Maturity. The calculation of Average
Annual Debt Service Requirements shall be net of(1)capitalized interest from bond proceeds and
(2) the receipt or anticipated receipt of a refundable tax credit or similar payment relating to a
series of Subordinate 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
Subordinate Lien Obligations to which it relates.
G. The term Bonds shall mean the $34,835,000 "CITY OF CORPUS CHRISTI,
TEXAS UTILITY SYSTEM SUBORDINATE LIEN REVENUE REFUNDING BONDS,
SERIES 2018", dated February 15, 2018, authorized by this Ordinance.
H. The term Bond Fund shall mean the special Fund or account created and established
by the provisions of Section 13 of this Ordinance.
L The term City shall mean the City of Corpus Christi,Texas and,where appropriate,
the City Council of the City.
J. The term Closing Dale shall mean the date of physical delivery of the Initial Bonds
in exchange for the payment in full by the Purchaser.
K. 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.
L. 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.
M. 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.
N. The term Debt shall mean
(1) all indebtedness payable from Net Revenues and/or Subordinate Lien
Pledged Revenues incurred or assumed by the City for borrowed money (including
indebtedness payable from Net Revenues and/or Subordinate Lien Pledged Revenues
82504375 15 -19-
arising under Credit Agreements)and all other financing obligations of the System payable
from Net Revenues and/or Subordinate Lien Pledged Revenues that, in accordance with
generally accepted accounting principles,are shown on the liability side of a balance sheet;
and
(2) all other indebtedness payable from Subordinate Lien Pledged Revenues
and/or Net Revenues (other than indebtedness otherwise treated as Debt hereunder) for
borrowed money or for the acquisition, construction, or improvement of property or
capitalized lease obligations pertaining to the System that is guaranteed, directly or
indirectly, in any manner by the City,or that is in effect guaranteed,directly or indirectly,
by the City through an agreement, contingent or otherwise, to purchase any such
indebtedness or to advance or supply funds for the payment or purchase of any such
indebtedness or to purchase property or services primarily for the purpose of enabling the
debtor or seller to make payment of such indebtedness, or to assure the owner of the
indebtedness against loss,or to supply funds to or in any other manner invest in the debtor
(including any agreement to pay for property or services irrespective of whether or not such
property is delivered or such services are rendered), or otherwise.
For the purpose of determining Debt, there shall be excluded any particular Debt if, upon
or prior to the maturity thereof, there shall have been deposited with the proper depository (a) in
trust the necessary funds (or investments that will provide sufficient funds, if permitted by the
instrument creating such Debt) for the payment, redemption, or satisfaction of such Debt or (b)
evidence of such Debt deposited for cancellation; and thereafter it shall not be considered Debt.
No item shall be considered Debt unless such item constitutes indebtedness under generally
accepted accounting principles applied on a basis consistent with the financial statements of the
System in prior Fiscal Years.
G. The term Debt Service Requirements shall mean, as of any particular date of
computation, with respect to any obligations and with respect to any period,the aggregate of the
amounts to be paid or set aside by the City as of such date or in such period for the payment of the
principal of, premium, if any, and interest (to the extent not capitalized) on such obligations;
assuming, in the case of obligations without a fixed numerical rate, that such obligations bear
interest calculated by assuming (i) that the interest rate for every 12-month period on such bonds
is equal to the rate of interest reported in the most recently published edition of The Bond Buyer
(or its successor)at the time of calculation as the"Revenue Bond Index"or,if such Revenue Bond
Index is no longer being maintained by The Bond Buyer(or its successor)at the time of calculation,
such interest rate shall be assumed to be 80% of the rate of interest then being paid on United
States Treasury obligations of like maturity and(ii)that, in the case of bonds not subject to fixed
scheduled mandatory sinking fund redemptions,that the principal of such bonds is amortized such
that annual debt service is substantially level over the remaining stated life of such bonds or in the
manner permitted under Section 1371.057(c), as amended, Texas Government Code as the same
relates to interim or non—permanent indebtedness, and in the case of obligations required to be
redeemed or prepaid as to principal prior to Stated Maturity according to a fixed schedule, the
principal amounts thereof will be redeemed prior to Stated Maturity in accordance with the
mandatory redemption provisions applicable thereto(in each case notwithstanding any contingent
obligation to redeem bonds more rapidly). For the term of any Credit Agreement in the form of
an interest rate hedge agreement entered into in connection with any such obligations,Debt Service
82504375.15 -20-
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.
P. The term Depository shall mean an official depository bank of the City.
Q. The term Engineer shall mean an individual, firm, or corporation engaged in the
engineering profession, being a registered professional engineer under the laws of the State of
Texas, having specific experience with respect to a combined municipal utility system similar to
the System and such individual,firm,or corporation may be employed by,or may be an employee
of,the City.
R. The term Federal Contract shall mean Federal 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.
S. The term Fiscal Year shall mean the twelve month accounting period used by the
City in connection with the operation of the System which may be any twelve consecutive month
period established by the City,presently being that period commencing on October 1 of each year
and ending on the following September 30.
'F. The term Government Securities as used herein, shall mean (i) direct noncallable
obligations of the United States, including obligations that are unconditionally guaranteed by,the
United States of America;(ii)noncallable obligations of an agency or instrumentality of the United
States, including obligations that are unconditionally guaranteed or insured by the agency or
instrumentality and that, on the date the governing body of the issuer adopts or approves the
proceedings authorizing the issuance of refunding bonds, are rated as to investment quality by a
nationally recognized investment rating firm not less than AAA or its equivalent; (iii)noncallable
obligations of a state or an agency or a county, municipality, or other political subdivision of a
state that have been refunded and that, on the date the governing body of the issuer adopts or
approves the proceedings authorizing the issuance of refunding bonds, are rated as to investment
quality by a nationally recognized investment rating firm not less than AAA or its equivalent; 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.
U. 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.
V. The term Holder or Holders shall mean the registered owner,whose name appears
in the Security Register,for any Bond.
W. The term 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
82504375/5 -21-
and inferior to the lien on and pledge of the Net Revenues that is or will be pledged to the payment
of the Priority Bonds, that is included in Junior Lien Pledged Revenues, that is or will be pledged
to the payment of any 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, if any, 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.
X. The term Interest Payment Date shall mean the date semiannual interest is payable
on the Bonds, being January 15 and July 15 of each year, commencing July 15, 2018, while any
of the Bonds remain Outstanding.
Y. The term Junior Lien Obligations shall mean (i)the Previously Issued Junior Lien
Obligations, (ii) any Additional Junior Lien Obligations, and (iii) obligations hereafter issued to
refund any of the foregoing that are payable from and equally and ratably secured solely by a lien
on and pledge of the Junior Lien Pledged Revenues, which includes a lien on and pledge of Net
Revenues that is junior and inferior to the lien thereon and pledge thereof securing the repayment
of the Priority Bonds, but senior and superior to the lien thereon and pledge thereof securing the
repayment of the Subordinate Lien Obligations and any Inferior Lien Obligations, as determined
by the City Council in accordance with applicable law.
Z. The term Junior Lien Pledged Revenues means (1) the Net Revenues that remain
after payment of all amounts, and funding of all funds,relating to any Priority Bonds,plus(2)any
additional revenues,income,receipts,or other resources,including,without limitation,any grants,
donations, or income received or to be received from the United States Government,or 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.
AA. The term Net Revenues shall mean all Gross Revenues less Operating Expenses.
BB. 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.
82504375 15 -22-
CC. The term Ordinance shall mean this Ordinance adopted by the City Council on
December 19,2017 authorizing the issuance of the Bonds.
DD. The term Outstanding shall mean when used in this Ordinance with respect to all
Debt means,as of the date of determination, all Debt except:
(1) those Priority Bonds, Junior Lien Obligations, Subordinate Lien
Obligations, and Inferior Lien Obligations canceled by the Paying Agent/Registrar or
delivered to the Paying Agent/Registrar for cancellation;
(2) those Priority Bonds, Junior Lien Obligations, Subordinate Lien
Obligations, and Inferior Lien Obligations for which payment has been duly provided by
the City in accordance with the provisions of Section 35 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.
EE. The term Paying Agent/Registrar shall mean the financial institution specified in
Section 3 of this Ordinance,or its herein-permitted successors and assigns.
FF. 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
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 any 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 2015A",dated March 1,2015,in the original principal amount
of$93,600,000;
(5) "City of Corpus Christi, Texas Utility System Junior Lien Revenue
Refunding Bonds, Series 2015", dated July 1, 2015, in the original principal amount of
$46,990,000
82504375.15 -23-
(6) "City of Corpus Christi, Texas Utility System Junior Lien Revenue
Improvement Bonds, Series 2015C", dated July 1, 2015, in the original principal amount
of$101,385,000;
(7) "City of Corpus Christi, Texas Utility System Junior Lien Revenue
Refunding Bonds, Series 2016", dated August 1, 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
$51,300,000;and
(9) "City of Corpus Christi, Texas Utility System Junior Lien Revenue
Refunding Bonds, Series 2017A", dated May 1, 2017, in the original principal amount of
$27,670,000; and
(10) "City of Corpus Christi, Texas Utility System Junior Lien Revenue
Improvement Bonds,Series 2017",dated October 1,2017,in the original principal amount
of$2,750,000.
