HomeMy WebLinkAboutRES 96-04 RESOLUTION NO. �a BE IT RESOLVED BY THE CITY COUNCIL
OF THE CITY OF BEAUMONT:
THAT the Preliminary Official Statement concerning the issuance of $16,000,000 in
Certificates of Obligation, Series 1996, dated January 2, 1996, and attached hereto as
Exhibit"A" and made a part hereof for all purposes, be and the same is hereby approved
by the City of Beaumont, Texas, and that officers, agents and representatives of the City
are hereby authorized to distribute the attached Preliminary Official Statement dated
January 2, 1996.
PASSED BY THE CITY COUNCIL of the City of Beaumont this the gZ5tW day
of , 1996.
CLY10r -
Pro Tempore
ATTEST:
City Clerk r
City of Beaumont, Texas
PRELIMW^RY OFFICIAL STATEMENT DATED DECEIV-FR 19. 1995
This Preliminary Official Statemem is subject to completion and amendment. Upon&,z, sale of the Certificates, the Official
Statement will be completed and delivered to the Underwriter.
In the opinion of Bond Counsel and Co-Bond Counsel, interest on the Certificates will be excludable from gross income for
federal income tax purposes under existing law, subject to the matters described under "LEGAL MATTERS- Tax Exemption"
herein, including the alternative minimum tax on corporations.
NEW ISSUE
$16,000,000
THE CITY OF BEAUMONT, TEXAS
(A political subdivision of the State of Texas located within Jefferson County)
COMBINATION TAX AND REVENUE
CERTIFICATES OF OBLIGATION
Series 1996
Dated: January 1, 1996
Principal and interest are payable at the principal corporate trust office of Bank One, Texas,N.A., Houston,Texas,the paying
agent/registrar(the "Registrar"). Interest is payable September 1, 1996, and each March 1 and September 1 thereafter until
maturity or prior redemption. The Certificates are subject to redemption prior to their scheduled maturities on March 1, 2006
or any date thereafter, at the option of the City. Upon redemption the Certificates will be payable at a price equal to the
principal amount thereof plus accrued interest to the date of redemption. The Certificates are issued in fully registered form
in integral multiples of$5,000. Interest on the Certificates will be payable by check,dated as of the interest payment date,and
mailed by the Registrar to registered owners shown on the records of the Registrar on the fifteenth calendar day of the month
next preceding each interest payment date(the "Record Date"). At the request of any registered owner of$1,000,000 or more
in aggregate principal amount of Certificates,the Registrar shall pay interest thereon by wire transfer in immediately available
funds to the account designated by such owner to the Registrar at least five days before the Record Date for such payment.
Payment of the principal of and interest on the Bonds when due will be insured by a municipal bond guaranty insurance policy
to be issued by simultaneously with the delivery of the Bonds.
MATURITY SCHEDULE
(Due March 1)
Initial
Initial
Interest Reoffering Interest Reoffering
Amount* Maturity Rate Yield a Amount* Maturity Rate Yield a
$ 440,000 1997 % % $1,105,000 2006 711 %
470,000 1998 1,140,000 2007(b)
500,000 1999 1,175,000 2008(b)
535,000 2000 1,215,000 2009(b)
560,000 2001 1,355,000 2010(b)
245,000 2002 1,450,000 2011(b)
255,000 2003 1,545,000 2012(b)
255,000 2004 1,645,000 2013(b)
410,000 2005 1,700,000 2014(b)
(a) The initial yields will be established by and are the sole responsibility of the Underwriter, and may subsequently be
changed.
(b) The Certificates maturing on or after March 1, 2007 are subject to redemption,at the option of the City, at the par value
thereof plus accrued interest, in whole or in part, on March 1, 2006, or any date thereafter.
The above certificates (the "Certificates") are being issued pursuant to the Constitution and laws of the State of Texas and
provisions of an ordinance(the"Ordinance")adopted by the City Council(the"City Council")of the City on January 23, 1996.
Proceeds from the sale of the Certificates will be used to provide funds for street,drainage and waterworks projects and to pay
certain costs in connection with the issuance of the Certificates. (See "THE CERTIFICATES - Use of Proceeds.") The
Certificates, when issued, will constitute valid and binding obligations of The City of Beaumont,Texas(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 will be further payable from a junior and subordinate pledge of the net revenues of the City's waterworks
system but only to the extent of and not in an amount in excess of$10,000.
The Certificates are offered when,as and if issued subject to the approving opinion of the Attorney General of the State of Texas
and the opinions of Orgain, Bell &Tucker, L.L.P., Beaumont, Texas, Bond Counsel to the City, and Heard, Goggan, Blair
& Williams, Beaumont, Texas, Co-Bond Counsel to the City, as to the validity of the issuance of the Certificates under the
Constitution and the laws of the State of Texas. Certain legal matters will be passed upon for the Underwriter by Mayor,Day,
Caldwell&Keeton, L.L.P., Houston,Texas,Underwriter's Counsel. The Certificates are expected to be available for delivery
on or about February 22, 1996.
* Preliminary amount, subject to change.
PRELEMINARY OFFICIAL STATEMENT DATED DECEMBER 19 1995
This Preliminary Official Statement is subject to completion and amendment. Upon the sale of the Certificates,the'
Official Statement will be completed and delivered to the Underwriter.
In the opinion of Bond Counsel and Co-Bond Counsel, interest on the Certificates will be excludable from gross
income for federal income tax purposes under existing law, subject to the matters described under;."LEGAL
MATTERS - Tax Exemption"herein, including the alternative minimum tax on corporations.
NEW ISSUE
$14,500,000
THE CITY OF BEAUMONT, TEXAS
(A political subdivision of the State of Texas located within Jefferson County)
COMBINATION TAX AND REVENUE
CERTIFICATES OF OBLIGATION
Series 1996
Dated: January 1, 1996
Principal and interest are payable at the principal corporate trust office of Bank One,Texas, N.A.,Houston,Texas,
the paying agent/registrar (the "Registrar"). Interest is payable September 1, 1996, and each March 1 and
September 1 thereafter until maturity or prior redemption. The Certificates are subject to redemption prior to their
scheduled maturities on March 1, 2006 or any date thereafter, at the option of the City. Upon redemption the
Certificates will be payable at a price equal to the principal amount thereof plus accrued interest to the date of
redemption. The Certificates are issued in fully registered form in integral multiples of$5,000. Interest on the
Certificates will be payable by check, dated as of the interest payment date, and mailed by the Registrar to
registered owners shown on the records of the Registrar on the fifteenth calendar day of the month next preceding
each interest payment date(the "Record Date"). At the request of any registered owner of$1,000,000 or more in
aggregate principal amount of Certificates, the Registrar shall pay interest thereon by wire transfer in immediately
available funds to the account designated by such owner to the Registrar at least five days before the Record Date
for such payment.
The Municipal Bond Guaranty Insurance Policy to guarantee the principal of and interest on the Certificates
will be issued by:
MATURITY SCHEDULE
(Due March 1)
Initial Initial
Interest Reoffering Interest Reoffering
Amount* Maturi ty Rate Yield a Amount* Maturi ty Rate Yield a
$ 170,000 1997 % % $1,115,000 2006 % %
185,000 1998:; 1,150,000 2007(b)
200,000 199;9 1,190,000 2008(b)
210,000 2000 1,225,000 2009(b)
215,000 X001 1,370,000 2010(b)
225,000 2002 1,465,000 201l(b)
230,000 2003 1,560,000 2012(b)
230,000 2004 1,660,000 2013(b)
385,000 2005 1,715,000 2014(b)
r'
(a) 'The initial yields will be established by and are the sole responsibility of the Underwriter, and may
r', subsequently be changed.
(li) The Certificates maturing on or after March 1, 2007 are subject to redemption, at the option of the City, at
the par value thereof plus accrued interest, in whole or in part, on March 1, 2006, or any date thereafter.
e
The above certificates(the "Certificates") being issued pursuant to the Constitution and laws of the State of Texas
and provision of and ordinance(the "Ordinance")adopted by the City Council(the "City Council")of the City on
January 23, 1996. Proceeds from the sale of the Certificates will be used to provide funds for street, drainage and
waterworks projects. The Certificates, when issued, will constitute valid and binding obligations of the City of
Beaumont,Texas (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 will be further payable from a junior and
subordinate pledge of the net revenues of the City's waterworks system but only to the extent of and not in an
amount in excess of$10,000.
The Certificates are offered when,as and if issued subject to the approving opinion of the Attorney General of the
State of Texas and the opinions of Orgain, Bell &Tucker, L.L.P., Beaumont, Texas, Bond Counsel to the City,
and Heard, Goggan, Blair&Williams, Beaumont, Texas, Co-Bond Counsel to the City, as to the validity of the
issuance of the Certificates under the Constitution and the laws of the State of Texas. Certain legal matters will
be passed upon for the Underwriter by Mayor, Day, Caldwell&Keeton, L.L.P., Houston, Texas, Underwriter's
Counsel. The Certificates are expected to be available for delivery on or about February 22, 1996.
* Preliminary amount, subject to change.
