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8-25-2020 Special Session packetDaiquiri Beebe, Ward 1 Russell Humphrey, Ward 2 Blake Irving, Ward 3 Mayor Pro Tem Joe P. Rodriquez, Ward 4 CITY OF HUNTSVILLE, TEXAS Andy Brauninger, Mayor Bert Lyle, Position 1 At-Large Dee Howard Mullins, Position 2 At-Large Clyde D. Loll, Position 3 At-Large Mari Montgomery, Position 4 At-Large HUNTSVILLE CITY COUNCIL AGENDA TUESDAY, AUGUST 25, 2020 SPECIAL SESSION 5:00 P.M. IN CITY COUNCIL CHAMBERS, HUNTSVILLE CITY HALL, 1212 AVENUE M, HUNTSVILLE, TEXAS 77340 City hall will implement 6-foot social distancing for those in attendance. The City reserves the right to take temperatures of those wanting to attend and requires attendees to wear face masks. The City reserves the right to deny access to the meeting because of the above requirements for the safety of its citizens. For those who cannot attend because of the social distancing requirements or for the reasons listed above, the meeting will be broadcast live on the City website at www.HuntsvilleTX.gov/Meetings or on Facebook. The meeting will be recorded, and such recordings will be made available on the City website at www.HuntsvilleTX.gov. Persons with disabilities who plan to attend this meeting and who may need auxiliary aids or services are requested to contact the City Secretary’s office (936.291.5413), two working days prior to the meeting for appropriate arrangements. SPECIAL SESSION [5:00 P.M.] CALL TO ORDER 1. EXECUTIVE SESSION a. City Council will convene in closed session as authorized by Texas Government Code, Chapter 551, 551.071 – consultation with counsel on legal matters regarding Raven Nest Golf Course. 2. RECONVENE Take action on items discussed in executive session, if needed. 3. CITY COUNCIL/CITY ATTORNEY/CITY MANAGER a. Discussion and possible action to adopt Ordinance 2020-41 to amend the budget for FY 19-20 and/or CIP Project budgets. b. Discussion and possible action to approve Resolution 2020-28 Authorizing the Defeasance and Redemption of the City's $3,005,000 Outstanding Combination Tax and Revenue Certificates of Obligation, Series 2001; Authorizing Execution of an Escrow Agreement in connection with the Defeasance; and Authorizing Other Matters Related to the Defeasance and Redemption of such Certificates of Obligation. ADJOURNMENT *If, during the course of the meeting and discussion of any items covered by this notice, City Council determines that a Closed or Executive session of the Council is required, then such closed meeting will be held as authorized by Texas Government Code, Chapter 551, Section 551.071 – consultation with counsel on legal matters; 551.072 – deliberation regarding purchase, exchange, lease or value of real property; 551.073 – deliberation regarding a prospective gift; 551.074 – personnel matters regarding the appointment, employment, evaluation, reassignment, duties, discipline, or dismissal of a public officer or employee; 551.076 – implementation of security personnel or devices; 551.087 – deliberation regarding economic development negotiation; Sec. 551.089 - deliberation regarding security devices or security audits; and/or other matters as authorized under the Texas Government Code. If a Closed or Executive session is held in accordance with the Texas Government Code as set out above, the City Council will reconvene in Open Session to take action, if necessary, on the items addressed during Executive Session. CERTIFICATE I, Brenda Poe, City Secretary, do hereby certify that a copy of the August 25, 2020 City Council agenda was posted on the City Hall bulletin board, a place convenient and readily accessible to the general public at all times, and to the City’s website, www.HuntsvilleTX.gov, in compliance with Chapter 551, Texas Government Code. DATE OF POSTING: 8/21/2020 TIME OF POSTING: 3:45 pm ____________________________ TAKEN DOWN: Brenda Poe, City Secretary Brenda Poe Agenda Item #3a Item/Subject: Consider adoption of Ordinance 2020-41 to amend the budget for FY 19-20 and/or CIP Project budgets. Initiating Department/Presenter: Finance Presenter: Steve Ritter – Finance Director Recommended Motion: Move to adopt Ordinance 2020-41 to amend the budget for FY 19-20 and/or CIP Project budgets. Strategic Initiative: Goal #6 - Finance - Provide a sustainable, efficient and fiscally sound government through conservative fiscal practices and resource management. Discussion: Detailed explanation is provided in the attachment, Exhibit A, to the Ordinance. Previous Council Action: None. Financial Implications: ☒ See the attached Ordinance and related Budget Amendments (Exhibit A) Approvals: ☒City Attorney ☒Director of Finance ☒City Manager Associated Information: • Ordinance 2020-41, page 2 • Exhibit A (list of budget amendments), page 3 8/25/2020 Agenda Item: 3a CITY COUNCIL AGENDA ORDINANCE NO. 2020-41 AN ORDINANCE OF THE CITY OF HUNTSVILLE, TEXAS, AMENDING THE 2019-2020 ANNUAL BUDGET AND CAPITAL IMPROVEMENTS PROJECTS (CIP) BUDGETS, ORDINANCE NO. 2019-52 TO AMEND ADOPTED EXPENDITURES OF THE BUDGET; AND DECLARING AN EFFECTIVE DATE. WHEREAS, the 2019-2020 Annual Budget and CIP Budgets were adopted by Ordinance 2019-52 on September 17, 2019; WHEREAS, various unforeseen circumstances affecting the City have presented themselves during the course of the fiscal year; WHEREAS, the City Council considered the circumstances independently, deliberating appropriately on the associated revenues and expenditures and the overall impact on the general financial status of the City; WHEREAS, pursuant to the laws of the State of Texas and the City Charter of the City of Huntsville, Texas, the City Council has determined that it will be beneficial and advantageous to the citizens of the City of Huntsville to amend the annual budget for fiscal year 2019 – 2020 and the Capital Improvements Projects (CIP) budget as set forth herein; and WHEREAS, this ordinance combines the independent