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Ordinance No. 2,0696920 ORDINANCE NO.2069 ORDINANCE AUTHORIZING ISSUANCE OP $1,250,000 WATERWORKS AND SANITARY SEWER SYSTEM REVENUE BONDS, SERIES 1976;APPROPRIATING $500,000 OP PROCEEDS OF SALE THEREOF FOR THE PURPOSE OF IMPROVING AND EXTENDING THE CITY'S SANITARY SEWER SYSTEM;AND CONTAINING OTHER PROVISIONSRELATING THERETO THE STATE OF TEXAS § COUNTIES OF HARRIS AND CHAMBERS § CITY OF BAYTOWN § WHEREAS,$500,000 in principal amount ofthe bonds here inafter authorized wereduly and favorably voted at an elec tionheld in the City of Baytown (the "City")onthe 17th day of March,1970;and WHEREAS,the City Council now deems it advisable to issue $500,000 bonds as a portion and the final installment of $2,500,000 sanitary sewer system bonds voted at said election, and to issue $750,000 bonds to refund certain outstanding bonds,as hereinafter provided; THEREFORE,BEIT ORDAINED BY THECITY COUNCIL OP THECITY OF BAYTOWN THAT: Section 1.The City's negotiable,serial coupon bonds to be designated CITY OF BAYTOWN,TEXAS,WATERWORKS AND SANITARY SEWER SYSTEM REVENUE BONDS,SERIES 1976 (hereinafter called the "Bonds"),are hereby authorized tobe issued and delivered in the amount of $500,000 forthe purpose of improving and extending the City's sanitary sewer system,and in the amount of $750,000 for the purpose of refunding and canceling,and in lieu of,$750,000 in principal amount of the City's outstanding Waterworks and Sanitary Sewer System Junior Lien Revenue Bonds, Series 1975,dated April 1,1975,aggregating $1,250,000 in principal amount. 6921 Section 2.The Bonds shall be dated September 15,1976, shall be numbered consecutively from 1 through 250,shall be in the denomination of $5,000 each,and shall mature and become due and payable serially on May 15 in each of the years,and in the amounts,respectively,as set forth in the following schedule: YEAR 1978 1979 1980 1981 1982 1983 1984 AMOUNT $40,000 45,000 50,000 55,000 60,000 65,000 80,000 YEAR 1985 1986 1987 1988 1989 1990 1991 AMOUNT $85,000 90,000 130,000 145,000 135,000 125,000 145,000 The Bonds may be redeemed prior to their scheduled maturities, at the option of the City,on the dates stated and in the man ner provided in the FORM OF BOND set forth in this ordinance. Section 3.The Bonds shall bear interest per annum at the following rates,respectively,to-wit: Bonds maturing 1978 through 198J_,6.1 % Bonds maturing 1982_through 19 ,5.25 % Bonds maturing 198_3_through 19 ,4.6 % Bonds maturing 1984_through 19 ,4.75 % Bonds maturing 1985.through 19 ,4.9 % Bonds maturing 1986^through 19 ,5.0 % Bonds maturing 1987.through 19 ,5.15 % Bonds maturing 1988_through 19 ,5.3 % Bonds maturing 1989.through 19 ,5.4 % Bonds maturing 1990_through 199T_,5.50 % -2- 6922 jps evidenced by interest coupons which shall appertain to the Bonds and which shall be payable on the dates indicated in the FORM OF BOND set forth in this ordinance. Section h.The Bonds,and the interest coupons apper taining thereto,shall be payable,shall have the character istics,and shall be signed and executed (and the Bondsshall be sealed)all as provided,and in the manner indicated,in the FORM OF BOND set forth in this ordinance. Section 5.The form of the Bonds,including the form of registration certificate of the Comptroller of Public Ac- f counts of the State of Texas to be printed and endorsed on each of the Bonds,and the form of the aforesaid interest coupons which shall appertain and be attached initially to each of the Bonds,shall be,respectively,substantially as follows: FORM OF BOND: NO.$5,000 UNITED STATES OF AMERICA STATE OF TEXAS f^COUNTIES OF HARRIS AND CHAMBERS CITY OF BAYTOWN,TEXAS WATERWORKS AND SANITARY SEWER SYSTEM REVENUE BOND SERIES 1976 ON MAY 15,,the CITY OF BAYTOWN (the "City"),in the Counties of Harris and Chambers,in the State of Texas, promises to pay to bearer the principal amount of FIVE THOUSAND DOLLARS and to pay interest thereon,from the date hereof,at the rate of %per annum,evidenced by interest couponspayable May 15,1977,and semiannually thereafter on each November 15 -3- 6923 0^and May 15 while this Bond is outstanding.The principal of thisBond andthe interest coupons appertaining hereto shall be payable to bearer,in lawful money of the United States of America,without exchange or collection charges to the bearer, uponpresentation and surrender of thisBond or proper interest coupon at the