TABLE OF CONTENTS
Page
USE OF INFORMATION IN OFFICIAL STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SALE AND DISTRIBUTION OF THE CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Prices and Marketability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Municipal Bond Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Municipal Bond Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
OFFICIAL STATEMENT SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SELECTED FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
THE CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Description of the Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Source of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Authority for Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Issuance of Refunding Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
LegalInvestments in Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Remedies in the Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
PRO-FORMA DEBT SERVICE SCHEDULE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
DEBT STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
BondedIndebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Revenue Support of Ad Valorem Tax Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Estimated Overlapping Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Debt Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Short Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
TAXDATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Authority for Ad Valorem Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Historical Analysis of Ad Valorem Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Estimated Overlapping Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SalesTax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Industrial District Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Tax Increment Reinvestment Zone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Historical Operations of the City's General Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
General Fund and Debt Service Fund Balance for the Past Six Fiscal Years . . . . . . . . . . . . . . . 20
FinancialStatements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ADMINISTRATION OF THE CITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Mayor and City Council . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Consultants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
LEGISLATION AND REGULATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Affecting the City's Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Affecting the Tax Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
OTHER CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Future Bond Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
OtherFinancing Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
PensionFund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Collective Bargaining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
RiskManagement/Self Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Landfill Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
TaxExemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Tax Accounting Treatment of Original Issue Discount Certificates . . . . . . . . . . . . . . . . . . . . . 27
No-Litigation Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
GENERAL CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Sources and Compilation of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Certification as to Official Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Updating of Official Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
CONTINUING DISCLOSURE OF INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
AnnualReports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Material Event Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Availability of Information From NRMSIRs and SID . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Limitations and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Audited Financial Report of the City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Compliance With Prior Undertakings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
APPENDIX A - GENERAL INFORMATION REGARDING THE BEAUMONT AREA AND ITS ECONOMY
APPENDIX B -FINANCIAL STATEMENTS OF THE CITY
APPENDIX C -FORM OF LEGAL OPINIONS
2
USE OF INFORMATION IN OFFICIAL STATEMENT
For purpose of compliance with Rule 15c2-12 of the Securities and Exchange Commission,this document constitutes
an Official Statement of the City with respect to the Certificates that has been deemed "final" by the City as of its
date except for the omission of no more than the information provided by subsection(b)(1)of Rule 15c2-12.
No dealer, broker, salesman or other person has been authorized 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 Official 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.
This Official Statement contains, in part, estimates, assumptions and matters of opinion which are not intended as
statements of fact, and no representation is made as to the correctness of such estimates, assumptions or matters
of opinion or as to the likelihood that they will be realized. 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 condition of
the City or other matters described herein since the date hereof.
SALE AND DISTRIBUTION OF THE CERTIFICATES
Underwriting:
(referred to herein as the"Underwriter")have
agreed to purchase the Certificates from the City pursuant to a bond purchase agreement with the City at a price
of plus accrued interest on the Certificates to the date of delivery. The Underwriter's obligation is
to purchase all of the Certificates if any are purchased.
Sale of Refunding Bonds:
Concurrently with the issuance of the Certificates, the City anticipates issuing its Refunding Bonds,Series 1996(the
"Refunding Bonds")pursuant to a separate ordinance(the "Bond Ordinance")and a separate official statement. The
Bonds will be payable from the proceeds of an annual ad valorem tax, levied within the limits prescribed by law,
against property within the City and, as such, the Bonds will be on a parity with the Certificates. See "THE
CERTIFICATES - Source of Payment" herein.
Prices and Marketability:
The delivery of the Certificates is conditioned upon the receipt by the City of a certificate executed and delivered
by the Underwriter on or before the date of delivery of the Certificates stating the prices at which a substantial
amount of the Certificates of each maturity have been sold to the public. For this purpose, the term "public" shall
not include any person who is a certificate house, broker or similar person acting in the capacity of purchaser or
wholesaler. The City has no control over trading of the Certificates after a bona fide offering of the Certificates
is made by the Underwriter at the yields specified on the cover page. Information concerning reoffering yields or
prices is the responsibility of the Underwriter.
3
The prices and other terms respecting the offering and sale of the Certificates may be changed from time to time
by the Underwriter after the Certificates are released for sale,and the Certificates may be offered and sold at prices
other than the initial offering price,including sales to dealers who may sell the Certificates into investment accounts.
IN CONNECTION WITH THE OFFERING OF THE CERTIFICATES, THE UNDERWRITER MAY OVER-
ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
CERTIFICATES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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
Certifica's have not been registered or qualified under the Securities Act of Texas in reliance upon various
exempticns 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 in such jurisdictions.
Municipal Bond Insurance:
- COPY TO COME -
4
Municipal Bond Ratings:
Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's Ratings Group ("Standard&Poor's") have
assigned their municipal bond ratings of"Aaa" and "AAA",respectively, to the Certificates with the understanding
that upon delivery of the Certificates, a guaranty insurance policy insuring the timely payment of the principal of
and interest on the Certificates will be issued by . The ratings of the Certificates
reflects only the views of such companies at the time the ratings are given, 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 downward or withdrawn entirely by Moody's and Standard & Poor's or
of either of them, if, in the judgment of Moody's and Standard & Poor's, circumstances so warrant. Any such
downward revision or withdrawal of the ratings may have an adverse effect on the market price of the Certificates.
5
OFFICIAL STATEMENT SUMMARY
The following material is a summary of certain information contained herein and is qualified in its entirety by the
detailed information and financial statements appearing elsewhere in this Official Statement.The reader should refer
particularly to sections that are indicated for more complete information.
GENERAL
The Issuer . . . . . . . . . . . . . . . . . . . . . . . The City of Beaumont, Texas (the "City")is a home rule city
of the State of Texas located within Jefferson County, Texas.
The Certificates . . . . . . . . . . . . . . . . . . . $14,500,000 Combination Tax and Revenue Certificates of
Obligation, Series 1996, are dated January 1, 1996, and
mature March 1, 1997 through and including March 1, 2014.
See "THE CERTIFICATES-D_:,cription of the Certificates."
Payment of Interest . . . . . . . . . . . . . . . . . Interest on the Certificates accrues from January 1, 1996, and
is payable September 1, 1996, and on each March 1 and
September 1 thereafter until maturity or prior redemption.
Other Characteristics . . . . . . . . . . . . . . . . The Certificates are issued in fully registered form. The
Certificates will be issued in denominations of $5,000 of
principal amount or integral multiples thereof. The
Certificates are subject to redemption prior to their scheduled
maturities on March 1, 2006, or any date thereafter, at the
option of the City. See "THE CERTIFICATES -
Redemption."
Source of Payment . . . . . . . . . . . . . . . . . Principal of and interest on the Certificates are payable 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 will be further payable
from a junior and subordinate pledge of the net revenues of
the City's waterworks system but only to the extent of and in
an amount not in excess of $10,000. See "THE
CERTIFICATES - Source of Payment."
Use of Proceeds . . . . . . . . . . . . . . . . . . . Proceeds of the Certificates will be used to provide funds for
streets, drainage and waterworks projects. In addition, the
proceeds will be used to pay the costs of issuance of the
Certificates. See "THE CERTIFICATES -Sources and Uses
of Funds."
Ratings . . . . . . . . . . . . . . . . . . . . . . . . Moody's Investors Service, Inc. (_) . . . . . . . . . .
Standard&Poor's Ratings Group (_) . . . . . . . . . .
Payment Record . . . . . . . . . . . . . . . . . . . The City has never defaulted on the timely payment of
principal of and interest on its obligations.
6
SELECTED FINANCIAL INFORMATION
(Unaudited)
1995 Certified Assessed Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,311,639,210(a)
(100% of market value as of January 1, 1995)
See "TAX DATA" and "TAXING PROCEDURES."
Direct Debt:
Outstanding Ad Valorem Tax Debt(as of October 1, 1995) . . . . . . . . . . . . . $ 61,681,090(b)
The Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,500,000
The Refunding Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.900,000(c)*
Total Direct Ad Valorem Tax Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 92,081,091
Less: Self-Supported Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,249.900(d)
Total Direct Ad Valorem Tax Supported Debt 76.831,191
Estimated Overlapping Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 33,194.690
Direct Ad Valorem Tax Supported and Estimated Overlapping Debt . . . . . . . . . . . $ 110,025,881
Estimated Interest&Sinking Fund Balance (as of October 1, 1995) . . . . . . . . . . . $ 5,765,521
Ratio of Direct Ad Valorem
Tax Debt to................: 1995 Certified Assessed Valuation($3,311,639,210) 2.78%
1995 Estimated Population(118,323) . . . . . . . . $778
Ratio of Direct Ad Valorem Tax
Supported Debt to........: 1995 Certified Assessed Valuation($3,311,639,210) 2.32%
1995 Estimated Population(118,323) . . . . . . . . $649
Ratio of Direct Ad Valorem Tax
Supported and Estimated
Overlapping Debt to.....: 1995 Certified Assessed Valuation($3,311,639,210) 3.32%
1995 Estimated Population(118,323) . . . . . . . . $930
(a) Certified by the Jefferson County Appraisal District.
(b) Excludes the Refunded Bonds(as defined below).
(c) Concurrently with the issuance of the Certificates, the City will issue approximately$15,900,000 Refunding
Bonds, Series 1996 (the "Refunding Bonds") the proceeds of which will be applied to advance refund
$2,615,000*Combination Tax and Revenue Certificates of Obligation, Series 1990 and $12,050,000*Public
Improvement Bonds, Series 1992 (the "Refunded Bonds").
(d) Certain tax bonds of the City are being paid from revenues other than ad valorem taxes. See "DEBT
STATEMENT - Revenue Support of Ad Valorem Tax Debt."
* Preliminary amount, subject to change. 7
I I 1
THE CERTIFICATES
Description of the Certificates:
The Certificates are dated January 1, 1996, bear interest from such date at the stated interest rates indicated under
"MATURITY SCHEDULE", which interest is payable September 1, 1996, and each March 1 and September 1
thereafter until maturity or prior redemption. The Certificates are issued in fully registered form in denominations
of$5,000 each or any multiple thereof. Principal of and interest on the Certificates are payable at the principal
corporate trust office of Bank One, Texas, N.A., Houston, Texas. Interest on the Certificates will be payable by
check, dated as of the interest payment date, and mailed by the Registrar to registered owners as shown on the
records of the Registrar. At the request of any registered owner of$1,000,000 or more in aggregate principal
amount of Certificates, the Registrar shall pay interest thereon by wire transfer in immediately available funds to
the account designated by such owner to the Registrar in writing at least five days before the Record Date for such
payment.
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.