Council actions into one budget amendment document; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF HUNTSVILLE, TEXAS, that: Section 1. The findings set forth above are incorporated into the body of this ordinance. Section 2. The annual budget for fiscal year 2019 – 2020 is hereby amended to include the expenditures and revenues in Exhibit “A” and the Capital Improvements Projects budget is hereby amended to include the expenditures described in Exhibit “A” attached hereto and made a part of this ordinance as if set out verbatim herein. Section 3. All ordinances of the City in conflict with the provisions of this ordinance are hereby repealed, and all other ordinances of the City not in conflict with the provisions of this ordinance shall remain in full force and effect. Section 4. Should any section, portion, sentence, clause or phrase of this ordinance be declared unconstitutional or invalid for any reason, it shall not invalidate or impair the force or effect of any other section or portion of this ordinance. Section 5. The necessity for amending the budget for the fiscal year 2019 – 2020 and Capital Improvements Projects, as required by the laws of the State of Texas, requires that this ordinance shall take effect immediately from and after its passage, as the law in such cases provides. Section 6. This ordinance shall take effect immediately after its passage. PASSED AND APPROVED on this the 25th day of August 2020. THE CITY OF HUNTSVILLE, TEXAS __________________________________ Andy Brauninger, Mayor ATTEST: APPROVED AS TO FORM: ____________________________ _____________________________________ Brenda Poe, City Secretary Leonard Schneider, City Attorney Exhibit A Budget Amendments FY 19-20 August 25, 2020 Increase:General Fund - Transfer to Debt Service Fund (DSF)318,759$ Trnsfr from General Fund to DSF coming from Unallocated Reserves 318,759$ Increase:DSF - Transfer from General Fund 318,759$ Increase:DSF - Misc. Rev. (pmt from Sam Houston State University)2,705,000$ Increase:DSF - '01 Golf Principal 3,005,000$ Increase:DSF - '01 Golf Interest 18,759$ Explanation: The contract/agreement with Sam Houston State University for the sale of the golf course calls for defeaseance and calling of the outstanding Series 2001 Certificates of Obligation (COs) (issued for construction of the golf course). The balance of principal on these COs is $3,005,000 and accrued interest through the scheduled call date of September 28, 2020 is $18,759. Per the contract/agreement the City is to provide $300,000 toward paying off principal plus the accrued interest amount. The University is to provide $2,705,000 toward paying of principal. The proposed Budget Amendment puts in place budget to make the necessary payments to call the debt and also provides for the funding sources. Use of General Fund's Unallocated Reserves of approximately $320,000 leaves an estimated balance at 9/30/20 of $11,483,000 which exceeds the approximate $6,500,000 required balance by $4,983,000. Agenda Item #3b Item/Subject: Consider approval of Resolution 2020-28 Authorizing the Defeasance and Redemption of the City's $3,005,000 Outstanding Combination Tax and Revenue Certificates of Obligation, Series 2001; Authorizing Execution of an Escrow Agreement in connection with the Defeasance; and Authorizing Other Matters Related to the Defeasance and Redemption of such Certificates of Obligation. Initiating Department/Presenter: City Attorney Presenter: Leonard Schneider, City Attorney Recommended Motion: Move to approve Resolution 2020-28 Authorizing the Defeasance and Redemption of the City's $3,005,000 Outstanding Combination Tax and Revenue Certificates of Obligation, Series 2001; Authorizing Execution of an Escrow Agreement in connection with the Defeasance; and Authorizing Other Matters Related to the Defeasance and Redemption of such Certificates of Obligation. Strategic Initiative: Goal #6 - Finance - Provide a sustainable, efficient and fiscally sound government through conservative fiscal practices and resource management. Discussion: Attached is all pertinent documentation related to the sale agreement of the Raven Nest golf course to Sam Houston State University from City of Huntsville and Resolution 2020-28 and related Exhibits. Previous Council Action: Council previously has authorized staff to move forward in completing the sale of the golf course to Sam Houston State University on August 18, 2020. Financial Implications: ☒ Agenda Item 3a in this evening’s Council agenda provided the financial implications information Approvals: ☒City Attorney ☒Director of Finance ☒City Manager Associated Information: • Resolution 2020-28 • Conditional Notice of Defeasance and Redemption • Related Exhibits • Escrow Agreement • Certificate for Resolution 8/25/2020 Agenda Item: 3b CITY COUNCIL AGENDA HuntsvilleDefease\2020: Resolution RESOLUTION NO. 2020- 28 RESOLUTION AUTHORIZING THE DEFEASANCE AND REDEMPTION OF THE CITY'S $3,005,000 OUTSTANDING COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 2001; AUTHORIZING EXECUTION OF AN ESCROW AGREEMENT IN CONNECTION WITH THE DEFEASANCE; AND AUTHORIZING OTHER MATTERS RELATED TO THE DEFEASANCE AND REDEMPTION OF SUCH CERTIFICATES OF OBLIGATION WHEREAS, the City of Huntsville, Texas (the "City") has duly issued and there is now outstanding the following obligations: City of Huntsville, Texas Combination Tax and Revenue Certificates of Obligation, Series 2001, outstanding in the aggregate principal amount of $3,005,000 (the "Series 2001 Obligations"); and WHEREAS, the Series 2001 Obligations were issued to construct and equip the Ravens Nest Golf Course (the "Golf Course") which is currently leased to Sam Houston State University, a member of the Texas State University System (the "University") and pursuant to a proposed Lease Buyout Agreement (the "Agreement") the City proposes to sell the Golf Course to the University in accordance with the terms of the Agreement; and WHEREAS, in connection with the proposed sell of the Golf Course and as a requirement of the Agreement, the City Council of the City hereby deems it to be in the best interest of the City to the apply the funds received from the University together with other lawfully available funds of the City to defease and redeem in its entirety the outstanding Series 2001 Obligations on the first available redemption date after the giving of notice and compliance with the provisions of the ordinance authorizing the issuance of the Series 2001 Obligations. