HomeMy WebLinkAboutRES 88-068 IT_
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R E S 0 L U T 1 0 N
BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF BEAUMONT:
That the Official Notice of Sale concerning the issuance of
$3 ,000 ,000 in Combination Tax and Revenue Certificates of
Obligation, Series 1988 , and the Preliminary Official Statement
concerning the issuance of such certificates of obligation, both
dated March 22 , 1988 , and attached hereto as Exhibit "A" and made
a part hereof for all purposes, be and the same are hereby
approved by the City of Beaumont.
PASSED BY THE CITY COUNCIL of the City of Beaumont this
the .a , � day of 'z
1 988.
Mayor
This Official Notice of Sale does not alone constitute an offer
to sell but is merely notice of sale of the Certificates described herein.
The offer to sell such Certificates is being made by means of this Official
Notice of Sale, the Official Bid Form and the Preliminary Official Statement.
OFFICIAL NOTICE OF SALE
$3,000,000
THE CITY OF BEAUMONT
(A home rule city of the State of Texas
located within Jefferson County)
COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION
SERIES 1988
(THE CERTIFICATES ARE QUALIFIED TAX-EXEMPT OBLICATIONS FOR FINANCIAL INSTITUTIONS)
THE SALE
Certificates Offered for Sale at Competitive Bid:
The City Council (the "Council") of The City of Beaumont (the "City"), a home rule city of
the State of Texas located within Jefferson County, is offering for sale at competitive bid
$3,000,000 Combination Tax and Revenue Certificates of Obligation, Series 1988 (the
"Certificates").
Bid Opening:
The Council will open and publicly read sealed bids for the purchase of the Certificates at
the City Hall, 801 Main Street, Beaumont, Texas, at 1:00 P. M., Central Daylight Saving Time, on
Tuesday, April 19, 1988. Sealed bids, which must be submitted on the Official Bid Form and
plainly marked "Bid for Certificates," should be addressed to "Mayor and City Council, City of
Beaumont, Texas," and should be delivered to the above address prior to the above scheduled time
for bid opening. Any bid received after such scheduled time for bid opening will not be accepted
and will be returned unopened.
Award of the Certificates:
The City will take action to adopt an ordinance (the "Certificate Ordinance") authorizing the
issuance and awarding sale of the Certificates promptly after the opening of bids. The City
reserves the right to reject any and all bids and to waive any irregularities, except time of
filing.
Exhibit "A"
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THE CERTIFICATES
Description of Certain Terms of the Certificates:
The Certificates will be dated May 1, 1988, and interest will be paid on September 1, 1988,
and on each March 1 and September 1 thereafter until maturity. The principal and semi-annual
interest will be payable at the principal corporate trust office of the Texas Commerce Bank
National Association, Houston, Texas, the paying agent/registrar (the "Registrar"). The
Certificates are not subject to redemption prior to their scheduled maturities. Principal of the
Certificates will be payable to the registered owner at maturity upon presentation and surrender
to the Registrar. Interest on the Certificates will be payable by check or draft, dated as of
the interest payment date, and mailed by the Registrar to the registered owner as shown on the
records of the Registrar on the 15th calendar date of the month next preceding each interest
payment date (the "Record Date"). The Certificates will mature on March 1, in each year as
follows:
Principal Principal
Year Amount Year Amount
1989 $210,000 1994 $300,000
1990 225,000 1995 325,000
1991 250,000 1996 350,000
1992 260,000 1997 375,000
1993 2800000 1998 425,000
Security for Payment:
The Certificates when issued shall constitute valid and binding obligations of the City
payable both as to principal and interest from the proceeds of a continuing, direct annual ad
valorem tax, levied within the limits prescribed by law, against taxable property located within
the City and further payable from a junior and subordinate pledge of the net revenues of the
City's water and sanitary sewer system. The City reserves the right to issue additional
obligations payable from such revenues, which obligations may be senior to, on a parity with or
junior and subordinate to the payment of such revenues pledged to the Certificates.
CONDITIONS OF SALE
Types of Bids and Interest Rates:
The Certificates will be sold in one block on an "all or none" basis, at a price of not less
than the par value thereof plus accrued interest to the date of delivery. Bidders are invited to
name the rates of interest to be borne by the Certificates, provided that each rate bid must be
in a multiple of 1/8th of 1% or 1/20th of 1%, and further provided that the highest stated
interest rate bid must not exceed the lowest stated interest rate bid by more than 1 1/2% in
stated interest rate. No limitation will be imposed upon bidders as to the number of rates or
stated interest changes which may be used; however, all certificates of one maturity must bear
one and the same rate. No bids involving supplemental interest rates will be considered. Each
bidder shall state 1n his bid the net and total interest cost in dollars and the effective
interest rate determined thereby, which shall be considered informative only and not as a part of
the bid.
Basis of Award:
For the purpose of awarding the Certificates, the interest cost of each bid will be computed
by determining, at the rates specified therein, the total dollar value of all interest on the
Certificates from the date thereof to their respective maturities, and subtracting therefrom the
premium, if any. Subject to the City's right to reject any or all bids, the Certificates will be
awarded to the bidder (the "Purchaser") whose bid, under the above computation, produces the
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lowest net interest cost to the City. In the event of mathematical discrepancies between the
stated interest rates bid and the interest cost determined therefrom, as both appear on the
Official Bid Form, the bid will be governed solely by the stated interest rates named.
Good Faith Deposit:
Each bid must be accompanied by a bank cashier's check payable to the order of "City of
Beaumont", in the amount of $60,000. This check will be considered as a Good Faith Deposit, and
the check of the Purchaser will be retained uncashed by the City pending the Purchaser's
compliance with the terms of his Official Bid Form and the Official Notice of Sale. In the event
the Purchaser should fail or refuse to take up and pay for the Certificates in accordance with
his bid, then the check shall be cashed and accepted by the City as full and complete liquidated
damages. The above mentioned cashier's check may accompany the Official Bid Form or it may be
submitted separately; if submitted separately, it shall be made available to the City prior to
the opening of the bids and shall be accompanied by instructions by the bank on which it is drawn
which authorize its use as a Good Faith Deposit by the Purchaser, who shall be named in such
instructions. Unless otherwise stipulated, the Good Faith Deposit will be cashed and applied to
the purchase price of the Certificates on the date of the delivery of the Certificates. No
interest will be allowed on the Good Faith Deposit. The checks accompanying bids other than the
Purchaser's bid will be returned immediately after the bids are opened and an award of the
Certificates has been made.
Financial Advisor's Right to Bid:
The City hereby authorizes Underwood, Neuhaus b Co. Incorporated, the Financial Advisor, to
bid on the Certificates.
Initial Offering Price Certificate:
To provide the City with information to enable it to comply with certain conditions of the
Internal Revenue Code of 1986 relating to the exclusion of interest on the Certificates from
gross income for federal income tax purposes, the successful bidder will be required to complete,
execute, and deliver to the City (on or before the date of delivery of the Certificates) a
certification regarding "issue price" substantially in the form attached hereto or accompanying
this Notice of Sale. If the successful bidder will not reoffer the Certificates for sale or has
not sold a substantial amount of the Certificates of any maturity by the date of delivery, such
certificate may be modified in a manner approved by the City. In no event will the City fail to
deliver the Certificates as a result of the successful bidder's inability to certify actual sales
of Certificates at a particular price prior to delivery. Each bidder, by submitting its bid,
agrees to complete, execute, and deliver such a certificate by the date of delivery of the
Certificates, if its bid is accepted by the City. It will be the responsibility of the
successful bidder to institute such syndicate reporting requirements, to make such investigation,
or otherwise to ascertain the facts necessary to enable it to make such certifications with
reasonable certainty. Any questions concerning such certification should be directed to Bond
Counsel.
DELIVERY AND ACCOMPANYING DOCUMENTS
The delivery of the Certificates is subject to receipt of the opinion of Vinson 8 Elkins,
Bond Counsel for the City, hereinafter described.
Delivery of Initial Certificates:
Delivery will be accomplished by the issuance of one Certificate for each maturity (the
"Initial Certificates"), either in typed or printed form, in the aggregate principal amount of
$3,000,000, payable to the Initial Purchaser, signed by the Mayor and City Clerk of the City with
their manual or facsimile signature, approved by the Attorney General of the State of Texas, and
registered by the Comptroller of Public Accounts of the State of Texas. Delivery will be at the
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corporate trust office of the Registrar. Payment for the Initial Certificates must be made in
immediately available funds for unconditional credit to the City, or as otherwise directed by the
City. The Initial Purchaser will be given six (6) business days' notice of the time fixed for
delivery of the Initial Certificates. It is anticipated that Delivery can be made on or about
May 19, 1988, and it is understood and agreed that the Initial Purchaser will accept delivery and
make payment for the Initial Certificates by 10:00 A.M. Houston Time on or about May 19, 1988, or
thereafter on the date the Initial Certificates are tendered for delivery, up to and including
June 20, 1988. If for any reason the City is unable to make delivery on or before June 20, 1988,
then the City shall immediately contact the Initial Purchaser and offer to allow the Initial
Purchaser to extend his offer for an additional thirty days. If the Initial Purchaser does not
elect to extend his offer within six days thereafter, then his Good Faith Deposit will be
returned, and both the City and the Initial Purchaser shall be relieved of any further
obligation.
Conditions of Delivery:
The Initial Purchaser's obligation to take up and pay for the Certificates is subject to the
following conditions: (1) the Initial Purchaser's receipt of the Certificates, the legal
opinions, the no-litigation certificate and the Official Statement Certificate, all of which are
described below, and (ii) the non-occurrence of the events described under the captions "Tax
Exemption" and "No Material Adverse Change".
Ratings:
The City has made application for municipal bond ratings to both Moody Is Investors Service,
Inc. and Standard and Poor's Corporation.
CUSIP Numbers:
It is anticipated that CUSIP identification numbers will be printed on the Certificates, but
neither the failure to print such number on any Certificate nor any error with respect thereto
shall constitute cause for a failure or refusal by the Initial Purchaser to accept delivery of
and pay for the Certificates in accordance with the terms of this Official Notice of Sale. All
expenses in relation to the printing of CUSIP numbers on the Certificates shall be paid by the
City; however, the CUSIP Service Bureau charge for the assignment of the numbers shall be the
responsibility of and shall be paid by the Initial Purchaser.
Exchange of Initial Certificates:
If the initial Purchaser furnishes to the Registrar, at least five (5) business days prior
to the Initial Delivery, written instructions designating the names in which the Certificates are
to be registered, the addresses of the registered holders, the maturities, interest rates and
denominations of such Certificates, the Registrar shall, on the date of Delivery, authenticate
and deliver in exchange for the Initial Certificates, Certificates registered in accordance with
such instructions in an aggregate principal amount equal to the principal amount of the Initial
Certificates.
If, at the time set for closing, the Initial Purchaser has provided the Registrar the
required five (5) business days' notice of its registration instructions, the Initial Purchaser
snail not be required to pay for the Initial Certificates until the Registrar is able to deliver
to the Initial Purchaser, definitive, registered Certificates conforming to the Initial
Purchaser's bid and registration instructions.
Registration:
The Certificates are transferable only on the bond register kept by the Registrar upon
surrender and reissuance. The Certificates are exchangeable for an equal principal amount of
Certificates of the same maturity in any authorized denomination upon surrender of the
Certificates to be exchanged at the principal office of the Registrar. No service charge will be
made for any transfer or exchange, but the City may require payment of a sum sufficient to cover
any tax or governmental charge payable in connection therewith.
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Legal Opinion:
The City will furnish the Initial Purchaser a transcript of certain certified proceedings
had incident to the authorization and issuance of the Certificates. The City will also furnish
the approving legal opinion of Vinson 8 Elkins, Bond Counsel, to the effect that, based upon an
examination of such transcript, the Certificates are valid and binding obligations of the City
under the Constitution and laws of the State of Texas and to the effect that interest on the
Certificates is excludable from gross income for federal income tax purposes under existing law
and that the Certificates are not private activity bonds. The legal opinion of Bond Counsel will
further state that taxable property within the City is subject to the levy of ad valorem taxes,
within the limits prescribed by law, to pay the Certificates and the interest thereon.
Tax Exemption:
In the opinion of Vinson d Elkins, Bond Counsel , (i) interest on the Certificates is
excludable from gross income for federal income tax purposes under existing law and (ii) the
Certificates are not "private activity bonds" under the Internal Revenue Code of 1986, as amended
(the "Code"), and interest on the Certificates will not be subject to the alternative minimum tax
on individuals and corporations, except as described below in the discussion regarding the book-
income (current-earnings) item for corporations.
The Code imposes a number of requirements that must be satisfied for interest on state or
local obligations, such as the Certificates, to be excludable from gross income for federal
income tax purposes. These requirements include limitations on the use of Certificate proceeds
and the source of repayment of Certificates, limitations on the investment of Certificate
proceeds prior to expenditure, a requirement that excess arbitrage earned on the investment of
Certificate proceed be paid periodically to the United States and a requirement that the City
file an information report with the Internal Revenue Service. The City has covenanted in the
Ordinance that it will comply with these requirements.