Source of Payment:
The Certificates are payable as to principal and interest 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 will be further payable from a junior and subordinate pledge of the net revenues of the City's
waterworks system but only to the extent of and in an amount not in excess of$10,000.00. In the Ordinance (as
hereinafter defined),the City covenants that while the Certificates are outstanding,it will levy,assess and undertake
to collect such tax. See also "Remedies in the Event of Default."
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")which was adopted by the City Council on January 23, 1996,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 Secretary protesting the issuance of such certificates prior to
their issuance.
8
Redemption•
The Certificates are subject to redemption prior to scheduled maturities on March 1, 2006 or any date thereafter
at the option of the City. Upon redemption the Certificates will be payable at a price equal to the principal amount
thereof plus accrued interest to the date of redemption.
Use of Proceeds:
Proceeds of the Certificates are being used to provide funds for streets, drainage and waterworks projects. 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 and Co-Bond Counsel's fees, both of which are contingent upon the sale of the Certificates, as well
as other administrative costs incurred.
Issuance of Refunding Bonds:
Contemporaneous with issuance of the Certificates, the City is issuing approximately $15,900,000 in the City's
Refunding Bonds, Series 1996 (the "Refunding Bonds"). These Bonds will be issued to refund a portion of the
City's$2,615,000 Combination Tax and Revenue Certificates of Obligation, Series 1990, and$12,050,000 Public
Improvement Bonds, Series 1992 (the "Refunded Bonds").
Legal Investments in Texas:
Pursuant to Section 9 of the Bond Procedures Act of 1981, as amended, Texas Revised Civil Statutes Annotated
Article 717k-6(the "Procedures Act"), all certificates issued by the City constitute negotiable instruments, and are
investment securities governed by Chapter 8, Texas Uniform Commercial Code,notwithstanding any provisions of
law or court decision to the contrary, and are legal and authorized investments for banks, savings banks, trust
companies, building and loan associations, savings and loan associations, insurance companies, fiduciaries, and
trustees, and for sinking fund of cities, towns, villages, school districts, and other political subdivisions or public
agencies of the State of Texas. The Procedures Act further provides that the Certificates are eligible to secure
deposits of public funds of the state, its agencies and political subdivisions,and are legal security for those deposits
to the extent of their market value. No review by the City has been made of the laws in other states to determine
whether the Certificates are legal investments for various institutions 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. Other than the limited pledge of waterworks and sewer system revenues, the
Ordinance does not provide any other security for the payment of the Certificates, or any express remedies in the
event of default,and 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 Certificateholder.
Although a Certificateholder 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 Certificateholder could,in the event of default,ask a court for a writ of 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.
9
f,
PRO-FORMA DEBT SERVICE SCHEDULE
The following sets forth the principal and interest on the City's outstanding debt, the Certificates and the Refunding Bonds.
Less:
Total Total Revenue Total
Fiscal Outstanding Less: --------------------Plus-------------------- New Supported Ad Valorem
Year Ad Valorem Refunded The Refunding Bonds The Certificates Ad Valorem Ad Valorem Tax Supported
Ending Tax Debt Bonds Principal (a) Interest Principal (a) Interest Tax Debt Tax Debt(c) Debt
1996 $11,633,392 $ 974,653 $ 553,917 $ 591,117 $ 11,803,772 $ 1,922,541 $ 9,881,231
1997 11,644,696 1,900,816 830,875 $ 440,000 875,125 11,889,880 2,402,947 9,486,933
1998 11,382,500 1,900,690 830,875 470,000 851,238 11,633,923 2,140,928 9,492,995
1999 10,935,294 1,895,656 830,875 500,000 825,775 11,196,288 1,710,494 9,485,794
2000 10,950,416 1,914,581 830,875 535,000 798,606 11,200,316 1,700,969 9,499,347
2001 10,191,025 1,152,875 830,875 560,000 769,863 11,198,888 1,701,661 9,497,227
2002 10,185,729 1,138,156 830,875 245,000 748,731 10,872,179 1,371,898 9,500,281
2003 10,191,816 1,149,844 830,875 255,000 735,606 10,863,453 1,362,739 9,500,714
2004 10,200,323 1,137,975 830,875 255,000 722,219 10,870,442 1,368,815 9,501,627
2005 10,220,570 1,172,475 830,875 410,000 704,763 10,993,733 1,494,683 9,499,050
2006 2,658,750 1,927,875 $5,520,000 690,115 1,105,000 663,613 8,709,603 793,125 7,916,478
2007 2,536,125 1,831,500 5,840,000 397,515 1,140,000 601,875 8,684,015 765,625 7,918,390
2008 2,413,188 1,735,313 1,530,000 205,130 1,175,000 538,213 4,126,218 738,125 3,388,093
2009 2,291,250 1,640,625 1,515,000 123,680 1,215,000 472,488 3,976,793 710,625 3,266,168
2010 2,169,750 1,546,875 1,505,000 41,388 1,355,000 401,813 3,926,075 780,375 3,145,700
2011 594,813 1,450,000 322,863 2,367,676 795,188 1,572,488
2012 566,500 1,545,000 236,756 2,348,256 806,375 1,541,881
2013 537,875 1,645,000 145,044 2,327,919 814,688 1,513,231
2014 511,750 1,700,000 48.875 2,260,625 771.563 1,489,062
$121,815,762 23 019 909 $15,910,000 12AL9,,620 16 000 000 11 054 583 $151,250,054 $24,153,364 $127,096,690
Estimated Average Annual Ad Valorem Tax Supported Debt Service Requirement (1996/2014) . . . . . . . . . . . . . . . . . $ 6,689,300
Estimated Average Annual Ad Valorem Tax Debt Service Requirement(1996/2014) . . . . . . . . . . . . . . . . . . . . . . . . $ 7,960,529
Estimated Maximum Annual Ad Valorem Tax Debt Service Requirement(1997) . . . . . . . . . . . . . . . . . . . . . . . . . . $11,889,880
(a) Preliminary amount, subject to change.
(b) Interest estimated at various rates per maturity.
(c) Debt supported by revenues other than ad valorem tax revenues.
10
PRO-FORMA DEBT SERVICE SCHEDULE
The following sets forth the principal and interest on the City's outstanding debt, the Certificates and the Refunding Bonds.
° Less:
"s Tom Total Revenue Total
Fiscal `"°Qutstanding Less: --------------------Plus -------------------- New Supported Ad Valorem
Year Ad°Valorem Refunded The Refunding Bonds The Certificates Ad Valorem Ad Valorem Tax Supported
Endine Tax Debt Bonds Principal (a) Interest Principal (a) Interest Tax Debt Tax Debt(c) Debt
1996 $11,633,392 $' 9Z4,653 $ 553,320 $ 538,917 $ 11,750,976 $ 1,870,041 $ 9,880,935
1997 11,644,696 1,900;816 829,980 $ 170,000 803,913 11,547,773 2,061,284 9,486,489
1998 11,382,500 1,900,690'' 829,980 185,000 794,594 11,291,384 1,798,834 9,492,550
1999 10,935,294 1,895,656 829,980 200,000 784,488 10,854,106 1,368,756 9,485,349
2000 10,950,416 1,914,581 $ 10,000 829,758 210,000 773,725 10,859,318 1,360,375 9,498,943
2001 10,191,025 1,152,875 15,000 829,190 215,000 762,569 10,859,909 1,362,999 9,496,910
2002 10,185,729 1,138,156 15,000 828,493 225,000 751,019 10,867,084 1,371,898 9,495,186
2003 10,191,816 1,149,844 20,000 827;660 230,000 739,075 10,858,707 1,362,739 9,495,969
2004 10,200,323 1,137,975 20,000 826,690 230,000 727,000 10,866,038 1,368,815 9,497,223
2005 10,220,570 1,172,475 25,000 825,575 385,000 710,856 10,994,526 1,494,683 9,499,843
2006 2,658,750 1,927,875 5,465,000 685,593 1,115,000 670,088 8,666,555 793,125 7,873,430
2007 2,536,125 1,831,500 5,780,000 395,955 1,150,000 607,800 8,638,380 765,625 7,872,755
2008 2,413,188 1,735,313 1,530,000 205,130 1,190,000 543,450 4,146,455 738,125 3,408,330
2009 2,291,250 1,640,625 1,515,000 123,680 1,225,000 477,038 3,991,343 710,625 3,280,718
2010 2,169,750 1,546,875 1,505,000 41,388 1,370,000 405,675 30 944,938 780,375 3,164,563
2011 594,813 1,465,000 325,881 2;385,694 795,188 1,590,506
2012 566,500 1,560,000 238,913 2,365;413 806,375 1,559,038
2013 537,875 1,660,000 146,338 2,344,21'3,. 814,688 1,529,525
2014 511.750 1,715,000 49,306 2,276,056 - 771,563 1.504,493
S 121,815,762 $23,019,909 $15,9 00 000 9 462 372 14 500 000 10 850 642 149 508 868 22'3,96 113 $127,112,755
Estimated Average Annual Ad Valorem Tax Supported Debt Service Requirement(1996/2014) $ 6,690,145 tea=
Estimated Average Annual Ad Valorem Tax Debt Service Requirements (1996/2014) . . . . . $ 7,868,888
Estimated Maximum Annual Ad Valorem Tax Debt Service Requirement (1996) . . . . . . . . $11,750,976
(a) Preliminary amount, subject to change.
(b) Interest estimated at various rates per maturity.
(c) Debt supported by revenues other than ad valorem tax revenues.
10
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 certificates and bonds the City has also issued revenue bonds and has incurred contractual
and other indebtedness and liabilities which are not included below. 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•
1995 Certified Assessed Valuation(100% of Estimated Market Value) . . . . . . . . . . . . $3,311,639,210(a)
Direct Debt
Outstanding Ad Valorem Tax Debt(as of October 1, 1995) . . . . . . . . . . . . . . . $ 61,681,091(b)
The certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,500,000
The Refunding Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,900,000(c)*
Total Direct Ad Valorem Tax Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 92,081,091
Less Self-Supporting Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,249.900(d)
Total Direct Ad Valorem Tax Supported Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 76,831,191
Estimated Interest&Sinking Fund Balance (as of October 1, 1995) . . . . . . . . . . . . . $ 5,765,521
(a) Certified by the Jefferson County Appraisal District.
