HomeMy WebLinkAboutRES 95-101 RESOLUTION APPROVING NOTICE OF SALE AND PRELIMINARY
OFFICIAL STATEMENT AND AUTHORIZING
DISTRIBUTION THEREOF
BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF BEAUMONT, TEXAS:
That the Official Notice of Sale concerning the issuance of
$6,000,000 in Certificates of Obligation, Series 1995, and the
Preliminary Official Statement concerning the issuance of such
certificates of obligation, both dated April 4, 1995, and
attached hereto as Exhibit "A" and made a part hereof for all
purposes, be and the same are hereby approved by the City of
Beaumont, Texas, and that officers, agents and representatives of
the City are hereby authorized to distribute the attached
Official Notice of Sale and Preliminary Official Statement dated
April 14, 1995 .
PASSED BY THE CITY COUNCIL of the City of Beaumont this -the
4th day of April, 1995.
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Mayor
CITY OF BEAUMONT, TEXAS
ATTEST:
City Cle k,
CITY OF BEAUMONT, TEXAS
(SEAT, ` w'
;ti ,
CERTIFICATE FOR RESOLUTION r t,
THE STATE OF TEXAS
COUNTY OF JEFFERSON
We, the undersigned officers of the City Council of the City
of Beaumont, Texas, hereby certify as follows:
1. The City Council of the City of Beaumont, Texas,
convened in regular meeting on the 4th day of April, 1995, at the
regular meeting place thereof, within said City, and the roll was
called of the duly constituted officers and members of said City
Council and the City Clerk, to wit:
David W. Moore Mayor
John K. Davis Mayor Pro Tem and Councilman,
Ward III
Andrew P. Cokinos Councilman at Large
Becky Ames Councilman at Large
Lulu L. Smith Councilman Ward I
Guy N. Goodson Councilman Ward II
Calvin Williams Councilman Ward IV
Rosemarie Chiappetta City Clerk
and all of said persons were present, except the following
absentees : I thus
constituting a quorum. Whereupon, among other business, the
following was transacted at said meeting: a written
RESOLUTION APPROVING NOTICE OF SALE AND
PRELIMINARY OFFICIAL STATEMENT AND
AUTHORIZING DISTRIBUTION THEREOF
was duly introduced for the consideration of said City Council
and read in full. It was then duly moved and seconded that said
resolution be adopted; and, after due discussion, said motion,
carrying with it the adoption of said resolution, prevailed and
carried by the following vote
AYES: Mayor Moore, Mayor Pro Tem Davis, Councilmembers Ames, Smith,
Goodson and Williams
NOES: Councilman Cokinos
2 . That a true, full and correct copy of the aforesaid
.resolution adopted at the meeting described in the above and
foregoing paragraph is attached to and follows this certificate;
that said resolution has been duly recorded in said City
Council 's minutes of said meeting pertaining to the adoption of
said resolution; that the above and foregoing paragraph is a
true, full and correct excerpt from said City Council ' s minutes
of said meeting; that the above and foregoing paragraph is a
true, full and correct excerpt from said City Council 's minutes
as indicated therein; that the persons named in the above and
foregoing paragraph are the duly chosen, qualified and acting
officers and members of said City Council as indicated therein;
that each of the officers and members of said City Council was
duly and sufficiently notified officially and personally, in
advance, of the date, hour, place and purpose of the aforesaid
meeting, and that said resolution would be introduced and
considered for adoption at said meeting, and each of said
officers and members consented, in advance, to the holding of
said meeting for such purpose; that said meeting was open to the
public as required by law; and the public as required by law; and
that public notice of the date, hour, place and subject of said
meeting was given as required by Chapter 551 of the Texas
Government Code Annotated, Vernon's 1994, as amended.
SIGNED AND SEALED this 4th day of April, 1995 .
4 03
City Clerk Mayor
(S E A L)
k i
This Official Notice of Sale does not alone constitute an invitation for bids but is merely notice of sale of the obligations
described herein. The invitation for bids on such Certificates is being made by means of this Official Notice of Sale, the
Official Bid Form and the Official Statement. Prospective purchasers are urged to carefully examine all the documents to
determine the investment quality of the Certificates.
OFFICIAL NOTICE OF SALE
$6,000,000
CITY OF BEAUMONT,TEXAS
(Jefferson County,Texas)
COMBINATION TAX AND REVENUE
CERTIFICATES OF OBLIGATION,SERIES 1995
"QUALIFIED TAX-EXEMPT OBLIGATIONS FOR FINANCIAL INSTITUTIONS"
THE SALE
CERTIFICATES OF OBLIGATION OFFERED FOR SALE AT COMPETITIVE BID: The City Council (the
"Council")of the City of Beaumont,Texas(the"City")is offering for sale at competitive bid its$6,000,000 Combination Tax
and Revenue Certificates of Obligation, Series 1995 (the"Certificates").
PLACE AND TIME OF SALE: The City will receive sealed bids at the City Hall, 801 Main,Beaumont, Texas 77701 until
12:00 Noon, C.D.S.T., Tuesday, April 18, 1995, and the bids will be opened and publicly read in the Council Chamber.
Sealed bids, which must be submitted in duplicate on the Official Bid Form and plainly marked"Bid for Certificates," are to
be addressed to "Mayor and City Council, City of Beaumont,Texas." All bids must be delivered at the above address prior to
the above-scheduled time. Any bid received after such scheduled time for bid opening will not be accepted and will be
returned unopened.
AWARD OF THE CERTIFICATES: The Council will take action to award the Certificates (or reject all bids)at a regular
meeting of the City Council on the date of the bid opening, and will adopt an ordinance authorizing the Certificates and
approving the Official Statement (the "Ordinance"). The City reserves the right to reject any or all bids and to waive any
irregularities.
THE CERTIFICATES
DESCRIPTION: The Certificates will be dated May 1, 1995 and interest will be calculated on the basis of a 360-day year of
twelve 30-day months. Interest on the Certificates will be paid on March 1, 1996, and semiannually on March 1 and
September 1 of each year thereafter until maturity or prior redemption. The Certificates are subject to redemption prior to
their scheduled maturities on March 1, 2005, 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 will be issued in fully registered form in principal amounts of$5,000 or any integral multiple thereof.
Principal and semiannual interest will be paid by First Interstate Bank of Texas, N.A., Houston, Texas, the Paying
Agent/Registrar. Interest will be paid by check dated as of the interest payment date and mailed on or before each interest
payment date by the Paying Agent/Registrar to the registered owner appearing on the Paying Agent/Registrar's books on the
Record Date (hereinafter defined). Fineipal will be paid to the registered owners at maturity upon presentation of the
Certificates to the Paying Agent/Regisuar. The Certificates will mature March 1 in each year as follows:
Principal Principal
Maturity Date Amount Maturity Date Amount
March 1, 1997 $130,000 March 1,2006 $500,000
March 1, 1998 140,000 March 1,2007 500,000
March 1, 1999 145,000 March 1,2008 500,000
March 1, 2000 155,000 March 1,2009 500,000
March 1,2001 165,000 March 1,2010 500,000
March 1,2002 175,000 March 1,2011 500,000
March 1,2003 185,000 March 1,2012 500,000
March 1, 2004 195,000 March 1, 2013 500,000
March 1,2005 210,000 March 1,2014 500,000
a ,
PAYING AGENT/REGISTRAR: The initial Paying Agent/Registrar shall be First Interstate Bank of Texas,
N.A.,Houston,Texas(see"Paying Agent/Registrar"in Official Statement).
SOURCE OF PAYMENT: The Certificates are direct obligations of the City, and the principal thereof and
interest thereon are payable from the proceeds of an annual ad valorem tax levied upon all taxable property within
the City,within the limits prescribed by law and will be further payable from a junior and subordinate pledge of the
net revenues of the City's waterworks and sewer system,but only to the extent of and in an amount not in excess of
$10,000.00 of the net revenues of such system per annum.
Further details with reference to the Certificates are set forth in the Official Statement.
CONDITIONS OF THE SALE
TYPES OF BIDS AND INTEREST RATES: The Certificates will be sold in one block on an "All or None"
basis,and at a price of not less than their par value plus accrued interest to the date of delivery of the Certificates.
Bidders are invited to name the rate(s)of interest to be borne by the Certificates,provided that each rate bid must
be in a multiple of 1/8 of 1%or 1/20 of 1%and the net effective interest rate for the Certificates(calculated in the
manner required by Texas Revised Civil Statutes Annotated Article 717k-2, as amended) must not exceed 15%.