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF HUNTSVILLE, TEXAS THAT: Section 1. Subject to the receipt of funds from the University pursuant to the Agreement, the City hereby calls for redemption the Series 2001 Obligations. Attached to this Resolution as Exhibit "A" and made a part hereof for all purposes, is a copy of the conditional notice of redemption and defeasance for the Series 2001 Obligations in substantially final form with such changes approved by the Acting City Manager and Director of Finance. The Acting City Manager, the Director of Finance, the City Attorney, Bond Counsel to the City and the paying agent for the Series 2001 Obligations are hereby authorized to take all actions necessary to effectuate the defeasance and redemption of the Series 2001 Obligations, including sending all notices of such defeasance and redemption required by the ordinance authorizing the Series 2001 Obligations. Section 2. The City hereby authorizes the deposit of funds received from the University pursuant to the Agreement together with lawfully available funds of the City sufficient HuntsvilleDefeasance\2020: Resolution 2 to defease and redeem all of the outstanding Series 2001 Obligations shall be deposited with Wells Fargo Bank, N.A., as Escrow Agent for such obligations, pursuant to the terms of an Escrow Agreement by and between the City and Wells Fargo Bank, N.A.. (the "Escrow Agreement"). The Escrow Agreement in substantially the form and substance attached hereto as Exhibit "B" is hereby approved, and the Director of Finance is hereby authorized to complete, amend, modify and execute the Escrow Agreement, as necessary. The City hereby determines and authorizes that such funds deposited under the Escrow Agreement shall be used to defease and redeem the 2001 Obligations. Section 3. The Director of Finance is hereby authorized to transfer City funds as necessary in accordance with the budget transfer ordinance to defease and redeem the Series 2001 Obligations. Section 4. The Director of Finance is hereby expressly authorized, empowered and directed to do and perform all such acts and things, including giving any notices as may be required by the City's continuing disclosure obligations, if any, with respect to the Series 2001 Obligations and all other instruments, whether or not herein mentioned, as may be necessary or desirable in order to carry out the terms and provisions of this Resolution and the ordinance authorizing the Series 2001 Obligations. Section 5. If any provision of this Resolution or the application thereof to any circumstance shall be held to be invalid, the remainder of this Resolution and the application thereof to other circumstances shall nevertheless be valid, and this City Council hereby declares that this Resolution would have been enacted without such invalid provision. Section 6. This Resolution shall be in full force and effect immediately upon its passage and approval. Passed and approved this 25th day of August, 2020. CITY OF HUNTSVILLE, TEXAS _________________________________ Andy Brauninger, Mayor ATTEST: APPROVED AS TO FORM: ______________________ ________________________ Brenda Poe, City Secretary Leonard Schneider, City Attorney HuntsvilleDefeasance\2020: Resolution A-2 EXHIBIT "A" CONDITIONAL NOTICE OF DEFEASANCE AND REDEMPTION Conditional Notice is hereby given that the following obligations issued by the City of Huntsville, Texas, have been called for redemption prior to their scheduled maturities, at a price of par and accrued interest to the date of redemption, to-wit: City of Huntsville, Texas Combination Tax and Revenue Certificates of Obligation, Series 2001, maturing on August 15 as further described below (the "Obligations") CUSIP Number* Maturity Date (August 15) Principal Amount Interest Rate Redemption Date** 447258KP8 2021 $185,000 4.900% 9-28-2020 447258KR4 2023 $400,000 5.000% 9-28-2020 447258KU7 2026 $680,000 5.000% 9-28-2020 447258LA0 2032 $1,740,000 5.000% 9-28-2020 ______ * The CUSIP Numbers are provided for the convenience of the holders of the Obligations. The City and the Paying Agent do not warrant the accuracy of the CUSIP Numbers, and neither shall be responsible for any error of any nature relating to CUSIP Numbers. **Preliminary, subject to change. Defeasance and redemption of the Obligations is subject to receipt by the City of certain funds by a third party. If the Obligations are defeased and redeemed as provided in this Conditional Notice of Defeasance/Redemption, due provision for the payment of the Obligations shall have been made with Wells Fargo Bank, N.A. (the "Bank"), the paying agent for said obligations, and said obligations shall be presented for payment either in person or by mail, at the following address: Interest on the redeemed obligations shall cease to accrue thereon after their redemption date. In compliance with section 3406 of the Internal Revenue Code of 1986, as amended, payors making certain payments due on debt securities may be obligated to deduct and withhold a portion of such payment from the remittance to any payee who has failed to provide such payor with a valid taxpayer identification number. To avoid the imposition of this withholding tax, such payees should submit a certified taxpayer identification number when surrendering Obligations for redemption. CITY OF HUNTSVILLE, TEXAS First Class/Registered/Certified