(b) Excludes the Refunded Bonds (as defined below). Preliminary amount, subject to change.
(c) Concurrently with the issuance of the Certificates, the City will issue approximately $15,900,000 Refunding
Bonds, Series 1996 which will be applied to advance refund $2,615,000 Combination Tax and Revenue
Certificates of Obligation,Series 1990 and$12,050,000 Public Improvement Bonds, Series 1992(collectively,
the "Refunded Bonds").
(d) Certain tax obligations of the City being paid from revenues other than ad valorem taxes. See "DEBT
STATEMENT -Revenue Support of Ad Valorem Tax Debt."
Revenue Support of Ad Valorem Tax Debt:
Certair cax bonds and certificates of obligation of the City are being paid from revenues other than ad valorem
taxes. Currently the City has a total of$8,749,900 of such bonds and certificates of obligation which are presently
outstanding. A portion of the Certificates ($6,500,000) are being issued for waterworks projects and will be
supported by revenues other than ad valorem taxes. The following is a schedule of revenues used by the City to
pay debt service on certain of its tax obligations in the years 1991 through 1995. 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 paid directly from these funds.
1995 1994 1993 1992 1991
Transfer from Street Maintenance
to Debt Service Fund $ (a) (a) $ 750,000 $ 746,775 $ 412,038
Debt Service paid from
Enterprise Funds $1,605,394 $1,606,231 $2,168,985 $2,183,398 $2,063,748
(a) Debt service previously paid from the Street Maintenance Fund was paid directly from the Debt Service Fund.
* Preliminary amount, subject to change. 11
n
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 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.
Overlapping_
Taxing Jurisdiction Debt as of 10-1-95 Percent Amount
Beaumont Independent School District $16,950,000 61.83% $ 10,480,185
Jefferson County 25,075,000 31.14 7,808,355
Jefferson County Drainage District No. 6 5,319,983 80.47 4,280,990
Port of Beaumont Navigation District 15,600,000 68.11 10,625,160
TOTAL ESTIMATED OVERLAPPING DEBT $ 33,194,690
The City 76,831,191(a)
TOTAL DIRECT AD VALOREM TAX SUPPORTED
AND ESTIMATED OVERLAPPING DEBT $110,025,881
(a) Direct Ad Valorem Tax Supported Debt. Includes the Certificates and the Refunding Bonds and excludes the
Refunded Bonds. Preliminary amount, subject to change.
Debt Ratios:
Direct Direct Tax
Ad Valorem Supported and
Ad Valorem Tax Supported Overlapping
Tax Debt Debt Debt
1995 Certified Assessed Valuation ($3,311,639,210) . . . . . . 2.78% 2.32% 3.32%
Per Capita(118,323) . . . . . . . . . . . . . . . . . . . . . . . . . $778 $649 $930
Short Term Debt:
Under Article VII of the City Charter, the City is empowered to issue tax anticipation notes. As of October 1,
1995, 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 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.
12
Authority'for Ad Valorem Taxation:
Following is a discussion of ad valorem taxation under Texas law. Recently effective changes to the law,especially
the Texas Property Code(the "Property 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 Property
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. 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 City presently exempts from taxation up to$17,500
assessed valuation on residential homesteads to persons over 65 years of age. Such homestead and disabled veterans
exemptions from the 1995 tax roll approximate $161,794,790.
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 rolls. The total loss in value due to grants of
agricultural use and open-space land appraisal from the 1995 tax roll approximates $19,906,820.
The City may enter into tax abatement agreements to encourage economic develops?_at. Under such agreements,
a property owner agrees to construct certain improvements on its property. The City in turn agrees not to levy a
tax on all or part of the increased value attributable to the improvements until the expiration of the agreement. Such
abatement agreement may last for a period of up to 10 years. The estimated value of property in the City that was
subject to tax abatement on January 1, 1995 is $8,126,860. Assessed value figures herein are net of abatements.
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 20% of market value. 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 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
13
,k ..
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 in 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 many
factors, including,but not limited to the condition of the property, 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"). 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 1995 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 September 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 Appraisal District's 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 Property 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.
14
Historical Analysis of Ad Valorem Taxation:
- Collection Ratios -
Tax Rate % Tax Collections
Tax Assessed Per $100 of Adjusted Current Current and Fiscal Year
Year Valuation Assessed Valuation Tax_Levy Year Prior Years Ending 9-30
1985 $2,867,002,595 $0.690 $19,782,318 95.03 98.14 1986
1986 2,868,966,060 .690 19,795,866 95.96 98.23 1987
1987 2,716,566,740 .690 18,744,311 96.61 100.49 1988
1988 2,736,778,860 .540 14,778,606 (a) 97.17 102.49 1989
1989 2,759,044,690 .540 14,898,841 97.19 100.76 1990
1990 2,790,700,060 .540 15,069,780 97.50 101.90 1991
1991 2,890,352,140 .590 17,053,078 97.11 99.45 1992
1992 2,986,049,120 .620 18,513,505 97.50 99.10 1993
1993 3,180,647,370 .615 19,562,083 98.70 100.60 1994
1994 3,251,615,993 .615 19,997,459 97.19(b) 99.14(b) 1995
1995 3,311,639,210 .615 20,366,602 (c) (c) 1996
(a) Levy reduced due to election of additional 1/2 cent sales tax.
(b) Unaudited.
(c) In process of collection.
-Tax Rate Distribution-
1995 1994 1993 1992 1991 1990
General Fund $0.350 $0.350 $0.350 $0.35 $0.35 $0.31
Interest&
Sinking Fund .265 .265 .265 .27 .24 .21
Capital Project Fund -0- -0- -0- -0- -0- 0.02
Total 0.615 0.615 0.615 0.62 0.59 0.54
- Tax Base Distribution-
Type of Property 1995 Tax Roll % 1994 Tax Roll % 1993 Tax Roll %
Residential $1,882,624,540 53.77% $1,862,271,680 54-11% $1,828,689,790 53.27%
Commercial 1,073,248,630 30.65 1,047,937,273 30.45 1,043,254,680 30.39
Industrial 214,419,720 6.12 202,187,980 5.87 225,947,420 6.58
Utilities 198,175,210 5.66 196,268,360 5.70 199,523,300 5.81
Vacant Lots/Tracts/Acreage 125,621,030 3.59 125,837,650 3.66 128,412,300 3.74
Minerals 4,798,360 .13 4,546,530 .13 4,488,620 .13
Other Personal 2,580,190 .07 2,523,200 .07 2.329,310 .07
Gross Assessed Value $3,501,467,680 $3,441,572,673 $3,432,645,420
Less: Exemptions 189,828.470 189,956.680 187.492.510
Net Assessed Value $3,311,639,210 13,251,6151993 3,245,152,910
15
-Principal Taxpayers -
1995 1994 1993
Taxpayer Type of Property Tax Roll Tax Roll Tax Roll
Gulf States Utilities Co. Electric Utility $ 94,911,570 $ 94,013,730 $ 96,664,630
Southwestern Bell Telephone Co. Telephone Utility 68,114,650 70,498,560 71,482,610
Clark Refining&Marketing Inc. (a) Chemical Properties 42,233,000 (b) (b)
Amoco Oil Company Chemical Properties 30,132,600 34,614,290 33,664,381
Parkdale Mall Shopping Center 26,310,060 28,441,890 28,456,650
Betz Laboratories Chemical Properties 21,320,120 22,870,060 22,674,360
Sabine Gas Trans. Co. Pipeline Company 19,249,500 26,332,800 26,021,000
Wal-Mart Stores Inc. Wholesale Outlet 18,017,470 17,426,270 (b)
Phelan A. M. &Harry Phelan Real Properties 17,445,770 17,217,520 15,186,560
Beaumont Regional Medical Center Hospital 15,818,060 (b) (b)
Chevron USA Inc. (a) Chemical Properties (b) 24,223,450 37,736,700
Winne Pipeline Co. Pipeline Company (b) 13,168,440 20,312,040
Mobil Oil Corp. Chemical Properties (b) (b) 11.592,990
Total Top Ten Taxpayers Assessed Valuation $353 348.807.100 $363.791.920
% of Assessed Valuation to Respective Tax Roll 10.68% 10.97% 10.75%
(a) During the first quarter of 1995 Chevron USA sold a substantial portion of its chemical properties to Clark
Refining.
(b) Not a principal taxpayer in that tax year.
- Tax Adequacy -
Estimated Average Annual Ad Valorem Tax Supported
Debt Service Requirements (1996/2014)(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,690,145
Tax Rate of$0.213 per $100 assessed valuation against
the 1995 Assessed Valuation, at 95% collection, produces . . . . . . . . . . . . . . . . . . . . . . $ 6,701,102
Estimated Average Annual Debt Service Requirements (1996/2014) . . . . . . . . . . . . . . . . . $ 7,868,145
Tax Rate of$0.251 per $100 assessed valuation against
the 1994 Assessed Valuation, at 95% collection, produces . . . . . . . . . . . . . . . . . . . . . . $ 7,896,604
Estimated Maximum Annual Debt Service Requirements (in the year 1996) . . . . . . . . . . . . . $11,750,976
Tax Rate of$0.374 per $100 assessed valuation against
the 1995 Assessed Valuation, at 9545 collection, produces . . . . . . . . . . . . . . . . . . . . . . $11,766,254
(a) Ad Valorem Tax Supported 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.
16
Set forth below is an estimation of ad valorem taxes levied on a $75,000 single-family residency 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 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.