Bond Counsel 's opinion will assume continuing compliance with the covenants of the Ordinance
pertaining to those sections of the Code which affect the exclusion from gross income of interest
on the Certificates for federal income tax purposes and, in addition, will rely on
representations by the City with respect to matters solely within the knowledge of the City,
which Bond Counsel has not independently verified. If the City should fail to comply with the
covenants in the Ordinance or if the foregoing representations should be determined to be
inaccurate or incomplete, interest on the Certificates could become taxable from the date of
delivery of the Bonds, regardless of the date on which the event causing such taxability occurs.
The Code also imposes a 20% alternative minimum tax on the "alternative minimum taxable
income" of a corporation (other than any S corporation, regulated investment company, REIT, or
REMIC), if the amount of such alternative minimum tax is greater than the amount of the
corporation's regular income tax. The "Superfund Revenue Act of 1986" also imposes an additional
.12% "environmental tax" on the alternative minimum taxable income of a corporation in excess of
$2,000,000. Generally, for taxable years beginning in 1987, 1988 or 1989, a corporation's
alternative minimum taxable income includes 50% of the amount by which a corporation's "adjusted
net book income" exceeds the corporation's "alternative minimum taxable income". For later
taxable years, a corporations' alternative minimum taxable income will be based on its "adjusted
current earnings." Because interest on tax-exempt obligations, such as the Bonds, is included in
a corporation's "adjusted net book income" and "adjusted current earnings," ownership of the
Bonds in taxable years beginning after December 31, 1986 could subject a corporations to
alternative minimum tax consequences.
Except as stated above, Bond Counsel will express no opinion as to any federal, state or
local tax consequences resulting from the ownership of, receipt of interest on, or disposition
of, the Certificates.
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Prospective purchases of the Certificates should be aware that the ownership of tax-exempt
obligations may result in collateral federal income tax consequences to financial institutions,
life insurance and property and casualty insurance companies, certain S corporations with
Subchapter C earnings and profits, individual recipients of Social Security or Railroad
Retirement benefits and taxpayers who may be deemed to have incurred or continued indebtedness to
purchase or carry tax-exempt obligation. In addition, certain foreign corporations doing
business in the United States may be subject to the new "branch profits tax" on their
effectively-connected earnings and profits, including tax-exempt interest such as interest on the
Certificates. These categories of prospective purchases should consult their own tax advisors as
to the applicability of these consequences.
No-Litigation Certificate:
The customary closing papers, including a certificate to the effect that no litigation of
any nature has been filed or is then pending to restrain the issuance and delivery of the
Certificates, or, except as disclosed under the Section entitled "Pending Litigation" herein,
which would affect the provisions made for their payment or security, or in any manner
questioning the validity of said Certificates will also be furnished.
Change in Tax-Exempt Status:
At any time before the Certificates are tendered for delivery, the Purchaser may withdraw his
bid if the interest received by private holders on Certificates of the same type and character
shall be declared to be includable in gross income under present federal income tax laws, either
by ruling of the Internal Revenue Service or by a decision of any federal court, or shall be
declared taxable or be required to be taken into account in computing any federal income taxes,
by the terms of any federal income tax law enacted subsequent to the date of this Notice of Sale
and Bidding Instructions.
No Material Adverse Change:
The obligations of the Initial Purchaser to take and pay for the Certificates, and of the
City to deliver the Certificates, are subject to the condition that, up to the time of delivery
of and receipt of payment for the Certificates, there shall have been no material adverse change
in the condition (financial or otherwise) of the City subsequent to the date of sale from that
set forth or contemplated in the Preliminary Official Statement, as it may have been supplemented
or amended through the date of sale.
GENERAL CONSIDERATIONS
Certification as to Official Statement:
At the time of payment for and delivery of the Certificates, the City will furnish to the
Initial Purchaser a certificate executed by the Mayor and City Clerk of the City and the City
Manager for the City, acting in their official capacities, to the effect that to the best of
their knowledge and belief: (a) the description and statements of or pertaining to the City
contained in its Preliminary and final Official Statements, on the respective dates of such
statements, on the date of sale of the Certificates and the acceptance of the best bid therefor,
and on the date of delivery of the Certificates, were and are true and correct in all material
respects; (b) insofar as the City and its affairs, including its financial affairs, are
concerned, such Preliminary and final Official Statements excluding Appendices, as then
supplemented or amended, did not and do not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading; and (c)
insofar as the descriptions and - statements, including financial data contained in such
Preliminary and final Official Statements, of or pertaining to entities other than the City and
their activities are concerned, such statements and data have been obtained from sources which
they believe to be reliable and that they have no reason to believe that they are untrue in any
material respect.
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Securities Laws:
For the purposes of the securities laws of certain jurisdictions, the City is restricting its
solicitation of bids in Maine to registered Maine dealers and in Nebraska, New York, North
Dakota, Ohio, Rhode Island and Vermont to registered dealers, banks, savings institutions, trust
companies, insurance companies and institutional buyers in those states. No bids are solicited
from persons in New Hampshire or Nevada. The City has made no investigation, and the above
should not be construed as creating any implication regarding the eligibility to purchase or
participate in the underwriting of the Certificates under any applicable legal investment,
insurance, banking or other laws which might govern the ability of such institutions to
underwrite or invest in the Certificates.
By submission of its bid, the Initial Purchaser represents that it is not a party described
in the preceding paragraph from whom bids are not solicited and that the sale of the Certificates
in states other than Texas will be made only pursuant to exemptions from registration or,
wherever necessary, the Initial Purchaser will register the Certificates in accordance with the
securities laws of the state in which the Certificates are offered or sold. The City agrees to
cooperate with the Initial Purchaser, at the Initial Purchaser's written request and expense, in
registering the Certificates or obtaining an exemption from registration in any state where such
action is necessary.
Record Date:
The record date (the "Record Date") for the interest payable on any interest payment date
means the 15th day of the month next preceding such interest payment date.
Official Statement:
Upon the award of the sale of the Certificates, the Preliminary Official Statement will be
amended to conform to the terms of the Initial Purchaser's bid and, if necessary, to make certain
other changes. In connection therewith, the Initial Purchaser will be required to furnish
information concerning the initial resale offering prices and yields of the Certificates as well
as the names of the members of the underwriting syndicate. The Initial Purchaser will be
furnished with such copies of the Official Statement for distribution to purchasers from the
Initial Purchaser as he may reasonably request within twenty business days from the date of the
award of the sale of the Certificates or at such later date as may be mutually satisfactory, but
in no event later than the date of delivery of the Certificates. Additional copies will be made
available at the Initial Purchaser's request and expense. The City assumes no responsibility or
obligation for the distribution or delivery of any copies of the Official Statement to anyone
other than the Purchaser.
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Additional Copies:
Additional copies of this Official Notice of Sale, the Official Bid Form and the Preliminary
Official Statement may be obtained from Underwood, Neuhaus 8 Co. Incorporated, 909 Fannin,
Houston, Texas 77010.
Maurice Meyers
Mayor
City of Beaumont, Texas
March 22, 1988
Viri
CERTIFICATE OF UNDERWRITER
The undersigned hereby certifies as follows with respect to the sale of $3,000,000 The City
of Beaumont, Texas, Combination Tax and Revenue Certificates of Obligation, Series 1988 (the
"Certificates"):
1. The undersigned is the underwriter or the manager of the syndicate of underwriters that
purchased the Certificates from the The City of Beaumont, Texas (the "City") at competitive sale.
2. The undersigned and/or one or more other members of the underwriting syndicate, if any,
have made a bona fide offering of the Certificates of each maturity to the public.
3. The initial offering price (expressed as a yield) for the Certificates of each maturity
at which a substantial amount of the Certificates of such maturity was sold to the public is as
set forth below:
Principal Amount Maturity Date Yield
S 210,000 3-1-89
225,000 3-1-90
250,000 3-1-91
2602000 3-1-92
280,000 3-1-93
300,000 3-1-94
325,000 3-1-95
350,000 3-1-96
375,000 3-1-97
425,000 3-1-98
TOTAL $3,000,000
4. The term "public", as used herein, means persons other than bond houses, brokers,
dealers, and similar persons or organizations acting in the capacity of underwriters or
wholesalers.
5. The offering prices (yields) described above reflect current market prices at the time
of such sales.
6. The undersigned understands that the statements made herein will be relied upon by the
City in its effort to comply with the provisions imposed by the Internal Revenue Code of 1986, on
the exclusion of interest on the Certificates from gross income for federal income tax purposes.
Executed and delivered this day of 1988.
NAME OF UNDERWRITER OR MANAGER
By:
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OFFICIAL BID FORM
Mayor and City Council
City of Beaumont
City Hall
801 Main Street
Beaumont, Texas
Gentlemen:
We have read in detail the Official Notice of Sale and accompanying Preliminary Official
Statement of The City of Beaumont (the "City"), relating to its $3,000,000 Combination Tax and
Revenue Certificates of Obligation, Series 1988 (the "Certificates") . We hereby offer to
purchase the Certificates, described in your Official Notice of Sale and Preliminary Official
Statement, upon the terms and conditions set forth in such Official Notice of Sale, which terms
and conditions are incorporated herein by reference for all purposes, for a price of par value
thereof, plus accrued interest, to the date the Certificates are delivered to us, plus a cash
premium of S provided such Certificates bear interest at the following rates:
Maturity Interest Rate Maturity Interest Rate
3-1-1989 % 3-1-1994 %
3-1-1990 % 3-1-1995 %
3-1-1991 % 3-1-1996 %
3-1-1992 % 3-1-1997 %
3-1-1993 % 3-1-1998 %
Our calculation (which is not a part of this bid) of the interest cost from the above is:
Total Interest Cost From May 1, 1988............................... S
Less: Cash Premium................................................ $
Net Interest Cost.................................................. $
Net Effective Interest Rate........................................ %
The Initial Certificates shall be registered in the name of
(syndicate manager). We will advise the Texas Commerce Bank National
Association, Houston, Texas, Corporate Trust Division, the paying agent/registrar (The
"Registrar"), of our registration instructions at least five business days prior to the date set
for Initial Delivery.
The undersigned agrees to complete, execute and deliver to the City, by the date of delivery
of the Certificates, a certificate relating to the "issue price" of the Certificates in the form
accompanying the Official Notice of Sale, with such changes thereto as may be acceptable to the
City.
We agree to accept delivery of and make payment for the Certificates in immediately avail-
able funds at the Corporate Trust Office, Texas Commerce Bank National Association, Houston,
Texas, not later than 10:00 A.M., Houston Time, on or about May 19, 1988, or thereafter on the
date the Certificates are tendered for delivery, pursuant to the terms set forth in the Notice of
Sale and Bidding Instructions.
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Cashier's Check No. issued by
Bank, Texas, and payable to your order in the amount of S60,000 (is
attached hereto) (has been made available to you prior to the opening of this Bid) as a Good
Faith Deposit for disposition in accordance with the terms and conditions set forth herein and in
the Official Notice of Sale. Should we fail or refuse to make payment for the Certificates in
accordance with such terms and conditions, this check shall be cashed and the proceeds retained
as complete liquidated damages against us. We hereby represent that sale of the Certificates in
states other than Texas will be made only pursuant to exemptions from registration or
qualification and where necessary, we will register or qualify the Certificates in accordance
with the securities laws of the states in which the Certificates are offered or sold.
Respectfully submitted,
By
Authorized Representative
ACCEPTANCE CLAUSE
The above and foregoing bid is hereby in all things accepted by the City of Beaumont this
19th day of April 1988.
ATTEST:
City Clerk City of Beaumont Mayor, City of Beaumont
Return of $60,000 Good Faith Deposit is hereby acknowledged:
CERTIFICATE YEARS
Dated: May 1 , 1988 Due: March 1, Annually
Accumulated
Year Amount Certificate Years Certificate Years
1989 $210,000 174.993 174.993
1990 225,000 412.493 587.486
1991 250,000 708.325 1,295.811
1992 260,000 996.658 2,292.469
1993 280,000 1,353.324 3,645.793
1994• 300,000 1,749.990 5,395.783
1995 325,000 2,220.823 7,616:606
1996 350,000 2,741.655 10,358.261
1997 375,000 3,312.488 13,670.749
1998 425,000 4,179.153 17,849.902
Total Certificate Years: 17,849.902
Average Maturity: 5.95 years
a
'O 1„
CO PRELIMINARY OFFICIAL STATEMENT DATED MARCH 22, 1988
c + o Delivery of the Certificates is subject to the opinion of Bond Counsel that interest on the
O v u Certificates is excludable from gross income for federal income tax purposes under existing law
Z o .2 and the Certificates are not private activity bonds. See "Tax Exemption" for a discussion of the
± " 2 opinion of Bond Counsel , including a description of alternative minimum tax consequeneces for
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L corporations.
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} U :1 DELIVERY OF THE CERTIFICATES IS SUBJECT TO THE OPINION OF BOND COUNSEL TO THE EFFECT THAT
a' o INTEREST ON THE CERTIFICATES IS EXCLUDABLE FROM GROSS INCOME FOR FEDERAL INCOME TAX PURPOSES
UNDER EXISTING LAW AND THAT THE CERTIFICATES ARE NOT PRIVATE ACTIVITY CERTIFICATES. SEE "TAX
m .2 3t EXEMPTION" FOR A DISCUSSION OF BOND COUNSEL'S OPINION INCLUDING A DESCRIPTION OF ALTERNATIVE
s MINIMUM TAX CONSEQUENCES FOR CORPORATIONS.