GG. The term Previously Issued Priority Bonds 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 prior and first lien on and pledge of the Net Revenues of the System, identified as
follows:
(1) "City of Corpus Christi, Texas Utility System Revenue Improvement
Bonds,Series 2009",dated March 1,2009,in the original principal amount of$96,490,000;
(2) "City of Corpus Christi, Texas Utility System Revenue Improvement
Bonds, Series 2010",dated March 1,2010,in the original principal amount of$8,000,000;
(3) "City of Corpus Christi, Texas Utility System Revenue Improvement
Bonds, Taxable Series 2010 (Direct Subsidy-Build America Bonds)", dated July 1, 2010,
in the original principal amount of$60,625,000;
(4) "City of Corpus Christi, Texas Utility System Revenue Improvement
Bonds,Series 2010A",dated July 1,2010,in the original principal amount of$14,375,000;
and
(5) "City of Corpus Christi, Texas Utility System Revenue Improvement
Bonds,Series 2012",dated April 1,2012,in the original principal amount of$52,500,000.
HH. 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.
82504375.15 -24-
H. 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.
JJ. The term Purchaser shall mean the initial purchaser or purchasers of the Bonds
named in Section 28 of this Ordinance.
KK. The term Refunded Obligations shall mean the obligations set forth on Schedule I
hereto which is incorporated by reference for all purposes to this ordinance,being those financial
obligations evidenced in Federal 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,and currently outstanding in
a combined principal and interest amount of$42,443,784.10 calculated to March 12,2018. These
Refunded Obligations will be paid in full on March 12,2018.
LL. The term Required Reserve Amount shall have the meaning given such term in
Section 14 of this Ordinance.
MM. The term Reserve Fund shall have the meaning given such term in Section 14 of
this Ordinance.
NN. The term Reserve Fund Deposits shall have the meaning given such term in Section
14 of this Ordinance.
00. 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,Junior Lien Pledged Revenues,or Subordinate Lien
Pledged Revenues, and for which all maintenance and operation expenses are payable from
sources other than ad valorem taxes,Net Revenues,Junior Lien Pledged Revenues,or Subordinate
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.
PP. 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.
82504375.15 -25-
QQ. The term Subordinate Lien Obligations shall mean CO upon issuance, the Bonds,
(ii) 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 any Inferior Lien Obligations 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(iii) 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.
RR. The term Subordinate 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 and
Junior Lien Obligations, plus (ii) any additional revenues, income, receipts, or other resources,
including,without limitation,any grants,donations,or income received or to be received from the
United States Government,or any other public or private source,whether pursuant to an agreement
or otherwise,which hereafter are pledged by the City to the payment of the Bonds,and at the City's
discretion, any Additional Subordinate Lien Obligations, and excluding those revenues excluded
from Gross Revenues.
SS. The term System shall mean and include,whether now existing or hereinafter added
(including additions made from time to time in accordance with the provisions of the City
ordinances authorizing the issuance of the Outstanding Priority Bonds), the City's existing
combined waterworks system,wastewater disposal system and gas system,together with all future
extensions, improvements, enlargements,and additions thereto, including, to the extent permitted
by law (and to be added at the sole discretion of the City), storm sewer and drainage within the
waterworks system, solid waste disposal system, additional utility (including electricity),
telecommunications, technology, and any other similar enterprise services, and all replacements,
additions, and improvements to any of the foregoing, within or without the City limits;provided
that, notwithstanding the foregoing, and to the extent now or hereafter authorized or permitted by
law, the term System shall not include any waterworks, wastewater or gas facilities which are
declared by the City to be a Special Project and not a part of the System and which are hereafter
acquired or constructed by the City with the proceeds from the issuance of Special Project Bonds,
which are hereby defined as being special revenue obligations of the City which are not secured
by or payable from all or part of the Net Revenues,Junior Lien Pledged Revenues,or Subordinate
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.
TT. The term System Fund shall have the meaning given such term in Section 12 of this
Ordinance.
82504375.15 -26-
SECTION 10. Pledge of Subordinate Lien Pledged Revenues.
A. The City hereby covenants and agrees that the Subordinate Lien Pledged Revenues
of the System are hereby irrevocably pledged to the payment and security of the Subordinate 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 ordained that the
Subordinate Lien Obligations,and the interest thereon, shall constitute a lien on and pledge of the
Subordinate 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 Subordinate Lien Pledged
Revenues for the payment and security of the Subordinate Lien Obligations, shall be, subject to
the subordinate lien nature of the Subordinate 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 Subordinate Lien Obligations are and will be secured by and payable only
from the Subordinate 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 Subordinate 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 Subordinate Lien Obligations are Outstanding and unpaid such that
the pledge of the Subordinate 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 Subordinate Lien Obligations the perfection of the security interest in
this-pledge, the City Council agrees to take such measures as it determines are reasonable and
necessary under Texas law to comply with the applicable provisions of Chapter 9, as amended,
Texas Business&Commerce Code and enable a filing to perfect the security interest in this pledge
to occur.
SECTION 11. Rates and Charges. For the benefit of the Holders of the Bonds and in
addition to all provisions and covenants in the laws of the State of Texas and in this Ordinance,
the City hereby expressly stipulates and agrees,while any of the Subordinate 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;
82504375.15 -27-
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 any Subordinate Lien Obligations and any Inferior Lien Obligations;
D. To produce Net Revenues,together with any other lawfully available funds, equal
to at least the Average Annual Debt Service Requirements on the then-Outstanding Subordinate
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 Subordinate 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 Subordinate Lien Pledged
Revenues, that is subordinate and inferior to the liens thereon and pledges thereof securing the
repayment of the Priority Bonds and Junior Lien Obligations,respectively,but senior and superior
to the lien thereon and pledge thereof securing the repayment of any Inferior Lien Obligations;
E. To produce Net Revenues, together with any other lawfully available funds,
sufficient to pay the principal of and interest on any 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 any 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 any Subordinate Lien Obligations;and
F. To pay,together with any other lawfully available funds,any other legally incurred
Debt payable from the Net Revenues of the System and/or secured by a lien on any part of the
System.
The determination of the amount of principal of and interest on any obligations identified in this
Section for the purpose of confirming the sufficiency of System rates and charges shall be made
after giving consideration as an offset to debt service the receipt or anticipated receipt of a
refundable tax creditor similar payment relating to any series of obligations irrevocably designated
as refundable tax credit bonds pursuant to the City ordinance authorizing their issuance or
otherwise relating thereto.
SECTION 12. System Fund. The City hereby covenants, agrees, and ratifies its prior
covenants and agreements that the Gross Revenues of the System shall be deposited,as collected
and received, into a separate Fund or account (previously created and established and to be
maintained with the Depository) known as the "City of Corpus Christi, Texas Utility System
Revenue Fund"(the System Fund)and that the Gross Revenues of the System shall be kept separate
and apart from all other funds of the City. All Gross Revenues deposited into the System Fund
82504375.15 -28-
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 Lien Obligations and any Additional Junior Lien Obligations hereafter issued by the
City.
D. Fourth: To the payment of the amounts required to be deposited into the special
funds and accounts created and established for the payment,security and benefit of the Bonds and
any Additional Subordinate Lien Obligations hereafter issued by the City.
E. Fifth: To the payment of the amounts that must be deposited in any special funds
and accounts created and established for the payment, security, and benefit 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 and Junior Lien Obligations, respectively).
SECTION 13. Bond Fund - Excess Funds. For purposes of providing funds to pay the
principal of and interest on the Bonds as the same become due and payable, the City agrees to
maintain,at the Depository,a separate and special Fund or account to be created and known as the
"City of Corpus Christi,Texas Utility System Subordinate Lien 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 one hundred per cent(100%) of the amount required
to fully pay the interest on and the principal of the currently Outstanding Subordinate Lien
Obligations then falling due and payable, such deposits to pay maturing principal and accrued
imefest on the currently Outstanding Subordinate Lien Obligations to be made in substantially
equal monthly installments on or before the 10th day of each month, beginning on or before the
10th day of the month next following the delivery of the Bonds to the Purchasers. As described
further in Section 15 hereof, if the Subordinate 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.
82504375.15 -29-
The required monthly deposits to the Bond Fund for the payment of principal of and interest
on the Subordinate 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 Subordinate Lien Obligations (principal and
interest)or(ii)the Subordinate 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
Subordinate 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 Subordinate 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 Subordinate 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
be retained in the Reserve Fund until the Reserve Fund contains the Required Reserve Amount;
thereafter,such earnings and income shall be deposited to the credit of the System Fund. All funds
deposited into the Reserve Fund shall be used solely for the payment of the principal of and interest
on the Bonds,when and to the extent other funds available for such purposes are insufficient,and,
in addition, may be used to retire the last Stated Maturity or Stated Maturities of or interest on the
Bonds.
The City may acquire a Credit Facility or Facilities issued by a Credit Provider in amounts
equal to all or part of the Required Reserve Amount for the Bonds in lieu of depositing cash into
the Reserve Fund; provided, however, that no such Credit Facility may be so substituted unless
the substitution of the Credit Facility will not, in and of itself, cause any ratings then assigned to
the Bonds by any nationally recognized rating agency to be lowered and the resolution authorizing
the substitution of the Credit Facility for all or part of the Required Reserve Amount for the Bonds
contains (i) a finding that such substitution is cost effective and (ii) a provision that the interest
due on any repayment obligation of the City by reason of payments made under such Credit
Facility does not exceed the highest lawful rate of interest which may be paid by the City at the
time of the delivery of the Credit Facility. The City reserves the right to use Subordinate 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.
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Until the issuance of any Additional Subordinate 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 $3,387,136.00. Of this amount, $3,387,136.00, derived from lawfully available City
funds other than proceeds of the Bonds, shall he deposited to the Reserve Fund at the time of
issuance of the Bonds.