Mail By Overnight or Courier By Hand Wells Fargo Bank, N.A. Corporate Trust Operations P.O. Box 1517 Minneapolis, MN 55480-1517 Wells Fargo Bank, N.A. Corporate Trust Operations N9303-121 6th & Marquette Avenue Minneapolis, MN 55479 Wells Fargo Bank, N.A. Northstar East Building 608 2nd Ave. So., 12th Floor Minneapolis, MN HuntsvilleDefeasance\2020: Resolution B-1 EXHIBIT "B" ESCROW AGREEMENT Huntsville\RedemptionCOs2001\2020: EscrowAgrmnt 1 ESCROW AGREEMENT Defeasance and Redemption of City of Huntsville, Texas Combination Tax and Revenue Certificates of Obligation, Series 2001 (the "Defeased Obligations") THIS ESCROW AGREEMENT, dated as of August 31, 2020 (herein, together with any amendments or supplements hereto, called the "Agreement"), entered into by and between the City of Huntsville, Texas (the "Issuer") and Wells Fargo Bank, N.A., as escrow agent (together with any successor in such capacity, the "Escrow Agent"). The addresses of the Issuer and the Escrow Agent are shown on Exhibit "A" attached hereto and made a part hereof. W I T N E S S E T H: WHEREAS, the Issuer heretofore issued and there presently remain outstanding the obligations described in the Sufficiency Certificate of the City's Financial Advisor (the "Sufficiency Certificate") relating to the Defeased Obligations; and WHEREAS, the Defeased Obligations are scheduled to mature in such years, bear interest at such rates, subject to redemption and be payable at such times and in such amounts as are set forth in the Report; and WHEREAS, when firm banking arrangements have been made for the payment of principal and interest to the redemption dates of the Defeased Obligations, then the Defeased Obligations shall no longer be regarded as outstanding except for the purposes of receiving payment from the funds provided for such purpose and Issuer's right to call such Defeased Obligations for redemption in accordance with the provisions of the ordinance authorizing their issuance upon compliance with the provisions of Texas law; and F WHEREAS, Chapter 1207, Texas Government Code, as amended ("Chapter 1207"), authorizes the Issuer to deposit cash directly with an eligible institution, including any place of payment (paying agent) for any of the Defeased Obligations, and such deposit, if made before such payment dates and in sufficient amounts, shall constitute the making of firm banking and financial arrangements for the discharge and final payment of the Defeased Obligations; and WHEREAS, Chapter 1207 further authorizes the Issuer to enter into an escrow agreement with any such eligible institution for the Defeased Obligations with respect to the safekeeping, investment, administration and disposition of any such deposit, upon such terms and conditions as the Issuer and such institution may agree; and WHEREAS, this Agreement constitutes an escrow agreement of the kind authorized and required by said Chapter 1207; and WHEREAS, Wells Fargo Bank, N.A., is the paying agent for the Defeased Obligations; and Huntsville\RedemptionCOs2001\2020: EscrowAgrmnt 2 WHEREAS, Chapter 1207 makes it the duty of the Escrow Agent to comply with the terms of this Agreement and timely make available for the Defeased Obligations the amounts required to provide for the payment of the principal of and interest on such obligations when due, and in accordance with their terms, but solely from the funds, in the manner, and to the extent provided in this Agreement; and WHEREAS, the Issuer is making a cash deposit to provide for the payment of the principal of the Defeased Obligations on the redemption date and the interest thereon to such date as set forth in the Sufficiency Certificate; and NOW, THEREFORE, in consideration of the mutual undertakings, promises and agreements herein contained, the sufficiency of which are hereby acknowledged, and in order to secure the full and timely payment of principal of and the interest on the Defeased Obligations, the Issuer and the Escrow Agent mutually undertake, promise, and agree for themselves and their respective representatives and successors, as follows: ARTICLE I DEFINITIONS AND INTERPRETATIONS Section 1.01. Recitals. The recitals set forth in the preamble hereof are incorporated herein and shall have the same force and effect as if set forth in the Section. Section 1.02. Definitions. Unless the context clearly indicates otherwise, the following terms shall have the meanings assigned to them below when they are used in this Agreement: "Code" means the Internal Revenue Code of 1986, as amended, or to the extent applicable the Internal Revenue Code of 1954, together with any other applicable provisions of any successor federal income tax laws. "Escrow Fund" means the fund created by this Agreement to be administered by the Escrow Agent pursuant to the provisions of this Agreement. "Paying Agent" means Wells Fargo Bank, N.A., acting in its capacity as paying agent for the Defeased Obligations. Section 1.03. Other Definitions. The terms "Agreement," "Issuer," "Escrow Agent," "Paying Agent," "Defeased Obligations" and "Sufficiency Certificate" when they are used in this Agreement, shall have the meanings assigned to them in the title and preamble to this Agreement. Section 1.04. Interpretations. The titles and headings of the articles and sections of this Agreement have been inserted for convenience and reference only and are not to be considered a part hereof and shall not in any way modify or restrict the terms hereof. This Agreement and all of the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein and to achieve the intended purpose of providing for the refunding of the Defeased Obligations in accordance with applicable law. Huntsville\RedemptionCOs2001\2020: EscrowAgrmnt 3 ARTICLE II DEPOSIT OF FUNDS Section 2.01. Deposits in the Escrow Fund. The Issuer shall deposit, or cause to be deposited, with the Escrow Agent, for deposit in the Escrow Fund, cash in the amount as set