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HomeMy WebLinkAboutPACKET AUG 17 2004 W ° M City .Beaumont .Ul"`MEETING,,CIF,THE,Cf]rY COUNCIL UNCIL CHAMBERS AUGUST 17, 2004 1030 P.M. ,CGN•SENT AGENDA Approvral�of.minutes n .tn of committee appointments Aj :A afze:thesetfement ofthezWm of Annette Coward l3j t Authorize-the City>Manager to increase_the:Rehabilitation of the elevated Water.Storage Tank Sabine-Pass de-Harriot Street:Project amount for"extra work." A City of Beaumont 7Ej---t17!j Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Matt Martin, Liability Administrator MEETING DATE: August 17, 2004 AGENDA MEMO DATE: August 11, 2004 REQUESTED ACTION: Consider a resolution authorizing the settlement of the claim of Annette Coward. RECOMMENDATION Council approval of a resolution authorizing the settlement of the claim of Annette Coward. BACKGROUND Council authorized the settlement of this claim in Executive Session August 10, 2004. BUDGETARY IMPACT There are sufficient funds in the Liability Trust Fund to pay the settlement amount as shown: Annette Coward $22,500 2345 San Jacinto Beaumont, TX 77701 PREVIOUS ACTION None. SUBSEQUENT ACTION None. RECOMMENDED BY City Manager and City Attorney. G:\CGW GENDA\RESOLUTI\CLAIMLAW.DOC\AGEN MEMO-CLAIM\COWARD C-S 03-137-8-04.wpd i RESOLUTION NO. WHEREAS, the claim of Annette Coward has been discussed in an Executive Session properly called and held Tuesday, August 10, 2004; and, WHEREAS, the Council desires to authorize the settlement of the claim; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the City Attorney be and he is hereby authorized to settle the claim of Annette Coward in the amount of Twenty-Two Thousand Five-Hundred ($22,500) Dollars. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 17th day of August, 2004. - Mayor Evelyn M. Lord - B City of Beaumont � t Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Joseph G.Majdalani, Water Utilities Manager MEETING DATE: August 17, 2004 AGENDA MEMO DATE: August 10,2004 REQUESTED ACTION: Council approval of a resolution authorizing the City Manager to increase the Rehabilitation ofthe Elevated Water Storage Tank at Sabine Pass and Harriot Street Project amount for"extra work." RECOMMENDATION Administration recommends approval of increasing the Rehabilitation of the Elevated Water Storage Tank at Sabine Pass and Harriot Street Project amount by$12,498.25 to remove and replace the existing drain line and to paint pumps and piping accessories that were cited during the TCEQ annual inspection. BACKGROUND The drain line from the wet riser floor of the elevated storage tank has deteriorated and must be replaced. The paint on the pumps, motors, blind flanges, influent lines, headers, enclosures, piping, valve assemblies, valve actuator assemblies have deteriorated exposing the equipment to rusting. These conditions were cited by the TCEQ during their annual inspection. The primary goals of the project are to restore the surface of the equipment, remove and stop the rusting, prolong its life, and meet TCEQ regulations. BUDGETARY IMPACT Funds for the project are available in the Capital Improvement Funds. PREVIOUS ACTION Resolution 03-184 in the amount of$328,650 was passed by City Council on August 26,2003. SUBSEQUENT ACTION None. RECOMMENDED BY City Manager,Public Works Director,and Water Utilities Manager. WUAgenC0Eva1StorTanksk.wpd August 10,2004 lit APPROVAL OF CONTRACT CHANGE CHANGE ORDER No.: ONE(1) DATE: August 2,2004 PROJECT: City of Beaumont,Texas Rehabilitation of the Elevated Water Storage Tank at Sabine Pass&Harriot Street OWNER: City of Beaumont,Texas 801 Main Street Beaumont,Texas 77704 CONTRACTOR: Utility Services Co.,Inc. P.O.BOX 41304 Houston,Texas 77241 TO THE OWNER: Approval of the following contract change is requested. REASON FOR CHANGE: a.Adjust bid item quantities. b.Provide pay items for additional painting services. c.Provide a one(1)year warranty on the additional painting services. CONTRACT PRICE ORIGINAL CONTRACT AMOUNT: $ 328,650.00 THIS CHANGE ORDER: Item Description 2 Sodding,DELETE 6385 SY @$0.55/SY -$3,511.75 Additive Bid Item,DELETE 1 LS @$8,000.00/1-S -$8,000.00 New Items 4 Well Site No. 1 1) Paint well pump and motor, blind $6,800.00 flange on the west side of the tank, two (2) blind flanges on the south side of the tank, and the influent line to the concrete tank, including surface preparation, and remove the existing copper pipe running next to the influent line, ADD $3,500.00; 2) Paint the diesel tank and associate piping,including surface preparation;ADD $3,300.00 5 Well Site No.2-Paint well header,well pump enclosure, $3,000.00 control box support frame and the concrete pedestal under the header piping, including surface preparation; ADD $3,000.00/LS City of Beaumont,Texas Change Order No.One(1) Rehabilitation of the Elevated Water Storage Tank Page 2 of 2 at Sabine Pass and Harriot Street 6 Well Site No. 3 - Paint the well pump,motor and header $4,000.00 piping, and the control box support frame, including surface preparation, and replace grout under the well pump;ADD$4,000.00/LS Prison Site - Paint both pump stations, the valve assembly to the left of the overflow pipe, the valve actuator assembly, the blind flange to the right of the overflow pipe, the bottom of the catwalk at the exterior 7 access ladder, including surface preparation, and remove all seal material between the tank and the foundation and reseal and paint;ADD$8,500.00/LS $8,500.00 8 Additional Tank Work - 1) Remove drain line plate $1,710.00 form wet riser floor, ADD $700.00/LS; 2) Replace existing drain line,ADD$1,010.00/LS AMOUNT OF THIS CHANGE ORDER: $12,498.25 TOTAL REVISED CONTRACT AMOUNT INCLUDING THIS CHANGE ORDER No.One(1): $341,148.25 CONDITION OF CHANGE: Contractor acknowledges and agrees that the adjustments in contract price and contract time stipulated in this Change Order represents full compensation for all increases and decreases in the cost of, and the time required to perform the entire work under the Contract arising directly or indirectly from this Change Order and all previous Change Orders. Acceptance of this waiver constitutes an agreement between Owner and Contractor that the Change Order represents an all inclusive, mutually agreed upon adjustment to the Contract, and that Contractor will waive all rights to file a claim on this Change Order after it is properly executed. SUBMITTED BY REVIEWED BY APPROVED BY A;— Vl!-� Utility ervice Co.,Inc c a g c oft,Inc. City of Beaumont,Texas Contractor gainer Owner Date: � 4 / Date: 8-5-0�6 Date: C yof Beaumont REGULAR-MEETING ING O THE:CI'I'Y:COUNCIL �CDUNCIIL AUGUST 174 2004 1:30 P.M. AGENDA CAI:;I.;..TG.GRDER * invocation Pledge Roll Call 'k Presentations,und Recognition =Public,Comment: Persons may speak on scheduled agend&items 1-4/Consent Agenda Consent-Agenda GENERAL:BUSINESS l_ Consider,_approving;the,issuance of$17-million City of Beaumont, Texas, Waterworks and.Sewer•System Revenue'Bonds, Series:2004; and containing other matters related thereto 2. Consider approvingthefproposed 2004-tax:rate, take a record vote and schedule a public-hearing 3. Consider=approving.:an<amendment to the FY.2004 budget to transfer funds from the-:Debt Service:FundIo;provide.,for capital needs in the;Capital Reserve Fund 4. -Consider.appr6ving,a'ontract for:Security...Guard and Event.Staff services "','COMMENTS .Councilmembers/C ty Manager commenuon various matters (Public-Cornment(I'ersonsrzre limited to 3.minutes) EXECUTIVE SESSION * Consider matters related to contemplated or pending litigation in accordance with Section 551.071 of the Government Code: Penni Simonson, et al v. City of Beaumont City of Beaumont v. House of Praise Deliverance Ministries, Inc. * Consider the appointment, employment, evaluation, reassignment, duties, discipline, or dismissal of a public officer or employee in accordance with Section 551.074 of the Government Code: Specifically employment of a golf course superintendent Persons with disabilities who plan to attend this meeting and who may need auxiliary aids or services are requested to contact Pat Buehrle at 880-3725 a day prior to the meeting. J*T-,,M City of Beaumont Council Agenda Item c TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Kandy Daniel, Treasurer MEETING DATE: August 17, 2004 AGENDA MEMO DATE: August 11, 2004 REQUESTED ACTION: Council consider an ordinance authorizing the issuance of$17 million City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2004; and containing other matters related thereto. RECOMMENDATION The administration requests approval of an ordinance authorizing the issuance of$17 million City of Beaumont,Texas,Waterworks and Sewer System Revenue Bonds,Series 2004;and containing other matters related thereto. BACKGROUND (� Q`n 0 Results of the competitive bid process will be read by the City's Financial Advisor,142-41k I—debsando of RBC Dain Rauscher. A recommendation will be made to award the bonds to the underwriter offering the lowest overall interest cost to the City. The revenue bonds will mature September 1, 2007 through September 1,2028 with interest payable semiannually in Marchand September beginning March 1,2005. Wells Fargo Bank,Texas,N.A.will serve as paying agent/registrar. Delivery and receipt of proceeds by the City is scheduled for September 17, 2004. Proceeds will be used to provide funds for the expansion, repair, renovation and related improvements to the waterworks and sewer system. BUDGETARY IMPACT All debt shall be incurred in the Water Fund which is supported by revenues of the waterworks and sewer system. PREVIOUS ACTION None. SUBSEQUENT ACTION None. RECOMMENDED BY City Manager and Finance Officer. DRAFT No.3 ORDINANCE NO. ORDINANCE AUTHORIZING THE ISSUANCE OF THE CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2004; AND CONTAINING OTHER MATTERS RELATED THERETO THE STATE OF TEXAS § COUNTY OF JEFFERSON § THE CITY OF BEAUMONT § WHEREAS, The City of Beaumont, Texas (the "City") is authorized, pursuant to Chapter 1502, Texas Government Code, as amended, to issue bonds payable from the net revenues of its waterworks and sewer system to provide money for acquisitions, extensions, construction, improvement or repair of such system; and WHEREAS, the City now desires to issue bonds in order to provide funds to finance the expansion, repair, renovation and related improvements to the City's waterworks and sewer system; Now, Therefore BE IT ORDAINED BY THE CITY OF BEAUMONT,TEXAS.: 1. Findings and Determinations. It is hereby found and determined that the matters and facts contained in the preamble to this Ordinance are hereby found to be true and correct. 2. Definitions. Throughout this . ordinance the following terms and expressions as used herein shall have the meanings set forth below: The term"Act"shall mean Chapter 1502, Texas Government Code, as amended. The term "Additional Parity Bonds" shall mean the additional parity revenue bonds permitted to be issued by the City pursuant to Section 20 of this Ordinance. The term "Blanket Issuer Letter of Representations" means the Blanket Issuer Letter of Representations between the City, the Registrar and DTC. The term "Bond Insurance Policy" shall mean the insurance policy issued by the .Bond Insurer guaranteeing the scheduled payment of principal of and interest on the Bonds when due. The term "Bond Insurer" shall mean , or any successor thereto or assignee thereof. 1 The term "Bond Register" shall mean the books of registration kept by the Registrar in which are maintained the names and addresses of, and the principal amounts of the Bonds registered to, each Owner. The term "Bonds" shall mean the $17,000,000 The City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2004 authorized in this . Ordinance, unless the context clearly indicates otherwise. The term "Business Day" shall mean any day which is not a Saturday, Sunday, a day on which banking institutions in the city where the principal corporate trust office of the Registrar is located are authorized by law or. executive order to close, or a legal holiday. The term "City" shall mean The City of Beaumont,Texas. The term "Closing Date"means the date of the initial delivery of and payment for the Bonds. The term"Code"means the Internal Revenue Code of 1986, as.amended. The term"Comptroller"means the Comptroller of Public Accounts of the State of Texas. The term"DTC'.'means The Depository Trust Company of New York,New York, or any successor securities depository. The term "DTC Participant" means brokers and dealers, banks, trust companies, clearing corporations and certain other organizations on whose behalf DTC was created. to hold securities to facilitate the.clearance and settlement of securities transactions among DTC Participants. The term "Gross Revenues" shall mean all revenues, income and receipts of every nature derived or received by the City from the operation and ownership of the System (but excluding any utility deposits) and the interest income from the investment or deposit of money in the Revenue Fund, the Interest and Sinking Fund, and the Reserve Fund. The term "Interest Payment Date", when used in connection with any Bond, shall mean March 1, 2005, and each March 1 and September 1 thereafter until maturity or earlier redemption of such Bond. The term "Maintenance and Operation Expenses" shall mean the reasonable and necessary expenses of operation and maintenance of the System, including all salaries, labor, materials, repairs and extensions necessary to render efficient service, and all payments under contracts now or hereafter defined as operating expenses by the Legislature of the State of Texas. Depreciation shall never be considered as a Maintenance and Operation Expense. 