As and when Additional Subordinate 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 Subordinate 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 Subordinate Lien Obligations, of not less than 1/60th of the additional amount to be
maintained in the Reserve Fund by reason of the issuance of the Additional Subordinate 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
ofthe- issuance of Additional Subordinate Lien Obligations as provided in the preceding
paragraph),the City covenants and agrees to cure the deficiency in the Required Reserve Amount
by resuming the Required Reserve Fund Deposits to the Reserve Fund from the Junior Lien
Pledged Revenues in monthly deposit amounts equal to not less than 1/60th of the Required
Reserve Amount covenanted by the City to be maintained in the Reserve Fund. Any such
deficiency payments shall be made on or before the 10'" 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 Subordinate Lien Pledged Revenues shall
be applied and appropriated and used to establish and maintain the Required Reserve Amount and
to cure any deficiency in such amounts as required by the terms of this Ordinance, any City
ordinance authorizing the issuance of the Priority Bonds or Junior Lien Obligations,and any other
ordinance pertaining to the issuance of Additional Subordinate 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
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for the final payment of any such obligations pursuant to the provisions of the Act),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.
SECTION 15. Deficiencies—Excess Subordinate Lien Pledged Revenues.
A. If on any occasion there shall not be sufficient Subordinate 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 Subordinate 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 any Inferior Lien Obligations,
the excess Net Revenues of the System may be used by the City for any lawful purpose(as further
provided in Section 12 hereof).
SECTION 16. Payment of Bonds. While any of the Bonds are Outstanding,an Authorized
Official shall cause to be transferred to the Paying Agent/Registrar therefor, from funds on deposit
in the Bond Fund, amounts sufficient to fully pay and discharge promptly each installment of
interest on and principal of the Bonds as such installment accrues or matures; such transfer of
funds-must be made in such manner as will cause immediately available funds to be 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
bysuch governmental agencies as the Federal Land Banks, Federal Intermediate Credit Banks,
Banks for Cooperatives,Federal Home Loan Banks,Government National Mortgage Association,
Farmers Home Administration, Federal Home Loan Mortgage Association, or Federal Housing
Association; provided that all such deposits and investments shall be made in such a manner that
the money required to be expended from any Fund or account will be available at the proper time
or times. Such investments (except State and Local Government Series investments held in book
entry form, which shall at all times be valued at cost) shall be valued in terms of current market
value within 45 days of the close of each Fiscal Year. All interest and income derived from
deposits and investments in the Bond Fund immediately shall be credited to,and any losses debited
82504375.15 -32-
to, the Bond Fund. All such investments shall be sold promptly when necessary to prevent any
default in connection with the Bonds.
SECTION 18. Covenants. It is the intention of the City Council and accordingly hereby
recognized and stipulated that the provisions, agreements,and covenants contained herein bearing
upon the management and operations of the System, and the administering and application of
Gross Revenues derived from the operation thereof, shall to the extent possible be harmonized
with like provisions, agreements, and covenants contained in the City ordinances authorizing the
issuance of the Priority Bonds and Junior Lien Obligations 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 and Junior Lien Obligations 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 and Junior Lien Obligations now or
hereafter Outstanding; provided, however, that the provisions of this Ordinance concerning the
issuance of Additional Priority Bonds or Additional Junior Lien Obligations shall control. It is
expressly recognized that prior to the issuance of any Additional 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 and Junior Lien Obligations, as appropriate.
A. Performance. It will faithfully perform at all times any and all covenants,
undertakings, stipulations, and provisions contained in this Ordinance, and each ordinance
authorizing the issuance of Priority Bonds and Junior Lien Obligations, respectively; 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.
13. City's Legal Authority. It is a duly created and existing home rule city of the State
of Texas, and is duly authorized under the laws of the State of Texas to issue the Bonds; that all
action on its part for the issuance of the Bonds has been duly and effectively taken, and that the
Bonds in the hands of the owners thereof are and will be valid and enforceable special obligations
of the City in accordance with their terms.
C. Acquisition and Construction; Operation and Maintenance. (1)It shall use its best
efforts in accordance with Prudent Utility Practice to acquire and construct,or cause to be acquired
and constructed, any Capital Additions or Capital Improvements,in accordance with the plans and
specifications therefor, as modified from time to time, with due diligence and in a sound and
economical manner;and(2)it shall at all times use its best efforts to operate or cause to be operated
the System properly and in an efficient manner,consistent with Prudent Utility Practice,and shall
use its best efforts to maintain,preserve,reconstruct and keep the same or cause the same to be so
maintained, preserved, reconstructed and kept, with the appurtenances and every part and parcel
8x504375.15 -33-
thereof, in good repair, working order and condition, and shall from time to time make, or use its
best efforts to cause to be made,all necessary and proper repairs,replacement and renewals so that
at all times the operation of the System may be properly and advantageously conducted.
D. Title. It has or will obtain lawful title, whether such title is in fee or lesser interest,
to the lands,buildings,structures and facilities constituting the System,that it warrants that it will
defend the title to all the aforesaid lands,buildings,structures and facilities,and every part thereof,
for the benefit of the owners of the Junior Lien Obligations, against the claims and demands of all
persons whomsoever, that it is lawfully qualified to pledge the Junior Lien Pledged Revenues to
the payment of the Junior Lien Obligations in the manner prescribed herein, and has lawfully
exercised such rights.
E. Liens. It will from time to time and before the same become delinquent pay and
discharge all taxes,assessments and governmental charges,if any,which shall be lawfully imposed
upon it,or the System;it will pay all lawful claims for rents,royalties,labor,materials and supplies
which if unpaid might by law become a lien or charge thereon,the lien of which would be prior to
or interfere with the liens hereof, so that the priority of the liens granted hereunder shall be fully
preserved in the manner provided herein, and it will not create or suffer to be created any
mechanic's, laborer's,materialman's or other lien or charge which might or could be prior to the
liens hereof, or do or suffer any matter or thing whereby the liens hereof might or could be
impaired;provided however,that no such tax,assessment or charge,and that no such claims which
might be used as the basis of a mechanic's, laborer's, materialman's or other lien or charge, shall
be required to be paid so long as the validity of the same shall be contested in good faith by the
City:--
F. No Free Service. No free service or service otherwise than in accordance with the
established rate schedule shall be furnished, directly or indirectly, by the System to any person,
firm, corporation or other entity, other than the City. No part of the salary of any official or
employee of the City or his replacement shall be paid from Subordinate Lien Pledged Revenues
unless and only to the extent the duties and performances of such official or employee or his
replacement appertain directly to the System. To the extent the City receives the services of the
System, such services shall be accounted for according to the established rate schedule.
G. Further Encumbrance. It will not additionally encumber the Net Revenues of the
System in any manner,except as permitted in the City ordinances authorizing the Previously Issued
Priority Bonds, the Previously Issued Junior Lien Obligations,and in this Ordinance.
H. Sale, Lease or Disposal of Property. No part of the System shall be sold, leased,
mortgaged,demolished,removed or otherwise disposed of,except as follows:
(1) To the extent permitted by law, the City may sell or exchange at any time
and from time to time any property or facilities constituting part of the System only if(A)
it shall determine such property or facilities are not useful in the operation of the System,
or(B)the proceeds of such sale are$250,000 or less, or it shall have received a certificate
executed by an Engineer and the City Manager staling,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
82504375.15 -34-
Engineer and the City Manager stating (i)that system within the System of which the
property or facilities comprises a part thereof and (ii)in their opinion, that the sale or
exchange of such property or facilities will not impair the ability of the City to comply
during the current or any future Fiscal Year with the provisions of Subsection K of this
Section. The proceeds of any such sale or exchange not used to acquire other property
necessary or desirable for the safe or efficient operation of the System shall forthwith, at
the option of the City (i) be used to redeem or purchase Debt, or(ii)otherwise be used to
provide for the payment of Debt. The foregoing notwithstanding, if such property or
facilities sold or exchanged constituted property or facilities comprising all or a part of a
system within the System, the acquisition, improvement or extension of such system
having not been financed by the City in any manner with the proceeds of Debt,or with the
proceeds of obligations which were refunded in whole or in part with the proceeds of Debt,
then the City may utilize the proceeds of such sale or exchange for any lawful purpose;
and
(2) To the extent permitted by law, the City may lease or make contracts or
grant licenses for the operation of,or make arrangements for the use of, or grant easements
or other rights with respect to, any part of the System, provided that any such lease,
contract, license,arrangement, easement or right(A)does not impede the operation by the
City of the System and (B)does not in any manner impair or adversely affect the rights or
security of the owners of the Debt under this Ordinance; and provided, further, that if the
depreciated cost of the property to be covered by any such lease, contract, license,
arrangement,easement or other right is in excess of$500,000,the City shall have received
a certificate executed by an Engineer and the City Manager that the action of the 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.
1. Books, Records and Accounts. It shall keep proper books, records and accounts
separate and apart from all other records and accounts,in which complete and correct entries shall
be made of all transactions relating to the System and the City shall cause said books and accounts
to be audited annually as of the close of each Fiscal Year by the Accountant.
J. Insurance.
(1) Except as otherwise permitted in clause(2) below, it shall cause to be
insured such parts of the System as would usually be insured by corporations operating like
-------properties, with a responsible insurance company or companies, against risks, accidents or
casualties against which and to the extent insurance is usually carried by corporations
operating like properties, including,to the extent reasonably obtainable, fire and extended
coverage insurance,insurance against damage by floods,and use and occupancy insurance.
