ORD 2007-32-A - Issue Water - Sewer Bonds Series 2007 10-02-2007ORDINANCE NO. 2007-32A-
ORDINANCE AUTHORIZING CITY OF HUNTSVILLE, TEXAS WATERWORKS AND
SEWER SYSTEM REVENUE BONDS, SERIES 2007; AUTHORIZING THE PLEDGE
OF CERTAIN REVENUES IN SUPPORT OF THE BOND; APPROVING AND
AUTHORIZING A PAYING AGENT /REGISTRAR AGREEMENT AND A PURCHASE
AND INVESTMENT LETTER; AND AUTHORIZING OTHER MATTERS RELATED
TO THE ISSUANCE OF THE BOND
fl v VILLE!Wwssxevmz ommanr
ORDINANCE NO. 2007 -32
ORDINANCE AUTHORIZING CITY OF HUNTSVILLE, TEXAS WATERWORKS AND
SEWER SYSTEM REVENUE BONDS, SERIES 2007; AUTHORIZING THE PLEDGE
OF CERTAIN REVENUES IN SUPPORT OF THE BOND; APPROVING AND
AUTHORIZING A PAYING AGENT /REGISTRAR AGREEMENT AND A PURCHASE
AND INVESTMENT LETTER; AND AUTHORIZING OTHER MATTERS RELATED
TO THE ISSUANCE OF THE BOND
TABLE OF CONTENTS
HUMS VIUD W W SSRSVN07. 0N,—,e
Page
RECITALS ....................................
..............................1
SECTION 1.
DEFINITIONS ................... ..............................1
SECTION 2.
AMOUNT AND PURPOSE OF THE BOND ...........................
1
SECTION 3.
DESIGNATION, DATE, DENOMINATIONS, NUMBERS, AND
MATURITIES OF THE BOND ...... ...............................
2
SECTION 4.
INTEREST ...................... ..............................2
SECTION 5.
CHARACTERISTICS OF THE BOND . ..............................
3
SECTION 6.
FORM OF BOND ................ ...............................
5
SECTION 7,
PLEDGE OF NET REVENUES
5
SECTION 8.
WATERWORKS AND SEWER SYSTEM FUND ......................
5
SECTION 9.
INTEREST AND SINKING FUND
6
SECTION 10.
RESERVE FUND ................ ...............................
6
SECTION 11.
TRANSFERS FROM FUNDS . ...... ...............................
7
SECTION 12.
SECURITY OF FUNDS - INVESTMENTS ...........................
8
SECTION 13.
ISSUANCE OF ADDITIONAL BONDS - REFUNDING BONDS -
OBLIGATIONS SECURED BY INFERIOR LIEN ......................
8
SECTION 14.
RATES AND CHARGES ..........
SECTION 15.
MAINTENANCE AND OPERATION - INSURANCE . .................
10
SECTION 16.
RECORDS - ACCOUNTS - ACCOUNTING REPORTS .................
10
SECTION 17.
COVENANTS REGARDING TAX EXEMPTION OF INTEREST
ON THE BONDS ................ ...............................
11
SECTION 18.
CONTINUING DISCLOSURE UNDERTAKING ......................
14
SECTION 19.
SPECIAL COVENANTS .......... ...............................
14
SECTION 20.
REMEDY IN EVENT OF DEFAULT ...............................
14
SECTION 21.
SPECIAL OBLIGATIONS ........ ...............................
15
SECTION 22.
DEFEASANCE OF THE BOND .... ...............................
15
SECTION 23.
DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BOND ...
16
SECTION 24.
AMENDMENT OF ORDINANCE .. ...............................
17
SECTION 25.
SALE AND DELIVERY OF THE BOND ............................
19
SECTION 26.
CUSTODY, APPROVAL AND REGISTRATION OF THE BOND;
BOND COUNSEL'S OPINION, BOND INSURANCE AND CUSIP
NUMBERS ...................... .............................19
HUMS VIUD W W SSRSVN07. 0N,—,e
Page
SECTION 27.
AMENDMENTS TO ORDINANCE UPON DISCHARGE OR
AMENDMENT OF PREVIOUSLY ISSUED BONDS ..................
20
SECTION 28.
NO RECOURSE AGAINST CITY OFFICIALS .......................
23
SECTION 29.
FURTHER ACTIONS ............ ...............................
23
SECTION 30.
INTERPRETATIONS ............ ...............................
24
SECTION 31.
INCONSISTENT PROVISIONS .... ...............................
24
SECTION 32.
INTERESTED PARTIES ......... ...............................
24
SECTION 33.
INCORPORATION OF RECITALS . ...............................
24
SECTION 34.
SEVERABILITY ................ ...............................
24
SECTION 35.
REPEALER ...................... .............................24
SECTION 36.
EFFECTIVE DATE .............. ...............................
24
Signatures and Seal ............................ .............................25
Exhibit A - Definitions
Exhibit B - Form of Series 2007 Bond
Exhibit C - Description of Annual Financial Information
Hui 'Viu,F/wWSSREVwx Ord =� ii
ORDINANCE NO. 2007-32
ORDINANCE AUTHORIZING CITY OF HUNTSVILLE, TEXAS WATERWORKS AND
SEWER SYSTEM REVENUE BONDS, SERIES 2007; AUTHORIZING THE PLEDGE
OF CERTAIN REVENUES IN SUPPORT OF THE BOND; APPROVING AND
AUTHORIZING A PAYING AGENT /REGISTRAR AGREEMENT AND A PURCHASE
AND INVESTMENT LETTER; AND AUTHORIZING OTHER MA'T'TERS RELATED
TO THE ISSUANCE OF THE BOND
STATE OF TEXAS
COUNTY OF WALKER
CITY OF HUNTSVILLE
WHEREAS, the City Council has determined to issue $ 1,995,000 of revenue bonds for the
purpose of improvements and extensions to the City's Waterworks and Sewer System (hereinafter
defined) and payment of professional services including legal, fiscal, architectural, engineer and any
costs of issuance and the City Council deems it necessary and desirable to issue such bonds at this
time; and
WHEREAS, the Bond (hereinafter defined) authorized by this Ordinance is being issued and
delivered pursuant to the City Charter and to Chapter 1502,, Texas Government Code, as amended,
and other applicable laws; and
WHEREAS, the City Council further finds and determines that the revenue bonds herein
authorized can be issued on parity with the Previously Issued Bonds (hereinafter defined) payable
from and secured by a first lien on and a pledge of the Net Revenues of the City's Combined
Waterworks and Sewer System in that the terms and conditions precedent specified for the issuance
of parity additional obligations have been satisfied; and
WHEREAS, it is hereby officially found and determined that the meeting at which this
Ordinance was passed was open to the public, and public notice of the time, place and purpose of said
meeting was given, all as required by Chapter 551, Texas Government Code.
THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF
HUNTSVILLE, TEXAS THAT:
SECTION 1. DEFINITIONS. For all purposes of this Ordinance, except as otherwise
expressly provided or unless the context otherwise requires, the terms defined in Exhibit "A" to this
Ordinance have the meanings assigned to them in Exhibit "A ".
SECTION 2. AMOUNT AND PURPOSE OF THE BOND. The bond or bonds ofthe City
further described in Section 3 of this Ordinance and herein defined as the Bond are hereby authorized
to be issued and delivered in the aggregate principal amount of $1,995,000 FOR THE PURPOSE
HWTSVLLDIVWSSUVOV: OrdN ncl
OF IMPROVEMENTS AND EXTENSIONS TO THE CITY'S WATERWORKS AND
SEWER SYSTEM (HEREINAFTER DEFINED) AND PAYMENT OF PROFESSIONAL
SERVICES INCLUDING LEGAL, FISCAL, ARCHITECTURAL, ENGINEERAND COSTS
OF ISSUANCE.
SECTION 3. DESIGNATION, DA'Z'E, DENOMINATION, NUMBERS, AND
MATURITIES OF THE BOND. The Bond issued pursuant to this Ordinance for the purpose
described in Section 2 of this Ordinance shall be designated: "CITY OF HUNTSVILLE, TEXAS
WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2007," and initially
there shall be issued, sold, and delivered hereunder one fully registered bond, dated October 15, 2007,
in the denomination and principal amount hereinafter stated, numbered consecutively from R -t
upward (except the initial Bond delivered to the Attorney General of the State of Texas which shall
be numbered T -1), payable to the respective initial registered owners thereof (as designated in Section
25 hereof), or to the registered assignee or assignees of the Bond or any portion or portions thereof
(in each case, the "Registered Owner "), and the Bond shall have a final maturity date of August 15,
2017 in the principal amount of $1,995,000.
SECTION 4. INTEREST. The Bond shall bear interest from the dates specified in the FORM
OF BOND set forth in Exhibit 'B" to this Ordinance to their respective date of maturity or
redemption prior to maturity at a rate of 4.025 %. Said interest shall be payable in the manner
provided and on the dates stated in the FORM OF BOND set forth in Exhibit "B" to this Ordinance.
__SECTION 5. CHARACTERISTICS OF THE BOND. (a) Registration, Transfer, and
Exchange; Authentication. The City shall keep or cause to be kept at the designated office for
payment ofJPMorgan Chase Bank, MA., (the "Paying Agent /Registrar ") books or records for the
registration ofthe transfer and exchange of the Bond (the "Registration Books "), and the Cityhereby
appoints the Paying Agent/Registrar as its registrar and transfer agent to keep such books or records
and make such registrations of transfers and exchanges under such reasonable regulations as the City
and Paying Agent /Registrar may prescribe; and the Paying Agent/Registrar shall make such
registrations, transfers and exchanges as herein provided. The Paying Agent/Registrar Agreement
between the City and the Paying Agent /Registrar, in substantially the form presented to the City
Council at the meeting at which this Ordinance was considered, is hereby approved and the Mayor
and City Secretary of the City are hereby authorized to execute the Paying Agent/Registrar
Agreement and approve any changes in the final form thereof.
The Paying Agent /Registrar shall obtain and record in the Registration Books the address of
the registered owner of each Bond to which payments with respect to the Bond shall be mailed, as
herein provided; but it shall be the duty of each registered owner to notify the Paying Agent/Registrar
in writing of the address to which payments shall be mailed, and such interest payments shall not be
mailed unless such notice has been given. To the extent possible and under reasonable circumstances,
all transfers of the Bond shall be made within three business days after request and presentation
thereof. The City shall have the right to inspect the Registration Books during regular business hours
of the Paying Agent /Registrar, but otherwise the Paying Agent/Registrar shall keep the Registration
HUNT VILL&WWSSRMF: DM ance
Books confidential and, unless otherwise required by law, shall not permit their inspection by any
other entity. The Paying Agent /Registrar's standard or customary fees and charges for making such
registration, transfer, exchange and delivery of a substitute Bond or Bonds shall be paid as provided
in the FORM OF BOND set forth in Exhibit 'B" to this Ordinance. Registration of assignments,
transfers and exchanges of the Bond shall be made in the mamrer provided and with the effect stated
in the FORM OF BOND set forth in Exhibit "B" to this Ordinance. Each substitute Bond shall bear
a letter and /or number to distinguish it from each other Bond.
Except as provided in (c) below, an authorized representative of the Paying Agent/Registrar
shall, before the delivery of any such Bond, date and manually sign the Paying Agent/Registrar's
Authentication Certificate, and no such Bond shall be deemed to be issued or outstanding unless such
Certificate is so executed. The Paying Agent /Registrar promptly shall cancel all paid Bonds and
Bonds surrendered for transfer and exchange. No additional ordinances, orders or resolutions need
be passed or adopted by the governing body of the City or any other body or person so as to
accomplish the foregoing transfer and exchange of any Bond or portion thereof, and the Paying
Agent/Registrar shall provide for the preparation, execution and delivery of the substitute Bonds in
the manner prescribed herein. Pursuant to Chapter 1201, Texas Government Code, and particularly
Subchapter D thereof, the duty of transfer and exchange of Bonds as aforesaid is hereby imposed
upon the Paying Agent /Registrar, and, upon the execution of said Certificate, the transferred and
exchanged Bond shall be valid, incontestable and enforceable in the same manner and with the same
effect as the Bonds which initially were issued and delivered pursuant to this Ordinance, approved
by the Attorney General and registered by the Comptroller of Public Accounts.
(b) Payment of Bonds and Interest. The City hereby further appoints the Paying
Agent/Registrar to act as the paying agent for paying the principal of and interest on the Bonds, all
as provided in this Ordinance. The Paying Agent/ Registrar shall keep proper records ofall payments
made by the City and the Paying Agent /Registrar with respect to the Bonds.
(c) In General, The Bond (i) shall be issued in fully registered form with the principal of and
interest on the Bond to be payable only to the registered owners thereof, (ii) may and shall be
redeemed prior to its scheduled maturity, (iii) may be transferred and assigned, ('iv) may be exchanged
for other Bonds of the same Series, (v) shall have the characteristics, (vi) shall be signed, sealed,
executed and authenticated, (vii) the principal ofand interest on the Bonds shall be payable, and (viii)
shall be administered and the Paying Agent/Registrar and the City shall have certain duties and
responsibilities with respect to the Bond, all as provided, and in the manner and to the effect as
required or indicated, in the FORM OF BOND set forth in Exhibit "B" to this Ordinance. The Bond
initially issued and delivered pursuant to this Ordinance is not required to be, and shall not be,
authenticated by the Paying Agent/ Registrar, but on each substitute Bond issued in exchange for the
Bond issued under this Ordinance, the Paying Agent /Registrar shall execute the PAYING
AGENT /REGISTRAR'S AUTHENTICATION CERTIFICATE, in the form set forth in the FORM
OF BOND.
(d) Substitute Paving A,gent/Registrar. The City covenants with the registered owners of the
Bond that at all times while the Bond is outstanding the City will provide a competent and legally
H"N VILL£WWSSRFA'07. 0Ninance
qualified bank, trust company, financial institution or other entity to act as and perform the services
of Paying Agent/Registrar for the Bond under this Ordinance, and that the Paying Agent/Registrar
will be one entity. The City reserves the right to, and may, at its option and to the extent permitted
by law, (i) act in the capacity of Paying Agent/Registrar or (ii) change the Paying Agent/Registrar
upon not less than 30 days written notice to the Paying Agent/Registrar, to be effective at such time
which will not disrupt or delay payment on the next principal or interest payment date after such
notice. In the event that the entity at anytime acting as Paying Agent /Registrar (or its successor by
merger, acquisition or other method) should resign or otherwise cease to act as such, the City
covenants that promptly it will assume the duties or will appoint a competent and legally qualified
bank, trust company, financial institution or other agency to act as Paying Agent/Registrar under this
Ordinance. Upon any change in the Paying Agent /Registrar, the previous Paying Agent/Registrar
promptly shall transfer and deliver the Registration Books (or a copy thereof), along with all other
pertinent books and records relating to the Bond, to the new Paying Agent /Registrar designated and
appointed by the City. Upon any change in the Paying Agent/Registrar, the City promptly will cause
a written notice thereof to be sent by the new Paying Agent /Registrar to each registered owner of the
Bond, by United States mail, first -class postage prepaid, which notice also shall give the address of
the new Paying Agent /Registrar. By accepting the position and performing as such, each Paying
Agent/Registrar shall be deemed to have agreed to the provisions of this Ordinance, and a certified
copy of this Ordinance shall be delivered to each Paying Agent /Registrar.
(e) Book - Entry -Only System for Bonds. The Bonds issued in exchange for the Bond initially
issued to the purchaser specified in Section 25 herein shall be initially issued in the form of a separate
single fully registered Bond payable in installments in the aggregate principal amount.
SECTION 6. FORM OF BOND. The form of the Bond, including the form of Paying
Agent /Registrar's Authentication Certificate, the form of Assignment and the form of Registration
Certificate of the Comptroller of Public Accounts of the State of Texas to be attached only to the
Bond initially issued and delivered pursuant to this Ordinance, shall be, respectively, substantially in
the form set forth in Exhibit 'B " hereto, with such appropriate variations, omissions or insertions as
are permitted or required by this Ordinance.
SECTION 7. PLEDGE OF NET REVENUES. (a) The City hereby covenants and agrees
that all Net Revenues of the System, with the exception of those in excess of the amounts required
to establish and maintain the special funds created for the payment and security ofthe Bonds Similarly
Secured, are hereby irrevocably pledged to the payment of the Previously Issued Bonds, the Bonds
and Additional Bonds, if issued including the establishment and maintenance of the special funds
created and established for the payment and security thereof, all as hereinafter provided. It is hereby
ordained that the Bonds Similarly Secured and the interest thereon, shall constitute a first lien on the
Net Revenues of the System in accordance with the terms and provisions of this Ordinance, which
lien shall be valid and binding without any physical delivery thereof or further act by the City.
Chapter 1208, Government Code, applies to the issuance of the Bonds and the pledge of revenues
granted by the City under this Section 7, and such pledge is therefore valid, effective and perfected.
If Texas law is amended at any time while the Bonds are outstanding and unpaid such that the pledge
of revenues granted by the City under this Section 7 is to be subject to the filing requirements of
11M SV1LLE!W WSSU,,vw]: ONmance
Chapter 9, Business & Commerce Code, then in order to preserve to the registered owners of the
Bonds the perfection of the security interest in said pledge, the City agrees to take such measures as
it determines are reasonable and necessary under Texas law to comply with the applicable provisions
of Chapter 9, Business & Commerce Code and enable a filing to perfect the security interest in said
pledge to occur.
