HomeMy WebLinkAboutPACKET JUL 30 2013 RIC3 errs OrrOUTOArTT
BEAUW*
T • s • a • A • s
REGULAR MEETING OF THE CITY COUNCIL
COUNCIL CHAMBERS JULY 30,2013 1:30 P.M.
CONSENT AGENDA
* Approval of minutes—July 23, 2013
* Confirmation of committee appointments
A) Approve a resolution approving a contract for refurbishing and remounting an ambulance
body
B) Approve a resolution authorizing the City Manager to enter into a lease agreement with
Jefferson County for property located at 3455 Sarah Street
RICH WITH OPPORTUNITY
BEA,UMDN*
T • R • X - s • a City Council Agenda Item
TO: City Council
FROM: Kyle Hayes, City Manager
PREPARED BY: Laura Clark, Chief Financial Officer
MEETING DATE: July 30, 2013
REQUESTED ACTION: Council consider a resolution approving the award of a
contract for refurbishing and remounting an ambulance
body to Frazer, Ltd. of Houston in the approximate amount
of$49,200.
BACKGROUND
Beaumont EMS operates ambulances consisting of a body or box module mounted on a heavy-
duty pickup chassis. Ambulance bodies, when periodically refurbished, have a longer service
life than the chassis on which they are mounted. Refurbishment is less costly than purchasing a
new body each time a chassis needs to be replaced. Refurbishment of bodies and replacement of
chassis are requested through the City's budget process. The Fleet Superintendent evaluated the
request and recommended refurbishment and replacement due to the age and mileage of the unit.
Council approved the purchase of the chassis on February 5, 2013, Resolution No. 13-026.
Pricing was obtained through the Houston-Galveston Area Council (H-GAC)Cooperative
Purchasing Program. H-GAC provides cities and political subdivisions with the means to
purchase specialized equipment at volume pricing. H-GAC complies with State of Texas
procurement statutes. The contract estimate of$49,200 includes the$600 H-GAC fee.
Warranty and service are provided by Frazer Ltd. for the lifetime of the ambulance body while in
possession of the original owner.
FUNDING SOURCE
Capital Reserve Fund.
RECOMMENDATION
Approval of resolution.
RESOLUTION NO.
BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF BEAUMONT:
THAT the City Council hereby approves the award of a contract to Frazer, Ltd., of Houston
Texas, in the amount of$49,200 for refurbishing and remounting an ambulance body for
use by Beaumont EMS Division.
PASSED BY THE CITY COUNCIL of the City of Beaumont this the 30th day of July,
2013.
- Mayor Becky Ames -
B
RICH WITH OPPORTUNITY
BEAU
T 0 19 • X • A • S City Council Agenda Item
TO: City Council
FROM: Kyle Hayes, City Manager
PREPARED BY: Chris Boone,Community Development Director
MEETING DATE: July 30,2013
REQUESTED ACTION: Council consider a resolution authorizing the City Manager
to enter into a lease agreement with Jefferson County for the
property located at 3455 Sarah Street.
BACKGROUND
Approximately three years ago,the Melton YMCA closed and was reopened as the L.L.Melton
Family Life Center. Serving as a community recreation center for the area,the Life Center
continues to operate,with assistance from the City. The management of the Melton Life Center
was recently approached by Dr.Donna Farrell,Ph.D.,LSSP about utilizing the facility,while
maintaining recreational activities for the community.
On July 9,2013,City Council authorized a lease with Dr. Farrell for the use of the City-owned
building on the north half of this ten acre property. The attached lease would allow the City to
also lease the south half of the property to Dr. Farrell. In the past,a similar arrangement
arrangement allowed the City to lease this property to the Y.M.C.A.
FUNDING SOURCE
Not Applicable.
RECOMMENDATION
The Administration recommends approval.
4,SON CC��
TEXA"�
AGENDA ITEM July 23, 2013
Consider, possibly approve and authorize the Jefferson County
Judge to execute a lease between Jefferson County, Texas and the
City of Beaumont, Texas for the L.L. Melton Property.
RESOLUTION NO.
BE IT RESOLVED BY THE CITY COUNCIL
OF THE CITY OF BEAUMONT:
THAT the City Manager be and he is hereby authorized to execute a twenty(20)year lease
agreement, expiring on July 14, 2033, with Jefferson County, Texas (Lessor) for a rental
amount of$1.00 annually for property located at 3455 Sarah Street, Beaumont, Texas, to
be used for private education services, recreational, social and civic activities at the L.L.
Melton Family Life Center. The lease agreement is substantially in the form attached
hereto as Exhibit "A" and made a part hereof for all purposes.
PASSED BY THE CITY COUNCIL of the City of Beaumont this the 30th day of July,
2013.
- Mayor Becky Ames -
L.L.MELTON PROPERTY LEASE AGREEMENT
Date: July 1,2013
Lessor: Jefferson County,Texas
Lessor's Physical Address: 1149 Pearl Street
Beaumont,Texas 77701
Lessee: City of Beaumont,Texas
Lessee's Mailing Address: 801 Main Street
Beaumont,Texas 77701
Leased Premises: Being a portion of the South one-half(S.''/s)of Block Nineteen(19)in the M.C.
Cartwright Subdivision in the J.W.Bullock League of the City of Beaumont,
Jefferson County,Texas,and descnl)ed by metes and bounds as follows:
BEGINNING at an iron pin in the west line of Block Nineteen(19),said iron pin
marking the division line of the north and south one-half of Block Nineteen(19);
said point being the northwest comer of the south one-half of Bbdc Nn (19)
and the southwest comer of the north one-half of Block Nineteen(19);
THENCE,East along the dividing line of the north and south one-half of Block
Nineteen(19)a distance of six hundred ninety-seven and fives feet(697.5')to
an iron pin for caner,said iron pin being fifteen feet(15)west of the east line of
Block Nineteen(19);
THENCE,South 0'8'30"west along a line fifteen feet(15)from and parallel to
the east line of Block Nineteen(19)a distance of three hundred five and sixty-five
on hundredths feet(305.65')to an iron pin for caner in the south line of Block
Nineteen(19);
THENCE,West along the south line of Block Nineteen(19)a distance of six
hundred ninety-seven and five-tenths feet(697.5')to an iron pin for corner,said iron
pin being the southwest corner of Block Nmetew(19);
THENCE,North 0'8'30"east along the west line of Block Nineteen(19)a distance
of three hundred five and sixty-five one hundredths feet(305.65')to the PLACE OF
BEGINNING,said tract containing four and eighty-nine one hundredths(4.89)acres
more or less.
Lease Commencement Date: This Agreement will commence upon execution by Lessor and Lessee.
Lease Term: The term of this lease is for a term of Twenty(20)years,beginning on
July 15,2013 and terminating on July 14,2033.
Page 1
EXHIBIT "A"
Lease Rent: The total rent under this Lease is the sum of Twenty and No/100($20.00)
Dollars. LESSEE agrees to pay LESSOR said amount in annual
installments of One and No/100($1.00)Dollar each,beginning at the
execution of this Lease,and payable on the 15th day of June of each year
thereafter during the term of the Lease. LESSEE shall not be held in
default for nonpayment of rent unless and until LESSOR give LESSEE
ten(10)days notice in writing of said nonpayment.
Permitted Lease Use: Recreational,education,social,and civic activities.
1. Lessee agrees to lease the Leased Premises for the Lease Term beginning on the Lease
Commencement Date and ending on the Lease Termination Date.
2. Lessee may sublet the lease premises,or any portion thereon to an organization,public,
private or not-for-profit,that will be used for the purpose of providing recreational,
educational,social,and/or civic activities for the general public.
3. Lessee shall have no authority to incur any obligations on behalf of lessor,and Lessor is not
obligated to furnish Lessee any equipment or improvements beyond those agreed to by the
parties.
4. Lease may be terminated by either the LESSOR or LESSEE for breach of any and all
provisions herein.
SIGNED:
LESSOR: LESSEE:
Jefferson County,Texas City of Beaumont,Texas
\j
Title Title
Date Date
Page 2
RICS WITS OPPORTaSITT
BEAUNUAF K*
T + Z * X * A * 8
REGULAR MEETING OF THE CITY COUNCIL
COUNCIL CHAMBERS JULY 30,2013 1:30 P.M.
AGENDA
CALL TO ORDER
* Invocation Pledge Roll Call
* Presentations and Recognition
* Public Comment: Persons may speak on scheduled agenda items 1-3/Consent
Agenda
* Consent Agenda
GENERAL BUSINESS
1. Consider an ordinance authorizing the issuance and sale of City of Beaumont,
Texas, Certificates of Obligation, Series 2013 in an estimated amount not to
exceed$43 Million; levying taxes to provide for payment thereof; and containing
other matters related thereto
2. Consider a resolution authorizing the City Attorney to bring suit to compel the
filing of hotel occupancy tax reports and to collect hotel occupancy taxes due the
City of Beaumont by Economy Inn/Prabhubhai Jivanji Bhakta
3. Consider a resolution in support of a Finding of Public Interest in Entergy and ITC
Holding's Proposed Transfer, Merger, and Spin-Off of Transmission Business
from Entergy to ITC Holdings
PUBLIC HEARING
* Receive comments related to a grant application to partially fund the operation
and maintenance of the Beaumont Municipal Transit System in FY 2013
4. Consider a resolution authorizing the City Manager to submit a grant application
and execute a contract with the Federal Transit Administration to receive
Operating Assistance funds for the Beaumont Municipal Transit System
COMMENTS
* Councilmembers/City Manager comment on various matters
* Public Comment(Persons are limited to 3 minutes)
Persons with disabilities who plan to attend this meeting and who may need auxiliary aids or
services are requested to contact Mitchell Normand at 880-3777 three days prior to the meeting.
1
July 30,2013
Consider an ordinance authorizing the issuance and sale of City of Beaumont, Texas, Certificates
of Obligation, Series 2013 in an estimated amount not to exceed$43 Million; levying taxes to
provide for payment thereof; and containing other matters related thereto
RICH WITH OPPORTUNITY
IIEA,[IMON
T • E • X • A • s City Council Agenda Item
TO: City Council
FROM: Kyle Hayes, City Manager
PREPARED BY: Laura Clark, Chief Financial Officer' In
MEETING DATE: July 30, 2013
REQUESTED ACTION: Council consider an ordinance authorizing the issuance and
sale of City of Beaumont, Texas, Certificates of Obligation,
Series 2013 in an estimated amount not to exceed $43
Million; levying taxes to provide for payment thereof, and
containing other matters related thereto.
BACKGROUND
Results of the sale will be presented by the City's Financial Advisor, Dustin Traylor of RBC
Capital Markets. A recommendation will be made to award the bonds to the underwriters.
Interest is payable semiannually in March and September beginning March 1, 2014. The Bank
of New York Mellon Trust Company,N.A. Dallas, Texas,will serve as paying agent/registrar.
Delivery and receipt of the proceeds by the City are scheduled for August 27, 2013.
FUNDING SOURCE
Principal and interest is paid from the Debt Service Fund which is supported by property taxes.
The new debt will require the debt service rate to be increased by $.05 per $100 of assessed
valuation. The rate will come before Council for consideration in September.
RECOMMENDATION
Approval of ordinance.
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ORDINANCE NO.
ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF THE CITY
OF BEAUMONT,TEXAS,CERTIFICATES OF OBLIGATION,SERIES 2013;
LEVYING TAXES TO PROVIDE FOR PAYMENT THEREOF;
AND CONTAINING OTHER MATTERS RELATED THERETO
THE STATE OF TEXAS §
COUNTY OF JEFFERSON §
THE CITY OF BEAUMONT §
WHEREAS, The City of Beaumont, Texas(the "City") is authorized to issue certificates of
obligation under Subchapter C of Chapter 271 of the Texas Local Government Code, as amended,
and under Sections 1 and 2 of Article lI of the Charter of the City of Beaumont, Texas, most
recently amended on September 16, 2003; and
WHEREAS, the City Council of the City has heretofore authorized the publication of a
notice of intention to issue certificates of obligation to the effect that the City Council would meet
on July 30, 2013, the date tentatively set for passage of an ordinance and such other action as may
be deemed necessary to authorize the issuance of certificates of obligation payable from City ad
valorem taxes and a pledge of certain revenues of the City's waterworks and sewer system, or as
soon thereafter as may be practicable,for the purpose of evidencing the indebtedness of the City for
the cost of(1) City street improvements, including street construction, extension, reconstruction,
widening, replacement, resurfacing, and rehabilitation, and the construction of related sidewalks,
curbs, gutters, ditches, drainage improvements, lighting, and landscape improvements; (2)
construction of laterals, improvements to inlets, manholes, and pipe on Campus Avenue, Zavalla
Drive, East Woodrow Street, Kenneth Avenue, Saxe Street, and Florida Avenue; (3) construction
of drainage improvements on City property or City right-of-way in the Caldwood Addition
including installation or replacement of inlets and laterals on Bristol, Sunbury, Medford,
Canterbury, Cross, North Caldwood, Central Caldwood, South Caldwood and West Caldwood
Streets; (4) construction or improvements on City property or City right-of-way for two remaining
phases of the High School Ditch Project including drainage improvements in area bounded by H-1-
10 on the north, South Street on the south, First Street on the east and Eleventh Street on the west;
(5) conduct storm water master drainage plan study through a professional services agreement to
update the current plan for drainage projects; (6)relocation of Fire Station No. 2 from Ironton Street
to Helbig Street; (7) construction of hike and bike trails on easement owned by City between Major
Drive and Dowlen Road for public use; (8) relocation of Fire Station No. 1 to Gulf and Caldwell
Streets; (9) complete construction of new Public Health Complex (on City-owned property on
College near 4d` Street), and furnishings and equipment; (10) construction of new Senior Center to
be owned by the City for public use to replace existing Best Years Center; (11) relocation of Fire
Station No. 11 to the vicinity of Royal and Neches Streets; (12) Improvement to Riverfront Park
along Neches River between Elizabeth Street and the KCS Bridge for public use, on City owned
property; (13) the cost of professional services incurred in connection with the respective projects;
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and(14)costs of issuance of debt and related fees;and
WHEREAS, such notice was published at the times and in the manner required by the
Constitution and the laws of the State of Texas and the United States of America, respectively,
particularly Chapter 271, Texas Local Government Code,as amended; and
WHEREAS, no petition signed by at least five percent (5%) of the qualified voters of the
City has been received by the City Clerk prior to the date of this Ordinance protesting the issuance
of the certificates of obligation;and
WHEREAS, the City Council of the City has determined to authorize such certificates of
obligation for the purposes set out in this Ordinance;and
WHEREAS, the City is authorized, pursuant to Chapter 1502, Texas Government Code, as
amended, to make a limited, junior and subordinate pledge of not more than $10,000 of the net
revenues of the City's waterworks and sewer system as security for the certificates of obligation
authorized herein; and
WHEREAS, the City is a home-rule municipality that: (i)adopted its charter under Section
5,Article XI,Texas Constitution; (ii)has a population of more than 50,000 and(iii)has outstanding
long-term indebtedness that is rated by a nationally recognized rating agency for municipal
securities in one of the four highest rating categories for a long-term obligation.
NOW, THEREFORE,BE IT ORDAINED BY THE CITY OF BEAUMONT, TEXAS:
1. Preamble. 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 "Business Day" shall mean any day which is not a Saturday, Sunday, a legal
holiday,or a day on which the Registrar is authorized by law or executive order to close.