Public liability and property damage insurance shall also be carried unless the City
Attorney gives a written opinion to the effect that the City is not liable for claims which
would be protected by such insurance. At any time while any contractor engaged in
construction work shall be fully responsible therefor,the City shall not be required to cavy
insurance on the work being constructed if the contractor is required to carry appropriate
82504375.15 -35-
insurance. All such policies shall be open to the inspection of the bondholders and their
representatives at all reasonable times.
(2) In lieu of obtaining policies for insurance as provided above,the City may
self-insure against risks, accidents,claims or casualties described in clause (1)above.
(3) The annual audit hereinafter required shall contain a section commenting
on whether or not the City has complied with the requirements of this Section with respect
to the maintenance of insurance, and listing the areas of insurance for which the City is
self-insuring, all policies carried, and whether or not all insurance premiums upon the
insurance policies to which reference is hereinbefore made have been paid.
K. Audits. After the close of each Fiscal Year while any Debt is Outstanding,an audit
will be made of the books and accounts relating to the System and the Net Revenues by the
Accountant. Such annual audit reports shall be open to the inspection of the registered owners of
Debt and their agents and representatives at all reasonable times.
L. Governmental Agencies. It will comply with all of the terms and conditions of any
and all franchises,permits and authorizations applicable to or necessary with respect to the System,
and which have been obtained from any governmental agency; and the City has or will obtain and
keep in full force and effect all franchises,permits,authorization and other requirements applicable
to or necessary with respect to the acquisition,construction,equipment,operation and maintenance
of the System.
M. No Competition. To the extent it legally may, it will not grant any franchise or
permit for the acquisition, construction or operation of any competing facilities which might be
used as a substitute for the System's facilities, and, to the extent that it legally may, the City will
prohibit any such competing facilities.
N. Rights of Inspection. The Engineer or any registered owner of $100,000 in
aggregate principal amount of the Debt then Outstanding shall have the right at all reasonable
times to inspect the System and all records,accounts and data of the City relating thereto,and upon
request the City shall furnish to an Engineer or such registered owner, as the case may be, such
financial statements, reports and other information relating to the City and the System as an
Engineer or such registered owner may from time to time reasonably request.
SECTION 19. Issuance of Additional Priority Bonds, Additional Junior Lien Obligations
Additional Subordinate Lien Obligations, and Additional Inferior Lien Obligations. The City
hereby expressly reserves the right to hereafter issue bonds, notes, warrants, certificates of
obligation,or similar obligations, payable, wholly or in part, as appropriate, from and secured by
a pledge of and lien on the Net Revenues of the System with the following priorities, without
limitation as to principal amount, but subject to any terms, conditions, or restrictions applicable
thereto under existing ordinances, laws,or otherwise:
A. Additional Priority Bonds payable from and equally and ratably secured by a first
and prior lien on and pledge of the Net Revenues of the System upon satisfying each of the
conditions precedent contained in the City ordinances authorizing the Previously Issued Priority
Bonds concerning the issuance of Additional Priority Bonds to realize debt service savings by
52504375.15 -36-
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 any Inferior Lien Obligations upon satisfying each of the
conditions precedent contained in the City ordinances authorizing the Previously Issued Junior
Lien Obligations.
C. Additional Subordinate Lien Obligations, secured by and payable from the
Subordinate Lien Pledged Revenues, which includes (i) the Net Revenues that remain after
payment of all amounts, and funding of all funds, relating to any Priority Bonds and Junior Lien
Obligations, plus (ii) any additional revenues, income, receipts, or other resources, including,
without limitation, any grants, donations, or income received or to be received from the United
States Government, or any other public or private source, whether pursuant to an agreement or
otherwise, which hereafter are pledged by the City to the payment of the Bonds, upon satisfying
each of the following conditions precedent:
(1) The City Manager(or other officer of the City then having the responsibility
for the financial affairs of the City)shall have executed a certificate stating(i)that the City
is not then in default as to any covenant, obligation or agreement contained in any
ordinance or other proceeding relating to any obligations of the City payable from and
secured by a lien on and pledge of the Net Revenues; (ii)that the amounts on deposit in all
Funds or Accounts created and established for the payment and security of all Outstanding
obligations payable from and secured by a lien on and pledge of the Net Revenues are the
amounts then required to be deposited therein. Such certificate shall be dated on or before
the date of delivery of such Additional Subordinate Lien Obligations, but such certificate
shall not be dated prior to the date an ordinance is passed authorizing the issuance of such
Additional Subordinate Lien Obligations; and (iii)that according to the books and records
of the City, the Net Earnings (as hereinafter defined) for the preceding Fiscal Year for
which there is available audited financial data or for 12 consecutive months out of the 15
months immediately preceding the month the ordinance authorizing the Additional
Subordinate Lien Obligations is adopted are at least equal to 1.15 times the Average Annual
Debt Service Requirements for all then-Outstanding Priority Bonds, Junior Lien
Obligations, and. Subordinate Lien Obligations after giving effect to the Additional
Subordinate Lien Obligations then proposed.
(2) Completion Issues. Once a System improvement has been initiated by
meeting the conditions precedent specified in Subsection 1 above and the initial
Subordinate Lien Obligations issued therefor are delivered, the City reserves the right to
issue Additional Subordinate Lien Obligations to finance the remaining costs of such
System improvement in such amounts as may be necessary to complete the acquisition and
construction thereof and make the same commercially operative without satisfaction of any
condition precedent under Subsection(3)(i) and (ii) or Subsection (1) of this Section but
subject to satisfaction of the following conditions precedent: (i)the City makes a forecast
82504375.15 -37-
(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 Subordinate 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 System improvement is expected to be commercially
operative;and(ii)an Engineer reviews such Forecast and executes a certificate to the effect
that(A) such Forecast is reasonable,and based thereon(and such other factors deemed to
be relevant), the Net Revenues of the System will be adequate to pay all the obligations,
payable from the Subordinate Lien Pledged Revenues of the System to be Outstanding
after the issuance of the Additional Subordinate Lien Obligations then being issued for the
Forecast Period and (B)the proceeds from the sale of such Additional Subordinate Lien
Obligations are estimated to be sufficient to complete such acquisition and construction.
(3) Computations; Reports. With reference to Subordinate Lien Obligations
anticipated and estimated to be issued or incurred, the Average Annual Debt Service
Requirements therefor shall be those reasonably estimated and computed by the City's
Director of Financial Services (or other officer of the City then having the primary
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
Subordinate 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
Subordinate Lien Obligations to which it relates. In the preparation of the engineering
report required in Subsection(2) 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 Subordinate Lien Obligations for System improvements,
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.
(4) 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 and THIRD levels of priority in
Section 12 hereof,but not expenditures which, under standard accounting practice,should
be charged to capital expenditures.
(5) 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.
82504375.15 -48_
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 and the
Subordinate 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 Junior Lien Obligations and this Ordinance.
SECTION 20. Refunding Bonds. The City reserves the right to issue refunding bonds to
refund all or any part of the currently Outstanding Debt, pursuant to any applicable law then
available, upon such terms and conditions as the City Council may deem to be in the best interest
of the City, and if less than all such currently Outstanding Debt are refunded, the conditions
precedent prescribed for the issuance of Additional Subordinate Lien Obligations set forth in
Section 19 of this Ordinance shall be satisfied and the City Managers' certification required in
Section 19(c)(1)(iii) shall give effect to the Debt Service Requirements of the proposed refunding
bonds(but shall not give effect to the Debt Service Requirements of the obligations being refunded
following their cancellation or provision being made for their payment); provided, however, that
the condition precedent identified in subsection 19(c)(1)(iii) of this subsection shall not apply to
revenue refunding bonds secured by the Subordinate Lien Pledged Revenues and issued for gross
debt service savings.
SECTION 21. Issuance of Special Project Bonds. Nothing in this Ordinance shall be
construed to deny the City the right and it shall retain the right to issue Special Project Bonds,
provided, however, the City will not issue Special Project Bonds unless the City concludes, upon
recommendation of the City Council, that (i)the plan for developing the Special Project is
consistent with sound planning, (ii)the Special Project would not materially and adversely
interfere with the operation of the System, (iii) the Special Project can be economically and
efficiently operated and maintained, and (iv)the Special Project can be economically and
efficiently utilized by the City to meet combined utility system requirements and the cost of such
will be reasonable.
SECTION 22. Security of Funds. All money on deposit in the funds or accounts for which
this Ordinance makes provision (except any portion thereof as may be at any time properly
invested as provided herein) shall be secured in the manner and to the fullest extent required by
the laws of Texas for the security of public funds,and money on deposit in such Funds or accounts
shall be used only for the purposes permitted by this Ordinance.
SECTION 23. Remedies in Event of Default. The Purchasers may exercise all rights and
remedies available to it in law or equity,and any provision of the Bonds that restricts or limits the
Purchasers' full exercise of these remedies shall be of no force and effect.
In addition to all the rights and remedies provided by the laws of the State of Texas, the
City covenants and agrees particularly that in the event the City(a)defaults in the payments to be
made to the Bond Fund, or (b) defaults in the observance or performance of any other of the
covenants, conditions, or obligations set forth in this Ordinance, the Holders of any of the Bonds
shall be entitled to seek a writ of mandamus issued by a court of proper jurisdiction compelling
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and requiring the governing body of the City and other officers of the City to observe and perform
any covenant, condition, or obligation prescribed in this Ordinance.
No delay or omission to exercise any right or power accruing upon any default shall impair
any such right or power or shall be construed to be a waiver of any such default or acquiescence
therein, and every such right and power may be exercised from time to time and as often as may
be deemed expedient. The specific remedy herein provided shall be cumulative of all other
existing remedies and the specification of such remedy shall not be deemed to be exclusive.