2 The term"MSRB"shall mean the Municipal Securities.Rulemaking Board. The term "Net Revenues" shall mean all Gross Revenues remaining. after deducting the Maintenance and Operation Expenses. The term "NRMSIR" means each person whom the SEC or its staff has determined to be a nationally recognized municipal securities information repository within the meaning of the Rule from time to time. The term "Ordinance" as used herein and in the Bonds shall mean this ordinance authorizing the Bonds and all amendments and supplements hereto. The term "Owner" shall mean any person who shall be the registered owner of any outstanding Bonds. The term "Parity Bonds" shall mean the Bonds, the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 1998, and the City's outstanding Waterworks and Sewer.System Revenue Refunding Bonds, Series 1999, and the City's outstanding Waterworks and. Sewer System Revenue Bonds, Series 2000, and the City's outstanding Waterworks. and Sewer System Adjustable Rate Revenue Bonds,Series 2002, and each series of Additional Parity Bonds from time to time hereafter issued,but only to the extent such Parity Bonds remain outstanding within the meaning of this Ordinance. The term "Paying Agent" shall mean the Registrar. The term "Record Date" shall mean, for any Interest Payment Date, the fifteenth (15th) calendar day of the month next preceding each Interest Payment Date. The term "Registrar" shall mean Wells Fargo Bank Texas, N.A., Houston, Texas, and its successors in that capacity. The term "Reserve Fund Requirement" shall mean an amount equal to the average annual principal and interest requirement on the Parity Bonds, which may be determined and redetermined each year by the City but in no event less frequently than upon the issuance of each series of Parity Bonds. The term"Rule".shall mean SEC Rule 15c-12, as amended from time to tome. The term "SEC" shall mean the United States Securities and Exchange Commission. The term "SID" shall mean the Municipal Advisory Council of Texas, which has been designated by the State of Texas as, and determined by the SEC staff to be, a state information depository within the meaning of the Rule. The term "Special Project" shall mean, to the extent permitted by law, any property, improvement or facility declared by the City not to be part of the System and substantially all of the costs of the acquisition, construction and installation of which is 3 paid from proceeds of a financing transaction other than the issuance of bonds payable from ad valorem taxes or Net Revenues of the System, and for which all maintenance and operation expenses are payable from sources other than revenues of the System,but only to the extent that and for so long as all or any part of the revenues or proceeds of which are or will be pledged to secure the payment or repayment of such costs of acquisition, construction and installation under such financing transaction. The term "System" shall mean all properties, facilities, improvements, equipment, interests and rights constituting the waterworks and sewer system of the City, including all future extensions, replacements, betterments,additions, improvements, enlargements, acquisitions, purchases and repairs to the System,but excluding all Special Projects. The term "Underwriter" shall mean 3. Authorization. The Bonds shall be issued in fully registered form in the total authorized aggregate amount of SEVENTEEN MILLION DOLLARS ($17,000,000) for the purpose of providing funds to (i) finance the expansion, repair, renovation and related improvements to the City's waterworks and sewer system, and- (ii)paying all costs of issuance of the Bonds(the"Project"). . 4. Designation, Date, and Interest Payment Dates. The Bonds shall be designated as "THE CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2004" and shall be dated September 1, 2004. The Bonds.shall bear interest at.the rates set forth in Section 5 below from the later of the initial date of delivery, or the most recent Interest Payment Date to which such interest has been paid or duly provided for, calculated on the basis of a 360 day year of twelve 30 day months, payable on March 1, 2005, and semiannually thereafter on September 1 and March 1 of each year until maturity or prior redemption. 5. Initial Bonds: Numbers and Denominations. The Bonds shall be initially issued bearing the numbers, in the principal amounts, and bearing interest at the rates set forth in the following schedule, and may be transferred and exchanged as set out in this. Ordinance. The Bonds shall mature, in accordance with this Ordinance, on September 1 in each of the years and in the amounts set out in such schedule. Bonds delivered on transfer of or in exchange for other Bonds shall be numbered (with appropriate prefix) in order of their authentication by the Registrar, shall be in the.denomination of$5,000 or integral multiples thereof, and shall mature on the same date and bear interest at the same rate as the Bond or Bonds in lieu of which they are delivered. BONDS Bond Principal Interest Number Year Amount Rate R-1 2007 $ 200,000 % R-2 2008 $ 205,000 % R-3 2009 $ 210,000 % R-4 2010 $ 215,000 % 4 R-5 2011 $ 220,000 % R-6 2012 $ 225,000 R-7 2013 $ 230,000 % R-8 2014 $ 240,000 % R-9 2015 $ 250,000 % R-10 2016 $ 255,000 % R-11 2017 $ 260,000 % R-12 2018 $ 270,000 % R-13 2019 $ 275,000 % R-14 2020 $ 280,000 % R-15 2021 $ 285,000 % R-16 2022 $ 290,000 % R-17 2023 $ 300,000 % R-18 2024 $2,315,000 % R-19 2025 $2,435,000 % R-20 2026 $2,555,000 R-21 2027 $2,680,000 % R-22 2028 $2,805,000 % 6. Execution of Bonds; Seal. The Bonds shall be signed by the Mayor and countersigned by the City Clerk or Deputy City Clerk, by their manual, lithographed, or facsimile signatures, and the official seal of the City shall be impressed or placed in facsimile thereon. Such facsimile signatures on the Bonds shall have the same effect as if each of the Bonds had been signed manually and in person by each of said officers, and such facsimile seal on the Bonds shall have the same effect as if the official seal of the City had been manually impressed upon each of the Bonds. If any officer of the City whose manual or facsimile signature shall appear on the Bonds shall cease to be such officer before the authentication of such Bonds or before the delivery of such Bonds, such manual or facsimile signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in such office. 7. Approval by Attorney General; Registration by Comptroller. The Bonds to be initially issued shall be delivered to the Attorney General of Texas for approval and shall be registered by the Comptroller of Public Accounts of the State of Texas. The manually executed registration certificate of the Comptroller of Public Accounts substantially in the form provided in Section 18 of this Ordinance shall be attached or affixed to the Bonds to be initially issued. 8. Authentication. Except for the Bonds to be initially issued, which need not be authenticated by the Registrar, only such Bonds which bear thereon a certificate of authentication, substantially in the.form provided in Section 18 of this Ordinance, manually executed by an authorized representative of the Registrar, shall be entitled to the benefits of this Ordinance or shall be valid or obligatory for any purpose. Such duly executed certificate of authentication shall be conclusive evidence that the. Bonds so authenticated were delivered by the Registrar hereunder. 9. Payment of Principal and Interest. The Registrar is hereby appointed as the paying agent for the Bonds. The principal of and premium, if any, on the Bonds shall 5 be payable, without exchange or collection charges, in any coin or currency of the United States of America which, on the date of payment, is legal tender for the payment of debts due the United States of America, upon their presentation and surrender as they respectively become due and payable, whether at maturity or by prior redemption, at the principal corporate trust office of the Registrar. The interest on each Bond shall be payable by check on the Interest Payment Date, mailed by the Registrar on or before each Interest Payment Date to the Owner of record as of the Record Date, to the address of such Owner as shown on the Bond Register. Any accrued interest payable at maturity on a Bond shall be paid upon presentation and surrender of such Bond at the principal corporate trust office of the Registrar. If the date for payment of the principal of or interest on any Bond is not a Business Day, then the date for such payment shall be the next succeeding Business Day, and payment on such date shall have the same force and effect as if made on the original date such payment was due. 10. Successor Registrars. The City covenants that at all times while any Bonds are outstanding it will provide a legally qualified bank, trust company, financial institution or other agency to act as Registrar for the Bonds. The City reserves the right to change the Registrar for the Bonds on not less than 60 days written notice to the Registrar, so long as any such notice is effective not less than 60 days prior to the next succeeding principal or interest payment date on the Bonds. Promptly upon the appointment of any successor Registrar, the.previous Registrar shall deliver the Bond Register or copies thereof to the new Registrar, and the new Registrar shall notify each Owner, by United States mail, first class postage prepaid, of such change and of the address of the new Registrar. Each Registrar hereunder, by acting in that capacity, shall be deemed to have agreed to the provisions of this Section. 11. Special Record Date. If interest on any Bond is not paid on any Interest Payment Date and continues unpaid for thirty (30) days thereafter, the Registrar shall establish a new record date for the payment of such interest, to be known as a Special Record Date. The Registrar shall establish a Special Record Date when funds to make such interest payment are received from or on behalf of the City. Such Special Record Date shall be fifteen (15) days prior to the date fixed for payment of such past due interest, and notice of the date of payment and the Special. Record Date shall be sent by United States mail, first class, postage prepaid, not later than five (5) days prior to the Special Record Date, to each affected Owner of record as of the close of business on the day prior to the mailing of such notice. 12. Ownership; Unclaimed Principal and Interest. The City, the Registrar and any other person may treat the person in whose name any Bond is registered as the absolute owner of such Bond for the purpose of making and receiving payment of principal of and premium, if any, or interest on such Bond, and for all other purposes, whether or not such Bond is overdue, and neither the City nor the Registrar shall be bound by any notice or knowledge to the contrary. All payments made to the person deemed to be the owner of any Bond in accordance with this Section 12 shall be valid and effectual and shall discharge the liability of the City and the Registrar upon such Bond to the extent of the sums paid. 6 Amounts held by the Registrar which represent principal of and interest on the Bonds remaining unclaimed by the Owner after the expiration of three years from the date such amounts have become due and payable shall be reported and disposed of by the Registrar in accordance with the applicable provisions of Texas law, including Title 6 of the Texas Property Code, as amended. 