HomeMy WebLinkAboutORD 10-052 A.5.b
ORDINANCE NO. 10- 052
ORDINANCE AUTHORIZING THE ISSUANCE OF THE CITY OF
BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM
REVENUE BONDS, TAXABLE SERIES 2010B (BUILD AMERICA
BONDS — DIRECT PAYMENT TO ISSUER); ELECTION TO
DESIGNATE THIS SERIES OF BONDS AS "BUILD AMERICA BONDS";
EXECUTION OF BOND PURCHASE AGREEMENT; AND CONTAINING
OTHER MATTERS RELATED THERETO
THE STATE OF TEXAS §
COUNTY OF JEFFERSON §
THE CITY OF BEAUMONT §
WHEREAS, The City of Beaumont, Texas (herein referred to as the "City" or the
"Issuer") is authorized, pursuant to Chapter 1502, Texas Government Code, as amended, to issue
bonds, without election, payable from the net revenues of its waterworks and sewer system to
provide money for acquisitions, purchases, expansions, extensions, construction, reconstruction,
renovation, equipping, and improvement 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 (the "Project");
Now, Therefore
BE IT ORDAINED BY THE CITY OF BEAUMONT, TEXAS:
1. Findings and Determinations. It is hereby found and determined that the
transactions contemplated in this Ordinance will benefit the City. In addition, 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 21 of this Ordinance.
The term "Blanket Issuer Letter of Representations" means the Blanket Issuer Letter of
Representations between the City and DTC.
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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" or "Series 2010B Bonds" shall mean The City of Beaumont, Texas,
Waterworks and Sewer System Revenue Bonds, Taxable Series 2010B (Build America Bonds —
Direct Payment to Issuer), 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 heretofore and hereafter
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. Gross Revenues shall not
include any federal credit subsidy payments received by the City as a result of the election in
Section 47 of this Ordinance to designate these Bonds as Build America Bonds.
The term "Interest Payment Date", when used in connection with any Bond, shall mean
March 1, 2011, and each March 1 and September 1 thereafter until maturity or earlier redemption
of such Bond.
The term "Issuer" shall mean the City.
The term "Maintenance and Operation Expenses" shall mean the reasonable and
necessary expenses of operation and maintenance of the System, including all salaries, labor,
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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.
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. For purposes of any reimbursement agreement authorized
in Section 20(g) of this Ordinance, agreements to make payments out of Net Revenues, in all
cases Net Revenues for such purpose shall mean only Net Revenues available after satisfaction of
obligations to holders of current and future priority liens against such Net Revenues.
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 Bonds, Series 2000, and the City's outstanding
Waterworks and Sewer System Revenue Bonds, Series 2004, and the City's outstanding
Waterworks and Sewer System Revenue Refunding Bonds, Series 2005, and the City's
outstanding Waterworks and Sewer System Revenue Bonds, Series 2005, and the City's
outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 2006, and the
City's outstanding Waterworks and Sewer System Revenue Bonds, Series 2006A, and the
City's Waterworks and Sewer System Revenue Bonds, Series 2008, the City's Waterworks
and Sewer Revenue Refunding Bonds, 2010 and the City's Waterworks and Sewer System
Revenue Bonds, Series 2010A issued concurrently with the Bonds, 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" for the Bonds 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 The Bank of New York Mellon Trust Company,
N.A., Dallas, 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.
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The term "Rule" shall mean SEC Rule 15c-12, as amended from time to time.
The term "SEC" shall mean the United States Securities and Exchange Commission.
The term "Series 2010 Bonds" shall mean the $6,540,000.00 The City of Beaumont,
Texas, Waterworks and Sewer System Revenue Refunding Bonds, Series 2010 authorized by
a separate Ordinance, unless the context clearly indicates otherwise.
The term "Series 2010A Bonds" shall mean the $5,980,000.00 The City of Beaumont,
Texas, Waterworks and Sewer System Revenue Bonds, Series 2010A authorized by a
separate Ordinance, unless the context clearly indicates otherwise.
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 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, collectively, Wells Fargo Bank, National
Association, Estrada Hinojosa& Company, Inc., and Coastal Securities, Inc.