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0i o' L $3,000,000
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`" THE CITY OF BEAUMONT
m m m (A home rule City of the State of Texas located within Jefferson County)
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a c a
a COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION
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m SERIES 1988
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The Certificates are Qualified Tax-Exempt Obligations for Financial Institutions
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i- c Dated: May 1, 1988
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m M Principal and interest payable at the principal corporate trust office of the Texas Commerce Bank
National Association Houston Texas the
paying agent/registrar (the "Registrar"). Interest
o ? payable September 1, 1988, and each March t and September 1 thereafter until maturity. The
0 0 c Certificates are not subject to redemption prior to their scheduled maturities. The Certificates
LN o are issued in fully registered form in integral multiples of $5,000. Interest on the
c > o Certificates will be payable by check or draft, dated as of the interest payment date, and mailed
} by the Registrar to registered owners as shown on the records of the Registrar on the 15th
0 � } calendar date of the month next preceding each interest payment date (the "Record Date").
m .
N L M
+ t m MATURITY SCHEDULE
N _ } (Due March 1)
Initial Initial
L a Interest Reoffering Interest Reoffering
N Amount Maturity Rate Yield (a) Amount Maturity Rate Yield (a)
s
a ? $210,000 1989 $300,000 1994
0 4 0 225,000 1990 325,000 1995
` L 250,000 1991 350,000 1996
0 w 260,000 1992 375,000 1997
0 3 280,000 1993 425,000 1998
c
A 0
L M
O N
(a) The initial yields will be established by and are the sole responsibility of the Purchaser,
and may subsequently be changed.
a
r
- Collection History -
The State Comptroller, after deduction of a 2% service fee, currently remits the City's
portion of sales tax collections monthly. By statute the Comptroller is required to remit at
least twice annually. The following is an analysis of the collection history of the City's sales
tax:
Ad Valorem Taxation Comparisons
Fiscal Year Sales Tax Equivalent Tax Rate % of Actual
Ended 9-30 Receipts Tax Year Equivalent Tax Levy
1978 5,280,290 (1977) $0.894 47.83
1979 6,135,353 (1978) .914 48.86
1980 7,024,856 (1979) .965 51.59
1981 8,147,717 (1980) 1.019 54.47
1982 8,717,207 (1981) .561 50.49
1983 8,627,153 (1982) .361 48.10
1984 9,758,376 (1983) .386 50.79
1985 9,671,021 (1984) .374 47.92
1986 9,758,156 (1985) .341 49.41
1987 9,442,775 (1986) .329 47.70
1988 3,873,466 (a) (1987) -x- _X_
(a) Collections through February 29, 1988.
- Sales Tax Option -
During the Third Called Session of the 69th Texas Legislature which convened in the summer
of 1986, H.B. 79 was passed giving Texas cities the option of assessing a 1/2 cent sales tax.
The sales tax must be approved by a majority of the city's voters in a local option election and,
if the tax is approved, then the city must reduce its ad valorem tax property levy by the
estimated sales tax revenues.
The City had a special election of the City's voters on August 8, 1987, approving a 1/2 cent
sales tax. The City will begin sales tax collections on January 1, 1988 and will reduce its ad
valorem tax levy on October 1, 1988 and on each October 1 thereafter by an amount equal to the
estimated 112 cent sales tax collections in the next ensuing fiscal year. The City estimates
that the 112 cent sales tax revenues will be approximately $4,600,000 annually and that the
City's ad valorem tax levy will be reduced by that amount. This reduction would cause the City's
ad valorem tax rate to decrease by approximately 22% from $0.69 per $100 assessed valuation to
$0.54 per $100 assessed valuation.
Industrial District Contracts:
The City has created, within its extraterritorial jurisdiction, but outside of the City
limits, ten Industrial Districts and has entered into contracts with the industry within such
districts which expired December 31, 1987. The contracts specified payments to be made in lieu
of ad valorem taxes and thereby protect the industries from annexation by the City during the
term of the contract, seven years. The annual payments shown below increased 6% annually from
1982 through 1984 and increased 12% in 1985 and 6% in 1986 and 1987 unless otherwise indicated.
Such revenues are not pledged to the payment of the Certificates.
16
The Industrial District, the industry within, their contract dates and current payment are
as follows:
Annual Payment
Industrial District 1988 (a) 1987 1986 1985
Mobil Oil Corporation................. $4,218,766 $3,792,000 $3,577,000 $3,375,000
Texas Gulf Sulphur Co................. 107,129 98,563 92,984 87,720
P. D. Glycol/Houston Chemical
(was PPG Industries)................ 370,725 325,000 306,600 289,200
Bethlehem Steel Corp.................. 47,564 111,459 105,150 99,200
E. I. duPont de Nemours 8 Co.......... 1,292,015 1,071,614 1,010,956 953,730
Gulf States Utilities Co.............. 67,644 238,592 221,792 205,793
Goodyear Tire 8 Rubber Co............. 382,099 447,391 422,067 398,180
Olin Corp............................. 42,910 58,189 54,895
51,790
Amoco Texas Refining,,,,,,,,,,,,,,,,,, 216,035 155,598 146,790 138,480
Pennwalt Corp............... 99,285 152,918 144,262 136,100
Texas Eastern Transmission Corp.,,,,,, 17,491 10,930 11,238 -0-
Gulf Lucas/Chevron U.S.A.............. 187,012 146,874 103,084 -0-
TOTAL............................ $7,0048 $6,Z 609 128 $6,196,818 $5,735,193
(a) Estimated
Revenue from these contracts is summarized and compared to ad valorem taxation in the table
below:
Receipts from
Industrial Ad Valorem Taxation Comparisons
Fiscal Year District Equivalent Tax Rate % of Actual
Ended 9-30 Contracts Tax Year Equivalent Tax Levy
1982 $4,591,139 (1981) .296 26.59
1983 4,837,738 (1982) .203 26.97
1984 5,114,045 (1983) .202 26.62
1985 5,735,193 (1984) .222 28.42
1986 6,196,818 (1985) .216 31.38
1987 6,609,128 (1986) .230 33.39
1988 7,048,675 (1987) .259 37.60
All of the industrial district contracts described above expired on December 31, 1987. Upon
expiration of the contracts, all property within the industrial districts will become subject to
ad valorem taxation on January 1, 1988, at the City's option through further annexation
proceedings. The City is currently renegotiating all industrial district contracts and cannot
predict whether new contracts will be executed prior to expiration of the existing contracts.
New contract being considered by the companies will provide 1988 payments as shown, will be for 7
years and will be baed on an average of 67% of assessed value.
Tax Increment Reinvestment Zone:
In 1982, the City established a tax increment reinvestment zone in the downtown area in
order to assist in its revitalization. As a result of creation of the zone, ad valorem taxes
currently collected in excess of collections during a base year are to be used to finance public
improvements to be located within the zone. These excess ad valorem tax collections will not be
available for debt service on ad valorem tax debt (including the Bonds). Tax increments set
aside for public improvements in the City's zone will be approximately 554,000 during 1988. The
zone was set up with a life of 21 years. The taxable assessed valuation of property within the
District was approximately $40,322,890 or 1.48% of the taxable assessed valuation of the City at
the time of determination.
SELECTED FINANCIAL DATA
Historical Operations of the City's General Fund:
The following is a condensed statement of revenues and expenses of the City's General Fund
for the past five fiscal years. The inclusion of the following table is not intended to imply
that any revenues of the City, other than receipts from ad valorem taxes as provided in the
Ordinance, are pledged to pay principal and interest on the Certifcates.
Fiscal Year Ended September 30
REVENUES.....................
1988(a) 1987 1986 1985 1984 1983
-
Property Taxes............. 811,674,430 $12,705,420 $13,308,127 $13,065,923 $12,436,046 811,750,575
Other Taxes (b)............ 16,883,060 13,533,552 14,362,934 14,278,984 13,788,065 12,534,239
Industrial District
Contract Payments........ 9,778,570 9,265,699 9,096,818 8,337,522 7,314,045 4,837,783
Licenses and Permits....... 430,790 405,410 512,318 467,070 630,906 447,647
User Fees Charges for
Services................. 957,580 1,016,504 881,884 830,671 461,256 310,685
Intergovernmental Revenues 10,200 11,694 29,959 11,451 29,500 2,409,810
Fines and Forfeits......... 1,255,620 1,112,554 1,435,130 1,853,932 1,766,325 1,527,058
Cultural and Recreational.. 118,390 83,272(c) 537,857 594,416 642,269 561,670
Interest................... 325,000 409,358 554,999 694,624 789,525 870,644
Miscellaneous.............. 215,160 407,397 364,988 324,499 424-,712 331 ,499
Total Revenues.......... 841,648,800 539,950,86®0 $41085 540,459,092 $38,2�82,6�4g $35,5581612
EXPENDITURES
Executive.................. $ 751,260 $ 780,744 $ 567,620 5 436,148 $ 468,142 $ 353,643
Legal...................... 314,260 295,174 304,956 297,227 269,801 289,181
Clerk 8 Court......,,,,, • 618,290 611,522 583,215 612,878 555,018 592,279
Administrative Service (d) -0- -0- 2,765,448 2,983,968 2,351,679 2,872,181
Resource Management........ 2,043,650 1,753,849(d) -0- -0- -0-
Finance.................... 2,193,380 2,931,311(d) 1,309,674 1,425,290 1,664,990 1,355,502
Community Development...... 949,730 878,628 860,337 957,698 1,014,548 927,436
Police..................... 11,179,060 10,384,132 10,091,832 10,042,509 9,199,396 9,041,379
Fire and Emergency Services 9,343,010 8,868,594 8,341,528 8,593,008 8,139,498 8,026,567
Public Works............... 9,109,420 6,931,465 6,460,197 7,046,819 7,166,597 8,639,991
Community Services......... 3,451,640(e) 4,942,089(c) 5,719,450 6,294,933 5,612,115 6,617,225
City-wide Charges.......... 816,370 -0- -0- 287,691 532,206 723,942
Disaster Recovery.......... -0- -0- 1,075,440 -0- _0_ -0-
Total................... $40,770,070 838,377,508 $38,079,697 838,978,169 836 973 990 835 609 224
�® L38,3771 _8&0792 ,
(a) Budget figures.
(b) Includes Sales and Use Taxes, Street Rentals and penalties and interest on delinquent taxes.
(c) Beginning in 1987 the Convention Facilities Fund was accounted for as an enterprise fund.
(d) Administrative Service was reorganized in 1987 into Resource Management with many of its
functions allocated to other departments.
(e) Beginning in 1988 the parks division was shifted from Community Services to Public Works.
18
General Fund and Debt Service Fund Balance for the Past Five Fiscal Years:
Fiscal Year Ended_ September 30,
1988(a) 1987 1986 1985 1984 1983
General Fund........ S 3,581,904 55,854,542 $5,455,601 S(839,520)(b) $3,538,763 $1,907,798
Debt Service Fund... $ 1,704,189 $1,999,494 $1,428,519 $ 645,718 52,407,460 $4,063,258
(a) Budget figures.
(b) See - "SPECIAL CONSIDERATIONS - Loss of City Funds and Curative Actions by the City".
Financial Statements:
A copy of the City's Financial Statements for the fiscal year ended September 30, 1987, is
attached hereto in the APPENDIX B. Copies of such statements for preceding years are available,
for a fee, upon request.
ADMINISTRATION OF THE CITY
Mayor and City Council :
Policy-making and legislative functions are the responsibility of and are vested in the
Mayor and Council under provisions of the "Charter of the City of Beaumont" (the "Charter")
approved by the electorate December 6, 1947, and amended in 1972, 1983 and 1986. The city
council is composed of seven members, including the Mayor, three of whom, including the Mayor,
are to be elected at-large in even numbered years. All members will serve two-year terms. The
Mayor is entitled to vote on all matters before the Council, but has no power to veto Council
action. Member of the Council are described below:
Council Members Position Term Expires Occupation
Maurice Meyers Mayor May, 1988 President/Accurate Business Machines,
Inc.
Bob Lee, Jr. Councilman at Large May, 1988 Executive Vice President/Holland
Advertising Co.
Andrew P. Cokinos Councilman at Large May, 1988 Marketing Officer, Beaumont Bank, N.A.
Dr. Lulu L. Smith Councilman Ward 1 May, 1989 Director of Student Health,
Lamar University
Michael B. Brumley Councilman Ward 2 May, 1989 Prehearing Examiner/Texas Industrial
and Mayor Pro Tem Accident Board
Audwin Samuel Councilman Ward 3 May, 1989 Director, Triplex Minority Business
David W. Moore Councilman Ward 4 May, 1989 Marketing Executive/Xerox Corp.
19
Administration:
Under provisions of the Charter, the Council enacts local legislation, adopts budgets,
determines policies and appoints the City Manager, who is charged with the duties of executing
the laws and administering the government of the City. As the chief executive officer and head
of the administrative branch of the City government, the City Manager, is given the power and
duties to:
(1) Appoint and remove all department heads and all other employees in the administrative
service of the City and may authorize the head of a department to appoint and remove
subordinates in his respective department;
(2) Prepare the budget annually, submit it to Council , and be responsible for its
administration;
(3) Prepare and submit to Council a complete report on the finances and administrative
activities of the City;
(4) Keep Council advised of the financial condition and future needs of the City and make
appropriate recommendations; and
(5) Perform such other necessary duties as prescribed by the Charter or required by Council .