For the avoidance of doubt,no default with respect to any obligation that is secured by and
payable from a lien on and pledge of Net Revenues that is junior and subordinate to the lien thereon
and pledge thereof securing the Priority Bonds shall ever be deemed to be a default with respect
to the Priority Bonds.
SECTION 24. Notices to Holders Waiver. Wherever this Ordinance provides for notice to
Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and sent by United States Mail, first-class postage prepaid, to the address
of each Holder as it appears in the Security Register.
In any case where notice to Holders is given by mail,neither the failure to mail such notice
to any particular Holders, nor any defect in any notice so mailed, shall affect the sufficiency of
such notice with respect to all other Holders. Where this Ordinance provides for notice in any
manner, such notice may be waived in writing by the Holder entitled to receive such notice,either
before or after the event with respect to which such notice is given, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the Paying
Agent/Registrar, but such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
SECTION 25. Bonds Are Negotiable Instruments. Each of the Bonds authorized herein
shall be deemed and construed to be a"security" and as such a negotiable instrument within the
meaning of Chapter 8 of the Texas Uniform Commercial Code.
SECTION 26. Cancellation. All Bonds surrendered for payment, transfer, redemption,
exchange,or replacement,if surrendered to the Paying Agent/Registrar,shall be promptly canceled
by it and, if surrendered to the City, shall be delivered to the Paying Agent/Registrar and, if not
already canceled,shall be promptly canceled by the Paying Agent/Registrar. The City may at any
time deliver to the Paying Agent/Registrar for cancellation any Bonds previously certified or
registered and delivered which the City may have acquired in any manner whatsoever, and all
Bonds so delivered shall be promptly canceled by the Paying Agent/Registrar. All canceled Bonds
held by the Paying Agent/Registrar shall be destroyed as directed by the City.
SECTION 27. Mutilated,Destroyed,Lost,and Stolen Bonds. If(1)any mutilated Bond is
surrendered to the Paying Agent/Registrar, or the City and the Paying Agent/Registrar receive
evidence to their satisfaction of the destruction,loss,or theft of any Bond,and(2)there is delivered
to the City and the Paying Agent/Registrar such security or indemnity as may be required to save
each of them harmless,then,in the absence of notice to the City or the Paying Agent/Registrar that
such Bond has been acquired by a bona fide purchaser,the City shall execute and,upon its request,
the Paying Agent/Registrar shall register and deliver, in exchange for or in lieu of any such
82504375.15 -40-
mutilated, destroyed, lost, or stolen Bond, a new Bond of the same Stated Maturity and interest
rate and of like tenor and principal amount,bearing a number not contemporaneously Outstanding.
In case any such mutilated, destroyed, lost, or stolen Bond has become or is about to
become due and payable, the City in its discretion may, instead of issuing a new Bond,pay such
Bond.
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. Confirmation of Sale; Approval of Private Placement Memorandum. The
sale of the Bonds to the Texas Water Development Board(the Purchaser) for the purchase price
of$34,835,000.00, which represents a purchase price of par, less the Purchaser's origination fee
of$0.00 and no accrued interest, pursuant to a loan commitment received from the Purchaser, is
hereby confirmed. The pricing and terms of the Bonds are hereby found and determined to be the
most advantageous reasonably obtained from the City. Delivery of the Bonds shall be made to the
Purchaser as soon as practicable after the adoption of this Ordinance, upon payment therefor by
federal funds wire transfer,at no cost to the Purchaser, in accordance with the terms of sale.
Furthermore, the City hereby approves in all respects the City's Private Placement
Memorandum prepared in conjunction with the sale of the Bonds and to be delivered to the
Purchaser on the Closing Date. The Mayor or Mayor Pro Tem and/or City Secretary are further
authorized and directed to manually execute and deliver for and on behalf of the City copies of the
Private Placement Memorandum in final form as may be required by the Purchaser,and such final
Private Placement Memorandum in the form and content manually executed by said officials shall
be deemed to be approved by the City Council and constitute the Private Placement Memorandum
authorized for delivery to the Purchaser.
SECTION 29. Compliance with Purchaser's Rules and Regulations. The City will comply
with all of the requirements contained in the resolution or resolutions adopted by the Purchaser
with respect to the issuance of the Bonds. In addition, in compliance with the Purchaser's
Development Fund Program Rules, the City agrees and covenants so long as the Purchaser is the
sole Holder of the Bonds:
A. to keep and maintain full and complete records and accounts pertaining to the
construction of the project refinanced with the proceeds of sale of the Bonds,including the Escrow
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Fund(defined herein), in accordance with the standards set forth by the Government Accounting
Standard Board;
B. to provide the Purchaser with copies of"as built plans" pertaining to the projects
financed, in whole or in part, with any funds of the Purchaser;
C. in addition to the requirements contained in Section 18.1 hereof,to maintain current,
accurate, and complete records and accounts necessary to demonstrate compliance with financial
assistance related legal and contractual provisions;
D. to comply with all applicable requirements contained in 31 TAC Chapter 363;
E. to notify the Executive Administrator of the Purchaser prior to taking any actions
to alter the legal status of the City Council in any manner (such as a sale-transfer-merger with
another retail public utility that results in a change in governance of the System) and to receive
approval from the Purchaser of any action to convey the City's obligations to the Purchaser,as the
Holder of the Bonds,to another entity;
P. to the extent permitted by law, to indemnify, hold harmless, and protect the
Purchaser from any and all claims,causes of action, or damages to the person or property of third
parties arising from the sampling, analysis, transport, storage, treatment and disposition of any
contaminated sewage sludge, contaminated sediments and/or contaminated media that may be
generated by the City, its contractors, consultants, agents, officials, and employees as a result of
activities relating to the project refinanced with proceeds of the Bonds to the extent permitted by
law;
G. to provide the Purchaser with all information required to be reported in accordance
with the Federal Funding Accountability and Transparency Act of2006,Pub. L. 109-282,and the
City shall obtain a Data Universal Numbering System Number,register with the System for Award
Management (SAM), and maintain current registration at all times while the Bonds remain
Outstanding;
H. to not use any portion of the Bond proceeds, directly or indirectly,to acquire or to
replace funds which were used, directly or indirectly, to acquire Nonpurpose Investments (as
defined in Section 33 hereof) which produce a yield materially higher than the yield on the
Purchaser's bonds that are used to provide the Purchaser with proceeds that it will use to purchase
the Bonds(the Source Series Bonds),other than Nonpurpose Investments acquired with:
(I) Proceeds of the Source Series Bonds invested for a reasonable temporary
period of up to three(3)years(reduced by the period of investment by the Purchaser)until
such proceeds are needed for the facilities to be financed;
(2) Amounts invested in a bona fide debt service fund, within the meaning of
§1.148-1(b)of the Regulations(as defined in Section 36 hereof); and
(3) Amounts deposited in any reasonably required reserve or replacement fund
to the extent such amounts do not exceed the least of maximum annual debt service on the
82504375.15 -42-
Bonds, 125%of average annual debt service on the Bonds, or 10% of the stated principal
amount(or,in the case of a discount,the issue price)of the Bonds;
I. to provide documentation that the all applicable State procurement requirements,
as well as all federal procurement requirements, under the Disadvantaged Business Enterprises
program are met; and
J. to provide a schedule prepared by an Engineer, specifying the useful life of the
components of the project refinanced with Bond proceeds.
SECTION 30. Escrow Deposit Letter - Approval and Execution. The Escrow Deposit
Letter dated as of December 19, 2017 (the Agreement)by and between the City and UMB Bank,
N.A., Dallas, Texas (the Escrow Agent), attached hereto as Exhibit B 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.
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 UTILITY SYSTEM SUBORDINATE LIEN REVENUE
REFUNDING BONDS, SERIES 2018 ESCROW FUND" (the Escrow rung, 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 31. 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 be 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 be deposited into the Bond Fund and used to pay principal on the Bonds.
SECTION 32. Payment of Refunded Obligations. The Refunded Obligations referenced
in the preamble hereof become subject to prepayment prior to their final maturity on any date at
the price of par and accrued interest to their date of payment. The City shall give written notice to
the counterparty to the contractual obligation evidencing the Refunded Obligations that the
Refunded Obligations have been identified for prepayment, and the City Council orders that such
obligations shall be paid on the date set forth on Schedule I attached hereto, and such order to
82504375.15 43-
prepay the Refunded Obligations on such date shall be irrevocable upon the delivery of the Bonds.
A copy of the notice and consent of the counterparty to the Refunded Obligations, as the sole
holder of or obligated counterparty with respect to such obligations, is attached to this Ordinance
as Exhibit C and is incorporated herein by reference for all purposes.
SECTION 33. Covenants to Maintain Tax-Exempt Status.
A. Definitions. When used in this Section, the following terms have the following
meanings:
Code means the Internal Revenue Code of 1986, as amended by all legislation, if
any, effective on or before the Closing Date.
Computation Date has the meaning set forth in Section 1.148-1(b) of the
Regulations.
Gross Proceeds means any proceeds as defined in Section 1,148-1(b) of the
Regulations, and any replacement proceeds as defined in Section 1.148-1(c) of the
Regulations,of the Bonds.
Investment has the meaning set forth in Section 1.148-1(b)of the Regulations.
Nonpurpose Investment means any investment property, as defined in section
148(b) of the Code, in which Gross Proceeds of the Bonds are invested and which is not
acquired to carry out the governmental purposes of the Bonds.
Rebate Amount has the meaning set forth in Section 1.148-1(b)of the Regulations.