- SECTION 8. WATERWORKS AND SEWER SYSTEM FUND. The City hereby
covenants and agrees that Gross Revenues of the System (excluding earnings and income derived
from investments held in the Interest and Sinking Fund and Reserve Fund) shall be deposited as
collected to the credit of a fund maintained at a Depository and known on the books and records of
the City as the "Water and Sewer Fund" (herein called the "System Fund "), and such revenues ofthe
System shall be kept separate and apart from all other funds of the City. All Gross Revenues
deposited in the System Fund shall be pledged and appropriated to the extent required for the
following uses and in the order of priority shown:
(a) To the payment of all necessary and reasonable Maintenance and Operating Expenses
as defined herein or required by statute to be a first charge on and claim against the Gross Revenues
thereof.
(b) To the payment of the amounts required to be deposited in the Interest and Sinking
Fund established and maintained for the payment of Debt Service on the Bonds Similarly Secured as
the same becomes due and payable.
(c) To the payment of the amounts required to be deposited in the Reserve Fund to
accumulate and maintain therein the Required Reserve in accordance with the provisions of this
Ordinance or any other ordinance relating to issuance of Bonds Similarly Secured.
Any Net Revenues remaining in the System Fund after satisfying the foregoing payments, or making
adequate and sufficient provision for the payment thereof, may be appropriated and used for any other
City purpose now or hereafter permitted by law.
SECTJON 4. INTEREST AND SINKING FUND. To provide funds to pay the principal
of and interest on the Bonds Similarly Secured as the same shall become due and payable, the City
hereby agrees and covenants to maintain at a Depository a special Account or Fund known as the
"City of Huntsville Waterworks and Sewer System Revenue Bonds Interest and Sinking Fund: (the
"Interest and Sinking Fund "). In addition to the payments required to be made to the Interest and
Sinking Fund in accordance with the provisions of the ordinance authorizing the Previously Issued
Bonds, the City covenants that there shall be deposited into the Interest and Sinking Fund prior to
each principal and interest payment date for the Bonds from the Net Revenues an amount equal to
One Hundred Per Certain (100 %) of the amount required to fully pay the interest on and principal
of the Bonds then falling due and payable, such deposits to the Interest and Sinking Fund to pay
accrued interest and maturing principal on the Bonds to be made in substantially equal monthly
installments on or before the I" day of each month beginning on or before the 15° day of the month
next following the month the Bonds are delivered to the Purchaser.
HCNMJLLE W W SgRL V,OJ: ONiname 5
If the City shall, for any reason, fail to pay into the Interest and Sinking Fund in any month
the full amounts above stipulated, amounts equivalent to such deficiencies shall be set apart and paid
into said Interest and Sinking Fund from the first available and unallocated Net Revenues of the
following month or months, and such payments shall be in addition to the amounts hereinabove
provided to be otherwise paid into the Interest and Sinking Fund dining such month or months.
Money in the Interest and Sinking Fund shall be used only to pay the principal of and interest on the
Previously Issued Bonds, the Bond and Additional Bonds.
Any surplus proceeds of sale of the Bond shall be deposited hr the Interest and Sinking Fund,
and such deposits shall be taken into consideration and reduce the amount of the monthly installments
otherwise required to be deposited in the Interest and Sinking Fund from the Net Revenues of the
System.
___SECTtoN 10. RESERVE FUND. For purposes of accumulating and maintaining funds as
a reserve for the payment of the Bonds Simlarly Secured, the City agrees and covenants to create
and maintain on the books and records of the City a separate and special fund or account known as
the "Revenue Bond Reserve Fund" (the "Reserve Fund "), and all funds deposited to the credit of such
fund shall be kept and maintained in a special banking account or fund maintained at a Depository.
All funds deposited therein (excluding earnings and income derived or received from deposits or
investments which may be transferred to the System Fund referred to in Section 8 hereof during such
periods as there is on deposit in the Reserve Fund the Required Reserve) shall be used solely for the
payment of the principal of and interest on the Bonds Similarly Secured when (whether at maturity,
upon a mandatory redemption date or any interest payment date) other funds available for such
purposes are insufficient, and, in addition, may be used to the extent not required to maintain the
Required Reserve, to pay, or provide for the payment of, the final principal amount of a series of
Bonds Similarly Secured so that such series of Bonds Similarly Secured is no longer deemed to be
Outstanding as such term is defined herein.
The City hereby reaffirms that it will accumulate and, when accumulated, continuously
maintain in the Reserve Fund an amount equal to the lesser of (i) the Average Annual Debt Service
(calculated on a Fiscal Year basis) for all Bonds Similarly Secured then Outstanding, as determined
on the date each series of Additional Bonds are delivered or incurred, as the case may be, or (ii) the
maximum amount in a reasonably required reserve fund that can be invested without restriction as
to yield pursuant to Subsection (d) or Section 148 of the Internal Revenue Code of 1986, as
amended, and regulations promulgated thereunder — the "Required Reserve."
By reason of the issuance of the Bonds, the Required Reserve shall be an amount equal to the
Average Annual Debt Service (calculated on a Fiscal Year basis) for all Bonds Similarly Secured that
are Outstanding at the time the provisions hereof become operative and effective, and the City shall
continue to make monthly deposits in the Reserve Fund, if then required, on or before the 1" day of
each month in substantially equal amounts so that the Required Reserve shall have been accumulated
in the Reserve Fund within 60 months from the date of issuance of the Bonds.
HLNTSVLL&W&SSREVOV Ordinance 6
When and so long as the cash and investments in the Reserve Fund total not Iess than the
Required Reserve, 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, the City covenants and agrees to
cure the deficiency in the Required Reserve by resuming monthly deposits to said fund from the Net
Revenues of the System; such monthly deposits to be in amounts equal to not less than 1 /60th of the
then total Required Reserve to be maintained in said fund and to be made on or before the 15' day
of each month until the total Required Reserve then to be maintained in said Fund has been fully
restored. The City further covenants and agrees that, subject only to the payments to be made to the
Interest and Sinking Fetid, the Net Revenues shall be applied and appropriated and used to establish
and maintain the Required Reserve and to cure any deficiency in such amounts as required by the
terms of this Ordinance and any other ordinance pertaining to the issuance of Additional Bonds.
During such tines as the Reserve Fund contains the total Required Reserve, the City may, at
its option, withdraw all surplus in the Reserve Fund in excess of the Required Reserve and deposit
such surplus in the System Fund.
SECTION 11. TRANSFERS FROM FUNDS. While any ofthe Bonds are Outstanding, the
proper officers of the City are hereby authorized to transfer or cause to be transferred to the Paying
Agent /Registrar, from funds on deposit in the Interest and Sinking Fund and, if necessary, in the
Reserve Fund, amounts sufficient to fully pay and discharge promptly each installment of interest and
principal of the Bond as the same accrue or mature; such transfer of funds to be made in such manner
as will cause immediately available fiends to be deposited with the Paying Agent/Registrar for the
Bond at the close of the last business day next preceding the date of a payment for the Bond.
_ _SECTION 12. SECURITY OF FUNDS - INVESTMENTS. (a) Moneys on deposit in the
funds referred to in this Ordinance (except any portion thereof as may be at any time properly
invested) shall be secured in the manner and to the fullest extent permitted by law for the security of
public funds, and moneys on deposit in such funds shall be used only for the purposes permitted by
this Ordinance.
(b) Money deposited to the credit of any fund referenced in this Ordinance may, at the option
of the City be invested in funds and obligations authorized and identified in the Public Funds
Investment Act, as amended (Government Code, Chapter 2256); provided, however, the investment
of moneys in the Interest and Sinking Fund and Reserve Fund shall be restricted to Government
Obligations and time deposits or certificates of deposit secured (to the extent not insured by the
Federal Deposit Insurance Corporation) by Govermment Obligations; provided that all such deposits
and investments shall be made in such a manner that the money required to be expended from any
fund 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 and,
with respect to investments held for the account of the Reserve Fund, within 30 days of the date of
passage of each ordinance authorizing the issuance of Additional Bonds. All interest and income
derived from deposits and investments in the Interest and Sinking Fund immediately shall be credited
to, and any losses debited to, the Interest and Sinking Fund. All interest and interest income derived
f:N+ VULLFWWSSREVX Ordineru�
from deposits in and investments of the Reserve Fund shall, subject to the limitations provided in
Section 10 hereof, be credited to and deposited in the System Fund. All such investments shall be
sold promptly when necessary to prevent any default in connection with the Bonds.
—SECTION 13. ISSUANCE OF ADDITIONAL BONDS - REFUNDING BONDS -
OBLIGATIONS SECURED BY INFERIOR LIEN. (a) Subject to the provisions hereinafter
appearing as to conditions precedent which must be satisfied, the City reserves the right to issue, from
time to time as needed, Additional Bonds for any lawful purpose. Such Additional Bonds may be
issued in such form and manner as now or hereafter authorized by the laws of the State of Texas for
the issuance of evidences of indebtedness or other instruments, and should new methods or financing
techniques be developed that differ from those now available and in normal use, the City reserves the
right to employ the same in its financing arrangements provided only that the following conditions
precedent for the authorization and issuance of the same are satisfied, to wit:
(1) The Director of Finance of the City (or other officer of the City then having the primary
responsibility for the financial affairs of the City) shall have executed a certificate stating (a)
that, to the best of his knowledge and belief, 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
of the System that would materially affect the security or payment of such obligations and (b)
either (i) payments into all special 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 of the System have been made and the amounts on deposit in such
special funds or accounts are the amounts then required to be on deposit therein or (ii) the
application of the proceeds of sale of such obligations then being issued will cure any such
deficiency.
(2) The Additional Bonds shall be scheduled to stature or be payable as to principal on
February 15 or August 15 (or both) in each year the same are to be outstanding or during the
term thereof.
(3) The City has secured a certificate or opinion of an independent Certified Public
Accountant to the effect that, according to the books and records of the City, the Net
Earnings, for the preceding Fiscal Year or for 12 consecutive months out of the 15 months
immediately preceding the month the ordinance authorizing the issuance of the Additional
Bonds is adopted, are at least equal to (i) 1.10 times the maximum Debt Service Requirement
and (ii) 1.25 times the Average Annual Debt Service for all Bonds Similarly Secured then
Outstanding after giving effect to the issuance of the Additional Bonds then being issued. In
making a determination of the Net Earnings, the Accountant may take into consideration a
change in the rates and charges for services and facilities afforded by the System that became
effective at least 60 days prior to the last day of the period for which Net Earnings are
determined and, for purposes of satisfying the above Net Earnings test, make a pro forma
determination of the Net Earnings of the System for the period of time covered by his
i{O VTLLL VSSREV'O:O inanm
certification or opinion based on such change in rates and charges being in effect for the entire
period covered by the Accountant's certificate or opinion.
As used in this Section, the tenn "Net Earnings" shall mean the Gross Revenues ofthe System
after deducting the Maintenance and Operating Expenses ofthe System, but not depreciation charges
or expenditures which, under generally accepted accounting principles, should be charged to capital
expenditures.
(b) The City reserves the right to issue refunding bonds to refund all or any part of the Bonds
Similarly Secured (pursuant to any law then available) upon such terms and conditions as the City
Council of the City may deem to be in the best interest of the City and its inhabitants, and if less than
all such Bonds Similarly Secured then outstanding are refunded, the conditions precedent prescribed
(for the issuance of Additional Bonds) set forth in subparagraph (a) (3) shall give effect to the Debt
Service of the proposed refunding bonds (and shall not give effect to the Debt Service of the Bonds
Similarly Secured being refunded following their cancellation or provision being made for their
payment).
(c) The City hereby reserves the right to issue obligations payable from and secured by a lien
on and pledge of the Net Revenues of the System, junior and subordinate in rank and dignity to the
lien and pledge securing the payment of the Bonds Similarly Secured, as may he authorized by the
laws of the State of Texas.
_SECTION 14. RATES AND CHARGES. For the benefit of the Holders of the Bonds and
in addition to all provisions and covenants in the laws ofthe State of Texas and in this Ordinance, the
City hereby expressly stipulates and agrees, while any of the Bonds 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 Maintenance and Operating Expenses, depreciation charges and replacement
and betterment costs,
(b) To produce Net Revenues sufficient to pay the current Debt Service on the Bonds
Similarly Secured then Outstanding and the amounts required to be deposited in any reserve or
contingency fund created for the payment and security of the Bonds Similarly Secured, or other
evidences of indebtedness issued or incurred that are payable only from and secured solely by a lien
on and pledge of the Net Revenues of the System, and
(c) To produce Net Revenues equal to at least 1.10 times the annual Debt Service for the
Bonds Similarly Secured then Outstanding.
(d) To pay all other indebtedness payable from the Net Revenues and/or secured by a lien
on the properties or the revenues of the System.
H(.N` VIUEWWSSRE %WO 0nin c
SECTION 15. MAINTENANCE AND OPERATION - INSURANCE. The City shall
maintain the System in good condition and operate the same in an efficient manner and at reasonable
cost. In regard to the operations and properties of the System, the City also agrees to carry and
maintain liability and property damage insurance of the kind and in the amounts carried by municipal
corporations in Texas owning and operating similar facilities and providing like services; provided,
however, the City in lieu of and/or in combination with carrying such insurance may self - insure
against such perils and risks by establishing self-insurance reserves. Annually each year not later than
the end ofeach Fiscal Year, the City shall prepare or cause to be prepared by a person competent and
knowledgeable in such matters a written evaluation of the adequacy of such self - insurance and /or
insurance coverage and of any recommended changes in regard to the City's insurance /self - insurance
policies, practices and procedures.
SECTION 16. RECORDS - ACCOUNTS - ACCOUNTING REPORTS. The City hereby
covenants and agrees that while the Bond is Outstanding, it will keep and maintain separate and
complete records and accounts pertaining to the operations of the System in which complete and
correct entries shall be made of all transactions relating thereto, as provided by Chapter 1502, Texas
Government Code, as amended or other applicable law. The Holders of any Bonds or any duly
authorized agent or agents of such Holders shall have the right at all reasonable times to inspect such
records, accounts and data relating thereto, and to inspect the System an all properties comprising
same. The City further agrees that following the close of each Fiscal Year, it will cause an audit of
such books and accounts to be made by an independent firm of Certified Public Accountants. Each
such audit, in addition to whatever other matters may be thought proper by the accountant, shall
particularly include the following:
(a) A statement of the income and expenses of the System for such Fiscal Year.
(b) A balance sheet for the System as of the end of such Fiscal Year.
(c) The Accountant's comments regarding the manner in which the City has carried out
the requirements of this Ordinance and any other ordinance authorizing the issuance of Additional
Bonds and his recommendations for any changes or improvements in the operations, records and
accounts of the System.
Expenses incurred in making an annual audit of the operations of the System are to be regarded as
Maintenance and Operating Expenses. Copies of each annual audit shall be furnished to the
Executive Director of the Municipal Advisory Council of Texas at his office in Austin, Texas, and,
upon request, to the initial Purchasers of the Bond and subsequent Holders of the said Bond. The
audits herein required shall be made within 120 days following the close of each Fiscal Year insofar
as is possible.
SECTION 17. COVENANTS REGARDING TAX EXEMPTION OF INTEREST ON
THE BOND. (a) Covenants. The City covenants to take any action necessary to assure, or refrain
from any action which would adversely affect, the treatment of the Bond as an obligation described
in section 103 of the Internal Revenue Code of 1986, as amended (the "Code "), the interest on which
11 M VILLG�4VWSSRyVX: Ordinance 10
is not includable in the "gross income" of the holder for purposes of federal income taxation. In
furtherance thereof, the City covenants as follows:
(1) to take any action to assure that no more than 10 percent of the proceeds of the
Bond or the projects financed therewith (less amounts deposited to a reserve fund, if any) are
used for any "private business use," as defined in section 141(b)(6) of the Code or, if more
than 10 percent of the proceeds or the projects financed therewith are so used, such amounts,
whether or not received by the City, with respect to such private business use, do not, under
the terms of this Ordinance or any underlying arrangement, directly or indirectly, secure or
provide for the payment of more than 10 percent of the debt service on the Bond, in
contravention of section 141(b)(2) of the Code;
(2) to take any action to assure that in the event that the "private business use"
described in subsection (1) hereof exceeds 5 percent of the proceeds of the Bond or the
projects financed therewith (less amounts deposited into a reserve fund, if any) then the
amount in excess of 5 percent is used for a "private business use" which is "related" and not
"disproportionate," within the meaning of section 14l (b)(3) of the Code, to the governmental
use;
(3) to take any action to assure that no amount which is greater than the lesser of
$5,000,000, or 5 percent of the proceeds of the Bond (less amounts deposited into a reserve
fund, if any) is directly or indirectly used to finance loans to persons, other than state or local
governmental units, in contravention of section 141(c) of the Code;
(4) to refrain from taking any action which would otherwise result in the Bond being
treated as a "private activity bond" within the meaning of section 141(b) of the Code;
(5) to refrain from taking any action that would result in the Bond being "federally
guaranteed" within the meaning of section 149(b) of the Code;
(6) to refrain from using any portion of the proceeds of the Bond, directly or
indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire
investment property (as defined in section 148(b)(2) ofthe Code) which produces a materially
higher yield over the term of the Bonds, other than investment property acquired with --
(A) proceeds of the Bond invested for a reasonable temporary period of 3
years or less or, in the case of a refunding bond, for a period of 30 days or less until
such proceeds are needed for the purpose for which the bonds are issued,
(B) amounts invested in a bona fide debt service fund, within the meaning of
section 1.148 -1(b) of the Treasury Regulations, and
eLN�VTLLeiwwssRFV07, omma"ee I I
(C) amounts deposited in any reasonably required reserve or replacement
fund to the extent such amounts do not exceed 10 percent of the proceeds of the
Bond;
(7) to otherwise restrict the use of the proceeds of the Bond or amounts treated as
proceeds of the Bond, as maybe necessary, so that the Bond does not otherwise contravene
the requirements of section 148 of the Code (relating to arbitrage) and, to the extent
applicable, section 149(d) of the Code (relating to advance refnndings); and
(8) to pay to the United States of America at least once during each five -year period
(beginning on the date of delivery of the Bond) an amount that is at least equal to 90 percent
of the "Excess Earnings" within the meaning of section 148(0 of the Code and to pay to the
United States of America, not later than 60 days after the Bond has been paid in full, 100
percent of the amount then required to be paid as a result of Excess Earnings under section
148(f) of the Code.