Members of the administrative staff are described below:
City Manager - Albert E. Haines - Mr. Haines is a graduate of Brigham Young University where
he received a Master's Degree in Public Administration in 1972. He has fifteen years experience
in municipal government and financial management. He became City Manager in April , 1986.
Chief Financial Officer - Betty J. Dunkerley - Ms. Dunkerley is a graduate of Southern
Methodist University (B.A. 1958). Ms. Dunkerley is a certified public accountant with nine years
experience in government accounting and finance. She is a member of the Texas Society of
Certified Public Accountants. Betty joined the City in April , 1985.
City Attorney - Lane Nichols is a graduate of Lamar University (1964) and the University of
Texas School of Law (1967). He has been City Attorney of Beaumont since March of 1984. Prior to
that he was First Assistant City Attorney for the City. He is a member of the Texas Bar
Association and admitted to practice in the U.S. District Court for the Eastern District of Texas
and the United States Supreme Court. He is a member of the National Association of Municipal Law
Officers and a member of the Board of directors of the Texas City Attorneys Association.
City Clerk - Rosmarie Chiappetta was originally employed by the City in 1964 and worked as a
secretary in the Water Commercial Division and then as a secretary in the City Manager's Office
and in the Personnel Department. In 1965, she was transferred to the Police Department and
worked as a secretary to the Chief of Police until 1969. She returned to the City in 1973 as a
secretary to the City Clerk. She was appointed as City Clerk by the City Council on July 21,
1987.
Consultants:
The City has retained' several consultants to perform professional services in connection with
the independent auditing of its books and records and other City -activities. Several of these
consultants are identified below:
20
Financial Advisor.................................. Underwood, Neuhaus 8 Co., Incorporated
Houston, Texas
Bond Counsel ...................................................... Messrs. Vinson 8 Elkins
Houston, Texas
Auditors ......................................................... Peat Marwick Main 8 Co.
Houston, Texas
LITIGATION
The City is defending a number of lawsuits in which personal injuries, property damages,
wrongful deaths and violations of civil rights law are alleged. The City is also aware of claims
based upon alleged personal injuries, property damages and violations of civil rights laws which
have not been asserted in litigation. The City considers that none of these lawsuits and claims,
either individually or in the aggregate, would if adversely decided, have a material adverse
effect on the ability of the City to pay principal of and interest on the Bonds.
For a description of the litigation resulting from the E.S.M. losses, See "SPECIAL
CONSIDERATIONS - Loss of City Funds and Curative Actions by the City".
LEGISLATION AND REGULATION
Affecting the City's Operations:
In July, 1987, the City was issued a new draft permit by the EPA for operation of the City's
waste water treatment and discharge system. The permit was scheduled to take effect on August 4,
1987.
The new permit will require that the City make major modifications to the waste water
treatment and discharge system so as to improve the quality and increase the oxygen content of
the effluent. Based upon present estimates, the city will have to expend at least $10,000,000 in
order to be in full compliance with the terms of the permit. In addition, the City estimates
that operating and maintenance costs of the system will increase by as much as $800,000 annually
in order to comply with the terms of the permit. The City cannot predict the extend to which the
terms of the permit will be modified by the final EPA order or whether any modifications will
result in reduction of these estimated construction, operating and maintenance costs and
expenses.
To finance costs of construction of necessary improvements to the waste water treatment and
discharge system, the City will make application to the Texas Water Development Board for an
assistance loan repayable over 20 years and accruing interest at a maximum rate of 3%. If the
City is unable to obtain an assistance loan, then the City will have to finance construction of
the necessary improvements through issuance of revenue bonds.
The Congressional authorization for the Federal Revenue Sharing Program expired on September
30, 1986. Therefor, the City anticipates that it will receive no revenue sharing payments for
any fiscal year beginning on or after October 1, 1987.
Affecting the Tax Base:
Air quality control measures of the EPA and the Texas Air Control Board ("TACB") may curtail
new industrial , commercial and residential development in the City and the surrounding areas.
Existing ambient ozone concentrations exceed EPA standards, and sulfur dioxide emissions are
increasing. Because of these factors, federal regulations are particularly stringent with regard
21
to construction or modifications of certain facilities which emit pollutants. The regulations
require, among other things, that new or increased hydrocarbon emissions must be offset by
reductions of existing sources in the area. New and more stringent limitations on development in
the Beaumont area may result if reasonable further progress is not made toward attaining the
EPA's ambient air quality standard for ozone. Such limitations could include (1) more stringent
offset regulations, (2) outright bans on new large facilities, and (3) increased transportation
controls. The City may be required to enforce such limitations which would have an adverse
effect on assessed valuations in the City and the surrounding area.
The EPA has approved a hydrocarbon control plan proposed by the Texas Air Control Board for
the Beaumont area ending the possibility of sanctions which have been proposed by the EPA.
Provisions of the plan include automobile emission control inspections, extensions of local bus
service and construction of transportation facilities. The EPA's approval of the plan will be
effective 30 days after its publications in the Federal Register.
Under the provisions of the Flood Disaster Protection Act of 1973 and accompanying
regulations, the Federal Insurance Administration identified property tying within the 100-year
flood plain (areas with a probability of flooding of 1% or greater each year) and subjected those
areas in regulations which constricted construction. These regulations are being implemented in
phases, as increasingly detailed data becomes available. The City and Jefferson County have
already passed ordinances implementing building restrictions in flood plain areas. Approximately
66$ of the surface area in the County and approximately 12$ of the surface area in the City are
considered flood hazard areas, which my have an adverse effect on the market valuation of the
property within the areas and all of which may adversely effect assessed valuations.
State Legislation:
The City is a home-rule city under the Texas Constitution, but it may not adopt ordinance or
charter provisions inconsistent with State law. The State Legislature concluded its biannual
regular session on June 1, 1987, and special sessions on June 2, 1987, and July 21, 1987. The
City is reviewing the legislation enacted during these sessions, to determine whether the
legislation will have any effect on the City. Under the Federal and State Constitutions, the
State Legislature may not, however, enact legislation that impairs the City's ability to pay
principal of an interest on the Certificates.
OTHER CONSIDERATION
Future Borrowing:
After issuance of the certificates, the City will have $2,000,000 of authorized but unissued
bonds available for street improvements and $11,300,000 of authorized but unissued bonds for
drainage improvements. It is not contemplated that the remaining bonds will be issued within 24
months.
The City estimates that up to $10,000,000 in revenue debt will have to be incurred in order
to bring its waste water treatment and discharge system into compliance with the requirements of
a newly issued EPA permit. These improvements will be made during the next three to four
years. See "LEGI^'_ATION AND REGULATION--Affecting the City's Operations".
The City has also entered into a participation trust sponsored by the Houston-Galveston
Council of Governments. Pursuant to this trust, the City may borrow up to $2,000,000 to finance
the acquisition of equipment. Currently, the City has borrowed approximately $450,000 from the
participation trust and anticipates that approximately $1 ,100,000 will be borrowed within the
next 12 months to finance equipment purchases.
22
Pension Fund:
All permanent employees of the City other than firemen are covered by a state-wide retirement
plan administered by the Board of Trustees of the Texas Municipal Retirement System (TMRS). The
City's contribution rate to the System, including supplemental disability benefits for calendar
year 1987, was set at 7.12% of each participant's salary as determined by the System's actuary in
accordance with the Texas Municipal Retirement System Act. The City's total contributions for
the fiscal year ended September 30, 1987, in accordance with these requirements, were $1,514,861.
The unfunded accrued liability for prior service benefits (both vested and nonvested) at the date
of latest actuarial determination on 12-31-86, was $11,385,553.
Firemen are covered by a Firemens' Relief and Retirement Fund maintained by members of the
City of Beaumont Fire Department under the provisions of applicable laws of the State of Texas.
All persons who are not more than 35 years of age upon entering service as a fireman become
members of the plan. While the City has no direct fiduciary responsibility for the fund, the
Director of Finance serves as member of its Board of Trustees. As determined by the latest
actuarial valuation on 12-31-84 required contributions made to the fund were 10% of salary by
each member and matched by 10% from the City, amounting to a contribution by the City in the
aggregate amount of $542,396 for the year ended September 30, 1987. Under Texas law, expenditure
of monies from the Firemens' Relief and Retirement Fund for an actuarial valuation can be made
only once every three years. The latest valuation prepared as of December 31, 1986, reflected
that there were unfunded liabilities of $7,632,886 which were being amortized over 28 years.
Collective Bargaining:
Police officers and firemen employed by the City have collective bargaining rights under the
Texas Fire and Police Employees Relations Act. The contract between the City and the unions
representing the policemen and firefighters expires Septembers 30, 1988, with a provision for
review of wages and certain other economic benefits on September 30, 1987. Neither the police
officers nor the firemen have the right to strike, but under the labor agreements the firemen may
submit any issues not resolved by negotiation to binding arbitration, while the policemen may
submit such issue to a factfinder with a referendum election finally determining all unresolved
issues.
Self-Insurance:
Commencing on October 1, 1986, the City discontinued all liability insurance coverage for
claims arising against the City and began a program of self-insurance. The principal reason for
implementation of this program was the extremely high premium costs for liability insurance
coverage.
In order to provide a fund to pay any claims which may arise now or in the future, the City
has dedicated a portion of its ad valorem tax rate to establish such a reserve. At the present
time, approximately $1,300,000 estimated balance has been placed in the reserve and the City
intends that a fund of approximately $7,000,000 will accumulate over the next five to seven
years.
However, there can be no assurance that the City will accumulate a fund of that magnitude or
that the City may not experience claims or suffer losses substantially in excess of the balance
in the fund from time to time. Therefore, the City may find it necessary to use current revenues
or to incur additional indebtedness in order to satisfy such claims and losses which may, either
individually or in the aggregate, be significant. Furthermore, it is not possible for the City
to estimate, its potential liability under this program of self-insurance due to its recent
implementation, although the prior claims and losses experienced have approximated an average of
$130,000 per year.
23
LEGAL MATTERS
Legal Opinions:
The City will furnish the Initial Purchaser a transcript of certain certified proceedings had
incident to the authorization and issuance of the Certificates. The City will also furnish the
approving legal opinion of Vinson & Elkins, Bond Counsel, to the effect that, based upon an
examination of such transcript, the Certificates are valid and binding obligations of the City
under the Constitution and laws of the State of Texas and to the effect that interest on the
Certificates is excludable from gross income for federal income tax purposes under existing
law. The legal opinion of Bond Counsel will further state that taxable property within the City
is subject to the levy of ad valorem taxes within the limits prescribed by law, to pay the
Certificates and interest thereon.
Bond Counsel was not requested to participate, and did not take part, in the preparation of
the Official Statement, and such firm has not assumed any responsibility with respect thereto or
undertaken independently to verify any of the information contained therein, except that, in its
capacity as Bond Counsel , such firm has reviewed the information describing the Certificates in
the Official Statement to verify that such description conforms to the provisions of the
Ordinance. The legal fee to be paid Bond Counsel for services rendered in connection with the
issuance of the Certificates is contingent upon the sale and delivery of the Certificates. The
legal opinion will be printed on the definitive Certificates.
Tax Exemption:
In the opinion of Vinson & Elkins, Bond Counsel , (i) interest on the Certificates is
excludable from gross income for federal income tax purposes under existing law and (ii) the
Certificates are not "private activity bonds" under the Internal Revenue Code of 1986, as amended
(the "Code"), and interest on the Certificates will not be subject to the alternative minimum tax
on individuals and corporations, except as described below in the discussion regarding the book-
income (current-earnings) item for corporations.
The Code imposes a number of requirements that must be satisfied for interest on state or
local obligations, such as the Certificates, to be excludable from gross income for federal
income tax purposes. These requirements include limitations on the use of Certificate proceeds
and the source of repayment of Certificates, limitations on the investment of Certificate
proceeds prior to expenditure, a requirement that excess arbitrage earned on the investment of
Certificate proceed be paid periodically to the United States and a requirement that the City
file an information report with the Internal Revenue Service. The City has covenanted in the
Ordinance that it will comply with these requirements.
Bond Counsel 's opinion will assume continuing compliance with the covenants of the Ordinance
pertaining to those sections of the Code which affect the exclusion from gross income of interest
on the Certificates for federal income tax purposes and, in addition, will rely on
representations by the City with respect to matters solely within the knowledge of the City,
which Bond Counsel has not independently verified. If the City should fail to comply with the
covenants in the Ordinance or if the foregoing representations should be determined to be
inaccurate or incomplete, interest on the Certificates could become taxable from the date of
delivery of the Bonds, regardless of the date on which the event causing such taxability occurs.
The Code also imposes a 20% alternative minimum tax on the "alternative minimum taxable
income" of a corporation (other than any S corporation, regulated investment company, REIT, or
REMIC), if the amount of such alternative minimum tax is greater than the amount of the
corporation's regular income tax. The "Superfund Revenue Act of 1986" also imposes an additional
.12% "environmental tax" on the alternative minimum taxable income of a corporation in excess of
$2,000,000. Generally, for taxable years beginning in 1987, 1988 or 1989, a corporation's
24
alternative minimum taxable income includes 50% of the amount by which a corporation's "adjusted
net book income" exceeds the corporation's alternative minimum taxable income." For later
taxable years, a corporations' alternative minimum taxable income will be based on its "adjusted
current earnings." Because interest on tax-exempt obligations, such as the Bonds, is included in
a corporation's adjusted net book income" and "adjusted current earnings," ownership of the Bonds
in taxable years beginning after December 31, 1986 could subject a corporations to alternative
minimum tax consequences.