The highest rate bid may not exceed the lowest rate bid by more than 2%in rate. No limitation is imposed upon
bidders as to the number of rates or changes which may be used. All Certificates of one maturity must bear one
and the same rate. No bids involving supplemental interest rates will be considered. Each bidder shall state in his
bid the total interest cost in dollars and the net effective interest rate determined hereby,which shall be considered
informative only and not as a part of the bid.
BASIS OF AWARD: For the purpose of awarding sale of the Certificates, the interest cost of each bid will be
computed by determining at the rate(s)specified therein,the total dollar cost of all interest on the Certificates from
the date thereof to their respective maturities,using the table of Certificate Years herein, and deducting therefrom
the premium bid, if any. Subject to the City's right to reject any or all bids and to waive any irregularities, the
Certificates will be awarded to the bidder(the"Purchaser")whose complying bid,based on the above computation,
produces the lowest net interest cost to the City.
GOOD FAITH DEPOSIT: A Good Faith Deposit,payable to the"City of Beaumont"in the amount of$120,000,
is required. Such Good Faith Deposit shall be in the form of a Cashier's Check,which is to be retained encashed
by the City pending the Purchaser's compliance with the terms of his bid and the Notice of Sale and Bidding
Instructions. The Good Faith Deposit may accompany the Official Bid Form or it may be submitted separately. if
submitted separately, it shall be made available to the City prior to the opening of the bids, and shall be
accompanied by instructions from the bank on which drawn which authorize its use as a Good Faith Deposit by the
Purchaser who shall be named in such instructions. Unless otherwise agreed, the Good Faith Deposit will be
cashed and applied to the purchase price of the Certificates on the date of delivery of the Certificates. No
interest will be allowed on the Good Faith Deposit. In the event the Purchaser should fail or refuse to take up and
pay for the Certificates in accordance with his bid,then said check shall be cashed and accepted by the City as full
and complete liquidated damages. The checks accompanying bids other than the winning bid will be returned
immediately after the bids are opened,and an award of the Certificates has been made.
DELIVERY OF THE CERTIFICATES AND ACCOMPANYING DOCUMENTS
CUSIP NUMBERS: It is anticipated that CUSIP identification numbers will appear on the Certificates, but
neither the failure to print or type such number on any Certificates nor any error with respect thereto shall
constitute cause for a failure or refusal by the Purchaser to accept delivery of and pay for the Certificates in
accordance with the terms of this Notice of Sale and the terms of the Official Bid Form. All expenses in relation to
the printing or typing of CUSIP numbers on the Certificates shall be paid by the City;provided, however,that the
CUSIP Service Bureau fee for the assignment of the numbers shall be the responsibility of and shall be paid for by
the Purchaser.
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INITIAL DELIVERY OF INITIAL CERTIFICATES: Initial Delivery will be accomplished by the issuance of
registered Certificates in the aggregate principal amount of$6,000,000, payable to the Purchaser, signed by the
manual or facsimile signature of the Mayor and City Clerk of the City, approved by the Attorney General, and
registered by the Comptroller of Public Accounts. Initial Delivery will be at the corporate trust office of the Paying
Agent/Registrar. Payment for the Certificates must be made in immediately available funds for unconditional
credit to the City,or as otherwise directed by the City. The Purchaser will be given five(5) business days'notice
of the time fixed for delivery of the Certificates. It is anticipated that Initial Delivery of the Initial Certificates can
be made on or about May 18, 1995, and it is understood and agreed that the Purchaser will accept delivery and
make payment for the Initial Certificates by 10:00 A.M.,on May 18, 1995,or thereafter on the date the Certificates
are tendered for delivery,up to and including June 15, 1995. If for any reason the City is unable to make delivery
on or before June 15, 1995,then the City shall immediately contact the Purchaser and offer to allow the Purchaser
to extend his offer for an additional fifteen(15)days. If the Purchaser does not elect to extend his offer within six
(6) days thereafter, then his Good Faith Deposit will be returned, and both the City and the Purchaser shall be
relieved of any further obligation. In no event shall the City be liable for any damages, whether direct,
consequential or otherwise,by reason of its failure to deliver the Certificates.
DELIVERY OF DEFINITIVE CERTIFICATES: Upon payment for the Initial Certificates at the time of the
Initial Delivery, the Paying Agent/Registrar shall cancel the Initial Certificates, provided registration instructions
have been received by the Paying Agent/Registrar, and shall register and deliver the registered definitive
Certificates, in any integral multiple of $5,000 for any one maturity, in accordance with written instructions
received from the Purchaser and/or members of the Purchaser's syndicate account. It shall be the duty of the
Purchaser and/or members of the Purchaser's syndicate account to furnish to the Paying Agent/Registrar, at least
five business days prior to the Initial Delivery, final written instructions designating the names in which the
Certificates are to be registered, the addresses of the registered owners, the maturities, interest rates and
denominations. The Paying Agent/Registrar will not be required to accept registration instructions after the fifth
business day prior to Initial Delivery. If such instructions are not received within the specified time period, the
cancellation of the Initial Certificates and delivery of registered definitive Certificates will be delayed until such
instructions are received.
CONDITIONS TO DELIVERY: The obligation of the Purchaser to take up and pay for the Certificates is
subject to the Purchaser's receipt of(a) the legal opinion of Orgain, Bell & Tucker, L.L.P., Beaumont, Texas,
Counsel for the City("Bond Counsel"), (b)a certificate to the effect that no litigation of any nature has been filed
or is then pending to restrain the issuance and delivery of the Certificates,and(c)the certification as to the Official
Statement,all as further described in the Official Statement.
In order to provide the City with information required to enable it to comply with certain conditions of the Internal
Revenue Code of 1986 relating to the exclusion of interest on the Certificates from the gross income of their
owners,the Purchaser will be required to complete,execute,and deliver to the City a certification as to their"issue
price" substantially in the form and to the effect attached hereto or accompanying this Notice of Sale. In the event
the Purchaser will not reoffer the Certificates for sale or is unable to sell a substantial amount of the Certificates of
any maturity by the date of delivery, such certificate may be modified in a manner approved by the City. In no
event will the City fail to deliver the Certificates as a result of the Purchaser's inability to sell a substantial
amount of Certificates at a particular price prior to delivery. Each bidder, by subn °tting its bid, agrees to
complete, execute, and deliver such a certificate, if its bid is accepted by the City. It will be the responsibility of
the Purchaser to institute such syndicate reporting requirements, to make such investigation, or otherwise to
ascertain the facts necessary to enable it to make such certification with reasonable certainty. Any questions
concerning such certification should be directed to Bond Counsel.
LEGAL OPINIONS: The Certificates are offered when, as and if issued, subject to the unqualified legal opinion
of the Attorney General of the State of Texas, and the approving legal opinion of Orgain, Bell &Tucker, L.L.P.,
Beaumont, Texas, Bond Counsel (see Legal Opinions in Official Statement). The opinion of said firm will be
printed on the Certificates.
iii
m 3
CERTIFICATION OF OFFICIAL STATEMENT: At the time of payment for, and Initial Delivery of, the
Initial Certificates, the City will execute and deliver to the Purchaser a certificate in the form set forth in the
Official Statement.
CHANGE IN TAX EXEMPT STATUS: At any time before the Certificates are tendered for delivery, the
Purchaser may withdraw his bid if the interest received by private holders on bonds of the same type and character
shall be declared to be taxable income under present federal income tax laws, either by ruling of the Internal
Revenue Service or by a decision of any Federal court, or shall be declared taxable or be required to be taken into
account in computing any federal income taxes, by the terms of any federal income tax law enacted subsequent to
the date of this Notice of Sale.
GENERAL
FINANCIAL ADVISOR: Rauscher Pierce Refsnes, Inc. is employed as Financial Advisor to the City in
connection with the issuance of the Certificates. The Financial Advisor's fee for services rendered with respect to
the sale of the Certificates is contingent upon the issuance and delivery of the Certificates. The City has authorized
Rauscher Pierce Refsnes, Inc. to submit a bid for the Certificates, either independently or as a member of a
syndicate organized to submit a bid for the Certificates. Rauscher Pierce Refsnes,Inc., in its capacity as Financial
Advisor,has not verified and does not assume any responsibility for the information, covenants and representations
contained in any of the legal documentation with respect to the federal income tax status of the Certificates.
BLUE SKY LAWS: By submission of his bid, the Purchaser represents that the sale of the Certificates in states
other than Texas will be made only pursuant to exemptions from registration or, where necessary, the Purchaser
will register the Certificates in accordance with the securities law of the states in which the Certificates are offered
or sold. The City agrees to cooperate with the Purchaser, at the Purchaser's written request and expense, in
registering the Certificates or obtaining an exemption from registration in any state where such action is necessary,
but the City will not consent to service of process in any such state.