The term "Certificates" or "Series 2013 Certificates" shall mean the Certificates of
Obligation, Series 2013, authorized in this Ordinance, unless the context clearly indicates
otherwise,as hereinafter authorized and provided.
The term "City" shall mean The City of Beaumont,Texas.
The term "Code" shall mean the Internal Revenue Code of 1986,as amended.
The term "Comptroller" shall mean the Comptroller of Public Accounts of the State of
Texas.
The term "Construction Fund" shall mean the construction fund established by the City
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pursuant to Section 19 of this Ordinance.
The term "DTC" shall mean The Depository Trust Company of New York, New York, or
any successor securities depository.
The term "DTC Participant" shall mean 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 the DTC
Participants.
The term "Interest and Sinking Fund" shall mean the interest and sinking fund established
by the City pursuant to Section 19 of this Ordinance.
The term "Interest Payment Date",when used in connection with any Certificate, shall mean
March 1,2014 and each September 1 and March 1 thereafter until maturity or earlier redemption.
The term"Issuer" shall mean the City.
The term "Net Revenues" shall mean the revenues of the System remaining after deduction
of the reasonable and necessary expenses of operation and maintenance of the System.
The term"Obligations"shall mean the Certificates.
The term "Ordinance" as used herein and in the Certificates shall mean this Ordinance
authorizing the Certificates.
The term "Owner" or "Registered Owner", when used with respect to any Certificate, shall
mean the person or entity in whose name such Certificate is registered in the Register.
The term "Paying Agent" shall mean the Registrar.
The term "Record Date" shall mean, for any Interest Payment Date, the 15th day of the
month next preceding such Interest Payment Date.
The term "Register" shall mean the books of registration kept by the Registrar in which are
maintained the names and addresses of and the principal amounts registered to each Owner.
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 "SEC" shall mean the United States Securities and Exchange Commission and its
successors.
The term"System" shall mean the City's waterworks and sewer system.
The term "Underwriter" shall mean Wells Fargo Bank, National Association, Estrada
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Hinojosa&Company, Inc.,Raymond James&Associates,Inc. and BOSC,Inc.
3. Authorization. The Certificates shall be issued in fully registered form,without coupons,
in the total authorized aggregate amount of FORTY-TWO NIILLION AND NO/100 DOLLARS
($42,000,000.00),for the purpose of evidencing the indebtedness of the City for the cost of(1)City
street improvements, including street construction, extension, reconstruction, widening,
replacement, resurfacing, and rehabilitation, and the construction of related sidewalks, curbs,
gutters, ditches, drainage improvements,lighting, and landscape improvements; (2) construction of
laterals, improvements to inlets, manholes, and pipe on Campus Avenue, Zavalla Drive, East
Woodrow Street, Kenneth Avenue, Saxe Street, and Florida Avenue; (3) construction of drainage
improvements on City property or City right-of-way in the Caldwood Addition including
installation or replacement of inlets and laterals on Bristol, Sunbury, Medford, Canterbury, Cross,
North Caldwood, Central Caldwood, South Caldwood and West Caldwood Streets; (4)construction
or improvements on City property or City right-of-way for two remaining phases of the High
School Ditch Project including drainage improvements in area bounded by IH-10 on the north,
South Street on the south, First Street on the east and Eleventh Street on the west; (5)conduct storm
water master drainage plan study through a professional services agreement to update the current
plan for drainage projects; (6)relocation of Fire Station No. 2 from Ironton Street to Helbig Street;
(7) construction of hike and bike trails on easement owned by City between Major Drive and
Dowlen Road for public use; (8) relocation of Fire Station No. 1 to Gulf and Caldwell Streets; (9�
complete construction of new Public Health Complex (on City-owned property on College near 4
Street), and furnishings and equipment; (10) construction of new Senior Center to be owned by the
City for public use to replace existing Best Years Center; (11) relocation of Fire Station No. 11 to
the vicinity of Royal and Neches Streets; (12) Improvement to Riverfront Park along Neches River
between Elizabeth Street and the KCS Bridge for public use, on City owned property; (13)the cost
of professional services incurred in connection with the respective projects; and (14) costs of
issuance of debt and related fees, which projects shall be financed with the proceeds of the
Certificates in such order of priority as determined by the City Council of the City.
4. Designation, Date, and Interest Payment Dates. The Certificates shall be designated
as the "THE CITY OF BEAUMONT, TEXAS, CERTIFICATES OF OBLIGATION, SERIES
2013," and shall be dated July 15, 2013. The Certificates shall bear interest at the rates set forth in
the schedule in Section 5 below, from the later of July 15, 2013,or the most recent Interest Payment
Date to which interest has been paid or duly provided for, calculated on the basis of a 360-day year
of twelve 30-day months, which interest shall be payable on March 1, 2014, and semiannually
thereafter on September 1 and March 1 of each year until maturity or earlier redemption.
5. Certificates,Numbers and Denominations.
The Certificates shall be in the total aggregate principal amount of FORTY-TWO
MILLION AND NO/100 DOLLARS ($42,000,000.00) 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. The
Certificates shall mature on March 1 in each of the years and in the amounts set out in such
schedule. Certificates delivered in transfer of or in exchange for other Certificates s hall be
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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 Certificate or Certificates in lieu of which they are delivered.
Certificate Year Principal Interest
Number of Maturity Amount Rate
SEE EXHIBIT A
6. Execution of Certificates, Seal. The Certificates shall be signed by the Mayor or
Mayor Pro Tern of the City and countersigned by the City Clerk or Deputy City Clerk of the City,
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 Certificates shall have
the same effect as if each of the Certificates had been signed manually and in person by each of said
officers, and such facsimile seal on the Certificates shall have the same effect as if the official seal
of the City had been manually impressed upon each of the Certificates. If any officer of the City
whose manual or facsimile signature shall appear on the Certificates shall cease to be such officer
before the authentication of such Certificates or before the delivery of such Certificates, 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 Certificates to be
initially issued shall be issued in the name of the Underwriter or Cede & Co., as instructed by the
Underwriter and delivered to the Attorney General of the State 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 17 of this Ordinance shall be attached or affixed to the initial Certificates.
8. Authentication. Except for the Certificates to be initially issued, which need not be
authenticated by the Registrar, only Certificates which bear thereon a certificate of authentication,
substantially in the form provided in Section 17 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 Certificates 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 Certificates. The principal of the Certificates 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 become due and payable, at the designated corporate trust office
of the Registrar. The interest on each Certificate shall be payable by check payable on the Interest
Payment Date, mailed by the Registrar on or before each Interest Payment Date to the Owner of
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record as of the Record Date,to the address of such Owner as shown on the Register.
If the date for payment of the principal of or interest on any Certificate 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 payment was due.
10. Successor Registrars. The City covenants that at all times while any Certificates are
outstanding it will provide a bank, trust company, financial institution or other entity duly qualified
and duly authorized to act as Registrar for the Certificates. The City reserves the right to change the
Registrar on not less than sixty(60) days'written notice to the Registrar, so long as any such notice
is effective not less than sixty (60) days prior to the next succeeding principal or interest payment
date on the Certificates. Promptly upon the appointment of any successor Registrar, the previous
Registrar shall deliver the 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 Certificate 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) business days prior to the Special Record Date, to each affected Owner of record as of the
close of business on the day prior to the mailing of such notice.
12. Ownership; Unclaimed Principal and Interest. The City,the Registrar and any other
person may treat the person in whose name any Certificate is registered as the absolute Owner of
such Certificate for the purpose of making payment of principal or interest on such Certificate, and
for all other purposes, whether or not such Certificate 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 Certificate in accordance with this Section 12 shall be valid
and effectual and shall discharge the liability of the City and the Registrar upon such Certificate to
the extent of the sums paid.
Amounts held by the Registrar which represent principal of and interest on the Certificates
remaining unclaimed by the Owner after the expiration of three (3) years from the date such
amounts have become due and payable shall be reported and disposed of by the Registrar in
accordance with the provisions of Texas law, including to the extent applicable,Title 6 of the Texas
Property Code,as amended.
13. Registration, Transfer, and Exchange; Special Election for Uncertificated
Certificates. So long as any Certificates remain outstanding,the Registrar shall keep the 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 Certificates in accordance with the
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terms of this Ordinance.
Each Certificate 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 Certificate for transfer, the Registrar
shall authenticate and deliver in exchange therefor, within three (3) Business Days after such
presentation, a new Certificate or Certificates, registered in the name of the transferee or
transferees, in authorized denominations and of the same maturity and aggregate principal amount
and bearing interest at the same rate as the Certificate or Certificates so presented.
All Certificates shall be exchangeable upon presentation and surrender thereof at the
principal corporate trust office of the Registrar for a Certificate or Certificates of the same maturity
and interest rate in any authorized denomination, in an aggregate principal amount equal to the
unpaid principal amount of the Certificate or Certificates presented for exchange. The Registrar
shall be and is hereby authorized to authenticate and deliver exchange Certificates in accordance
with the provisions of this Section 13. Each Certificate delivered in accordance with this Section
13 shall be entitled to the benefits and security of this Ordinance to the same extent as the
Certificate or Certificates in lieu of which such Certificate is delivered.
The City or the Registrar may require the Owner of any Certificate 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 Certificate. Any fee or charge of the Registrar for such transfer or exchange
shall be paid by the City.
Neither the City nor the Registrar shall be required to transfer or exchange any Certificate
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 Certificate called for redemption in part.
Notwithstanding any other provision hereof, upon initial issuance of the Certificates, the
ownership of the Certificates shall be registered in the name of Cede & Co., as nominee of DTC.
The definitive Certificates shall be initially issued in the form of a single separate certificate for
each of the maturities thereof.
With respect to Certificates 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 Certificates. 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 Certificates, (ii) the delivery to any DTC
Participant or any other person, other than an Owner of a Certificate, as shown on the Register, of
any notice with respect to the Certificates, including any notice of redemption, or(iii) the payment
to any DTC Participant or any other person, other than an Owner of a Certificate, as shown in the
Register, of any amount with respect to principal of,premium,if any, or interest on the Certificates.
Notwithstanding any other provision of this Ordinance to the contrary, the City and the Registrar
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shall be entitled to treat and consider the person in whose name each Certificate is registered in the
Register as the absolute Owner of such Certificate for the purpose of payment of principal of,
premium, if any, and interest on the Certificates, for the purpose of all matters with respect to such
Certificates, for the purpose of registering transfers with respect to such Certificates, and for all
other purposes whatsoever. The Registrar shall pay all principal of, premium, if any, and interest
on the Certificates only to or upon the order of the respective Owners, as shown in the Register as
provided in this Ordinance, 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 Certificates to the extent of
the sum or sums so paid. No person other than an Owner as shown in the Register, shall receive a
certificate for a Certificate evidencing the obligation of the City 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 Ordinance shall refer to such new nominee of DTC.
In the event that the City or the Registrar determines that DTC is incapable of discharging
its responsibilities described herein and in a letter of representation of the City to DTC and that it is
in the best interest of the beneficial Owners of the Certificates that they be able to obtain
certificated Certificates, or if DTC Participants owning at least 50% of the Certificates outstanding
based on current records of the DTC determine that continuation of the system of book-entry
transfers through the DTC (or a successor securities depository) is not in the best interest of such
beneficial Owners of the Certificates, or in the event DTC discontinues the services described
herein,the City or the Registrar 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
of the appointment of such successor securities depository and transfer one or more separate
Certificates to such successor securities depository or (ii) notify DTC of the availability through
DTC of Certificates and transfer one or more separate Certificates to DTC Participants having
Certificates credited to their DTC accounts. In such event, the Certificates 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 Certificates shall designate, in accordance with
the provisions of this Ordinance.
Notwithstanding any other provision of this Ordinance to the contrary, so long as any
Certificates 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 the Certificates, and all notices with respect
thereto, shall be made and given in the manner provided in a letter of representation from the City
to the DTC.
14. Mutilated Lost, or Stolen Certificates. Upon the presentation and surrender to the
Registrar of a mutilated Certificate,the Registrar shall authenticate and deliver in exchange therefor
a replacement Certificate of like maturity, interest rate and principal amount, bearing a number not
contemporaneously outstanding. If any Certificate 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 Certificate has been acquired by a bona fide purchaser, shall execute and the
Registrar shall authenticate and deliver a replacement Certificate of like amount, bearing a number
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not contemporaneously outstanding.
The City or the Registrar may require the Owner of a mutilated Certificate to pay a sum
sufficient to cover any tax or other governmental charge that may be imposed in connection
therewith and any other associated expenses,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 Certificate,before any replacement Certificate 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 Certificate;
(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 Certificate, a bona fide purchaser of the original
Certificate in lieu of which such replacement Certificate was issued presents for payment such
original Certificate, the City and the Registrar shall be entitled to recover such replacement
Certificate 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 Certificate has become
or is about to become due and payable, the City in its discretion may, instead of issuing a
replacement Certificate,authorize the Registrar to pay such Certificate.
Each replacement Certificate delivered in accordance with this Section 14 shall be entitled
to the benefits and security of this Ordinance to the same extent as the Certificate or Certificates in
lieu of which such replacement Certificate is delivered.
15. Cancellation of Certificates. All Certificates paid in accordance with this
Ordinance, and all Certificates in lieu of which exchange Certificates or replacement Certificates
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 Certificates.
16. Optional and Mandatory Redemption, Defeasance.
(a) The City reserves the right, at its option, to redeem Certificates having stated
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maturities on and after March 1, 2024 in whole or in part, on March 1, 2023, or any date thereafter,
at a price of par plus accrued interest to the date fixed for redemption. If less than all of the
Certificates are to be redeemed, the City shall determine the Certificates, or portions thereof, to be
redeemed.
The Certificates maturing in the years (the "Term Certificates")
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 Certificates in this Ordinance, at a price of par plus
accrued interest to the date fixed for redemption.
Certificates may be redeemed only in integral multiples of$5,000. If a Certificate subject to
redemption is in a denomination larger that$5,000, a portion of such Certificate may be redeemed,
but only in integral multiples of$5,000. Upon surrender of any Certificate for redemption in part,
the Registrar, in accordance with Section 13 hereof, shall authenticate and deliver in exchange
therefor a Certificate or Certificates of like maturity and interest rate in an aggregate principal
amount equal to the unredeemed portion of the Certificate so surrendered.
Not less than thirty (30) days prior to a redemption date for the Certificates, the City shall
cause a notice of redemption to be sent by United States mail, first class, postage prepaid, to each
Owner of each Certificate 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
Certificates are to be surrendered for payment and, if less than all the Certificates are to be
redeemed, the numbers of the Certificates 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 Certificates or portions thereof to be redeemed.
When Certificates have been called for redemption in whole or in part and due provision made to
redeem the same as herein provided, the Certificates 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 Certificate or portion thereof called for redemption shall
terminate on the date fixed for redemption.
(b) The City may defease the provisions of this Ordinance and discharge its obligation
to the Owners of any or all of the Certificates 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 Series 2013 Certificates plus interest thereon to the date of maturity or redemption;
or(b)pursuant to an escrow or trust agreement, cash and/or direct obligations of, or obligations the
principal of and interest on which are guaranteed by or secured by the pledge of direct obligations
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 Certificates plus interest thereon to the date of maturity or redemption; provided,
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however, that if any of such Series 2013 Certificates 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. Upon such deposit, such Certificates 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.