(b) Rebate Fund In order to facilitate compliance with the above covenant (8), a "Rebate
Fund" is hereby established by the City for the sole benefit of the United States of America, and such
fund shall not be subject to the claim of any other person, including without limitation the
bondholders. The Rebate Fund is established for the additional purpose of compliance with section
148 of the Code.
(c) Proceeds. The City understands that the term "proceeds" includes "disposition proceeds"
as defined in the Treasury Regulations and, in the case of refunding bonds, transferred proceeds (if
any) and proceeds of the refunded bonds expended prior to the date of issuance of the Bond. It 1s
the understanding of the City that the covenants contained herein are intended to assure compliance
with the Code and any regulations or rulings promulgated by the U.S. Department of the Treasury
pursuant thereto. In the event that regulations or rulings are hereafter promulgated which modify or
expand provisions of the Code, as applicable to the Bond, the City will not be required to comply
with any covenant contained herein to the extent that such failure to comply, in the opinion of
nationally recognized bond counsel, will not adversely aMet the exemption from federal income
taxation of interest on the Bond under section 103 of the Code. In the event that regulations or
rulings are hereafter promulgated which impose additional requirements which are applicable to the
Bond, the City agrees to comply with the additional requirements to the extent necessary, in the
opinion of nationally recognized bond counsel, to preserve the exemption from federal income
taxation of interest on the Bond under section 103 of the Code. In furtherance of such intention, the
Cityhereby authorizes and directs the CityManager to execute any documents, certificates or reports
required by the Code and to make such elections, on behalf of the City, which may be permitted by
the Code as are consistent with the purpose for the issuance of the Bond.
(d) Allocation Of, and Limitation On, Expenditures for the Project. The City covenants to
account for the expenditure of sale proceeds and investment earnings to be used for the purposes
described in Section 2 of this Ordinance (the "Project') on its books and records in accordance with
the requirements of the Internal Revenue Code. The City recognizes that in order for the proceeds
11MN V1LLDA'IV5SREN07'. ONinanco 12
to be considered used for the reimbursement of costs, the proceeds must be allocated to expenditures
within 18 months of the later of the date that (1) the expenditure is made,, or (2) the Project is
completed; but in no event later than three years after the date on which the original expenditure is
paid. The foregoing notwithstanding, the City recognizes that in order for proceeds to be expended
under the Internal Revenue Code, the sale proceeds or investment earnings must be expended no
more than 60 days after the earlier of (1) the fifth anniversary of the delivery of the Bond, or (2) the
date the Bond are retired. The City agrees to obtain the advice of nationally-recognized bond counsel
if such expenditure fails to comply with the foregoing to assure that such expenditure will not
adversely affect the tax - exempt status of the Bond. For purposes hereof, the City shall not be
obligated to comply with this covenant if it obtains an opinion that such failure to comply will not
adversely affect the excludability for federal income tax purposes from gross income of the interest.
(e) Disposition of Project. The City covenants that the property constituting the Project will
not be sold or otherwise disposed in a transaction resulting in the receipt by the City of cash or other
compensation, unless the City obtains an opinion ofnationally- recognized bond counsel that such sale
or other disposition will not adversely affect the tax - exempt status of the Bond. For purposes of the
foregoing, the portion of the property comprising personal property and disposed in the ordinary
course shall not be treated as a transaction resulting in the receipt of cash or other compensation. For
purposes hereof, the City shall not be obligated to comply with this covenant if it obtains an opinion
that such failure to comply will not adversely affect the excludability for federal income tax purposes
from gross income of the interest.
(f) Designation as Qualified Tax - Exempt Obligations. The City hereby designates the Bond
as "qualified tax - exempt bonds" as defined in section 265(b)(3) of the Code. In furtherance of such
designation, the City represents, covenants and warrants the following: (a) that during the calendar
year in which the Bond is issued, the City (including any subordinate entities) has not designated nor
will designate bonds, which when aggregated with the Bond, will result in more than $10,000,000
of "qualified tax - exempt bonds" being issued; (b) that the City reasonably anticipates that the amount
of tax - exempt obligations issued, during the calendar year in which the Bond is issued, by the City
(or any subordinate entities) will not exceed S 10,000,000; and, (c) that the City will take such action
or refrain from such action as necessary, and as more particularly set forth in this Section, in order
that the Bond will not be considered "private activity bonds" within the meaning ofsection 141 of the
Code.
_SECTION 18. CONTINUING DISCLOSURE UNDERTAKING. (a) No Rule 15e2 -12
Undertaking. The City has not made an undertaking with respect to the Bond in accordance with
Rule. The City is not, therefore, obligated pursuant to the Rule to provide any on- going disclosure
relating to the City or the Bond.
(b) Annual Reports. While the Bond remains outstanding, unless waived by the Holder, the
City shall provide annually to the Holder, within six months after the end of any Fiscal Year, audited
financial statements and such other financial information regarding the City as the Holder shall
reasonably request.
HUN1NVJLMVWMF.V07. odmance 13
_SECTION 19. SPECIAL COVENANTS. The City further covenants and agrees by and
through this Ordinance as follows:
(a) It has the lawful power to pledge the Net Revenues of the System to the
payment of the Bond to the extent provided herein and has lawfully exercised said power
under the Constitution and laws of the State of Texas, and that the Previously Issued Bonds,
the Bond, together with the Additional Bonds, shall be ratably secured in such manner that
no one bond shall have preference over any other bond of said issues.
(b) The Net Revenues of the System have not been in any manner pledged or
encumbered to the payment of any debt or obligation of the City or the System, save and
except for the Previously Issued Bonds, the Bond and various series of the City's outstanding
Certificates of Obligation.
(c) No free services of the System shall be allowed, and should the City or any of
its agents or instrumentalities make use of the services and facilities of the System, payment
of the reasonable value thereof shall be made by the City out of funds from sources other than
the revenues and income of the System.
(d) While the Bonds remain Outstanding, the City will not sell or otherwise
dispose of the System or, except as authorized below, any substantial portion of the System
or its component parts; provided, however, to the extent and inthe manner authorized by law,
the City may sell or dispose of any property, facilities and equipment not necessary or
essential the operation of the System or which is obsolete, damaged or surplus and the
proceeds of sale of such property, facilities and equipment, if any, shall be deposited to the
credit of the System Fund,
SECTION 20. REMEDY IN EVENT OF DEFAULT. In addition to all 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 at payments to be made to the Interest and Sinking Fund or the Reserve
Fund as required by this Ordinance or (b) defaults in the observance or performance of any other of
the covenants, conditions or obligations sets forth in this Ordinance, the Holder of any of the Bonds
shall be entitled to a writ of mandamus issued by a court of proper jurisdiction, compelling and
requiring the City and its officer 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 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.
BUWMVI LVWww SRFAIF_ ors m,<e 14
SECTION 21. SPECIAL OBLIGATIONS. The Bond is a special obligations of the City
payable from the pledged Net Revenues of the System and the Holders thereof shall never have the
right to demand payment thereof out of funds raised or to be raised by taxation.
SECTION 22. DEFEASANCE OF THE BOND. (a) The Bond and the interest thereon shall
be deemed to be paid, retired and no longer outstanding (a " Defeased Bond ") within the meaning of
this Ordinance, except to the extent provided in subsection (d) of this Section, when payment of the
principal of the Bond, plus interest thereon to the due date (whether such due date be by reason of
maturity, upon redemption, or otherwise) either (i) shall have been made or caused to be made in
accordance with the terms thereof (including the giving of any required notice of redemption) or (ii)
shall have been provided for on or before such due date by irrevocably depositing with or making
available to the Paying Agent/Registrar for such payment (1) lawful money of the United States of
America sufficient to make such payment, (2) Defeasance Securities, certified by an independent
public accounting firm of national reputation to mature as to principal and interest in such amounts
and at such times as will ensure the availability, without reinvestment„ of sufficient money to provide
for such payment and when proper arrangements have been made by the City with the Paying
Agent/Registrar for the payment of its services until the Defeased Bond shall have become due and
payable or (3) any combination of (1) and (2). At such time as the Bond shall be deemed to be a
Defeased Bond hereunder, as aforesaid, the Bond and the interest thereon shall no longer be secured
by, payable from, or entitled to the benefits o£ the Net Revenues as provided in this Ordinance, and
such principal and interest shall be payable solely fi-om such money or Defeasance Securities.
(b) The deposit under clause (ii) of subsection (a) shall be deemed a payment of the Bond as
aforesaid when proper notice of redemption of the Bond shall have been given, in accordance with
this Ordinance. Any money so deposited with the Paying Agent/Registrar as provided in this Section
may at the discretion of the City also be invested in Defeasance Securities, maturing in the amounts
and at the times as hercinbofore set forth, and all income from all Defeasance Securities in possession
of a paying agent pursuant to this Section which is not required for the payment of the Bond and
premium, if any, and interest thereon with respect to which such money has been so deposited, shall
be turned over to the City, or deposited as directed in writing by the City.
(c) Notwithstanding any provision of any other Section of this Ordinance which may be
contrary to the provisions of this Section,, all money or Defeasance Securities set aside and held in
trust pursuant to the provisions of this Section for the payment ofprincipal of the Bond and premium,
if any, and interest thereon, shall be applied to and used solely for the payment of the Bond and
premium, if any, and interest thereon, with respect to which such money or Defeasance Securities
have been so set aside in trust.
(d) Notwithstanding anything elsewhere in this Ordinance contained, ifmoneyor Defeasance
Securities have been deposited or set aside with a paying agent pursuant to this Section for the
payment of the Bond and such Bond shall not have in fact been actually paid in full, no amendment
of the provisions of this Section shall be made without the consent of the registered owner of the
Bond affected thereby.
HLt VILTIDWWSSREV'r ord.s 15
(e) Notwithstanding the provisions of subsection (a) above, to the extent that, upon the
defeasance ofthe Defeased Bond to be paid at its maturity, the City retains the right under Texas law
to later call that Defeased Bond for redemption in accordance with the provisions of the Ordinance
authorizing its issuance, the City may call such Defeased Bond for redemption upon complying with
the provisions of Texas law and upon the satisfaction of the provisions of subsection (a) above with
respect to such Defeased Bond as though it was being defeased at the time of the exercise of the
option to redeem the Defeased Bond and the effect of the redemption is taken into account in
determining the sufficiency of the provisions made for the payment of the Defeased Bond.
— __SEcrroN 23. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED
BONDS. (a) Replacement Bonds_ In the event any outstanding Bond is damaged, mutilated, lost,
stolen or destroyed, the Paying Agent/Registrar shall cause to be printed, executed and delivered, a
new bond of the same principal amount, maturity and interest rate, as the damaged, mutilated, lost,
stolen or destroyed Bond, in replacement for such Bond in the manner hereinafter provided.
(b) Application for Replacement Bonds. Application for replacement of damaged, mutilated,
lost, stolen or destroyed Bonds shall be made by the registered owner thereof to the Paying
Agent /Registrar. In every case of loss, theft or destruction of a Bond, the registered owner applying
for a replacement bond shall fitrnish to the City and to the Paying Agent/Registrar such security or
indemnity as may be required by them to save each of them harmless from any loss or damage with
respect thereto. Also, in every case of loss, theft or destruction of a Bond, the registered owner shall
furnish to the City and to the Paying Agent/Registrar evidence to their satisfaction of the loss, theft
or destruction of such Bond, as the case may be. In every case of damage or mutilation of a Bond,
the registered owner shall surrender to the Paying AgentlRegistrar for cancellation the Bond so
damaged or mutilated.
(c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the
event any such Bond shall have matured, and no default has occurred which is then continuing in the
payment of the principal of, redemption premium, if any, or interest on the Bond, the City may
authorize the payment of the same (without surrender thereof except in the case of a damaged or
mutilated Bond) instead of issuing a replacement Bond, provided security or indemnity is furnished
as above provided in this Section.
(d) Charge for Issuing Replacement Bonds. Prior to the issuance of any replacement bond,
the Paying Agent/Registrar shall charge the registered owner of such Bond with all legal, printing and
other expenses in connection therewith. Every replacement bond issued pursuant to the provisions
of this Section by virtue of the fact that any Bond is lost, stolen or destroyed shall constitute a
contractual obligation of the City whether or not the lost, stolen or destroyed Bond shall be found
at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Ordinance
equally and proportionately with any and all other Bonds duly issued under this Ordinance.
(e) Authority for Issuing Replacement Bonds. In accordance with Subchapter D of Chapter
1201, Texas Government Code, this Section of this Ordinance shall constitute authority for the
issuance of any such replacement bond without necessity of further action by the governing body of
HUN VILLE VWSSREVW1: Ominarse 16
the City or any other body or person, and the duty of the replacement of such bonds is hereby
authorized and imposed upon the Paying AgentlRegistrar, and the Paying Agent/Registrar shall
authenticate and deliver such Bonds in the form and manner and with the effect, as provided in
Section 5 of this Ordinance for Bonds issued in exchange for other Bonds.
- SECTION 24, AMENDMENT OF ORDINANCE. (a) The holders of the Bonds
aggregating a majority in principal amount of the aggregate principal amount of then Outstanding
Bond shall have the right from time to time to approve any amendment to this Ordinance which may
be deemed necessary or desirable by the City, provided, however, that without the consent of the
holders of all of the effected Bonds at the time outstanding, nothing herein contained shall permit or
be construed to permit the amendment of the terms and conditions in this Ordinance or in the Bonds
so as to:
(1) Make any change in the maturity of the Outstanding Bonds;
(2) Reduce the rate of interest borne by any of the Outstanding Bonds;
(3) Reduce the amount of the principal payable on the Outstanding Bonds,
(4) Modify the terms ofpayment ofprincipal of or interest on the Outstanding Bonds or
impose any conditions with respect to such payment;
(5) Affect the rights of the holders of less than all of the Bonds then outstanding;
(6) Change the minimum percentage of the principal amount of Bonds necessary for
consent to such amendment.
(b) I'f at any time the City shall desire to amend this Ordinance under this Section, unless
waived by the Holder, the City shall cause notice of the proposed amendment to be delivered to the
Insurer and published in a financial newspaper or journal of general circulation in The City of New
York, New York, once during each calendar week for at least two successive calendar weeks. Such
notice shall briefly set forth the nature of the proposed amendment and shall state that a copy thereof
is on file for inspection by all registered owners of Bonds at the designated trust office of the registrar
for the Bonds. Such publication is not required, however, if notice in writing is given to each
registered owner of the Bonds.
(c) Whenever at any tone not less than thirty days, and within one year, from the date of the
first publication of said notice or other service of written notice the City shall receive an instrument
or instruments executed by the holders of at least a majority in aggregate principal amount of all
Bonds then Outstanding, which instrument or instruments shall refer to the proposed amendment
described in said notice and which specifically consent to and approve such amendment in
substantially the form of the copy thereof on file with the Paying Agent/Registrar, the City Council
may pass the amendatory ordinance in substantially the same form.
H NiN ILLEWt'SSREVM:ONinancc 17
(d) Upon the passage of any amendatory ordinance pursuant to the provisions ofthis Section,
this Ordinance shall be deemed to be amended in accordance with such amendatory ordinance, and
the respective rights, duties and obligations under this Ordinance of the City and all the holders of
then outstanding Bonds shall thereafter be determined, exercised and enforced hereunder, subject in
all respects to such amendments.
(e) Any consent given by the registered owner of a Bond pursuant to the provisions of this
Section shall be irrevocable for a period of six months from the date of the first publication of the
notice provided for in this Section, and shall be conclusive and binding upon all future holders of the
same Bond during such period. Such consent may be revoked at any time after six months from the
date of the first publication of such notice by the holder who gave such consent, or by a successor
in title, by filing notice thereofwith the Paying Agent/Registrar and the City, but such revocation shall
not be effective if the registered owners of at least a majority in aggregate principal amount of the
then outstanding Bonds as in this Section defined have, prior to the attempted revocation, consented
to and approve the amendment.
(f) For the purpose of this Section, the fact of the holding ofBonds issued in registered form
without coupons and the amounts and numbers of such Bonds and the date oftheir holding same shall
be proved by the Registration Books of the Paying Agent/Registrar. For purposes of this Section,
the holder of Bond in such registered form shall be the owner thereof as shown on such Registration
Books. The City may conclusively assume that such ownership continues until written notice to the
contrary is served upon the City.