OFFICIAL STATEMENT
By accepting the winning bid, the City agrees to the following representations and covenants to assist the
Purchaser in complying with Rule 15c2-12 of the Securities and Exchange Commission("SEC").
FINAL OFFICIAL STATEMENT: The City has prepared the accompanying Official Statement for
dissemination to potential purchasers of the Certificates, but will not prepare any other document or version for
such purpose except as described below. The Purchaser will be responsible for informing the City of the initial
offering yields. The City will prepare a final Official Statement describing these offering yields, the interest rates
on the Certificates,the selling compensation,the final debt service schedule,the ratings assigned to the Certificates
(if not currently included),and the terms of and obligor on any policy of municipal bond insurance. Accordingly,
the City deems the accompanying Official Statement to be final as of its date, within the meaning of SEC Rule
15c2-12(b)(1), except for the omission of the foregoing items. By delivering the final Official Statement or any
amendment or supplement thereto to the Purchaser on or after the sale date, the City represents the same to be
complete as of such date,within the meaning of SEC Rule 15c2-12(e)(3). Notwithstanding the foregoing,the only
representations concerning the absence of material misstatements or omissions from the Official Statement which
are or will be made by the City are those described in the Official Statement under "CERTIFICATION OF THE
OFFICIAL STATEMENT."
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DELIVERY OF OFFICIAL STATEMENTS: The City will furnish to the Purchaser (and to each other
participating purchaser of the Certificates, within the meaning of SEC Rule 15c2-12(a), designated by the
Purchaser),within seven days after the sale date, up to 200 Official Statements. The City will also furnish to the
Purchaser a like number of any supplement or amendment prepared by the City for dissemination to potential
purchasers of the Certificates as described above as well as such additional copies of the Official Statement or any
supplement or amendment as the Purchaser may request prior to the 90th day after the end of the underwriting
period referred to in SEC Rule 15c2-12(e)(2). The City will pay the expense of preparing up to 200 copies of the
Official Statement and all copies of any supplement or amendment issued on or before the delivery date, but the
Purchaser must pay for all other copies of the Official Statement or any supplement or amendment thereto.
ADDITIONAL COPIES OF NOTICE, BID FORM AND STATEMENT: A limited number of additional
copies of this Notice of Sale, the Official Bid Form and the Official Statement, as available over and above the
normal mailing, may be obtained at the offices of Rauscher Pierce Refsnes, Inc., 1001 Fannin, Suite 700,Houston,
Texas,77002,Financial Advisor to the City.
On the date of the sale,the Council will, in the Ordinance authorizing the issuance of the Certificates, confirm its
approval of the form and content of the Official Statement, and any addenda, supplement or amendment thereto,
and authorize its use in the reoffering of the Certificates by the Purchaser.
/s/
Mayor
City of Beaumont,Texas
ATTEST:
/s/
City Clerk
City of Beaumont,Texas
April 6, 1995
v
CERTIFICATE OF UNDERWRITER
The undersigned hereby certifies with respect to the sale of $6,000,000 City of Beaumont, Texas
Combination Tax and Revenue Certificates of Obligation, Series 1995(the"Certificates"):
1. The undersigned is the underwriter or the manager of the syndicate of underwriter (the
"Underwriters") which has purchased the Certificates from the City of Beaumont, Texas (the "Issuer") at
competitive sale.
2. The Initial offering price to the public for the Certificates (expressed as a dollar amount, yield
percentage,or percentage of principal amount and exclusive of accrued interest)is as set forth below:
Principal Amount
Maturing Year of Maturi ty Offering Price
$130,000 March 1, 1997
140,000 March 1, 1998
145,000 March 1, 1999
155,000 March 1,2000
165,000 March 1,2001
175,000 March 1,2002
185,000 March 1,2003
195,000 March 1,2004
210,000 March 1,2005
500,000 March 1,2006
500,000 March 1,2007
500,000 March 1,2008
500,000 March 1,2009
500,000 March 1,2010
500,000 March 1,2011
500,000 March 1,2012
500,000 _ March 1,2013
500,000 March 1,2014
3. The Underwriters have made a bona fide offering to the public of all of the Certificates of each
maturity at the initial offering prices to the public,as set out above. The initial offering price set forth above is the
price at which the Underwriters expected,on the date the Certificates were purchased by the Underwriters,to offer
such Certificates to the general public and such price has not been adjusted to take into account actual facts after
such date.
4. The initial offe.nng prices described above for each maturity of the Certificates reflect current
market prices at the time such prices were established.
5. The term "public," as used herein, means persons other than bondhouses, brokers, dealers, and
similar persons or organizations acting in the capacity of underwriters or wholesalers.
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6. If any or all of the obligations constituting the Certificates are to be guaranteed then the premium
paid for such guarantee in an amount equal to $ is a reasonable amount payable solely for the
transfer of credit risk for the payment of debt service on the Certificates and does not include any amount payable
for a cost other than such guarantee, e.g., a credit rating fee. The Underwriter has represented that the present
value of the premium paid for the guarantee for each obligation constituting the Certificates to which such
premium is properly allocated and which are insured thereby is less than the present value of the interest
reasonably expected to be saved as a result of the insurance on each obligation constituting the Certificates. The
premium has been paid to a person which is not exempt from federal income taxation and which is not a user or
related to the user of any proceeds of the Certificates. In determining present value for this purpose, the yield of
the Certificates(determined with regard to the payment of the guarantee fee)has been used as the discount rate.
7. The undersigned understands that the statements made herein will be relied upon by the Issuer in
complying with the conditions imposed by the Internal Revenue Code of 1986, as amended, on the exclusion of
interest on the Certificates from the gross income of their owners for federal income tax purposes.
EXECUTED and DELIVERED this , 1995.
(Name of Underwriter or Manager)
By:
Title:
vii
OFFICIAL BID FORM
April 18, 1995
Mayor and City Council
City of Beaumont
801 Main
Beaumont,Texas 77701
Ladies and Gentlemen:
Subject to the terms of your Official Notice of Sale and Official Statement, dated April 6, 1995, which are incorporated
herein by reference, we hereby submit the following bid for $6,000,000 CITY OF BEAUMONT, TEXAS
COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 1995, dated May 1, 1995. This
offer is being made for all of the Certificates and for not less than all.
For said legally issued Certificates of Obligation, we will pay you the par value thereof, plus accrued interest from their
date to the date of delivery to us, plus a cash premium of 5 for Certificates of Obligation maturing and
bearing interest per annum as follows:
Maturity Date Principal Amount Interest Rate
March 1, 1997 $130,000 %
March 1, 1998 140,000 %
March 1, 1999 145,000 %
March 1,2000 155,000 %
March 1, 2001 165,000 %
March 1,2002 175,000 %
March 1,2003 185,000 %
March 1,2004 195,000 %
March 1,2005 - 210,000 %
March 1,2006 500,000 %
March 1,2007 500,000 %
March 1,2008 500,000 %
March 1, 2009 500,000 %
March 1,2010 500,000 %
March 1,2011 500,000 %
March 1,2012 500,000 %
March 1,2013 500,000 %
March 1,2014 500,000
Interest cost,in accordance with the above bid,is:
Gross Interest Cost $
Less: Premium $
NET INTEREST COST $
EFFECTIVE INTEREST RATE
The Initial Certificates shall be registered in the name of (syndicate manager). We will
advise First Interstate Bank of Texas, N.A., Houston, Texas the Paying Agent/Registrar, on forms to be provided by the
Paying Agent/Registrar and on registration instructions at least five business days prior to the date set for Initial Delivery.
Cashier's Check of the Bank, in the amount of$120,000,which
represents our Good Faith Deposit(is attached hereto)or(has been made available to you prior to the opening of this Bid),
and is submitted in accordance with the terms as set forth in the"Official Notice of Sale"and"Official Statement." Upon
delivery of the Certificates, said check will be cashed and applied to the purchase price of the Certificates on the date of
delivery of the Certificates.
We agree to accept delivery of and make payment for the Initial Certificates in immediately available funds at the
Corporate Trust Office, First Interstate Bank of Texas, N.A., Houston, Texas not later than 10:00 A.M., on May 18,
1995, or thereafter on the date the Certificates are tendered for delivery, pursuant to the terms set forth in the Official
Notice of Sale.
The undersigned agrees to complete,execute and deliver to the City,by the date of delivery of the Certificates,a certificate
relating to the "issue price" of the Certificates in the form and to the effect attached to or accompanying the Official
Notice of Sale,with such changes thereto as may be acceptable to the City.
Respectfully submitted,
By
Authorized Representative
ACCEPTED this 18th day of April, 1995,by the City Council,City of Beaumont,Texas.