FIRST CITY NATIONAL BANK OF HOUSTON,Houston, Texas,which shall be the paying agent for this series of Bonds. THIS BOND is one of a series of negotiable,serial,coupon Bonds,dated SEPTEMBER 15,1976,issued in the principal amount ^of $500,000 for the purpose of improving and extending the City's sanitary sewer system,and in the amount of $750,000 for the purpose of refunding and canceling,and in lieu of $750,000 in principal amount of the City's outstanding Waterworks and Sani tary Sewer System Junior Lien Revenue Bonds,Series 1975,dated April 1,1975,aggregating $1,250,000,in accordance with the Constitution and laws of the State of Texas,particularly Articles 1111 through 1118 and Article 717k-3,Vernon's Texas Civil Statutes,as amended,andthe home-rule charter of the City;and pursuant to an election held within the Cityon the 17th day of March,1970,and an ordinance duly adopted by the City Council of the Cityentitled ORDINANCE AUTHORIZING ISSUANCE OF $1,250,000 WATERWORKS AND SANITARY SEWER SYSTEM REVENUE BONDS, SERIES 1976;APPROPRIATING $500,000 OF PROCEEDS OF SALE THEREOF FOR THE PURPOSE OF IMPROVING AND EXTENDINGTHE CITY'S SANITARY SEWER SYSTEM;AND CONTAINING OTHER PROVISIONS RELATING THERETO and finally passed on the 26th day of August,1976,this Bond being one of a series of Bonds $500,000 of the aggregate princi pal amount of which constitutes a portion and the final install- v ment of $2,500,000 revenue bonds voted at the aforesaid election. -4- 6924 f^ON NOVEMBER 15,1988,ORON ANY INTEREST PAYMENT DATE THEREAFTER,the outstanding Bonds of this series may be re deemed prior to their scheduled maturities,at the option of the City,IN WHOLE,OR IN PART IN INVERSE NUMERICAL ORDER,for the principal amount thereof and accrued interest thereon to the date fixed for any such redemption.At least thirty days prior to the date fixed for any such redemption,the City shall cause a written notice of such redemption tobe mailed to the bank at which the Bonds are payable and published at least 0^once in a financial publication published in the City of New York,New York,orin the City of Austin,Texas.By the date fixed forany such redemption,due provision shall be made with the paying agent for the payment of the required redemp tion price.If such written notice of redemption is published and if due provision for such payment is made,all as provided above,the Bonds which are to be so redeemed thereby automat ically shall be redeemed prior to their scheduled maturities; and they shall not be regarded as being outstanding except for the purpose of being paid by the paying agent with the funds so provided for such payment. IT IS HEREBY certified,recited,and covenanted that this Bonds has been duly and validly issuedand delivered;that all acts,conditions,and things required or proper to be performed, exist,and be done precedent to orin the issuance and delivery of this Bondhave been performed,existed,and been done in accordance with law;and that the interest on and principal of this Bond and the series of which it is a part,together with other outstanding waterworks and sanitary sewer system revenue bonds of theCity,are secured by and payable from an irrevocable -5- z# 6925 ^first lien on and pledge of the Net Revenues from the opera tion of the City's waterworks and sanitary sewer system,as defined and provided,or adopted by reference,in the ordinance authorizing this series of Bonds. THEHOLDER hereof shallnever have the right to demand payment of this obligation out of any funds raised orto be raised by taxation. EXCEPT AS MODIFIED by the provisions ofthe ordinance authorizing this series of Bonds,the bearer of this Bond is and shall be subrogated to allthe rights and privileges be longing to the bearers of the bonds which have been refunded by the issuance of this Bond and the series of Bonds of which this Bond is a part. IN WITNESS WHEREOF,this Bond and the interest coupons appertaining hereto have been signed with the facsimile signa ture ofthe Mayor and countersigned with the facsimile signa ture of the City Clerk of the City,respectively,and the official seal of the City has beenduly impressed,or placed in facsimile,on this Bond. xxxxxxxxxx COUNTERSIGNED:Mayor xxxxxxxxxx City Clerk (SEAL) FORM OF REGISTRATION CERTIFICATE: COMPTROLLER'S REGISTRATION CERTIFICATE §REGISTER NO. I hereby certify thatthis Bond has been examined,cer tified as to validity,and approved by the