13. Registration, Transfer, and Exchange. So long as any Bonds remain outstanding, the Registrar shall keep the Bond Register at its principal corporate trust office and, subject to such reasonable regulations as it may prescribe, the Registrar shall provide for the registration and transfer of Bonds in accordance with the terms of this Ordinance. If the Registrar does not maintain its principal offices in the State of Texas, the City agrees to keep a Bond Register at its offices which is identical to the Bond Register maintained by the Registrar and the Registrar will notify the City as to any changes in the Bond Register within 1 business day. Each Bond shall be transferable only upon the presentation and surrender thereof at the principal corporate trust office of the Registrar, duly. endorsed. for transfer, or accompanied by an assignment duly executed by the registered Owner or his authorized representative in form satisfactory to the Registrar. Upon due presentation of any Bond in proper form for transfer, the Registrar shall authenticate and deliver in exchange therefor, within 72 hours after such presentation, a new Bond or Bonds, registered in the name of the transferee or transferees, in authorized denominations and of the same maturity and aggregate principal.amount and bearing interest at the same rate as the Bond or Bonds so presented. All Bonds shall be exchangeable upon presentation and surrender thereof at the principal corporate trust office of the Registrar for a Bond or Bonds.of the same'type, maturity and interest rate and in any authorized denomination, in an aggregate amount equal to the unpaid principal amount of the Bond or Bonds presented for exchange. The Registrar shall be and is hereby authorized to authenticate and deliver exchange Bonds in accordance with the provisions of this Section 13. Each Bond delivered in accordance with this Section 13 shall be entitled to the benefits and security of this Ordinance to the same extent as the Bond or Bonds in lieu of which such Bond is delivered. The City or the Registrar may require the Owner of any Bond to pay a sum sufficient to cover any tax or other governmental. charge that may be imposed in connection with the transfer or exchange of such Bond. Any fee or charge of the Registrar for such transfer or exchange shall be paid by the City. 14. Mutilated, Lost, or Stolen Bonds. Upon the presentation and surrender to the Registrar of a mutilated Bond, the Registrar shall.authenticate and deliver in exchange therefor a replacement Bond of like maturity, interest rate, and principal amount, bearing a number not contemporaneously outstanding. If any Bond is lost, apparently destroyed, or wrongfully taken, the City, pursuant to the applicable laws of the State of Texas and in the absence of notice or knowledge that such Bond has been acquired by a bona fide purchaser, shall execute and the Registrar shall authenticate and deliver a replacement Bond of like maturity, interest rate and principal amount or Maturity Amount, bearing a number not contemporaneously outstanding. 7 The City or the Registrar.may require the Owner of a mutilated Bond to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith and any other expenses connected therewith, including the fees and expenses of the Registrar. The City or the Registrar may require the Owner of a lost, apparently destroyed or wrongfully taken Bond, before any replacement Bond is issued, to: (1) furnish to the City and the Registrar satisfactory evidence of the ownership of and the circumstances of the loss, destruction or theft of such Bond; (2) furnish such security or indemnity as may be required by the Registrar and the City to save them harmless; (3) pay all expenses and charges in connection therewith, including, but not limited to, printing costs,.legal fees, fees of the Registrar and any tax or other governmental charge that may be imposed; and (4) meet any other reasonable requirements of the City and the Registrar. If, after the delivery of such replacement Bond, a bona fide purchaser of the original Bond in lieu of which such replacement Bond was issued presents for payment such original Bond, the City and the Registrar shall be entitled to recover such replacement Bond from the person to whom it was delivered or any person taking therefrom, except a .bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the City or the Registrar in connection therewith. If any such mutilated, lost, apparently destroyed or wrongfully taken Bond has become or is about to become due and payable, the City in its discretion may, instead of issuing a replacement Bond, authorize the Registrar to pay such Bond. Each replacement Bond delivered in accordance with this Section 14 shall be entitled to the benefits and security of this Ordinance to the same extent as the Bond or Bonds in lieu of which such replacement Bond is delivered. 15. Cancellation of Bonds. All Bonds paid in accordance with this Ordinance, and all Bonds in lieu of which exchange Bonds or replacement Bonds are authenticated and delivered in accordance herewith, shall be cancelled. and destroyed upon the making of.proper records regarding such payment. The Registrar shall furnish the City with appropriate certificates of destruction of such Bonds. 16. Book-Ent System. (a) Notwithstanding any other provision hereof, upon initial issuance of the Bonds but at the sole election of the Underwriter,the ownership of the Bonds shall be registered in the name of Cede & Co., as nominee of DTC, and except as otherwise provided in this Section, all of the outstanding Bonds shall be registered in the name of Cede & Co., as nominee of DTC. The definitive Bonds shall be initially issued in the form of a single separate certificate for each of the maturities thereof. If the Underwriter 8 shall elect to invoke the provisions of this Section, then the following provisions shall take effect with respect to the Bonds. (b) With respect to Bonds registered in the name of Cede & Co., as nominee of DTC, the City and the Registrar shall have no responsibility or obligation to any DTC Participant or to any person on behalf of whom such a DTC Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence, the City and the Registrar shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Bonds, (ii)the delivery to any DTC Participant or any other person, other than an Owner of a Bond, as shown on the Register, of any notice with respect to the Bonds, including any notice of redemption, or(iii)the payment to any DTC Participant or any other person, other than an Owner of a Bond, as shown in the Register, of any amount with respect to principal of,premium, if any, or interest on the Bonds. Notwithstanding any other provision of this Ordinance to the contrary, the City and the Registrar shall be entitled to treat and consider the person in whose name each Bond is registered in the Register as the absolute Owner of such Bond for the purpose of payment of principal of, premium,if any, and interest on the Bonds, for the purpose of all matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Registrar shall pay all principal of, premium, if any, and interest on the Bonds only to or upon the order of the respective Owners, as shown in the Register as provided in this Order, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to payment of principal of,premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. No person other than an Owner as shown in the Register, shall receive a Bond certificate evidencing the obligation of the District to make payments of amounts due pursuant to this Ordinance. Upon delivery by DTC to the Registrar of written notice to the' effect that DTC has determined to substitute a new nominee in place of Cede & Co., the word"Cede&Co." in this Order shall refer to such new nominee of DTC. (c) In the event that the City in its sole discretion determines that the beneficial owners of the Bonds be able to obtain certificated Bonds, or in the event DTC discontinues the services described herein, the City shall (i) appoint a successor securities, depository, qualified to act as such under Section 17(a) of the Securities and Exchange Act of 1934, as amended, and notify DTC and DTC Participants, as identified by DTC, of the appointment . of such successor securities depository and transfer one or more separate Bonds to such successor securities depository or (ii) notify DTC and DTC Participants, as identified by DTC, of the availability through DTC of Bonds and transfer one or more separate Bonds to DTC Participants having Bonds credited to their DTC , as identified by DTC. In such event, the Bonds shall no longer be restricted to being registered in the Register in the name of Cede & Co., as nominee of DTC, but may be registered in the name of the successor securities depository, or its nominee, or in whatever name or names Owners transferring or exchanging Bonds shall designate,in accordance with the provisions of this Ordinance. 9 IAN The execution and delivery of the Blanket Letter of Representations is hereby approved with such changes as may be approved by the Mayor or City Manager of the City and the Mayor is hereby authorized and directed to execute such Blanket Letter,of Representations. (e) Notwithstanding any other provision of this Ordinance to the contrary, so long as any Bonds are registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal of, premium, if any, and interest on such Bonds, and all notices with respect to such Bonds, shall be made and given, respectively, in the manner provided in the Blanket Letter of Representations. 17. Optional Redemption. The City reserves the right, at its option, to redeem Bonds having stated maturities on and after September 1, 2011, in whole or in part, on September 1, 2010, or any date thereafter, at a price of par plus accrued interest to the date fixed for redemption. If less than all of the Bonds are to be redeemed, the City shall determine the Bonds,or portions thereof,to be redeemed. Bonds may be redeemed only in integral multiples of$5,000. If a Bond subject,to redemption is in a denomination larger that $5,000, a portion of such Bond may be redeemed, but only in integral multiples of $5,000. Upon surrender of any Bond for redemption in part, the Registrar, in accordance with Section 13 hereof, shall authenticate and deliver in exchange therefor a Bond or Bonds of like maturity and interest rate in an aggregate principal amount equal to the unredeemed portion of the Bond so surrendered. Not less than thirty(30)days prior to a redemption date for the Bonds,the City shall cause a notice of redemption to be sent by United States mail,first class,_postage prepaid,to each Owner of each Bond to be redeemed in whole or in part, at the address of the Owner appearing on the Register at the close of business on the Business Day next preceding the date of the mailing of such notice. Such notice shall state the redemption date, the redemption price, the place at which Bonds are to be surrendered for payment and, if less than all the Bonds are to be redeemed, the numbers of the Bonds or portions thereof to be redeemed. Any notice of redemption so mailed shall be conclusively presumed to have been duly given whether or not the Owner receives such notice. By the date fixed for redemption, due provision shall be made with the Registrar for payment of the redemption price of the Bonds or portions thereof to be redeemed. When Bonds have been called for redemption in whole or in part and due provision made to redeem the same as herein provided, the Bonds or portions thereof so redeemed shall no longer be regarded as outstanding except for the purpose of being paid solely from the funds so provided for redemption, and.the rights of the Owners to collect interest which would otherwise accrue after the redemption date on any Bond or portion thereof called for redemption shall terminate on the date fixed for redemption. 18. Form. The form of the Bonds, including the form of the Registrar's Authentication Certificate, the form of Assignment, the form of Statement of Insurance, and the form of Registration Certificate of the Comptroller of Public Accounts of the 10 State of Texas which shall be attached or affixed to the Bonds initially issued shall be, respectively, substantially as follows, with such additions, deletions and variations as may be necessary or desirable and not prohibited by this Ordinance: FORM OF BOND United States of America State of Texas NUMBER DENOMINATION R- $ REGISTERED REGISTERED THE CITY OF BEAUMONT,TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2004 INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP: September 1,2004 REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS The City of Beaumont,Texas (the "City")promises to pay, but solely from certain Net Revenues as hereinafter provided, to the Registered Owner identified above, or registered assigns, on the maturity date specified above, upon presentation and surrender of this bond at the principal corporate trust office of Wells Fargo Bank Texas, N.A., Houston, Texas (the "Registrar"), the principal amount identified above, payable in any coin or currency of the United States of America which on the date of payment of such principal is legal tender for the payment of debts due the United States of America,and to pay, solely from such Net Revenues, interest thereon at the rate shown above, calculated on the basis of a 360 day year of twelve 30 day months, from the later of the initial date of delivery, or the most recent interest payment date to which interest has been paid or duly provided for. Interest on this bond is payable by check on March 1 and September 1, beginning on March 1, 2005, mailed to the registered owner of record as shown on the books of registration kept by the Registrar as of the fifteenth day of the month next preceding each interest payment date. Any accrued interest due at maturity shall be paid upon presentation and surrender of this Bond at the principal corporate trust office of the Registrar. THIS BOND is one of a duly authorized issue of Bonds, aggregating $17,000,000 (the "Bonds"), issued for the purpose of providing funds to (i) finance the expansion, repair, renovation and related improvements to the City's waterworks and sewer system, and(ii)paying all costs of issuance of the Bonds, pursuant to an ordinance adopted by the City Council on August 17, 2004 (the "Ordinance"), and in