Mayor
ATTEST:
City Clerk
Return of Good Faith Check is hereby acknowledged:
Firm:
By:
(For your information you will find attached a list of the group of purchasers associated with us in this proposal)
t a
BOND YEARS
$6,000,000
CITY OF BEAUMONT,TEXAS
(Jefferson County,Texas)
COMBINATION TAX AND REVENUE
CERTIFICATES OF OBLIGATION
SERIES 1995
Dated:May 1, 1995
Due: As shown below
Years
Maturity Bond Cumulative
Date Amount Years Bond Years
March 1, 1997 $130,000 238.3333 238.3333
March 1, 1998 140,000 396.6667 635.0000
March 1, 1999 145,000 555.8333 1,190.8333
March 1,2000 155,000 749.1667 1,940.0000
March 1,2001 165,000 962.5000 2,902.5000
March 1,2002 175,000 1,195.8333 4,098.3333
March 1,2003 185,000 1,449.1667 5,547.5000
March 1,2004 195,000 1,722.5000 7,270.0000
March 1,2005 210,000 - 2,065.0000 9,335.0000
March 1,2006 500,000 5,416.6667 14,751.6667
March 1,2007 500,000 5,916.6667 20,668.3333
March 1,2008 500,000 6,416.6667 27,085.0000
March 1,2009 500,000 6,916.6667 34,001.6667
March 1,2010 500,000 7,416.6667 41,418.3333
March 1,2011 500,000 7,916.6667 49,335.0000
March 1,2012 500,000 8,416.6667 57,751.6667
March 1,2013 500,000 8,916.6667 66,668.3333
March 1,2014 500.000 9,416.6667 76,085.0000
S
AVERAGE MATURITY-12.681 YEARS
S
PRELIMINARY OFFICIAL STATEMENT DATED APREL 6. 1995
The Preliminary Official Statement is subject to completion and amendment and is intended solely for the solicitation
of initial bids to purchase the Certificates. Upon the sale of the Certificates, the Official Statement will be
rn
•� ; completed and delivered to the Purchaser.
In the opinion of Bond Counsel,interest on the Certicates will be excludable from gross income for federal income
tax purposes under existing law, subject to the matters described under 'Tax Matters' herein, including the
akernative minimum tax on corporations.
c 0
NEW ISSUE
�D - ,000,000
CITY OF BEAUMONT, TEXAS
(A political subdivision of the State of Texas located within Jefferson County)
COMBINATION TAX AND REVENUE
C, ; CERTIFICATES OF OBLIGATION
Series 1995
"o
.2 "QUALIFIED TAX-EXEMPT OBLIGATIONS FOR FINANCIAL INSTITUTIONS"
g ° Dated: May 1, 1995
Principal and interest is payable at the principal corporate trust office of the First Interstate Bank of Texas, N.A.,
cHouston,Texas, the paying agent/registrar(the "Registrar'). Interest is payable March 1, 1996, and each March
y 1 and September 1 thereafter until maturity or prior redemption. The Certificates are subject to redemption prior
yb to their scheduled maturities on March 1, 2005 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
a c redemption. The Certificates are issued in fully registered form in integral multiples of$5,000. Interest on the
2 a � 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").
-
U MATURITY SCHEDULE
o c
.. (Due March 1)
40 2 3 Initial Initial
w Interest Reoffering Interest Reofferin g
o Amount Maturity Rate Yield a Amount Maturi Rate Yield (a)
•g c $130,000 1997 % % $500,000 2006(b) % %
a 140,000 1998 500,000 2007(b)
145,000 1999 500,000 2008(b)
.� 155,000 2000 500,000 2009(b)
° w 165,000 2001 500,000 2010(b)
175,000 2002 500,000 2011(b)
�= 185,000 2003 500,000 2012(b)
O 9 195,000 2004 500,000 2013(b)
t m x 210,000 2005 500,000 2014(b)
T0 •5
a ?" a
y mg 2 (a) The initial yields will be established by and are the sole responsibility of the Purchaser, and may subsequently
8 be changed.
' (b) The Certificates maturing March 1, 2006 through March 1, 2014, both inclusive, 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, 2005,
or any date thereafter.
e
i
The above certificates (the "Certificates") constitute all the certificates authorized by the City Council (the "City
Council") of the City on April 18, 1995. 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 and sewer system but
only to the extent of and not in an amount in excess of$10,000 per annum.
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 opinion of Orgain, Bell&Tucker, L.L.P., Beaumont, Texas, 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. The
Certificates are expected to be available for delivery on or about May 18, 1995.
� s
TABLE OF CONTENTS
Page
USE OF INFORMATION IN OFFICIAL STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SALE AND DISTRIBUTION OF THE CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Sale of the Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Prices and Marketability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SecuritiesLaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Municipal Bond Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
OFFICIAL STATEMENT SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SELECTED FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
THE CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Description of the Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Source of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Authority for Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Future Bond Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Legal Investments in Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Remedies in the Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
PRO-FORMA DEBT SERVICE SCHEDULE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
DEBT STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Bonded Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Revenue Support of Ad Valorem Tax Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Estimated Overlapping Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
DebtRatios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ShortTerm Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
TAXDATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 11
Authority for Ad Valorem Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Historical Analysis of Ad Valorem Taxation . . . 13
Estimated Overlapping Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SalesTax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Industrial District Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Tax Increment Reinvestment Zone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Historical Operations of the City's General Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
General Fund and Debt Service Fund Balance for the Past Six Fiscal Years . . . . . . . . . . . . . . . 18
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ADMINISTRATION OF THE CITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Mayor and City Council . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Consultants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
LEGISLATION AND REGULATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Affecting the City's Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Affecting the Tax Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
State Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
OTHER CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Future Bond Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Other Financing Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Pension Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Collective Bargaining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Risk Management/Self Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Landfill Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
LegalOpinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
TaxExemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Tax Accounting Treatment of Original Issue Discount Bonds . . . . . . . . . . . . . . . . . ... . . . . . 26
No-Litigation Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
QUALIFIED TAX-EXEMPT OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
GENERAL CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Sources and Compilation of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Certification as to Official Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Updating of Official Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
APPENDIX A -ECONOMIC AND DEMOGRAPHIC CHARACTERISTICS
APPENDIX B -FINANCIAL STATEMENTS OF THE CITY
APPENDIX C - FORM OF LEGAL OPINION
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
Sale of the Certificates:
After requesting competitive bids for the Certificates, the City has accepted the bid resulting in the lowest net
interest cost, which bid was tendered by a syndicate composed of
("Purchaser") to purchase the Certificates bearing the interest rates shown under "MATURITY SCHEDULE" at
a price of the par value thereof,plus a cash premium of$ ,plus accrued interest to the date of delivery.
The net effective interest rate on the Certificates was % as calculated pursuant to Article. 717k-2 of
Vernon's Annotated Texas Civil Statutes.
Prices and Marketability:
The delivery of the Certificates is conditioned upon the receipt by the City of a certificate executed and delivered
by the Purchaser 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
why ;saler. The City has no control over trading of the Certificates after a bona fide offering of the Certificates
is made by the Purchaser at the yields specified on the cover page. Information concerning reoffering yields or
prices is the responsibility of the Purchaser.
The prices and other terms respecting the offering and sale of the Certificates may be changed from time to time
by the Purchaser 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 PURCHASER 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.
3
Securities Laws:
No registration statement relating to the Certificates has been filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, in reliance upon the exemptions provided thereunder. The
Certificates have not been registered or qualified under the Securities Act of Texas in reliance upon various
exemptions contained therein;nor have the Certificates been registered or qualified under the securities acts of any
jurisdiction. The City assumes no responsibility for registration or qualification of the Certificates under the
securities laws of any jurisdiction in which the Certificates may be offered, sold or otherwise transferred. This
disclaimer of responsibility for registration or qualification for sale or other disposition of the Certificates shall not
be construed as an interpretation of any kind with regard to the availability of any exemption from securities
registration or qualification provisions in such jurisdictions.
ti
In connection with the sale of the Certificates, the City has made application to Moody's Investors Service, Inc.
("Moody's")and Standard&Poor's Rating Corporation("S&P")for a rating and the ratings of"_" and "_",
respectively, has been assigned to the Certificates. An explanation of the significance of such ratings may be
obtained from Moody's and S&P. The ratings reflect only the view of Moody's and S&P and the City makes no
representation as to the appropriateness of such ratings.
There is no assurance that such rating will continue for any period of time or that it will not be revised downward
or withdrawn entirely by Moody's if,in the judgment of Moody's,circumstances so warrant. Any such downward
revision or withdrawal of the rating may have an adverse effect on the market price of the Certificates.