Attorney General -6- 6926 of the State of Texas,and that thisBond has been registered by the Comptroller of Public Accounts of the State of Texas. WITNESS my signature and seal this . xxxxxxxxxx Comptroller of Public Accounts of (SEAL).the State of Texas FORM OF INTEREST COUPON; NO. ON 15,19_, the CITY OF BAYTOWN,in the Counties of Harris and Chambers, T State of Texas,promises to pay to bearer the amount shown on this interest coupon,in lawful money of the United States of America,without exchange or collection charges to the bearer, unless due provision has beenmade for the redemption prior to maturity of the Bond to which this coupon appertains,upon pre sentation and surrender of this interest coupon at the FIRST CITY NATIONALBANK OF HOUSTON,Houston,Texas,said amount being interest duethatday onthe Bond bearing the number hereinafter designated of that issue of CITY OF BAYTOWN,TEXAS, jpk WATERWORKS AND SANITARY SEWER SYSTEM REVENUE BONDS,SERIES 1976,dated September 15,1976.The holder hereof shall never have the right to demand payment of this obligation out of any funds raised or to be raised by taxation.Bond No.. xxxxxxxxxx xxxxxxxxxx City Clerk Mayor Section 6.TheBonds are and shall be secured by and payable from an irrevocable first lien on and pledge of the Net Revenues from the operation of the City's waterworks and ^sanitary sewer system (the "System"),and said Net Revenues -7- 6927 j»\are further pledged irrevocably to the maintenance ofthe Bond Fund. Section 7»The Bonds,and interest coupons appertaining thereto,shall constitute special obligations of theCity, payable solely from the pledged Net Revenues,and the holders of the Bonds andthe interest coupons attached thereto shall never have the right to demand payment out of any funds raised or tobe raised by taxation. Section 8.(a)The term "Bond"or "Bonds"shall mean any or all of theBonds,as the case may be,authorized tobe issuedand delivered by this ordinance. (b)The term "Outstanding Bonds",as used herein,shall mean the outstanding bonds of the following issues of the City: Waterworks and Sewer System Revenue Bonds, Series 1958,dated February 15,1958,au thorized by ordinance dated February 6,1958; Waterworks and Sanitary Sewer System Revenue Bonds,Series 1966,dated February 15,1966, authorized by ordinance dated February 24,1966; V/aterworks and Sanitary Sewer System Revenue Bonds,Series 1967,dated May 15,1967,autho rized by ordinance dated May 25,1967;and Waterworks and Sanitary Sewer System Revenue Bonds,Series 1971,datedApril 15,1971,au thorized by ordinance dated April 12,1971. (c)The Bonds hereby authorized are parity "Additional Bonds",as defined and permitted in an ordinance dated May 13, 1957,hereafter called the "1957 Ordinance",whereby the City's Waterworks and Sewer System Revenue Refunding Bonds,Series 1957,dated May 15,1957 (all of which bonds have now been re tired both as to principal and interest)were authorized,and Sections 8.02 (a),(b),(c),and (e)and Sections 9 through 12 f of said ordinance (a photocopy thereof being attached hereto, -8- 6928 marked Exhibit "A",and made a part hereof for all purposes) are hereby adopted by reference and shall be applicable to the Bonds for all purposes except to the extent hereinafter specifically modified and supplemented.TheBonds andthe Outstanding Bonds are and shall be secured by and payablefrom a first lienon and pledge of the Met Revenues from the opera tion of the System,and all of said obligations shall be on a parity and of equal dignity in all respects. Section 9.In addition to all other amounts required by the 1957 Ordinance and by the ordinances authorizing the Out standing Bonds,theCity,at the same time payments are made into the Bond Fund under the provisions of the 1957 Ordinance and of the ordinances authorizing the Outstanding Bonds,re spectively,from the funds in the System Fund,shall pay into the Bond Fund each year beginning with the year in which the Bonds are issued,an amount equal to 100$of the amount re quired to meet the interest and principal payments falling due on and before the next maturity date of the Bonds.In addition to such payments and in addition to the payments into the Bond Fund ReserveAccount required by the 1957 Ordinance and bythe ordinances authorizing the Outstanding Bonds,the City shall pay into the Bond Fund,from the System Fund,in each year 20$of the above required amount sufficient to meet the