accordance with the authority 11 of Chapter 1502, Texas Government Code, as amended, and all other applicable law. THIS BOND AND ALL OF THE BONDS OF THIS SERIES are special obligations of the City, and together with the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 1998, the City's outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 1999, the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2000, and the City's outstanding Waterworks and Sewer System Adjustable Rate Revenue Bonds, Series 2002, are equally and ratably payable from and secured by.a first lien on the "Net Revenues" collected and received by the City from the operation and ownership of those properties, facilities, improvements, equipment, interests, rights and powers constituting the waterworks and sewer system of the City which are defined in the Ordinance as the "System", which Net Revenues are required to be set aside for and pledged to the payment of this series of bonds, the outstanding bonds and all additional bonds issued on a parity therewith, in the Interest and Sinking Fund and the Reserve Fund required to be maintained for the payment of all such bonds, all as more fully described and provided for in and subject to the restrictions and limitations imposed by the Ordinance. This Bond and the series of which it is a part, together with the interest thereon, are payable solely from such Net Revenues and do not constitute an indebtedness or general obligation of the City. THE HOLDER OF THIS OBLIGATION IS NOT ENTITLED. TO DEMAND PAYMENT OF THIS OBLIGATION OUT OF ANY MONEY RAISED BY TAXATION. THE CITY HAS RESERVED THE RIGHT TO ISSUE ADDITIONAL PARITY REVENUE BONDS, subject to the restrictions. and limitations contained in the Ordinance, which shall be equally and ratably payable from, and secured by a first lien on and pledge of, the aforesaid Net Revenues in the same manner and to the same extent as this Bond and the series of which it is a part. THE CITY RESERVES THE RIGHT, at its option,to redeem the Bonds having stated maturities on or after September 1, 2015, in whole or in part, on September 1, 2014, or any date thereafter, in integral multiples of$5,000, at a price of par plus accrued interest to the date fixed for redemption. Reference is made to the Ordinance for complete details concerning the manner of redeeming the Bonds. NOTICE OF ANY REDEMPTION shall be given at least thirty (30) days prior to the date fixed for redemption by first class mail, addressed to the registered owner of each Bond to be redeemed in whole or in part at the address shown on the books of registration kept by the Registrar. When Bonds or portions thereof have been called for redemption and due provision has been made to redeem the same, the principal amounts so redeemed shall be payable solely from the funds provided for redemption and interest which would otherwise accrue on the amounts called for redemption shall terminate on the date fixed for redemption. THIS BOND IS TRANSFERABLE only upon presentation and surrender at the principal corporate trust office of the Registrar, duly endorsed for transfer or accompanied by an assignment duly executed by the registered.owner or his authorized representative, subject to the terms and conditions of the Ordinance. 12 THE BONDS ARE EXCHANGEABLE at the principal corporate trust office of the Registrar for bonds in the principal amount of$5,000 or any integral multiple thereof, subject to the terms and conditions of the Ordinance. THIS BOND shall not be valid or obligatory for any purpose or be entitled to any benefit under the Ordinance unless this Bond either(i) is registered by the Comptroller of Public Accounts of the State of Texas by registration certificate attached or affixed hereto or (ii) is authenticated by the Registrar by due execution of the authentication certificate endorsed hereon. THE REGISTERED OWNER of this Bond, by acceptance hereof, acknowledges and agrees to be bound by all the terms and conditions of the Ordinance. THE CITY has covenanted in the Ordinance that it will at all times provide a legally qualified registrar for the Bonds and will cause notice of any change of registrar to be mailed to each registered owner. IT IS HEREBY certified,recited and covenanted that this Bond has been duly and validly issued and delivered; that all acts, conditions and things required or proper to be performed, to exist and to be done precedent to or in the issuance and delivery of this Bond have been performed, exist and have been done in accordance with law; that the bonds of this series do not. exceed any statutory limitation; and that provision has been made for the payment of principal and interest on this bond and all of the bonds of this series by the aforesaid lien on and pledge of the Net Revenues of the System. IN WITNESS WHEREOF, this bond has been signed with the manual or facsimile signature of the Mayor and countersigned with the manual or facsimile signature of the City Clerk, and the official seal of the City has been duly impressed, or placed in facsimile, on this bond. (AUTHENTICATION CERTIFICATE) THE CITY OF BEAUMONT,TEXAS (SEAL) Mayor City Clerk Form of Registration Certificate of Comptroller of Public Accounts COMPTROLLER'S REGISTRATION CERTIFICATE: 13 REGISTER NO. I hereby certify that this bond has been examined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this bond has been registered by the Comptroller of Public Accounts of the State of Texas. WITNESS MY SIGNATURE AND SEAL this Comptroller of Public Accounts (SEAL) of the State of Texas Form of Registrar's Authentication Certificate AUTHENTICATION CERTIFICATE It is hereby certified that this bond has been delivered pursuant to the Bond Ordinance described in the text of this Bond. Wells Fargo Bank Texas,N.A. By: Authorized Signature Date of Authentication. Form of Assignment ASSIGNMENT For value received, the undersigned hereby sells, assigns, and transfers unto (Please print or type name, address, and zip code of Transferee) (Please insert Social Security or Taxpayer Identification Number of Transferee) the within bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer said bond on the books kept for registration thereof, with full power of substitution in the premises. DATED 14 Signature Guaranteed: Registered Owner NOTICE: The signature above must correspond to the name of the registered owner as shown NOTICE: Signature must be on the face of this bond in guaranteed by a member firm every particular,without of the New York Stock any alteration, enlargement Exchange or a commercial or change whatsoever. bank or trust company. STATEMENT OF INSURANCE 18. Legal Opinion; Cusip. The approving opinion of Orgain, Bell& Tucker, L.L.P., Beaumont, Texas, Bond Counsel, and CUSIP Numbers may be printed:on the Bonds,but errors or omissions in the printing of such opinion or such numbers shall have no effect on the validity of the Bonds. 19. (a) Pledge and Source of Payment. The City hereby covenants and agrees that all Gross Revenues of the System shall, as collected and received by the City, be deposited and paid into the special funds established in this Ordinance, and shall be applied in the manner hereinafter set forth, in order to provide for (i) the payment of all Maintenance and Operation Expenses, and (ii) the payment of principal; interest and any redemption. premiums on the Parity Bonds, and all expenses of paying, securing and insuring the same. The Parity Bonds shall constitute special obligations of the City that shall be payable solely from, and shall be equally and ratably secured by a first lien on, the Net Revenues, as collected and received by the City from the operation and ownership of the System, which Net Revenues shall, in the manner.hereinafter provided, be set aside for and are hereby pledged by the City to the payment of the Parity Bonds in the Interest and Sinking Fund and the Reserve Fund as:hereinafter provided, and except as otherwise expressly provided herein, the Parity Bonds shall be in all respects on a parity with and of equal dignity with one another. The holders of the Parity Bonds shall never have the right to demand payment of either the principal of or interest on the Parity Bonds out of any funds raised or to be raised by taxation. (b) Construction Fund. There is hereby created and there shall be established on the books of the City a separate account to be entitled the"City of Beaumont, Texas, Waterworks and Sewer System Revenue Bonds, Series 2004, Construction Fund". Immediately after the sale and delivery of the Bonds, that portion of the proceeds of the Bonds to be used for the cost of the Project and the cost of issuance of the.Bonds shall be deposited into the Construction Fund and disbursed for such purposes. Pending completion of construction of the Project, interest earned on such proceeds may be used, at the City's 15 discretion, for the Project and shall be accounted for, maintained,deposited and expended as permitted by the provisions of Section 1202.043 of the Texas Government Code, as from time to time in effect, or as otherwise required by applicable law. Thereafter, such interest shall be deposited in the Interest and Sinking Fund. Upon completion of the Project, the monies,if any,remaining in the Construction Fund shall be transferred and deposited by the City into the Interest and Sinking Fund. (c) Rates and Charges. So long as any Parity Bonds remain outstanding, there shall be fixed, charged and collected rates and charges for the use and services of the System, which may be fully sufficient at all times: (i) to pay all Maintenance and Operation Expenses; and (ii) to produce Net Revenues in each fiscal year at least equal to 110 percent of the principal and interest requirements scheduled to occur in such fiscal year on all Parity Bonds then outstanding plus an amount equal to the sum of all deposits required to be made to the Reserve Fund in such fiscal year, but in no event less than the amount required to establish and maintain the Interest and .Sinking Fund, the Reserve Fund as hereinafter provided, and, to the extent that funds for such purpose are not otherwise available, to pay all other outstanding obligations payable from the Net Revenues of the System as and when the same become due. The City covenants that it will not grant or permit any free service from the System except for public buildings and institutions operated by the City. (d) Special Funds. The following special funds shall be maintained and accounted for as hereinafter provided so long as any of the Parity Bonds remain outstanding: (i) Waterworks and Sewer System Revenue Fund (the "Revenue Fund"); (ii) Waterworks and Sewer System Revenue Bond Interest and Sinking Fund(the "Interest and Sinking Fund"); and (iii) Waterworks and Sewer System Revenue Bond Reserve Fund (the "Reserve Fund".). The Revenue Fund shall be maintained as a separate account on the books of the City. The Interest and Sinking Fund and the Reserve Fund shall be maintained at an official depository bank of the City, separate and apart from all other funds and accounts of the City, and shall constitute trust funds which shall be held in trust for the benefit of the holders of the Parity Bonds, and the proceeds of which(except for interest income, which shall be transferred to the Revenue Fund) shall be and are hereby pledged to the payment of the Parity Bonds. All of the Funds named above shall be used solely as provided in this Ordinance so long as any Parity Bonds remain outstanding. (e). Flow of Funds. All Gross Revenues of the System shall be 16 deposited as collected into the Revenue Fund. Moneys from time to time on deposit to the credit of the Revenue Fund shall be applied as follows in the following order of priority: (i) First, to pay Maintenance and Operation Expenses and to provide by encumbrance for the payment of all obligations incurred by the City for Maintenance and Operation Expenses which may include an operating reserve equal to one month's estimated Maintenance and Operation Expenses. (ii) Second, to.make all deposits into the Interest and Sinking Fund required by this Ordinance and any ordinance authorizing the.issuance of any outstanding Parity Bonds and any ordinance authorizing the issuance of Additional Parity Bonds. (iii) Third, to make all deposits into the Reserve Fund required by this Ordinance and any ordinance authorizing the issuance of any.outstanding Parity Bonds and any ordinance authorizing the issuance of Additional Parity Bonds. (iv) Fourth, to pay any amounts due to any bond insurer of.Parity Bonds not paid pursuant to subsections (ii)or(iii) above. (v) Fifth, for any lawful purpose, including transfers to the General Fund as permitted by law. Whenever the total amounts on deposit to the credit of the Interest and Sinking Fund and the Reserve Fund shall be equivalent to the sum of the aggregate principal amount of all outstanding Parity Bonds plus the aggregate amount of all interest accrued and to accrue thereon, no further payments need be made into the Interest and Sinking Fund or the Reserve Fund. (f) Interest and Sinking Fund. On or before the last Business Day of each month so long as any Parity Bonds remain outstanding, after making