17. Forms.
The form of the Certificates, 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 Certificates 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 CERTIFICATE
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTY OF JEFFERSON
NUMBER DENOMINATION
CR- $
REGISTERED REGISTERED
THE CITY OF BEAUMONT, TEXAS
CERTIFICATE OF OBLIGATION
SERIES 2013
INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP:
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 certificate at the designated corporate trust office of TBE 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 the
Dated Date specified above, or the most recent interest payment date to which interest has been
paid or duly provided for. Interest on this Certificate is payable by check on March 1, 2014, and
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semiannually thereafter on each September 1 and March 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 CERTIFICATE is one of a duly authorized issue of Certificates of Obligation,
aggregating $42,000,000.00 (the "Certificates"), issued in accordance with the Constitution and the
laws of the State of Texas, particularly Chapter 271, Texas Local Government Code, as amended,
and Sections 1 and 2 of Article H of the Charter of the City, most recently amended September 16,
2003, for the cost of construction of authorized street, drainage, building, park and other capital
improvements, the purchase of equipment and the cost of issuance of the Certificates, pursuant to
an ordinance duly adopted by the City Council of the City on July 30, 2013 (the "Ordinance"),
which Ordinance is of record in the official minutes of the City Council.
THE CITY RESERVES THE RIGHT, at its option,to redeem the Certificates having stated
maturities on or after March 1,2024, in whole or in part,on March 1,2023 or any date thereafter, in
integral multiples of$5,000, at a price of par plus accrued interest to the date fixed for redemption.
Reference is made to the Ordinance for complete details concerning the manner of redeeming the
Certificates.
THE CERTIFICATES maturing in the years 20_ and 20 (the "Term Certificates") 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 CERTIFICATES DUE
Date Amount
TERM CERTIFICATES DUE
Date Amount
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The Paying Agent shall select for redemption by lot, or by any other customary method that
results in random selection, a principal amount of Term Certificates equal to the aggregate principal
amount of such Term Certificates to be redeemed, shall call such Term Certificates for redemption
on the scheduled mandatory redemption date, and shall give notice of such redemption in
accordance with the Ordinance authorizing the Certificates. The principal amount of Term
Certificates required to be mandatorily redeemed shall be reduced by the principal amount of Term
Certificates 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 Certificate to be
redeemed in whole or in part at the address shown on the books of registration kept by the
Registrar. When Certificates 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 Certificates may be defeased as provided in the Ordinance authorizing the Certificates.
THIS CERTIFICATE 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 CERTIFICATES are exchangeable at the principal corporate trust office of the
Registrar for Certificates 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 Certificate 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 Certificate called for redemption in part.
THIS CERTIFICATE shall not be valid or obligatory for any purpose or be entitled to any
benefit under the Ordinance unless this Certificate 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 Certificate, 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 Certificates and will cause notice of any change of registrar to be mailed
to each registered owner.
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IT IS HEREBY certified, recited and covenanted that this Certificate 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 Certificate have been
performed, exist and have been done in accordance with law; and that annual ad valorem taxes
sufficient to provide for the payment of the interest on and principal of this Certificate, as such
interest comes due and such principal matures, have been levied, within the limits prescribed by
law, against all taxable property in the City, and have been pledged irrevocably for such payment.
IT IS FURTHER certified, recited and represented that the net revenues (the "Net
Revenues") to be derived from the operation of the City's waterworks and sewer system (the
"System"), but only to the extent of and in an amount not to exceed Ten Thousand Dollars
($10,000.00) in the aggregate, are also pledged to the payment of the principal of and interest on
this Certificate and the series of Certificates of which it is a part to the extent that taxes may ever be
insufficient or unavailable for said purpose, all as set forth in the Ordinance to which reference is
made for all particulars; provided, however, that such pledge of Net Revenues is and shall be junior
and subordinate in all respects to the pledge of such Net Revenues to the payment of any obligation
of the City, whether authorized heretofore or hereafter, which the City designates as having a
pledge senior to the pledge of such Net Revenues to the payment of this Certificate and that series
of Certificates of which it is a part, and the City also reserves the right to issue, for any lawful
purpose at any time, in one or more installments, bonds, certificates of obligation and other
obligations of any kind payable in whole or in part from the Net Revenues of the System, secured
by a pledge of the Net Revenues of the System that may be prior and superior in right to, on a parity
with, or junior and subordinate to the pledge of Net Revenues securing this Certificate and the
series of Certificates of which it is a part.
IN WITNESS WHEREOF, this Certificate 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 Certificate.
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 certificate has been examined, certified as to validity,and approved
by the Attorney General of the State of Texas, and that this certificate has been registered by the
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Comptroller of Public Accounts of the State of Texas.
WITNESS MY SIGNATURE AND SEAL this day of ,201_.
xxxxxxxx
Comptroller of Public Accounts
(Seal) of the State of Texas
FORM OF REGISTRAR'S AUTHENTICATION CERTIFICATE
REGISTRAR'S
AUTHENTICATION CERTIFICATE
It is hereby certified that this Certificate has been delivered pursuant to the Ordinance
described in the text of this Certificate.
The Bank of New York Mellon Trust Company,N.A.
Dallas,Texas, as Registrar
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 certificate and all rights thereunder, and hereby irrevocably constitutes and appoints
attorney to transfer said certificate on the books kept for registration thereof, with full power of
substitution in the premises.
DATED:
Signature Guaranteed:
NOTICE: The signature
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above must correspond to
the name of the registered
NOTICE: Signature must be owner as shown on the face
guaranteed by a member firm of this Certificate 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 CERTIFICATE
18. Legal Opinion; CUSIP Numbers. The approving opinion of Orgain Bell & Tucker,
LLP, Beaumont,Texas,Bond Counsel,and CUSIP Numbers may be printed on the Certificates,but
errors or omissions in the printing of such opinion or such numbers shall have no effect on the
validity of the Certificates.
19. Interest and Sinking Fund; Tax Levy; Pledge of Revenues, Construction Fund. The
proceeds from all taxes levied, assessed and collected for and on account of the Certificates
authorized by this Ordinance are hereby irrevocably pledged and shall be deposited, as collected, in
a special fund to be designated "City of Beaumont, Texas, Certificates of Obligation, Series 2013,
Interest and Sinking Fund". While the Certificates or any part of the principal thereof or interest
thereon remain outstanding and unpaid, there is hereby levied and there shall be annually levied,
assessed and collected in due time, form and manner within the limits prescribed by law, and at the
same time other City taxes are levied, assessed and collected, in each year, beginning with the
current year, a continuing direct annual ad valorem tax upon all taxable property in the City
sufficient to pay the interest on the Certificates as the same becomes due, and to provide and
maintain a sinking fund adequate to pay each installment of the principal or maturity amount of the
Certificates as the same matures but in each year never less,than 2%of the original principal of the
Certificates, full allowance being made for delinquencies and costs of collection, and said taxes
when collected shall be applied to the payment of the interest on and principal of the Certificates
and to no other purpose. There is hereby appropriated from current funds on hand, which are
certified to be on hand and available for such purpose, an amount sufficient to pay debt service
coming due on the Certificates on March 1, 2014 and September 1, 2014, and such amount shall
not be used for any other purpose. A tax rate has not been determined for 2014, but the City
certifies that such rate,when determined,will take into account the Certificates being issued.
The Net Revenues of the System, but only to the extent of and in an amount not to exceed
$10,000 in the aggregate, are hereby irrevocably pledged to the payment of the principal of and
interest on the Certificates as the same come due; provided, however, that such pledge of Net
Revenues is and shall be junior and subordinate in all respects to the pledge of the Net Revenues to
the payment of any obligation of the City, whether authorized heretofore or hereafter, which the
City designates as having a pledge senior to the pledge of such Net Revenues to the payment of the
Certificates; and the City also reserves the right to issue, for any lawful purpose at any time, in one
or more installments, bonds, certificates of obligation and other obligations of any kind payable in
whole or in part from the Net Revenues of the System that may be prior and superior in right to, on
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a parity with, or junior and subordinate to the pledge of Net Revenues securing this series of
Certificates.
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, Certificates of Obligation, Series 2013,
Construction Fund". Immediately after the sale and delivery of the Certificates, that portion of the
proceeds of the Certificates to be used for the cost of construction of authorized projects and the
cost of issuance of the Certificates shall be deposited into the Construction Fund and disbursed for
such purposes. Pending completion of construction of such projects, interest earned on such
proceeds may be used, at the City's discretion, for such projects and shall be accounted for,
maintained, deposited and expended as permitted by the provisions of Section 1201.043, Texas
Government Code Annotated, 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 such projects, the monies, if any, remaining in the Construction Fund shall be
transferred and deposited by the City into the Interest and Sinking Fund.
IT IS ORDERED AND DIRECTED that this Ordinance pledging ad valorem tax revenue
of the City and limited net revenues of the System for the payment of the Certificates to the extent
provided herein be filed and recorded in the records of the City as necessary to cause the pledge to
be valid under Section 1201.044 of the Government Code of Texas. At any time while any of the
Certificates are outstanding, it is determined by the City or demanded by the holder of any
Certificates 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.
20. Further Proceedings. After the Certificates shall have been executed, it shall be the
duty of the Mayor of the City to deliver the Certificates 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 Certificates to be initially issued shall have been approved by the Attorney
General of the State of Texas, the Certificates shall be delivered to the Comptroller of Public
Accounts of the State of Texas for registration. Upon registration of the Certificates to be initially
issued,the Comptroller of Public Accounts (or a deputy lawfully designated in writing to act for the
Comptroller) shall manually sign the Comptroller's Registration Certificate prescribed herein to be
affixed or attached to the Certificates to be initially issued, and the seal of the Comptroller shall be
impressed, or placed in facsimile, thereon. In addition, the Mayor, the Mayor Pro Tem, the City
Clerk, the City Manager and other appropriate officials of the City are hereby authorized and
directed to do any and all things necessary or convenient to carry out the purposes of this
Ordinance, and each of such persons are authorized, acting alone and without the joinder of the
others, to execute any and all closing certificates, instruments and such other documents as may be
necessary or appropriate to carry out the purposes of this Ordinance.
21. Sale of Certificates. The Certificates are hereby sold and shall be delivered to the
Underwriter at a price of$ , which represents the par amount of the Certificates
of$ less an original issue discount of$ , plus a premium of
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$ and less an Underwriting Discount of $ plus accrued
interest thereon from the dated date of the Certificates to the date of issuance, all in accordance
with the terms of a certificate of obligation 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 Mayor
and the Mayor Pro Tem and other appropriate officials of the City are hereby authorized and
directed to execute such certificates of obligation 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 Certificates, and, if deemed by
the acting officer to be in the best interests of the City, to terminate the agreement as permitted by
the terms thereof.
The City finds that the net effective interest of the Certificates is %.
The premium received for the Certificates shall be counted against the noticed amount of
$43,000,000 authorized by and published as required by law pursuant to the Resolution adopted
by the City Council on June 25, 2013.
22. Tax Exemption. (a) The City intends that the interest on the Certificates shall 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. 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 Certificates to be includable in gross income, as
defined in Section 61 of the Code,of the holders thereof for purposes of federal income taxation. In
particular, the City covenants and agrees to comply with each requirement of this Section 22;
provided, however, that the City shall not be required to comply with any particular requirement of
this Section 22 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 Certificates or if the City has received a
Counsel's Opinion to the effect that compliance with some other requirement set forth in this
Section 22 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 22.
(b) The City covenants and agrees that its use of Net Proceeds (as defined below)of the
Certificates will at all times satisfy the following requirements:
(i) The City will use all of the Net Proceeds of the Certificates for the cost of
construction of authorized street, drainage, building, park, and other capital improvements,
equipment purchases and the cost of issuance of the Certificates. The City has limited and
will limit with respect to the Certificates the amount of original or investment proceeds
thereof to be used(other than use as a member of the general public)in the trade or business
of any person other than a governmental unit to an amount aggregating no more than 10%
of the Net Proceeds of the Certificates ("private-use proceeds"). For purposes of this
Section, the term "person" includes any individual, corporation, partnership, unincorporated
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association, or any other entity capable of carrying on a trade or business; and the term
"trade or business" means, with respect to any natural person, any activity regularly carried
on for profit and, with respect to persons other than natural persons, any activity other than
an activity carved on by a governmental unit. Any use of proceeds of the Certificates in any
manner contrary to the guidelines set forth in Revenue Procedure 93-19, including any
revisions or amendments thereto, shall constitute the use of such proceeds in the trade or
business of one who is not a governmental unit;
(ii) The City has not permitted and will not permit more than 5% of the Net
Proceeds of the Certificates to be used in the trade or business of any person other than a
governmental unit if such use is unrelated to the governmental purpose of the Certificates.
Further, the amount of private-use proceeds of the Certificates in excess of 5% of the Net
Proceeds thereof("excess private-use proceeds")did not and will not exceed the proceeds of
the Certificates expended for the governmental purpose of the Certificates to which such
excess private-use proceeds relate;
(iii) Principal of and interest on the Certificates shall be paid solely from ad
valorem tax receipts collected by the City and from the Net Revenues of the System to the
extent pledged hereunder. Further, no person using more than 10% of the Net Proceeds of
the Certificates in a trade or business, other than a governmental unit, has made or shall
make payments (other than as a member of the general public), directly or indirectly,
accounting for more than 10%of such receipts;
(iv) The City has not permitted and will not permit with respect to the Certificates
an amount of proceeds thereof exceeding the lesser of(a) $5,000,000 or(b) 5% of the Net
Proceeds of the Certificates to be used, directly or indirectly, to finance loans to persons
other than a governmental unit; and
(v) The City will use $ of the Net Proceeds of the Certificates to
pay the costs of issuance of the Certificates.
When used in this Section, the term "Net Proceeds" of the Certificates shall mean the proceeds to
the City from the sale thereof to the Underwriter, including investment earnings on such proceeds,
less accrued interest with respect to such issue.
(c) 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 Certificates 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) The City shall certify, through an authorized officer, employee or agent, that based
upon all facts and estimates known or reasonably expected to be in existence on the date the
Certificates are delivered, the City will reasonably expect that the proceeds of the Certificates will
not be used in a manner that would cause the Certificates to be "arbitrage bonds" within the
meaning of Section 148(a) of the Code and applicable regulations thereunder. Moreover, the City
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covenants and agrees that it will make such use of the proceeds of the Certificates, including
interest or other investment income derived from the proceeds of the Certificates, regulate
investments of such proceeds and amounts, and take such other and further action as may be
required so that the Certificates will not be "arbitrage bonds" within the meaning of Section 148(a)
of the Code and applicable regulations thereunder.
(e) 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 Certificates(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 Certificates
as may be required to calculate the amount earned on the investment of the gross proceeds of the
Certificates 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 Certificates which is required to be rebated
to the federal government, and (iii) pay, not less often than every 5th anniversary date of the
delivery of the Certificates, and within sixty (60) days after retirement of the Certificates, all
amounts required to be rebated to the federal government.
The City covenants and agrees to comply with, among other things, the requirements of
section 148(f) of the Code and, if required, the City will satisfy the requirements out of funds other
than the proceeds of the Certificates and those in the Interest and Sinking Fund.
(f) The City covenants and agrees to file or cause to be filed with the Secretary of the
Treasury of the United States, not later than the 15th day of the second calendar month after the
close of the calendar quarter in which the Certificates are issued, an information statement
concerning the Certificates, all under and in accordance with Section 149(e) of the Code and
applicable regulations thereunder.