Except as stated above, Bond Counsel will express no opinion as to any federal, state or
local tax consequences resulting from the ownership of, receipt of interest on, or disposition
of, the Certificates.
Prospective purchases of the Certificates should be aware that the ownership of tax-exempt
obligations may result in collateral federal income tax consequences to financial institutions,
life insurance and property and casualty insurance companies, certain S corporations with
Subchapter C earnings and profits, individual recipients of Social Security or Railroad
Retirement benefits and taxpayers who may be deemed to have incurred or continued indebtedness to
purchase or carry tax-exempt obligation. In addition, certain foreign corporations doing
business in the United States may be subject to the new "branch profits tax" on their
effectively-connected earnings and profits, including tax-exempt interest such as interest on the
Certificates. These categories of prospective purchases should consult their own tax advisors as
to the applicability of these consequences.
Purchase of the Certificates by Financial Institutions:
The Code requires a pro rata reduction in the interest expense deduction of a financial
institution to reflect such financial institution's investment in tax-exempt obligations acquired
after August 7, 1986. An exception to the foregoing provison is provided in the Code for
qualified tax-exempt obligations," which include tax-exempt obligations, such as the
Certificates, (a) designated by the issuer as "qualified tax-exempt obligations" and (b) issued
by a political subdivision for which the aggregate amount of tax-exempt obligations (not
including private activity bonds other than qualified 501(c) (3) bonds) to be issued during the
calendar year is not expected to exceed $10,000,000.
The City will designate the Certificates as "qualified tax-exempt obligations" and has
represented that the aggregate amount of tax-exempt obligations (including the Certificates
issued by the City and entities subordinate to the City during calendar year 1988 is not expected
to exceed $10,000,000 and that the City and entities subordinate to the City have not designated
more than 510,000,000 in "quallified tax-exempt obligations" (including the Certificates during
calendar year 1988.
Based on the foregoing representations, Bond Counsel's opinion will state that the
Certificates are "qualified tax-exempt obligations" under existing law.
Notwithstanding this exception, financial institutions acquiring the Certificates will be
subject to a 20% disallowance of allocable interest expense.
No-Litigation Certificate:
The City will furnish the Initial Purchaser a certificate, dated as of the date of delivery
of the Certificates, executed by both the Mayor and City Attorney, to the effect that no
litigation of any nature is then pending or threatened, either in state or federal courts,
contesting or attacking the Certificates; restraining or enjoining the issuance, execution, or
delivery of the Certificates; affecting the provisions made for the payment of or security for
the Certificates; in any manner questioning the authority or proceedings for the issuance, execu-
tion or delivery of the Certificates; or affecting the validity of the Certificates.
25
SPECIAL CONSIDERATIONS
Loss of City Funds and Curative Actions by the City:
On March 4, 1985, the City learned that E.S.M. Government Securities, Inc. ("E.S.M."), had
been put in receivership by the United States Securities b Exchange Commission in a proceeding in
the United State District Court for the Southern District of Florida. The City determined that
it has confirmations relfecting its purchase from E.S.M. of $20,000,000 worth of government
securities which were subject to repurchase agreements with E.S.M. that were outstanding. These
investments represented approximately two-thirds of the City's net cash balance as of such
date. The City had purchased these securities from E.S.M. through E.S.M.'s broker in New York,
First Money Managers, Inc. Pursuant to instructions from First Money Managers, Inc., The City
had wired its funds to Bradford Trust Company in New York City. The City had received no
safekeeping receipts from Bradford Trust Company or any other party. Neither the funds lost nor
the earnings therefrom were available to the City for application to their various budgeted
purposes after such loss.
The City immediately instituted legal actions to attempt to recover its loss. To date, the
City has recovered approximately $16,637,424 of the loss in settlement of its suits against
Alexander Grant 8 Company and Bradford Trust Company, claim against First City National Bank,
Beaumont and as its share of the dividends paid in the stockbroker liquidation of E.S.M.
However, there can be no assurance that any portion of the remaining loss will be recovered.
The City still has pending its lawsuit against Touche Ross d Company based upon its audit of
the City's September 30, 1984 financial statements. The City also has several other
miscellaneous legal actions pending against the principals of E.S.M. and Marvin Warner. It is
not possible to predict whether the City will realize any recovery from these lawsuits in order
to further offset its loss.
Financial Condition of GSU:
The corporate headquarters of Gulf State Utilities Company ("GSU"), an electric public
utility operating in Texas and Louisiana, is located in the City. GSU has for some time been
publicly reporting serious financial distress and has stated that unless it receives adequate and
timely rate relief, it may have to seek protection from its creditors under the Bankruptcy
Code. The continued financial weakness of this major company, and even more its bankruptcy,
could materially affect the City and the economy of the City and region. It is not possible to
predict the effect of a bankruptcy. As a consequence, there may be a risk of significant delays
in the City's ability to recover ad valorem taxes, franchise fees, and other sums which may be
due it from GSU and also some risk of uncollectability of those amounts. Recently, GSU has
obtained rate increases in both Texas and Louisiana and have stated that they will be able to
enter the capital markets to provide needed cash.
General Economic Conditions:
The recent downturn in the petroleum and related chemical industries along the Texas Gulf
Coast regions has had adverse effects on the commercial activities that support the City's
economy. Retail, financial and construction activity has declined as a result of the reduced
demand for the products and services of these petroleum-related industries, with the result that
the total employment in the City and the surrounding area has decreased from levels in the mid-
1980's.
It has been estimated by the Jefferson County Appraisal District that as of January 1, 1988,
the assessed valuation of taxable property in the City will remain approximately the same as the
valuation determined as of January 1, 1987. In addition, during the current fiscal year the
City's revenues from sales taxes, franchise fee payments and water and sewer services are
approximately in line with the amounts budgeted by the City.
26
GENERAL CONSIDERATIONS
Sources and Compilation of Information:
The information contained in this Official Statement has been obtained primarily from the
City and from other sources believed to be reliable. No representation is made as to the
accuracy or completeness of the information derived from sources other than the City. The
summaries of the statutes, resolutions, and other related documents are included herein subject
to all of the provisions of such documents. These summaries do not purport to be complete
statements of such provisions and reference is made to such documents for further information.
Underwood, Neuhaus 8 Co. Incorporated was employed as Financial Advisor to perform certain
professional services for the City, including compiling of this Official Statement, for a fee to
be computed on each separate issuance of indebtedness, contingent upon such Certificates actually
being issued, sold and delivered.
Certification as to Official Statement:
At the time of payment for and delivery of the Certificates, the Initial Purchaser will be
furnished a certificate executed by an appropriate official of the City, acting in his official
capacity, to the effect that to the best of his knowledge and belief: (a) the descriptions and
statements pertaining to the City contained in its Preliminary and final Official Statements, on
the respective dates of such statements, on the date of sale of the Certificates and the
acceptance of the bid therefor, and on the date of delivery of the Certificates, did not and do
not contain an untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and (b) as of the date of delivery of the
Certificates, there have been no material adverse changes in the City's financial condition and
affairs since the date of the Preliminary and final Official Statements. Such certificate shall
not cover any information contained in APPENDIX A to the Preliminary and final Official
Statements or relating to taxing jurisdictions other than the City, or stated to have been
obtained from sources other than City records or to information supplied to the City by the
Underwriters for inclusion into the Preliminary and final Official Statements. In rendering such
certificate the person executing the certificate may state that he has relied in part on his
examination of the records of the City relating to matters within his own area of responsibility,
and his discussions with, or certificates or correspondence signed by, certain other officials,
employees, consultants and representatives of the City as to matters not within his area of
responsibility.
27
Updating of Official Statement:
The City will keep the Official Statement current by amendment or sticker to reflect material
changes in the affairs of the City and, to the extent that information comes to its attention, to
the other matters described in the Official Statement, until the delivery of the Certificates to
the Initial Purchaser. All changes in the affairs of the City and other matters described in the
Official Statement subsequent to the delivery of the Certificates to the Initial Purchaser and
all information with respect to the resale of the Certificates shall be the responsibility of the
Initial Purchaser.
/s/ Maurice Meyers
Mayor
The City of Beaumont, Texas
ATTEST:
/s/ Rosemarie Chiappeta
City Clerk
The City of Beaumont, Texas
28
APPENDIX A
- Economic and Demographic Characteristics -
The following information has been derived from various sources, including the Texas
Almanac, Texas Municipal Reports, Beaumont Chamber of Commerce, 111987 Sales 8 Marketing
Management's Survey of Buying Power", and municipal officials. While such sources are believed
to be reliable, no representation is made as to the accuracy thereof.
General
The City of Beaumont, the county seat of Jefferson County, is located ninety miles east of
Houston and thirty-five miles from the Gulf of Mexico on the banks of the Neches River. The City
is the center of one of the State's largest refining and petrochemical complexes, ranks second
among Texas ports in total ship tonnage and is the industrial and commercial center for more than
a quarter of a million people with 2,252 business establishments rated by Dun 8 Bradstreet.
Banks
(Source: Texas Banking Red Books - 1986/87 and 1987/88 Editions)
Located within the City are a total of eleven banks: First Interstate Bank-Beaumont, N.A.,
Beaumont Bank, N.A., First City Bank Central , First City Bank-Gateway, N.A., First City National
Bank of Beaumont, First Republic Bank, Beaumont, Lamar State Bank, MBank Beaumont, Parkdale Bank,
Plaza National Bank, and Texas Commerce Bank-Beaumont with total combined deposits of
$1,283,642,320 as of December 31, 1986, up from $1,167,870,530 of a year earlier, an increase of
$115,771,790.
Port of Beaumont
(Source: Port of Beaumont Navigation District)
The Port of Beaumont's public wharves are operated by the Port of Beaumont Navigation
District. The District operates ten ship berthing positions along a total of 5,900 feet of
dockage on the west bank of the Neches River just east of Beaumont's central business district.
The Port of Beaumont handled more cargo in 1987 than in any year in its history. Total cargo in
1987 was 4,338,445 tons, almost one million tons more than the 1986 figure of 3,383,878 tons, a
28 percent increase. Bulk grain topped 3.5 million tons for the first time in the port's history
and general cargo tonnage was the second highest in history. Bulk grain was up 28 percent and
general cargo was up 27 percent over 1986. Bulk grain through the Port's 3.5 million export
grain elevator reached an all-time record level of 3,594,096 tons. The elevator is operated by
Continental Grain Company under a long-term lease agreement. The 1987 grain tonnage was 6
percent over the tonnage record for grain set in 1973. General cargo tonnage in 1987 was 725,657
tons, second only to the 751,457 tons handled by the port in 1968. Total port tonnage excluding
grain was 744,349 tons. Longshoremen worked 355,004 man-hours in 1987, and earned a total
payroll of $5,482,229. In 1987, the port was visited by 206 ships and 80 barges.
Lamar University
(Source: Beaumont Chamber of Commerce)
Lamar University is a state supported institution founded in 1923. This four-year
university has an annual enrollment of more than 14,500 students and a fulitime faculty of more
than 400. Lamar offers bachelor degrees in 60 fields, master degrees in 22, and a doctorate of
engineering. The main campus in the southern part of Beaumont comprises approximately 300 acres
with 74 permanent buildings.
- Major Employers -
The following is a listing of some of the companies located in the City or in one of the
City's industrial districts. Employment range and relevant products have been obtained from the
Beaumont Chamber of Commerce and the 1988 Directory of Texas Manufacturers.