(g) The foregoing provisions of this Section notwithstanding, the City by action of the City
Council may amend this Ordinance for any one or more of the following purposes:
(1) To add to the covenants and agreements of the City in this Ordinance
contained, other covenants and agreements thereafter to be observed, grant additional rights
or remedies to bondholders or to surrender, restrict or linat any right or power herein
reserved to or conferred upon the City;
(2) To make such provisions for the purpose of curing any ambiguity, or curing,
correcting or supplementing any defective provision contained in this Ordinance, or in regard
to clarifying matters or questions arising under this Ordinance, as are necessary or desirable
and not contrary to or inconsistent with this Ordinance and which shall not adversely affect
the interests of the holders of the Bonds;
(3) To modify any of the provisions of this Ordinance in any other respect
whatever, provided that 6) such modification shall be, and be expressed to be, effective only
after all Bonds outstanding at the date of the adoption of such modification shall cease to be
outstanding, and (ii) such modification shalt be specifically referred to in the text of all
Additional Bonds issued after the date of the adoption of such modification.
RbN VILL WIVSSMe W o dm -. is
Notice of any such amendment may be published or given by the City in the manner described in
subsection (b) of this Section; provided, however, that the publication of such notice shall not
constitute a condition precedent to the adoption of such amendatory ordinance and the failure to
publish such notice shall not adversely affect the implementation of such amendment as adopted
pursuant to such amendatory ordinance.
_ _SECT ION 25. SALE AND DELIVERY OF THE BONDS. (a) The Bond is hereby sold and
shall be delivered to JPMorgan Chase Bank, N.A., (the "Purchaser ") determined to be the best bidder
with the lowest interest cost to the City. The City will initially deliver to the Purchaser one bond
payable in installments of the Bonds authorized under this Ordinance. The Mayor is authorized to
execute the acceptance clause of the Purchase and Investment Letter with the Purchaser.
(b) All officers of the City are authorized to execute such documents, certificates and
receipts as they may deem appropriate in order to consummate the deliveryofthe Bond in accordance
with the Purchase and Investment Letter.
(c) All officers of the City are authorized to take such actions and to execute such
documents, certificates and receipts as they may deem necessary and appropriate in order to
consummate the delivery of the Bond, including documents and certificates that may be necessary or
appropriate with respect to obtaining municipal bond insurance with respect to the Bond.
(d) The obligation of the Purchaser to accept delivery of the Bond is subject to the Purchaser
being furnished with the final, approving opinion of McCall, Parkhurst & Horton L.L.P., Bond
Counsel for the City, which opinion shall be dated as of and delivered on the Closing Date. The
engagement of such firm as bond counsel for the City in connection with the issuance, sale and
delivery of the Certificate is hereby approved, ratified and confirmed.
SECTION 26. CUSTODY, APPROVAL. AND REGISTRATION OF THE BOND;
BOND COUNSEL'S OPINION, BOND INSURANCE AND CUSIP NUMBERS. The Mayor
of the City is hereby authorized to have control of the Bond initially issued and delivered hereunder
and all necessary records and proceedings pertaining to the Bond pending its delivery and its
investigation, examination and approval by the Attorney General of the State of Texas, and its
registration by the Comptroller of Public Accounts of the State of Texas. Upon registration of the
Bond said Comptroller of Public Accounts (or a deputy designated in writing to act for said
Comptroller) shall manually sign the Comptroller's Registration Certificate attached to such Bond,,
and the seal of said Comptroller shall be impressed, or placed in facsimile, on such Certificate. The
approving legal opinion of the City's Bond Counsel (with an appropriate certificate pertaining thereto
executed by facsimile signature of the City Secretary of the City), a statement regarding any insurance
policy and the assigned CUSIP numbers may, at the option of the City, be printed on or attached to
the Bond issued and delivered under this Ordinance, but such additions or attachments shall not have
any legal effect, and shall be solely for the convenience and information of the registered owners of
the Bond.
HUMSVR.L6/WWSSREVN07: Ord anw 19
SFCTtorr 27. AMENDMENTS TO ORDINANCE UPON DISCHARGE OR
AMENDMENT OF PREVIOUSLY ISSUED BONDS. At such time as the Previously Issued
Bonds have been paid or are no longer Outstanding or the bondholder has consented to the below
described amendment, this Ordinance shall be amended and modified to read as follows:
(a) Section 10 shall be amended to read as follows:
"SECTION 14. RESERVE FUND. (a) For purposes of accumulating and
maintaining funds as a reserve for the payment of the Bonds Similarly Secured, the
City agrees and covenants to create and maintain on the books and records of the City
a separate and special fond or account known as the "Revenue Bond Reserve Fund"
(the "Reserve Fund "), and all funds deposited to the credit of such fund shall be kept
and maintained in a special banking account or fund maintained at a Depository. All
funds deposited therein (excluding earnings and income derived or received from
deposits or investments which may be transferred to the System Fund referred to in
Section 8 hereof during such periods as there is on deposit in the Reserve Fund the
Required Reserve) shall be used solely for the payment of the principal of and interest
on the Bonds Similarly Secured when (whether at maturity, upon a mandatory
redemption date or any interest payment date) other funds available for such purposes
are insufficient, and, in addition, may be used to the extent not required to maintain
the Required Reserve, to pay, or provide for the payment of, the final principal
amount of series of Bonds Similarly Secured so that such series of Bands Similarly
Secured is no longer deemed to be Outstanding as such tern is defined herein.
The City hereby reaffirms that it will accumulate and, when accumulated,
continuously maintain in the Reserve Fund an amount equal to the lesser of (i) the
Average Annual Debt Service (calculated on a Fiscal Year basis) for all Bonds
Similarly Secured then. Outstanding, as determined on the date each series of
Additional Bonds are delivered or incurred, as the case may be, or (ii) the maximum
amount in a reasonably required reserve fiord that can be invested without restriction
as to yield pursuant to Subsection (d) or Section 148 of the Internal Revenue Code
of 1986, as amended, and regulations promulgated thereunder — the 'Required
Reserve."
By reason of the issuance of the Bonds, the Required Reserve shall be an
amount equal to the Average Annual Debt Service (calculated on a Fiscal Year basis)
for all Bonds Similarly Secured that are Outstanding at the time the provisions hereof
become operative and effective, and the City shall continue to make monthly deposits
in the Reserve Fund, if then required, on or before the I' day of each month in
substant ially equal amounts so that the Required Reserve shall have been accumulated
in the Reserve Fund within 60 months from the date of issuance of the Bonds.
When and so long as the cash and investments in the Reserve Fund total not
less than the Required Reserve, no deposits need be made to the credit of the Reserve
ACNNVTTXEiWWSSR6N0;: om.nana 20
Fund; but, if and when the Reserve Fund at any time contains less than the Required
Reserve, the City covenants and agrees to cure the deficiency in the Required Reserve
by resuming monthly deposits to said fund from the Net Revenues of the System;
such monthly deposits to be in amounts equal to not less than 1 /60th of the then total
Required Reserve to be maintained in said fund and to he made on or before the 15'
day of each month until the total Required Reserve then to be maintained in said Fund
has been fully restored, The City further covenants and agrees that, subject only to
the payments to be made to the Interest and Sinking Fund, the Net Revenues shall be
applied and appropriated and used to establish and maintain the Required Reserve and
to cure any deficiency in such amounts as required by the terns of this Ordinance and
any other ordinance pertaining to the issuance of Additional Bonds.
During such times as the Reserve Fund contains the total Required Reserve,
the City may, at its option, withdraw all surplus in the Reserve Fund in excess of the
Required Reserve and deposit such surplus in the System Fund.
(b) A Reserve Fund Obligation issued in an amount equal to all or part of the
Required Reserve Amount for the Bonds, the Previously Issued Bonds and the
Additional Bonds may be used in lieu of depositing cash into the Reserve Fund. In
addition, a Reserve Fund Obligation may be substituted for monies and investments
in the Reserve Fund if the substitution of the Reserve Fund Obligation will not, in and
of itself, cause any ratings then assigned to the Bonds, the Previously Issued Bonds
and the Additional Bonds by any Rating Agency to be towered and the ordinance
authorizing the substitution of the Reserve Fund Obligation for all or part of the
Required Reserve contains a finding that such substitution is cost effective. In the
event a Reserve Fund Obligation is substituted in lieu of all or a portion of the cash
on deposit in the Reserve Fund, such cash in excess of the Required Reserve may be
withdrawn from the Reserve Fund and deposited in the System Fund.
(c) A Reserve Fund Obligation permitted under (b) above, must be in the
form of a surety bond or insurance policy meeting the requirements described below.
(I) (i) A surety bond or insurance pohcyissued to the Paying Agent/Registrar,
as agent of the Holders, by a company licensed to issue an insurance policy
guaranteeing the timely payment of debt service on the Parity Obligations (a
"municipal bond insurer ") if the claims paying ability of the issuer thereofshall
be rated "AAA" or "Aaa ", respectively, by S &P and Moody's, or (ii) a surety
bond or insurance policy issued to the Paying Agent /Registrar, as agent of the
Holders, by an entity other than a municipal bond insurer, if the form and
substance of such instrument and the issuer thereof shall be approved in
writing by each Bond Insurer of record.
(2) The obligation to reimburse the issuer of a Reserve Fund Obligation for
any claims or draws upon such Reserve Fund Obligation in accordance with
HMn'VIL(.5VW5SREV1h7: Gdinance 21
its terms, including expenses incurred in connection with such claims or
draws, to the extent permitted by law, (a Reserve Fund Obligation Payment)
shall be made from the deposits made to the Reserve Fund as provided in this
Section and in Section 8. The Reserve Fund Obligation shall provide for a
revolving feature under which the amount available thereunder will be
reinstated to the extent of any reimbursement of draws or claims paid. If the
revolving feature is suspended or terminated for any reason, the right of the
issuer of the Reserve Fund Obligation to reimbursement will be subordinated
to the cash replenishment of the Reserve Fund to an amount equal to the
difference between the full original amount available under the Reserve Fund
Obligation and the amount then available for further draws or claims. In the
event (a) the issuer of a Reserve Fund Obligation becomes insolvent, or (b)
the issuer of a Reserve Fund Obligation defaults in its payment obligations
thereunder, or (c) the claims paying ability ofthe issuer ofthe insurance policy
or surety bond falls below "AAA" or "Aaa ", by S &P and Moody's,
respectively, the obligation to reimburse the issuer of the Reserve Fund
Obligation shall be subordinated to the cash replenishment of the Reserve
Fund.
{3) In the event (a) the revolving reinstatement feature described in the
preceding paragraph is suspended or terminated, or (b) the rating ofthe claims
paying ability of the issuer of the surety bond or insurance policy falls below
"AAA" or "Aaa ", by S &P and Moody's, respectively, the City shall either (i)
deposit into the Reserve Fund, in accordance with this Section and Section 8,
an amount sufficient to cause the cash or investments credited to the Reserve
Fund to accumulate to the Required Reserve, or (ii) replace such instrument
with a surety bond or insurance policy meeting the requirements of I and 2
above, within six months of such occurrence. In the event (a) the rating ofthe
claims- paying ability of the issuer of the surety bond or insurance policy falls
below "A" by S &P and Moody"s,, or (b) the issuer of the Reserve Fund
Obligation defaults in its payment obligations hereunder, or (c) the issuer of
the Reserve Fund Obligation becomes insolvent, the City shall either (i)
deposit into the Reserve Fund, in accordance with this Section, amounts
sufficient to cause the cash or investments on deposit in the Reserve Fund to
accumulate to the Required Reserve Amount, or (ii) replace such instrument
with a surety bond or insurance policy meeting the requirements of f and 2
above within six months of such occurrence.
{4) The Paying Agent /Registrar shall ascertain the necessity for a claim or
draw upon any Reserve Fund Obligation and provide notice to the issuer of
the Reserve Fund Obligation in accordance with its terms not later than three
days (or such appropriate time period as will, when combined with the timing
of required payment under the Reserve Fund Obligation, ensure payment
under the Reserve Fund Obligation on or before the interest payment date)
11 N BVIG[.EWwsSREV%D7: Ordmne 22
prior to each date upon which the principal of or interest on the Bonds
Similarly Secured will be due.
It is recognized that a Reserve Fund Obligation may be issued which is
payable only with respect to a part ofthe Bonds, the Previously Issued Bonds and the
Additional Bonds with the remainder of the Required Reserve being satisfied by
monies and investments and in that case any draws upon the Reserve Fund will have
to be made on a pro -rata basis to ensure that Bonds Similarly Secured enjoy an equal
amount of security. Therefore, (i) draws upon one or more such Reserve Fund
Obligations shall be made on a pro -rata basis with cash and investments available in
the Reserve Fund and (ii) deposits and credits to the Reserve Fund to restore it to the
Required Reserve shall be utilized on a pro -rata basis to pay Reserve Fund Obligation
Payments to reimburse the issuers ofthe Reserve Fund Obligations, thus restoring that
part of the Required Reserve, and to restore with cash and investments the balance
of the Required Reserve.
(b) F„ hibit "A" shall be amended to add the following definitions:
"Reserve Fund Obligation" means a suretybond or insurance policy deposited
in the Reserve Fund to satisfy the Required Reserve whereby the issuer is obligated
to provide funds up to and including the maximum amount and under the conditions
specified in such agreement or instrument.
_ "Reserve FundOGligationPayment"means any subrogationpayment the City
is obligated to make from Net Revenues deposited in the Reserve Fund with respect
to a Reserve Fund Obligation.
SECTION 28. NO RECOURSE AGAINST CITY OFFICIALS. No recourse shall be had
for the payment of principal of or interest on the Bonds or for any claim based thereon or on this
Ordinance against any official of the City or any person executing any Bonds.
__SECTION 29. FURTHER ACTIONS. 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 carryout the terms andprovisions ofthis Ordinance, the Bonds, the initial sale
and delivery of the Bonds, the Paying Agent /Registrar Agreement, any insurance commitment letter
or insurance policy and the Official Statement. In addition, prior to the initial delivery of the Bonds,
the Mayor, the City Manager or Assistant City Manager, the City Attorney 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
Hv VJT.e'fWWssanv,m: oMmaoce 23
satisfy requirements of the Bond Insurer, or (iii) obtain the approval of the Bond by the Texas
Attorney General's office.
In case any officer of the City whose signature shall appear on the Bond shall cease to be such
officer before the delivery of such Bond, 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 30. INTERPRETATIONS. All terms defined herein and all pronouns used in this
Ordinance shall be deemed to apply equally to singular and plural and to all genders. The titles and
headings of the articles and sections of this Ordinance and the Table of Contents of this Ordinance
have been inserted for convenience of reference only and are not to be considered a part hereof and
shall not in anyway modify or restrict any of the terms or provisions hereof. This Ordinance and all
the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein
and to sustain the validity of the Bond and the validity of the lien on and pledge of the Pledged
Revenues to secure the payment of the Bond.
—SECTION 31. INCONSISTENT PROVISIONS. All ordinances, orders or resolutions, 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 contained herein.
----SECTION 32. INTERESTED PARTIES. Nothing in this Ordinance expressed or implied
is intended or shall be construed to confer upon, or to give to, any person or entity, other than the
City and the registered owners of the Bond, any right, remedy or claim under or by reason of this
Ordinance or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises
and agreements in this Ordinance contained by and on behalf of the City shall be for the sole and
exclusive benefit of the City and the registered owners of the Bond.
SECTION 33. INCORPORATION OF RECITALS. The City hereby finds that the
statements set forth in the recitals of this Ordinance are true and correct, and the City hereby
incorporates such recitals as a part of this Ordinance.
__SECTION 34. SEVERABILITY. If any provision of this Ordinance or the application
thereof to any circumstance shall be held to be invalid, the remainder of this Ordinance and the
application thereofto other circumstances shall nevertheless be valid, and this governing body hereby
declares that this Ordinance would have been enacted without such invalid provision.
SECTION 35. REPEALER. All orders, resolutions and ordinances, or parts thereof,
inconsistent herewith are hereby repealed to the extent of such inconsistency.
SECTION 36. EFFECTIVE DATE. This Ordinance shall become effective immediately
upon its adoption in accordance with Section 1201.028, Texas Government Code, as amended.
mtn'r VILLcwwssREW7: 01dim.m 24
INTRODUCED, PASSED, APPROVED AND ADOPTED by the members of the City
Council of the City of Huntsville, this the 2 °d day of October, 2007.
J. Turner, Mayor
ATTEST:
Danna Welter, City Secretary
APPROVED AS TO FORM:
Thomas Leeper, City Attorney
Exhibit A - Definitions
Exhibit B - Form of Bond
Exhibit C - Description of Annual Financial Information
HIp VILLE'WWSSREV'g7; Ordinance 25
EXHIBIT A
As used in this Ordinance, the following terms and expressions shall have the meanings set
forth below, unless the text hereof specifically indicates otherwise:
The term "Additional Bonds" shall mean the additional parity revenue bonds which the City
reserves the right to issue on a parity with the Previously Issued Bonds and the Bond in accordance
with the terms and conditions stated in Section 13 hereof.
The term "Average Annual Debt Service' shall mean that average amount which, at the time
of computation, will be required to pay the Debt Service of obligations when due and derived by
dividing the total of such Debt Service by the number of years then remaining before final maturity.
Capitalized interest payments provided from proceeds of Bonds Similarly Secured shall be excluded
in making the aforementioned computation.
The term 'Bond" shall mean the "City of Huntsville, Texas Waterworks and Sewer System
Revenue Bonds, Series 2007," dated October 15, 2007.
The term "Bonds Similarly Secured" shall mean the Previously Issued Bonds, the Bond and
Additional Bonds.
The term "City" shall mean the City of Huntsville, Texas, the City Council thereof and any
successor to the City as owner of the System.