(g) The City covenants that any dispositions of personal property components of the
Project funded by the Certificates will occur in the ordinary course of an established governmental
program and will satisfy the following requirements:
i. The weighted average maturity of the portion of the Certificates financing
personal property is not greater than 120 percent of the reasonably expected actual use of
such personal property for governmental purposes;
ii. The reasonably expected fair market value of such personal property on
the date of disposition will be not greater than 25 percent of its cost;
iii. Such personal property will no longer be suitable for its governmental
purposes on the date of disposition; and
iv. The City is required to deposit amounts received from such disposition in
a commingled fund with substantial tax or other governmental revenues and the Issuer
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reasonably expect to spend such amounts on governmental programs within 6 months
from the date of commingling.
(h) 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 any investment arrangement with respect to the gross proceeds of
the Certificates that might result in a reduction in the amount required to be paid to the federal
government because such arrangement results in smaller profit or a larger loss than would have
resulted if such arrangement had been at arm's length and had the yield on the issue not been
relevant to either party.
0) The City will not issue or use the Certificates as part of an "abusive arbitrage
device" (as defined in Section 1.148-10(a) of the Regulations). Without limiting the foregoing,
the Certificates are not and will not be a part of a transaction or series of transactions that
attempts to circumvent the provisions of Section 148 of the Code and the Regulations, by
(i)enabling the City to exploit the difference between tax-exempt and taxable interest rates to
gain a material financial advantage, or (ii) increasing the burden on the market for tax-exempt
obligations.
23. Application of Proceeds. Proceeds from the sale of the Certificates (Net of
Underwriter's Discount)shall,promptly upon receipt by the City,be applied as follows:
(a) Accrued interest received from the sale of the Certificates shall be deposited into the
Series 2013 Certificates of Obligation Interest and Sinking Fund;
(b) The sum of $ shall be used to pay costs of issuance of the
Certificates, with any amount left over to be transferred to the 2013 Certificates of
Obligation Construction Fund; and
(c) The remaining proceeds from the sale of the Certificates, together with investment
earnings thereof, shall be deposited into the Series 2013 Certificates of Obligation
Construction Fund and shall be used for the purposes set out in Section 3 of this
Ordinance, with any remainder to be deposited into the Series 2013 Certificates of
Obligation Interest and Sinking Fund.
24. Open Meeting. 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 Annotated, Vernods 1994, as amended, and such
notice as given is hereby authorized,approved,adopted and ratified.
25. 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.
26. Official Statement. The Preliminary Official Statement and the Official Statement
prepared in the initial offering and sale of the Certificates have been and are hereby authorized,
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approved and ratified as to form and content. The use of the Preliminary Official Statement and the
Official Statement in the reoffering of the Certificates 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.
27. Partial Invalidity. If any Section, paragraph, clause or provision of this Ordinance
shall for any reason be held to be invalid or unenforceable,the invalidity or unenforceability of such
Section, paragraph, clause or provision shall not affect any of the remaining provisions of this
Ordinance.
28. Related Matters. To satisfy in a timely manner all of the City's obligations under
this Ordinance, the Mayor, the City Clerk,the City Treasurer, 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 issuance of the Certificates, 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 hereof.
29. No Personal Liability. No recourse shall be had for payment of the principal of or
premium, if any, or interest on Certificate, or for any claim based thereon, or under this Ordinance,
against any official or employee of the City or any person executing any Certificate.
30. Continuing Disclosure Undertaking. The City undertakes and agrees for the benefit
of the holders of the Certificates to provide the following to the Municipal Securities Rulemaking
Board("MSRB"), in electronic format as prescribed by the MSRB, directly or through a designated
agent, on or before six months after the end of the City's fiscal year,which fiscal year presently ends
on September 30,
a. annual financial information(which may be unaudited)and operating data regarding
the City for fiscal years ending on or after September 30, 2013 which annual
financial information and operating data shall be of the type included in the
following listed sections contained in the Final Official Statement:
INVESTMENT AUTHORITY AND INVESTMENT OBJECTIVES OF
THE CITY—Current Investments
CITY TAX DEBT(except under the subheading"Estimated Overlapping Debt")
TAX DATA
SELECTED FINANCIAL DATA
Appendix`B"
b. audited financial statements for the City for fiscal years ending on or after
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September 30, 2013, when available, if the City commissions an audit and it is
completed by the required time; provided that if audited statements are not
commissioned or are not available by the required time, the City will provide
unaudited statements when and if they become available.
C. in a timely manner, not in excess of ten (10) business days after the occurrence of
the event,notice of any of the following events with respect to the Certificates:
i. Principal and interest payment delinquencies;
ii. Non-payment related defaults,if material;
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, the issuance by the Internal Revenue Service of
proposed or final determinations of taxability, Notices of Proposed Issue
(IRS Form 5701-TEB) or other material notices or determinations with
respect to the tax status of the Certificates, or other material events affecting
the tax status of the Certificates ;
vii. Modifications to rights of Certificate holders,if material;
viii. Certificate calls,if material,and tender offers;
ix. Defeasances;
X. Release, substitution or sale of property securing repayment of the
Certificates, if material;
xi. Rating changes;
xii. Bankruptcy, insolvency, receivership, or similar event of the obligated
person;
xiii. The consummation of a merger, consolidation, or acquisition involving an
obligated person or the sale of all or substantially all of the assets of the
obligated person, other than in the ordinary course of business,the entry into
a definitive agreement to undertake such an action, or the termination of a
definitive agreement relating to any such actions, other than pursuant to its
terms, if material; and
xiv. Appointment of a successor or additional trustee or the change of name of a
trustee,if material.
d. in a timely manner, notice of a failure of the City to provide required annual
financial information and operating data,on or before six months after the end of the
City's fiscal year.
e. all documents provided to the MSRB shall be accompanied by identifying
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information as prescribed by the MSRB.
These undertakings and agreements are subject to appropriation of necessary funds and to
applicable legal restrictions,if any.
The accounting principles pursuant to which the City's financial statements are currently
prepared are generally accepted accounting principles set out by the Government Accounting
Standards Board, and, subject to changes in applicable law or regulations, such principles will be
applied in the future.
If the City changes its fiscal year, it will notify the MSRB of the change (and of the new
fiscal year end) prior to the next date by which the City otherwise would be required to provide
annual financial information.
The City's obligation to update information and to provide notices of material events shall
be limited to the agreements herein. The City shall not be obligated to provide other information
that may be relevant or material to a complete presentation of its financial results of operations,
condition,or prospects and shall not be obligated to update any information that is provided,except
as described herein. The City makes no representation or warranty concerning such information or
concerning its usefulness to a decision to invest in or sell Certificates at any future date. THE CITY
DISCLAIMS ANY CONTRACTUAL OR TORT LIABILITY FOR DAMAGES RESULTING IN
WHOLE OR IN PART FROM ANY BREACH, WHETHER NEGLIGENT OR WITHOUT
FAULT ON ITS PART, OF ITS CONTINUING DISCLOSURE AGREEMENT OR FROM ANY
STATEMENT MADE PURSUANT TO ITS AGREEMENT. HOLDERS OR BENEFICIAL
OWNERS OF CERTIFICATES MAY SEEK AS THEIR SOLE REMEDY A WRIT OF
MANDAMUS TO COMPEL THE CITY TO COMPLY WITH THIS AGREEMENT. No default
by the City with respect to its continuing disclosure agreement shall constitute a breach of or default
under this Ordinance for purposes of any other provision of this Ordinance. Nothing in this
paragraph is intended or shall act to disclaim, waive, or otherwise limit the duties of the City under
federal and state securities laws.
The City may amend its continuing disclosure obligations and agreement in this Section 30
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 the agreement, as
amended, would have permitted the Underwriter to purchase or sell the Certificates in compliance
with SEC Rule 15c2-12, taking into account any amendments or interpretations of such Rule to the
date of such amendment, as well as such changed circumstances, and either the holders of a
majority in aggregate principal amount of the outstanding Certificates consent or 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 Certificates. The
City may also amend or repeal the obligations and agreement in this Section 30 if the SEC amends
or repeals the applicable provisions of Rule 15c2-12 or a court of final jurisdiction determines that
such provisions are invalid, and the City may amend the agreement in its discretion in any other
circumstance or manner, but in either case only to the extent that its right to do so would not
prevent the Underwriter from lawfully purchasing or reselling the Certificates in the primary
offering of the Certificates in compliance with Rule 15c2-12. If the City amends its agreement, it
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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.
The City's continuing obligation to provide annual financial information and operating data
and notices of events will terminate if and when the City no longer remains an "obligated person"
(as such term is defined in SEC Rule 15c2-12)with respect to the Certificates.
31. Re er. All orders, resolutions, and ordinances, and parts thereof inconsistent
herewith are hereby repealed to the extent of such inconsistency.
32. Effective Date. This Ordinance shall be in force and effect from and after its final
passage,and it is so ordered.
33. Amendment of Ordinance.
(a) If and to the extent permitted by this Ordinance,the owners of the Series 2013
Certificates aggregating in the principal amount of 51%of the aggregate principal amount
of the outstanding Series 2013 Certificates 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
2013 Certificates 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
Certificates so as to:
(1) Make any change in the maturity of the outstanding Series 2013
Certificates;
(2) Reduce the rate of interest borne by any of the outstanding Series
2013 Certificates;
(3) Reduce the amount of the principal payable on the outstanding
Series 2013 Certificates;
(4) Modify the terms of payment of principal of or interest on the
outstanding Series 2013 Certificates, or impose any conditions with respect to
such payment;
(5) Affect the owners of less than all of the outstanding Series 2013
Certificates then outstanding;
(6) Change the percentage of the principal amount of outstanding
Series 2013 Certificates, 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
financial newspaper or journal published in The City of New York, New York, once
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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 Series
2013 Certificates. Such publication is not required, however, if notice in writing is given
to each owner of the outstanding Series 2013 Certificates. 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 Series 2013 Certificates 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 obligations under this
Ordinance of the City and all the owners of then outstanding Series 2013 Certificates
shall thereafter be determined, exercised and enforced hereunder, subject in all respect to
such amendments.
(e) Any consent given by the owner of outstanding Series 2013 Certificates,
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 Series 2013 Certificates
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 Series 2013 Certificates 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 Series 2013
Certificates by any owner of Series 2013 Certificates and the amount and number of such
Series 2013 Certificates 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(or as to item(2)by the City Council or by the Mayor or Mayor
Pro-Tem and the City Clerk as to changes prior to issuance to comply with requirements
by the Attorney General of Texas or Underwriter) 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
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Ordinance contained, other covenants and agreements thereafter to be observed,
grant additional rights or remedies to the owners of Certificates 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 clarifying matters or
questions arising under this Ordinance, as are required by the Attorney General of
Texas to obtain the Attorney General's approval of the issuance of the Series 2013
Certificates or required by the Underwriter before their issuance or for the purpose
of curing any ambiguity, or curing, correcting or supplementing any defective
provision contained in this Ordinance, or at any time before or after issuance as
are necessary or desirable and not contrary to or inconsistent with this Ordinance,
and in all events which shall not adversely affect the interests of the owners of the
Series 2013 Certificates.
(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 Series 2013 Certificates outstanding at the date of the
adoption of such modification shall cease to be outstanding, and (ii) such
modification shall be specifically referred to in the text of all Series 2013
Certificates issued after the date of the adoption of such modification.
[The remainder of this page has intentionally been left blank]
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PASSED AND APPROVED this 30''day of July,2013.
MAYOR
THE CITY OF BEAUMONT, TEXAS
ATTEST:
CITY CLERK
THE CITY OF BEAUMONT, TEXAS
(SEAL)
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A.8
EXHIBIT A
The City of Beaumont,Texas
Certificates of Obligation, Series 2013
[Information copied directly from information received]
The Certificates maturing on or after March 1, 2024 are subject to optional redemption, in whole
or in part, on March 1, 2023, or any date thereafter, at a price equal to the principal amount
thereof,plus accrued interest to the date of redemption.
The Term Certificates are subject to mandatory sinking fund redemption as described in the
Ordinance.
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2
July 30,2013
Consider a resolution authorizing the City Attorney to bring suit to compel the filing of hotel
occupancy tax reports and to collect hotel occupancy taxes due the City of Beaumont by Economy
Inn/Prabhubhai Jivanji Bhakta
RICH WITH OPPORTUNITY
BEA,UMON*
T • E • x • A • s City Council Agenda Item
TO: City Council
FROM: Kyle Hayes, City Manager
PREPARED BY: Tyrone E. Cooper, City Attorney
MEETING DATE: July 30, 2013
REQUESTED ACTION: Consider a resolution authorizing the City Attorney to bring
suit to compel the filing of hotel occupancy tax reports and
to collect hotel occupancy taxes due the City of Beaumont
by Economy Inn/Prabhubhai Jivanj i Bhakta.
BACKGROUND
State law gives to the City of Beaumont authority to levy a tax not to exceed seven percent(7%)of
the cost of occupancy of any room or space paid for in a hotel. The hotel or its representative is
required to collect the occupancy tax,timely file with the City a monthly report showing the taxes
collected and remit such taxes monthly to the City of Beaumont. The City of Beaumont has enacted
Chapter 18, Article 18.03, Sections 18.03.001 through 18.03.007, of the Code of Ordinances to
address hotel occupancy taxes. State law also gives to the City authority to bring suit against the
person who has failed to file the monthly report.Further,state law gives to the City authority to bring
suit against the person who has collected and failed to pay the tax to the City when due. At the same
time, authority is given to enjoin the person from operating a hotel until the report is filed and the
tax is paid in full.
Economy Inn at 53515 College Street in Beaumont has failed to file its hotel occupancy tax reports
with the City since March 2011.Further,Economy Inn is delinquent in the remittance of the current
hotel occupancy taxes collected for the period of time of March 2011, through the present, in the
estimated amount of$8,836.36, including penalties and interest.
Request is hereby made to bring suit to compel the filing of hotel occupancy tax reports and collect
delinquent hotel occupancy taxes due the City of Beaumont by Economy Inn/Prabhubhai Jivanji
Bhakta.
FUNDING SOURCE
Potentially recoverable revenue in the estimated amount of$8,836.36.
RECOMMENDATION
Approval of resolution.
RESOLUTION NO.
BE IT RESOLVED BY THE CITY COUNCIL
OF THE CITY OF BEAUMONT:
THAT the City Attorney is hereby authorized to file and prosecute a lawsuit against
Economy Inn/Prabhubhai Jivanji Bhakta, Beaumont, Texas, to compel the filing of hotel
occupancy tax reports and to collect delinquent hotel occupancy taxes.
PASSED BY THE CITY COUNCIL of the City of Beaumont this the 30th day of July,
2013.
- Mayor Becky Ames -
3
July 30,2013
Consider a resolution in support of a Finding of Public Interest in Entergy and ITC Holding's
Proposed Transfer,Merger,and Spin-Off of Transmission Business from Entergy to ITC Holdings
RICH WITH OPPORTUNITY
BEAUMON*
T • E • X • A • S City Council Agenda Item
TO: City Council
FROM: Kyle Hayes, City Manager
PREPARED BY: Tyrone E. Cooper, City Attorney
MEETING DATE: July 30, 2013
REQUESTED ACTION: Council consider a resolution in support of a Finding of
Public Interest in Entergy and ITC Holding's Proposed
Transfer, Merger, and Spin-Off of Transmission Business
from Entergy to ITC Holdings.