all required payments and provision for payment of Maintenance and Operation Expenses, there shall be transferred into the Interest and Sinking Fund from the Revenue Fund the following amounts: (i) Such amounts, in approximately equal monthly installments, as will be sufficient to pay the interest scheduled to become due on the Parity Bonds on the next interest payment date; and (ii) Such amounts, in approximately equal monthly installments, as will be sufficient to pay the next maturing principal of the Parity Bonds, including the principal amounts of, and any redemption premiums on, any Parity Bonds payable as a result of the exercise or operation of any redemption provision contained in this Ordinance or in any ordinance authorizing the issuance of Parity Bonds. Moneys deposited to the credit of the Interest and Sinking Fund (except for interest income, which shall be transferred to the Revenue Fund) shall be used solely for the 17 purpose.of paying principal (either at maturity or prior redemption or to purchase Parity Bonds in the open market to be credited against mandatory redemption requirements), interest and redemption premiums on the Parity Bonds, plus all bank charges and other costs and expenses relating to such payment, on a pro rata basis among all series of Parity Bonds. On or before each principal and/or interest payment date for the Parity Bonds, the City shall transfer from the Interest and Sinking Fund to the paying agents for the Parity Bonds an amount equal to the principal, interest and redemption premiums payable on the Parity Bonds on such date, together with an amount equal to all bank charges and other costs and expenses relating to such payment. The paying agents for the Parity Bonds shall totally destroy all paid Parity Bonds and coupons (if any) and shall provide the City with an appropriate certificate of destruction. (g) Reserve Fund. Unless the Reserve Fund is fully funded, on or before the last Business Day of each month so long as any Parity Bonds remain outstanding, after making all required payments and provision for payment of Maintenance and Operation Expenses, and after making the transfers into the Interest and Sinking Fund required in the preceding Section, there shall be transferred into the Reserve Fund from the Revenue Fund an amount at least equal to one-sixtieth (1/6011) of the average annual principal and interest requirements on the Parity Bonds, so that the Reserve Fund shall contain, in no more than 60 months after the issuance of each such issue of Parity Bonds, money and investments in an aggregate amount at least equal to the average annual principal and interest requirements on all Parity Bonds then outstanding. After such amount has accumulated in`the Reserve Fund and so long thereafter as such Fund contains such amount, no further deposits shall be required to be made into the Reserve Fund, and any excess amounts may be transferred to the Revenue Fund. But if and whenever the balance in the Reserve Fund is reduced below such amount, monthly deposits into such Fund shall be resumed and continued in amounts at least equal to one-sixtieth (1/60') of the average annual principal and interest requirements on the Parity Bonds until the Reserve Fund has been restored to such amount. provided however, if a Reserve Fund Surety Policy has been obtained by the City pursuant to the next paragraph below, then the provisions of such next paragraph shall govern and control with respect to replenishment of amounts drawn under the Reserve Fund Surety Policy. The Reserve Fund shall be used to pay the principal of and interest on the Parity Bonds at any time when there is not sufficient money available in the Interest and Sinking Fund for such purpose and it may be used finally to pay and retire the last Parity Bonds to mature or be redeemed. To the extent permitted by law, the City expressly reserves the right at any time to satisfy all or any part of the amounts required to be on deposit in the Reserve Fund (the "Reserve Fund Requirement") by obtaining for the benefit of the Reserve Fund one or more Reserve Fund Surety Policies (a."Reserve Fund Surety Policy"). In the event the city elects to substitute at any time a Reserve Fund Surety Policy for any funded amounts in the. Reserve Fund, it may apply any bond proceeds thereby released, to the greatest extent permitted by law, to any purposes for which the bonds were issued, and if all such purposes have been satisfied, to the payment of debt service on such bonds, and it may apply any other funds thereby released to any of the purposes for which such funds may lawfully be applied including the payment of debt service on the Parity Bonds. A Reserve Fund Surety Policy shall be an insurance policy or other similar guarantee in a principal amount equal to the portion of the Reserve Fund Requirement to be satisfied which is 18 issued by a financial institution or insurance company with a rating for its long term unsecured debt or claims paying ability in the highest letter category by two major municipal securities evaluation sources. The premium for any such policy shall be paid from bond proceeds or other funds of the City lawfully available for such purpose. The City reserves the right to fund any increase in the Reserve Fund Requirement caused by the issuance of Additional Parity Bonds by the purchase of a.Reserve Fund Surety Policy in the amount of such increase or by making transfers from the Revenue Fund to the Reserve Fund, in approximately equal monthly installments, in amounts sufficient to accumulate the increase in the Reserve Fund Requirement within sixty(60)months of the issuance of such Additional Parity Bonds. If the Reserve Fund contains only cash and the balance in the Reserve Fund is reduced below the Reserve Fund Requirement at any time,.the City shall make monthly transfers from the Revenue Fund to the Reserve Fund, in approximately equal monthly installments, in amounts sufficient to restore the balance in the Reserve Fund to the Reserve Fund Requirement within twelve (12) months of the date on which the balance in the Reserve Fund was so reduced. If the Reserve Fund contains a Reserve Fund Surety Policy (and no cash) and a draw is made against such policy, the City shall make monthly transfers from the Revenue Fund,in approximately equal monthly installments, in amounts sufficient to reimburse the amount drawn under such policy within twelve (12) months. If the Reserve Fund.contains a combination of cash and a Reserve Fund Surety Policy, and the balance in the Reserve Fund is reduced below the Reserve Fund Requirement by a combination of cash withdrawals and draws against the Reserve Fund Surety Policy, the City shall make monthly transfers from the Revenue Fund, in approximately equal monthly installments, in amounts sufficient to restore the cash balance in the Reserve Fund and reimburse the amount drawn under such policy within twelve (12) months, with reimbursement to be made for all amounts drawn under such policy before any cash deposits are made into the Reserve Fund. Any reimbursement of amounts drawn against a Reserve Fund Surety Policy shall be limited to the amounts actually paid under such policy, and the City shall have no obligation to make any reimbursement payment with respect to any such policy except as provided herein. (h) Deficiencies in Funds. If in any month there shall not be deposited .into any Fund maintained pursuant to this Section 19 the full amounts required herein, amounts equivalent to such deficiency shall be set apart and paid into such Fund or Funds from the first available and unallocated money in the Revenue Fund, and such payment shall be in addition to the amounts otherwise required to be paid into such Funds during the succeeding month or months. To the extent necessary, the rates and charges for the System shall be increased to make up for any such deficiencies. (i) Investment of Funds; Transfer of Investment Income. Money in each Fund maintained pursuant to this Section of this Ordinance may, at the option of the City, be invested as permitted by law, provided that all such deposits and investments shall be made in such manner that the money required to be expended from any Fund will be available at the proper time or times, and provided further that in no event shall deposits or investment of money in the.Reserve Fund mature later than the final maturity date of the Parity Bonds. Any obligation in which money is so invested shall be kept and held in the Fund from which the investment was made. All such investments shall be promptly sold when necessary to prevent any default in connection with the Parity Bonds. All interest and income derived from such deposits and investments shall be transferred 19 or credited as received to the Revenue Fund, and shall constitute Gross Revenues of the System; provided, however, to the extent such interest and income is derived from bond proceeds, such interest and income shall not constitute Gross Revenues of the System and shall only be used for the purposes for which the bond proceeds may be used. 20. Additional Bonds. (a) Additional Parity Bonds. The City reserves the right to issue, for. any lawful purpose, including the refunding of any previously issued Parity Bonds or any other bonds or obligations of the City issued in connection.with the System, one or more series of Additional Parity Bonds payable from, and secured by a first lien on and pledge of, the Net Revenues of the System, on a parity with the Bonds and any other Additional Parity Bonds then outstanding; provided, however, that no Additional Parity Bonds may be issued unless: (i) The Additional Parity Bonds mature on 'September 1, and interest is payable on March l and September 1; (ii) The Interest and Sinking Fund and the Reserve Fund each contain the amount of money then required to be on deposit therein; (iii) For either the preceding Fiscal Year or any consecutive 12-month calendar period ending no more than 90 days prior to adoption of the ordinance authorizing such Additional Parity Bonds, Net Revenues were equal to at least 125% of the average annual principal and interest requirements on all Parity Bonds that will be outstanding after the issuance of the series of Additional Parity Bonds then proposed to be issued, as certified by the City's Finance Officer or by an independent certified public accountant or firm of independent certified public accountants; or (iv) If the City cannot meet the test described in (iii) above, but a change in the rates and charges applicable to the System becomes effective at least sixty (60) days prior to the adoption of the ordinance authorizing Additional Parity Bonds and the City's Finance Officer certifies that, had such change in rates and charges been effective for the preceding fiscal year or 12 consecutive calendar month period ending no more than 90 days prior to adoption of said ordinance, the Net Revenues for such period would have met the test described in(iii)above. (b) Subordinate Lien Obligations. The City reserves the right to issue, for any lawful purpose, bonds, notes or other obligations secured in whole or in part by liens on and pledges of the Net Revenues that are junior and subordinate to the hen on and pledge of Net Revenues securing payment of the Parity Bonds. Such subordinate lien obligations may be further secured by any other source of payment lawfully available for such purposes. (c) Special Project Bonds. The City reserves the right to issue revenue bonds secured by liens on and pledges of revenues and proceeds derived from Special Projects. 