forth in the Sufficiency Certificate, and the Escrow Agent shall, upon the receipt thereof, acknowledge such receipt to the Issuer in writing. ARTICLE III CREATION AND OPERATION OF ESCROW FUND Section 3.01. Escrow Fund. The Escrow Agent has created on its books a special trust fund and irrevocable escrow to be known as City of Huntsville, Texas Combination Tax and Revenue Certificates of Obligation, Series 2001 (2020 Cash Defeasance) (the "Escrow Fund"). The Escrow Agent hereby agrees that upon receipt thereof it will irrevocably deposit to the credit of the Escrow Fund the funds and the Escrowed Securities described in the Sufficiency Certificate. Such deposit, all proceeds therefrom, and all cash balances from time to time on deposit therein (a) shall be the property of the Escrow Fund, (b) shall be applied only in strict conformity with the terms and conditions of this Agreement, and (c) are hereby irrevocably pledged to the payment of the principal of and interest on the Defeased Obligations, which payment shall be made by timely transfers of such amounts at such times as are provided for in Section 3.02 hereof. When the final transfers have been made for the payment of such principal of and interest on the Defeased Obligations, any balance then remaining in the Escrow Fund shall be transferred to the Issuer, and the Escrow Agent shall thereupon be discharged from any further duties hereunder. Section 3.02. Payment of Principal and Interest. The Escrow Agent is hereby irrevocably instructed to transfer from the cash on deposit in the Escrow Fund, the amounts required to pay the principal of the Defeased Obligations at the redemption date and interest thereon to such redemption date in the amounts and at the times shown in the Sufficiency Certificate. Section 3.03. Sufficiency of Escrow Fund. The Issuer represents that the cash balance on deposit in the Escrow Fund will be at all times sufficient to pay the interest on the Defeased Obligations as such interest comes due and the principal of the Defeased Obligations on the Defeased Obligations redemption date, all as more fully set forth in the Sufficiency Certificate. If, for any reason, at any time, the cash balances on deposit in the Escrow Fund shall be insufficient to transfer the amounts required by the Paying Agent for the Defeased Obligations to make the payments set forth in Section 3.02 hereof, the Issuer shall timely deposit in the Escrow Fund, from any funds that are lawfully available therefor, additional funds in the amounts required to make such payments. Notice of any such insufficiency shall be given as promptly as practicable as hereinafter provided, but the Escrow Agent shall not in any manner be responsible for any insufficiency of funds in the Escrow Fund or the Issuer's failure to make additional deposits thereto. Section 3.04. Trust Fund. The Escrow Agent shall hold at all times the Escrow Fund wholly segregated from all other funds and securities on deposit with the Escrow Agent; it shall Huntsville\RedemptionCOs2001\2020: EscrowAgrmnt 4 never allow the assets of the Escrow Fund to be commingled with any other funds or securities of the Escrow Agent; and it shall hold and dispose of the assets of the Escrow Fund only as set forth herein. The owners of the Defeased Obligations shall be entitled to the same preferred claim and first lien upon all assets of the Escrow Fund to which they are entitled as owners of the Defeased Obligations. The amounts received by the Escrow Agent under this Agreement shall not be considered as a banking deposit by the Issuer, and the Escrow Agent shall have no right to title with respect thereto except as a constructive trustee and Escrow Agent under the terms of this Agreement. The amounts received by the Escrow Agent under this Agreement shall not be subject to warrants, drafts or checks drawn by the Issuer or, except to the extent expressly herein provided, by the Paying Agent. Section 3.05. Security for Cash Balances. Cash balances from time to time on deposit in the Escrow Fund shall, to the extent not insured by the Federal Deposit Insurance Corporation or its successor, be continuously secured by a pledge of direct obligations of, or obligations unconditionally guaranteed by, the United States of America, having a market value at least equal to such cash balances. ARTICLE IV LIMITATION ON INVESTMENTS The Escrow Agent shall not have any power or duty to invest or reinvest any money held hereunder. ARTICLE V APPLICATION OF CASH BALANCES No withdrawals, transfers, or reinvestment shall be made of cash balances in the Escrow Fund. ARTICLE VI RECORDS AND REPORTS Section 6.01. Records. The Escrow Agent will keep books of record and account in which complete and correct entries shall be made of all transactions relating to the receipts, disbursements, allocations and application of the money deposited to the Escrow Fund and all proceeds thereof, and such books shall be available for inspection at reasonable hours and under reasonable conditions by the Issuer and the owners of the Defeased Obligations. Section 6.02. Reports. While this Agreement remains in effect, the Escrow Agent annually shall prepare and send to the Issuer a written report summarizing all transactions relating to the Escrow Fund during the preceding year, including, without limitation, credits to the Escrow Fund as a result of interest payments on and transfers from the Escrow Fund for payments on the Defeased Obligations or otherwise, together with a detailed statement of the cash balance on deposit in the Escrow Fund as of the end of such period. ARTICLE VII CONCERNING THE PAYING AGENT AND ESCROW AGENT Huntsville\RedemptionCOs2001\2020: EscrowAgrmnt 5 Section 7.01. Representations. The Escrow Agent hereby represents that it has all necessary power and authority to enter into this Agreement and undertake the obligations and responsibilities imposed upon it herein, and that it will carry