Approximate
Name Product Range
American Valve 8 Hydrant
Manufacturing Co. Iron gate, swing check valves, fire hydrants 250-499
Babin Machine Works Automatic indexing bolt circle drilling machines 50-99
Beaumont Coca-Cola Bottling Co. Soft drinks 100-249
Beaumont Enterprise-Journal Newspapers 250-499
Beaumont Rice Mills Inc. Rice milling 50-99
Becker Gus Printing Co., Inc. Printers 25-49
Bethlehem Steel Corp. Ship repair, barge construction, offshore drilling
equipment 250-499
Big Three Industries Inc. Nitrogen, oxygen, argon 25-49
Borden Inc. Milk processing 50-99
Carlin Mfg. E Distributing Inc. Wire seat springs, for antique automobiles 25-49
Dow Jones d Co. Inc. Newspaper; offset commercial printing 25-49
John Dollinger Jr. Inc. Fabricators of structural and plate steel 100-249
E.I . DuPont deNemours b Co. Inc. Feed supplement, synthetic rubber, hydrocarbon
rubber, ammonia, methanol 1,000-4,999
Entex Natural gas distribution 75
Exell Inc. Steel pressure vessels E shell-and-tube
heat exchangers 50-99
Goodyear Tire 8 Rubber Co. Synthetic rubber d adhesives 500-999
Gulf Coast Machine 8 Supply Industrial forgings 250-499
Gulf States Utilities Co. Electric utility 1,900 (1)
Helena Laboratories Medical laboratory inorganic reagents, electro-
medical equipment 100-249
International Galvanizers Inc. Hot-dip galvanizing 25-49
J b J Mfg. Co. Loader-stackers; automatic packaging machines 25-49
Keown Supply Co. Hot b cold asphalt mix 50-99
Lamar University Press Newspaper 25-49
Mabry Foundry 8 Supply Ductile, iron 8 steel castings iron pipe,
valves d fittings 50-99
Marine 8 Industrial Electrical
Service Company Switchboard panels for ships, electric motors 100-249
Mobil Oil Corporation Petroleum refining 1,000-4,999
Mobil Chemical Company Ethylene, butadiene, propylene benzane, totuene,
urea 100-249
Modern Inc. Post hole diggers, agricultural machinery 100-249
National Concrete Products Concrete pipe b septic tanks 25-49
OCB Metal Inc. Forgings, castings d machine work, heat treating
welding 100-249
Olin Corporation Chemical Division Sulphuric acid, ammonium sulfate 50-99
P. D. Glycol Glycols 8 oxides 50-99
Pennwalt Corporation Ethyl, methyl mercaptan 25-49
Pepsi-Cola Bottling Co. Soft drinks 25-49
Reward/Work Center Wiping clothes, wooden doghouses litter sticks 100-249
Rogers Enterprises Inc. Prescription eyeglasses 8 contact lenses 250-499
Seal Mfg. & Supply Co. Wooden office cabinets; store d bank fixtures 25-49
Southern Avionics Co. Inc. Radio beacon transmitters & mast-type antennas 25-49
Southern Iron & Metal Co. Smelting of ferrous and non-ferrous scrap metal 50-99
Southern States Steel Co. Steel reinforcing bars 25-49
Texas Coffee Co. Roasted coffee, spices, tea 25-49
Texas Metal Works Inc. Steel flanges, forgings 50-99
Third Coast Industries Alloy stell stud bolts 50-99
Transit Mix Concrete &
Foundation Co. Ready-mix concrete 25-49
Valspar Corporation Paints & enamels 25-49
Warren Refrigerator Co. Commercial refrigerating equipment 50-99
Zummo Meat Co. Inc. Slaughtering, processed meat, sausages 25-49
(1) Total employment in the Beaumont-Port Arthur-Orange SMSA.
- Building Permits -
(Source: Beaumont Chamber of Commerce)
Year Number of Permits Value
1987 N/A $107,719,176
1986 4,522 84,979,259
1985 4,947 80,230,877
1984 6,082 118,390,929
1983 5,639 166,745,039
1982 4,529 135,523,688
1981 4,208 97,381,921
1980 4,489 134,529,794
1979 4,235 87,180,947
1978 3,973 104,551,375
1977 3,773 82,041,729
1976 3,954 52,482,355
1975 3,985 46,409,957
1974 3,209 35,911,286
1973 3,703 40,010,288
1972 3,749 32,477,965
1971 3,133 23,399,896
1970 2,760 13,848,332
- Jefferson County -
Jefferson County is a Gulf Coast county and component of the Beaumont-Port Arthur Metropolitan
Statistical Area. The county is traversed by Interstate Highway 10, U.S. Highways 90 and 69-287, State
Highways 12, 73, 87 and 105 and three farm-to-market roads. The economy is based on industry, mineral
production, agriculture and shipping. Cash receipts from agriculture in 1985 totaled $27.5 million, with
$28.2 million contributed by crop production. In 1985 the county ranked 5th in the state in production
of rice with 1.5 million cwt and 4th in soybean production with 449,000 bushels. 28,000 head of cattle
were on ranches as of 1-1-86.
Ninety manufacturing plants, employing over 20 persons each, produced goods valued at $18.2 billion
during 1985. Principal manufactured goods include petroleum products, petro-chemicals, oil-field
equipment, steel fabrication, ships, barges and machinery. 1986 retail sales totaled $1.8 billion.
- City and County SMSA Statistics -
The following are various statistical analyses of the City, Jefferson County, and the Beaumont -
Port Arthur Standard Metropolitan Statistical Area extracted from "Sales d Marketing Management - 1987
Survey of Buying Power; Copyright - 1987 Sales 8 Marketing Management Survey of Buying Power: further
reproduction is forbidden.
Beaumont-
Port Arthur
The City Jefferson County SMSA
Population (12-31-86) 123,300 257,900 393,600
Median Age (years) 31.4 32.1 31.7
% 18-24 12.3 11.8 11.2
% 25-34 18.1 16.9 16.8
% 35-49 17.4 18.1 19.1
% 50 8 over 26.1 27.0 25.4
Number of Households 45,700 94,500 140,700
Retail Sales (1986) (S1,0001s)
Food $170,256 $345,490 $524,990
Eating, Drinking 117,381 175,580 213,197
General Merchandise 173,383 240,139 317,541
Furniture, Furnishings,
Appliances 69,913 93,426 113,370
Automotive 221,245 360,431 532,200
Drugs 26,115 50,497 76,094
Total Retail Sales 1,113,225 1,792,073 2,465,575
Effective Buying Income (1986)
Total Effective Buying
Income ("EBI") ($1,000's) $1,487,535 53,140,495 $4,703,210
Median Household EBI 24,373 26,557 27,611
% Households EBI
510,000 - $19,999 20.6 19.3 18.4
$20,000 - $34,999 23.7 25.0 25.7
$35,000 - $49,999 16.9 19.8 19.8
$50,000 d Over 16,7 16.7 16.9
- Growth Indicators -
(Source: Beaumont Chamber of Commerce)
1950 1960 1970 1980
Bank Deposits $103,200,072 $158,309,066 8301,705,224 $932,814,787
Savings 8 Loan Deposits $ 5,446,690 $ 51,398,527 $128,527,595 $561,229,967
Electric Meters 28,312 39,285 42,835 44,859
Gas Meters 23,078 34,509 35,295 36,391
Water Meters (a) 20,883 32,357 36,975 41,423
Telephones 24,118 56,155 74,463 103,045
Population 94,014 119,175 117,548 118,102
(a) Provided by the City's Waterworks Department.
APPENDIX 8
Comprehensive Annual Financial Report
City of Beaumont, Texas
Fiscal Year Ended September 30, 1987
The above certificates (the "Certificates") constitute all of the certificates of obligation
authorized by the City Council on April 19, 1988. The Certificates, when issued, will constitute
valid and binding obligations of The City of Beaumont (the "City") and will be payable from the
proceeds of an annual ad valorem tax, levied within the limits prescribed by law, against taxable
property within the City and further payable from a junior and subordinate pledge of the net
revenues of the City's water and sanitary sewer system.
PAYMENT RECORD:The City has never defaulted.
BOND COUNSEL:Vinson 8 Elkins, Houston, Texas.
DELIVERY:When issued -- anticipated on or about May 19, 1988
SEALED BIDS TO BE OPENED: Tuesday, April 19, 1988, 1 :00 P.M., Central Daylight Savings Time
TABLE OF CONTENTS
Peke
USEOF INFORMATION IN OFFICIAL STATEMENT............................................. 3
SALE AND DISTRIBUTION OF THE CERTIFICATES............................................ 3
Sale of the Certificates........................................................ 3
Marketability...................................................................
3
Securities Laws.................................................................
3
Municipal Bond Ratings..........................................................
3
OFFICIAL STATEMENT SUMMARY...........................................................
5
THECERTIFICATES.....................................................................
6
Description of the Certificates.................................................
6
Source of Payment...............................................................
7
Authority for Issuance..........................................................
7
Use of Proceeds.................................................................
7
Legal Investments in Texas......................................................
7
Remedies in the Event of Default................................................ 7
PRO-FORMA DEBT SERVICE SCHEDULE...................................................... 8
DEBTSTATEMENT.......................................................................
9
General.........................................................................
9
Bonded Indebtedness.............................................................
9
Revenue Support of Ad Valorem Tax Bonds and Certificates of Obligation.......... 9
Estimated Overlapping Debt...................................................... 9
Debt Ratios..................................................................... 10
Short Term Debt.................................................................
10
TAXDATA............................................................................. 10
General.....................
Authority for Ad Valorem Taxation............................................... 11
Historical Analysis of Ad Valorem Taxation...................................... 13
Estimated Overlapping Taxes..................................................... 15
Sales Tax................................................................. .... 15
Industrial District Contracts................................................... 16
Tax Increment Reinvestment Zone................................................. 17
SELECTEDFINANCIAL DATA.............................................................. 18
Historical Operations of the City's General Fund................................ 18
General Fund and Debt Service Fund Balance for the Past Five Fiscal Years....... 19
Financial Statements............................................................ 19
ADMINISTRATIONOF THE CITY........................................................... 19
Mayor and City Council......................................................... 19
Administration.................................................................. 20
Consultants.................................................... ................ 20
LITIGATION........................................................................... 21
LEGISLATION AND REGULATION........................................................... 21
Affecting the City's Operations................................................. 21
Affecting the Tax Base.......................................................... 21
State Legislation.............................................................. 22
OTHERCONSIDERATIONS.......................................... ................... .... 22
...
Future Borrowing............................... ... 22
...........................
Pension Fund................................................... ....... 23
..........
Collective Bargaining............................................... ...... 23
Self-Insurance.................................................................. 23
LEGALMATTERS........................................................................ 24
Legal Opinions............................................................. 24
Tax Exemption................................ ...... ... 24
Purchase of the Certificates by Financial Institutions.......................... 25
No-Litigation Certificate....................................................... 25
SPECIAL CONSIDERATIONS............................................................... 26
Loss of City Funds and Curative Actions by the City............................. 26
Financial Condition of GSU...................................................... 26
General Economic Conditions..................................................... 26
GENERAL CONSIDERATIONS............................................................... 27
Sources and Compilation of Information.......................................... 27
Certification as to Official Statement.......................................... 27
Updating of Official Statement.................................................. 28
APPENDIX A - ECONOMIC AND DEMOGRAPHIC CHARACTERISTICS
APPENDIX 8 - FINANCIAL STATEMENTS OF THE CITY
2
USE OF INFORMATION IN OFFICIAL STATEMENT
No dealer, broker, salesman or other person has been authorized by the City to give any
information or to make any representation other than those contained in this Official Statement,
and, if given or made, such other information or representations must not be relied upon as
having been authorized by the City.
This O f f i c i a l Statement is not to be used in an offer to sell or the solicitation of an
offer to buy in any state in which such offer or solicitation is not authorized or in which the
person making such offer or solicitation is not qualified to do so or to any person to whom it is
unlawful to make such offer or solicitation.
Any information and expressions of opinion herein contained are subject to change without
notice, and neither the delivery of this Official Statement nor any sale made hereunder shall ,
under any circumstances, create any implication that there has been no change in the affairs of
the City or other matters described herein since the date hereof.
SALE AND DISTRIBUTION OF THE CERTIFICATES
Sale of the Certificates:
After requesting competitive bids for the Certificates, the City has accepted the bid
resulting in the lowest net interest cost, which bid was tendered by a syndicate composed of
("Purchaser") to
purchase the Certificates bearing the interest rates shown under "MATURITY SCHEDULE" at a price
of the par value thereof, plus a cash premium of , plus accrued interest to the date of
delivery. The net effective interest rate on the Certificates was % as calculated
pursuant to Article 717k-2 of Vernon's Annotated Texas Civil Statutes.
Marketability:
The City has no understanding with the Purchaser regarding the reoffering yields or prices
of the Certificates and has no control over trading of the Certificates after their initial sale
by the City. Information concerning reoffering yields or prices is the responsibility of the
Purchaser. No assurance can be given that any trading market will be developed for the
Certificates after the initial sale by the City.
Securities Laws:
No registration statement relating to the Certificates has been filed with the Securities
and Exchange Commission under the Securities Act of 1933, as amended, in reliance upon the
exemptions provided thereunder. The Certificates have not been registered or qualified under the
Securities Act of Texas in reliance upon various exemptions contained therein; nor have the
Certificates been registered or qualified under the securities acts of any jurisdiction. The
City assumes no responsibility for registration or qualification of the Certificates under the
securities laws of any jurisdiction in which the Certificates may be offered, sold or otherwise
transferred. This disclaimer of responsibility for registration or qualification for sale or
other disposition of the Certificates shall not be construed as an interpretation of any kind
with regard to the availability of any exemption from securities registration or qualification
provisions.
Municipal Bond Ratings:
In connection with the sale of the Certificates, the City made application to Moody's
Investors Service, Inc. ("Moody's") and Standard d Poor's Corporation ("W") for a municipal
bond rating, and ratings of " it and "—of respectively, have been assigned to the Certificates
and the outstanding bonds and certificates on a parity with the Certificates. An explanation of
3
such ratings may be obtained from the companies furnishing such ratings. The ratings reflect
only the views of such companies and the City makes no representation as to the appropriateness
of the ratings.
There is no assurance that such ratings will continue for any given period of time or that
they will not be revised or withdrawn entirely by either or both of such rating companies, if in
the judgment of either or both companies, circumstances so warrant. Any such revision or
withdrawal of ratings may have an adverse effect on the market price of the Certificates.
4
OFFICIAL STATEMENT SUMMARY
The following material is qualified in its entirety by the detailed information and
financial statements appearing elsewhere in this Official Statement.
- General -
The Issuer ................... The City of Beaumont, a home rule city of the State of Texas
located within Jefferson County.
The Certificates ............. $3,000,000 Combination Tax and Revenue Certificates of Obligation,
Series 1988, dated May 1, 1988; various amounts due March 1, 1989
through 1998.