Regulations means any proposed, temporary, or final Income Tax Regulations
issued pursuant to sections 103 and 141 through 150 of the Code, and 103 of the Internal
Revenue Code of 1954, which are applicable to the Bonds. Any reference to any specific
Regulation shall also mean, as appropriate, any proposed, temporary or final Income Tax
Regulation designed to supplement,amend or replace the specific Regulation referenced,
Yield of
(1) any Investment has the meaning set forth in Section 1.148-5 of the
Regulations;and
(2) the Bonds means the yield on the Bonds, calculated in the manner
set forth in Section 1.148-4 of the Regulations.
B. Not to Cause Interest to Become Taxable. The City shall not use, permit the use
of, or omit to use Gross Proceeds or any other amounts (or any property the acquisition,
construction or improvement of which is to be financed or refinanced directly or indirectly with
Gross Proceeds) in a manner which if made or omitted, respectively, would cause the interest on
any Bond to become includable in the gross income, as defined in section 61 of the Code, of the
owner thereof for federal income tax purposes. Without limiting the generality of the foregoing,
82504375.15 -44-
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:
(I) 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 applicable to the general public)
or any property acquired,constructed or improved with such Gross Proceeds in any activity
carried on by any person or entity(including the United States or any agency, department
and instrumentality thereof)other than a state or local government,unless such use is solely
as a member of the general public; and
(2) not directly or indirectly impose or accept any charge or other payment by
any person or entity who is treated as using Gross Proceeds of the Bonds or any property
the acquisition, construction or improvement of which is to be financed or refinanced
directly or indirectly with such Gross Proceeds, other than taxes of general application
within the City or interest earned on investments acquired with such Gross Proceeds
pending application for their intended purposes.
D. No Private Loan. Except as would not cause the Bonds to become"private activity
bonds"within the meaning of section 141 of the Code and the Regulations and rulings thereunder,
the City shall not use Gross Proceeds of the Bonds (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: (1)property acquired, constructed or improved
with such Gross Proceeds is sold or leased to such person or entity in a transaction which creates
a debt for federal income tax purposes;(2)capacity in or service from such property is committed
to such person or entity under a take-or-pay, output or similar contract or arrangement; or (3)
indirect benefits, or burdens and benefits of ownership, of such Gross Proceeds or any property
acquired, constructed or improved with such Gross Proceeds are otherwise transferred in a
transaction which is the economic equivalent of a loan.
E. Not to Invest at Higher Yield. Except as would not cause the Bonds to become
"arbitrage bonds" within the meaning of section 148 of the Code and the Regulations and rulings
thereunder,the City shall not at any time prior to the final Stated Maturity of the Bonds directly or
indirectly invest Gross Proceeds in any Investment, if as a result of such investment the Yield of
any Investment acquired with Gross Proceeds, whether then held or previously disposed of,
materially exceeds the Yield of the Bonds.
A250437515 -45-
F. Not Federally Guaranteed. Except to the extent permitted by section 149(6)of the
Code and the Regulations and rulings thereunder,the City shall not take or omit to take any action
which would cause the Bonds to be federally guaranteed within the meaning of section 149(b)of
the Code and the Regulations and rulings thereunder.
G. Information Report. The City shall timely file the information required by section
149(e) of the Code with the Secretary of the Treasury on Form 8038-G or such other form and in
such place as the Secretary may prescribe.
H. Rebate of Arbitrage Profits. Except to the extent otherwise provided in
section 148(f)of the Code and the Regulations and rulings thereunder:
(1) The City shall account for all Gross Proceeds (including all receipts,
expenditures and investments thereof) on its books of account separately and apart from
all other funds (and receipts, expenditures and investments thereof) and shall retain all
records of accounting for at least six years after the day on which the last Outstanding Bond
is discharged. However, to the extent permitted by law, the City may commingle Gross
Proceeds of the Bonds with other money of the City, provided that the City separately
accounts for each receipt and expenditure of Gross Proceeds and the obligations acquired
therewith.
(2) Not less frequently than each Computation Date,the City shall calculate the
Rebate Amount in accordance with rules set forth in section 148(f) of the Code and the
Regulations and rulings thereunder. The City shall maintain such calculations with its
official transcript of proceedings relating to the issuance of the Bonds until six years after
the final Computation Date.
(3) As additional consideration for the purchase of the Bonds by the Purchaser
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(f) of the Code and the Regulations
and rulings thereunder,and shall be accompanied by Form 8038-T or such other forms and
information as is or may be required by section 148(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
82504375.15 -46-
error), including payment to the United States of any additional Rebate Amount owed to
it, interest thereon, and any penalty imposed under Section 1.148-3(h)of the Regulations.
I. Not to Divert Arbitrage Profits. Except to the extent permitted by section 148 of
the Code and the Regulations and rulings thereunder, the City shall not, at any time prior to the
earlier of the Stated Maturity or final payment of the Bonds,enter into any transaction that reduces
the amount required to be paid to the United States pursuant to Subsection H of this Section
because such transaction results in a smaller profit or a larger loss than would have resulted if the
transaction had been at arm's length and had the Yield of the Bonds not been relevant to either
party.
J. Bonds Not Hedge Bonds.
(1) 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 City 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 and the Bonds will be issued,and the proceeds thereof used, within 90
days after the Closing Date for the payment of the Refunded Obligations at their date of
prepayment. 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 149(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
L. 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 34. Control and Custody of Bonds. The Mayor shall be and is hereby
authorized to take and have charge of all necessary orders and records pending investigation by
the Attorney General of the State of Texas and shall take and have charge and control of the Bonds
pending their approval by the Attorney General of the State of Texas, the registration thereof by
the Comptroller of Public Accounts of the State of Texas and the delivery of the Bonds to the
Purchaser.
Furthermore, any of the Mayor of the City, Mayor Pro Tern of the City, any Authorized
Official, or any combination of them are hereby authorized and directed to furnish and execute
82504375 15 47-
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 Purchaser.
SECTION 35. Satisfaction of Obligation of City. If the City shall payor 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 Subordinate Lien Pledged Revenues made under this Ordinance and all covenants, agreements,
and other obligations of the City to the Holders shall thereupon cease,terminate,and be discharged
and satisfied.
The Bonds, or any principal amount(s)thereof, shall be deemed to have been paid within
the meaning and with the effect expressed above in this Section when (i)money sufficient to pay
in full such Bonds or the principal amount(s) thereof at Stated Maturity or to the redemption date
therefor,together with all interest due thereon,shall have been irrevocably deposited with and held
in trust by the Paying Agent/Registrar or an authorized escrow agent,or(ii)Government Securities
shall have been irrevocably deposited in trust with the Paying Agent/Registrar, or an authorized
escrow agent, which Government Securities have, in the case of a net defeasance, been certified
by an independent accounting firm to mature as to principal and interest in such amounts and at
such times as will insure the availability,without reinvestment,of sufficient money,together with
any money deposited therewith,if any,to pay when due the principal of and interest on such Bonds,
or the principal amount(s) thereof, on and prior to the Stated Maturity thereof or (if notice of
redemption has been duly given or waived or if irrevocable arrangements therefor acceptable to
the Paying Agent/Registrar have been made) the redemption date thereof for the Bonds. In the
event of a gross defeasance of the Bonds, the City shall deliver a certificate from its financial
advisor,the Paying Agent/Registrar,or another qualified third party concerning the deposit of cash
and/or Government Securities to pay, when due, the principal of, redemption premium (if any),
and interest due on any defeased Bonds. The City covenants that no deposit of money or
Government Securities will be made under this Section and no use made of any such deposit which
would cause the Bonds to be treated as arbitrage bonds within the meaning of section 148 of the
Code(as defined in Section 33 hereof).
Any money so deposited with the Paying Agent/Registrar, and all income from
Government Securities held in trust by the Paying Agent/Registrar,or an authorized escrow agent,
pursuant to this Section which is not required for the payment of the Bonds, or any principal
amount(s) thereof, or interest thereon with respect to which such money has been so deposited
shall be remitted to the City or deposited as directed by the City. Furthermore, any money held
by the Paying Agent/Registrar for the payment of the principal of and interest on the Bonds and
remaining unclaimed for a period of three (3) years after the Stated Maturity, or applicable
redemption date,of the Bonds such money was deposited and is held in trust to pay shall upon the
request of the City be remitted to the City against a written receipt therefor, subject to the
unclaimed property laws of the State of Texas.
Notwithstanding any other provision of this Ordinance to the contrary,it is hereby provided
that any determination not to redeem defeased Bonds that is made in conjunction with the payment
arrangements specified in subsection(i)or(ii)above shall not be irrevocable,provided that: (1) in
8250437515 _48_
the proceedings providing for such defeasance, the City expressly reserves the right to call the
defeased Bonds for redemption; (2) gives notice of the reservation of that right to the owners of
the defeased Bonds immediately following the defeasance;(3)directs that notice of the reservation
be included in any redemption notice that it authorizes; and (4) at the time of the redemption,
satisfies the conditions of(i)or(ii)above with respect to such defeased debt as though it was being
defeased at the time of the exercise of the option to redeem the defeased Bonds, after taking the
redemption into account in determining the sufficiency of the provisions made for the payment of
the defeased Bonds.