out all of its obligations hereunder. Section 7.02. Limitation on Liability. The liability of the Escrow Agent to transfer funds for the payment of the principal of and interest on the Defeased Obligations shall be limited to the cash on deposit in the Escrow Fund. Notwithstanding any provision contained herein to the contrary, neither the Escrow Agent nor the Paying Agent shall have any liability whatsoever for the insufficiency of funds from time to time in the Escrow Fund, except for the obligation to notify the Issuer as promptly as practicable of any such occurrence. The recitals herein shall be taken as the statements of the Issuer and shall not be considered as made by, or imposing any obligation or liability upon, the Escrow Agent. The Escrow Agent is not a party to the proceedings authorizing the Defeased Obligations and is not responsible for nor bound by any of the provisions thereof (except as a place of payment and paying agent and/or a Paying Agent/Registrar therefor). In its capacity as Escrow Agent, it is agreed that the Escrow Agent need look only to the terms and provisions of this Agreement. The Escrow Agent makes no representations as to the value, conditions or sufficiency of the Escrow Fund, or any part thereof, or as to the title of the Issuer thereto, or as to the security afforded thereby or hereby, and the Escrow Agent shall not incur any liability or responsibility in respect to any of such matters. It is the intention of the parties hereto that the Escrow Agent shall never be required to use or advance its own funds or otherwise incur personal financial liability in the performance of any of its duties or the exercise of any of its rights and powers hereunder. The Escrow Agent shall not be liable for any action taken or neglected to be taken by it in good faith in any exercise of reasonable care and believed by it to be within the discretion or power conferred upon it by this Agreement, nor shall the Escrow Agent be responsible for the consequences of any error of judgment; and the Escrow Agent shall not be answerable except for its own action, neglect or default, nor for any loss unless the same shall have been through its negligence or willful misconduct. Unless it is specifically otherwise provided herein, the Escrow Agent has no duty to determine or inquire into the happening or occurrence of any event or contingency or the performance or failure of performance of the Issuer with respect to arrangements or contracts with others, with the Escrow Agent's sole duty hereunder being to safeguard the Escrow Fund, to dispose of and deliver the same in accordance with this Agreement. If, however, the Escrow Agent is called upon by the terms of this Agreement to determine the occurrence of any event or contingency, the Escrow Agent shall be obligated, in making such determination, only to exercise reasonable care and diligence, and in event of error in making such determination the Escrow Agent shall be liable only for its own willful misconduct or its negligence. In determining the occurrence of any such event or contingency the Escrow Agent may request from the Issuer or any other person such reasonable additional evidence as the Escrow Agent in its discretion may deem Huntsville\RedemptionCOs2001\2020: EscrowAgrmnt 6 necessary to determine any fact relating to the occurrence of such event or contingency, and in this connection may make inquiries of, and consult with, among others, the Issuer at any time. Section 7.03. Compensation. Concurrently with the funding of the Escrow Fund, the Issuer shall pay to the Escrow Agent, as a fee for performing the services hereunder and for all expenses incurred or to be incurred by the Escrow Agent in the administration of this Agreement, the amount set forth in Exhibit "B" attached hereto, the sufficiency of which is hereby acknowledged by the Escrow Agent. In the event that the Escrow Agent is requested to perform any extraordinary services hereunder, the Issuer hereby agrees to pay reasonable fees to the Escrow Agent for such extraordinary services and to reimburse the Escrow Agent for all expenses incurred by the Escrow Agent in performing such extraordinary services, and the Escrow Agent hereby agrees to look only to the Issuer for the payment of such fees and reimbursement of such expenses. The Escrow Agent hereby agrees that in no event shall it ever assert any claim or lien against the Escrow Fund for any fees for its services, whether regular or extraordinary, as Escrow Agent, or in any other capacity, or for reimbursement for any of its expenses. Section 7.04. Successor Escrow Agents. If at any time the Escrow Agent or its legal successor or successors should become unable, through operation or law or otherwise, to act as escrow agent hereunder, or if its property and affairs shall be taken under the control of any state or federal court or administrative body because of insolvency or bankruptcy or for any other reason, a vacancy shall forthwith exist in the office of Escrow Agent hereunder. In such event the Issuer, by appropriate action, promptly shall appoint an Escrow Agent to fill such vacancy. If no successor Escrow Agent shall have been appointed by the Issuer within 60 calendar days, a successor may be appointed by the owners of a majority in principal amount of the Defeased Obligations then outstanding by an instrument or instruments in writing filed with the Issuer, signed by such owners or by their duly authorized attorneys-in-fact. If, in a proper case, no appointment of a successor Escrow Agent shall be made pursuant to the foregoing provisions of this section within three months after a vacancy shall have occurred, the owner of any Defeased Obligation may apply to any court of competent jurisdiction to appoint a successor Escrow Agent. Such court may thereupon, after such notice, if any, as it may deem proper, prescribe and appoint a successor Escrow Agent. Any successor