3. Authorization. The Bonds shall be issued in fully registered form in the total
g
authorized aggregate amount of NINETEEN MILLION FORTY THOUSAND AND NO/100
DOLLARS ($19,040,000.00) for the purpose of providing funds to (i) finance capital
expenditures acquisition, purchase, construction, reconstruction, improvement, renovation,
expansion, or equipping of property, buildings, structures, facilities, or related infrastructure for
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, TAXABLE SERIES 2010B (BUILD AMERICA BONDS — DIRECT
PAYMENT TO ISSUER)" and shall be dated August 1, 2010. The Bonds, Series 2010 shall
bear interest at the rates set forth in Section 5 below from the later of August 1, 2010, 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, 2011, and
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semiannually thereafter on March 1 and September 1 of each year until maturity or prior
redemption.
5. Initial Bonds; Numbers and Denominations.
The Bonds shall be in the total aggregate principal amount of $19,040,000.00 and shall be
issued in the principal amounts, and bearing interest at the rates set forth in the following schedule,
shall be numbered from CR-1 and upward, and may be transferred and exchanged as set out in this
Order. Such Bonds shall mature on September 1 in each of the years and in the amounts set out in
such schedule. Bonds delivered in transfer of or in exchange for other Bonds shall be numbered 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.
Bond Year Principal Interest
Number of Maturity Amount Rate
CR-1 2021
CR-2 2022
CR-3 2023
CR-4 2024 SEE EXHIBIT A
CR-5 2025
CR-6 2030
CR-7 2036
6. Execution of Bonds; Seal. The Bonds shall be signed by the Mayor or Mayor Pro
Tem 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
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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 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.tom. 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
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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.
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 three (3) business days after
such presentation, a new Bond or Bonds, registered in the name of the transferee or transferees,
in authorized denominations and of the same type, 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.
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Neither the City nor the Registrar shall be required to transfer or exchange any Bond called
for redemption, in whole or in part, within forty-five (45) days of the date fixed for redemption;
provided, however, such limitation on transfer shall not be applicable to an exchange by the Owner
of the unredeemed balance of a Bond called for redemption in part.
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 bearing a number not contemporaneously outstanding.
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
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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-Entry 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 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
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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.
(d) The execution and delivery of the Blanket Letter of Representations is hereby ratified
and approved and the Mayor is hereby authorized and directed to execute a new Blanket Letter of
Representations, if required, with such changes as may be approved by the Mayor or City Manager
of the City.
(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 and Mandatory Redemption, Defeasance.
(a) The City reserves the right, at its option, to redeem Bonds having stated maturities
on and after September 1, 2021, in whole or in part, on September 1, 2020, 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.
The Bonds maturing in the year 2030 and 2036 (the "Term Bonds") are also subject to
mandatory redemption prior to scheduled maturity, in the amount, on the date, and on the terms
set out in the form of Bonds in this Ordinance, at a price of par plus accrued interest to the date
fixed for redemption.
The City also reserves the right, at its option, to redeem Bonds prior to maturity, in whole
or in part, on any date on or after the occurrence of an Extraordinary Event at a redemption price
equal to the greater of:
(i) the issue price of the principal amount of the Bonds to be redeemed, provided that
such amount must be at least equal to the par amount of the Bonds to be redeemed; or
(ii) the sum of the present value of the remaining scheduled payments of principal and
interest to the earlier of the stated maturity or the optional redemption date of the Bonds to
be redeemed, not including any portion of those payments of interest accrued and unpaid as
of the redemption date, discounted to the redemption date on a semi-annual basis, assuming
a 360-day year consisting of twelve 30-day months, at the Treasury Rate, plus one hundred
(100) basis points, plus, in each case, accrued and unpaid interest to the redemption date on
the Bonds to be redeemed.
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"Extraordinary Event" means (1) any change in Section 54AA or Section 6431 of the Code
(as such Sections were added by Section 1531 of the Recovery Act, pertaining to Build America
Bonds) pursuant to which the federal payments in connection with the Bonds are reduced or
eliminated, or (2) any offset, withholding, denial, or failure, refusal to pay, or delay in payment, for
any reason whatsoever, of the federal payments in amounts duly applied for by the City for more
than ninety (90) days in an aggregate amount of more than $100,000.00.