1995 Tax Estimated
Taxing Jurisdictions Rate/ 100 1995 Tax Bill
The City $0.615000 $ 461.25
Beaumont Independent School District 1.417600 1,063.20
Jefferson County .370000 277.50
Jefferson County Drainage District No. 6 .196898 147.67
Port of Beaumont Navigation District .019000 14.25
Port of Beaumont .073970 55.48
Estimated Total 1995 Tax Bill 2.692468 2 019.52
Sales Tax: --
- Authority-
The City has adopted the provisions of Section 321.001 2L M.. of the Texas Tax Code, 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.
- Sales Tax Option-
In 1986 the Texas Legislature passed a statute giving Texas cities the option of assessing a 1/2 cent sales tax in
addition to the 1% sales tax authorized under Section 321.001 of the Texas Tax Code that is discussed above. The
sales tax must be approved by a majority of a 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 the one-half cent sales tax.
- 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 Lew
1985 $ 9,671,021 (1984) $0.374 47.92%
1986 9,758,156 (1985) .341 49.41
1987 9,442,775 (1986) .329 47.70
1988 12,972,384 (a) (1987) .478 69.21
1989 15,928,261 (a) (1988) .582 107.78
1990 17,405,117 (a) (1989) .631 116.82
1991 18,415,116 (a) (1990) .660 122.20
1992 20,391,037 (a) (1991) .682 109.95
1993 20,185,256 (a) (1992) .676 109.03
1994 20,914,296 (a) (1993) .656 106.91
1995 21,276,506 (a) (1994) .654 106.40
(a) Includes 1/2 cent sales tax increase
17
Industrial District Contracts:
The City has created, within its extraterritorial jurisdiction,but outside of the City limits, Industrial Districts and
has entered into contracts with the industries within such districts. Contracts with the industries listed below were
negotiated in 1995 and will expire in 2001. The contracts specify payments to be made in lieu of ad valorem taxes
and protect the industries from annexation by the City during the term of the respective contracts. In fiscal year
1995, revenues from the Industrial District Contracts increased by 18.75% from the previous fiscal year due to
terms of the new contracts and are expected to increase an average of 7.5% each year throughout the term of the
contracts. Such revenues are not pledged to the payment of the Bonds.
Industries with contracts with the City and payments are as follows:
Ine<.istrial District 1996(a) 1995 1994 1993 1992
Mobil Oil 'Corporation . . . . . . . . . . . . $5,755,000 $5,231,698 $4,545,543 $4,862,666 $5,396,197
Texas Gulf Sulphur Co. . . . . . . . . . . . -0- (a) 6,837 7,165 18,561
P. D. Glycol (Occidental Petroleum Corp.) 478,000 450,573 435,266 449,488 526,577
Beaumont Methanol Corp. . . . . . . . . . . 418,000 393,600 250,000 -0- -0-
ICI Acrylics . . . . . . . . . . . . . . . . . . 394,000 358,206 -0- -0- -0-
E. I. duPont de Nemours & Co. . . . . . . 1,130,000 1,028,299 924,197 1,320,112 1,191,746
Gulf States Utilities Co. . . . . . . . . . . . 62,000 58,786 65,172 66,066 63,390
Goodyear Tire&Rubber Co. . . . . . . . . 663,000 625,000 618,768 603,701 519,400
Olin Corp. . . . . . . . . . . . . . . . . . . . 53,000 50,003 46,052 49,819 49,468
Atochem North America, Inc.. . . . . . . . 156,000 141,946 126,155 46,845 104,034
Texas Eastern Transmission Corp. . . . . . 16,000 15,239 16,156 16,686 15,950
Trinity Industries . . . . . . . . . . . . . . . 103.000 97,205 -0- -0- -0-
Total . . . . . . . . . . . . . . . . . . . . 9 228 000 8 450 555 7 034 146 7 422 550 7 885 323
(a) Budgeted payments.
Total rev rue to the City from these contracts is summarized and compared to ad valorem taxation in the table
below:
Revenues from
Industrial Ad Valorem Taxation Comparisons
Fiscal Year District Equivalent Tax Rate % of Actual
Ended 9-30 Contracts Tax Year Equivalent Tax Levy
1985 $5,735,193 (1984) $0.2220 28.42%
1986 6,196,818 (1985) .2160 31.38
1987 6,609,128 (1986) .2300 33.39
1988 6,628,188 (1987) .2440 35.36
1989 6,552,245 (1988) .2390 44.34
1990 6,942,792 (1989) .2520 46.60
1991 7,196,213 (1990) .2580 47.75
1992 7,885,323 (1991) .2640 42.52
1993 7,422,550 (1992) .2490 40.09
1994 7,034,146 (1993) .2212 35.96
1995 8,450,555 (1994) .2413 42.26
18
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 was approximately $320,000 during 1995. The
zone was set up with a life of 21 years. The taxable assessed valuation of property within the zone was
approximately$5,592,230 or.2030 of the taxable assessed valuation of the City at the time of determination. The
taxable assessed calculation of property within the zone was$3,565,270 or a.11% of the taxable assessed valuation
of the City at July 14, 1995.
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 and a limited pledge of the net revenues of the City's waterworks system as provided
in the Ordinance, are pledged to pay principal and interest on the Certificates.
Fiscal Year Ended September 30
1995(x) 1994 1993 1992 1991 1990
REVENUES
Property Taxes $11,382,889 $11,373,924 $10,432,349 $10,200,928 $ 9,131,119 $ 8,797,516
Gross Receipts Tax 9,250,416 9,247,949 9,144,328 8,639,799 8,440,117 7,929,209
Sales and Use Tax 21,559,087 20,914,296 20,185,256 20,391,037 18,415,116 17,405,117
Industrial Payments 8,450,555 7,034,147 7,422,551 7,885,323 7,196,213 6,942,792
Licenses and Permits 521,024 489,107 475,874 498,589 488,166 430,602
Charges for Services 1,450,960 1,411,974 1,379,681 1,242,337 1,118,261 1,121,040
Fines & Forfeits 1,739,411 1,469,868 1,326,540 1,349,857 1,322,622 1,272,498
Recreational Activities 669,922 670,897 685,992 751,217 735,435 687,585
Intergovernmental 21,390 24,280 118,077 625,141 643,186 28,652
Interest 610,043 174,590 135,770 195,686 157,954 268,762
Miscellaneous 707,388 394,829 829,191 1.444,861 519.687 367.726
Total Revenues 56 363 085 53 205 861 52 135 609 53 224 775 48 167 876 45 251 499
EXPENDITURES
General Government
Executive $ 2,066,187 $ 2,027,438 $ 1,935,898 $ 1,875,759 $ 1,795,562 $ 1,720,435
Central Services 4,572,986 4,450,431 3,553,136 2,505,098 2,009,466 897,653
Administrative
Services 2,145,273 2,141,675 1,992,363 2,231,620 2,467,278 3,343,501
Finance 1,045,161 989,700 966,449(b) -
Police 15,553,421 14,931,842 14,258,518 14,443,078 13,256,264 12,580,758
Fire 11,719,638 11,352,192 11,006,344 10,723,554 9,913,928 9,595,236
Public Safety 1,945,342 1,783,715 1,729,126 2,669,770 2,456,467 2,304,950
Health 1,310,042 1,379,162 1,199,258 1,716,061 1,669,768 1,100,838
Public Works 7,848,058 7,996,189 8,252,370 8,844,037 8,359,432 8,025,451
Community Services 4,594,811 4,327,413 4,585,331 4,201,474 4,032,493 4,222,470
Non-Departmental 644.407 840.272 713,758 1,151,743 775.435 1.240,423
Total $53,445,326 52 220 029 $50,192,551 $50,362,194 46 736 093 $45,031,715
(a) Unaudited year-end figures.
(b) Restated due to change in accounting entity.
19
General Fund and Debt Service Fund Balance for the Past Six Fiscal Years:
Fiscal Year Ended September 30
1995(a) 1994 1993 1992 1991 1990
General Fund $7,497,198 $5,983,439(b)$6,282,570 $4,465,868 $4,601,339 $3,977,198
Debt Service Fund $5,765,521 $3,756,497 $3,622,257 $3,423,739 $3,525,115 $3,440,490
(a) Unaudited year-end fund balances.
(b) Includes a prior period adjustment of$413,373.
Financial Statements:
A copy of the City's Financial Statements for the fiscal year ended September 30, 1995, 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 City Council under
provisions of the "Charter of the City of Beaumont" (the "Charter") approved by the electorate December 6, 1947,
and amended in 1952, 1972, 1983 and 1986. The 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 serve two-
year terms. The Mayor is entitled to vote on all matters before the Council, but has no power to veto Council
action. Members of the Council are described below:
Council Members Position Term Expires Occupation
David W. Moore Mayor May 1996 Marketing Executive/
Xerox Corporation
Becky Ames Mayor Pro Tern and May 1996 Director of Sales and
Councilmember at Large Mi-keting, Hilton Hotel
Lulu L. Smith, M.D. Councilmember May 1997 Physician
Ward 1 Stat Care
Guy N. Goodson Councilmember May 1997 Attorney at Law,
Ward 2 Bernsen, Jamail &
Goodson, L.L.P.
John K. Davis Councilmember May 1997 Insurance Agent/
Ward 3 Metropolitan Life
Bobbie J. Patterson Councilmember May 1997 Coordinator of Adult Services,
South Jefferson
Ward 4 Center for Children
and Adults
Andrew P. Cokinos Councilmember at Large May 1996 Investments/Real Estate
20
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 -Ray A. Riley- Mr. Riley is a graduate of Ouachita Baptist University(1961) and received a
Master's Degree in Public Administration from Kansas University (1967). Mr. Riley has served as City
Manager of Olathe, Kansas (1968-1973), Fort Smith, Arkansas (1973-1978), and Beaumont, Texas (1978-
1983). He was the executive vice-president of T.E. Moor & Company, an insurance company located in
Beaumont, Texas, from 1983-1989 until returning as Beaumont's City Manager in February of 1989.