The term 'Debt Service" 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 Bonds Similarly
Secured without a fixed numerical rate, that such obligations bear, or would have borne, interest at
the highest rate reached, or that would have applied to such obligations (using the index or method
for computing interest applicable to such obligations) during the twenty -four (24) month period next
preceding the date of computation; and further assuming in the case of obligations required to be
redeemed or prepaid as to principal prior to maturity, the principal amounts therof will be redeemed
prior to maturity in accordance with the mandatory redemption provisions applicable thereto.
The term "Defeasance Securities" shall mean (i) Federal Securities, (ii) noncallable obligations
of an agency or instrumentality of the United States of America, including obligations that are
unconditionally guaranteed or insured by the agency or instrumentality and that, on the date the City
Council adopts or approves proceedings authorizing the issuance of refunding bonds or otherwise
provide for the funding of an escrow to effect the defeasance of the Bond is rated as to investment
quality by a nationally recognized investment rating firm not less than "AAA" or its equivalent, and
(iii) noncallable obligations of a state or an agency or a county, municipality, or other political
subdivision of a state that have been refimded and that, on the date the City Council adopts or
approves proceedings authorizing the issuance of refirnding bonds or otherwise provide for the
xuNnVIIMu WSAF,V^ .: Ordmnve A -1
funding of an escrow to effect the defeasance of the Bond, is rated as to investment quality by a
nationally recognized investment rating firm no less than "AAA" or its equivalent.
The term "Federal Securities" as used herein shall mean direct, noncallable obligations of the
United States of America, including obligations that are unconditionally guaranteed by the United
States of America (including Interest Strips of the Resolution Funding Corporation).
The term "Fiscal Year" shall mean the twelve -month financial accounting period used for the
System ending each year on September 30 "; provided, however, the City may, by ordinance, change
the fiscal year to another period of not less than twelve calendar months, if found and determined to
be necessary.
The term "Gross Revenues" shall mean all income and revenues of every nature derived or
received from the operation and ownership (excluding refundable meter deposits, gifts and grants in
aid of construction, impact fees charged developers and special assessments against landowners) of
the System, including earnings and income derived from the investment or deposit of moneys in any
special funds or accounts created and established for the payment and security of the Bonds Similarly
Secured and other obligations payable solely from and secured only by a lien on and pledge of the Net
Revenues.
The term "Holder" or "Holders" shall mean the registered owner, whose name appears in the
Registration Books, for the Bond.
The term "Maintenance and Operating Expenses" shall mean allcurrent expenses of operating
and maintaining 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 Council, reasonably and fairly exercised, are necessary to maintain the
operations and render adequate service to the City and the inhabitants thereof, or such as might be
necessary to meet some physical accident or condition which would otherwise impair obligations
payable from Net Revenues shall be deducted in determining "Net Revenues ". Depreciation charges
shall not be considered Maintenance and Operating Expenses. Maintenance and Operating Expenses
shall include payments under contracts for the purchase ofwater supply, treatment ofsewage or other
materials, goods or services for the System to the extent authorized by law and the provisions of such
contract.
The term "Net Revenues" shall mean Gross Revenues of the System, with respect to any
period, after deducting the System's Maintenance and Operating Expenses during such period.
The term "Ordinance" shall mean this ordinance finally adopted by the City Council on
October 2, 2007.
The term "Outstanding" when used in this Ordinance with respect to the Bond or Bonds
Similarly Secured means, as of the date of determination, the Bond and Bonds Similarly Secured
theretofore sold, issued and delivered by the City, except:
HUNBVILLGRVWSSR V^6b Urdir me A -2
(1) the Bond or Bonds Similarly Secured canceled or delivered to the transfer agent or
registrar for cancellation in connection with the exchange or transfer of such
obligations;
(2) the Bond or Bonds Similarly Secured paid or deed to be paid in accordance with the
provisions of Section 22 hereof, and
(3) the Bond or Bonds Similarly Secured that have been mutilated, destroyed, lost or
stolen and replacements therefor have been registered and delivered in lieu thereof.
The term "Paying Agent /Registrar" shall have the meaning set forth in Section 5 hereof,
The term "Permitted Investments" shall mean any security or obligation or combination
thereof permitted under the Public Funds Investments Act, Chapter 2256, Texas Government Code,
as amended or other applicable law.
The term 'Previously Issued Bonds" shall mean the Outstanding and unpaid revenue bonds
of the City payable from and equally and ratably secured by a first lien on and pledge of the Net
Revenues of the System, identified as follows:
City of Huntsville, Texas Waterworks and Sewer SystemRevenue Bonds, Series 1997, dated
February 1, 1997, and originally issued in the principal amount of S 14,395,000
City of Huntsville, Texas Waterworks and Sewer SystemRevenue Bonds, Series 2002, dated
November 15, 2002, and originally issued in the principal amount of $7,255,000
The term "Record Date" shall mean Record Date as defined in the Form of Bonds in
Exhibit "B" to this Ordinance.
The term 'Required Reserve" shall mean the amount required to be accumulated and
maintained in the Reserve Fund under the provisions of Section 10 hereof.
The term 'Reserve Fund" shall mean the special fund created, established and maintained by
the provisions of Section 10 of this Ordinance.
The term "Rule" shall mean SEC Rule 15c2 -12, as amended from time to time.
The term "System" shall mean all properties, facilities and plants currently owned, operated
and maintained by the City for the supply, treatment, transmission and distribution of potable water
and the collection, treatment and disposal ofwater- carried wastes, together with all future extensions,
improvements, replacements and additions thereto; provided, however, that notwithstanding the
foregoing, and to the extent now or hereafter authorized or permitted by law, the term "System" shall
not mean to include facilities of any kind which are declared not to be a part of the System and which
are acquired or constructed by or on behalf of the City with the proceeds from the issuance of
"Special Facilities Bonds ", which are hereby defined as being special revenue obligations of the City
TILNT VILLEWWSSREVNT OMmznce A-3
which are not Bonds but which are payable from and secured by other liens on and pledges of any
revenues, sources or payments, not pledged to the payment of the Bonds Similarly Secured including,
but not limited to, special contract revenues or payments received from any other legal entity in
connection with such facilities.
HLNT VIDE' W W SSREl4P1: 0m- -, A -4
EXHIBIT 8
FORM OF BOND
R- UNITED STATES OF AMERICA PRINCIPAL
STATE OF TEXAS AMOUNT
CITY OF HUNTSVILLE, TEXAS g
WATERWORKS AN]) SEWER SYSTEM REVENUE BOND, SERIES 2007
INTEREST RATE: MATURITY DATE
REGISTERED OWNER:
PRINCIPAL AMOUNT:
DATE OF SERIES DATE OF DELIVERY
October 15, 2007 November 1, 2007
DOLLARS
ON THE MATURITY DATE specified above, the CITY OF HUNTSVILLE, TEXAS
(the "Issuer "), being a political subdivision and municipal corporation of the State of Texas, hereby
promises to pay to the Registered Owner specified above, or registered assigns (hereinafter called the
"Registered Owner "), the Principal Amount specified above, and to pay interest thereon (calculated
on the basis of 360 -day year of twelve 30 -day months) from the Date of Delivery at the Interest
Rate per annum specified above, payable on February 15, 2008, and semiannually on each August 15
and February 1.5 thereafter to the Maturity Date specified above, or the date of redemption prior to
maturity; except that if this Bond is required to be authenticated and the date of its authentication is
later than the first Record Date (hereinafter defined), such Principal Amount shall bear interest from
the interest payment date next preceding the date ofauthentication, unless such date of authentication
is after any Record Date but on or before the next following interest payment date, in which case such
principal amount shall bear interest from such next following interest payment date; provided,
however, that if on the date of authentication hereof the interest on the Bond or Bonds, if any, for
which this Bond is being exchanged is due but has not been paid, then this Bond shall bear interest
from the date to which such interest has been paid in full. Notwithstanding the foregoing, during any
period in which ownership of the Bonds is determined only by a book entry at a securities depository
for the Bonds, any payment to the securities depository, or its nominee or registered assigns, shall
be made in accordance with existing arrangements between the Issuer and the securities depository.
THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of the
United States of America, without exchange or collection charges. The principal of this Bond shall
be paid to the Registered Owner hereof upon presentation and surrender of this Bond at maturity or
upon the date fixed for its redemption prior to maturity, at the designated office for payment of
JPMorgan Chase Bank, N.A., Houston, Texas which is the "Paying Agent /Registrar" for this Bond.
The payment of interest can this Bond shall be made by the Paying AgenURegistrar to the Registered
HLNT VILLC'WWSSREV-04: B -I
Owner hereof on each interest payment date by check, dated as of such interest payment date, drawn
by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required by the
Ordinance authorizing the issuance of this Bond (the "Bond Ordinance ") to be on deposit with the
Paying Agent/Registrar for such purpose as hereinafter provided: and such check shall be sent by the
Paying Agent/Registrar by United States mail, first -class postage prepaid, on each such interest payment
date, to the Registered Owner hereof, at its address as it appeared on the last business day of the month
next preceding each such date (the "Record Date ") on the Registration Books kept by the Paying
Agent/Registrar, as hereinafter described. In the event of a non - payment of interest on a scheduled
payment date, and for 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 ofsuch interest
have been received from the Issuer. Notice of the Special Record Date and of the scheduled payment date
of the past due interest (the "Special Payment Date" which shall be 15 days after the Special Record Date)
shall be sent at least five business days prior to the Special Record Date by United States mail, first class,
postage prepaid, to the address of each Registered Owner appearing on the Registration Books of the
Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing
of such notice. Any accrued interest due upon the redemption of this Bond prior to maturity as provided
herein shall be paid to the Registered Owner upon presentation and surrender of this Bond for redemption
and payment at the principal office for payment of the Paying Agent/Registrar (unless the redemption date
is a regularly scheduled interest payment date, in which case accrued interest on such redeemed Bonds
shall be payable in the regular manner described above). The Issuer covenants with the Registered Owner
of this Bond that on or before each principal payment date, interest payment date, and accrued interest
payment date for this Bond it will make available to the Paying Agent /Registrar, from the "Interest and
Sinking Fund" referred to in and maintained by the Bond Ordinance, the amounts required to provide for
the payment, in immediately available funds, of all principal of and interest on the Bonds, when due.
Terms used in this Bond and not otherwise defined shall have the meaning given in the Bond Ordinance.
DURING ANY PERIOD in which ownership of the Bonds is determined only by a book
entry at a securities depository for the Bonds, if fewer than all of the Bonds of the same maturity and
bearing the same interest rate are to be redeemed, the particular Bonds of such maturity and bearing
such interest rate shall be selected in accordance with the arrangements between the Issuer and the
securities depository.
--IF THE DATE for the payment of the principal of or interest on this Bond shall be a
Saturday, Sunday, legal holiday, or day on which banking institutions in the city where the principal
office for payment of the Paying Agent/Registrar is located are authorized by law or executive order
to close, or the United States Postal Service is not open for business (each a "Non- Business Day "),
then the date for such payment shall be the next succeeding day which is not a Non - Business Day,
and payment on such date shall have the same force and effect as if made on the original date payment
was due.
_—ON AUGUST 15, 2010 OR ON ANY DATE THEREAFTER, the Bonds maturing on and
after August 15, 2011 may be redeemed prior to their scheduled maturities, at the option of the
Issuer, with funds derived from any available and lawful source, at a redemption price equal to the
principal amount to be redeemed plus accrued interest to the date fixed for redemption as a whole,
or from time to time in part, and, if in part, the particular Bonds, or portions thereof, to be redeemed
H SVa.LEVWSSREVV omman.. B -2
shall be selected and designated by the Issuer, and if less than all of a maturity is to be redeemed the
Paying Agent/Registrar shall determine by lot the Bonds, or portions thereof within such maturity to
be redeemed (provided that a portion of Bond may be redeemed only in integral multiples of $5,000
of principal amount),
THE BOND maturing on August 15, 2017 (the "Term Bond ") is subject to mandatory
sinking fund redemption by lot prior to maturity in the following amounts, on the following dates and
at a price of par plus accrued interest to the redemption date.
Bonds Maturing August 15, 2017
Redemption Date
Principal Amount
August 15, 2008
$180,000
August 15, 2009
165,000
August 15, 2010
175,000
August 15, 2011
185,000
August 15, 2012
August 15, 2013
August 15, 2014
August 15, 2015
August 15, 2016
August 15, 1017*
*Final Maturity
190,000
200,000
210,000
220,000
230,000
240,000*
THE PRINCIPAL AMOUNT of the Term Bond required to be redeemed pursuant to the
operation of the mandatory sinking fund redemption provisions shall be reduced, at the option of the
City by the principal amount of any Term Bond of the stated maturity which, at least 50 days prior
to a mandatory redemption date, (1) shall have been acquired by the City, at a price not exceeding
the principal amount of such Term Bond plus accrued interest to the date of purchase thereof, and
delivered to the Paying Agent/Registrar for cancellation, (2) shall have been purchased and canceled
by the Paying Agent/Registrar at the request of the City with monies in the Interest and Sinking Fund
at a price not exceeding the principal amount of the Tenn Bond plus accrued interest to the date of
purchase thereof, or (3) shall have been redeemed pursuant to the optional redemption provisions and
not theretofore credited against a mandatory sinking fund redemption requirement.
AT LEAST 30 days prior to the date fixed for any redemption of Bonds or portions thereof
prior to maturity, a written notice of such redemption shall be sent by the Paying Agent /Registrar by
United States mail, first-class postage prepaid, at least 30 days prior to the date fixed for any such
redemption to the Registered Owner of each Bond to be redeemed at its address as it appeared on
the Registration Books maintained by the Paying Agent /Registrar on the day such notice of
redemption is mailed. By the date fixed for any such redemption, due provision shall be made with
the Paying Agent /Registrar for the payment of the required redemption price for the Bonds or
portions thereof which are to be so redeemed. If such written notice of redemption is mailed and if
due provision for such payment is made, all as provided above, the Bonds or portions thereof which
are to be so redeemed thereby automatically shall be treated as redeemed prior to their scheduled
HLmL Vu.ce�wWSSREV,07 omNance B -3
maturities, and they shall not bear interest after the date fixed for redemption, and they shall not be
regarded as being outstanding except for the right of the Registered Owner to receive the redemption
price from the Paying Agent/Registrar out of the funds provided for such payment. If a portion of
any Bond shall be redeemed a substitute Bond or Bonds having the same maturity date, bearing
interest at the same rate, in any denomination or denominations fit any integral multiple of 55,000,
at the written request of the Registered Owner, and in an aggregate principal amount equal to the
unredeemed portion thereof, will be issued to the Registered Owner upon the surrender thereof for
cancellation, at the expense of the Issuer, all as provided in the Bond Ordinance_
ALL BONDS OF THIS SERIES are issuable solely as fully registered Bonds, without
interest coupons, in the denomination of any integral multiple of $5,000 (an "Authorized
Denomination "). As provided in the Bond. Ordinance, this Bond, or any unredeemed portion hereof,
may, at the request of the Registered Owner or the assignee or assignees hereof, be assigned,
transferred and exchanged for a like aggregate principal amount of fully registered Bonds, without
interest coupons, payable to the appropriate Registered Owner, assignee or assignees, as the case may
be, having the same denomination or denominations in any integral multiple of $5,000 as requested
in writing by the appropriate Registered Owner, assignee or assignees, as the case may be, upon
surrender of this Bond to the Paying Agent /Registrar for cancellation, all in accordance with the form
and procedures set forth in the Bond Ordinance. Among other requirements for such assignment and
transfer, this Bond must be presented and surrendered to the Paying Agent,'Registrar, together with
proper instruments of assignment, in form and with guarantee ofsignatures satisfactory to the Paying
Agent /Registrar, evidencing assignment of this Bond or any portion or portions hereof in any integral
multiple of $5,000 to the assignee or assignees in whose name or names this Bond or any such
portion or portions hereof is or are to be registered. The form of Assignment printed or endorsed
on this Bond may be executed by the Registered Owner to evidence the assignment hereof, but such
method is not exclusive, and other instruments of assignment satisfactory to the Paying
Agent /Registrar may be used to evidence the assignment of this Bond or any portion or portions
hereoffrom time to time by the Registered Owner. The Paying Agent /Registrar's reasonable standard
or customary tees and charges for transferring and exchanging any Bond or portion thereof shall be
paid by the Issuer, but any taxes or governmental charges required to be paid with respect thereto
shall be paid by the one requesting such assignment, transfer or exchange as a condition precedent
to the exercise of such privilege. The Paying Agent /Registrar shall not be required to make any such
transfer or exchange (i) during the period commencing with the close ofbusiness on any Record Date
and ending with the opening of business on the next following principal or interest payment date, or,
(ii) with respect to any Bond or any portion thereof called for redemption prior to maturity, within
45 days prior to its redemption date; provided, however, such limitation of transfer shall not be
applicable to an exchange by the Registered Owner of an unredeemed balance of a Bond called for
redemption in part.
_WHENEVER the beneficial ownership of this Bond is detennmed by a book entry at a
securities depository for the Bonds, the foregoing requirements of holding, delivering or transferring
this Bond shall be modified to require the appropriate person or entity to meet the requirements of
the securities depository as to registering or transferring the book entry to produce the same effect.
IiL T VILC&WWSSR5VP Ordmanre B -4
IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the Issuer, resigns
or otherwise ceases to act as such, the Issuer has covenanted in the Bond Ordinance that it promptly
will appoint a competent and legally qualified substitute therefor, and cause written notice thereof to
be mailed to the Registered Owners of the Bonds.