Municipal Bond Insurance:
The City has made application for municipal bond insurance under the bidders option program. The premium for
such insurance, if used, will be paid for by the Purchaser.
4
OFFICIAL STATEMENT SOMIARY
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 is a home rule city of the State of
Texas located within Jefferson County, Texas.
The Certificates . . . . . . . . . . . . . . . . . . . $6,000,000 Combination Tax and Revenue Certificates of
Obligation, Series 1995, are dated May 1, 1995, and mature
March 1, 1997 through March 1, 2014. See "THE
CERTIFICATES -General."
Payment of Interest . . . . . . . . . . . . . . . . . Interest on the Certificates accrues from May 1, 1995, and is
payable March 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, 2005, or any date thereafter, at the
option of the City.
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 and sewer system but only to the extent
of and in an amount not in excess of$10,000 per annum. See
"THE CERTIFICATES - Source of Payment."
Use of Proceeds . . . . . . . . . . . . . . . . . . . Proceeds of the Certificates will be used to provide funds for
street improvements. 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 Corporation . . . . . . . . . . . . .
Qualified Tax-Exempt Obligations . . . . . . . . The City will designate the Certificates as Qualified Tax-
Exempt Obligations for Financial Institutions. See
"QUALIFIED TAX-EXEMPT OBLIGATIONS" herein.
Payment Record . . . . . . . . . . . . . . . . . . . The City has never defaulted on the timely payment of
principal of and interest on its obligations.
5
SELECTED FINANCIAL INFORMATION
(Unaudited)
1994 Certified Assessed Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,251,615,993(a)
(100% of market value as of January 1, 1994)
See "TAX DATA" and "TAXING PROCEDURES."
Direct Debt:
Outstanding Ad Valorem Tax Debt(as of March 15, 1995) . . . . . . . . . . . . . . . $ 73,246,091
The Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.000.000
Total Direct Ad Valorem Tax Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 79.246.091
Less: Self-Supported Debt(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9.441:600
Total Direct Ad Valorem Tax Supported Debt . . . . . . . . . . . . . . . . . . . . . . . $ 69.804.491
Estimated Overlapping Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 31.694.415
Direct Ad Valorem Tax Supported and Estimated Overlapping Debt . . . . . . . . . . . $ 101.498.906
Estimated Interest&Sinking Fund Balance (as of March 15, 1995) . . . . . . . . . . . $ 7.432.755
Ratio of Direct Ad Valorem
Tax Debt to................: 1994 Certified Assessed Valuation($3,251,615,993) 2.44%
1994 Estimated Population(114,461) . . . . . . . . $ 692
Ratio of Direct Ad Valorem Tax
Supported Debt to........: 1994 Certified Assessed Valuation($3,251,615,993) 2.15%
1994 Estimated Population(114,461) . . . . . . . . $609
Ratio of Direct Ad Valorem Tax
Supported and Estimated
Overlapping Debt to.....: 1994 Certified Assessed Valuation($3,251,615,993) 3.12%
1994 Estimated Population(114,461) . . . . . . . . $887
(a) Certified by the Jefferson County Appraisal District.
(b) See "DEBT STATEMENT - Revenue Support of Ad Valorem Tax Debt."
6
THE CERTIFICATES
Description of the Certificates:
The Certificates are dated May 1, 1995, bear interest from such date at the stated interest rates indicated under
"MATURITY SCHEDULE", which interest is payable March 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. The Certificates are subject to redemption prior to scheduled maturities
on March 1,2005 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. Principal of and
interest on the Certificates are payable at the principal corporate trust office of the First Interstate Bank of 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.
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 and sewer system but only to the extent of and in an amount not in excess of$10,000.00 per annum.
In the Ordinance, 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") adopted by the City Council on April 18, 1995, 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.
7
Use of Proceeds:
Proceeds of the Certificates are being used to provide funds for street improvements. The proceeds will also be
used to pay the costs of issuance of the Certificates, including the Financial Advisor's fee and Bond Counsel's fee,
both of which are contingent upon the sale of the Certificates, as well as other administrative costs incurred.
Future Bond Issues:
Currently, the City Council plans to authorize approximately $4,000,000 additional certificates of obligation or
bonds in 1996 in order to continue the street improvements that are part of the City's current capital improvement
program. The City also reserves the right to issue such certificates of obligation or bonds if authorized by the
electorate. 'Depending on the rate of development within the City,changes in assessed valuation,and the amounts,
interest rates, maturities and time of issuance of additional certificates of obligation or bonds,increases in the City's
annual ad valorem tax rate may be required to provide for the payment of the principal of and interest on the
outstanding bonds, the Certificates, and such future certificates of obligation or bonds.
Leual Investments in Texas:
Pursuant to Section 9 of the Bond Procedures Act of 1981, as amended, Texas Revised Civil Statutes Annotated
Article 717kfi(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 inu;rest 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.
8
PRO-FORMA DEBT SERVICE SCHEDULE
The following sets forth the principal and interest on the City's outstanding debt and the Certificates.
Less: Self Total
Fiscal Year Outstanding The Certificates Total Supporting Ad
Ending Ad Valorem $6.000.000 Ad Valorem Ad Valorem Valorem Tax
9-30 Tax Debt Princil2 al Interest(a) Tax Debt Tax Debt(b) Supported Debt
1995 $ 10,154,199 $10,154,199 $1,605,394 $ 8,548,805
1996 11,175,065 $ 480,000 11,655,065 1,627,773 10,027,292
1997 11,175,306 $ 130,000 356,100 11,661,406 1,621,748 10,039,658
1998 10,912,155 140,000 348,000 11,400,155 1,353,443 10,046,712
1999 10,469,496 145,000 339,450 10,953,946 918,310 10,035,636
2000 10,484,669 155,000 330,450 10,970,119 910,309 10,059,810
2001 9,725,998 165,000 320,850 10,211,848 918,445 9,293,403
2002 9,722,091 175,000 310,650 10,207,741 927,986 9,279,755
2003 9,730,239 185,000 299,850 10,215,089 924,605 9,290,484
2004 9,741,475 195,000 288,450 10,224,925 946,192 9,278,733
2005 9,759,975 210,000 276,300 10,246,275 931,248 9,315,027
2006 1,927,875 500,000 255,000 2,682,875 2,682,875
2007 1,831,500 500,000 225,000 2,556,500 2,556,500
2008 1,735,313 500,000 195,000 2,430,313 2,430,313
2009 1,640,625 500,000 165,000 2,305,625 2,305,625
2010 1,546,875 500,000 135,000 2,181,875 2,181,875
2011 500,000 105,000 605,000 605,000
2012 500,000 75,000 575,000 575,000
2013 500,000 45,000 545,000 545,000
2014 500.000 15.000 515.000 515.000
$121 ,856 $6,000, $4,565,100 $132,297,956 $15.685.451 1116,612,505
Estimated Average Annual Ad Valorem Tax Supported Debt Service Requirement(1995/2014) $,5,830,625
Estimated Average Annual Ad Valorem Tax Debt Service Requirements (1995/2014) . . . . . $ 6,614,898
Estimated Maximum Annual Ad Valorem Tax Debt Service Requirement (1997) . . . . . . . . $11,661,406
(a) Interest estimated at 6.00% for illustration purposes.
(b) Debt supported by revenues other than ad valorem tax revenues.
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.
9
: .
Bonded Indebtedness:
1994 Certified Assessed Valuation(100% of Estimated Market Value) . . . . . . . . . . . . $3,251,615,993(a)
Direct Debt
Outstanding Ad Valorem Tax Debt(as of March 15, 1995) . . . . . . . . . . . . . . . $ 73,246,091
The Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.000.000
Total Direct Ad Valorem Tax Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 79,246,091
Less Self Supporting Debt(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9.441.600
Total Direct Ad Valorem Tax Supported Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 69.804.491
Estimated Interest&Sinking Fund Balance (as of March 15, 1995) . . . . . . . . . . . . . $ 7,432.755
(a) Certified by the Jefferson County Appraisal District.
(b) See "DEBT STATEMENT -Revenue Support of Ad Valorem Tax Debt."
Revenue Support of Ad Valorem Tax Debt:
Certain tax supported bonds and certificates of obligation are being paid from revenues other than ad valorem
taxes. Upon issuance of the Certificates the City has a total of $9,441,600 of such bonds and certificates of
obligation which are presently outstanding. The following is a schedule of funds so transferred in 1990 through
1994. 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.
1994 1993 1992 1991 1990
Transfer from other funds to
Debt Service Fund (a) $ 750,000 $ 746,775 $ 412,038 $ 66,100
Debt Service paid from
Enterprise Funds $1,606,231 $2,168,985 $2,183,398 $2,063,748 $2,072,120
(a) Debt service paid from the Street Maintenance Fund were paid directly from the Debt Service Fund.