20 21. Covenants and Provisions Relating to all Parity Bonds. (a) Punctual Payment of Parity Bonds. The City will punctually pay or cause to be paid the interest on and principal of all Parity Bonds according to the terms thereof and will.faithfully do and perform, and at all times fully observe, any and all covenants, undertakings, stipulations and provisions contained in this Ordinance and in any ordinance authorizing the issuance of Additional Parity Bonds. (b) Maintenance of System. So long as any Parity Bonds remain outstanding, the City covenants that it will at all times maintain the System, or within the limits of its authority cause the same to be maintained, in good condition and working order and will operate the same, or cause the same to be operated, in an efficient.and economical manner at a reasonable cost and in accordance with 'sound business principles. In operating and maintaining the System, the City will comply'with all contractual provisions and agreements entered into by it and with all valid rules, regulations, directions or order of any governmental, administrative or judicial body promulgating same, noncompliance with which would materially an adversely affect the operation of the System. (c) Sale or Encumbrance of System. So long as any Parity Bond remain outstanding, the City will not sell, dispose of or, except as permitted.in this Ordinance, further encumber the System;provided, however, that this provision shall not prevent the City from disposing of any portion of the System which is being replaced or is deemed by the City to be obsolete, worn out, surplus or no longer needed for the proper operation of the System. Any agreement pursuant to which the City contracts with a person,corporation, municipal corporation or political subdivision to operate the System or to lease and/or operate all or part of the System shall not be considered as an. encumbrance of the System. (d) Insurance. The City further covenants and agrees that it will keep the System insured with insurers of good standing against risks, accidents or casualties against which and to the extent insurance is customarily carried by political subdivisions of the State of Texas operating similar properties, to the extent that such insurance is available. The cost of all such insurance,together with any additional insurance, shall.be a part of the Maintenance and Operation Expenses. All net proceeds of such insurance shall be applied to repair or replace the insured property that is damaged or destroyed, or to make other capital improvements to the System, or to redeem Parity Bonds. (e) Accounts, Records and Audits. So long as any Parity:Bonds remain outstanding, the City covenants and agrees that it will maintain a proper and complete system of records and accounts pertaining to the operation of the System in which full, true and proper entries will be made of all dealings, transactions, business and affairs which in any way affect or pertain to the System or the Gross Revenues or the Net Revenues thereof. The City shall after the close of each of its Fiscal Years cause an audit report of such records and accounts to be prepared by an independent certified public accountant or independent firm of certified public accountants. Each year promptly after such audit report is prepared, the City shall furnish a copy thereof without cost to the 21 Municipal Advisory Council of Texas and any holders of Parity Bonds who shall request same. All expenses incurred in preparing such audits shall be Maintenance and Operation Expenses. (f) Competition. To the extent it legally may, the City will not grant any franchise or allow for the acquisition, construction or operation of any competing facilities which might be used as a substitute for the System and will prohibit the operation of any such competing facilities. (g) Pledge and Encumbrance of Net Revenues. The City covenants and represents that it has the lawful power to pledge the Net Revenues to the payment of the Parity Bonds and has lawfully exercised such power under the Constitution and laws of the State of Texas. The City further covenants and represents that, other than to the payment of the Parity Bonds, the Net Revenues are not and will not be pledged to the payment of any debt or obligation of the City, or in any other manner encumbered unless such.pledge or encumbrance is junior and subordinate.to the lien and pledge securing payment of the Parity Bonds. (h) Remedies. This Ordinance shall constitute a contract between the City and the holders of the Parity Bonds from time to time outstanding, and the Bond Insurers, and shall remain in effect until the Parity Bonds and the interest thereon and all amounts owing to the Bond Insurers under any Bond Insurance Policy shall be fully paid or discharged or provision therefor shall have been made as provided herein. In the event of a default in the payment of the principal of or interest on any of the Parity Bonds or a default in the performance of any duty or covenant provided by law or in this Ordinance or a default in respect of any Bond Insurance Policy, the holder or holders of any of the Parity Bonds or any Bond Insurer, as appropriate, may pursue all legal remedies afforded by the Constitution and laws of the State of Texas to compel the City to remedy such default and to prevent further default or defaults. Without in any way limiting the generality of the foregoing, it is expressly provided that any holder of any of the Parity Bonds or any Bond Insurer may at law or in equity, by suit, action, mandamus, or other proceedings, enforce and compel performance of all duties required to be performed by the City under this Ordinance, including the making and collection of reasonable and sufficient rates and charges for the use and services of the System, the deposit of the Gross Revenues thereof into the special funds as herein provided, and the application of such Gross Revenues and Net Revenues in the manner required in this Ordinance. (i) Defeasance. The City may defease the provisions of this Ordinance and discharge its obligation to the holders of any or all of the Parity Bonds to pay principal, interest and redemption premium (if any) thereon in any manner permitted by law, including, without limitation,by depositing with any paying agent for such Parity Bonds or with the State Treasurer of the State of Texas either: (i) cash in an amount equal to the principal amount and redemption premium, if any, of such Parity Bonds plus interest thereon to the date of maturity or redemption, or (ii)pursuant to an escrow or trust agreement, direct obligations of, or obligations the principal and interest of which are guaranteed by, the United States of America, in principal amounts and maturities and bearing interest at rates. sufficient to provide for the timely payment of the principal amount and redemption premium, if any, of such Parity Bonds plus interest thereon to the date of maturity or redemption; provided,however, that if any of such Parity Bonds are to 22 be redeemed prior to their respective dates of maturity, provision shall have been made for giving notice of redemption as provided in the ordinance authorizing such Parity Bonds. Upon such deposit, such Parity Bonds and coupons appertaining thereto shall no longer be regarded to be outstanding or unpaid, and the lien on and pledge of Net Revenues securing such Parity Bonds shall thereupon cease and terminate. (j) Legal Holidays: In any case where the date fixed for payment of interest on or principal of the Parity Bonds or the date fixed for redemption of any Parity Bonds shall be a legal holiday or a day on which a paying agent for the Parity Bonds is authorized by law to close, then payment of interest or principal by such paying agent need not be made on such date but may be made on the next succeeding business day with the same force and effect as if made on the date fixed for such payment and no interest.shall accrue for the period from such date to the date of actual payment. (k) Unavailability of Authorized Publication. If, because of the temporary or permanent suspension of any.newspaper, journal or other publication, or, for any reason, publication.of notice cannot be made meeting any requirements herein established, any notice required to be published by the provisions of this Ordinance shall be given in such other manner and at such time or times as in the judgment of the City shall most effectively approximate such required publication and.the giving of such notice in such manner shall for all purposes of this Ordinance be deemed to be in compliance with the requirements for publication thereof. (1) Obligations Owing to Insurers. The City stipulates and agrees that it shall make full and timely payment of all amounts owing to any Insurer under any Financial Guaranty Agreements and there shall be no termination of this Ordinance or redemption, refunding or defeasance of the Parity Bonds unless and until all of such amounts owing under the Financial Guaranty.Agreement in respect of those Bonds shall have been paid in full. 22. Further Proceedings. After the Bonds to be initially issued shall have been executed, it shall be the duty of the Mayor and other appropriate officials and agents of the City to deliver the Bonds to be initially issued and all pertinent records and proceedings to the Attorney General of the State of Texas, for examination and approval. After the Bonds to be initially issued shall have been approved by the Attorney General,. they shall be delivered to the Comptroller of Public Accounts.of the State of Texas for registration. Upon registration of the Bonds to be initially issued, the Comptroller of Public Accounts (or the Comptroller's bond clerk or an assistant bond clerk lawfully designated in writing to act for the Comptroller) shall manually sign the.Comptroller's Registration Certificate prescribed herein and the seal of said Comptroller shall be impressed or placed in facsimile, thereon. 23. Sale of Bonds. The Bonds are hereby sold and shall be delivered to the Underwriter at the price of$ , representing the principal amount of the Bonds equal to $17,000,000.00, plus a cash premium of$ . In addition thereto, at the time of delivery the Underwriter shall pay to the City the accrued interest on the Bonds to the date of delivery. The City finds that the bid of the Underwriter for the purchase of the Bonds and which bid has been accepted by the City was the best bid and the purchase price and terms are hereby found and determined to be the most 23 advantageous reasonably obtainable by the City. The Mayor and other appropriate officials of the City are hereby authorized and directed to do any and all things necessary or desire able to satisfy the conditions set out herein and to provide for the issuance and delivery of the Bonds. All officials and representatives of the City are authorized and directed to execute such documents and to do any and all things necessary, desirable or appropriate to obtain the Bond Insurance Policy, and the printing on the Bonds covered by the Bond Insurance Policy of an appropriate legend regarding such insurance is hereby approved and authorized. 24. Tax Exemption. (a) General Tax Covenant. The City intends that the interest on the Bonds shall be excludable from gross income for purposes of federal income taxation pursuant to Sections 103 and 141 through 150 of the Code, and-the applicable Income Tax Regulations (the "Regulations"). The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that if taken or omitted, respectively, would cause the interest on the Bonds to be includable in gross income, as defined in Section 61 of the Code, of the holders thereof for purposes of federal income taxation. In particular, the City covenants and agrees to comply with each requirement of this Section; provided, however, that the City shall not be required to comply with any particular requirement of this Section if the City has received an opinion of nationally recognized bond counsel ("Counsel's Opinion") that such noncompliance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or if the City has received Counsel's Opinion to the effect that compliance with some other requirement set forth in this Section will satisfy the applicable requirements of the Code, in which case compliance with such other requirement specified in such Counsel's Opinion shall constitute compliance with the corresponding requirement specified in this Section. The City represents and warrants that the City shall realize present value debt service savings (determined without regard to administrative expenses) in connection with issuance of the Bonds to the extent that the proceeds thereof are used to refund the Refunded Bonds. (b) No Private Use or Payment and No Private Loan Financing. The City shall certify, through an authorized officer, employee or agent that based upon all facts and circumstances known or reasonably expected to be in existence on the date the Bonds are delivered, that the proceeds of the Refunded Bonds have not been used, and that proceeds of the Refunded Bonds and the Bonds will not be used in a manner that would cause the Bonds to be "private activity bonds" within the meaning of Section 141 of the Code and the Regulations promulgated thereunder. Moreover, the City covenants and agrees that it will make such use of the proceeds of the Refunded Bonds and the Bonds including interest or other investment income derived from Bond proceeds, regulate the use of property financed, directly or indirectly, with such proceeds, and take such other and further action as may be required. so that the Bonds will not be "private activity bonds" within the meaning of Section 141 of the Code and the Regulations promulgated thereunder. (c) . No Federal Guaranty. The City covenants and agrees not to take 24 any action, or knowingly omit to take any action within its control, that, if taken or omitted, respectively, would cause the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Code and applicable regulations thereunder, except as permitted by Section 149(b)(3)of the Code and such Regulations. (d) No-Arbitrage Covenant. The City shall certify, through an authorized officer, employee or agent, that based upon all facts and estimates known or reasonably expected to be in existence on the date the Bonds are delivered, the City will reasonably expect that the proceeds of the Bonds and the amounts transferred from the Reserve Fund for the Refunded Bonds pursuant to Section.26 of this Ordinance will not be used in a manner that would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148(a) of the Code and applicable Regulations thereunder. Moreover, the City covenants and agrees that it will make such use of the proceeds of the Bonds and the amounts so transferred from said Reserve Fund (including