Escrow Agent shall be a corporation organized and doing business under the laws of the United States or the State of Texas, authorized under such laws to exercise corporate trust powers, authorized under Texas law to act as an escrow agent, having its principal office and place of business in the State of Texas, having a combined capital and surplus of at least $5,000,000 and subject to the supervision or examination by Federal or State authority. Any successor Escrow Agent shall execute, acknowledge and deliver to the Issuer and the Escrow Agent an instrument accepting such appointment hereunder, and the Escrow Agent shall execute and deliver an instrument transferring to such successor Escrow Agent, subject to the terms of this Agreement, all the rights, powers and trusts of the Escrow Agent hereunder. Upon the request of any such successor Escrow Agent, the Issuer shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor Escrow Agent all such rights, powers and duties. Huntsville\RedemptionCOs2001\2020: EscrowAgrmnt 7 The Escrow Agent at the time acting hereunder may at any time resign and be discharged from the trust hereby created by giving not less than sixty (60) days' written notice to the Issuer and publishing notice thereof, specifying the date when such resignation will take effect, in a newspaper printed in the English language and with general circulation in New York, New York, such publication to be made once at least three (3) weeks prior to the date when the resignation is to take effect. No such resignation shall take effect unless a successor Escrow Agent shall have been appointed by the owners of the Defeased Obligations or by the Issuer as herein provided and such successor Escrow Agent shall be a paying agent for the Defeased Obligations and shall have accepted such appointment, in which event such resignation shall take effect immediately upon the appointment and acceptance of a successor Escrow Agent. Under any circumstances, the Escrow Agent shall pay over to its successor Escrow Agent proportional parts of the Escrow Agent's fee and, if applicable, its Paying Agent's fee hereunder. ARTICLE VIII MISCELLANEOUS Section 8.01. Notice. Any notice, authorization, request, or demand required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given when mailed by registered or certified mail, postage prepaid addressed to the Issuer or the Escrow Agent at the address shown on Exhibit "A" attached hereto. The United States Post Office registered or certified mail receipt showing delivery of the aforesaid shall be conclusive evidence of the date and fact of delivery. Any party hereto may change the address to which notices are to be delivered by giving to the other parties not less than ten (10) calendar days prior notice thereof. Section 8.02. Termination of Responsibilities. Upon the taking of all the actions as described herein by the Escrow Agent, the Escrow Agent shall have no further obligations or responsibilities hereunder to the Issuer, the owners of the Defeased Obligations or to any other person or persons in connection with this Agreement. Section 8.03. Binding Agreement. This Agreement shall be binding upon the Issuer and the Escrow Agent and their respective successors and legal representatives, and shall inure solely to the benefit of the owners of the Defeased Obligations, the Issuer, the Escrow Agent and their respective successors and legal representatives. Section 8.04. Severability. In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, but this Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. Section 8.05. Texas Law Governs. This Agreement shall be governed exclusively by the provisions hereof and by the applicable laws of the State of Texas. Section 8.06. Time of the Essence. Time shall be of the essence in the performance of obligations from time to time imposed upon the Escrow Agent by this Agreement. Huntsville\RedemptionCOs2001\2020: EscrowAgrmnt 8 Section 8.07. Effective Date of Agreement. This Agreement shall be effective upon receipt by the Escrow Agent of the funds described in the Sufficiency Certificate, together with the specific sums stated in Section 7.03 for Escrow Agent and paying agency fees, expenses, and services. Section 8.08. Amendments. This Agreement shall not be amended except to cure any ambiguity or formal defect or omission in this Agreement. No amendment shall be effective unless the same shall be in writing and signed by the parties thereto. No such amendment shall adversely affect the rights of the holders of the Defeased Obligations. Section 8.09. Counterparts. This Agreement may be executed in one or more counterparts, each and all of which shall constitute one and the same instrument. Section 8.10. Anti-Boycott. The Escrow Agent hereby verifies that it and its parent company, wholly- or majority-owned subsidiaries, and other affiliates, if any, do not boycott Israel and, to the extent this Agreement is a contract for goods or services, will not boycott Israel during the term of this Agreement. The foregoing verification is made solely to comply with Chapter 2271, Texas Government Code, and to the extent such Section does not contravene applicable Federal law. As used in the foregoing verification, 'boycott Israel' means refusing the deal with, terminating business activities, with, or otherwise taking any action that is intended to penalize, inflict economic harm on, or limit commercial relations specifically with Israel, or with a person or entity doing business in Israel or in an Israeli-controlled territory, but does not include an action made for ordinary business purposes. The Escrow Agent understand 'affiliate' to mean an entity that controls, is controlled by, or is under common control with the Escrow Agent and exists to make a profit. Section 8.11. Terrorist Organizations. The Escrow Agent represents that neither it nor any of its parent company, wholly- or majority-owned