__IT IS HEREBY certified, recited and covenanted that this Bond has been duly and validly
authorized, issued and delivered; that all acts, conditions and things required or proper to be
performed, exist, and be done precedent to or in the authorization, issuance and delivery ofthis Bond
have been performed, existed and been done in accordance with law; that this Bond is a special
obligation of the Issuer, and that the interest on and principal of this Bond, together with the
Previously Issued Bonds and all other outstanding "Bonds Similarly Secured" (as defined in the Bond
Ordinance), as such interest comes due, and as such principal matures, are payable from and secured
by a lien on and pledge of the "Net Revenues" of the "System" (which is generally described as the
Issuer's combined waterworks and sewer system), all as provided in the Bond Ordinance.
THE ISSUER also has reserved the right, subject to restrictions stated in the Ordinance, to
issue Additional Bonds which also may be made payable from and equally and ratably secured by a
first lien on and pledge of, the Net Revenues of the System in the same manner and to the same extent
as this Series of Bonds.
THE ISSUER also has reserved the right, subject to restrictions stated in the Bond Ordinance
to issue obligations payable from and equally and ratably secured, in whole or in part, by a lien on and
pledge of the Net Revenues (as defined in the Bond Ordinance), junior and subordinate in rank and
dignity to the lien on and pledge of such Net Revenues securing payment of the Bonds or Bonds
Similarly Secured.
—THE OWNER HEREOF shall never have the right to demand payment ofthis Bond out of
any funds raised or to be raised by taxation.
BY BECOMING the Registered Owner of this Bond, the Registered Owner thereby
acknowledges all of the terms and provisions of the Bond Ordinance, agrees to be bound by such
terms and provisions, acknowledges that the Bond Ordinance is duly recorded and available for
inspection in the official minutes and records ofthe governing body of the Issuer and agrees that the
terms and provisions of this Bond and the Bond Ordinance constitute a contract between each
Registered Owner hereof and the Issuer.
---IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual
or facsimile signature of the Mayor of the Issuer, and countersigned with the manual or facsimile
signature ofthe City Secretary ofthe Issuer and the official seal ofthe Issuer has been duly impressed,
or placed in facsimile, on this Bond.
Countersigned:
(facsimile signature) (facsimile signature}
�MMLL'W WSSREW7: Ordmaacz B -5
City Secretary, City of Huntsville, Texas
(CITY SEAL)
Mayor, City of Huntsville, Texas
FORM OF REGISTRATION CERTIFICATE
OF THE COMPTROLLER OF PUBLIC ACCOUNTS:
COMPTROLLER'S REGISTRATION CERTIFICATE:
REGISTER NO.
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 that this Bond has been registered by the Comptroller
of Public Accounts of the State of Texas.
Witness my signature and seal this
(COMPTROLLER'S SEAL)
Comptroller of Public Accounts
of the State of Texas
FORM OF PAYING AGENT /REGISTRAR'S AUTHENTICATION CERTIFICATE
PAYING AGENT /REGISTRAR'S AUTHENTICATION CERTIFICATE
(To be executed tf this Bond is not accompanied by an executed Registration
Certificate of the Comptroller of Public Accounts of the State of Texas)
It is hereby certified that this Bond has been issued under the provisions of the Bond
Ordinance described in the text of this Bond; and that this Bond has been issued in exchange for a
bond or bonds, or a portion of a bond or bonds of a series which originally was approved by the
Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the
State of Texas.
Dated: JPMORGAN CHASE BANK, N.A.
Houston, Texas
Paying Agent/Registrar
Authorized Representative
FORM OF ASSIGNMENT•
rvury VILLPWwssaevw9: omtnanre B -6
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned Registered Owner of this Bond, or duly
authorized representative or attorney thereof, hereby sells, assigns and transfers this Bond and all
rights hereunder unto
(Assignee's Social Security or
Taxpayer Identification Number)
(Please print or typewrite Assignee's name and address,
including zip code)
ano hereby irrevocably constitutes and appoints
attorney to transfer the registration of this Bond on the Paying Agent/Registrar's Registration Books
with full power of substitution in the premises.
Dated:
Signature Guaranteed:
NOTICE: Signature(s) must be guaranteed by
a member firm of the New York Stock
Exchange or a commercial bank or trust
company.
NOTICE: The signature above must
correspond with the name of the Registered
Owner as it appears upon the front of this
Bond in every particular, without alteration or
enlargement or any change whatsoever.
INSERTIONS FOR THE INITIAL BOND
The initial Bond shall be in the form set forth in this Exhibit, except that:
A. immediately under the name of the Bond, the headings "INTEREST RATE" and
"MATURITY DATE" shall both be completed with the words "As shown below" and
"CUSIP NO." shall be deleted.
B. the first paragraph shall be deleted and the following will be inserted:
"ON THE MATURITY DATE SPECIFIED ABOVE, the City of Huntsville, Texas (the
"City "), being a political subdivision, hereby promises to pay to the Registered Owner specified
above, or registered assigns (hereinafter called the "Registered Owner "), on August 15 in each of the
years, in the principal installments and bearing interest at the per annum rates set forth in the
following schedule:
Years
Principal Installments
Interest Rates
(Information from Sections 3 and 4 to be inserted)
BLN VILL6WWSSREV 107 '. Ord,nan B -%
The City promises to pay interest on the unpaid principal amount hereof (calculated on the basis of
a 360 -day year of twelve 30 -day months) from the Date of Delivery at the respective Interest Rate
per annum specified above. Interest is payable on February 15, 2008 and semiannually on each
August 15 and February 15 thereafter to the date of payment of the principal installment specified
above; except, that if this Bond is required to be authenticated and the date of its authentication is
later than the first Record Date (hereinafter defined), such principal amount shall bear interest from
the interest payment date next preceding the date of authentication, unless such date of authentication
is after any Record Date but on or before the next following interest payment date, in which case such
principal amount shall bear interest from such next following interest payment date; provided,
however, that if on the date of authentication hereof the interest on the Bond or Bonds, if any, for
which this Bond is being exchanged is due but has not been paid, then this Bond shall bear interest
from the date to which such interest has been paid in full."
C. The initial Bond shall be numbered "7-1."
x Nn VaLL'wwssxev'm: ommo.0 B -8
INTRODUCED, PASSED, APPROVED AND ADOPTED by the members of the City
Council of the City of Huntsville, this the 2nd day of October, 2007.
J. Turn , y r
ATTEST:
Danna Welter, City Secretary
APPROVED AS TO FORM:
Thomas Leeper, City ^ttyrney
Exhibit A - Definitions
Exhibit B - Form of Bond
Exhibit C - Description of Annual Financial Information
HIIMSVILLE/V ISSREV 07: Ordinance 26
EXHIBIT A
As used in this Ordinance, the following terms and expressions shall have the meanings set
forth below, unless the text hereof specifically indicates otherwise:
The term "Additional Bonds" shall mean the additional parity revenue bonds which the City
reserves the right to issue on a parity with the Previously Issued Bonds and the Bond in accordance
with the terms and conditions stated in Section 13 hereof.
The term "Average Annual Debt Service" shall mean that average amount which, at the time
of computation, will be required to pay the Debt Service of obligations when due and derived by
dividing the total of such Debt Service by the number of years then remaining before final maturity.
Capitalized interest payments provided from proceeds of Bonds Similarly Secured shall be excluded
in making the aforementioned computation.
The term "Bond" shall mean the "City of Huntsville, Texas Waterworks and Sewer System
Revenue Bonds, Series 2007," dated October 15, 2007.
The term "Bonds Similarly Secured" shall mean the Previously Issued Bonds, the Bond and
Additional Bonds.
The term "City" shall mean the City of Huntsville, Texas, the City Council thereof and any
successor to the City as owner of the System.
The term "Debt Service" 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 Bonds
Similarly Secured without a fixed numerical rate, that such obligations bear, or would have borne,
interest at the highest rate reached, or that would have applied to such obligations (using the index
or method for computing interest applicable to such obligations) during the twenty -four (24) month
period next preceding the date of computation; and further assuming in the case of obligations
required to be redeemed or prepaid as to principal prior to maturity, the principal amounts therof will
be redeemed prior to maturity in accordance with the mandatory redemption provisions applicable
thereto.
The term "Defeasance Securities" shall mean (i) Federal Securities, (ii) noncallable
obligations of an agency or instrumentality of the United States of America, including obligations
that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date
the City Council adopts or approves proceedings authorizing the issuance of refunding bonds or
otherwise provide for the funding of an escrow to effect the defeasauce of the Bond is rated as to
investment quality by a nationally recognized investment rating firm not less than "AAA" or its
equivalent, and (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 City Council
adopts or approves proceedings authorizing the issuance of refunding bonds or otherwise provide
HONIB%-M1 -F W W &SEWERREV20U)I OMfrc A-1
for the funding of an escrow to effect the defeasance of the Bond, is rated as to investment quality
by a nationally recognized investment rating firm no less than "AAA" or its equivalent.
The term "Federal Securities" as used herein shall mean direct, noncallable obligations of
the United States of America, including obligations that are unconditionally guaranteed by the
United States of America (including Interest Strips of the Resolution Funding Corporation).
The term "Fiscal Year" shall mean the twelve -month financial accounting period used for
the System ending each year on September 30' °; provided, however, the City may, by ordinance,
change the fiscal year to another period of not less than twelve calendar months, if found and
determined to be necessary.
The term "Gross Revenues" shall mean all income and revenues of every nature derived or
received from the operation and ownership (excluding refundable meter deposits, gifts and grants
in aid of construction, impact fees charged developers and special assessments against landowners)
of the System, including earnings and income derived from the investment or deposit of moneys in
any special funds or accounts created and established for the payment and security of the Bonds
Similarly Secured and other obligations payable solely from and secured only by a lien on and
pledge of the Net Revenues.
The term "Holder" or "Holders" shall mean the registered owner, whose name appears in the
Registration Books, for the Bond.
The term "Maintenance and Operating Expenses" shall mean all current expenses of
operating and maintaining 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 Council, reasonably and fairly exercised, are necessary to maintain the
operations and render adequate service to the City and the inhabitants thereof, or such as might be
necessary to meet some physical accident or condition which would otherwise impair obligations
payable from Net Revenues shall be deducted in determining "Net Revenues ". Depreciation charges
shall not be considered Maintenance and Operating Expenses. Maintenance and Operating Expenses
shall include payments under contracts for the purchase of water supply, treatment of sewage or
other materials, goods or services for the System to the extent authorized by law and the provisions
of such contract.
The term "Net Revenues" shall mean Gross Revenues of the System, with respect to any
period, after deducting the System's Maintenance and Operating Expenses during such period.
The term "Ordinance" shall mean this ordinance finally adopted by the City Council on
October 2,'007.
The term "Outstanding" when used in this Ordinance with respect to the Bond or Bonds
Similarly Secured means, as of the date of determination, the Bond and Bonds Similarly Secured
theretofore sold, issued and delivered by the City,, except:
MIN SVILLEI V &SGNk.RREV2W ONinanu A -2
(t) the Bond or Bonds Similarly Secured canceled or delivered to the transfer agent or
registrar for cancellation in connection with the exchange or transfer of such
obligations;
(2) the Bond or Bonds Similarly Secured paid or deed to be paid in accordance with the
provisions of Section 22 hereof; and
(3) the Bond or Bonds Similarly Secured that have been mutilated, destroyed, lost or
stolen and replacements therefor have been registered and delivered in lieu thereof.
The term "Paying Agent/Registrar" shall have the meaning set forth in Section 5 hereof
The term "Permitted Investments" shall mean any security or obligation or combination
thereofpermitted under the Public Funds Investments Act, Chapter 2256, Texas Government Code,
as amended or other applicable law.
The term "Previously Issued Bonds" shall mean the Outstanding and unpaid revenue bonds
of the City payable from and equally and ratably secured by a first lien on and pledge of the Net
Revenues of the System, identified as follows:
City of Huntsville, Texas Waterworks and Sewer System Revenue Bonds, Series 1997,
dated February 1, 1997, and originally issued in the principal amount of $14,395,000
City of Huntsville, Texas Waterworks and Sewer System Revenue Bonds, Series 2002,
dated November 15„ 2002, and originally issued in the principal amount of $7,255,000
The term "Record Date" shall mean Record Date as defined in the Form of Bonds in
Exhibit "B" to this Ordinance.
The term "Required Reserve" shall mean the amount required to be accumulated and
maintained in the Reserve Fund under the provisions of Section 10 hereof.
The terin "Reserve Fund" shall mean the special fund created, established and maintained
by the provisions of Section 10 of this Ordinance.
The terns "Rule" shall mean SEC Rule 15c2 -12, as amended from time to time.
The term "System" shall mean all properties, facilities and plants currently owned, operated
and maintained by the City for the supply, treatment, transmission and distribution of potable water
and the collection, treatment and disposal of water - carried wastes, together with all future
extensions, improvements, replacements and additions thereto; provided, however, that
notwithstanding the foregoing, and to the extent now or hereafter authorized or permitted by law,
the term "System" shall not mean to include facilities of any kind which are declared not to be a part
of the System and which are acquired or constructed by or on behalf of the City with the proceeds
from the issuance of "Special Facilities Bands ", which are hereby defined as being special revenue
obligations of the City which are not Bonds but which are payable from and secured by other liens
on and pledges of any revenues, sources or payments, not pledged to the payment of the Bonds
HUMSVIUEIWW &SEWL REV2007: 01d, w A-3
Similarly Secured including, but not limited to, special contract revenues or payments received from
any other legal entity in connection with such facilities.
IIUN, VILLFJWW&SEWHRUV3007 ONinanm A -4
EXHIBIT B
FORM OF BOND
R- UNITED STATES OF AMERICA PRINCIPAL
STATE OF TEXAS AMOUNT
CITY OF HUNTSVILLE, TEXAS $
WATERWORKS AND SEWER SYSTEM REVENUE BOND, SERIES 2007
INTEREST RATE MATURITY DATE DATE OF DATE OF CUSIP NO,
SERIES DELIVERY
October 15,
2007
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
ON THE MATURITY DATE specified above, the CITY OF HUNTSVILLE, TEXAS
(the "Issuer "), being a political subdivision and municipal corporation of the State of Texas, hereby
promises to pay to the Registered Owner specified above, or registered assigns (hereinafter called
the "Registered Owner "), the Principal Amount specified above, and to pay interest thereon
(calculated on the basis of a 360 -day year of twelve 30 -day months) from the Date of Delivery at
the Interest Rate per annum specified above, payable on February 15, 2008, and semiannually on
each August 15 and February 15 thereafter to the Maturity Date specified above, or the date of
redemption prior to maturity; except that if this Bond is required to be authenticated and the date of
its authentication is later than the first Record Date (hereinafter defined), such Principal Amount
shall bear interest from the interest payment date next preceding the date of authentication, unless
such date of authentication is after any Record .Date but on or before the next following interest
payment date, in which case such principal amount shall bear interest from such next following
interest payment date; provided, however, that if on the date of authentication hereof the interest on
the Bond or Bonds, if any, for which this Bond is being exchanged is due but has not been paid, then
this Bond shall bear interest from the date to which such interest has been paid in full.
Notwithstanding the foregoing, during any period in which ownership of the Bonds is determined
only by a book entry at a securities depository for the Bonds, any payment to the securities
depository, or its nominee or registered assigns, shall be made in accordance with existing
arrangements between the Issuer and the securities depository.
THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of
the United States of America, without exchange or collection charges. The principal of this Bond
shall be paid to the Registered Owner hereof upon presentation and surrender of this Bond at
maturity or upon the date fixed for its redemption prior to maturity, at the designated office for
payment Texas which is the "Paying Agent /Registrar "for this
HOVTSV[LT-EIW W& EWFRREV2T7 0,din -me B -t
Bond. The payment of interest on this Bond shall be made by the Paying Agent/Registrar to the
Registered Owner hereof on each interest payment date by check, dated as of such interest payment
date, drawn by the Paying Agent /Registrar on, and payable solely from, funds of the Issuer required
by the Ordinance authorizing the issuance ofthis Bond (the "Bond Ordinance ") to be on depositwith
the Paying Agent/Registrar for such purpose as hereinafter provided; and such check shall be sent
by the Paying Agent/Registrar by United States mail, first -class postage prepaid, on each such interest
payment date, to the Registered Owner hereof, at its address as it appeared on the last business day of
the month next preceding each such date (the "Record Date ") on the Registration Book's kept by the
Paying Agent/Registrar, as hereinafter described. In the event of a non - payment of interest oil a
scheduled payment date, and for 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 Issuer. Notice of the Special Record Date and of
the scheduled payment date of the past due interest (the "Special Payment Date" which shall be 15 days
after the Special Record Date) shall be sent at least five business days prior to the Special Record Date
by United States mail, first class, postage prepaid, to the address of each Registered Owner appearing
on the Registration Books ofthe Paying Agent/Registrar at the close of business on the last business day
next preceding the date of mailing of such notice. Any accrued interest due upon the redemption of this
Bond prior to maturity as provided herein shall be paid to the Registered Owner upon presentation and
surrender of this Bond for redemption and payment at the principal office for payment of the Paying
Agent/Registrar (unless the redemption date is a regularly scheduled interestpayment date, in which case
accrued interest on such redeemed Bonds shall be payable in the regular manner described above). The
Issuer covenants with the Registered Owner of this Bond that on or before each principal payment date,
interest payment date, and accrued interest payment date for this Bond it will make available to the
Paying Agent/Registrar, from the "Interest and Sinking Fund" referred to in and maintained by the Bond
Ordinance, the amounts required to provide for the payment, in immediately available funds, of all
principal of and interest on the Bonds, when due. Terms used in this Bond and not otherwise defined
shall have the meaning given in the Bond Ordinance.