interestand principal payments falling due on or before the next maturity date of the Bonds andthe interest and prin cipal payments on the Bonds for one year thereafter.Such additional payments shall be made into the Bond Fund Reserve Account established bythe1957 Ordinance.The amount required 6929 zpss to be paid intothe BondFund in each year shall be in sub stantially equal monthly payments from the monies in the System Fund after deductions have been made for payment of the reasonable cost of operating and maintaining the System for such month.If the revenues of the System in any month, after deduction for operation and maintenance,are insufficient to make the required payment into the Bond Fund,including the Bond Fund Reserve Account,then the amount of any deficiency in such paymentshall be added to the amount otherwise required to be paid into the Bond Fund in the next month.Insofar as the Bonds are concerned,no payments other than the payments required by the 1957 Ordinance need be made into the Contin gencies Fund.Except as provided herein,all of the provisions of'the aforesaid 1957 Ordinance relating to the payment orde posits of monies into the Bond Fund andthe BondFund Reserve Account and to the maintenance of said Bond Fund,including said Bond Fund Reserve Account,shall apply to payments orde posits required by this ordinance and to the maintenance of said Bond Fund,including said Bond Fund Reserve Account. Section 10.There is hereby appropriated out of the pro ceeds of sale of.theBonds the sum of $500,000 forthe purpose of improving and extending the City's sanitary sewer system and said proceeds of sale of the Bonds shall be used and ex pended for such purpose asset forth in the ordinance adopted February 26,1970,calling the bond election which was held in the City on March 17,1970.It is estimated that the maximum costof the current project,which consists of one project only,for improving and extending the City's sanitary sewer -10- 6930 system will not exceed $500,000;consequently,there is no necessity for any down payment and no such down payment is ordered to be made.It is hereby officially found and deter mined that the probable period of usefulness of the current project is forty (40)years. Section 11.That based upon all facts,estimates and circumstances now known or reasonably expected to bein exis tence on the date the Bonds are delivered and paid for,the City reasonably expects that the proceeds of the Bonds will notbe used in a manner that wouldcause the Bonds or any portion of the Bonds to be an "arbitrage bond"under Section 103(d)(2)of the Internal Revenue Code of 1954,as amended, and the temporary and proposed regulations heretofore pre scribed thereunder,including,without limitation,Sections 1.103-13 and 1.103-14 of the proposed regulations published in the Federal Register on May 3,1973.Furthermore,all officers, employees and agents of the City are authorized and directed to provide certifications offacts,estimates and circumstances which are material to the reasonable expectations of the City as of the date the Bondsare delivered and paid for,andany such certifications may be relied upon by counsel,by the owners or holders of the Bonds,or by any person interested in the exemption of interest on the Bonds from Federal income taxation.Moreover,the City covenants that it shall make such use of the proceeds of the Bonds,and takesuch other and further action as may be required so that the Bonds shall not be "arbitrage bonds"under Section 103(d)of the Internal Revenue Codeof 1954,as amended,and regulations prescribed fromtime to time thereunder. -11- 6931 4v #*s Section 12.Except as modified bythe provisions of this ordinance,the bearers of the Bonds hereby authorized are and shall be subrogated to all of the rights and privileges belonging to the bearers of the bonds which are being refunded bythe issuance of the Bonds. Section 13.The Mayor of the City is herebyauthorized to have control of the Bonds and all necessary records and proceedings pertaining to the Bonds pending their delivery and their investigation,examination,and approval bythe Attorney General of the State of Texas and their registration by the Comptroller of Public Accounts of the State of Texas.None of the Bondsshall be so registered until all of the obligations being refunded by the issuance of the Bonds have beenduly cancelled by the said Comptroller. Section lit.The