SECTION 36. Ordinance a Contract; Amendments — Outstanding Bonds. The City
acknowledges that the covenants and obligations of the City herein contained are a material
inducement to the purchase of the Bonds. This Ordinance shall constitute a contract with the
Holders from time to time, binding on the City and its successors and assigns, and it shall not be
amended or repealed by the City so long as any Bond remains Outstanding except as permitted in
this Section. The City may,without the consent of or notice to any Holders, from time to time and
at any time, amend this Ordinance in any manner not detrimental to the interests of the Holders,
including the curing of any ambiguity, inconsistency, or formal defect or omission herein. In
addition, the City may, with the written consent of Holders holding a majority in aggregate
principal amount of the Bonds then Outstanding affected thereby,amend,add to,or rescind any of
the provisions of this Ordinance;provided that, without the consent of all Holders of Outstanding
Bonds, no such amendment, addition, or rescission shall (1)extend the time or times of payment
of the principal of and interest on the Bonds, reduce the principal amount thereof,the redemption
price therefor, or the rate of interest thereon, or in any other way modify the terms of payment of
the principal of or interest on the Bonds,(2)give any preference to any Bond.over any other Bond,
or (3) reduce the aggregate principal amount of Bonds required for consent to any such
amendment, addition, or rescission.
SECTION 37. Printed Opinion. The Purchaser's obligation to accept delivery of the Bonds
is subject to their being furnished a final opinion of Norton Rose Fulbright US LLP, as Bond
Counsel, approving certain legal matters as to the Bonds, said opinion to be dated and delivered
as of the date of initial delivery and payment for such Bonds. Printing of a true and correct copy
of said opinion on the reverse side of each of said Bonds, with appropriate certificate pertaining
thereto executed by facsimile signature of the City's Secretary is hereby approved and authorized.
SECTION 38. 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 39. Effect of Headings. The Section headings herein are for convenience only
and shall not affect the construction hereof.
SECTION 40. 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
82504395.15 49-
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 41. 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 ordained herein.
SECTION 42. 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 43. Severability. If any provision of this Ordinance or the application thereof
to any person or circumstance shall be held to be invalid,the remainder of this Ordinance and the
application of such provision to other persons and circumstances shall nevertheless be valid, and
the City Council hereby declares that this Ordinance would have been enacted without such invalid
provision.
SECTION 44. Incorporation of Preamble Recitals. The recitals contained in the preamble
hereof are hereby found to be true, and such recitals are hereby made a part of this Ordinance for
all purposes and are adopted as a part of the judgment and findings of the City Council.
SECTION 45. Authorization of Paving 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 46. Authorization of Financing Agreement. The City Council of the City
hereby finds and determines that it is in the best interest of the City to authorize the execution of a
Financing Agreement concerning certain aspects of the delivery of the Bonds and the purchase
thereof by the Purchaser and to comply with the Purchaser's rules and regulations. Any Authorized
Official, or their designee, is authorized to execute the Financing Agreement as the act and deed
of the City Council.
SECTION 47. Application to Texas Water Development Board. The City Council ratifies
and confirms its prior approval of the form and content of the Application to the Texas Water
Development Board (the Application) prepared in connection with the sale of the Bonds to the
Purchaser and hereby approves the form and content of any addenda, supplement,or amendment
thereto.
SECTION 48. 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.
82504375.15 -50-
SECTION 49. Continuing Disclosure of Information.
A. Definitions. As used in this Section, the following terms have the meanings
ascribed to such terms below:
EMMA means the MSRB's Electronic Municipal Market Access system,accessible by the
general public, without charge, on the internet through the uniform resource locator (URL)
http://www.emma.msrb.org.
MSRB means the Municipal Securities Rulemaking Board.
Rule means SEC Rule 15c2-12,as amended from time to time.
SEC means the United States Securities and Exchange Commission.
B. Annual Reports. The City shall file annually with the MSRB,(1)within six months
after the end of each Fiscal Year of the City ending in or after 2018, financial information and
operating data with respect to the System of the general type described in Exhibit D hereto, and
(2) if not provided as part such financial information and operating data, audited financial
statements of the City, when and if available. Any financial statements so to be provided shall be
(i) prepared in accordance with the accounting principles described in Exhibit D hereto, or such
other accounting principles as the City may be required to employ from time to time pursuant to
state law or regulation, and (ii) audited, if the City commissions an audit of such financial
statements and the audit is completed within the period during which they must be provided. If
the audit of such financial statements is not complete within such period, then the City shall file
unaudited financial statements within such period and audited financial statements for the
applicable Fiscal Year to the MSRB, when and if the audit report on such statements becomes
available.
If the City changes its Fiscal Year, it will file notice thereof with the MSRB of the change
(and of the date of the new Fiscal Year end) prior to the next date by which the City otherwise
would be required to provide financial information and operating data pursuant to this Section.
C. Notice of Certain Events. The City shall file notice of any of the following events
with respect to the Bonds to the MSRB in a timely manner and not more than 10 business days
after occurrence of the event:
(I) Principal and interest payment delinquencies;
(2) Non-payment related defaults,if material;
(3) Unscheduled draws on debt service reserves reflecting financial difficulties;
(4) Unscheduled draws on credit enhancements reflecting financial difficulties;
(5) Substitution of credit or liquidity providers,or their failure to perform;
82504375.15 -51-
(6) Adverse tax opinions, the issuance by the Internal Revenue Service of
proposed or final determinations of taxability,Notices of Proposed Issue(IRS Fenn 5701-
TEB), or other material notices or determinations with respect to the tax status of the
Bonds,or other material events affecting the tax status of the Bonds;
(7) Modifications to rights of Holders of the Bonds,if material;
(8) Bond calls, if material, and tender offers;
(9) Defeasances;
(10) Release, substitution, or sale of property securing repayment of the Bonds,
if material;
(11) Rating changes;
(12) Bankruptcy, insolvency, receivership, or similar event of the City, which
shall occur as described below;
(13) The consummation of a merger, consolidation,or acquisition involving the
City or the sale of all or substantially all of its assets, other than in the ordinary course of
business, the entry into of a definitive agreement to undertake such an action or the
termination of a definitive agreement relating to any such actions, other than pursuant to
its terms, if material; and
(14) Appointment of a successor or additional Paying AgentRegistrar or the
change of name of a Paying Agent/Registrar,if material.
For these purposes, any event described in the immediately preceding paragraph (12) is
considered to occur when any of the following occur: the appointment of a receiver, fiscal agent,
or similar officer for the City in a proceeding under the United States Bankruptcy Code or in any
other proceeding under state or federal law in which a court or governmental authority has assumed
jurisdiction over substantially all of the assets or business of the City, or if such jurisdiction has
been assumed by leaving the existing governing body and officials or officers in possession but
subject to the supervision and orders of a court or governmental authority, or the entry of an order
confirming a plan of reorganization, arrangement, or liquidation by a court or governmental
authority having supervision or jurisdiction over substantially all of the assets or business of the
City.
The City shall file notice with the MSRB,in a timely manner,of any failure by the City to
provide financial information or operating data in accordance with this Section by the time
required by this Section.
D. Limitations,Disclaimers,and Amendments. The City shall be obligated to observe
and perform the covenants specified in this Section for so long as,but only for so long as,the City
remains an`obligated person" with respect to the Bonds within the meaning of the Rule, except
that the City in any event will give notice of any deposit that causes the Bonds to be no longer
Outstanding.
82504375.15 -52-
The provisions of this Section are for the sole benefit of the Holders and beneficial owners
of the Bonds, and nothing in this Section, express or implied,shall give any benefit or any legal or
equitable right, remedy, or claim hereunder to any other person. The City undertakes to provide
only the financial information, operating data, financial statements, and notices which it has
expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any
other information that may be relevant or material to a complete presentation of the City's financial
results, condition, or prospects or hereby undertake to update any information provided in
accordance with this Section or otherwise,except as expressly provided herein. The City does not
make any representation or warranty concerning such information or its usefulness to a decision
to invest in or sell Bonds at any future date.
UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER
OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON,IN CONTRACT OR
TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY
THE CITY, WHETHER NEGLIGENT OR WITH OR WITHOUT FAULT ON ITS PART, OF
ANY COVENANT SPECIFIED IN THIS SECTION,BUT EVERY RIGHT AND REMEDY OF
ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH
BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC
PERFORMANCE.
No default by the City in observing or performing its obligations under this Section shall
constitute a breach of or default under this Ordinance for purposes of any other provision of this
Ordinance.
Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the
duties of the City under federal and state securities laws.
The provisions of this Section may be amended by the City from time to time to adapt to
changed circumstances that arise from a change in legal requirements,a change in law,or a change
in the identity,nature,status,or type of operations of the City,but only if(1)the provisions of this
Section, as so amended, would have permitted an underwriter to purchase or sell Bonds in the
primary offering of the Bonds in compliance with the Rule,taking into account any amendments
or interpretations of the Rule to the date of such amendment, as well as such changed
circumstances, and (2)either(a)the Holders of a majority in aggregate principal amount(or any
greater amount required by any other provision of this Ordinance that authorizes such an
amendment) of the Outstanding Bonds consent to such amendment or (b) a person that is
unaffiliated with the City (such as nationally recognized bond counsel) determines that such
amendment will not materially impair the interests of the Holders and beneficial owners of the
Bonds. The City may also repeal or amend the provisions of this Section if the SEC amends or
repeals the applicable provisions of the Rule or any court of final jurisdiction enters judgment that
such provisions of the Rule are invalid,and the City also may amend the provisions of this Section
in its discretion in any other manner or circumstance, but in either case only if and to the extent
that the provisions of this sentence would not have prevented an underwriter from lawfully
purchasing or selling Bonds in the primary offering of the Bonds, giving effect to (a) such
provisions as so amended and (b) any amendments or interpretations of the Rule. If the City so
amends the provisions of this Section, the City shall include with any amended financial
information or operating data next provided in accordance with this Section an explanation, in
82504375.15 -53-
narrative form, of the reasons for the amendment and of the impact of any change in the type of
financial information or operating data so provided.