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
Taxin¢Jurisdiction Debt as of 3• .5-95 Percent Amount
Beaumont Independent School District $16,950,000 61.83% $12,149,595
Jefferson County 27,550,000 31.14 8,579,070
Jefferson County Drainage District No. 6 5,075,000 80.47 4,079,829
Port of Beaumont Navigation District 10,110,000 68.11 6.885.921
TOTAL ESTIMATED OVERLAPPING DEBT $31,694,415
The City 69.804.491(a)
TOTAL DIRECT AD VALOREM TAX SUPPORTED
AND ESTIMATED OVERLAPPING DEBT 1101,498,906
(a) Direct Ad Valorem Tax Supported Debt.
10
Debt Ratios:
Direct Direct Tax
Ad Valorem Supported and
Ad Valorem Tax Supported Overlapping
Tax Debt Debt Debt
1994 Certified Assessed Valuation($3,251,615,993) . . . . . . 2.44% 2.15% 3.12%
Per Capita(114,461) . . . . . . . . . . . . . . . . . . . . . . . . . $ 692 $609 $887
Short Term Deb t•
Under Article VII of the City Charter, the City is empowered to issue Tax Anticipation Notes. As of March
15, 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.
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.
11
-Property Subject to Taxation-
Except for certain exemptions provided by Texas law, all the property in the City, real or personal, is subject
to taxation by the City. Principal categories of exempt property include property owned by the State of Texas or
its political subdivisions if the property is used for public purposes; property exempt from ad valorem taxation by
federal law; certain household goods, family supplies, and personal effects; farm products owned by producers;
certain property associated with charitable organizations,use and development associations, religious organizations,
and qualified schools; designated historic sites; solar and wind powered energy devices; most individually owned
automobiles; property of disabled veterans only to the extent of $3,000 of taxable valuation; and residential
homesteads of persons over 65 years, to the extent the governing body of the political subdivision granting an
exemption deems it advisable to exempt such homestead. The Council presently exempts from taxation up to
$17,500 assessed valuation on residential homesteads to persons over 65 years of age. Such homestead and disabled
veterans exemptions from the 1994 tax roll approximate$160,035,940.
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 1994 tax roll approximates $19,912,070.
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
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
facts, 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.
12
The Appraisal District is required to review all property within the City at least every four years. The
reappraisal was completed for the 1991 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 a obligation to assess all property for taxation which has not
been rendered for taxation by the owner and to present his assessments along with any objections to renditions to
a nine-member Appraisal Review Board, each of whom has resided within the Appraisal District for two years, and
has been appointed by the Appraisal District's Board of Directors. The Appraisal Review Board has the ultimate
responsibility of equalizing the value of all comparable taxable property within the Appraisal District;however,any
owner who has rendered his property may appeal the decision of the Appraisal Review Board by filing suit in
district court in Jefferson County, within 45 days from the date the tax roll is approved. In the event of such suit,
the value of the property is determined by the court, or by a jury if requested by the owner, which value as so
determined is binding on the City for the tax year in question and the succeeding year, except for subsequent
improvements.
A city, or other taxing unit,may challenge the appraisals assigned categories of property within its jurisdiction
under certain limited circumstances. The City may also sue the Appraisal District to compel it to comply with the
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.
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
19P9 2,759,044,690 .540 14,898,841 97.19 100.76 1990
199,C) 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 (b) (b) 1995
(a) Levy reduced due to election of additional 1/2 cent sales tax.
(b) In process of collection.
13
-Tax Rate Distribution-
1994 1993 1992 1991 1990 1989 1988
General Fund $0.350 $0.350 $0.35 $0.35 $0.31 $0.31068 $0.2922
Interest&
Sinking Fund .265 .265 .27 .24 .21 0.22080 0.2200
Liability Insurance
Trust Fund -0- -0- -0- -0- -0- -0- 0.0192
Capital Project Fund -0- -0- =0- _0- 0.02 0.00852 0.0086
Total 0.615 0.615 0.62 0.59 0.54 0.54000 0.5400
-Tax Base Distribution-
Type of Property 1994 Tax Roll % 1993 Tax Roll % _ 1992 Tax Roll %
Residential $1,862,271,680 54.11% $1,828,689,790 53.27% $1,649,234,630 52.05%
Commercial 1,047,937,273 30.45 1,043,254,680 30.39 1,005,201,670 31.72
Industrial 202,187,980 5.87 225,947,420 6.58 176,478,550 5.57
Utilities 196,268,360 5.70 199,523,300 5.81 203,190,060 6.41
Vacant Lots/Tracts/Acreage 125,837,650 3.66 128,412,300 3.74 126,416,910 3.99
Minerals 4,546,530 .13 4,488,620 .13 5,647,300 .18
Other Personal 2.523,200 .07 2.329,310 .07 2,546,210 .08
Gross Assessed Value $3,441,572,673 $3,432,645,420 $3,168,715,330
Less: Exemptions 189,956.680 187.492.510 182.666.210
Net Assessed Value $3,251,615,993 $3,245,152,910 52,986,049,120
- Principal Taxpayers -
1994 1993 1992
Taxpayer Type of Propert y Tax Roll Tax Roll Tax Roll
Gulf States Utilities Co. Electric Utility $ 94,013,730 $ 96,664,630 $ 94,776,050
Southwestern Bell Telephone Co. Telephone Utility 70,498,560 71,482,610 70,683,510
Amoco Oil Company Chemical Properties 34,614,290 33,664,381 34,446,320
Parkdale Mall Shopping Center 28,441,890 28,456,650 28,492,250
Sabine Gas Trans. Co. Pipeline Company 26,332,800 26,021,000 (b)
Chevron USA Inc. (a) Chemical Properties 24,223,450 37,736,700 35,037,800
Betz Laboratories Chemical Properties 22,870,060 22,674,360 22,428,520
Wal-Mart Stores Inc. Wholesale Outlet 17,426,270 (b) 10,502,960
Phelan A. M. &Harry Phelan Real Properties 17,217,520 15,186,560 16,948,880
Winnie Pipeline Co. Pipeline Company 13,168,440 20,312,040 (b)
Mobil Oil Corp. Chemical Properties (b) 11,592,990 10,221,550
First City, Texas -Beaumont Bank (b) (b) 10.791,470
Total Top Ten Taxpayers Assessed Valuation 348 807 1 $363,791,920 122LLI 11.8 1.0
% of Assessed Valuation to Respective Tax Roll 10.97% 10.75% 11.20%
(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.
14
e
-Tax Adequacy -
Estimated Average Annual Ad Valorem Tax Supported
Debt Service Requirements (1995/2014)(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,830,625
Tax Rate of$0.189 per $100 assessed valuation against
the 1994 Assessed Valuation, at 95% collection,produces . . . . . . . . . . . . . . . . . . . . . . $ 5,838,276
Estimated Average Annual Debt Service Requirements (1995/2014) . . . . . . . . . . . . . . . . . $ 6,614,898
Tax Rate of$0.215 per $100 assessed valuation against
the 1994 Assessed Valuation, at 95% collection, produces . . . . . . . . . . . . . . . . . . . . . . $ 6,641,426
Estimated Maximum Annual Debt Service Requirements (in the year 1997) . . . . . . . . . . . . . $11,661,406
Tax Rate of$0.378 per $100 assessed valuation against
the 1994 Assessed Valuation, at 95% collection, produces . . . . . . . . . . . . . . . . . . . . . . $11,676,553
(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.
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.
1994 Tax Estimated
Taxing Jurisdictions Rate/ 100 1994 Tax Bill
The City $0.615000 $461.25
Beaumont Independent School District 1.385000 1,038.25
Jefferson Count;' .340000 255.00
Jefferson County Drainage District No. 6 .171780 128.84
Port of Beaumont Navigation District .074963 56.22
Port of Beaumont .012450 9.34
Estimated Total 1994 Tax Bill 2.599243 IL 249.40
Sales Tax
-Authority-
The City has adopted the provisions of Section 321.001 et sea. 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.
15
i i n
- Sales Tax Option-
In 1986 the Texas Legislature passed a statute giving Texas cities the option of assessing a 1/2 cent sales tax.
The sales tax must be approved by a majority of the city's voters in a local option election and, if the tax is
approved, then the city must reduce its ad valorem tax property levy by the estimated sales tax revenues.
The City had a special election of the City's voters on August 8, 1987, approving a 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 FAuivalen t Tax Levy
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
(a) Includes 1/2 cent sales tax increase
Industrial District Contracts: _
The City has created, within its extraterritorial jurisdiction, but outside of the City limits, ten Industrial
Districts and has entered into contracts with the industries within such districts. The contracts 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 Certificates.