BACKGROUND
On February 19, 2013, Entergy(ETI) and ITC Holdings (ITC)filed an application with the Public
Utility Commission of Texas for Approval of Change of Ownership and Control of Transmission
Business, Transfer of Certification Rights, Certain Cost Recovery Approvals, and Related Relief.
The Steering Committee of Cities within the ETI service area intervened in the proceeding and filed
testimony opposing the application as originally filed by ETI and ITC. The major issued raised by
Cities'case involve the transmission cost increases as a result of the rates anticipated to be approved
by the Federal Energy Regulatory Commission,the projected benefits to be received as a result of
ITC ownership,the oversight afforded to the Texas Regulatory Authorities,including Cities,of the
transmission business, the quality of service from ITC, and the ability to perform and finance
necessary storm restorations.
The Cities' expert testimony set out a cost benefit analysis concluding that the benefits of the
transaction were not discernible at the present time and were not guaranteed to offset the known
quantifiable transmission cost increases to customers. Cities' experts testified that a public interest
finding could be met if the Commission imposed conditions-including a condition that no cost
increase resulting from ITC Holding's ownership of the transmission business would be permitted
to be charged to Texas customers without first finding that the quantifiable economic benefit of the
transaction outweigh the anticipated cost increases resulting from the spread between ITC Holding's
overall rate of return relative to Entergy's overall rate of return.
Representatives of the various Cities received a letter dated July 3,2013 from representatives of both
Entergy and ITC agreeing to abide by the conditions of transfer recommended by the Cities' expert
testimony and to guarantee that no transmission cost increase caused by ITC ownership of the system
would be charged to Texas customers without first demonstrating that the quantifiable benefits
resulting from the transaction more than offset the increase transmission cost associated with ITC's
rate setting formula. A copy of the letter is attached for your information.
On July 9, 2013, the Administrative Law Judges hearing the case agreed with Cities' expert
testimony that the proposal as originally filed and as amended through rebuttal testimony is not in
the public interest. The Administrative Law Judges also agreed that if the Commission were to
approve the proposed transaction, the Commission should impose the conditions listed in Cities'
expert testimony.
Representatives of the Steering Committee of Cities met on Wednesday, July 10`h with
representatives of Entergy and ITC Holdings to discuss the issues raised by the case and the terms
and guarantees set forth in the letter dated July 3, 2013. At the conclusion of the meeting, the
Steering Committee of Cities met and voted to support a finding of public interest for the
Commission's consideration of the proposed transfer of Entergy's transmission business to ITC
Holdings conditioned upon the terms and guarantees contained in the letter to the Cities.
The main components of the commitment include,but are not limited to providing rate mitigation
of approximately $77 million during the first five years following the close of the transaction that
is intended to offset the retail rate impact as it pertains to anticipated benefits. The commitment is
to continue the rate mitigation beyond the five year period to the extent that the transmission cost
increases are not offset by benefits resulting from the transaction. Additionally, the company has
committed to providing customers a $13.1 million refund (bill credit) over the first three years
following the close of the transaction which is intended to compensate customers for the transition
to ITC's forward-looking rate. Also,ITC's commitment includes a local corporate presence,use of
local work force and local civic and charitable support. The details of the proposed commitments
are outlined at length in the attachment.
You are being asked to consider a resolution in support of the proposed commitments and guarantees
as outlined by Entergy Texas,Inc.and ITC Holdings to be submitted for consideration by the Public
Utility Commission of Texas.
FUNDING SOURCE
Not applicable.
RECOMMENDATION
Approval of resolution.
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF BEAUMONT, TEXAS, IN
SUPPORT OF A PROPOSAL BY ENTERGY TEXAS, INC. AND ITC
HOLDINGS CORP. REGARDING THE CHANGE OF OWNERSHIP AND
CONTROL OF TRANSMISSION BUSINESS, TRANSFER OF
CERTIFICATION RIGHTS, AND RELATED RELIEF IN PUBLIC
UTILITY COMMISSION DOCKET NO. 41223 UPON THE GUARANTEE
OF ENUMERATED CONDITIONS.
WHEREAS, on or about February 19, 2013 Entergy Texas, Inc. ("Entergy") and
ITC Holdings Corp. ("ITC Holdings") filed an Application for Approval of Change of
Ownership and Control of Transmission Business, Transfer of Certification Rights,
Certain Cost Recovery Approvals, and Related Relief with the Public Utility Commission
of Texas("PUC"or"Commission") and docketed as PUC Docket No. 41223; and,
WHEREAS, Entergy is a utility serving customers within the municipal limits of
City and regulated by the City; and,
WHEREAS, ITC Holdings is the first, largest, and only publicly traded
independent transmission company in the nation; and,
WHEREAS, City intervened as part of the Entergy Service Area Cities' Steering
Committee in Docket No. 41223 and filed expert testimony in opposition to Entergy's
and ITC Holding's Application, as originally filed, as the quantitative and qualitative
benefits of the transaction were not readily discernible and insufficient to offset the
anticipated transmission costs resulting from the transaction; and,
WHEREAS, City's expert testimony determined that Commission could find that
the transaction is in the public interest by imposing the conditions listed below, the first
two of which guarantee that no transmission cost increase resulting from ITC Holding's
increased rate of return would be charged to customers in Texas without first finding that
the economic benefits of the transaction offset the increased transmission costs. The
conditions recommended by Cities' expert testimony are as follows:
1. ETI's customers should be left no worse off in terms of costs under the
transaction than under continued ETI ownership, and should be entitled to
rate refunds or credits if necessary to ensure this;
2. Any transmission-related cost increases must first be approved by Texas
regulatory authorities and must be offset by quantifiable transaction
benefits;
3. ETI/ITC shall not seek to recover any costs incurred to effectuate the ITC
transaction from its customers;
1
4. ITC shall assume all liabilities for unfunded retirement or other
obligations such as historical transmission storm damage;
5. ITC should be subject to applicable Texas or multi-state regulatory
oversight to the extent such oversight does not conflict with FERC
regulation;
6. The PUCT should maintain input on transmission planning activities, and
ETI/ITC should support an oversight group similar to the existing Entergy
Regional State Committee;
7. ETI should keep the PUCT apprised of ITC transaction activities in other
EOC jurisdictions, and provide all transaction-related orders and updates,
studies,reviews, reports, and analyses as required under the orders;
8. ITC should provide the PUCT any periodic filings required by other
regulatory jurisdictions related to transmission system safety and
reliability;
9. ITC should provide the PUCT a transmission-related vegetation
management plan to ensure continued maintenance of the Texas
transmission system;
10. ETI/ITC should provide an emergency response plan that reflects
coordination and communication between ETI, ITC, PUCT and
emergency responders; and
11. In the event any EOC or ITC Company commits to provide rate discounts
or concessions to customers in any other EOC jurisdiction, ETI and ITC
must offer substantially the same concession to customers in Texas.
and,
WHEREAS, on July 9, 2013, the Administrative Law Judges issued a Proposal
for Decision recommending against the transaction as proposed in the original application
and in the hearing on the merits in Docket No. 41223 and recommended that if the
Commission were to approve the transaction that the conditions listed in Cities' expert
testimony be imposed; and,
WHEREAS, on July 3, 2013, Entergy and ITC filed the attached letter and
guarantees with the Cities and have agreed to satisfactorily address the Cities' conditions;
and,
2
WHEREAS, the Entergy Service Area Cities' Steering Committee had a meeting
with ITC and Entergy on July 10, 2013, and received assurances from both ITC and
Entergy that the companies would abide by the commitments made in the July 3, 2013,
letter. The Steering Committee voted to support the proposed transaction with ITC and
Entergy guaranteeing commitments that address the conditions enumerated by Cities;
NOW THEREFORE, BE IT RESOLVED
BY THE CITY COUNCIL OF THE CITY OF BEAUMONT:
Section 1. That the statement and findings set out in the preamble to this
resolution are hereby in all things approved and adopted.
Section 2. The City of Beaumont hereby supports a public interest finding by
the Commission contingent on the approval of the terms and conditions that reflect the
commitments made by Entergy and ITC Holdings, which address the conditions set out
by the Administrative Law Judges and contained in Cities' expert testimony.
Section 3. The meeting at which this resolution was approved was in all
things conducted in strict compliance with the Texas Open Meetings Act, Texas
Government Code, Chapter 551.
Section 4. This resolution shall become effective from and after its passage.
PASSED BY THE CITY COUNCIL of the City of Beaumont this the 30th day of July,
2013.
- Mayor Becky Ames-
ATTEST:
City Clerk
i
3
9425 Pi Texas
*Entmy 9425 PinecroR The woodlands,Texas 77380
Tel 281-W2-4680
Fax 28162-4683
Sallie T.Rainer
Presiderd CEO
sminer@entergy.oan
July 3,2013
[Addressee]
[Addressee Title]
[Address]
[Address]
Dear[Address],
We are writing to ask for your City's support of the proposed transaction whereby
Entergy Texas will spin off its electric transmission business and merge that business with
ITC Holdings Corp. (ITC). This transaction will bring a strong new business partner to
Southeast Texas and significant benefits to retail electric consumers.
Entergy Texas firmly believes that the independent transmission company model is the
most effective and efficient model to manage the requirements to build and maintain the
transmission grid necessary to meet customer electric demands and preferences today and into
the future,particularly as Entergy Texas moves into the operating environment of a Regional
Transmission Organization(RTO). ITC,the first,largest and only publicly-traded
independent transmission company in the United States,is the right partner to take on that
role. ITC is financially strong,has more than a decade of experience planning and operating
in an RTO environment,and has a proven track record of top tier performance for the
transmission systems it owns and operates. ITC is committed to making investments in
transmission infrastructure in Southeast Texas to enhance reliability,provide greater market
access to lower cost generation resources,and reduce congestion on the transmission system
for the benefit of retail customers. Having ITC responsible for investments in transmission
will also make Entergy Texas financially stronger and improve Entergy Texas' ability to.
support growing investment requirements in generation and distribution infiastructure,which
will also serve to benefit customers.
Entergy Texas and ITC appreciate that a coalition of cities has actively participated in
proceedings before the Public Utility Commission of Texas to explore the benefits offered by
this transaction. The coalition took the position that the transaction could be found to be
consistent with the public interest subject to certain conditions. Entergy Texas and ITC have
made commitments to address those conditions at the hearing for this proceeding and are
making further commitments in the attached list of amended commitments. Notably,Entergy
Texas and ITC are making commitments in Texas to provide rate mitigation(approximately
$77 million)for five years that will offset the retail rate effects of the cost of capital difference
arising from ITC's federally-approved rate construct(including ITC's authorized return on
equity of 12.38 51o)as compared to Entergy Texas'retail rate construct. Moreover,Entergy
Texas and ITC commit.that,during the fifth year following the close of the transaction,ITC
will conduct a test to demonstrate that ITC's ownership of and investment in transmission
EXHIBIT "A"
have produced benefits that offset the actual retail rate effects resulting from the change in
cost of capital due to ITC's ownership. If ITC is not able to show that such benefits offset
such costs,Entergy Texas and ITC commit that they will continue to provide rate mitigation
until ITC can make such a showing. Entergy Texas also makes the commitment to provide
additional retail bill credits(approximately$13 million)to compensate customers for the
transition to ITC's forward-looking rate. Finally, and importantly,the attached includes ITC's
commitments to a local corporate presence,use of local workforce,and local civic and
charitable support. These commitments are incremental to the local economic development
benefits that will accompany ITC's investment in transmission.
These commitments have been carefully constructed by Entergy Texas and ITC to be
responsive to the conditions set forth by the coalition and to ensure that customers are
protected from rate increases resulting from the difference between ITC and Entergy Texas
cost of capital that are not more than offset by demonstrated benefits. We trust that you will
agree the commitments made by Entergy Texas and TIC substantively satisfy the conditions
set forth by the coalition and that your City will take formal action to support the transaction
subject to those commitments.
We thank you for your continued support of Entergy Texas and your thoughtful
consideration of ITC as a new corporate citizen in the region. Please do not hesitate to contact
any of us should you have any questions regarding the companies' commitments to customers
and the community as part of this transaction.
Respectfully,
Sallie T.Rainer Linda Blair
President/CEO Executive Vice President&CBO
Entergy Texas,Inc. .ITC Holdings Corp. .
Theodore H. Bunting,Jr. Cameron Bready
Group President—Utility Operations Executive Vice President&CFO
Entergy Corporation ITC Holdings Corp.
Enter
cc: Dan Lawton
Attachment
AMENDED PROPOSED COMMI'T'MENTS
The following proposal is made by the Entergy Texas Inc. ("ETP') and ITC to resolve
Docket No. 41223. This listing of conditions and commitments is intended to substitute
for all those conditions and commitments made by the Applicants in any previous term
sheet, public discussions (except those commitments made during a contested case
hearing)and/or in Applicants' rebuttal testimony.
1. DFT7NTTIONS
"Actual WACC Effects" means the difference in ETI retail WACC as of December 5,
2011 and actual ITC WACC applied to the ITC Rate Base and adjusted for ETI retail
impact only. This is used for benefits test(s)and true-up(s)during the Transition Period.
"Annual Review Period"means a calendar year within the Extension Period.
"Attachment O rate"means the MISO tariff Attachment O forward-looking formula, and
resulting revenue requirement and transmission charges for ITC as approved by FERC in
Docket No.ER12-2681.
"Estimated WACC Effects"means the difference in ETI retail WACC as of December 5,
2011 and estimated ITC WACC applied to ETI estimated transmission raze base and
adjusted for ETI retail impact calculated in the retail regulatory filing to estimate retail
rate effects of the Transaction. This is used for rate mitigation calculations.
"Extension Period" means the time period following the Initial Period, if any, during
which the Rate Mitigation Plan continues in effect.
"FERC"means the Federal Energy Regulatory Commission.
"Initial Period"means the 5-year period starting at the close of the Transaction.
"ITC"means the ITC Midsouth operating company in Texas.
"ITC Ownership Benefit Calculation"means the benefits of ITC ownership as calculated
in accordance with ARuendix H to this term sheet.
1
"ITC Rate Base" means actual ITC rate base reflected in rates charged for transmission
service that are passed through ETI retail rates.
"MISO"means the Midcontinent Independent System Operator,Inc.
"Rate Mitigation Plan" means use of funds over the Initial Period and Extension Period,
if any,to offset certain rate effects of the Transaction.
"Regulatory Authority"means the Public Utility Commission of Texas.
"RTO"means Regional Transmission Organization.
"Transaction" means the Reverse Morris Trust transaction among ITC Holdings Corp.,
Entergy Corp., and affiliated entities through which a subsidiary of ITC Holdings Corp.
will own the transmission assets formerly owned by the Entergy Operating Companies.
"Transition Period" means the period of time following close of the Transaction during
which the Rate Mitigation Plan is in place, which begins with the Initial Period and
includes the Extension Period,if any.
"WACC"means Weighted Average Cost of Capital in percentage terms.
II. En AND ITC MUTUAL PROPOSALS
A. Rate Mitigation—WACC Effects
1. Initial Period: ITC and ETI agree to implement a Rate Mitigation Plan over
the Transition Period, which at a minimum will be the Initial Period but may
be extended during the Extension Period as set forth below. The funds
associated with the Rate Mitigation Plan for the Initial Period are specified in
AnDendix A. but may be modified in accordance with Subsection II.A.10
below.