"Treasury Rate" means, with respect to any redemption date for a particular Bond, the yield
to maturity as of such redemption date of United States Treasury securities with a constant maturity
(as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that
has become publicly available at least two business days prior to the redemption date (excluding
inflation indexed securities) (or, if such Statistical Release is no longer published, any publicly
available source of similar market data)) most nearly equal to the period from the redemption date
to the maturity date to such maturity date is less than one year, the weekly average yield on actually
traded United States Treasury securities adjusted to a constant maturity of one year will be used.
The extraordinary optional redemption price of the Bonds to be redeemed will be
determined by an independent accounting firm, investment banking firm or financial advisor
retained by the City, at the City's expense, to calculate such redemption price. The City may
conclusively rely on the determination of such redemption price by such independent accounting
firm, investment banking firm or financial advisor and will not be liable for such reliance and such
determination shall be conclusive on the bondholders.
The City shall select for redemption by lot, or by any other customary method that results in
random selection, a principal amount of Term Bonds equal to the aggregate principal amount of
such Term Bonds to be redeemed, shall call such Term Bonds for redemption on the scheduled
mandatory redemption date, and shall give notice of such redemption in accordance with the
Ordinance authorizing the Bonds. The principal amount of Term Bonds required to be mandatorily
redeemed shall be reduced by the principal amount of Term Bonds which, at least 45 days prior to
the mandatory redemption date, shall have been delivered to the Registrar for cancellation or shall
have been optionally redeemed and not previously credited against a mandatory redemption
requirement
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
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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.
(b) The City may defease the provisions of this Ordinance or any ordinance applicable
to any Parity Bonds being defeased and discharge its obligation to the Owners of any or all of the
Bonds or any or all of the Parity Bonds to pay principal, interest and redemption premium, if any,
thereon in any manner permitted by law, including by depositing with the Paying Agent/Registrar,
or if authorized by Texas law, with any national or state bank having trust powers and having
combined capital and surplus of at least $50 million, or with the State Treasurer of the State of
Texas either: (a) cash in an amount equal to the principal amount and redemption premium, if any,
of such bonds being defeased plus interest thereon to the date of maturity or redemption; or (b)
pursuant to an escrow or trust agreement, cash and/or direct bonds of, or bonds the principal of and
interest on which are guaranteed by or secured by the pledge of direct bonds of 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 Bonds being
defeased plus interest thereon to the date of maturity or redemption; provided, however, that if any
of such bonds being defeased are to be redeemed prior to their respective dates of maturity,
provision shall have been made for giving notice of redemption as provided in this Ordinance or
ordinance applicable to the Parity Bonds being defeased. Upon such deposit, such bonds being
defeased shall no longer be regarded to be outstanding or unpaid. Any surplus amounts not
required to accomplish such defeasance shall be returned to the City.
(c) If any Bonds are redeemed or defeased and at that time any amounts attributable to
refundable credits received from the federal government with respect to the Bonds remain on
deposit in the Interest and Sinking Fund for these Bonds, the City is authorized to refund the federal
government such amounts then required by Federal law applicable to these Bonds.
18. Form.
The form of the Bonds, including the form of the Registrar's Authentication Certificate, the
form of Assignment, and the form of Registration Certificate of the Comptroller of Public Accounts
of the State of Texas 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
12
A.5.b
COUNTY OF JEFFERSON
NUMBER DENOMINATION
CR- $
REGISTERED REGISTERED
THE CITY OF BEAUMONT,TEXAS
WATERWORKS AND SEWER SYSTEM
REVENUE BONDS, TAXABLE SERIES 2010B
(BUILD AMERICA BONDS —DIRECT PAYMENT TO ISSUER)
INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP:
September 1, , 2010
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
THE CITY OF BEAUMONT, TEXAS (the "City"), promises to pay to the registered owner
identified above, or registered assigns, on the date specified above, upon presentation and surrender
of this Bond at the designated corporate trust office of THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., Dallas, Texas (the "Registrar"), or at its principal payment office in
Dallas, Texas, 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 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 August 1,
2010, 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, 2011, and semiannually thereafter on each
March 1 and September 1, mailed to the registered owner as shown on the books of registration
kept by the Registrar as of the 15th day of the month next preceding each interest payment date.
THIS BOND is one of a duly authorized issue of Bonds, aggregating $19,040,000.00 (the
"Bonds"), issued in accordance with the Constitution and the laws of the State of Texas, particularly
Chapter 1502, Texas Government Code, as amended, for the cost of acquisition, purchase,
construction, reconstruction, improvement, renovation, expansion or equipping of property,
buildings, structures, facilities, or related infrastructure for the City's waterworks and sewer system
and the cost of issuance of the Bonds, pursuant to an ordinance duly adopted by the City Council of
the City on July 13, 2010 (the "Ordinance"), which Ordinance is of record in the official minutes of
the City Council.