Payment of Interest........... September 1 , 1988, and each March 1 and September 1 thereafter,
until maturity.
Source of Payment............. Principal of and interest on the Certificates are payable from a
continuing, direct annual ad valorem tax levied with the limits
prescribed by law and further payable from a junior and
subordinate pledge of the net revenues of the City's water ar_°
sanitary sewer system.
Other Characteristics ........ The Certificates are issued in fully registered form in integral
multiples of $5,000. The Certificates are not subject to
redemption prior to their scheduled maturities.
Use of Proceeds............. Proceeds from the sale of the Certificates are to be used to
purchase equipment for the automated refuge system. The proceeds
will also be used to pay costs incurred in the issuance of the
Certificates. See "Use of Proceeds".
Bond Ratings.................. Mood s Investors Service Inc. _ .. it
Standard 8 Poor's.....................................it—if
......................
Population.................... 1988 Estimate - 120,000. _
- Financial Highlights
(Unaudited)
1987 Certified Assessed Valuation (100% of Estimated Market Value)..... $2,716,566,740
Direct Tax Debt
Outstanding Debt (as of March 1, 1988)............................. $ 81,701,091
The Certificates.....................................•..♦•••.. $ 3,000,000
...........
Total Direct Debt......................................................
84,701,091
Less: Self-Supported Debt......................................... S 12,770,000 (a)
Direct Ad Valorem Tax Supported Debt.......... . S 71,931,091
Estimated Overlapping Debt.......... . • .
...... S 22,988,276
Total Direct Tax Supported and Estimated Overlapping Debt ............. $ 94,919,367
Interest and Sinking Fund Balance (Estimated as of March 1, 1988)...... $ 4,538,140
5
Debt Ratios: of 1987 Certified Per
Assessed Valuation Capita
Direct Debt....................................... 3.12% $706
Direct Ad Valorem Tax Supported Debt.............. 2.64% $599
Direct Tax Supported and Estimated
Overlapping Debt................................ 3.49% $791
Annual Requirements:
Average (Fiscal Years 1988/2005)(b)................................. $7,219,309
Average (Fiscal Years 1988/2005).................................... $8,799,481
Maximum (1996)...................................................... $9,326,453
Tax Collections:
Arithmetic Average, Tax Years (1983/1987) - Current Year.................. 96.32%
- Current and Prior Years....... 98.28%
(a) See "DEBT STATEMENT - Revenue Support of Ad Valorem Tax Debt.
(b) Less Self Supported Ad Valorem Tax Debt.
THE CERTIFICATES
Description of the Certificates:
The Certificates are dated May 1, 1988, bear interest from such date at the stated interest
rates indicated under "MATURITY SCHEDULE", which interest is payable September 1 , 1988, and each
March 1 and September 1 thereafter until maturity. The Certificates are issued in fully
registered form in denominations of $5,000 each or any multiple thereof. The Certificates are
not subject to redemption prior to scheduled maturities. Principal of and interest on the
Certificates are payable at the principal corporate trust office of the Texas Commerce Bank
National Association, Houston, Texas. Interest on the Certificates will be payable by check or
draft, dated as of the interest payment date, and mailed by the Registrar to registered owner as
shown on the records of the Registrar.
The Certificates are transferable only on the certificate register kept by the Registrar
upon surrender and reissuance. The Certificates are exchangeable for an equal principal amount
of Certificates of the same maturity in any authorized denomination upon surrender of the
Certificates to be exchanged at the principal corporate trust office of the Registrar. No
service charge will be made for any transfer, but the City may require payment of a sum
sufficient to cover any tax or governmental charge payable in connection therewith.
The record date (the "Record Date") for the interest payable on any interest payment date
means the 15th calendar day of the month next preceding such interest payment date.
It will be required that all transfers be made within three business days after request and
presentation.
The City has agreed to replace mutilated, destroyed, lost or stolen Certificates upon
surrender of the mutilated Certificates, or receipt of satisfactory evidence of such destruction,
loss or theft, and receipt by the City and the Registrar of security or indemnity to keep -them
harmless. The City may require payment of taxes, governmental charges and other .expenses in
connection with any such replacement.
6
Source of Payment:
The Certificates are payable as to principal and interest solely from and secured by the
proceeds of a continuing, direct annual ad valorem tax levied, within the limits prescribed by
law, against taxable property within the City. The Certificates are also further payable from a
junior and subordinate pledge of the net revenues of the City's water and sanitary sewer
system. The City reserves the right to issue additional obligations payable from such revenues,
which obligations may be senior to, on a parity with or junior and subordinate to the payment of
such revenues pledged to the Certificates. See, also "Remedies in the Event of Default." In the
Ordinance, the City covenants that while the Certificates are outstanding, it will levy, assess
and undertake to collect such tax.
Authority for Issuance:
The Certificates are being issued pursuant to the applicable provisions of the Constitution
and laws of the State of Texas particularly Sections 271.041-271.063, Texas Local Government
Code, as amended, and the provisions of an ordinance (the "Ordinance") adopted by the City
Council on April 190 1988, and which specifically authorizes the sale and issuance of the
Certificates. Further reference to the Ordinance is hereby made. No election is required as a
prerequisite to the sale and issuance of certificates of obligation, unless a petition signed by
5% of the qualified voters of the City is filed with the City Clerk protesting the issuance of
such certificates prior to the issuance.
Use of Proceeds:
Proceeds of the Certificates are being used to provide funds to purchase equipment for the
automated refuse system. The proceeds will also be used to pay the costs of issuance of the
Certificates, including the Financial Advisor's fee, and Bond Counsel's fee, both of which are
contingent upon the sale of the Certificates, as well as other administrative costs incurred.
Legal Investments in Texas:
Section 271.051, Texas Local Government Code, as amended, which applies to the certificates,
provides that certificates approved by the Attorney General are legal and authorized investments
for banks, savings banks, trust companies, and savings and loan associations; insurance
companies; fiduciaries, trustees, and guardians; and sinking funds of municipalities, counties,
school districts, or other political corporations or subdivisions of the state; and are eligible
to secure deposits of public funds of the state or a municipality, county, school district, or
other political corporations or subdivision of the state. The certificates are sufficient
security for the deposits to the extend of the face value of the certificates, if accompanied by
any appurtenant unmatured interest coupons.
The City has made no investigation of any other laws, rules, regulations or investment
criteria that may affect the suitability of the Certificates for any of the above purposes or
that may limit the authority of any of the above entities or persons to purchase or invest in the
Certificates. No representation is made with respect to the laws of states other than Texas as
to whether the Certificates are legal investments for various institutions or purposes in those
states.
Remedies in the Event of Default:
The Ordinance requires the City to assess and collect ad valorem taxes each year sufficient
to pay principal and interest when due on the Certificates and has also made a junior and
subordinate pledge of the net revenues of the City's water and sanitary sewer system to the
payment of the Certificates, but provides no other security for the payment se the Certificates,
provides no' express remedies in the event of default, makes no provision for acceleration of
maturity of the Certificates in the event of default, and does not provide for a trustee to
protect the rights of the certificate owner. See also "Municipal Certificate Insurance and
Ratings".
7
Although a certificate owner could presumably obtain a judgment against the City in the
event of default in the payment of principal or interest on the Certificates, such judgment could
not be satisfied by execution against any property of the City. A certificate owner could, in
the event of default, ask a court for a mandamus or court order compelling the City to levy,
assess and collect sufficient ad valorem taxes to pay principal of and interest on the
Certificates as it falls due on the Certificates or to perform the City's other obligations under
the Ordinance. Such remedy might need to be enforced on a periodic basis. The enforcement of a
claim for payment of principal or interest on the Certificates would be subject to judicial
discretion, sovereign police powers and the applicable provisions of the federal bankruptcy laws
and to any other similar laws affecting the rights of political subdivisions generally.
PRO-FORMA DEBT SERVICE SCHEDULE
The following sets forth the principal and interest on the City's outstanding bonds,
certificates of obligation and the Certificates (assuming 7.50% interest on the Certificates).
Self Supported
Fiscal Year Outstanding The Certificates Total New Ad Valorem Tax
Ending Ad Valorem $3,000,000 Ad Valorem Debt Included
9-30 Tax Debt Principal Interest Tax Debt In Total
1988 $ 8,820,015 $ 75,000 $ 8,895,015 $ 1,808,313
1989 8,582,253 $ 210,000 217,125 9,009,378 2,159,600
1990 8,561,563 225,000 200,812 8,987,375 2,152,212
1991 8,531,421 250,000 183,000 8,964,421 2,143,075
1992 8,528,395 260,000 163,875 8,952,270 2,267,025
1993 8,442,931 280,000 143,625 8,866,556 2,249,888
1994 7,882,654 300,000 121,875 8,304,529 1,734,238
1995 7,882,926 325,000 98,438 8,306,364 1,726,001
1996 8,903,328 350,000 73,125 9,326,453 1,741,438
1997 8,902,706 375,000 45,937 9,323,643 1,733,700
1998 8,617,156 425,000 15,937 9,058,093 1,465,599
1999 8,619,793 8,619,793 1,029,600
2000 8,614,240 8,614,240 1 ,019,200
2001 8,619,088 8,619,088 1,029,775
2002 8,629,550 8,629,550 1,039,550
2003 8,629,563 8,629,563 1,039,563
2004 8,648,913 8,648,913 1,058,913
2005 8,635,413 8,635,413 1,045,413
$154 051 908 S3,000 00 $1,338,750 $158,390,658 $28_44®
Average Annual Debt Service Requirements (1988/2005)(a).....................$ 7,219,309
Average Annual Debt Service Requirements (1988/2005)........................$ 8,799,481
Maximum Annual Debt Service Requirement (1996)......... ..................$ 9,326,453
(a) Less Self Supported Ad Valorem Tax Debt.
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DEBT STATEMENT
General :
The following tables and calculations relate to the Certificates and to all other tax
supported debt of the City. In addition to outstanding bonds and certificates of obligation, the
City has also issued revenue certificates and has incurred contractual and other indebtedness and
liabilities which are not included below but which are significant in amount. The City and
various other political subdivisions of government which overlap all or a portion of the City are
empowered to incur debt to be paid from revenues raised or to be raised by ad valorem taxation
against all or a portion of property within the City.
Bonded Indebtedness:
1987 Certified Assessed Valuation
.(1005 Estimated Market Value)............................... ...52,716,566,740
Direct Ad Valorem Tax Debt
Outstanding Debt (as of March 1, 1988)...........................S 81,701,091
The Certificates.....................................................•....... 3,000,000
Total Direct Ad Valorem Tax Debt.................. ...S 84,701 ,091
Less: Self Supported Debt.. . ...........................S 12,770,000(a)
Total Direct Ad Valorem Tax Supported Debt............................g 71
, ,
Interest & Sinking Fund Balance (Estimated as of March 1, 1988).......S 41538,140
(a) See "DEBT STATEMENT - Revenue Support of Ad Valorem Tax bonds and certificates of
obligation.
Revenue Support of Ad Valorem Tax Bonds and Certificates of Obli ation:
Certain tax supported bonds and certificates of obligation are being paid from revenues
other than ad valorem taxes. Including a portion of the Certificates, $13,511,000 of such bonds
and certificates of obligation are presently outstanding, and their debt service requirements
were traditionally paid with amounts transferred from the other funds into the Debt Service Fund
from 1980 through 1985. The following is a listing of funds so transferred from 1980 through
1985, which amounts represent the actual principal and interest requirements of such bonds and
certificates of obligation:
1987 1986 1985 1984 1983 1982
Transfer from other funds to
Debt Service Fund $66,953 556,950 $689,444 5897,375 $708,852 $559,700
Beginning in 1986, the City has pursued a policy of recording bonds and certificates of
obligation associated with enterprise fund activities in the appropriate enterprise funds. The
debt service of these bonds and certificates of obligation are now paid directly from these funds
and is no longer transferred to the debt service fund. In the 1986 and 1987 fiscal years
$1,289,270 and 51,656,247, respectively, was paid from these enterprise funds for debt service.
Estimated Overlapping Debt:
The following table indicates the indebtedness, defined as outstanding certificates payable
from ad valorem taxes, of governmental entities overlapping the City and the estimated
percentages and amounts of such indebtedness attributable to property within the City. This
information is based upon data secured from the individual jurisdictions and or the Texas
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Municipal Reports. Such figures do not indicate the tax burden levied by the applicable taxing
jurisdictions for operation and maintenance or for other purposes. The City has not
independently verified the accuracy or completeness of the information shown below except for
amounts related to the City.
Debt as Overlapping
of 3-1-88 Percentage Amount
Taxing Jurisdiction
Beaumont Independent School District S 3,295,000 63.18% S 2,081,781
Jefferson County 19,735,000 27.50 5,427,125
Jefferson County Drainage District No. 6 13,700,000 73.21 10,029,770
Port of Beaumont Navigation District 8,000,000 68.12 5,449,600
TOTAL ESTIMATED OVERLAPPING DEBT $22,988,276
The City 712931,091(a)
TOTAL DIRECT TAX SUPPORTED AND
ESTIMATED OVERLAPPING DEBT $94,919,367
(a) Less self-supporting add valorem tax debt service
Debt Ratios:
Direct Direct Tax
Ad Valorem Supported and
Tax Supported Overlapping
Direct Debt Debt Debt
1987 Certified Assessed Valuation (52,716,566,740)..... 3.12% 2.64% 3.49%
Per Capita (120,000)............ ...... $706 $599 $791
................