2. Extension Period: If at the end of the Initial Period, ITC has not
demonstrated that the annual ITC Ownership Benefit Calculation is greater
than the annual Actual WACC Effects in the fifth year following the close of
the Transaction,the Rate Mitigation Plan shall remain in place until such time
as ITC has demonstrated that the annual ITC Ownership Benefit Calculation
exceeds the annual Actual WACC Effects during an Annual Review Period
The Rate Mitigation Plan for the Extension Period will consist of annual funds
that reflect 100%of the projected Actual WACC Effects net of the percentage
of annual Actual WACC Effects offset by the ITC Ownership Benefit
Calculation per the last calculation of such benefits.
2
3. True Up of Initial Period: If at the end of the Initial Period the annual ITC
Ownership Benefit Calculation is not greater than the annual Actual WACC
Effects in the fifth year following the close of the Transaction,there will be a
true-up of the Actual WACC Effects for the Initial Period to the funds
associated with the Rate Mitigation for the Initial Period specified in
Appendix A. To the extent that Actual WACC Effects less the ITC
Ownership Benefit Calculation exceeds the funds associated with the Rate
Mitigation Plan for the Initial Period.specified in A,mmmilix A.additional rate
mitigation for the difference will be put in place over the next two years (one-
half of the additional rate mitigation in the sixth year following close of the
Transaction and one-half of the additional rate mitigation in the seventh year
following the close of the Transaction).
4. True Up During Extension Period: During the Extension Period, if any, if
annual Actual WACC Effects less the ITC Ownership Benefit Calculation for
the Extension Period exceed the rate mitigation funds provided during the
Extension Period in accordance with Subsection MAI, additional rate
mitigation funds for such difference will be put in place in the next calendar
year.
5. Review of Benefits By Third Party Evaluator: The determination of
whether the annual ITC Ownership Benefit Calculation exceeds annual Actual
WACC Effects shall"be made by a Third Party Evaluator in accordance with
the methodology set forth in Appendix B. Beginning no earlier than the last
year of the Initial Period and at any time during the Extension Period, ITC
shall be permitted to initiate the Third Party Evaluator's assessment of the
annual ITC Ownership Benefit Calculation to determine whether the annual
ITC Ownership Benefit Calculation exceeds annual Actual WACC Effects.
There shall be no limit as to the number of times or frequency that the Third
Party Evaluator's assessment of the ITC Ownership Benefit Calculation may
be initiated during the Extension Period. The Third Party Evaluator shall be
selected by ITC and all costs associated with the Third Party Evaluator's
services will be paid by ITC.
6. Termination of Rate Mitigation: If the Third Party Evaluator determines, in
accordance with Appendix B. that the annual ITC Ownership Benefit
Calculation exceeds annual Actual WACC Effects at either the end of the
Initial Period or for any Annual Review Period, any obligations for rate
mitigation terminates on the 30th day following the filing of the Third Party
Evaluator's determination.
7. ETI Treatment of Rate Mitigation Provided by ITC: Any rate mitigation
provided by ITC that is realized by En as part of the Rate Mitigation Plan
will be passed through to ETI customers in accordance with Qnpendu A —
Section IH A Transmission Cost Rate Meehanism.
3
8. Termination of ETI Contribution To Rate Mitigation: If at the end of the
2& year following the close of the Transaction, the ITC Ownership Benefit
Calculation has not been found to exceed the annual Actual WACC Effects
for an Annual Review Period, ETI's obligation to provide bill credits shall
cease. ITC shall be obligated to provide all rate mitigation thereafter until
such time as the ITC Ownership Benefit Calculation exceeds the annual
Actual WACC Effects for an Annual Review Period.
9. Measuring Estimated or Actual WACC Effects: For purposes of
measuring Estimated and Actual WACC Effects,in either the Initial Period or
the Extension Period, ETI's WACC will be based on equity and capital
structure as of the date of the Transaction's announcement (December 5,
2011), which is the basis for determining the amounts set forth in Apnendia
A.
10.FERC Ordered Rate Construct Change: If FERC issues an order that
changes the formula raze or elements of the rate construct (including the
forward looking application of the formula rate, authorized rate of return on
equity, target capital structure, and annual true-up mechanism) for ITC, and
which causes a change in ITC-WACC, then any rate mitigation shall be
adjusted by an amount equivalent to the change in ITC-WACC caused by that
FERC order.
11.No Challenge To Rate Construct By Parties: During the Initial Period,the
Rate Mitigation Plan is conditioned on the parties to this proceeding in
support of the Rate Mitigation Plan and the Regulatory Authority that
approves the Rate Mitigation Plan not challenging the formula rate and
elements of the rate construct (including the forward looking application of
the formula rate, authorized rate of return on equity, target capital structure,
and annual true-up mechanism) that are approved for ITC by the FERC in
connection with the Transaction.
12.Return On Equity: During the Transition Period, ITC will not seek an approval
from FERC to utilize an overall rate of return on equity that is above the
prevailing return on equity level approved for use by Transmission Owners in
MISO, except that if that retaurn on equity level is less than 12.38 percent then
ITC may seek approval from FERC to utilize a rats of return on equity up to
12.38 percent.
B. Rate Mitigation—Forward Test Year
1. ETI agrees to provide additional retail customers bill credits specified in
Appendix A over the first three years of the Initial Period, which amount
represents the estimated effects on retail customers of eliminating regulatory
lag by implementing a forward test year during the Initial Period.
C. Transmission Svstem Performance
4
1. ITC and ETI Storm Plans: Within 180 days after the closing of the ITC
Transaction, ETI and ITC shall file with the Regulatory Authority new
(separate) Emergency Response Plans specifically detailing their proposed
responses to tropical storms, hurricane and flood conditions, the manner in
which coordination and communication between ETI and ITC will occur, how
communication and coordination with State and local authorities will occur
and all related matters.
2. Vegetation Management Plans: ETI and ITC, within 180 days after
closing of the ITC Transaction, shall file with the Regulatory Authority
their tree trimming/vegetation control plan for the ETI service territories.
That plan must include expected expenditures broken down by ETI service
territories and between ITC and ETI for transmission vegetation control
versus distribution vegetation control. That plan should also detail the
breakdown of responsibility for vegetation control as between ETI and ITC.
3. System Hardening Plans: ITC; one year after closing of the ITC
Transaction, shall file with the Regulatory Authority its proposal for
"hardening"of the former ETI backbone transmission system.
4. Joint Storm Drills: ITC and ETI commit to conduct, no less than annually,
joint storm drills,which will include the participation of other entities who are
interconnected with ITC's transmission system who choose to participate,
which address joint plans for responding to catastrophic storms.
D. Other Matters
1. State Approvals: The Regulatory Authority will have the right to reconsider
its approval and public interest determination if the other jurisdictions, not
including City of New Orleans or Missouri, issue an Order denying any other
Entergy Operating Company the authority to complete the ITC Transaction.
2. FERC Approval: The Regulatory Authority will have the right to reconsider
its approval and public interest determination if the FERC issues an Order
denying Entergy and/or ITC the authority to complete the ITC Transaction.
3. Most Favored Nations: ITC and ETI will provide to the Regulatory
Authority any contingency, condition or benefit that is provided for in any
other Regulatory Authority's order approving the Transaction in any other
jurisdiction provided such contingency, condition or benefit does not derive
from circumstances or regulatory requirements unique to an individual
jurisdiction and can be applied consistently across jurisdictions, and ITC and
ETI receive comparable terms and consideration from the Regulatory
Authority seeking to receive such contingency,condition or benefit.
4. Requests For Relief: Requests for relief in the joint application are granted to
the extent not modified by this term sheet.
5
III. ITC PROPOSALS
A. Jurisdiction Generally: ITC is committed to operating in full compliance with
all applicable legal and regulatory requirements, and working closely and
collaboratively with the Regulatory Authority. ITC will operate subject to and-in
compliance with all state statutes and regulations that apply to it as an electric
transmission only public utility in Texas.
B. Books and Records: ITC acknowledges that the Regulatory Authority has
authority to review its books and records in accordance with the requirements of
state law.
C. Asset Transfers: ITC shall not transfer any transmission assets located in Texas
without the prior approval of the Regulatory Authority, in accordance with the
requirements of state law.
D. State ITC Representative: ITC will designate an employee whose main work
location and residence is in Texas to be a liaison on behalf of ITC to the
Regulatory Authority. ITC also will designate personnel who will be available to
participate in emergency operations coordination when needed.
E. Requests for Information and Meetings: Subject to reasonable notice,ITC will
cooperate with Regulatory Authority requests for information and for ITC staff to
attend Regulatory Authority meetings,technical conferences,and hearings.
F. Transmission Projects: On an ongoing basis, and at least annually regarding its
annual capital investment program, ITC will share with the Regulatory Authority
information about its planned or proposed transmission projects, including the
rationale for planned or proposed projects,currently anticipated timing and cost of
construction, and other material information about such projects. In addition,ITC
will respond to inquiries from the Regulatory Authority regarding its transmission
projects, will be open to and consider input from the Regulatory Authority
regarding its transmission project plans, and support the Regulatory Authority's
active participation in the regional transmission planning process.
G. Annual Rate Posting: On an annual basis, at least 15 days prior to the time that
ITC posts its forecasted Attachment O rate with MISO, ITC shall provide to the
Regulatory Authority a summary of that forecasted rate posting, including all
expected rate impacts.
H. Responses to Inquiries: ITC commits that it will respond to data requests timely
regarding its annual forecasted Attachment O rate posting with MISO and
otherwise cooperate with the Regulatory Authority and their Staff in their
analyses. ITC further agrees to make members of its staff available to the
Regulatory Authority and its Staff to respond to inquiries and to explain the
submission and the annual rate posting process.
6
I. Summary of Rates Charged: Annually, within 30 days after ITC submits its
annual FERC Form No. 1 to FERC,ITC shall provide to the Regulatory Authority
a summary of all rates charged by MISO to network transmission customers of
ITC for the prior year.
I Litigation Expenses: For issues in which Regulatory Authority has a justiciable
interest and as provided by state law,ITC commits that it will annually fund up to
$1.5 million (unless otherwise provided by applicable state law) the Regulatory
Authority's reasonably necessary expenses for an effective review of any
information or pleadings that ITC submits to the Regulatory Authority or to
FERC, and complaints or actions filed by, or investigations or audits initiated by,
the Regulatory Authority at FERC or its own jurisdiction related to transmission
services provided by ITC to utilities that are subject to the retail jurisdiction of the
Regulatory Authority. ITC also will continue to fund such necessary expenses as
had been provided in state law if that state law is repealed or does not otherwise
remain in force. This commitment is contingent upon ITC's ability to recover
such costs in rates.
IC. Rate Filings: ITC commits that it will review with the Regulatory Authority
and/or Staff any rate filings initiated by it to FERC that would impact ITC's
customers in Texas in advance to explain the rationale for such a filing.
L. MISO Conditions: ITC will abide by all applicable MISO conditions, identified
in Appendix A. ITC will abide by this condition provided that: a) any exit fee
associated with terminating membership in MISO be paid by electric consumers
within the footprint served by ITC; b) any termination of membership in MISO
also be approved by FERC; c) any termination of membership in WSO also not
be disputed by another state Regulatory Authority or local authority in which ITC
or one of its affiliates operates; d) if terminating membership in MISO, ITC is
able to join a different RTO immediately upon its exit from MISO; and e) ITC
shall retain all of its rights, state and federal, to appeal and/or seek other review
of any decision or determination by the Regulatory Authority regarding ITC
membership in an RTO, including the right to assert federal preemptive rights and
seek related relief at the FERC and in the courts under applicable federal law.
M. Transmission Project Commitment: ITC will solicit input from the Regulatory
Authority regarding transmission projects that should be studied and pursued.
ITC will collaborate with the Regulatory Authority to'pursue such projects, and
take appropriate actions to study and construct such projects that fulfill ITC's
transmission planning criteria, are approved through the necessary RTO planning
processes,and receive other necessary regulatory approvals.
N. Siting Authority: ITC agrees that the Regulatory Authority has certification and
siting authority for electric transmission, and will abide by any final Regulatory
Authority order adopted exercising that authority, subject to ITC reserving any
appeal rights provided under state law. However,this condition is not intended to
preempt ITC's compliance with any federal statute or final order of the FERC.
7
ITC reserves all its rights to participate in proceedings to establish rules related to
the Regulatory Authority's rights and authority, and reserves the right to appeal
any rules that may be inconsistent with the applicable State and Federal laws, and.
otherwise reserves its rights to appeal orders issued pursuant to such rules.
O. System Improvement Plan: Within 1 year after the closing of the ITC
Transaction, ITC shall submit to the Regulatory Authority a report on its analysis
of the transmission system formerly owned by ETI and its related plan to improve
the transmission system in Texas. Included in its analysis will be a study of
congestion on the transmission system and an identification of transmission
projects to mitigate such congestion. ITC will propose and support in the MISO
planning process those transmission projects identified in the study that are
expected to cost-effectively reduce congestion.
P. ITC Responsibility for Transmission System: ITC acknowledges and commits
that,to the extent not otherwise preempted by federal law,after completion of the
ITC Transaction, it will be fully responsible and accountable to the Regulatory
Authority for the provision of safe,reliable, adequate and reasonable cost service
to its customers in all respects related to planning and the provision of service for
the transmission function. ITC shall also be responsible for coordination of
operations with ETI as necessary.
Q. ITC Local Presence: ITC commits to maintain one or more office, warehouse,
and/or pull-out facility locations in this state that will be staffed with ITC
personnel.
R. Civic and Charitable Support: During the 3-year period immediately following
closing of the Transaction, the subsidiaries of ITC Holdings Corp. that own the
electric transmission facilities formerly owned by subsidiaries of Entergy Corp.
will provide charitable contributions and other community support within the
communities in which they operate (allocated among those jurisdictions in a
reasonable manner and approximately commensurate in amount with each other),
at a level comparable in the aggregate to the levels currently provided by ITC
Holdings Corp. in its other service territories.
S. Use of Local Workforce: To the extent possible, and where such personnel or
vendors satisfy ITC's standards related to quality, capability, cost efficiency, and
equipment or other specifications, ITC will seek to utilize vendors, contractors,
and personnel located in this state in its transmission system maintenance and
capital investment initiatives.
T. Goodwill: ITC confirms its commitment that it will not seek to recover goodwill
related to the Transaction.
U. Transaction Costs: ITC will not seek to recover its Transaction costs unless
such recovery is approved by FERC, based on a finding that the benefits of the
Transaction outweigh such costs.
8
V. Workforce Commitment: For a period of 3 years following closing of the
Transaction, ITC Holdings Corp. will not implement layoffs of employees
performing work on ITC's behalf at a level or in a manner that is not
approximately commensurate with layoffs of employees performing work on
behalf of ITC Holdings Corp.'s other subsidiary operating companies.
W.ERSC Participation: ITC will support retention of the Entergy Regional State
Committee's existing authority over cost allocation and construction of
transmission upgrades for the five-year transition period after the Entergy
Operating Companies join MISO and the transitional framework conditionally
approved by FERC in Order No.ER12-480-000.
IV. ETI Transmission Coat Rate Mechaj&w And Incremental Costs
A. ETI Transmission Cost Recovery
1. Transmission Cost Recovery: ETI shall be authorized to implement the
transmission cost recovery specified in AMaendiz A.
B. Incremental Costs
1. Incremental Costs: ETI agrees that it will not seek to recover incremental
costs associated with the Transaction. While this excludes all external costs,
there are certain internal costs that currently are being charged to the
Transaction that are not incremental to the ETI's ongoing revenue
requirements. ETI proposes that it be permitted to retain these costs in rates
but subject to an after-the-fact review by the Regulatory Authority that these
costs were prudently incurred for purposes unrelated to the Transaction.