THIS BOND AND ALL OF THE BONDS OF THIS SERIES are special Bonds 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
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A.5.b
Bonds, Series 2000, the City's outstanding Waterworks and Sewer System Revenue Bonds,
Series 2004, and the City's outstanding Waterworks and Sewer System Revenue Refunding
Bonds, Series 2005, and the City's outstanding Waterworks and Sewer System Revenue Bonds,
Series 2005, and the City's outstanding Waterworks and Sewer System Revenue Refunding
Bonds, Series 2006, and the City's outstanding Waterworks and Sewer System Revenue Bonds,
Series 2006A, the City's outstanding Waterworks and Sewer System Revenue Bonds, Series
2008, the City's Waterworks and Sewer System Revenue Refunding Bonds, Series 2010, and the
City's Waterworks and Sewer System Revenue Bonds, Series 2010A 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 RESERVES THE RIGHT, at its option, to redeem the Bonds having stated
maturities on or after September 1, 2021, in whole or in part, on September 1, 2020, or any date
thereafter, in integral multiples of$5,000, at a price of par plus accrued interest to the date fixed for
redemption. The City further reserves the right, at its option, to redeem the Bonds prior to maturity,
in whole or in part, on any date on or after the occurrence of an Extraordinary Event (as defined in
the Ordinance) at a redemption price stated in the Ordinance. Reference is made to the Ordinance
for complete details concerning the manner of redeeming the Bonds.
THE BONDS maturing in the year 2030 (the "Term Bonds") are also subject to mandatory
redemption prior to maturity in the amounts and on the dates set out below, at a price equal to the
principal amount to be redeemed plus accrued interest to the redemption date:
TERM BONDS DUE SEPTEMBER 1, 2030
i
Date Amount
9/l/26 $1,175,000
9/l/27 1,220,000
9/1/28 1,270,000
9/l/29 1,180,000
THE BONDS maturing in the year 2036 (the "Term Bonds") are also subject to mandatory
redemption prior to maturity in the amounts and on the dates set out below, at a price equal to the
principal amount to be redeemed plus accrued interest to the redemption date:
14
A.5.b
TERM BONDS DUE SEPTEMBER 1, 2036
Date Amount
9/1/31 $1,330,000
9/1/32 1,385,000
9/1/33 1,435,000
9/l/34 1,495,000
9/1/35 1,555,000
The City shall select for redemption by lot, or by any other customary method that results in
random selection, a principal amount of Term Bonds equal to the aggregate principal amount of
such Term Bonds to be redeemed, shall call such Term Bonds for redemption on the scheduled
mandatory redemption date, and shall give notice of such redemption in accordance with the
Ordinance authorizing the Bonds. The principal amount of Term Bonds required to be mandatorily
redeemed shall be reduced by the principal amount of Term Bonds which, at least 45 days prior to
the mandatory redemption date, shall have been delivered to the Registrar for cancellation or shall
have been optionally redeemed and not previously credited against a mandatory redemption
requirement.
NOTICE OF ANY REDEMPTION shall be given at least thirty (30) days prior 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.
The Bonds may be defeased as provided in the Ordinance authorizing the Bonds.
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.
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 this Ordinance.
NEITHER THE CITY NOR THE REGISTRAR shall be required to transfer or exchange
any Bond called for redemption, in whole or in part, within forty-five(45) days of the date fixed for
redemption; provided, however, such limitation on transfer shall not be applicable to an exchange
by the Owner of the unredeemed balance of a Bond called for redemption in part.
15
A.5.b
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) 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 of the City and countersigned with the manual or facsimile signature of the
City Clerk of the City and the official seal of the City has been duly impressed, or placed in
facsimile, on this Bond.
THE CITY OF BEAUMONT, TEXAS
Mayor
(SEAL)
City Clerk
FORM OF REGISTRATION CERTIFICATE
OF COMPTROLLER OF PUBLIC ACCOUNTS
COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO.
I hereby certify that this Bond has been examined, certified as to validity, and approved by
the Attorney General of the State of Texas, and that this Bond has been registered by the
Comptroller of Public Accounts of the State of Texas.