E. Information Format—Incorporation by Reference. The City information required
under this Section shall be filed with the MSRB through EMMA in such format and accompanied
by such identifying information as may be specified from time to time thereby. Under the current
rules of the MSRB, continuing disclosure documents submitted to EMMA must be in word-
searchable portable document format (PDF) files that permit the document to be saved, viewed,
printed, and retransmitted by electronic means and the series of obligations to which such
continuing disclosure documents relate must be identified by CUSIP number or numbers.
Financial information and operating data to be provided pursuant to this Section may be
set forth in full in one or more documents or may be included by specific reference to any document
(including an official statement or other offering document)available to the public through EMMA
or filed with the United States Securities and Exchange Commission.
SECTION 50. Book-Entry Only System. The Bonds initially shall 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 DTC. The
City and the Paying Agent/Registrar are authorized to execute, deliver, and take the actions set
forth in such letters to or agreements with DTC as shall be necessary to effectuate the DTC System,
including the Letter of Representations attached hereto as Exhibit E(the Representation Letter).
With respect to the Bonds registered in the name of Cede & Co.,as nominee of DTC,the
City and the Paying Agent/Registrar shall have no responsibility or obligation to any broker-dealer,
bank, or other financial institution for which DTC holds the Bonds from time to time as securities
depository (a Depository Participant) or to any person on behalf of whom such a Depository
Participant holds an interest in the Bonds (an Indirect Participant). Without limiting the
immediately preceding sentence, the City and the Paying Agent/Registrar shall have no
responsibility or obligation with respect to (i)the accuracy of the records of DTC,Cede&Co., or
any Depository Participant with respect to any ownership interest in the Bonds, (ii)the delivery to
any Depository Participant or any other person, other than a registered owner of the Bonds, as
shown on the Security Register, of any notice with respect to the Bonds, including any notice of
redemption, or (iii)the delivery to any Depository Participant or any Indirect Participant or any
other Person,other than a Holder of a Bond,of any amount with respect to principal of,premium,
if any, or interest on the Bonds. While in the DTC System,no person other than Cede & Co., or
any successor thereto, as nominee for DTC, shall receive a bond certificate evidencing the
obligation of the City to make payments of principal,premium,if any,and interest pursuant to this
Ordinance. Upon delivery by DTC to the Paying Agent/Registrar of written notice to the effect
that DTC has determined to substitute a new nominee in place of 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.
82504375.15 -54-
In the event that (a) the City determines that DTC is incapable of discharging its
responsibilities described herein and in the Representation Letter, (b)the Representation Letter
shall be terminated for any reason, or(c) DTC or the City determines that it is in the best interest
of the beneficial owners of the Bonds that they be able to obtain certificated Bonds,the City shall
notify the Paying Agent/Registrar,DTC, and the Depository Participants of the availability within
a reasonable period of time through DTC of bond certificates, and the Bonds shall no longer be
restricted to being registered in the name of Cede& Co., as nominee of DTC. However,the City
will not discontinue the use of DTC without prior notice and consent of the Purchaser for so long
as the Purchaser is the Holder of any of the Bonds, At that time, the City may determine that the
Bonds shall be registered in the name of and deposited with a successor depository operating a
securities depository system, as may be acceptable to the City, or such depository's agent or
designee, and if the City and the Paying Agent/Registrar do not select such alternate securities
depository system then the Bonds may be registered in whatever name or names the Holders of
Bonds transferring or exchanging the Bonds shall designate, in accordance with the provisions
hereof.
Notwithstanding any other provision of this Ordinance to the contrary,so long as any Bond
is registered in the name of Cede&Co.,as nominee of DTC,all payments with respect to principal
of, premium, if any, and interest on such Bond and all notices with respect to such Bond shall be
made and given, respectively, in the manner provided in the Representation Letter.
SECTION 51. 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
Application to the Purchaser. In addition, prior to the initial delivery of the Bonds, each
Authorized Official and Bond Counsel are hereby authorized and directed to approve any technical
changes or corrections to this Ordinance or to any of the instruments authorized and approved by
this Ordinance necessary in order to (i) correct any ambiguity or mistake or properly or more
completely document the transactions contemplated and approved by this Ordinance, (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 52. Unavailability of Authorized Publication. If, because of the temporary or
permanent suspension of any newspaper, journal, or other publication, or, for any reason,
publication of notice cannot be made meeting any requirements herein established, any notice
required to be published by the provisions of this Ordinance shall be given in such other manner
and at such time or times as in the judgment of the City or of the Paying Agent/Registrar shall
most effectively approximate such required publication and the giving of such notice in such
manner shall for all purposes of this Ordinance be deemed to be in compliance with the
requirements for publication thereof.
82504375 15 -55-
SECTION 53. 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 54. Automatic Budget Amendments to Reflect Final Debt Service Payments.
To the extent that the City Council has adopted an annual budget that includes payment of debt
service on any Bonds issued (or to be issued) pursuant to this Ordinance based on the City's
reasonable expectations and projections relative to those Bonds, such budget entries shall, upon
the issuance of Bonds, be automatically adjusted to reflect actual debt service payments on those
Bonds coming due during the period of time covered by such budget. Each Authorized Official,
or the designee thereof, is authorized to make such necessary budget entries and/or adjustments to
reflect these final debt service amounts.
SECTION 55. 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 56. 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 57. 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
Internal 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 58. Effective Date. This Ordinance shall be in force and effect from and after
its final passage,and it is so ordained.
[The remainder of this page intentionally left blank]
82504375.15 -56-
SIGNED AND SEALED THIS 19TH DAY OF DECEMBER,2017.
CITY OF CORPUS CHRISTI, TEXAS
144.(.C.9'sr-�"
May
ATTEST:
L FLIM
City Secretary
(SEAL)
APPROVED THIS 19TH DAY OF DECEMBER,2017:FD
Miles Risley,City Attorney
82504375 12 S-1
SIGNED AND SEALED THIS 12th DAY OF DECEMBER, 2017.
CITY OF CORPUS CHRISTI,TEXAS
1/11tCtrM4A4-- —
Ma if
ATTEST:
4/(
City Secretary
(SEAL)
APPROVED THIS 12th DAY OF DECEMBER, 2017:
Miles Ris ey, City Attorney
82504375.5 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 12th
day of December, 2017, authorizing the issuance of the City's Utility System Subordinate Lien
Revenue Refunding Bonds, Series 2018,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 12th day of December,2017.
RdQ, i-g
Secretary
(CITY SEAL)
82504375.5 S-2
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 19th
day of December, 2017, authorizing the issuance of the City's Utility System Subordinate Lien
Revenue Refunding Bonds, Series 2018,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 19th day of December,2017.
RL2 cte,.. l-f wt wvO G
City Secretary
(CITY SEAL)
82504375.12 S-2
The foregoing ordinance was read for the first time and passed to its second reading on this the
12th day of December, 2017,by the following vote:
Joe McComb akI Ben Molina
Rudy Garza �A arc _ Lucy Rubio `4„J
I
01
Paulette Guajardo OW• I
� Greg Smith ,,..d& .
Michael Hunter / Carolyn Vaughn 1
1Debbie Lindsey-Opel ", I
i
That the foregoing ordinance was read for the second time and passed finally on this thJ day
of December,2017,by the following vote:
Joe McComb i.t / Ben Molina —1(1—
Rudy Garza i ' Lucy Rubio _A...4
Paulette Guajardo i �_ Greg Smith I? !
Michael Hunter .4. .4arolyn Vaughn ... .AA
Debbie Lindsey-Opel ,`^'. , /
1
161
PASSED AND APPROVED,this theth day of December,2017.
.ATTEST:
R.-e-6Lcie,k_ ize.ri-Z-, A (M1(!6(1 14/ - -
Rebecca Huerta Joe omb
City Secretary Mat .-
82504375.5 S-3
n313 4
INDEX TO SCHEDULES AND EXHIBITS
Schedule I Schedule of Refunded Obligations
Schedule II Approval Certificate
Exhibit A Paying Agent/Registrar Agreement
Exhibit B Agreement
Exhibit C Holder Consent
Exhibit D Description of Annual Financial Information
Exhibit E DTC Letter of Representations
82504375 15 Index-1
SCHEDULE I
Schedule of Refunded Obligations
Federal Contract No. 6-07-01-X0675 entered into by and 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 is currently outstanding in a combined principal and interest amount of
$42,168,828.64 calculated to March 12,2018. These Refunded Obligations will be
paid in full on March 12,2018.
82504375.15 Schedule 1-1
SCHEDULE II
Approval Certificate
See Tab No. 2
82504375.15 Schedule Il-1
EXHIBIT A
Paying Agent/Registrar Agreement
See Tab No. 4
82504375.15 A-1
EXHIBIT B
Agreement
See Tab No. 5
82504375.15 B-1
EXHIBIT C
Holder Consent
See Tab No. 20
82504375.15 C-1
EXHIBIT D
Description of Annual Financial Information
The following information is referred to in Section 49 of this Ordinance.
Annual Financial Statements and Operating Data
The financial information and operating data with respect to the City to be provided
annually in accordance with such Section are as specified(and included in the Appendix or under
the headings of the Application referred to) below:
The City's audited financial statements for the most recently concluded fiscal year or to
the extent these audited financial statements are not available, the portions of the unaudited
financial statements of the City referenced in the Application,but for the most recently concluded
fiscal year.
Accounting Principles
The accounting principles referred to in such Section are the accounting principles
described in the notes to the financial statements referred to above.
82504375.15 D-1
EXHIBIT E
DTC Letter of Representation
See Tab No. 6
82504375.15 E-1