9
APPENDIX A: SUPPLEMENTAL PROPOSED COMM]Cl'MENTS FOR
TEXAS
I. ITC AND ETI COMUTMENTS
A. hate Mitigation—WACC Effects
Subject to Section ILA.10 in the Amended Proposed Commitments, during the Initial Period,
ITC and ETI shall provide $77 million in Rate Mitigation Funds, which amount represents an
offset of 100%of the estimate of WACC Effects on retail rates during the Initial Period as well
as effects of the termination of Service Schedule MSS-2. The $77 million of Rate Mitigation
Funds will be provided to customers via$67 million in rate rebates by ITC or bill credits by ETI
and$10 million of net avoided costs for MSS-2.
B. Forward Test Year
ETI agrees to provide retail customers with$13.1 million in additional bill credits over the first 3
years after Transaction close.
C. Other Entergy Retail Regulator Decisions
ITC and ETI will provide the Commission, within a reasonable time after they receive them,
decisions of any of the other Entergy Retail Regulators, and the FERC, approving, denying, or
otherwise impacting the ITC Transaction.
D. Tinting of Closing
ITC and ETI will not close the Transaction until after ETI has provided the notices described in
Findings of Fact Nos. 21 and 133 of the Commission's Order in Docket No. 40346 to fulfill the
terms and conditions contained in that Order.
H. ITC PROPOSALS
A. Securitization
To the extent permitted by law, upon order of the Commission, ITC will take steps necessary,
including seeking FERC approval as necessary, to utilize securitization to finance transmission-
related storm damage repair and restoration costs above $100 million for a single storm
occurrence, so long as securitized financing is available and is the least cost financing
alternative,ITC receives all applicable regulatory approvals for such securitization, and the costs
associated with obtaining such securitization is recoverable through ITC's rate for transmission
service. To the extent current law does not permit ITC to utilize securitized financing, ITC will
take reasonable steps to have changes to law made to enable such securitized financing. In
addition, ITC's compliance under this provision may be accomplished through its obtaining
securitized financing directly or through Entergy Corporation's or one of its affiliates' obtaining
securitized financing on ITC's behalf.
1
B. MISO Conditions
MISO Conditions: ITC will abide by all applicable MGSO conditions as set forth in the
Commission's Order of October 26, 2012, in Docket No. 40346. We have reviewed the MISO
conditions in the Commission's Order in Docket No. 40346 and believe that conditions
contained therein not identified below are inapplicable to ITC,have already been satisfied,or are
beyond the control of ITC.
Applicable Conditions:
Finding of Fact No. 23: MISO Governance (E-RSQ — ETI agreed that as a condition of
joining MISO it will support retention of the Entergy Regional State Committee's (E RSC's)
current level of authority during the five-year transition period(as defined in Attachment FF of
the MISO tares in MISO as follows:
a. The E RSC shall retain authority to direct the EOCs, upon unanimous vote, to exercise
their rights as transmission owners in MISO to add projects to the MISO transmission
expansion plan;
b. The E R,SC shall retain authority, upon unanimous vote, to direct the EOCs, as
transmission owners in MISO to propose to modem the usual MISO cost allocation
methodology among the EOCs' transmission pricing zones with respect to new
transmission projects, other than multi-value projects, that are situated entirely within
MISO South, and are approved during the five-year transition period for cost allocation
that MISO proposed to FEW and that FERC has conditionally approved Any
modifications to the cost allocation methodology would require FERC approval.
c. ETI further agreed that it will use reasonable efforts in working with the other EOCs
(who ETI expects will work with their respective retail regulators)and the Commission in
considering an extension of such authority beyond the five year transition period
ITC will abide by this condition.
Finding of Fact No. 26: MISO CostBenefd Review — The signatories agreed that the
Commission will conduct a supplemental review of ETI's continued MISO membership prior to
the end of five years from the date that ETI achieves integration into MISO or December 31,
2018, whichever occurs first. In connection with this supplemental review, one year prior to that
date, ETI will submit a filing that includes a study analyzing the costs and benefits to date of
MISO participation and a forward-looking cost/benefit analysis, which affords the opportunity
for meaningful stakeholder input.
a. MISO CostsBenefit Periodic Reports ETI agreed to work in cooperation with
Commission Staff to develop an appropriate framework for periodic analyses and
reporting of the costs and benefits of ETI membership in MISO.
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To the extent that any study by ETI or Commission supplemental review.of ETI's continued
MISO membership leads to any Commission proceeding regarding the potential exit of ITC from
MISO as a transmission owner, then ITC will participate in any such proceeding, and further
subject to Amended Proposed Commitments Subsection III.L regarding MISO Conditions.
Finding of Fact No. 31: Transmission Congestion Reporting—ETI agreed that it will provide
regular periodic updates to the Commission which detail its ongoing efforts, through its own
transmission planning and its participation in the MISO transmission expansion planning
process, to proactively .fy, advocate and pursue construction of transmission upgrades that
are reasonably forecasted to provide a net economic benefit toward reducing ETFs cost to
provide reliable electric service to its retail customers.
ITC will abide by this condition as contemplated by the Amended Proposed Commitments to
which this appendix is attached.
Finding of Fact No. 33: The signatories agreed that, after ETI joins MISO, it shall remain
responsible and accountable for the operation of its systems, including but not limited to: the
manner in which it participates in any MISO-administered market; how it offers its generation
Into the MISO Day Ahead and Real Time Markets, how it offers load into the MISO Dory Ahead
market, bidding and scheduling; any actions it takes to supply its retail loads; any actions it
takes to procure fuel, capacity and/or energy, the prudent administration and management of its
energy supply contracts, the prudent administration and management of its energy supply
transactions with MISO; its obligation to ensure that the charges and credits received from
MISO are correct and accurate, appropriate management of nominating ARRs, conversion to or
use of PTAs and appropriate crediting of ARR and FTR receipts, and any resource adequacy
market transactions.
ITC's commitment regarding its responsibility for the operation of the transmission system is
addressed in the Amended Proposed Commitments to which this appendix is attached.
Finding of Fact Na 34: The signatories agreed that Commission Staff shall have complete
access to information and full rights to conduct audits of costs incurred by or credited to ETI
and to conduct prudence reviews, as needeg in connection with these and related activities
within ETFs control, including activities associated with transitioning to and operating within
membership in MISO. These audits and prudence reviews rights are not intended to make ETI
responsible for activities required by a valid FERC tariff and which are undertaken by MISO
that are therefore beyond ETI's control. Ensuring that MISO charges and credits to ETI are
correct and accurate, however, will be the explicit responsibility of ETI to the extent that it is
reasonably possible for ETI to do so consistent with the information that is available to it ETI
must undertake all reasonable efforts to verb the correctness and accuracy of these charges and
credits which will include all reasonable efforts to obtain the information necessary to verify the
accuracy of these charges and credits. ETI must also validate that the charges and credits it
receives are being assessed pursuant to the MISO tariff.
ITC will provide information upon request by the Commission related to the costs incurred as a
result of ITC's participation as a transmission owner in MISO that are ultimately reflected in
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retail rates in Texas. ITC's commitment to abide by this condition is not intended to grant the
Commission any authority it does not currently have under state law nor give up any rights that
ITC may have under federal, state,or local law.
C. Congestion Study
Following the close of the Transaction, ITC will undertake a study of congestion on the
transmission system formerly owned by ETI, identifying transmission projects to mitigate
congestion, and present such study to regulatory authorities that exercise retail rate jurisdiction
over ETI. ITC commits to propose and support in the MISO planning process those transmission
projects identified in the study that are expected to cost-effectively reduce congestion.
III. ETI,PROPOSALS
A. Transmission Cost Rate Mechanism
ETI shall be authorized to implement a Transmission Cost Recovery Factor (TCRF) consistent
with P.U.C. SUBST.R.25.239,modified such that ETI shall: 1) be authorized to defer on an on-
going basis costs for transmission service incurred under the MISO Tariff not recovered by base
rates of the TCRF, with carrying costs at ETI's WACC, and 2) subsequently include such
deferred amounts in the calculation of the TCRF rate. The TCRF shall be the means by which
bill credits from ITC will be flowed through to ETI's retail customers as well as the means by
which bill credits from ETI shall be provided to ETI's retail customers. Any costs associated
with transmission assets that are not being transferred to ITC (e.g., certain step-up transformers)
shall continue to be recovered by ETI in its base rates.
B. Call Premiums
ETI will not request recovery in rates of any call premiums incurred to pay down debt in
connection with the Transaction.
C. Service Conditions
ETI acknowledges and commits that after the completion of the ITC Transaction, it will remain
fully responsible and accountable for the provision of safe, reliable, adequate, and lowest
reasonable cost service to its customers in all respects relating to generation, distribution, and
customer service. ETI shall also be responsible for coordination with ITC.
A MISO Billing Accuracy
ETI will undertake all reasonable efforts to verify the correctness and accuracy of the ITC
portion of the MISO charges and credits to ETI, which will include all reasonable efforts to
obtain the information necessary to verify the accuracy of these charges and credits. ETI will
also validate that the charges and credits it receives are being assessed pursuant to the MISO
tariff.
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E. Use of Transaction Proceeds
ETI commits that within 30 days of the date of a Commission Order in this docket, it will file
with the Commission the planned use of the proceeds of the ITC Transaction to ensure that
this use is consistent with that described in the Direct and Rebuttal Testimony of Theodore
Bunting. Should ETI utilize the proceeds of the transaction in a manner different than as
presented in Mr. Bunting's testimony, the Commission reserves the authority to determine
whether the use of the proceeds is prudent and the appropriate ratemaking treatment of the ETI
decision. Within 180 days after the ITC Transaction is consummated, ETI shall file with the
Commission a report detailing specifically how the proceeds of the transaction were used,or will
be used, including without limitation identifying the debt that was retired or will be retired. To
the extent that ETI has not completed the disposition of proceeds within 180 days, it shall file
with the Commission a report detailing the final disposition, with such report to be filed within
60 days of the completion of the final disposition.
F. Limitation of Federal Preemption Arguments
If ETI challenges or appeals any Commission Order issued in this docket related to the ITC
Transaction,that challenge or appeal will not raise the issue of federal preemption with respect to
the jurisdiction of the Commission to approve or state its non-objection to the ITC Transaction in
order for the transaction to proceed and be consummated and/or the transmission assets of ETI to
be sold or transferred. ETI reserves its rights to appeal an Order of the Commission to the Texas
courts on any other issues.
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APPENDIX B: CALCULATION OF ITC OWNERSHIP BENEFITS
I. DEFINITIONS
"Actual WACC Effects" means the difference in ETI retail WACC as of December 5, 2011 and
actual ITC WACC applied to the ITC Rate Base and adjusted for ETI retail impact only.
"Annualized Cost of ITC Economic Projects" means the project cost of the ITC Economic
Projects based on MISO's determination divided by 40 years.
"Asset Care Plan" means work yet to be completed under ETI's "2013 T&D Reliability Plan" at
the time the Transaction closes.
"Economic Base Case" means any models of the state of the transmission assets owned by ITC
MidSouth at the time the Transaction closes. The presumed state of the transmission assets in
the ITC Midsouth footprint Is the transmission assets at the time of the Transaction's close
modified to include the projects in Attachment 1 to Amnadix B that receive approval through
MISO's planning process as identified on that list. At the time any study is initiated, the most
recently available models produced by MISO will be used to represent the systems and data
outside of the transmission assets owned by ITC Midsouth. To the extent these models include
systems and data outside the MISO footprint, such systems and data will be represented as in
the MISO models.
"Extension Period" means the time period following the Initial Period, if any, during which the
Rate Mitigation Plan continues in effect.
"Initial Period"means the 5-year period starting at the close of the Transaction.
"ITC Base Case" means any models of the state of the transmission assets contained within the
footprint of ITC Midsouth to be used in this benefits test. The-state of the transmission assets
for the ITC Midsouth footprint is the transmission assets contained within the footprint of ITC
Midsouth at the time any study is initiated, modified by all transmission projects approved by
MISO for integration into the ITC Midsouth footprint. At the time any study is initiated, the
most recently available models produced by MISO will be used to represent the systems and
data outside of the transmission assets in the ITC Midsouth footprint. To the extent these
models include systems and data outside the MISO footprint, such systems and data will be
represented as in the MISO models.
"ITC Economic Projects" means projects proposed by ITC and included in an approved MISO
transmission plan as a Market Efficiency Project.
"ITC Ownership Benefit Calculation" means the benefits of ITC ownership as calculated in
accordance with section III.A below.
1
"ITC Rate Base" means actual ITC rate base reflected in rates charged for transmission service
that are passed through ETI retail rates.
""MISO" means the Midcontinent Independent System Operator, Inc.
"Rate Mitigation Plan" means use of funds over the Initial Period and Extension Period, if any,
to offset certain rate effects of the Transaction.
"Reliability Base Level' means the 2012 results using the SGS Methodology for given indices on
the transmission system as owned and operated by Entergy Corp.,and its affiliated entities.
"SGS Report" means the Transmission Reliability Benchmarking Study published by SGS
Statistical Services.
"SGS Methodology" means the methodologies employed in the development of the SGS
Report, or similar methodologies, to determine average circuit sustained outages and average
circuit outage duration.
"Subject Year" means the most recent year for which complete data is available for a measure.
Subject Year may vary by measure.
'Transaction" means the Reverse Morris Trust transaction among ITC Holdings Corp., Entergy
Corp., and affiliated entities through which a subsidiary of ITC Holdings Corp. will own the
transmission assets formerly owned by the Entergy Operating Companies.
"Transition Period" means the period of time following close of the Transaction during which
the Rate Mitigation Plan is in place, which begins with the Initial Period and includes the
Extension Period, if any.
"Third Party Evaluator" means an individual or entity (together with any necessary
subcontractor(s)) who, in ITCs sole discretion, is qualified to oversee and/or administer the
benefits test.
"WACC"means Weighted Average Cost of Capital in percentage terms.
II. CALCULATION
A. Overview
There are three components of the test that shall be applied to determine whether the
benefits of ITCs ownership of transmission offset the Actual WACC Effects:
1. Im2Egnd System Performance: The showing of an improvement In system
reliability, incremental to the Reliability Base Level, as indicated through the
system performance metrics described herein;and
2
2. Improved System Economics: The showing of an improvement in system
economics, incremental to the Economic Base Case, as indicated through the
economic benefit metrics described herein.
3. Not Readily Quantifiable Benefits: The Transaction produces benefits that are
not readily quantifiable. For purposes of calculation, this is assumed to be 10%
of Actual WACC Effects.
B. Methodology of Test for Improved System Performance
1. Calculation
For a given year,the Improved System will be the sum of:
a. Percentage Improvement in Average Circuit Sustained Outages,
b. Percentage Improvement in Average Circuit Outage Duration,and
c. Percentage Remediation of Asset Care Plan
2. Explanation Of Calculation Elements
a. Percentage Improvement in Average Circuit Sustained Outages
Utilizing the SGS Methodology, the Percentage Improvement in Average Circuit
Sustained Outages is the Subject Year actual ITC annual average circuit sustained
outages reduction as compared to the Reliability Base Level average circuit
sustained outages. This metric is calculated as the percentage by which the
Subject Year average circuit sustained outages is less than the average circuit
sustained outages observed in the Reliability Base Level. Percentage
Improvement in Average Circuit Sustained Outages will be evaluated for each
transmission pricing zone.
b. Percentage Improvement in Average amuit Outage Duration
Utilizing the SGS Methodology, the Percentage Improvement in Average Circuit
Outage Duration is the Subject Year actual ITC annual average circuit outage
duration reduction as compared to the Reliability Base Level average circuit
outage duration.This metric is calculated as the percentage by which the Subject
Year average circuit outage duration is less than the average circuit outage
duration observed in the Reliability Base Level. Percentage Improvement in
Average Circuit Outage Duration will be evaluated for each transmission pricing
zone.