WITNESS MY SIGNATURE AND SEAL this day of 2010.
16
A.5.b
xxxxxxxx
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 Ordinance described
in the text of this Bond.
The Bank of New York Mellon Trust Company, N.A.
Dallas, Texas
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:
Signature Guaranteed:
NOTICE: The signature
above must correspond to
the name of the registered
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A.5.b
NOTICE: Signature must be owner as shown on the face
guaranteed by a member firm of this bond in
of the New York Stock Exchange every particular, without
or a commercial bank or trust any alteration, enlargement
company. or change whatsoever.
END OF FORM OF BOND
19. Legal Opinion; CUSIP Numbers. The approving opinion of Orgain Bell &
Tucker, LLP, 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.
20. (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.
IT IS ORDERED AND DIRECTED that this Ordinance pledging Net Revenues for the
payment of the Bonds to the extent provided herein be filed and recorded in the records of the
District as necessary to cause the pledge to be valid under Section 1201.44 of the Government
Code of Texas. At any time while any of the Bonds are outstanding, it is determined by the City
or demanded by the holder of any Bonds that further action by the City is required to make the
pledge valid or maintain the validity of the pledge, the City covenants and hereby directs the
officers of the City to make such filings, including but not limited to appropriate filings under
Chapter 9 of the Business and Commerce Code of Texas as are necessary to make the pledge
valid or continue its validity.
(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, Taxable Series 2010B (Build America Bonds —
Direct Payment to Issuer), Construction Fund" ("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
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A.5.b
Project and the cost of issuance of the Series 2010A Bonds shall be deposited into such
Construction Fund and disbursed for such purposes. All such disbursements shall be limited as
provided in Section 47 of this Ordinance. Pending completion of construction of the Project,
interest earned on such proceeds may be used, at the City's discretion, for the Project and shall be
accounted for, maintained, deposited and expended as permitted by the provisions of Section
1201.043 of the Government Code of Texas, 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 such Construction Fund shall be
transferred and deposited by the City into the Interest and Sinking Fund subject to the limitations in
Section 47 of this Ordinance.
(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
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A.5.b
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 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.
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. Such permitted transfers to the General Fund are hereby expressly
authorized by this Ordinance and the purposes for which such surplus revenues may be
used shall include, but not be limited to, payment of any other debt, expense, or
obligation of the City.
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
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A.5.b
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 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 (1/60th) 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 (1/60th) 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"). The purchase of such Reserve Fund Surety
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A.5.b
Policy is approved, and the Mayor, Mayor Pro-Tem, City Manager, Chief Financial Officer, City
Clerk, Deputy City Clerk, and all other appropriate officers and agents of the City are each
authorized to execute such documents, including but not limited to a reimbursement agreement,
to grant a subordinated pledge and lien on the Net Revenues as security for the payment of
amounts due under the reimbursement agreement (which grant if made is hereby approved), and
to do any and all things necessary or desirable to obtain such a Policy if in the discretion of the
acting official deems its acquisition in the best interests of the City. 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 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 20 the full amounts required herein, amounts
equivalent to such deficiency shall be set apart and paid into such Fund or Funds from the first
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A.5.b
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 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.
21. 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 1 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
23
A.5.b
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 (including but not limited to reimbursement
agreements undertaken to obtain Reserve Fund Security Policies) secured in whole or in part by
liens on and pledges of the Net Revenues that are junior and subordinate to the lien 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.
22. 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
24
A.5.b
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 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
of or interest on an of the Parity Bonds or a default in the performance of an duty or
principal Y Y P Y Y
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
25
A.5.b
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.
(1) [deleted].
(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.
23. 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.
24. Sale of Bonds. The Bonds are hereby sold and shall be delivered to the
Underwriter at a price of $19,040,000.00, which represents the par amount of the Bonds of
$19,040,000.00, plus any accrued interest thereon from the dated date of the Bonds to the date of
issuance, all in accordance with the terms of a bond purchase agreement of even date herewith,
presented to and hereby approved by the City Council, which price and terms are hereby found
and determined to be the most advantageous reasonably obtainable by the City. Each of the
26
A.5.b
Mayor and the Mayor Pro Tern and other appropriate officials of the City are hereby authorized
and directed to execute such bond purchase agreement on behalf of the City, and each of the
Mayor and Mayor Pro Tem and all other officers, agents and representatives of the City are
hereby authorized to do any and all things necessary or desirable to satisfy the conditions set out
therein and to provide for the issuance and delivery of the Bonds.