DURING ANY PERIOD in which ownership of the Bonds is determined only by a book
entry at a securities depository for the Bonds, if fewer than all of the Bonds of tile same maturity and
bearing the same interest rate are to be redeemed, the particular Bonds of such maturity and bearing
such interest rate shall be selected in accordance with the arrangements between the Issuer and the
securities depository.
IF THE DATE for the payment of the principal of or interest on this Bond shall be a
Saturday, Sunday, legal holiday, or day on which banking institutions in the city where the principal
office for payment ofthe Paying Agent/Registrar is located are authorized by law or executive order
to close, or the United States Postal Service is not open for business (each a "Non- Business Day "),
then the date for such payment shall be the next succeeding day which is not a Non- Business Day,
and payment on such date shall have the same force and effect as if made on the original date
payment was due.
ON AUGUST 15, _ OR ON ANY DATE THEREAFTER, the Bonds maturing on and
after August 15, ` may be redeemed prior to their scheduled maturities, at the option of the
Issuer, with funds derived from any available and lawful source, at a redemption price equal to the
principal amount to be redeemed plus accrued interest to the date fixed for redemption as a whole,
or from time to time in part, and, if in part, the particular Bonds, or portions thereof, to be redeemed
eLWIMUEr W&sewewenv2007 OMIOance B -2
shall be selected and designated by the Issuer, and if less than all of maturity is to be redeemed the
Paying Agent/Registrar shall determine by lot the Bonds, or portions thereof within such maturity
to be redeemed (provided that a portion of a Bond may be redeemed only in integral multiples of
$5,000 of principal amount).
AT LEAST 30 days prior to the date fixed for any redemption of Bonds or portions thereof
prior to maturity, a written notice of such redemption shall be sent by the Paying Agent/Registrar
by United States mail, first -class postage prepaid, at least 30 days prior to the date fixed for any such
redemption to the Registered Owner of each Bond to be redeemed at its address as it appeared on
the Registration Books maintained by the Paying Agent /Registrar on the day such notice of
redemption is mailed. By the date fixed for any such redemption, due provision shall be made with
the Paying Agent/Registrar for the payment of the required redemption price for the Bonds or
portions thereof which are to be so redeemed. If such written notice of redemption is mailed and
if due provision for such payment is made, all as provided above, the Bonds or portions thereof
which are to be so redeemed thereby automatically shall be treated as redeemed prior to their
scheduled maturities, and they shall not bear interest after the date fixed for redemption, and they
shall not be regarded as being outstanding except for the right of the Registered Owner to receive
the redemption price from the Paying Agent/Registrar out of the funds provided for such payment.
If a portion of any Bond shall be redeemed a substitute Bond or Bonds having the same maturity
date, bearing interest at the same rate, in any denomination or denominations in any integral multiple
of $5,000, at the written request of the Registered Owner, and in an aggregate principal amount
equal to the unredeemed portion thereof„ will be issued to the Registered Owner upon the surrender
thereof for cancellation, at the expense of the Issuer, all as provided in the Bond Ordinance.
ALL BONDS OF THIS SERIES are issuable solely as fully registered Bonds, without
interest coupons, in the denomination of any integral multiple of $5,000 (an "Authorized
Denomination "). As provided in the Bond Ordinance, this Bond, or any unredeemed portion hereof,
may, at the request of the Registered Owner or the assignee or assignees hereof, be assigned,
transferred and exchanged for a like aggregate principal amount of fully registered Bonds, without
interest coupons, payable to the appropriate Registered Owner, assignee or assignees, as the case
may be, having the same denomination or denominations in any integral multiple of $5,000 as
requested in writing by the appropriate Registered Owner, assignee or assignees, as the case may
be, upon surrender of this Bond to the Paying Agent/Registrar for cancellation, all in accordance
with the form and procedures set forth in the Bond Ordinance. Among other requirements for such
assignment and transfer, this Bond must be presented and surrendered to the Paying Agent /Registrar,
together with proper instruments of assignment, in form and with guarantee of signatures
satisfactory to the Paying Agent/Registrar, evidencing assignment of this Bond or any portion or
portions hereof in any integral multiple of $5,000 to the assignee or assignees in whose name or
names this Bond or any such portion or portions hereof is or are to be registered. The form of
Assignment printed or endorsed on this Bond may be executed by the Registered Owner to evidence
the assignment hereof, but such method is not exclusive, and other instruments of assignment
satisfactory to the Paying Agent/Registrar may be used to evidence the assignment of this Bond or
any portion or portions hereof from tune to time by the Registered Owner. The Paying
Agent/Registrar's reasonable standard or customary fees and charges for transferring and exchanging
any Bond or portion thereof shall be paid by the Issuer, but any taxes or governmental charges
required to be paid with respect thereto shall be paid by the one requesting such assignment, transfer
9UNT6 rJLC2rww &SBWWFW007, 01dmace 13-3
or exchange as a condition precedent to the exercise of such privilege. The Paying Agent/Registrar
shall not be required to make any such transfer or exchange (i) during the period commencing with
the close of business on any Record Date and ending with the opening of business on the next
following principal or interest payment date, or, (ii) with respect to any Bond or any portion thereof
called for redemption prior to maturity, within 45 days prior to its redemption date; provided,
however, such limitation of transfer shall not be applicable to an exchange by the Registered Owner
of an unredeemed balance of a Bond called for redemption in part.
WHENEVER the beneficial ownership of this Bond is determined by a book entry at a
securities depository for the Bonds, the foregoing requirements of holding, delivering or transferring
this Bond shall be modified to require the appropriate person or entity to meet the requirements of
the securities depository as to registering or transferring the book entry to produce the same effect.
IN THE EVENT any Paying Agent/Registrar for the Bonds is changed bythe Issuer, resigns
or otherwise ceases to act as such, the Issuer has covenanted in the Bond Ordinance that it promptly
will appoint a competent and Iegally qualified substitute therefor, and cause written notice thereof
to be mailed to the Registered Owners of the Bonds.
IT IS HEREBY certified, recited and covenanted that this Bond has been duly and validly
authorized, issued and delivered; that all acts, conditions and things required or proper to be
performed, exist, and be doneprecedent to or in the authorization, issuance and delivery of this Bond
have been performed, existed and been done in accordance with law; that this Bond is a special
obligation of the Issuer, and that the interest on and principal of this Bond, together with the
Previously Issued Bonds and all other Outstanding "Bonds Similarly Secured" (as defined in the
Bond Ordinance), as such interest comes due, and as such principal matures, are payable from and
secured by a lien on and pledge of the "Net Revenues" of the "System" (which is generally described
as the Issuer's combined waterworks and sewer system), all as provided in the Bond Ordinance.
THE ISSUER also has reserved the right, subject to restrictions stated in the Ordinance, to
issue Additional Bonds which also may be made payable from and equally and ratably secured by
a first lien on and pledge of, the Net Revenues of the System in the same manner and to the same
extent as this Series of Bonds.
THE ISSUER also has reserved the right, subject to restrictions stated in the Bond
Ordinance to issue obligations payable from and equally and ratably secured, in whole or in part,
by a lien on and pledge of the Net Revenues (as defined in the Bond Ordinance), junior and
subordinate in rank and dignity to the lien on and pledge of such Net Revenues securing payment
of the Bonds or Bonds Similarly Secured.
THE OWNER HEREOF shall never have the right to demand payment of this Bond out
of any funds raised or to be raised by taxation.
BY BECOMING the Registered Owner of this Bond, the Registered Owner thereby
acknowledges all of the terms and provisions of the Bond Ordinance, agrees to be bound by such
terms and provisions, acknowledges that the Bond Ordinance is duly recorded and available for
inspection in the official minutes and records of the governing body of the Issuer and agrees that the
IIUMWLI FW W &SE WRRREV.00': Ordinance B-4
terms and provisions of this Bond and the Bond Ordinance constitute a contract between each
Registered Owner hereof and the Issuer.
IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual
or facsimile signature of the Mayor of the Issuer, and countersigned with the manual or facsimile
signature of the City Secretary of the Issuer and the official seal of the Issuer has been duly
impressed, or placed in facsimile, on this Bond.
Countersigned:
(facsimile signature) (facsimile signature)
City Secretary, City of Huntsville, Texas Mayor, City of Huntsville, Texas
(CITY SEAL)
FORM OF REGISTRATION CERTIFICATE
OF THE COMPTROLLER OF PUBLIC ACCOUNTS:
COMPTROLLER'S REGISTRATION CERTIFICATE:
REGISTER NO.
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 that this Bond has been registered by the
Comptroller of Public Accounts of the State of Texas.
Witness my signature and seal this
(COMPTROLLER'S SEAL) Comptroller of Public Accounts
of the State of Texas
FORM OF PAYING AGENT /REGISTRAR'S AUTHENTICATION CERTIFICATE
PAYING AGENT /REGISTRAR'S AUTHENTICATION CERTIFICATE
(To be executed if this Bond is not accompanied by an executed Registration
Certificate of the Comptroller of Public Accounts of the State of Texas)
It is hereby certified that this Bond has been issued under the provisions of the Bond
Ordinance described in the text of this Bond; and that this Bond has been issued in exchange for a
bond or bonds, or a portion of a bond or bonds of a series which originally was approved by the
Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the
State of Texas.
HIWTSViLLE,, &sewcxaevzooz 0mtmnce B -5
Dated:
Texas
Paying Agent/Registrar
3
Authorized Representative
FORM OF ASSIGNMENT:
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned Registered Owner of this Bond, or duly
authorized representative or attorney thereof, hereby sells, assigns and transfers this Bond and all
rights hereunder unto
(Assignee's Social Security or (Please print or typewrite Assignee's name and address,
Taxpayer Identification Number) including zip code)
and hereby irrevocably constitutes and appoints
attorney to transfer the registration of this Bond on the Paying AgentlRegistrar's Registration Books
with full power of substitution in the premises.
Dated:
Signature Guaranteed:
NOTICE: Signature(s) must be guaranteed by NOTICE: The signature above must
a member firm of the New York Stock correspond with the name of the Registered
Exchange or a commercial bank or trust Owner as it appears upon the front of this
company. Bond in every particular, without alteration or
enlargement or any change whatsoever.
INSERTIONS FOR THE INITIAL BOND
The initial Bond shall be in the form set forth in this Exhibit, except that
A. immediately under the name of the Bond, the headings "INTEREST RATE" and
"MATURITY DATE" shall both be completed with the words "As shown below" and
"CUSIP NO_" shall be deleted.
B. the first paragraph shall be deleted and the following will be inserted:
"ON THE MATURITY DATE SPECIFIED ABOVE, the City oflluntsville, Texas (the
"City "), being a political subdivision, hereby promises to pay to the Registered Owner specified
auxrswua1ww &snVERRFvmm: orelnjncc B -6
above, or registered assigns (hereinafter called the 'Registered Owner "), on August 15 in each of
the years, in the principal installments and bearing interest at the per annum rates set forth in the
following schedule:
Years Principal Installments
Interest Rates
(Information from Sections 3 and 4 to be inserted)
The City promises to pay interest on the unpaid principal amount hereof (calculated on the basis of
a 360 -day year of twelve 30 -day months) from the Date of Delivery at the respective Interest Rate
per annum specified above. Interest is payable on February 15, 2008 and semiannually on each
August 15 and February 15 thereafter to the date of payment of the principal installment specified
above; except, that if this Bond is required to be authenticated and the date of its authentication is
later than the first Record Date (hereinafter defined), such principal amount shall bear interest from
the interest payment date next preceding the date of authentication, unless such date of authentica-
tion is after any Record Date but on or before the next following interest payment date, in which
case such principal amount shall bear interest from such next following interest payment date; pro-
vided, however, that if on the date of authentication hereof the interest on the Bond or Bonds, if any,
for which this Bond is being exchanged is due but has not been paid, then this Bond shall bear inter-
est from the date to which such interest has been paid in full."
C. The initial Bond shall be numbered "T-l."
HHNTSVf LE/WW &SEWERREV2002 Ordmanvc B -%
CITY OF HUNTSVILLE, TEXAS
Bid Form
(Updated Maturities)
Name of Bank: mmor7 I Chase
Contact: Wendy Wipnerman Phone: 214 290 -2122
Bonds Due
Interest
Aug 15
Principal
Rate
2008
$180,000
4.025%
2009
165,000
4.025%
2010
175,000
4.025%
2011
185,000(1)
4.025%
2012
190,000(1)
4.025%
2013
200,000(1)
4.025%
2014
210,000(1)
4.025%
2015
220,000(1)
4.025%
2016
230,000(1)
4.025%
2017
240,000(l)
4.025%
(1) Callable on or after August 15, 2010.
Annual Cost to Service as Paying Agent/Registrar:
Other Costs to be incurred by City 12,500 Bank counsel fee Texas MAC Fees
Signal �Tltle rtJhrrCJ D��I aCn
Please reply to Joe Morrow with First Southwest Company by Tuesday, October
2, 2007, no later than 1:00 P.M., with your proposal, 713 -654 -9361 by fax or
jmorrow(afirstsw. com.
Confulential City of Huntsville
®rJ PMorganChase
Presentation
To
First Southwest Company
On
City of Huntsville, Texas
October 2, 2007
Confidential Information
Confidential City ofHunisvflle
October 2, 2007
Mr. Joe Morrow
First Southwest Company
1021 Main Street
Suite 2200
Houston, Texas 77002
Dear Mr. Morrow:
RE: City of Huntsville, Texas $1,995,000 (not to exceed) Waterworks and Sewer
System Revenue Bonds, Series 2007
We are pleased to bid for the City of Huntsville's issue of up to $1,995,000 in Waterworks
and Sewer System Revenue Bonds Series 2007 bank qualified (the "Bonds ") referred to in
your term sheet dated September 24, 2007 and the information attached thereto. Please
note that our bids are on a single Term Bond as opposed to Series Bonds.
Financing Terms and Conditions
Borrower /Seller: City of Huntsville, Texas
Lender/Purchaser: JPMorgan Chase Bank, N. A. (the "Bank ")
707 Travis, Floor 9
Houston, TX 77002
Bank Contacts: Pam Davis
Senior Banker
707 Travis, Floor 09
Houston, TX 77002
Tel. 713- 216 -1147, Fax 713 -216 -4499
Pam. J. Davis @chase. corn
Wendy J. Wipperman
Underwriter II
Government, Not- for - Profit, Healthcare Banking
1717 Main Street, Floor 3
Dallas, TX 75201
Tel. 214 - 290 -2122, Fax 214- 290 -2305
Wendy. i.wipperman(a)Ipmchase com
Confidential City ofHantsville
Facility Type: Private Placement of Waterworks and Sewer System
Revenue Bonds Series 2007 (the 'Bonds ") as a Bank
Qualified Tax Exempt Obligation, to be secured by a first
lien pledge of the net revenues of City of Huntsville's
waterworks and sewer system.
Facility Amount: Not to Exceed One Million Nine Hundred and Ninety-
Five Thousand US Dollars ($ 1,995,000).
Use of Proceeds: The proceeds from the sale of the Series 2007
Waterworks and Sewer System Revenue Bonds will be
used to finance improvements to the city's water and
sewer system.
Rate: Fixed rate of interest of 4.025% on a Bank Qualified
Tax Exempt Basis with a call provision anytime on or
after August 15, 2010, or
Fixed rate of interest of 3.79% on a Bank Qualified Tax
Exempt Basis with no call provision (will offer a make -
whole provision if desired).
Term: Approximately nine years and ten months, with final
maturity on August 15, 2017.
Closing Date: November 1, 2007
Security: The Bonds will constitute valid and legally binding
special obligations of the City of Huntsville secured by a
first lien pledge of the net revenues of the waterworks
and sewer system on parity with the city's waterworks
and sewer system revenue bonds outstanding.
Repayment Terms: Interest on the Bonds will be payable semi - annually on
August 15 and February 15, with the first interest
payment due on February 15, 2008. Principal will be
payable annually on August 15 as per debt service
schedule in the pricing summary.
Tax Exemption: Purchase of the Bonds is contingent upon the interest
on the Notes being excludable from gross income for
federal income tax purposes under existing regulations
on a Bank Qualified basis.
Confidential I of Huntsville
Upfront Bank Fees: None
Attorney's Fees: $2,500 to be paid by the city
Texas MAC Fees: To be paid by the city
Form of Notes: One Term Bond with amortization schedule.
Conditions Precedent: Purchase of the Bonds issued by the City of Huntsville
will be subject to the following conditions precedent:
Documentation: The City and all other parties would
execute and deliver such documentation as the Bank
may request, in form and substance satisfactory to the
Bank and its counsel. Such documentation to include,
but not limited to, i) standard representations and
warranties, ii) a Purchase Agreement, iii) authorization
for the issuance of such Obligations, in form and
substance acceptable to the Bank, iv) opinion of the City
of Huntsville counsel ratifying the authorization of such
Obligations, v) an opinion of the City of Huntsville's
counsel verifying the tax exempt nature of the Notes, vi)
approving opinion of the Attorney General, and vii)
certification by the City of Huntsville of no material
adverse change prior to closing.