subsidiaries, and other affiliates is a company identified on a list prepared and maintained by the Texas Comptroller of Public Accounts under Section 2252.153 or Section 2270.0201, Texas Government Code, and posted on any of the following pages of such officer’s internet website: https://comptroller.texas.gov/purchasing/docs/sudan-list.pdf, https://comptroller.texas.gov/purchasing/docs/iran-list.pdf, or https://comptroller.texas.gov/purchasing/docs/fto-list.pdf. The foregoing representation is made solely to comply with Section 2252.152, Texas Government Code, and to the extent such Section does not contravene applicable Federal law and excludes the Escrow Agent and each of its parent company, wholly- or majority-owned subsidiaries, and other affiliates, if any, that the United States government has affirmatively declared to be excluded from its federal sanctions regime relating to Sudan or Iran or any federal sanctions regime relating to a foreign terrorist organization. The Escrow Agent understands "affiliate" to mean any entity that controls, is controlled by, or is under common control with the Escrow Agent and exists to make a profit. Huntsville\RedemptionCOs2001\2020: EscrowAgrmnt 9 Section 8.12. Wiring Instructions. All funds for deposit in the Escrow Fund held pursuant to this Agreement shall be wired to Wells Fargo Bank, N.A.: ABA: 121000248 Account: ________* (*for security purposes provided separately prior to funding) BNF: GO Paying Agt & Escrow Acct FFC: City of Huntsville 01 Escrow and AA Kelly Ramaley [Remainder of Page Intentionally Left Blank] Huntsville\RedemptionCOs2001\2020: EscrowAgrmnt EASigPg EXECUTED as of the date first written above. CITY OF HUNTSVILLE, TEXAS By: ___________________________________ Name: Steve Ritter Title: Director of Finance Huntsville, Texas 1212 Avenue M Huntsville, Texas 77340 Huntsville\RedemptionCOs2001\2020: EscrowAgrmnt EASigPg WELLS FARGO BANK, N.A. By_________________________________________ Authorized Signatory Huntsville\RedemptionCOs2001\2020: EscrowAgrmnt EXHIBIT "A" ADDRESSES OF THE ISSUER AND THE ESCROW AGENT Issuer Huntsville, Texas 1212 Avenue M Huntsville, Texas 77340 Attn: Director of Finance Escrow Agent Wells Fargo Bank, N.A. Corporate Trust Services 600 S. 4th St., 6th Floor MAC N9300-060 Minneapolis, MN 554159 ATTN: Jeffrey K. Carlson Huntsville\RedemptionCOs2001\2020: EscrowAgrmnt EXHIBIT "B" ESCROW AGENT FEE SCHEDULE Acceptance Fee - $1,000.00 Annual Fee - $1,000.00 Redemption Fee - $ 500.00 HUNTSVILLE\Defeasance\2020: ResolutionCert CERTIFICATE FOR RESOLUTION NO. 2020-28 THE STATE OF TEXAS ' COUNTY OF WALKER ' CITY OF HUNTSVILLE ' We, the undersigned officers and members of the City of Huntsville, Texas (the "City"), hereby certify as follows: 1. The City Council of the City convened in SPECIAL MEETING ON THE 25TH DAY OF AUGUST, 2020, at Council Chambers, 1212 Avenue M, Huntsville, Texas 77340 (the "Meeting"), and the roll was called of the duly constituted officers and members of the City, to-wit: Andy Brauninger, Mayor Joe Rodriguez, Mayor Pro-Tem, Ward 4 Councilmember Daiquiri Beebe, Ward 1 Councilmember Russell Humphrey, Ward 2 Councilmember Blake Irving, Ward 3 Councilmember Bert Lyle, Position 1 Councilmember At Large Dee Howard Mullins, Position 2 Councilmember At Large Clyde Loll, Position 3 Councilmember At Large Mari Montgomery, Position 4 Councilmember At Large and all of the persons were present, except the following absentees: ________________, thus constituting a quorum. Whereupon, among other business, the following was transacted at the Meeting: a written RESOLUTION AUTHORIZING THE DEFEASANCE AND REDEMPTION OF THE CITY'S $3,005,000 OUTSTANDING COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 2001; AUTHORIZING THE EXECUTION OF AN ESCROW AGREEMENT IN CONNECTION WITH THE DEFEASANCE; AND OTHER MATTERS RELATING TO THE DEFEASANCE AND REDEMPTION OF THE CERTIFICATES OF OBLIGATION was duly introduced for the consideration of the City Council. It was then duly moved and seconded that the Resolution be passed on first reading; and, after due discussion, said motion carrying with it the passage of the Resolution, prevailed and carried by the following vote: AYES: __ NOES: __ 2. A true, full and correct copy of the Resolution passed at the Meeting described in the above and foregoing paragraphs is attached to and follows this Certificate; that the Resolution has been duly recorded in the City Council's minutes of the Meeting; that the above and foregoing HUNTSVILLE\Defeasance\2020: ResolutionCert paragraphs are a true, full and correct excerpt from the City Council's minutes of the Meeting pertaining to the passage of the Resolution; that the persons named in the above and foregoing paragraphs are the duly chosen, qualified and acting officers and members of the City Council as indicated therein; that each of the officers and members of the City Council was duly and sufficiently notified officially and personally, in advance, of the time, place and purpose of the Meeting, and that the Resolution would be introduced and considered for passage at the Meeting, and each of the officers and members consented, in advance, to the holding of the Meetings for such purpose, and that the Meeting was open to the public and public notice of the time, place and purpose of the meeting was given, all as required by Chapter 551, Texas Government Code. 3. The Mayor of the City has approved and hereby approves the Resolution; that the Mayor and the City Secretary of the City have duly signed the Resolution; and that the Mayor and the City Secretary of the City hereby declare that their signing of this Certificate shall constitute the signing of the attached and following copy of the Resolution for all purposes. HUNTSVILLE\Defeasance\2020: ResolutionCert SIGNED AND SEALED the 25th day of August, 2020. ____________________________________ ____________________________________ City Secretary Mayor [CITY SEAL]