25. Tax Exemption.
(a) The interest on the Bonds will not be excludable from gross income for
purposes of federal income taxation pursuant to Sections 103 and 141 through 150 of the Code, and
applicable regulations. Nevertheless, to qualify as Build America Bonds, the Bonds must be bonds
which would otherwise constitute tax-exempt bonds but for the election made in Section 47 of this
Ordinance. Therefore, 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 but for such election and designation of these Bonds
as Build America Bonds. In particular, the City covenants and agrees to comply with each
requirement of this Section 25; provided, however, that the City shall not be required to comply
with any particular requirement of this Section 25 if the City has received an opinion of nationally
recognized bond counsel (a "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 but for
such election) or if the City has received a Counsel's Opinion to the effect that compliance with
some other requirement set forth in this Section 25 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 25.
(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 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 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 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 or as permitted by laws hereinafter enacted.
(d) No-Arbitrage Covenant. The City shall certify, through an authorized
27
A.5.b
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 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,
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
148(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 arrangement had been at arm's
length and had the yield on the issue not been relevant to either party.
(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.
(g) ContinuinObligation. 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.
When used in this Section, the term "Net Proceeds" of the Bonds shall mean the proceeds
from the sale thereof to the Underwriter, including investment earnings on such proceeds, less
accrued interest with respect to such issue.
28
A.5.b
26. Application of Proceeds. Proceeds from the sale of the Bonds shall, promptly
upon receipt by the City, be applied as follows, subject in all cases to the requirements and
limitations in Section 47 of this Ordinance:
(i) Accrued interest, if any, shall be deposited into the Interest and Sinking
Fund;
(ii) No proceeds from the sale of the Bonds shall be deposited to any reserve
fund; and
(iii) The balance of the proceeds from the sale of the Bonds shall be deposited
into the Construction Fund and used to pay the costs of the Project.
27. Registrar. 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.
28. Official Statement. 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.
29. 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.
30. Continuing Disclosure Undertaking. (a) Annual Reports. The City undertakes and
agrees for the benefit of the Bond holders to provide annually to the MSRB,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", "CITY WATERWORKS AND SEWER
SYSTEM REVENUE DEBT", "ADMINISTRATION OF THE CITY", "THE SYSTEM-Water
and Sewer Rates" 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 the MSRB 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 the MSRB 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.
29
A.5.b
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 the MSRB or filed with the SEC.
(b) Material Event Notices. The City shall notify 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:
L Principal and interest payment delinquencies;
ii. Non-payment related defaults;
iii. 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 MSRB, in a timely manner, of any failure by the City to provide
financial information or operating data in accordance with section (a) above. All documents
provided to the MSRB shall be accompanied by identifying information as prescribed by the
MSRB.
(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.
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
30
A.5.b
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 OR FROM ANY STATEMENT MADE PURSUANT TO 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.
Failure to apply for or receive any of the federal payments in connection with the election
for treatment of the Bonds as Build America Bonds for any reason shall not be considered a default
of the City.
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 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.
31. 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
31
A.5.b
Code.
32. 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
Parity Bonds and the validity of the lien on and pledge of the Net Revenues to secure the
payment of the Parity Bonds.
33. [deleted].
34. Repealer. All orders, resolutions, and ordinances, and parts thereof inconsistent
herewith are hereby repealed to the extent of such inconsistency.
35. Effective Date. This Ordinance shall be in force and effect from and after its final
passage, and it is so ordered.
36. Amendment of Ordinance.
(a) If and to the extent permitted by this Ordinance, the owners of the Bonds
aggregating in the principal amount of 51% of the aggregate principal amount of the
outstanding Bonds, shall have the right from time to time to approve any amendment to
this Ordinance which may be deemed necessary or desirable by the City provided,
however, that without the consent of the owners of all of the Series at the time
outstanding, nothing herein contained shall permit or be construed to permit the
amendment of the terms and conditions in this Ordinance or in the Bonds so as to:
(1) Make any change in the maturity of the outstanding Bonds;
(2) Reduce the rate of interest borne by any of the outstanding Bonds;
(3) Reduce the amount of the principal payable on the outstanding
Bonds;
(4) Modify the terms of payment of principal of or interest on the
outstanding Bonds, or impose any conditions with respect to such payment;
(5) Affect the owners of less than all of the outstanding Bonds then
outstanding;
(6) Change the percentage of the principal amount of outstanding
Bonds, necessary for consent to such amendment.