Short Term Debt:
Under Article VII of the City Charter, the City is empowered to issue Tax Anticipation
Notes. As of 3-1-88, the City has no outstanding tax anticipation notes.
TAX DATA
General :
One of the City's sources of operational revenue and its principal source of funds for ad
valorem tax debt service payments is from the receipts from ad valorem taxation. The following
is a recapitulation of (1) the authority for taxation, including methodology, limitations,
remedies and procedures; (2) historical analysis of collection and trends of tax receipts and
provisions for delinquencies; and (3) an analysis of (a) the current tax base, (b) the principal
taxpayers and (c) other ad valorem taxation that may compete with the City's tax collections.
Additionally, sales tax authority and collections are analyzed as well as payments received in
lieu of taxes for Industrial District Contracts and tax receipts received from the City's tax
increment reinvestment zone. The inclusion of the following information is not intended to imply
that any revenues of the City, other than receipts of an ad valorem tax and certain revenues of
the City's water and sanitary sewer system, are pledged to pay the principal of or interest on
the Certificates. Such information, and the other information contained in this Official
Statement relating to sources of revenues other than ad valorem taxes, is included only for the
purpose of providing information concerning the general operation of the City.
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Authority for Ad Valorem Taxation:
Following is a discussion of ad valorem taxation under Texas law. Recently effective
changes to the law, especially the State Property Tax Code (the "Tax Code"), have had significant
effects upon the existing tax methodology and procedures discussed below. The City is continuing
to assess the full impact of such changes upon the City's ad valorem tax procedures, and cannot
predict the future possibility of further amendments or revisions to the Tax Code.
- Tax Rate Limitations -
Article XI , Section 5 of the Texas Constitution, provides for an overall limitation for Home
Rule Cities of $2.50 per $100 assessed valuation of which not more than $1 .50 can be used for
general operating purposes under the City Charter. The Attorney General of Texas follows a
policy, with respect to Home Rule Cities which have such a $2.50 limitation, of approving ad
valorem tax bonds only to the extent that all of such city's ad valorem tax debt can be serviced
by a tax rate of $1.50 at 90% collection.
- Property Subject to Taxation -
Except for certain exemptions provided by Texas law, all the property in the City, real or
personal , is subject to taxation by the City. Principal categories of exempt property include
property owned by the State of Texas or its political subdivisions if the property is used for
public purposes; property exempt from ad valorem taxation by federal law; certain household
goods, family supplies, and personal effects; farm products owned by producers; certain property
associated with charitable organizations, use and development associations, religious
organizations, and qualified schools; designated historic sites; solar and wind powered energy
devices; most individually owned automobiles; property of disabled veterans only to the extent of
$3,000 of taxable valuation; and residential homesteads of persons over 65 years, to the extent
the governing body of the political subdivision granting an exemption deems it advisable to
exempt such homestead. The Council presently exempts from taxation up to $17,500 assessed
valuation of residential homesteads to persons over 65 years of age. Such homestead and disabled
veterans exemptions from the 1987 tax roll approximate 5141,419,090.
An eligible owner of agricultural and timberland may apply to have such properties which
meet certain requirements appraised on the basis of productivity value or market value, whichever
is less. However, eligible timberland may not be appraised at a value lower than was assigned on
the 1978 tax roils. The total loss in value due to grants of agricultural use and open-space
land appraisal from the 1987 tax roll approximate $19,215,700.
Voters of the State of Texas have approved a state constitutional amendment which permits
local governments the option of granting homestead exemptions of up to 30% of market value of the
1985-1987 tax years, up to 20$ of market value thereafter. The City currently does not grant an
additional homestead exemption.
- Collections -
Since 1982, the City has contracted with the Jefferson County Tax Assessor-Collector to
collect ad valorem taxes on behalf of the City at a rate of $0.22 per taxpayer per year.
The City has a lien granted by statute for unpaid taxes on real property which is discharged
upon payment.- Thereafter, no lien exists -in favor of the City until it again levies taxes. A
tax lien may not be enforced on personal property transferred to a bona fide purchaser for value
who does not have actual notice of the existence of the lien. In the event a taxpayer fails to
make timely payment of taxes owing to the City on real property, a penalty of 6% of the unpaid
taxes is incurred in February and 1$ is added monthly until July 1 when the penalty becomes
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12%. In addition, interest on delinquent taxes accrues at the rate of 1% per month until paid.
The City may file suit for the collection of delinquent taxes and may foreclose such lien in a
foreclosure proceeding. The City may also impose an additional penalty to defray costs of
collection by an attorney, not to exceed 15% of the total amount due. The property subject to
the City's lien may be sold, in whole or 1n part, pursuant to a court order to collect the
amounts due. The ability of the City to collect delinquent taxes by foreclosure may be adversely
affected by the amount of taxes owed to other taxing units, adverse market conditions, taxpayer
redemption rights, or bankruptcy proceedings which restrain the collection of the taxpayer's
debt.
- Taxation Procedures -
Since January 1, 1982, the appraisal of property within the City is the responsibility of
the Jefferson County Appraisal District with county-wide jurisdiction (the "Appraisal
District"). Prior to January 1 , 1982, appraisal of property within the City was the
responsibility of the City's Tax Assessor-Collector. The Appraisal District operates under rules
adopted by the State Property Tax Board (the "Tax Board"). The Tax Board, appointed by the
Governor, began operation on January 1, 1980. Appraisal Districts within each county also began
operation at that time. The majority of the directors of the Appraisal District may be selected
by taxing entities other than the City.
The Appraisal District is required to review all property within the City at least every
four years. The reappraisal was completed for the 1987 tax roll . The Appraisal District is
required to assess all property within the City on the basis of 100% of its appraised value and
is prohibited from applying any assessment ratios. By August 1, or as soon as possible
thereafter, the City must adopt a tax rate for the current year. Taxes are due October 1 and
become delinquent after January 31 of the following year. No discount for early payment is
offered. Partial payments may be accepted if requested by the taxpayer and approved by the
City. If the effective tax rate, excluding taxes for bonds and other contracted obligations, for
the current year, exceeds the rate for the previous year by more than 8% above the effective tax
rate, the qualified voters of the City may petition for an election to determine whether to limit
the increase of the tax rate to no more than 8% for the current year. The City is required to
hold public hearings to permit voter discussion should the effective tax rate be increased by
more than 3%.
Under Texas law, the Appraisal District is under an obligation to assess all property for
taxation which has not been rendered for taxation by the owner and to present his assessments
along with any objections to renditions to a nine-member Appraisal Review Board, each of whom has
resided within the Appraisal District for two years, and has been appointed by the Appraisal
District's Board of Directors. The Appraisal Review Board has the ultimate responsibility of
equalizing the value of all comparable taxable property within the Appraisal District; however,
any owner who has rendered his property may appeal the decision of the Appraisal Review Board by
filing suit in district court in Jefferson County, within 45 days from the date the tax roll is
approved. In the event of such suit, the value of the property is determined by the court, or by
a jury if requested by the owner, which value as so determined is binding on the City for the tax
year in question and the succeeding year, except for subsequent improvements.
A city, or other taxing unit, may challenge the appraisals assigned categories of property
within its jurisdiction under certain limited circumstances. The City may also sue the Appraisal
District to compel it to comply with the Tax Code. It is not expected that Appraisal District
procedures will affect the ability of the City to adjust its tax rate so that it may levy and
collect taxes sufficient to meet its obligations.
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Historical Analysis of Ad Valorem Taxation:
- Collection Ratios -
Tax Rate Per % Tax Collections
Tax Assessed $100 Assessed Adjusted Current Current 8 Fiscal Year
Year Valuation Valuation Tax Levy Year Prior Years Ending 9-30
1980 S 799,830,460 $1.87 $14,956,830 97.04 99.10 1981
1981 1,553,040,314 (a) 1.12 17,394,052 96.43 97.40 1982
1982 2,391,880,308 (b) .75 17,939,102 98.66 98.87 1983
1983 2,529,125,360 .76 19,213,753 95.81 97.73 1984
1984 2,587,515,009 .78 20,189,503 96.15 98.41 1985
1985 2,867,002,595 .69 19,782,318 95.03 98.14 1986
1986 2,868,966,060 .69 19,795,866 95.96 98.23 1987
1987 2,716,566,740 .69 18,744,311 90.14 (c) 91.26 (c) 1988
(a) Increase in assessment ratio from 60% to 100%.
(b) Revaluation.
(c) Collection as of February 29, 1988.
- Tax Rate Distribution -
Tax Year
1987 1986 1985 1984 1983 1982 1981
General Fund $0.43050 $0.4462 $0.4646 $0.51 $0.51 $0.51 $0.79
Interest 8
Sinking Fund .23143 .2254 .2254 .27 .25 .24 .33
Liability Insurance
Trust Fund .01940 .0184 -0- -0- -0- -0- -0-
Capital Project
Fund .00867 -0- -0- -0- -0- -0- -0-
Total $0.69000 $0-6900 50 0 50.78 50.76 $0.75 S1.12
- Tax Base Distribution -
Type of Property 1987 Tax Roll % 1986 Tax Roll %
Residential $1,522,489,570 52.92 $1,693,252,720 55.94
Commercial 8 Industrial 676,512,910 23.51 649,909,660 21.47
Business Personal 336,248,630 11.69 346,294,590 11.44
Utilities 203,234,300 7.06 204,125,150 6.74
Vacant Lots/Tracts/Acreage 124,724,820 4.33 114,425,620 3.78
Minerals 10,746,060 .37 14,291,030 0.47
Vehicles 8 Other Personal 3,245,240 .11 4,796,790 0.22
Gross Value $2,877,201,530 $3,027,095,560
Less: Exemptions 160,634,790 158,129,500
Net Value 521716,566,740 $2,868,966;060
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- Principal Taxpayers -
Assessed Valuation
Taxpayer Type of Property 1987 Tax Roll 1986 Tax Roll
Gulf State Utilities Electric Utility S 96,796,220 S 98,017,430
Southwestern Bell Telephone Utility 78,495,330 76,953,160
Parkdale Mall Shopping Center 29,102,160 29,644,060
Betz Laboratories Chemical Properties 24,655,850 19,731,320
Beaumont Medical Surgical
Center Hospital 20,010,020 17,910,830
I .R.I . International Oil Field Equipment Manufacturing (a) 17,161 ,380
E.I . Dupont DeNemours Chemical Plant 15,703,600 14,460,310
InterFirst Bank of Beaumont Bank 15,210,750 13,878,090
Beaumont Coca-Cola Co. Bottling Plant 14,693,660 12,619,030
A. M. Phelan Real Estate and
Investment Property 13,308,730 -x-
Holidome, John Q. Hammonds Hotel-Motel 11,327,540 12,230,680
Total Top Ten Taxpayers Assessed Valuation $319,=30 $312,606,290
% of Assessed Valuation to Respective Tax Roll 11.75% 10.90%
(a) I .R.I . reported ceasing manufacturing in April , 1986.
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- Tax Adequacy -
Average Annual Debt Service Requirements (1988/2005)(a)................. $7,219,309
Tax Rate of 50.280 per 5100 assessed valuation against
the 1986 Assessed Valuation, at 95% collection, produces........... 57,226,068
Average Annual Debt Service Requirements (1988/2005).................... $8,799,481
Tax Rate of $0.341 per S10O assessed valuation against
the 1986 Assessed Valuation, at 95% collection, produces........... $8,800,318
Maximum Annual Debt Service Requirements (in the year 1996)............. 59,326,453
Tax Rate of $0.362 per $100 assessed valuation against
the 1986 Assessed Valuation, at 95% collection, produces........... $9,342,273
(a) less Self Supported Ad Valorem Tax Debt Service.
Estimated Overlapping Taxes:
Under Texas law, if ad valorem taxes levied by a taxing authority become delinquent, a lien
is created upon the property which has been taxed, which lien is on a parity with any tax lien on
such property in favor of the City. In addition to ad valorem taxes required to retire the
aforementioned direct and estimated overlapping debt, certain taxing jurisdictions including
those mentioned above are also authorized by Texas law to assess, levy, and collect ad valorem
taxes for operation, maintenance, administrative and/or general revenue purposes.
Set forth below is an estimation of ad valorem taxes levied on a $40,000 single-family
residence by such jurisdictions, assuming the assessments are made at their claimed basis of
assessment (100%). Such residence is further assumed to be located within Jefferson County,
wherein substantially all of the residential property within the City is located. No recognition
is given to local assessments for civic association dues, fire department contributions, or other
charges made by other than political subdivisions.
1987 Tax Estimated
Taxing Jurisdiction Rate/5100 1987 Tax Bill
The City $0.69 $276.00
Beaumont Independent School District 0.83 332,00
Jefferson County 0.24 96.00
Jefferson County Drainage District No. 6 0.19539 78,16
Port of Beaumont Navigation District 0.07 28.00
Estimated Total 1987 Tax Bill $810.16
Sales Tax:
- Authority -
The City has adopted the provisions of Article 1066c, Vernon's Texas Civil Statutes, as
amended, which grants the City the power to impose and levy a 1% sales tax. The City may not
pledge the proceeds from the Sales Tax as security for the Certificates.
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