interest or other investment income derived therefrom),. regulate investments of such. proceeds and amounts, and take such other and further action as may be required so that the Bonds will not be "arbitrage bonds" within the meaning of Section 148(a) of the Code and applicable Regulations thereunder. (e) Arbitrage Rebate. If the City does not qualify for an exception to the requirements of Section 148(f) of the Code relating to rebate to the United States, the City will take.all necessary steps to comply with the requirement that certain amounts earned by the City on the investment of the "gross proceeds" of the Bonds (within the meaning of Section 1.48(f)(6)(B) of the Code), be rebated to the federal government. Specifically, the City will (i)maintain records regarding the investment of the gross proceeds of the Bonds as may be required to calculate the amount earned on the investment of the gross proceeds of the Bonds separately from records of amounts on deposit in the funds and accounts of the City allocable to other bond issues of the City or moneys which do not represent gross proceeds of any bonds of the City, (ii) calculate at such times as are required by applicable regulations, the amount. earned from the investment of the gross proceeds of the Bonds which is required to be rebated to the federal government, and (iii)pay, not less often than every fifth anniversary date of the delivery of the Bonds, and within sixty days after the retirement of the Bonds, or on such other date as may be permitted under applicable regulations with respect to "gross proceeds" in the Escrow Fund,. all amounts required to be rebated to the federal government. Further, the City will not indirectly pay any amount otherwise payable to the federal government pursuant to the foregoing requirements to any person other than the federal government by entering into an investment arrangement with respect to the gross proceeds of the Bonds that might result in a reduction in the amount required to be paid to the federal government because such arrangement results in a smaller profit or a larger loss than would have resulted if the arrangment had been at arm's length and had the yield on the issue not been relevant to either parry. (f) Information Reporting. The City covenants and agrees to file or cause to be filed with the Secretary of the Treasury, not later than the 15th day of the second calendar month after the close of the calendar quarter in which the Bonds are issued, an information statement concerning the Bonds, all under and in accordance with Section 149(e) of the Code and applicable regulations thereunder. 25 (g) Continuing Obligation. Notwithstanding any other provision of this Ordinance, the City's obligations under the covenants and provisions of this Section shall survive the defeasance and discharge of the Bonds. 25. Application of Proceeds. . Proceeds from the sale of the Bonds shall, promptly upon receipt by the City,be applied as follows: (i) Accrued interest, if any, shall be deposited into the Interest and Sinking Fund; (ii) $ from the sale of the Bonds shall be used to pay the costs of issuing the Bonds; and (iii) The sum of$ from the sale of the Bonds shall be deposited into the Construction Fund and used to pay the costs of the Project; and (iv) Any proceeds from the .Bonds remaining after making all such deposits and payments shall be deposited into the Interest and Sinking Fund. 26. Regis The form of agreement setting forth the duties of the Registrar is hereby approved, and the appropriate officials of the City are hereby authorized to execute such agreement for and on behalf of the City. 27. Official Statement. The Official Notice of Sale, the Preliminary Official Statement and the Official Statement prepared in the initial offering and sale of the Bonds have been and are hereby authorized, approved and ratified as to form and content. The use of the Preliminary Official Statement and the Official Statement in the reoffering of the Bonds by the Underwriter is hereby approved, authorized and ratified. The proper officials of the City are hereby authorized to execute and deliver a certificate pertaining to the Preliminary Official Statement and the Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Certificates. 28. No Personal Liability. No recourse shall be had for payment of the principal of or interest on any Bonds or for any claim based thereon, or on this Ordinance, against any official or employee of the City or any person executing any Bonds.. 29. Continuing Disclosure Undertaking. (a) Annual Reports. The City shall_ provide annually to each NRMSIR and the SID, within six months after the end of each fiscal year, financial information and operating data with respect to the City of the general type included in the final Official Statement authorized in this Ordinance (i) under the headings "SELECTED FINANCIAL INFORMATION", "DEBT STATEMENT", "TAX DATA", "SELECTED FINANCIAL DATA","ADMINISTRATION OF THE CITY", and in APPENDIX B. The information to be provided shall include the financial statements of the City prepared in accordance with the accounting principles the City may be required to employ from time to time pursuant to State law or regulation and audited, if the audit is completed within the period during which they must be provided. If the audit of such financial statements is not. completed within such period, then the City shall provide unaudited financial statements for the applicable fiscal year to each NRMSI and the SID 26 within such six month period, and audited financial statements when the audit report on such statement becomes available. If the City changes its fiscal year, it will notify each NMSIR and the SID of the change(and of the date of the new fiscal year end)prior to the next date by which the City otherwise would be required to provide financial information and operating data pursuant to this Section. The financial information and operating data to be provided pursuant to this Section may be set forth in full in one or more documents or may be included by specific reference to any document (including an official statement or other offering document, if it is available from the MSRB)that theretofore has been provided to each NRMSIR and the SID or filed with the SEC. (b) Material Event Notices. The City shall notify the SID and either each NRMSIR or the MSRB, in a timely manner, of any of the following events with respect to the Bonds,if such event is material within the meaning of the federal securities laws: i. Principal and interest payment delinquencies; ii. Non-payment related defaults; Unscheduled draws on debt service reserves reflecting financial difficulties; iv. Unscheduled draws on credit enhancements reflecting financial difficulties; V. Substitution of credit or liquidity providers, . or their failure to perform; vi. Adverse tax opinions or events affecting the tax-exempt status of the Bonds; vii. Modifications to rights of Bondholders; viii. Bond calls; ix. Defeasances; X. Release, substitution or sale of property securing repayment of the securities; and xi. Rating changes. The City shall notify the SID and either each NRMSIR or the MSRB, in.a timely . manner, of any failure by the City to provide financial information or operating data in accordance with section(a) above.. (c) Limitations. Disclaimers and Amendments. The City shall be obligated to observe and perform the covenants specified in this Section for so long as, but only for so long as, the City remains an "obligated person" with respect to the Bonds within the meaning of the Rule, except that the City in any event will give notice of any deposit made in accordance with Texas law that causes Bonds no longer to be outstanding. 27 The provisions of this Section are for the sole benefit of the holders and beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The City undertakes to provide only the financial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any other information that may be relevant or material to a complete presentation of the City's financial results, condition, or prospects or hereby undertake to update any information provided in accordance with this Section or otherwise, except as expressly provided herein. The City does not make any representation or warranty concerning such information or its usefulness to a decision to invest in or sell Bonds at any future date. UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH, WHETHER NEGLIGENT OR WITHOUT FAULT.ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION. HOLDERS OR BENEFICIAL OWNERS OF BONDS MAY SEEK AS THEIR SOLE REMEDY A WRIT OF MANDAMUS TO COMPEL THE CITY TO COMPLY WITH ITS AGREEMENT. No default by the City with respect to.its continuing disclosure agreement shall constitute a breach of or default under this Ordinance for purposes of any other provision of this Ordinance. Nothing in this Section is intended or shall act to disclaim,waive,or otherwise limit the duties of the City under federal and state securities laws. The provisions of this Section may be amended by the City from time to time to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status or type of operations of the City, if(i) the agreement, as amended, would have permitted the Underwriter to purchase or sell the Bonds in the initial primary offering in compliance with the Rule, taking into account any amendments or interpretations of such rule to the date of such amendment, as well as such changed circumstances, and (ii) either (a).the holders of a majority in aggregate principal amount of the outstanding Bonds consent to such amendment,or(b)any person unaffiliated with the City (such as nationally recognized bond counsel) determines the amendment will not materially impair the interests of the holders and beneficial owners of the Bonds. The City may also amend or repeal the obligations and agreement in this Section if the SEC amends or repeals the applicable provisions of the Rule or a court of final jurisdiction determines that such provisions are invalid, and the City may amend the agreement in its discretion in any other circumstance or manner,but in either case only to the extent that its right to do so would not prevent an underwriter from lawfully purchasing or reselling the Bonds in the primary offering of the Bonds in compliance with the Rule. If the City amends its agreement, it must include with the next financial information and operating data 28 provided in accordance with its agreement an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in the type of information and operating data so provided. 30. Open Meeting. It is hereby officially found and determined that the meeting at which this Ordinance was adopted was open to the public, and public notice of the time, place and purpose of said meeting was given, all as required by Chapter 551 of the Texas Government Code. 31. Interpretations. All terms defined herein and all pronouns used in this Ordinance shall be deemed to apply equally to singular and plural and to all genders. The titles and headings of the sections of this Ordinance have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof. This Ordinance and all of the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein and to sustain the validity of the Panty Bonds and the validity of the lien on and pledge of the Net Revenues to secure the payment of the Parity Bonds.. [32. Special Provisions Relatingto Reserve Policy. To the extent permissible by applicable law,the City is authorized at any time hereafter to obtain a Qualified Surety Bond to fund the Reserve Fund Requirement. Hereinafter such Qualified Surety Bond shall be referred to as the "Reserve Policy". If and so long as a Reserve Policy is in effect, and to the extent the following provisions are not in conflict with the provisions of Section 19 of this Ordinance, the following provisions shall apply and be applicable: (A) The City shall repay any draws under the Reserve Policy and pay all related reasonable expenses incurred by Financial Guaranty (together with interest thereon at a rate equal to the lower of (i) the prime rate of Morgan Guaranty Trust Company of New York in effect from time to time plus 2% per.. annum and (ii) the highest permitted by law) shall enjoy the same priority as the obligation to maintain and refill the reserve fund. Repayment of draws, expenses and accrued interest (collectively, "Policy Costs") shall commence in the first month following each draw, and each such monthly payment shall be in an amount equal to 1/12 of the aggregate of Policy Costs related to such draw. If and to the extent that cash has also been deposited in the reserve fund, all such cash shall be used (or investments purchased with such cash shall be liquidated and the proceeds applied as required) prior to any drawing under.the Reserve Policy, and repayment of any Policy Costs shall be made prior to replenishment of any such cash amounts. If, in addition to the Reserve Policy, any other reserve fund substitute instrument ("Additional Reserve Policy") is provided, drawing under the Reserve Policy and any such Additional .Reserve Policy, and repayment of Policy Costs and reimbursement of amounts due under the Additional