(b) If at any time the City shall desire to amend this Ordinance under this
Section, the City shall cause notice of the proposed amendment to be published in a
32
A.5.b
financial newspaper or journal published in The City of New York, New York, once
during each calendar week for at least two successive calendar weeks. Such notice shall
briefly set forth the nature of the proposed amendment and shall state that a copy thereof
is on file at the principal office of the Paying Agent for inspection by all owners of
Bonds. Such publication is not required, however, if notice in writing is given to each
owner of the outstanding Bonds. Not less than thirty (30) days' notice of the proposed
amendment shall also be given by the City to the Underwriter.
(c) Whenever at any time not less than thirty (30) days, and within one (1)
year, from the date of the publication of said notice or other service of written notice the
City shall receive an instrument or instruments executed by the owners of at least 51% in
aggregate principal amount of Bonds then outstanding, which instrument or instruments
shall refer to the proposed amendment described in said notice and which specifically
consent to and approve such amendment in substantially the form of the copy thereof on
file with the Paying Agent, the City Council may adopt the amendatory resolution in
substantially the same form.
(d) Upon adoption of any amendatory resolution pursuant to the provision of
this Section, this Ordinance shall be deemed to be amended in accordance with such
amendatory resolution, and the respective rights, duties and Bonds under this Ordinance
of the City and all the owners of then outstanding Bonds, shall thereafter be determined,
exercised and enforced hereunder, subject in all respect to such amendments.
(e) Any consent given by the owner of outstanding Bonds, pursuant to the
provisions of this Section shall be irrevocable for a period of six months from the date of
the first publication of the notice provided for in this Section, and shall be conclusive and
binding upon all future owners of the same Bonds during such period. Such consent may
be revoked at any time after six months from the date of the first publication of such
notice by the owner who gave such consent, or by a successor in title, by filing notice
thereof with the Paying Agent and the City, but such revocation shall not be effective if
the owners of 51% in aggregate principal amount of the then outstanding Bonds as in this
Section defined have, prior to the attempted revocation, consented to and approved the
amendment.
(f) For the purpose of this Section, the fact of the owning of Bonds by any
owner of Bonds and the amount and number of such Bonds, and the date of their owning
same shall be determined by the Registration Books of the Paying Agent/Registrar.
(g) The foregoing provisions of this Section notwithstanding, the City by
action of the City Council may amend this Ordinance for any one or more of the
following purposes:
(1) To add to the covenants and agreements of the City in this
Ordinance contained, other covenants and agreements thereafter to be observed,
33
A.5.b
grant additional rights or remedies to the owners of bonds or to surrender, restrict
or limit any right or power herein reserved to or conferred upon the City.
(2) To make such provisions for the purpose of curing any ambiguity,
or curing, correcting or supplementing any defective provision contained in this
Ordinance, or in regard to clarifying matters or questions arising under this
Ordinance, as are necessary or desirable and not contrary to or inconsistent with
this Ordinance and which shall not adversely affect the interests of the owners of
the Bonds.
(3) To modify any of the provisions of this Ordinance in any other
respect whatever, provided that: (i) such modification shall be, and be expressed
to be, effective only after all Bonds outstanding at the date of the adoption of such
modification.
37. Deleted
38. Deleted
39. [Deleted].
40. [Deleted].
41. Related Matters. To satisfy in a timely manner all of the City's obligations under
this Ordinance, the Mayor or Mayor Pro Tem, City Manager, Chief Financial Officer, City Clerk
or any Deputy City Clerk, and all other appropriate officers and agents of the City are hereby
authorized and directed to take all other actions that are reasonably necessary to provide for the
refunding of the Refunded Bonds, including without limitation, executing and delivering on
behalf of the City all certificates, consents, receipts, requests, and other documents as may be
reasonably necessary to satisfy the City's obligations under this Ordinance and to direct the
application of funds of the City consistent with the provisions of this Ordinance.
42. [Deleted].
I
43. 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.