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c. Percent Remediation of Asset Care Plan
The Percent Remediation of Asset Care Plan for the Subject Year will be
calculated as the total reduction in Asset Care Plan achieved by the end of the
Subject Year measured in task or unit depending on the activity. Percent
Remediation of Asset Care Plan will be evaluated for each transmission pricing
zone.
3. Implementation Roles and.Procedures
Generic Simplified Example: Percentage improvement or remediation for one metric=
(Base—ITC results or remaining work)/Base. If the base for a metric was 100 and ITC in
results or remaining work for that metric in a Subject Year = 95, then improvement or
remediation = (100—95)/100=5%. If the metrics were X, Y and Z respectively, the total
Improved System Performance would X+Y+Z).
C. Methodology of Test for Improved System Economics
1. Calculation: For a given year, the Improved System Economics will analyze the
incremental improvement of the economic performance in the ITC Base case as
compared to the Economic Base Case. The arithmetic annual average of the sum of the
following quantities over 40 years will be the Improved System Economics for the year:
a. Congestion and Fuel Savings Benefits,
b. Operating Reserves Savings Benefits,
c. System Planning Reserve Margin Benefits,
d. Transmission Line Losses Benefits,
e. Generation Investment Benefits,and
f. Future Transmission Investment Benefits
(YearlTotal =a +b +c+d +e+f foryearl,Year2Total = a+b +c+d+e+f foryear
2, Improved System Economics=Average of Year 1 Total,Year 2 Total, ...,Year 40 Total)
2. Explanation Of Calculation Elements
a. Congestion and Fuel Savings Benefits
To the extent the ITC Base Case allows for a more efficient dispatch of generation
resources,opening of markets to competition and spreading the benefits of low cost
generation throughout the ITC Midsouth footprint, as compared to the Economic
Base Case, these benefits will be counted as Congestion and Fuel Savings Benefits.
These benefits reflect the savings achieved through the reduction of transmission
congestion costs and through more efficient use of generation resources as well as
4
removal of reliability must run status for certain generators. The Congestion and
Fuel Savings Benefits will be evaluated on a MISO-wide basis and allocated to each
transmission pricing zone in the proportion that these benefits are shown to -be
received by that transmission pricing zone.
b. Operating Reserves Savings Benefits
To the extent the ITC Base Case reduces operating reserve costs for the ITC
Midsouth footprint as compared to the Economic Base Case, these benefits will be
counted as Operating Reserves Savings Benefits. These benefits may include the
savings from retirement of generation units previously needed to support reserve
margins Operating Reserves Savings Benefits be evaluated for each transmission
pricing zone.
c. System Planning Reserve Margin Benefits
To the extent the ITC Base Case reduces transmission congestion as compared to the
Economic Base Case, thereby reducing the footprint planning reserve margin and
decreasing the amount of generation required to meet the planning reserve margin,
this defers new generation.The value of these benefits will be counted as System
Planning Reserve Margin Benefits. System Planning Reserve Margin Benefits arising
from avoided/deferred generation capacity will be evaluated for each transmission
pricing zone.
d. System Losses Reduction
To the extent the ITC Base Case reduces overall system losses as compared to the
Economic Base Case, this reduces the generation needed to serve the system losses.
The energy value of these loss reductions is considered in the congestion and fuel
savings benefits, but the loss reduction also helps to reduce future generation
capacity needs. The value of the reduced future generation capacity needs benefits
will be counted as System Loss Benefits. System Loss Benefits will be evaluated for
each transmission pricing zone.
e. Optimization of Generation Locations
To the extent the ITC Base Case reduces or defers the need for constructing new
generating plants in load pockets as compared to the Economic Base Case, this
reduces the generation capital investment cost needed to serve the customers. The
value-of these benefits for the ITC Midsouth footprint will be counted as Generation
5
Investment Benefits. These benefits accruing from increased deliverability of
capacity will be evaluated for each transmission pricing zone.
f. Future Reliability Transmission
To the extent that ITC Economic Projects eliminate or defers the need for future
reliability transmission investments, this reduces the total transmission investment
cost needed to serve the customers. The value of this elimination or deferral for
each Transmission pricing zone in the ITC Midsouth footprint will be counted as
future transmission investment benefits.
3. Implementation Roles and Procedures
a. Performance of the Improved System Economics Test
The valuation metrics used in the Improved System Economics Test used above were
developed by MISO for their MVP analysis
(https://www.midyLestiso.org/Library/Repository/StudyLgndidate%20MVP%20Anal
ysis/MVP%20PortFolio%20Analvsis%20Full%20Reaort.pdfl. This MISO methodology
that has been vetted through a stakeholder process.
b. Input Assumptions of the Improved System Economics Test
In any year, all input assumptions of the ITC Base Case and the Economic Base Case
will be consistent with the most recent assumptions of the most recent MTEP
and/or MVP analyses to be performed by MISO. These assumptions include, but are
not limited to, fuel costs, US Environmental Protection Administration
mandates/Renewable Power Standards, load forecasts and the attendant
uncertainties, transmission topology (unless otherwise specified herein related to
Entergy or ITC Midsouth footprint)and generation futures.
III. OVERALL TEST IMPLEMENTATION FRAMEWORK
A. Establishment of the portion of ITCs Revenue Requirement Subject to
Mitigation
ITC Ownership Benefit Calculation:
For a given year:
a) Not Readily Quantifiable Benefits(assumed as 10%of Actual WACC Effects)
b) plus benefits demonstrated through Improved System Performance
multiplied by Actual WACC Effects(capped at 45%of Actual WACC Effects)
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c) plus benefits demonstrated through Improved System Economics
d) less Annualized Cost of ITC Economic Projects
e) less Actual WACC Effects
If the ITC Ownership Benefit Calculation in any given year for which the calculation can
be made is greater than or equal to zero,the Rate Mitigation Plan shall terminate on the
30th day following the filing of the Third Party Evaluator's determination.
The benefits test will be performed by the Third Party Evaluator near the end of the
Initial Period such that the results will be available to ITC and ETI at the conclusion of the
Initial Period. Thereafter the test may be applied for any period at the sole discretion of
ITC.
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ATTACHMENT 1 TO APPENDIX B: PROJECT LIST
Planned Projects Included in Economic Base Case
Project Name LE proposed 130
(Planning)
Fordyce: Relocate-capacitor bank to 115 kV bus EAl 2014 Summer
M- I
Sheridan South 500 kV FG Upgrade: Sheridan 500 kV Substation
replace 11 and,6 Une" EAl 2014 Summer
Sheridan South 500 kV FG Upgrade: Eldorado 500 kV Substation
1 switch and 2 line haps EAI 2014 Summer
LV Bagby to Read: Construct new 230 kV line and operate at 115 kV EAl 2014 Summer
Calico -Uparade 161 kV Une EAl 2014 Winter
Pine Bluff Voltage Support Project: Phase 2
Woodward: Construct 230 kV ring bus and convert White Bluff to
Pine Bluff Arsenal D to
Woodward 115 kV line to 230 kV EAl 2015 Summer
Woodward-Pine Bluff West-Pine Bluff McCamant: Reconductor 115
W EAl 2015 Summer
HS OW4,1$WWWW Upgrade Terminal Equipment EAl 2015 Summer
HS Union S East:Upgrade Terminal t EAl 2015 Summer
AECC L&D 2 to Met Construct new 115 kV Une EAl 2016 Summer
Mossville-Cut-in line 616(Nelson to Carlyss 138 kV)into Mossville
138 kV Substation EGSL 2013 Summer
Copol to Bowbeauc: Upgrade 69 kV One EGSL 2014 Winter
Sorrento Upgrade 138/115 kV Auto and upgrade Gonzales-Sorrento
139 kV Une EGS .LL 2014 Summer
1
NE Louisiana Improvement Project-Phase 2
Oakridge to new Dunn Substation-Construct new 115 W Line
(1272 ACSS)
Add 115 W breakers at Dunn ELL 2013 Summer
ML ONve: Add Shunt Reactor ELL 2013 Winter
NAW. U LWhoud breaker NOW ELL 2014 Winter
NMO: U Ninemile to South 230 W transmission line Not ELL 2014 Winter
BMW W on to S.E.V -Upgrade 115 W 11ne EMU 2015 Simmer
Deese le JNEC -Add 69 WV cqpWW bank ETI 2012 Summer
Conroe Area Switching Station: tie lines Longmire to Fish Creek and
Conroe to W haven into new switch' station ETI 2013 Summer
Men 138 W Sub letion: Add Capacitor Bank ETI 2015 Summer
U to 138 W Line ETI 2016 Summer
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APPENDIX C:SUPPLEMENTAL PROPOSED COMMITMENTS REGARDING THE
SELECTION OF THE THIRD PARTY EVALUATOR
Amended Proposed Commitments Section IT(A)(5)provides in the last sentence:"The Third
Party Evaluator shall be selected by ITC and all costs associated with the Third Party Evaluator's
services will be paid by ITC."This Appendix C provides additional details regarding that Third
Party Evaluation selection.
I.Mutua y Agreeable Selection of the Turd Party Evaluator
Ninety(90)days before the initiation of the review of benefits by the Third Party
Evaluator undertaken pursuant to Amended Proposed Commitments Section Il(A)(5),ITC and
the Entergy Regional State Committee("ERSC")(or comparable successor organization
comprised of the five retail authorities)will mutually agree on the selection of a Third Party
Evaluator that meets the qualification criteria set forth in Section II.
II.Third Party Evaluator Oualification Criteria
The Third Party Evaluator must be independent of ITC,Entergy,any Regulatory Authority and
the ERSC and must disclose any potential conflicts of interest regarding its representation of
ITC,Entergy,any Regulatory Authority or the ERSC in its proposal.In addition,the mutually
agreeable Third Party Evaluator must meet all of the following qualification criteria:
1) Powertlow experience
2) Electric market simulation experience
3) Experience with cost-benefit analysis for transmission projects
4) Experience with analysis in an RTO environment
5) Experience or knowledge of loss of load calculations(specifically those used by MISO)
III.Third Party Evaluator Report
The Third Party Evaluator's written report regarding its review of benefits will be submitted to
the Regulatory Authority(with any portions that are entitled to confidential treatment submitted
accordingly).The Third Party Evaluator will also be made available,upon reasonable notice,to
answer questions by the Regulatory Authority regarding the report in a duly noticed workshop or
open meeting.The conclusions of the written report shall be final and the Regulatory Authority
will issue an order accepting the written report,except that,if within 30 days of the submission
of the written report to the Regulatory Authority,the Regulatory Authority identifies a potential
error or errors in the written report,the Third Party Evaluator shall review the potential error(s)
and correct such error(s),and conclusions based thereon,if any.
PUBLIC HEARING
* Receive comments related to a grant application to
partially fund the operation and maintenance of the
Beaumont Municipal Transit System in FY 2013
4
July 30,2013
Consider a resolution authorizing the City Manager to submit a grant application and execute a
contract with the Federal Transit Administration to receive Operating Assistance funds for the
Beaumont Municipal Transit System
RICH WITH OPPORTUNITY
BEAUMON*,
T • 19 • X • A • s City Council Agenda Item
TO: City Council
FROM: Kyle Hayes, City Manager
PREPARED BY: Chris Boone, Community Development Director
MEETING DATE: July 30, 2013
REQUESTED ACTION: Council conduct a public hearing to consider a resolution
authorizing the City Manager to submit a grant application
and execute a contract with the Federal Transit
Administration(FTA)to receive Operating Assistance funds
for the Beaumont Municipal Transit System.
BACKGROUND
Beaumont Municipal Transit has prepared a grant application for FY 2013 FTA funds. The grant
will help fund the labor,fringe benefits,parts and supplies,purchased services,utilities,insurance,
licenses, and all other miscellaneous expenses needed for the operation and maintenance of the
Beaumont Municipal Transit(BMT) System in FY 2013,the period from October 1,2012 through
September 30, 2013.
FUNDING SOURCE
The grant will pay up to 50%of the net operating deficit.
FTA Grant $2,157,936
City Share $1,778,930
State $379,006
Total: $4,315,872
RECOMMENDATION
Approval of the resolution.
PUBLIC NOTICE
The City of Beaumont/Beaumont Municipal Transit (BMT) is considering applying
to the Federal Transit Administration (FTA)for a 5307 funding grant in FY 2013 for
operating the public transit system. The project would be for 50%of the net
deficit of the total operating expenses of the transit system. It is estimated that
the total cost of operating the transit system will be $4,841,076. Stripping out the
estimated fare box revenues of$525,204, then the net operating deficit would be
$4,315,872. The Program of Projects (POP) would break down as follows:
OPERATING EXPENSES
Federal Share $2,157,936
City Share $1,778,930
State Share $ 379,006
TOTAL PROJECT COST $4,315,872
This funding would be for the labor, fringe benefits, materials, supplies, parts
purchased services, insurance, utilities, taxes, licenses, and all other
miscellaneous expenses required to operate the city public transit system.
Federal funding has been decreasing for the past few years. Beaumont's federal
allocation for FY 2013 turned out to be significantly higher than expected, thus
reducing the city's earlier estimated share. The federal share jumped from around
1.7 million dollars last year in FY 2012 to over 2.1 million this year.
A Public Hearing will be conducted on the above proposed POP at the regular
scheduled meeting of the City Council of Beaumont on Tuesday,July 30, 2013, at
1:30 pm in City Council Chambers, Beaumont City Hall, 801 Main Street,
Beaumont, Texas, 77704.
The Public Hearing will offer an opportunity for interested persons, agencies, and
private transportation providers to comment on the proposal. The hearing will
also afford the opportunity for interested persons to be heard on the social,
economic, and environmental aspects of the proposal.
Prior to the hearing, additional information may be requested and/or written
comments may be submitted to:
William J. Munson
General Manager
Beaumont Municipal Transit
550 Milam Street
Beaumont, Texas 77701
(409)835-7895
In addition, the proposed POP may be viewed prior to the Public Hearing by the
public at the Beaumont Municipal Transit Office at 550 Milam Street, Beaumont,
Texas, 77701, during normal business hours of 8:00 am until 4:30 pm on
weekdays.
The above proposed POP will become final unless amended by the City Council.
The final approved POP will be available for public review at the Beaumont
Municipal Transit Office at 550 Milam Street, Beaumont, Texas, 77701, or a copy
can be requested by calling (409)835-7895.
RESOLUTION NO.
BE IT RESOLVED BY THE CITY COUNCIL
OF THE CITY OF BEAUMONT:
THAT the City Manager be and he is hereby authorized to submit a grant application and
execute a contract with the Federal Transit Administration (FTA) to receive an Operating
Assistance Grant in the amount of$2,157,936 for the Beaumont Municipal Transit System.
PASSED BY THE CITY COUNCIL of the City of Beaumont this the 30th day of July,
2013.
- Mayor Becky Ames -