16
The Industrial District, the industry within and current payment are as follows:
Industrial District 1995 1994 1993 1992 1991
Mobil Oil Corporation . . . . . . . . . . . . $5,231,698 $4,545,543 $4,862,666 $5,396,197 $4,872,478
Texas Gulf Sulphur Co. . . . . . . . . . . . (a) 6,837 7,165 18,561 -0-
Occidental Petroleum . . . . . . . . . . . . . 450,573 435,266 449,488 526,577 443,824
Beaumont Methanol Corp. . . . . . . . . . . 393,600 250,000 -0- -0- -0-
ICI Acrylics . . . . . . . . . . . . . . . . . . 358,206 -0- -0- -0- -0-
E. I. duPont de Nemours &Co. . . . . . . 1,028,299 924,197 1,320,112 1,191,746 1,263,168
Gulf States Utilities Co. . . . . . . . . . . . 58,786 65,172 66,066 63,390 _ 60,074
Goodyear Tire&Rubber Co. . . . . . . . . 625,000 618,768 603,701 519,400 396,460
Olin Corp. . . . . . . . . . . . . . . . . . . . 50,003 46,052 49,819 49,468 45,245
Atochem North America, Inc.. . . . . . . . 141,946 126,155 46,845 104,034 100,064
Texas Eastern Transmission Corp. . . . . . 15,239 16,156 16.686 15,950 14.900
Total . . . . . . . . . . . . . . . . . . . . 8 353 350 7 034 146 7 422 550 7 885 323 7 196 213
(a) Sold to Nechesfiber, in process of being annexed.
Revenue 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 FAuivalent Tax Lew
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 8,353,350 (1994) .2569 41.77
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 Certificates).
Tax increments set aside for public improvements in the City's zone will be approximately $90,000 during 1995.
The zone was set up with a life of 21 years. The taxable assessed valuation of property within the District was
approximately$5,592,230 or.20% of the taxable assessed valuation of the City at the time of determination. The
taxable assessed calculation of property within the District was $4,910,580 or a .15% of the taxable assessed
valuation of the City at July 20, 1994.
17
i
SELECTED FINANCIAL DATA
Historical Ocerations of the City's General Fund:
The following is a condensed statement of revenues and expenses of the City's General Fund for the past five
fiscal years. The inclusion of the following table is not intended to imply that any revenues of the City, other than
receipts from ad valorem taxes as provided in the Ordinance, are pledged to pay principal and interest on the
Certificates.
Fiscal Year Ended September 30,
1994 1993 1992 1991 1990 1989
REVENUES
Property Taxes $11,373,924 $10,432,349 $10,200,928 $ 9,131,119 $ 8,797,516 $ 8,436,783
Gross Receipts Tax 9,247,949 9,144,328 8,639,799 8,440,117 7,929,209 7,653,649
Sales and Use Tax 20,914,296 20,185,256 20,391,037 18,415,116 17,405,117 15,928,261
Industrial Payments 7,034,147 7,422,551 7,885,323 7,196,213 6,942,792 6,552,244
Licenses and Permits 489,107 475,874 498,589 488,166 430,602 436,619
Charges for Services 1,411,974 1,379,681 1,242,337 1,118,261 1,121,040 1,143,263
Fines&Forfeits 1,469,868 1,326,540 1,349,857 1,322,622 1,272,498 1,516,721
Recreational Activities 670,897 685,992 751,217 735,435 687,585 182,069
Intergovernmental 24,280 118,077 625,141 643,186 28,652 31,828
Interest 174,590 135,770 195,686 157,954 268,762 363,970
Miscellaneous 394,829 829,191 1,444,861 519.687 367.726 603,725
Total Revenues 53 205 861 52 135 609 53 224 775 48 167 876 45 251 499 542,849,132
EXPENDITURES
General Government
Executive $ 2,027,438 $ 1,935,898 $ 1,875,759 $ 1,795,562 $ 1,720,435 $ 1,906,190
Central Services 4,450,431 3,553,136 2,505,098 2,009,466 897,653 417,334
Administrative
Services 2,141,675 1,992,363 2,231,620 2,467,278 3,343,501 3,603,615
Finance 989,700 966,449(a) --- -- - ---
Police 14,931,842 14,258,518 14,443,078 13,256,264 12,580,758 11,618,980
Fire 11,352,192 11,006,344 10,723,554 9,913,928 9,595,236 9,074,969
Public Safety 1,783,715 1,729,.126 2,669,770 2,456,467 2,304,950 2,256,219
Health 1,379,162 1,199,258 1,716,061 1,669,768 1,100,838 933,733
Public Works 7,996,189 8,252,370 8,844,037 8,359,432 8,025,451 7,862,295
Community Services 4,327,413 4,585,331 4,201,474 4,032,493 4,222,470 3,386,420
Non-Departmental 840.272 713,758 1,151,743 775,435 1,240,423 392.013
Total 52 220 029 50 192 551 50 362 194 46 736 093 45 031 715 41 451 768
(a) Restated due to change in accounting entity.
General Fund and Debt Service Fund Balance for the Past Six Fiscal Years:
Fiscal Year Ended September 30,
1994 1993 1992 1991 1990 1989
General Fund $5,983,439(a)$6,282,570 $4,465,868 $4,601,339 $3,977,198 $4,007,476
Debt Service Fund $3,756,497 $3,622,257 $3,423,739 $3,525,115 $3,440,490 $2,332,176
(a) Includes a prior period adjustment of$413,373.
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Financial Statements:
A copy of the City's Financial Statements for the fiscal year ended September 30, 1994, is attached hereto in
the APPENDIX B. Copies of such statements for preceding years are available, for a fee, upon request.
ADMINISTRATION OF THE CITY
Mayor and City Council:
Policy-making and legislative functions are the responsibility of and are vested in the Mayor and Council under
provisions of the"Charter of the City of Beaumont" (the "Charter") approved by the electorate December 6, 1947,
and amended in 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
John K. Davis Mayor Pro Tem and May 1995 Insurance Agent/
Councilman Metropolitan Life
Ward 3
Lulu L. Smith, M.D. Councilwoman May 1995 Physician
Ward 1 Stat Care
Guy N. Goodson Councilman May 1995 Attorney at Law,
Ward 2 Bernsen, Jamail &
Goodson, L.L.P.
Calvin Williams Councilman May 1995 High School Principal
Ward 4
Becky Ames Councilman at Large May 1996 Director of Sales and
Marketing, Hilton Hotel
Andrew P. Cokinos Councilman at Large May 1996 Investments/Real Estate
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;
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(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 graduata 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.
Assistant City Manager - Sterling Pruitt - Mr. Pruitt is a graduate of Pittsburg State College (1970) and
received a Master's Degree in Public Administration from Kansas University(1974). Mr. Pruitt has served as an
assistant to the Budget Director for the City of Phoenix, Arizona(1974-1987),as an assistant to the City Manager
in Phoenix, Arizona(1987-1990)and was appointed Assistant City Manager for the City in June 1990.
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 Policy 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.
Consultants:
The City has retained several consultants to perform pruressional 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
Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cook Shaver Parker&Williams
Beaumont, Texas
Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rauscher Pierce Refsnes, Inc.
Houston, Texas
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4
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.
One particular case against the City involves a suit filed by five former employees of the Police Department.
The plaintiffs allege City violations of the Texas whistleblower statute and other constitutional provisions. The case
was tried in state court and a jury verdict of approximately$2,400,000 was returned against the City in January of
1991. The verdict was upheld by the Ninth Circuit Court of Appeals, but the Texas Supreme Court recently
reversed and rendered a judgment in favor of the City in a 9-0 decision. The plaintiffs have filed a motion for
rehearing which is pending.
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 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 bond proceeds are being used for rehabilitation of existing
sewer lines. This work is anticipated to start in July of 1995 and to be completed by the end of 1996.
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 and the City expects
to receive the permits during 1995. Upon obtaining the permits, the City anticipates it will have to spend
approximately$150,000 a year to comply with the requirements of the permits.
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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.
The City is also under a mandate from the Texas Water Commission to clean up soil contamination at its fire
training center. The City estimates that the clean up costs will be approximately$1,250,000 and that the costs will
be paid out of the revenues received from operation of the fire training center.
For the grant years beginning September 1, 1994 and September 1, 1995, the City will receive from the
Federal Transportation Authority annual grants sufficient to cover one-half of the deficit arising from operation of
the transit system. 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 American 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 Texas Natural Resource Conservation Commission
("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.