Reporting: The City will agree to submit to the Bank Annual Audited
Financial Reports within six months after the end of each
fiscal year of the county.
Documentation: Shall be prepared by Bond Counsel and would be
subject to review and acceptance by counsel to the
Purchaser.
Credit Approval: Credit Approval has been obtained for this
transaction. However, the closing of the transaction is
subject to Conditions Precedent described above and
completion of the Due Diligence described below.
Completion of Due Diligence: Closing of this transaction is subject to completion by
Bank of its due diligence investigation, including, without
limitation, a legal analysis of the transaction
contemplated herein.
Confidential City ofHuntsvilde
Sincerely,
Wendy J. Wipperman
Underwriter II
Government, Not - for - Profit, Healthcare Banking
JPMorgan Chase Bank, N.A.
The terms and conditions above are intended to be a substantive outline of the transaction rather than a full and complete description of all terms of
the purchase documents. This Term Sheet is for the City of Bastrop confidential use only and may not he disclosed to any other person other than its
employees, attorneys and financial advisors (but not other banks), and then only in connection with the proposed transaction and on a confidential
basis, except when: disclosure is required by law or where Bank consents to the proposed disclosure, which consent shall not be unreasonably
withheld.
October 2, 2007
City of Huntsville, Texas
1212 Avenue M
Huntsville, Texas 77340
McCall, Parkhurst & Horton L.L.P.
600 Congress Avenue, Suite 1800
Austin, Texas 78701
First Southwest Company
1021 Main Street, Suite 2200
Houston, Texas 77002
I, the undersigned, being an authorized officer of JPMorgan Chase Bank, N.A. (the 'Bank "),
being a financial institution, to -wit; a bank within the definition of sector 3(a)(2) of the Securities Act
of 1933, acknowledge that the City of Huntsville, Texas (the "Issuer "), is issuing its Waterworks and
Sewer System Revenue Bonds, Series 2007 (the "Bond ") for the purpose of providing funds for (i)
improvements to the Issuer's Waterworks and Sewer System, and (ii) to pay the costs of issuing the
Bond. The Bond is to be issued under the authority of Chapter 1502 of the Texas Government Code,
as amended. The bank hereby acknowledges receipt of the ordinance authorizing the issuance and
sale of the Bond (the "Bond Ordinance ").
The Bank further understands that the Bond is payable from, and secured by a lien on and
pledge of, the receipts of the Net Revenues of the System to provide for the payment of the interest
on and principal of the Bond, as such interest and principal come due.
The Bank further understands that the Bond will be sold for cash, will be approved by the
Attorney General of the State of Texas, and will be delivered in one installment in the form of one
fully- registered Bond representing the full maturity amount of the Bond, $1,995,000, which Bond
matures in annual installments, as set forth below, subject to redemption at the option of the Issuer.
The Bond will be initially registered in the name of the Bank.
In connection with the Bond, the Bank agrees as follows:
H.m,ille/WW &SSe ,Ra,2007
A. The Bank will purchase the Bond, which shall be delivered to the Bank on or about
November 1, 2007. The interest rate on the Bond shall be 4.025% per annum subject to
adjustment as provided in the Ordinance. The first interest payment date for the Bond shall
be February 15, 2008, with interest payable on each August 15 and February 15 thereafter
until maturity or prior redemption. Principal of the Bond will be payable in annual
installments, or upon redemption at the option of the Issuer, under the terms and conditions
described below. The purchase price fo the Bond shall be the principal amount thereof.
Interest on the Bond will accrue interest from the date of initial delivery. Annual principal
installment payments shall be made to the registered owner of the Bond on August 15, 2017
in the principal amount of $1,995,000.
B. It is understood and agreed that on August 15, 2010, the principal installments of the Bond
maturing on and after August 15, 2011 are subject to redemption at the option of the Issuer
at any time prior to the scheduled maturity, in whole or in part, at a redemption price equal
to the principal amount to be so redeemed plus accrued interest on the principal amount to
be so redeemed.
C. The Bond maturing on August 15, 2017 (the "Tenn. Bond ") is subject to mandatory sinking
fund redemption by lot prior to maturity in the following amounts, on the following dates and
at a price of par plus accrued interest to the redemption date.
Bonds Maturing August 15, 2017
Redemption Date
August 15, 2008
August: 15, 2009
August 15, 2010
August 15, 2011
August 15, 2012 .
August 15, 2013
August 15, 2014
August 15, 2015
August 15, 2016
August 15, 1017°
*Final Maturity
Principal Amount
$ 180,000
165,000
175,000
185,000
190,000
200,000
210,000
220,000
230,000
240,000*
The principal amount of the Term Bond required to be redeemed pursuant to the operation
of the mandatory sinking fund redemption provisions shall be reduced, at the option of the
City by the principal amount of any Term Bond of the stated maturity which, at least 50 days
prior to a mandatory redemption date, (1) shall have been acquired by the City, at a price not
exceeding the principal amount of such Term Bond plus accrued interest to the date of
purchase thereof, and delivered to the Paying Agent /Registrar for cancellation, (2) shall have
been purchased and canceled by the Paying Agent /Registrar at the request of the City with
monies in the Interest and Sinking Fund at a price not exceeding the principal amount of the
iiunlsvlle/W W &SSm,,,Red2007
Term Bond plus accrued interest to the date of purchase thereof, or (3) shall have been
redeemed pursuant to the optional redemption provisions and not theretofore credited against
a mandatory sinking fund redemption requirement.
D. The Bond will be fully registered as to principal and interest, and the Bank shall serve as the
initial paying agent and registrar for the Bond without charge to the Issuer, except for the
reimbursement of any reasonable expenditures incurred by the Bank in the capacity of paying
agent and registrar. The Bond is transferable in whole, but not in part.
E. In regard to its purchase of the Bond, the Bank acknowledges that no prospectus or other
offering document has been prepared; however, the Issuer has furnished the Bank with all
information necessary and requested by the Bank to permit the Bank to make an informed
decisions concerning its purchase of the Bond, and the Bank has made such inspections and
investigations as it has deemed necessary to determine the investment quality ofthe Bond and
to assess all risk factors associated with the purchase and ownership of the Bond. The Bank
hereby acknowledges and represents that it has a business relationship with the Issuer and that
it is familiar with the financial condition of the Issuer and the ability of the Issuer to timelypay
the principal of and interest on the Bond. The Bank has been furnished with such financial
information relating to the Issuer as it has requested for the purposes ofmaking its assessment
of the purchase of the Bond. The Bank has had a reasonable opportunity to request and
review such other information as it needs from the Issuer in order to enable it to make its
purchase. The Bank is not relying on McCall, Parkurst & Horton L.L.P., the Issuer`s Bond
Counsel, or First Southwest Company, the Issuer's Financial Advisor, as to the completeness
or accuracy of any financial information provided to the Bank by the Issuer in connectionwith
its determination to purchase the Bond.
F. The Bond purchased by the Bank is being purchased for the account of the Bank as evidence
of a loan (and not on behalf of another), and the Bank has no present intention of reselling
such Bond or dividing its interest therein, either currently or after the passage of a fixed or
determinable period of time or upon the occurrence or nonoccurrence of any predetermined
event or circumstance; provided, however that the Bank reserves the right to sell, pledge,
transfer, convey, hypothecate, or dispose of the Bond at some future date.
G. Delivery of the Bond to the Bank (the "Closing ") shall be made at the Bank on or about
November 1, 2007, it being understood that the delivery date may be extended by mutual
consent of the Bank and the Issuer.
H. The Bank acknowledges that the Bond will not be rated. In addition, the Bank acknowledges
that the Bond will not be listed on any securities exchange. Further, no trading market now
exists in the Bond, and none may exist in the future. Accordingly, the Bank understands that
it may need to bear the risks of this investment for an indefinite time, since any sale prior to
the maturity for the Bond may not be possible or may be at a price below that which the Bank
is paying for the Bond.
Rumville,WW &S Sew rRev2007
L It is understood and agreed that the Bank is buying the Bond in a private placement by the
Issuer to the Bank. The Bond is exempt from any federal securities registration requirements
by virtue of Section 3(a)(2) of the Securities Act of 1933. The private placement of the Bond
is exempt from the provisions of Rule 15c2 -12 of the Securities and Exchange Commission
(the 'Rule "); consequently the Issuer has not undertaken to make any on -going disclosures
for the benefit of the registered owner of the Bond in accordance with the Rule.
J. This agreement shall be terminated by delivery of 1,995,000 in principal amount ofthe Bond
to the Bank at the date of Closing, provided that the representations of the Bank in E. above,
shall survive the termination hereof.
K. The Issuer will designate the Bond as a "qualified tax - exempt obligation" within the meaning
of section 265(b) of the Internal Revenue Code. In furtherance of that designation, in the
Bond Ordinance, the Issuer will covenant to take such action which would assure or to refrain
from such action which would adversely affect the treatment of the Bond as a "qualified tax -
exempt organization."
L. As a condition to the purchase of the Bond, the Bank shall receive at the Closing an opinion
of Bond Counsel in substantially the form attached hereto as Exhibit A. In addition, the Bank
shall receive, at the Closing, an opinion of the Attorney General of the State of Texas to the
effect that the Bond has been lawfully issued by the Issuer and is a valid and binding
obligation of the Issuer under applicable laws of the State of Texas.
Respectfully Submitted,
By: Wendy J. Wipperman
Title: Underwriter lI
Huntsvl11e1WW &SSewcrRev2007
ACCEPTANCE
ACCEPTED pursuant to the Bond Ordinance adopted by the City Council of the City of
Huntsville, Texas, this the 2nd day of October, 2007.
Mayor
City Huntsville, Texas
Runtsv&e/W W &SSewcrReN_007
EXHIBIT A
[An opinion in substantially the following form will be delivered by McCall,
Parkhurst & Horton L.L.P., Bond Counsel, upon the delivery of the
Bond, assuming no material changes in facts or lam]
CITY OF HUNTSVILLE, TEXAS
WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2007
IN THE AGGREGATE PRINCIPAL AMOUNT OF $1,995,000
AS BOND COUNSEL FOR THE CITY OF HUNTSVILLE, TEXAS (the "City ") ofthe
bonds described above (the "Bond "), we have examined into the legality and validity of the Bond,
which bear interest from the dates specked in the text of the Bond, until maturity or redemption, at
the rates and payable on the dates specified in the text of the Bond and the ordinance of the City
adopted on October 2, 2007, authorizing the issuance of the Bond (the "Ordinance ").
WE HAVE EXAMINED the Constitution and laws of the State of Texas, certified copies
of the proceedings of the City, and other documents authorizing and relating to the issuance of said
Bond, including the executed bond (Bond Numbered R -1).
BASED ON SAID EXAMINATION, IT IS OUR OPINION that said Bond has been
authorized, issued and delivered in accordance with law; and that except as the enforceability thereof
maybe limited by laws relating to bankruptcy, insolvency, reorganization, moratorium and liquidation
and other laws now or hereafter enacted related to creditors` rights generally, the Bond constitutes
a valid and legally binding special obligation of the City payable, together with the Previously Issued
Bonds and all other outstanding Additional Bonds, from and secured by a lien on and pledge of the
Net Revenues of the System (which is generally described as the City's combined waterworks and
sewer system), all as provided in the Bond Ordinance authorizing the issuance of the Bond.
IT IS FURTHER OUT OPINION, except as discussed below, that the interest on the Bond
is excludable from the gross income of the owners thereof for federal income tax purposes under the
statutes, regulations, published rulings, and court decisions existing on the date of this opinion. We
are further ofthe opinion that the Bond is not "specified private activity bonds" and that, accordingly,
interest on the Bond will not be included as an individual or corporate alternative minimum tax
preference item under section 57(a)(5) of the Internal Revenue Code of 19$6 (the "Code "). In
expressing the aforementioned opinions, we have relied on certain representations, the accuracy of
which we have not independently verified, and assume compliance by City with certain covenants,
regarding the use and investment of the proceeds of the Bond and the use of the property financed
therewith. We call your attention to the fact that if such representations are determined to be
inaccurate or upon a failure by the City to comply with such covenants, interest on the Bond may
become includable in gross income retroactively to the date of issuance of the Bond.
OUR OPINIONS ARE BASED ON EXISTING LAW, which is subject to change. Such
opinions are further based on our knowledge of facts as of the date hereof. We assume no duty to
update or supplement our opinions to reflect any facts or circumstances that may thereafter come to
our attention or to reflect any changes in any law that may thereafter occur or become effective.
Huneuv610WW&$seuerRev2007 A -1
More, our opinions are not a guarantee of result and are not binding on the Internal Revenue Service
(the "Service "); rather, such opinions represent our legal judgment based upon our review of existing
law and in reliance upon the representations and covenants referenced above that we deem relevant
to such opinions. The Service has an ongoing audit program to determine compliance with rules that
relate to whether interest on state or local obligations is includable in gross income for federal income
tax purposes. No assurance can be given whether or not the Service will commence an audit of the
Bond. If an audit is commenced, in accordance with its current published procedures the Service is
likely to treat the City as the taxpayer. We observe that the City has covenanted not to take any
action, or omit to take any action within its control, that if taken or omitted, respectively, may result
in the treatment of interest on the Bond as includable in gross income for federal income tax
purposes. No assurance can be given whether or not the Service will commence an audit of the
Bond. If an audit is commenced, in accordance with its current published procedures the Service is
likely to treat the City as a the taxpayer. We observe that the City has covenanted not to take any
action, or omit to take any action within its control, that if taken or omitted, respectively, may result
in the treatment of interest on the Bond as includable in gross income for federal income tax
purposes.
EXCEPT AS STATED ABOVE, we express no opinion as to any other federal, state, or
local tax consequences of acquiring, carrying, owning, or disposing of the Bond. In particular, but
not by way of limitation, we express no opinion with respect to the federal, state or local tax
consequences arising from the enactment of any pending or fixture legislation.
WE CALL YOUR ATTENTION TO THE FACT that the interest on tax- exempt
obligations, such as the Bond, is included in a corporation's alternative minimum taxable income for
purposes of determining the alternative minimum tax imposed on corporations by section 55 of the
Code.
OUR SOLE ENGAGEMENT in connection with the issuance of the Bond is as Bond
Counsel for the City, and, in that capacity, we have been engaged by the City for the sole purpose of
rendering an opinion with respect of the legality and validity of the Bond under the Constitution and
laws of the State of Texas, and with respect to the exclusion from gross income of the interest on the
Bond for federal income tax purposes, and for no other reason or purpose. We have not been
requested to investigate or verify, and have not independently investigated or verified any records,
data, or other material relating to the financial condition or capabilities of the City, or the disclosure
thereof in connection with the sale ofthe Bond, and have not assumed any responsibility with respect
thereto. We express no opinion and make no comment with respect to the marketability of the Bond
and have relied solely on certificates executed by officials of the City as to the current outstanding
indebtedness of the City and System revenues.
THE FOREGOING OPINIONS represent out legal judgment based upon a review of
existing legal authorities that we deem relevant to render such opinions and are not a guarantee of
a result.
Respectfully,
Huntsville; W WBSSe,¢,Re,2007 A -2
CERTIFICATE FOR ORDINANCE NO. 2007- 30L
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 a REGULAR MEETING ON THE 2ND
DAY OF OCTOBER, 2007, at the City Council Chambers, Huntsville City Hall (the "Meeting "), and
the roll was called of the duly constituted officers and members of the City, to -wit:
J. Turner, Mayor Jim Willett, Ward 1
Dalene Zender, Position 1 Mac Woodward, Ward 2, Mayor Pro Tern
Melissa Mahaffey, Position 2 Clarence Griffin, Ward 3
Mickey S. Evans, Position 3 Wayne Barrett, Ward 4
Jack Choate, Position 4
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
ORDINANCE AUTHORIZING CITY OF HUNTSVILLE, TEXAS WATERWORKS AND
SEWER SYSTEM REVENUE BONDS, SERIES 2007; AUTHORIZING THE PLEDGE
OF CERTAIN REVENUES IN SUPPORT OF THE BOND; APPROVING AND
AUTHORIZING A PAYING AGENT/REGISTRAR AGREEMENT AND A PURCHASE
AND INVESTMENT LETTER; AND AUTHORIZING OTHER MATTERS RELATED
TO THE ISSUANCE OF THE BOND
was duly introduced for the consideration of the City Council. It was then duly moved and seconded
that the Ordinance be passed, and, after due discussion, said motion carrying with it the passage of
the Ordinance, prevailed and carried by the following vote:
AYES: +
NOES: a
2. A true, full and correct copy of the Ordinance passed at the Meeting described in the
above and foregoing paragraph is attached to and follows this Certificate; that the Ordinance has been
duly recorded in the City Council's minutes of the Meeting, that the above and foregoing paragraph
is a true, full and correct excerpt from the City Council's minutes of the Meeting pertaining to the
passage of the Ordinance, that the persons named in the above and foregoing paragraph 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
HI MVILLDNNSSRM07 Qrd u� Ce
personally, in advance, of the time, place and purpose of the Meeting, and that the Ordinance would
be introduced and considered for passage at the Meeting, and each of the officers and members
consented, in advance, to the holding ofthe Meeting 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, Government Code, as amended.
3. The Mayor of the City has approved and hereby approves the Ordinance; that the
Mayor and the City Secretary of the City have duly signed the Ordinance; 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 Ordinance for all purposes.
mm SVJLLE�w SSREW7 o� �cert
SIGNED AND SEALED the
City-Se—cretary
H I SVILLE\ WSSREW7: pldinanceCert
A