Reserve Policy, shall be made on a pro rata basis (calculated by reference to the Maximum Amounts available thereunder) after applying all available cash in the reserve fund and prior to replenishment of any such cash draws,respectively. (B) If the Issuer shall fail to pay any Policy Costs in accordance with the requirements of Paragraph 32(A) hereof, Financial Guaranty shall be entitled to exercise. any and all remedies available at law or under the authorizing 29 document other than (i) acceleration of the maturity of the Bonds or (ii) remedies which would adversely affect owners of the Bonds. (C) This Ordinance shall not be discharged until all Policy Costs owing to Financial Guaranty shall have been paid in full. (D) As security for the Issuer's repayment obligations with respect to the Reserve Policy, Financial Guaranty is hereby granted a security interest (subordinate only to that of the Bondholders) in all revenues and collateral pledged as security for the Bonds. (E) No additional bonds may be issued without Financial Guaranty's prior written consent if any Policy Costs are past due and owing to Financial Guaranty. (F) Upon the issuance of any Additional Parity Bonds secured by the Reserve. Fund, such Reserve Fund shall be fully funded (at the Debt Service Reserve Fund Requirement) upon the issuance of such parity obligations, either . with cash or permitted investments or by a reserve fund credit instrument acceptable to Financial Guaranty. (G) The Payment shall ascertain the necessity for a claim upon the Reserve Policy and the Paying Agent.shall provide notice to Financial Guaranty in accordance with the terms of the Reserve Policy at least two business days prior to each Interest Payment Date. (H) This Ordinance shall not be modified or amended without the prior written consent of Financial Guaranty. (I) Financial Guaranty shall be provided with written notice of the resignation or removal of the Paying Agent and the appointment of a successor thereto and of the issuance of additional indebtedness of the Issuer at 115 Broadway,New York,New York 1006, Attention: Risk Management.] [The remainder of this page has intentionally been left blank.] 30 PASSED AND APPROVED this 17' of August; 2004. Mayor The City of Beaumont ATTEST: City Clerk The City of Beaumont (SEAL) 31 •� City of Beaumont Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Andrea S. Deaton,Budget Officer MEETING DATE: August 17, 2004 AGENDA MEMO DATE: August 12, 2004 REQUESTED ACTION: Establish the proposed 2004 tax rate,take a record vote and schedule a public hearing. RECOMMENDATION It is recommended that Council establish a tax rate required to support the City Manager's proposed budget. In accordance with Chapter 26 of the Property Tax Code, if the proposed rate exceeds the lower of the rollback rate$0.664084 or 103 percent of effective tax rate$0.642988,the City Council must take a record vote to place the proposal to adopt the rate on the agenda of a future meeting.The proposed rate of$0.664,which includes a rate decrease of 0.6 of one cent,exceeds 103 percent of the effective tax rate of$0.642988 by $0.021012. If the motion passes, a public hearing must be scheduled. It is recommended that the public hearing be held on August 31, 2004. BACKGROUND Chapter 26 of the Property Tax Code requires taxing units to comply with truth-in-taxation laws in adopting their tax rate. BUDGETARY IMPACT The detail budget information for all funds,including proposed property tax revenues,was submitted to Council at the August 10, 2004 meeting. PREVIOUS ACTION None. SUBSEQUENT ACTION A public hearing will be held as scheduled by Council. The target date for adoption of the tax rate is September 14, 2004. However, it must be adopted no later than September 30, 2004. RECOMMENDED BY: City Manager and Finance Officer Notice of Public Hearing on Tax Increase The City of Beaumont will hold a public hearing on a proposal to increase total tax revenues from properties on the tax roll in the preceding year by 6.37 percent. Your individual taxes may increase at a greater or lesser rate,or even decrease,depending on the change in the taxable value of your property in relation to the change in taxable value of all other property and the tax rate that is adopted. The public hearing will be held on August 31,2004 at 1:30 PM at City Council Chambers, City Hall, 801 Main Street, Beaumont Texas. FOR the proposal: AGAINST the proposal: PRESENT and not voting: ���®�� ® � ABSENT: The following table compares taxes on an average home in this taxing unit last year to taxes proposed on the average home this year. Again,your individual taxes may be higher or lower,depending on the taxable value of your property. Last Year This Year Average residence homestead value $78,015 $84,851 General exemptions available $0 $0 (amount available on the average homestead,not mchxhn senior citizen's or disabiod person's exenviow) Average taxable value $78,015 $84,851 Tax rate(per$100) $0.670000 $0.664000 Tax $522.70 $563.41 Under this proposal,taxes on the average homestead would increase by$40.71 or 7.79 percent compared with last year's taxes. Comparing tax rates without adjusting for changes in property value,the tax rate would decrease by$0.006000 per$100 of taxable value or 0.90 percent compared to last year's tax rate. These tax rate figures are not adjusted for changes in the taxable value of property. 3 August 17,2004 Consider approving an amendment to the FY2004 budget to transfer funds from the Debt Service Fund to provide for capital needs in the Capital Reserve Fund I CRY of Beaumont Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Max S. Duplant, Finance Officer MEETING DATE: August 17, 2004 AGENDA MEMO DATE: August 12,2004 REQUESTED ACTION: Council consideration of an amendment to the FY 2004 budget to transfer$1,684,614 from the Debt Service Fund to provide for capital needs in the Capital Reserve Fund. RECOMMENDATION Administration recommends appropriating$1,684,614 from the Debt Service Fund unreserved fund balance to provide for capital needs in the Capital Reserve Fund, BACKGROUND On September 13, 1995 the City received a check in the amount of$1,684,614 from Southwestern Bell as settlement of a law suit. The funds were deposited in the Debt Service Fund and have been accounted for as part of the unreserved fund balance since this time. Although the deposit was originally made for policy reasons and to enhance the City's bond rating,the transfer of funds from the Debt Service Fund is needed in order to comply with arbitrage requirements. Arbitrage regulations prevent a City from carrying over residual funds from year to year in a Debt Service Fund which was specifically set up to pay tax supported debt. Since the money from the settlement is not funds raised from taxes levied to pay bonds,the City is able to transfer it to Capital Reserve where there is a greater need to fund future capital requirements. BUDGETARYIMPACT None. PREVIOUS ACTION None. SUBSEQUENT ACTION None. RECOMMENDED BY City Manager and Finance Officer. ORDINANCE NO. ENTITLED AN ORDINANCE AMENDING THE FISCAL BUDGET OF THE CITY OF BEAUMONT FOR THE FISCAL YEAR 2003/2004 TO TRANSFER $1,684,614 FROM THE DEBT SERVICE FUND TO THE CAPITAL RESERVE FUND; PROVIDING FOR SEVERABILITY; AND PROVIDING FOR REPEAL. BE IT ORDAINED BY THE CITY OF BEAUMONT: Section 1. THAT the Fiscal Budget of the City of Beaumont for the period commencing October 1, 2003, through September 30, 2004, be and the same is hereby amended to appropriate and transfer the sum of$1,684,614 from the unreserved fund in the Debt Service Fund to the City's Capital Reserve Fund. Section 2. That if any section, subsection, sentence, clause or phrase of this ordinance, or the application of same to a particular set of persons or circumstances, should for any reason be held to be invalid, such invalidity shall not affect the remaining portions of this ordinance, and to such end the various portions and provisions of this ordinance are declared to be severable. Section 3. That all ordinances or parts of ordinances in conflict herewith are repealed to the extent of the conflict only. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 17th day of August, 2004. -------------------------------- - Mayor Evelyn M. Lord - 4 August 17, 2004 Consider approving a contract for Security Guard and Event Staff services �.� City of Beaumont Council Agenda Item TO: City Council FROM: Kyle Hayes, City Manager PREPARED BY: Kirby Richard, Central Services Director MEETING DATE: August 17, 2004 AGENDA MEMO DATE: August 10,2004 REQUESTED ACTION: Council consider the award of an annual contract for Security Guard and Event Staff services. RECOMMENDATION Administration recommends the award of an annual contract for Security Guard and Event Staff services for the Convention Facilities Division to Lofton Staffing and Security Services of Beaumont, Texas. BACKGROUND Temporary staffing services are required by the Convention Facilities Division for special events held at various locations including the Civic Center,Julie Rogers Theatre, and the Fair Park Facilities. These temporary staff members include security guards,ushers,ticket takers, and temporary staff supervisors that aid in equipment and property security as well as citizens' safety and enjoyment of approximately 126 special events held annually. Each event has a unique set of staffing requirements. Factors including the location and type of event being held,the size of the expected crowd,and the event promoters's specific needs dictate the number of temporary staff positions to be filled as well as the number of hours to be worked at each event. Event promoters are responsible for all costs associated with temporary staffing. Bids were solicited from fifteen(15)staffing and security companies. Two(2)companies responded with bids indicating the hourly rate charges for typical staff positions. In order to analyze the bids received,the quoted hourly rates were applied to five(5)model events. The models were reflective of typical staffing levels required at events held at the Civic Center,Julie Rogers Theatre,the Harvest Club,and the Fair Park Coliseum. The result of the bid analysis is as follows: Security Guard and Special Event Staffing Contract August 10,2004 Page 2 TEMPORARY STAFF B.P.SECURITY& LOFTON STAFFING POSITION INVESTIGATIONS,INC. SERVICES HOUSTON,TX BEAUMONT,TX Guard Supervisor $12.00/hour $16.00/hour Ticket Supervisor $12.00/hour $13.60/hour Ticket Taker $12.00/hour $12.00/hour Usher Supervisor $12.00/hour $13.60/hour Usher $12.00/hour $12.00/hour Door Guard $12.00/hour $15.20/hour T-Shirt Guard $12.00/hour $15.20/hour MODEL EVENT& B.P.SECURITY& LOFTON STAFFING& APPROXIMATE ANNUAL INVESTIGATIONS,INC. SECURITY SERVICES FREQUENCY HOUSTON,TX BEAUMONT,TX 10 Civic Center Concerts $1,584.00 ea. $1,910.40 ea. 40 Julie Rogers Theater Events $ 666.00 ea. $ 741.60 ea. 20 Harvest Club Events $ 120.00 ea. $ 152.00 ea. 6 Coliseum Events $1,140.00 ea. $1,256.00 ea. 50 Civic Center Events $ 570.00 ea. $ 696.40 ea. ESTIMATED ANNUAL COST FOR 126 MODEL EVENTS: $80,220.00 $94,164.00 The apparent low bidder is B.F. Security & Investigations, Inc. of Houston, Texas. While they provide security guard services to a wide variety of clients in Houston,they do not currently operate an office in Beaumont nor do they have local temporary staffing employees. If awarded this contract, they intend to rely largely on their current employees in Houston to staff events in Beaumont for an indefinite period of time after the contract begins. Since it is critical that the temporary staffing agency awarded this contract provide a full staff in a timely fashion at every special event in order to assure the smooth operation of events for citizens' safety and enjoyment as well as to satisfy event promotors'requirements,Administration does not recommend awarding the contract to this agency. Security Guard and Special Event Staffing Contract August 10,2004 Page 3 The second bid was received from Lofton Staging and Security Services. The Beaumont office of Lofton Staffing and Security Services is a wholly owned division of The Lofton Corporation headquartered in Baton Rouge,Louisiana. Lofton Staffing has provided temporary staffing services to the Beaumont Convention Facilities Division for the past two (2)years. During that time, the temporary staff provided by Lofton has been reasonably qualified,timely,and managed appropriately. Quick corrective measures have been taken when necessary. In an attempt to provide the best service and value available to event promoters, Administration recommends the contract be awarded to Lofton Staffing and Security Services of Beaumont. Last year's contracted prices with Lofton Staffing were: TEMPORARY STAFF POSITION HOURLY RATE Guard Supervisor $14.85 Ticket Supervisor $13.20 Ticket Taker $11.55 Usher Supervisor $13.20 Usher $11.55 Door Guard $14.85 T-Shirt Guard $14.85 The total amount paid to Lofton Staffing since the beginning of this fiscal year is$95,445.48. BUDGETARY IMPACT The cost of Security Guard and Event Staff services are reimbursed by event promoters. PREVIOUS ACTION None. SUBSEQUENT ACTION None. RECOMMENDED BY City Manager and Central Services Director.