44. 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
Parity Bonds and the validity of the lien on and pledge of the Net Revenues to secure the
34
A.5.b
payment of the Parity Bonds.
45. [Deleted].
46. [Deleted].
47. The City hereby makes an irrevocable election, under Section 54AA(d)(1)(C) of
the Internal Revenue Code of 1986 (the "Code"), to designate the Bonds as "Build America
Bonds" and cause them to be "Qualified Bonds" thereunder.
The City hereby makes an irrevocable election pursuant to Section 54AA(g)(2)(B) of the
Code to receive direct payment of the credit described in Section 6431 of the Code with
respect to the issuance of the Bonds as Build America Bonds. The City hereby covenants
that it will use its best efforts to take all actions necessary to ensure the future collection
of the subsidy payments in support of the Bonds while the Bonds are outstanding;
provided, that a failure to apply for or collect the subsidy payments, in and of itself, shall
not constitute an event of default under this Ordinance or the Bonds.
The Chief Financial Officer of the City, of her or his designee, is hereby authorized and
directed from time to time and at any time to perform all acts and things necessary or desirable
and to execute and deliver any agreements, certificates, documents or other instruments, whether
herein mentioned, to carry out the terms and provisions of this Section 47, including but not
limited to (i) the preparation and making of any filings with the Internal Revenue Service and (ii)
taking any actions necessary to obtain any moneys from the Federal government that may be
available to the City.
All provisions of this Ordinance are intended to comply with the requirements of Sections
54A, 54AA, 103, 148, 163, 1273, and 6431 of the Code and the Bonds are intended to be
"qualified bonds" under Section 54AA of the Code. In the event of any inconsistency, this
Ordinance shall be interpreted to conform to those and all other applicable provisions of the
Code and all regulations and IRS rulings and notices applicable thereto.
All available project proceeds (as defined in Section 54A of the Code) from the issue of
the Bonds shall be used for capital expenditure (as defined under applicable provisions of the
Code and all regulations and IRS rulings and notices).
No more than 2 percent of the proceeds of the issue of the Bonds shall be used to pay
issuance costs of the Bonds and if any such excess costs should occur they shall be paid out of
Net Revenues and not out of issue proceeds. No issue proceeds shall be deposited or allocated to
any reserve fund (within the meaning of § 150(a)(3) of the Code) except and to the extent
permitted under Section 54AA(g)(2) of the Code. Deposits on allocations to any reserve funds in
amounts exceeding such permitted deposits or allocations, if any, shall be paid out of available
Net Revenues.
The Bonds are not authorized to be issued at an issue price that has more than a de
35
A.5.b
minimis amount (determined under rules similar to the rules of Section 1273(a)(3) of the Code)
of premium over the stated principal amount of the Bonds.
48. The City Council of the City may from time to time designate what Fund or Funds
any federal credit subsidy payment received shall be allocated to and the purposes for which they
may be spent. If no other designation exists at the time of receipt, such payments shall be
allocated to and deposited in the Interest and Sinking Fund.
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�I
36
A.5.b
PASSED AND APPROVED this 13`h day of July, 2010.
Mayor
The City of Beaumont
ATTEST:
City Clerk
The City o`Beaumont
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37
A.5.b
EXHIBIT "A"
SCHEDULE 1
$19,040,000
THE CITY OF BEAUMONT,TEXAS
WATERWORKS AND SEWER SYSTEM REVENUE BONDS
TAXABLE SERIES 2010B
(BUILD AMERICA BONDS —DIRECT PAYMENT TO ISSUER)
Interest Accrues From: August 1, 2010
MATURITY SCHEDULE
Maturity Principal
(September 1) Amount Interest Rate Yield
2021 $ 620,000 4.907% 4.907%
2022 $ 640,000 5.107% 5.107%
2023 $ 660,000 5,257% 5,257%
2024 $1,095,000 5.407% 5.407%
2025 $1,135,000 5.507% 5.507%
$6,070,000 6.007% Term Bonds due September 1, 2030 Yield 6.007%
$8,820,000 6.157% Term Bonds due September 1, 2036 Yield 6.157%
The Bonds are subject to optional redemption and to optional redemption upon occurrence of an
Extraordinary Event prior to maturity as described in the Ordinance.
The Term Bonds maturing in the years 2030 and 2036 are subject to mandatory sinking fund
redemption as described in the Ordinance.