Finance Officer-Beverly Hodges-Ms. Hodges is a graduate of Nicholls State University(1982)and received
a Master's in Public Administration from Louisiana State University (1994). She is a C.P.A. and has been
the City's Finance Officer since September of 1994. Prior to that she served as Treasurer (1994-1992)and
Business Manager (1992-1988) for the Iberville Parish Police Jury, Louisiana. She is a member of the
American Institute of Certified Public Accountants, the Texas Society of Certified Public Accountants and the
Government Finance Officers Association.
Treasurer - Kandy Daniel - Ms. Daniel is a graduate of Lamar University (1980). She has a degree in
Accounting with fourteen years experience in municipal finance. Ms. Daniel has been employed by the City
of Beaumont since 1981 and has held the position of Treasurer since October 1988. She is a member of the
Government Finance Officers Association and is Past President of the Government Treasurers Organization
of Texas.
City Attorney - Lane Nichols - Mr. 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 and past President of the Texas City Attorneys Association.
21
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:
Bond Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Orgain, Bell &Tucker, L.L.P.
Beaumont, Texas
Co-Bond Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Heard, Goggan, Blair&Williams
Beaumont, Texas
Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cook Shaver Parker &Williams
Beaumont, Texas
Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rauscher Pierce Refsnes, Inc.
_- Houston, Texas
LITIGATION
The City is a defendant in various lawsuits and is aware of pending claims arising in the ordinary course of its
municipal and enterprise activities, certain of which seek substantial damages. That litigation includes lawsuits
claiming damages which allege that the City caused personal injuries and wrongful deaths, lawsuits and claims
alleging discriminatory hiring and promotional practices and certain civil rights violations;and various other liability
claims. The status of such litigation ranges from an early discovery stage to various levels of appeal of judgments
both for and against the City.
The City is also aware of claims based upon alleged personal injuries, property damages and violations of civil
rights laws or federal environmental laws or regulations which have not been asserted in litigation.
The City intends to defend itself vigorously against the suits and claims; however, no prediction can be made, as
of the date hereof, with respect to the liability of the City for such claims or the final outcome of such suits.
In the opinion of the City, it is improbable that the lawsuits now outstanding and the claims now pending against
the City could become final in a time and manner so as to have a material impact upon the City or its ability to
repay the Certificates.
LEGISLATION AND REGULATION
Affecting the City's Operations:
In November of 1990, the City was issued a five year permit by the Environmental Protection Agency("EPA")for
operation of the City's wastewater treatment and discharge system. The City is also required to obtain an operating
permit from the Texas Natural Resource Conservation Commission (the "TNRCC"), formerly the Texas Water
Commission and the City obtained this permit in July of 1992. In April of 1992, the City issued $20,000,000 in
revenue bonds to finance the construction of a Wastewater Wetland Treatment System to comply with its 1990
permit issued by the EPA. This project was completed in September of 1993 at a cost of$13,800,000. The balance
of the 1992 bond proceeds are being used for rehabilitation of existing sewer lines. This work started in July of
1995 and should be completed by the end of 1996.
22
Recent revisions to the Clean Water Act will require the City to identify its storm sewer system and to eliminate
impermissible connections to that system. Proposed implementing regulations are expected to mandate compliance
over the next five years. Based upon current estimates,the City projects its cost of compliance with these revisions
to be approximately$800,000. It is expected that City revenues will be sufficient to cover this cost so long as there
is no significant increase in actual compliance cost.
In addition, the EPA has recently issued regulations (commonly known as National Pollution & Discharge
Elimination System) that will require the City to obtain discharge permits for the City's storm sewer system,
landfill, airport facilities and transit facilities. As required by law and applicable EPA regulations, the City
submitted its application for these permits in May of 1993. The City has spent approximately $800,000 in
consulting fees to obtain these permits. The City paid 1/2 of this cost and the other 1/2 was paid by Jefferson
County Drainage District No.6. The City's application for the discharge permits is pending. The City has received
a draft permit and the City expects to receive the permits during 1996. Upon obtaining the permits, the City
anticipates it will have to spend approximately$250,000 a year to comply with the requirements of the permits.
In this connection, the permits will require the City to periodically take storm water samples at up to 200 locations.
If the samples reveal an unacceptable level of pollutants, the City may be required to purify the storm water or it
may be required to take action to require the local property owner to purify the storm water. It is not possible to
predict what costs the City may incur if it is required to purify the storm water and whether the City would have
to borrow funds for such purpose.
For the grant year beginning September 1, 1995,the City received from the Federal Transportation Authority annual
grants sufficient to cover one-half of the deficit arising from operation of its transit system. The City expects to
receive the same grant for the grant year beginning September 1, 1996. However, the City has been advised that
beginning September 1, 1996, a lesser amount of funds may be available to cover these operating deficiencies.
City operations are also impacted by numerous federal mandates such as The Americans With Disabilities Act and
regulations controlling the abatement of asbestos and lead paint. The City, to its knowledge, is presently in
compliance with such regulations.
Affecting the Tax Base:
Air quality control measures of the EPA and the TNRCC 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 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 of new large facilities, and (3) increased
transportation controls. Enforcement of such limitations could 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 TNRCC 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 publication in the Federal Register. The area is currently awaiting a
response from the EPA and TNRCC regarding a waiver of the emission requirements or a reclassification of the
Beaumont area from serious to moderate or in compliance.
23
Under the provisions of the Flood Disaster Protection Act of 1973 and accompanying regulations, the Federal
Insurance Administration identified property lying within the 100-year flood plain (areas with a probability of
flooding of 1% or greater each year) and subjected those areas to regulations which restricted 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 may have an adverse effect on the market valuation of the property within the
areas and all of which may adversely effect assessed valuations.
OTHER CONSIDERATIONS
Future Bond Issues:
The City estimates that up to $7,000,000 in additional bonds may be issued prior to fiscal year 1998. If issued,
these bonds will provide funds for additional street and drainage improvements included in the current capital
improvement progrgm.
The City is currently in the process of upgrading and rehabilitating its existing sewer system, which is expected to
take place over a period of approximately 15 years at a cost of$1,500,000 per year. The City expects to pay for
the cost of such upgrade and rehabilitation to the sewer system out of existing revenues from the system. To the
extent that revenues are not sufficient for such purposes, the City may find it necessary to issue revenue bonds.
Other Financing Arrangements:
During fiscal year 1996, the City intends to enter into capital lease agreements totalling approximately $584,000
for the purchase of operating equipment. The lease agreements include non-appropriation funding language;
therefore, the City is not obligated to make lease payments beyond the then current fiscal year. In fiscal year 1996,
the City intends to enter into similar capital lease-purchase agreements totalling an estimated $3,102,000.
Pension Fund•
The City participates in two pension plans for its employees. The Texas Municipal Retirement System(TMRS),
an agent multi-employer defined contribution plan, covers all eligible employees except firefighters. Firefighters
are covered by the Beaumont Firemen's Relief and Retirement Fund, a single-employer defined benefit plan.
Both plans are created under Texas statues which establish each plan's provisions. The City's contributions to the
pension plans are actuarially determined and result in contribution rates that over time remain level as a percent of
payroll.
For fiscal year 1994, the City contributed 14% of covered payroll for police officers and 10% of covered payroll
for other eligible employees (excluding firefighters) to TMRS with those employees contributing 7% and 5%,
respectively. The City's unfunded pension obligation for this plan totals$14,100,000 which will be amortized over
twenty-five years.
Under the Firefighter's Relief and Retirement Fund, the City contributed 11% of covered payroll for firefighters
for fiscal year 1994 while the firefighters contributed 12% in the fiscal year 1994. The City's contributing 11.5%
in the fiscal year 1995 and will contribute 12% of covered payroll for firefighters in the fiscal year 1996 while the
firefighters continue to contribute 12%. The unfunded pension obligation for the firefighters totals$10,300,000,
which will be amortized over thirty years.
24
Collective Bargaining:
Police officers and firemen employed by the City have collective bargaining rights under the Texas Fire and Police
Employees Relations Act. The current labor agreements between the City and its fire union and the City and its
police union will each expire September 30, 1997. Neither the police officers nor the firemen have the right to
strike, but under the labor agreements firemen may submit any issues not resolved by negotiation to binding
arbitration, while the policemen may submit such issues to a factfinder with a referendum election finally
determining all unresolved issues.
Risk Management/Self Insurance:
The City has retained all liability risk which includes,but is not limited to, torts, statutory causes of action,contract
claims and errors and omissions. Transactions related to these risks are recorded in the City's General Liability
Fund. Contributions are made to this fund by all appropriate City funds based on the amounts needed for prior and
current claims and to establish a reserve. The General Liability Fund had current assets as of September 30, 1995,
of$3,494,429. However, there can be no assurance that the City may not experience claims or suffer losses
substantially in excess of the balance in the fund from time to time.
Under the laws of the State of Texas, most claims for torts are limited to$250,000 per person and $500,000 per
incident. As of September 30, 1995, the City estimated the liability'for claims that are probable and that can be
reasonably estimated is approximately$ . Therefore, to the extent that amounts in the General Liability
Fund are not sufficient, 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.
The City has purchased commercial property and casualty insurance on its real property and associated
improvements with a deductible of$75,000 per occurrence. Subject to the deductible, the insurance provides for
payment of replacement cost.
The City retains all risks associated with the employee health program up to$150,000 per person. Risks associated
with workers' compensation are retained by the City up to$500,000 per incident. The City purchases commercial
insurance to cover losses beyond the retained risk. Transactions related to employee health claims, workers'
compensation claims, dental insurance premiums and the administration of these programs are recorded in the
Employee Benefits Fund. Once again, contributions are made to this fund by all appropriate City funds based on
the amounts needed for prior, current and estimated future claims. As of September 30, 1995, the City estimated
its liability for 01-ims incurred in the fund to be $1,598,000. On the same date, the fund had a balance of
$2,186,581.