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 constricted construction. These
regulations are being implemented in phases, as increasingly detailed data becomes available. The City and
Jefferson County have already passed ordinances implementing building restrictions in flood plain areas.
Approximately 66% of the surface area in the County and approximately 12% of the surface area in the City are
considered flood hazard areas, which may have an adverse effect on the market valuation of the property within the
areas and all of which may adversely effect assessed valuations.
State Legislation:
The City is a home rule city under the Texas Constitution, but it may not adopt ordinances or charter
provisions inconsistent with State law. The State Legislature will conclude its bi-annual regular session on June 1,
1995. The City will review the legislation enacted and to be enacted during this session to determine whether the
legislation may have any adverse material effect upon the City. Under the Federal and State Constitutions,the State
Legislature may not,however, enact legislation that impairs the City's ability to pay principal of or interest on the
Certificates.
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OTHER CONSIDERATIONS
Future Bond issues:
The City estimates that up to$4,000,000 in additional certificates of obligation or bonds may be issued during
fiscal year 1996. If issued, these certificates will provide funds for additional street improvements included in the
current capital improvement program.
The City estimates that up to$1,000,000 will be incurred over the next five years to comply with the recent
revisions to the Clean Water Act. Funds from state or federal agencies in the forms of loans or grants are not
expected to be available. If then current City revenues are not sufficient for such purpose, the City will have to
issue tax or revenue bonds or certificates of obligation to obtain the necessary funds.
The City anticipates that during 1996 or 1997, it may be necessary to issue up to$6,000,000 in revenue bonds
to finance the cost of expansion to the City's water and sewer system to meet the increasing needs of local prison
and jail facilities. Such bonds, if issued, will be paid out of the revenues of the City's waterworks and sewer
system.
The City is currently in the process of upgrading and rehabilitating the 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 1994, the City entered into capital lease agreements totalling approximately $200,000 for
the purchase of operating equipment and $1,700,000 to finance the construction of a recreation center. 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 1995,the City intends to enter into similar capital lease-purchase
agreements totalling an estimated$850,000.
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 they continue to contribute 12%. The City's unfunded pension obligation for the firefighters totals
$10,300,000,which will be amortized over thirty years.
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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 a balance as of September 30,
1994, of$347,876. 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. Should claims or losses exceed the balance of
the fund, the City may find it necessary to use current revenues or to incur additional indebtedness in order to
satisfy such claims and losses.
Under the laws of the State of Texas, claims for torts are limited to $250,000 per person and $500,000 per
incident. As of September 30, 1994, the City estimated the liability for claims that are probable and that can be
reasonably estimated is approximately $3,567,625. Therefore, to the extent that amounts in the 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, 1994,the City estimated
its liability for claims incurred in the fund to be $1,524,000. On the same date, the fund had a balance of
$2,105,743.
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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. 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.
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.
LEGAL MATTERS
Legal O in nions:
The City will furnish the Purchaser 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 opinion of Orgain, Bell &Tucker, L.L.P., 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
Bonds" 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 has participated in the preparation of the Official Statement, but such firm has not undertaken
independently to verify any of the information contained therein, except that, in its capacity as Bond Counsel, such
firm has reviewed the information describing the Certificates in the Official Statement to verify that such description
conforms to the provisions of the Ordinance. 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 fee to be paid Bond Counsel for services rendered in
connection with the issuance of the Certificates is contingent upon the sale and delivery of the Certificates. The
legal opinion will be printed in the definitive Certificates.
Tax Exemption:
In the opinion of Orgain, Bell & Tucker, L.L.P., 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.
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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 Certificates proceeds and the source of repayment of Certificates, limitations on
the investment of Certificates proceeds prior to expenditure, a requirement that excess arbitrage earned on the
investment of Bond 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.
Bond Counsel's opinion will assume continuing compliance with the covenants of the Ordinance pertaining to
those sections of the Code which affect the exclusion from gross income of interest on the Certificates for federal
income tax purposes and, in addition,will rely on representations by the City with respect to matters.solely within
the knowledge of the City, which Bond Counsel has not independently verified. If the City should fail to comply
with the covenants in the Ordinance or if the foregoing representations should be determined to be inaccurate or
incomplete, interest on the Certificates, 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.
The Code also imposes a 20% alternative minimum tax on the "alternative minimum taxable income" of a
corporation"(other than any S corporation,regulated investment company,REIT,or REMIC),if the amount of such
alternative minimum tax is greater than the amount of the corporation's regular income tax. The "Superfund
Revenue Act of 1986" also imposes an additional .12% "environmental tax" on the alternative minimum taxable
income of a corporation in excess of 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 minimum
tax consequences.
Except as stated above and as set forth below under the heading "Tax Accounting Treatment of Original Issue
Discount Bonds", Bond Counsel will express no opinion as to any federal, state or local tax consequences resulting
from the ownership of, receipt of interest on, or disposition of, the Certificates.
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 -f prospective purchasers
should consult their own tax advisors as to the applicability of these consequences.
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Tax Accounting Treatment of Original Issue Discount Bonds:
The initial public offering prices of the Certificates maturing in the years through (the "Original
Issue Discount Bonds")are less than the principal amounts of such Certificates. In the opinion of 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 Bond and
(ii)the initial offering price to the public of each such Bond constitutes original issue discount with respect to such
Bond in the hands of an owner who has purchased such Bond 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 Bond equal to that portion of the amount of such original issue discount
allocable to the period that such Bond continues to be owned by such owner.
In the event of the redemption,sale or other taxable disposition of such Bond prior to stated maturity,however,
the amount realized by such owner in excess of the basis for such Bond in the hands of such owner(adjusted upward
by the portion of the original issue discount allocable to the period for which such Bond 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 Bond held by an owner
who purchased such Bond 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.
Under existing law, the original discount on each Original Issue Discount Bond 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 Bond 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 Purchaser 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 Bonds to the general public are equal to the fair market value thereof. Neither
the City nor Bond Counsel warrants that the Original Issue Discount Bonds will be offered and sold in accordance
with such assumptions.
No-Litigation Certificate:
The City will furnish the Purchaser 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.
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QUALIFIED TAX-EXEMPT OBLIGATIONS
Under section 265 of the Code, no deduction is allowed in the calculation of the federal income tax of a
financial institution for the portion of such financial institution's interest expense paid or incurred on indebtedness
which is deemed under the Code to have been incurred or continued to acquire or carry an investment in tax-exempt
obligations acquired after August 7, 1986. An exception to the foregoing provision is provided in the Code for
"qualified tax-exempt obligations," which includes tax-exempt obligations, such as the Certificates, if such
obligations are (a) designated by the issuer as "qualified tax-exempt obligations" and (b) issued by a political
subdivision for which the aggregate amount of tax-exempt obligations(not including private activity bonds other than
"qualified 501(c)(3)bonds") to be issued by such political subdivision and all entities aggregated with the issuer
under the Code during the calendar year is not expected to exceed $10 million.
The City expects to designate the Certificates as "qualified tax-exempt obligations"and has represented that
the aggregate amount of tax-exempt obligations (including the Certificates) issued by the City and the entities
aggregated with the City under the Code during calendar year 1995 is not expected to exceed $10 million and that
the City and entities aggregated with the City under the Code have not designated more than $10 million in
"qualified tax-exempt obligations" (including the Certificates) during calendar year 1995.
Notwithstanding the applicability of this exception, the financial institutions acquiring the Certificates will
continue to be subject to rules in effect under prior law which disallows the deduction of 20 percent of the interest
expense allocable to tax-exempt obligations, including 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 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. was employed as Financial Advisor to perform certain professional services for
the City, including compiling of this Official Statement, for a fee to be computed on each separate issuance of
indebtedness, contingent upon such Certificates actually being issued, sold and delivered.
Certification as to Official Statement:
At the time of payment for and delivery of the Certificates, the Purchaser will be furnished a certificate
executed by an appropriate official of the City, acting in his official capacity, to the effect that to the best of his
knowledge and belief: (a) the descriptions and statements pertaining to the City contained in its Preliminary and
final Official Statements, on the respective dates of such statements, on the date of sale of the Certificates and the
acceptance of the bid therefor, and on the date of delivery of the Certificates did not do not contain an untrue
statc.,nent 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 sLted to have been obtained from sources other than City records or
to information supplied to the City by the Purchaser 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.
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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 Purchaser. All changes in the affairs of the City and
other matters described in the Official Statement subsequent to the delivery of the Certificates to the Purchaser and
all information with respect to the resale of the Certificates shall be responsibility of the Purchaser.
/s/
Mayor
City of Beaumont, Texas
Attest:
/s/
City Clerk
City of Beaumont, Texas
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