Landfill Operations:
The City operates a Type 1 Solid Waste Landfill. New regulations issued by EPA which became effective in
October of 1993 imposed more stringent requirements on the Landfill operations. To date, approximately
$4,865,257 in annual operating costs have occurred,and it is expected that operating cost increases of approximately
$600,000 per year will be incurred to comply with these regulations. Such costs are currently being paid and are
expected to be paid in the future out of the revenues realized from disposal fees charged to commercial landfill users
and from monthly fees charged to the City's residential solid waste customers. The City raised disposal fees by
14% and it raised residential collection fees by 7.6% during fiscal year 1994 to cover the additional operating costs
and it does not anticipate a need to raise fees in the near future. Closure and post closure landfill costs are accrued
over the life of the landfill as a long term liability.
In 1994, the City restricted the receipt of waste at its Landfill to waste that is generated within the City limits. This
restriction is intended to preserve the remaining disposal capacity of the Landfill for residents of the City. It is
estimated that this restriction will extend the Landfill's estimated remaining life from 6 to 20 years. The City was
able to implement this restriction because Browning Ferris Industries opened a new Type 1 Landfill in October of
1993 that is located approximate 1/2 mile outside the City limits. While Browning Ferris Industries' Landfill now
serves as a regional landfill, its operation has not had any adverse effect on the City's Landfill.
25
LEGAL MATTERS
Legal Opinions:
The City will furnish the Underwriter a transcript of certain certified proceedings had incident to the authorization
and issuance of the Certificates, including a certified copy of the approving opinion of the Attorney General of the
State of Texas as recorded in the Bond Register of the Comptroller of Public Accounts of the State of Texas, to the
effect that the Certificates are valid and binding obligations of the City under the Constitution and the laws of the
State of Texas. The City will also furnish the approving legal opinions of Orgain, Bell &Tucker, L.L.P., Bond
Counsel, and Heard, Goggan, Blair&Williams, Co-Bond Counsel, to the effect that, based upon an examination
of such transcript, the Certificates are valid and binding special obligations of the City under the Constitution and
laws of the State of Texas and to the effect that interest on the Certificates, including accrued original issue
discount, is excludable from gross income for federal income tax purposes under existing law. See "Tax
Exemption" and "Tax Accounting Treatment of Original Issue Discount Certificates" below. 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 in order to pay the Certificates and interest thereon.
Bond Counsel and Co-Bond Counsel have participated in the preparation of the Official Statement, but such firms
have not undertaken independently to verify any of the information contained therein, except that, in their capacity
as Bond Counsel and Co-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. No person is entitled
to rely upon such firm's limited participation as an assumption of responsibility for, or an expression of any kind
with regard to, the accuracy or completeness of any of the information contained herein. The legal fees to be paid
Bond Counsel and Co-Bond Counsel for services rendered in connection with the issuance of the Certificates are
contingent upon the sale and delivery of the Certificates. The legal opinions will be printed on the definitive
Certificates.
Tax Exemption:
In the opinion of Orgain, Bell &Tucker, L.L.P., Bond Counsel and Heard, Goggan, Blair&Williams, Co-Bond
Counsel, (i)interest on the Certificates, including accrued original issue discount, 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 proceeds 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.
The opinions of Bond Counsel and Co-Bond Counsel 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 and Co-Bond Counsel have 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, including accrued
original issue discount, could become taxable from the date of delivery of the Certificates, regardless of the date
on which the event causing such taxability occurs.
26
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,REI T,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 the $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 corporation's alternative minimum taxable income will be based on its "adjusted current earnings." Because
interest on tax-exempt obligations,such as the Certificates,is included in a corporation's"adjusted net book income"
and "adjusted current earnings," ownership of the Certificates could subject a corporation to alternative m;n;mum
tax consequences.
Except as stated above and as set forth below under the heading "Tax Accounting Tres`-:sent of Original Issue
Discount Certificates", Bond Counsel and Co-Bond Counsel will express no opinion as to raiy federal, state or local
tax consequences resulting from the ownership of, receipt of interest on, or disposition o:, the Certificates.
Under the Code, taxpayers are required to report on federal income tax returns the amount of tax-exempt interest,
such as interest on the Certificates, received or accrued during the year.
Prospective purchasers 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 obligations. 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 purchasers
should consult their own tax advisors as to the applicability of these consequences.
Tax Accounting Treatment of Original Issue Discount Certificates:
The initial public offering prices of the Certificates maturing in the years through (the "Original Issue
Discount Certificates") are less than the principal amounts of such Certificates. In the opinions of Bond Counsel
and Co-Bond Counsel, under existing law and based upon the assumptions herein after stated:
(a) The difference between(i)the amount payable at the maturity of each Original Issue Discount Certificate
and (ii) the initial offering price to the public of each such Certificate constitutes original issue discount
with respect to such Certificate in the hands of an owner who has purchased such Certificate at the initial
offering price in the initial public offering of the Certificates; and
(b) Such initial owner is entitled to exclude from gross income (as defined in Section 61 of the Code) an
amount of income with respect to such Certificate equal to that portion of the amount of such original
issue discount allocable to the period that such Certificate continues to be owned by such owner.
In the event of the redemption,sale or other taxable disposition of such Certificate prior to stated maturity,however,
the amount realized by such owner in excess of the basis for such Certificate in the hands of such owner(adjusted
upward by the portion of the original issue discount allocable to the period for which such Certificate was held by
such initial owner) is includable in gross income. Because original issue discount is treated as interest for federal
income tax purposes, the discussion regarding interest on the Certificates under the caption "Tax Exemption"
generally applies, except as otherwise provided below, to original issue discount on an Original Issue Discount
Certificate held by an owner who purchased such Certificate at the initial offering price in the initial public offering
of the Certificates, and should be considered in connection with the discussion in this portion of the Official
Statement.
27
Under existing law, the original discount on each Original Issue Discount Certificate is accrued daily to the stated
maturity thereof(in amounts calculated as described below for each six-month period ending on the date before the
semi-annual anniversary dates of the date of the Certificates and ratably within each such six-month period)and the
accrued amount is added to an initial owner's basis for such Certificate for purposes of determining the amount of
gain or loss recognized by such owner upon the redemption, sale or other disposition thereof. The amount to be
added to basis for each accrual period is equal to the sum of the issue price plus the amount of original issue
discount accrued in prior periods multiplied by the yield to stated maturity(determined on the basis of compounding
at the close of each accrual period and properly adjusted for the length of the accrual period) less the amount
payable as current interest during such accrual period on such Certificates.
The foregoing opinion is based on the assumptions, that (a) the Underwriter has purchased the Certificates for
contemporaneous sale to the general public and not for investment purposes, (b)all of the Original Issue Discount
Certificates have been offered, and a substantial amount of each maturity thereof has been sold to the general public
in arm's-length transactions for a cash price (and with no other consideration being included) equal to the initial
offering prices thereof stated on the cover page of this Official Statement, and (c) the respective initial offering
prices of the Original Issue Discount Certificates to the general public are equal to the fair market value thereof.
Neither the City nor Bond Counsel nor Co-Bond Counsel warrants that the Original Issue Discount Certificates will
be offered and sold in accordance with such assumptions.
No-Litigation Certificate:
The City will furnish the Underwriter a certificate, dated as of the date of delivery of the Certificates, executed by
both the Mayor and City Clerk, 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, execution or delivery of the Certificates; or
affecting the validity of the Certificates.
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 ordinances, statutes,resolutions,and other related
documents are included herein subject to all 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.
Rauscher Pierce Refsnes, Inc. is employed by the City as its 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 indebtedness,such as the Certificates actually being issued,sold and
delivered.
28
Certification as to Official Statement:
At the time of payment for and delivery of the Certificates, the Underwriter 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 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 Official Statement and final Official Statements 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 Underwriter 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.
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 Underwriter. 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 Underwriter and all
information with respect to the resale of the Certificates shall be responsibility of the Underwriter except as
described below under "CONTINUING DISCLOSURE OF INFORMATION."
CONTINUING DISCLOSURE OF INFORMATION
In the Ordinance, the City has made the following agreement for the benefit of the holders and beneficial owners
of the Certificates. The City is required to observe the agreement for so long as it remains obligated to advance
funds to pay the Certificates. Under the agreement, the City will be obligated to provide certain updated financial
information and operating data annually, and timely notice of specified material events, to certain information
vendors. This information will be available to securities brokers and others who subscribe to receive the
information from the vendors.
Annual Reports:
The City will provide certain updated financial information and operating data to certain information vendors
annually. The information to be updated includes all quantitative financial information and operating data with
respect to the City of the general type included in this Official Statement under the headings "SELECTED
FINANCIAL INFORMATION," "DEBT STATEMENT," "TAX DATA," "SELECTED FINANCIAL DATA,"
"ADMINISTRATION OF THE CITY," and in Appendix "B". The City will update and provide this information
within six months after the end of each fiscal year ending in or after 1996. The City will provide the updated
information to each nationally recognized municipal securities information repository("NRMSIR")and to the Texas
Municipal Advisory Council,the state information depository("SID")designated by the State of Texas and approved
by the staff of the United States Securities and Exchange Commission(the "SEC").
29
The City,may provide updated information in full text or may incorporate by reference certain other publicly
available documents, as permitted by SEC Rule 15c2-12, as amended and in effect from time to time(the "Rule").
The updated information will include audited financial statements, if the City commissions an audit and it is
completed by the required time. If audited financial statements are not commissioned or are not available by the
required time, the City will provide unaudited financial statements when and if they become available. Any such
financial statements will be prepared in accordance with the accounting principles described in Appendix"B"or such
other accounting principles as the City may be required to employ from time to time pursuant to state law or
regulation.
The City's current fiscal year end is September 30. Accordingly,it must provide updated information by February
28 in each year, beginning February 28, 1997,unless the City changes its fiscal year. If the City changes its fiscal
year, it will notify each NRMSIR and the SID of the change.
Material Event Notices:
The City will also provide timely notices of certain events to certain information vendors. The City will provide
notice of any of the following events with respect to the Certificates, if such event is material to a decision to
purchase or sell Certificates: (1)principal and interest payment delinquencies; (2)non-payment related defaults;(3)
unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit
enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to
perform; (6)adverse tax opinions or events affecting the tax-exempt status of the Certificates; (7)modifications to
rights of holders of the Certificates; (8)calls; (9)defeasances; (10)release, substitution,or sale of property securing
repayment of the Certificates; and (11) rating changes affecting the Certificates. Neither the Certificates nor the
Ordinance makes any provision for debt service reserves or liquidity enhancement. In addition, the City will
provide timely notice of any failure by the City to provide information,data, or financial statements in accordance
with its agreement described above under "Annual Reports." The City will provide each notice described in this
paragraph to the SID and to either each NRMSIR or the Municipal Securities Rulemaking Board("MSRB").
Availability of Information From NRMSM and SID:
The City has agreed to provide the foregoing information only to NRMSIRs and the SID. The information will be
available to holders of and beneficial owners of the Certificates only if the holders comply with the procedures and
pay the charges established by such information vendors or obtain the information through securities brokers who
do so.
The Municipal Advisory Council of Texas has been designated by the State of Texas as a SID and has been
approved as such by the SEC staff. The address of the Municipal Advisory Council is 600 West 8th Street, P.O.
Box 2177, Austin, Texas 78768-2177, and its telephone number is 512/476-6947.
Limitations and Amendments:
The City has agreed to update information and to provide notices of material events only as described above. The
City has not agreed to provide other information that may be relevant or material to a complete presentation of its
financial results of operations,condition, or prospects or agreed to update any information that is provided, except
as described above. The City makes no representation or warranty concerning such information or concerning its
usefulness to a decision to invest in or sell Certificates at any future date. The City disclaims any contractual or
tort liability for damages resulting in whole or in part from any breach, WHETHER NEGLIGENT OR WITHOUT
FAULT ON ITS PART, of its continuing disclosure agreement or from any statement made pursuant to its
agreement. Holders or beneficial owners of Certificates may seek as their sole remedy a writ of mandamus to
compel the City to comply with its agreement. No default by the City with respect to its continuing disclosure
agreement shall constitute a breach of or default under the Ordinance for purposes of any other provision of the
Ordinance. Nothing in this paragraph is intended or shall act to disclaim, waive, or otherwise limit the duties of
the City under federal and state securities laws. The City's undertakings and agreements are subject to appropriation
of necessary funds and to applicable legal restrictions.
30
The City may amend its continuing disclosure agreement to adapt to changed circumstances that arise from a change
in legal requirements, a change in law, or a change in the identity,nature, status or type of operations of the City
if, but only if(i) the agreement, as so amended, would have permitted an underwriter to purchase or sell the
Certificates in the offering made hereby in compliance with the Rule, taking into account any amendments or
interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (2) either
(a) the holders of a majority in aggregate amount of the outstanding Certificates consent to such amendment or(b)
a person unaffiliated with the City(such as nationally recognized bond counsel)determines that the amendment will
not materially impair the interests of the holders and beneficial owners of the Certificates. The City may also
amend or repeal the agreement if the SEC amends or repeals the applicable provisions of the Rule or a court of final
jurisdiction determines that such provisions are invalid, and the City may amend the agreement in its discretion in
any other circumstance or manner, but in either case only to the extent that its right to do so would not prevent the
Underwriters from purchasing the Certificates in the offering described herein in compliance with the Rule. If the
City amends the agreement, it has agreed to include with any financial information or operating data next provided
in accordance with its agreement described above under "Annual Reports" an explanation,in narrative form, of the
reasons for the amendment and of the impact of any change in the type of financial information and operating data
so provided.
Audited Financial Report of the City:
The City presently requires that an annual audit be performed by an independent public accounting firm in
accordance with generally accepted auditing standards for governmental units. The most recent audit,and additional
financial information are available for public inspection,or copies may be obtained by written request, to the extent
permitted by law, addressed to the City Finance Officer, with such fee, if any, for copies as may from time to time
be authorized by the City.
Compliance With Prior Undertakings:
The City has not previously made a continuing disclosure agreement in accordance with the Rule.
This Official Statement was duly authorized and approved by the City Council of the City of Beaumont, as of the
date specified on the first page hereof.
/s/
Mayor
The City of Beaumont, Texas
Attest:
/s/
City Clerk
The City of Beaumont, Texas
31
Value added by manufacturing approximates $3 billion annually in the Beaumont area, the third highest in Texas,
according to "Texas Facts and Figures" published by Texas Commerce Bancshares, Inc. Beaumont has an
abundance of raw materials. Besides the naturally occurring raw materials, a great variety of man-made materials
are available in the area. Along the Texas Gulf Coast the maze of pipelines dubbed "The Spaghetti Bowl" delivers
feedstocks for the manufacture of an unlimited number of end products. Most of the feedstocks are hydrocarbons
derived from Texas' abundant oil and natural gas. Below is a partial listing of naturally occurring and man-made
raw materials produced in Southeast Texas.
Acrylonitrile Butane Ethane Kerosene
Ammonia Butylene Ethylene Methanol
Argon Caustic Soda Ethylene Glycols Naphtha
Benzene Chlorine Ethyl Benzene Sulfur
Brine Crude Oil Fuel Oil Natural Gas
Butadiene Cyclohexane Gasoline Nitrogen
Propylene Steel (Rod&Wire) Hexane Nitric Acid
Propylene Glycols Solvents, Aromatic Hydrogen Chloride Oxygen
Solvents, Paraffin Toluene Hydrogen Sulfide Urea
Polyethylene Propane Sulfuric Acid Waxes
Xylene
Beaumont's trade area includes Jefferson, Hardin and Orange Counties and is the seventh largest metropolitan trade
center in Texas. Beaumont is the largest city between Houston and Baton Rouge, an expanse of nearly 300 miles.
The community serves a large number of counties in Southeast Texas and parishes in Southwest Louisiana. As a
result, retail/wholesale trade, distribution, business and medical services are important parts of the economy and
a very real part of the economic base. Hospitals and clinics in Beaumont serve Southeast Texas and are an integral
part of the economy.
In 1993 approximately 33,000 acres of rice were planted in Jefferson County at an annual crop value of$12.9
million. The second largest crop is 5,000 to 6,000 acres of soybeans harvested at a value of$2 million. The
remaining major agribusiness in Jefferson County consists of 3,000-5,000 acres of wheat,4,000-5,000 acres of grain
sorghum, 2,000-3,000 acres of corn, 3,500-4,000 acres of crawfish plus an active livestock industry of 28,000 head
of cattle. The overall financial benefit to the community in an average weather year is $26 million.
The Foreign Trade Zone of Southeast Texas, Inc. (FTZSET) is a private non-profit corporation. A Foreign trade
zone is a site within the United States where foreign and domestic merchandise is considered to be outside U. S.
Customs territory.Both domestic and foreign goods can be placed in a zone without formal Customs entry,payment
of Customs duties or quota limits.
-Port of Beaumont -
Beaumont's Neches River deep-water ship channel is maintained by the Corps of Engineers at a minimum depth
of 40 feet and width of 400 feet. The Port of Beaumont, at the foot of Main Street, handles containerized, bulk
and general cargo in its facilities. In 1994 the Port of Beaumont handled 3.8 million tons of cargo, creating an
economic impact of$142 million and 1,500 jobs.
The military annually uses the Port of Beaumont for its exercises. In 1994, these exercises processed over 85,000
tons of cargo. Barge service on the Neches River links many industries in Beaumont with other coastal areas and
inland cities on navigable waterways.
- Building Permits -
(Source: The City of Beaumont)
Year Number of Permits Value
1995
1994 2,884 $ 78,285,990
1993 2,888 53,362,604
1992 2,854 72,600,558
1991 2,885 63,825,236
1990 2,704 49,044,343
1989 2,215 62,591,132
1988 3,225 44,800,000
1987 4,726 65,300,000
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
- 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 & Marketing Management - 1995 Survey of Buying Power";
Copyright- 1995 Sales &Marketing Management Survey of Buying Power: further reproduction is forbidden.
Beaumont-
Port Arthur
The City Jefferson County SMSA
Population(12-31-94) 115.3 244.4 375.1
Median Age (years) 34.0 34.7 34.6
% 18-24 9.3 8.4 8.3
% 25-34 15.1 14.6 14.3
% 35-49 20.9 20.9 21.6
% 50-Over 27.6 28.8 27.8
Number of Households 43.6 92.0 138.8
Retail Sales (1994) ($1.000's)
Food $ 171,841 $ 313,990 $ 500,455
Eating and Drinking 134,324 207,181 266,883
General Merchandise 272,196 381,742 497,500
Furniture, Furnishings, Appliances 73,649 96,929 118,860
Automotive 347,077 583,504 820,804
Drugs 41,302 79,306 109,786
Total Retail Sales 1,407,078 2,205,648 3,020,879
Effective Buying Income (1994)
Total Effective Buying Income ("EBI) ($1,000's) $1,762,141 $3,634,096 $5,442,069
Median Household EBI 30,706 31,426 31,907
% Household EBI
$10,000 to $19,999 16.9 16.9 16.7
$20,000- $34,999 20.4 20.9 21.5
$35,000- $49,999 16.8 17.0 17.4
$50,000 and Over 27.9 28.4 28.5
-Growth Indicators-
(Source: Beaumont Chamber of Commerce)
1950 1960 1970 1980 1990
Electric Meters 28,312 39,285 42,835 44,859 $ 53,310
Gas Meters 23,078 34,509 35,295 36,391 35,315
Water Meters (a) 20,883 32,357 37,975 41,423 44,844
Telephones 24,118 56,155 74,463 103,045 61,023
Population 94,014 119,175 117,548 118,102 114,323
(a) Provided by the City's Waterworks Department.
APPENDIX B - AUDITED FINANCIAL STATEMENTS OF THE CITY
APPENDIX C -FORM OF LEGAL OPINIONS