Official Statement,dated the date of this ordinance,of theCity of Baytown relating to the Bonds, and the distribution of such Official Statement to prospective investors inthe Bonds,is hereby authorized and approved.The appropriate officers and representatives of the City are hereby authorized to cause such Official Statement to be delivered to Rotan Mosie Inc. and the other members,if any,of the group represented by Rotan Mosie Inc.. In order to further facilitate the distribution of the Bonds, the Mayor,the City Clerk,and the Director of Finance,acting in their respective official capacities,are authorized to execute and deliver,on behalf of the City,a certificate in substantially the following form: -12- 6932 CERTIFICATE OP MAYOR,CITY CLERK AND DIRECTOR OF FINANCE THE STATE OF TEXAS § COUNTIES OF HARRISAND CHAMBERS § CITY OF BAYTOWN § The undersigned,Tom-Gentry,Mayor of the City of Baytown, Texas (the "City"),Eileen P.Hall,City Clerk of the City, and J.B.LeFevre,Director of Finance of the City,do each hereby certify on behalf of the City that: 1.We have reviewed the Official Statement,dated August 26,1976 (the "Official Statement"),relating to the City's Waterworks and Sanitary Sewer System Revenue Bonds, Series 1976 (the "Bonds");and 2.To the best of our knowledge and belief: (a)the description and statements of or pertaining to the City contained inits Official Statement on the date of such Official Statement,on the date of sale of the Bonds and acceptance of the best bid therefor,and on the date of the delivery ofthe Bonds,were and are true and correct in all material respects; (b)insofar as the City and its affairs,including its financial affairs,are concerned,such Official Statement did not and does not contain anuntrue state ment of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein,in the light of the circumstances under which they were made,not misleading;and (c)insofar as the descriptions and statements, including financial data contained in such Official Statement,ofor pertaining to entities other than the City and their activities are concerned,such statements and datahave beenobtained fromsources which the City believes to be reliable and that the City has no reason to believe that they are untrue in any material respect. IN WITNESS WHEREOF,wehave signed this certificate on behalf of the City on this the day of , 1976,the date of payment for and delivery of the Bonds. CITY OF BAYTOWN,TEXAS Mayor City Clerk Director of Finance ■13- 6933 and such officers,and any other appropriate officer of the City,are further authorized to execute and deliver,on behalf of theCity,such other documents,instruments andpapers and to take such further action as such officer or officers may determine to be necessary or advisable to complete the delivery ofthe Bonds and the distribution thereof,such determination to be conclusively evidenced by the execution and delivery of such document,instrument or paper orthe taking of such action, as the case may be.A copy of such Official Statement is attached hereto and is made a part of this ordinance for all purposes. Section 15.All of the Bonds are hereby sold and shall be delivered to Rotan Mosie Inc.and associates for thepar value thereof and accrued interest thereon to date of delivery,plus a premium of $none t subject to the un qualified approving opinions,as to the legality of the Bonds, ofthe Attorney General of the State of Texas and of Vinson, Elkins,SearIs,Connally &Smith,Houston,Texas,market attorneys]and it is hereby officially found,determined,and declared thatthe Bonds are soldonthe best terms andfor the best price possible. Section 16.Immediately following delivery of the Bonds to the purchaser thereof,the accrued interest and premium,if any,shall be deposited in the Bond Fund. Section 17.The approving opinion of Vinson,Elkins, Searls,Connally &Smith,Houston,Texas,and Cusip Numbers may be printed on the back of each of the Bonds,but errors -1H- 6934 or omissions in such opinion or errors inor omissions of such numbers shall have no effect onthe validity of the Bonds. Section 18.The Mayor andall other appropriate offi cers of the City are hereby authorized and directed to do any and all things necessary or convenient to carry out thepro visions of this ordinance. Section 19.This ordinance was read once by the City Council and shall take effect immediately. Section 20.Itis hereby officially found and determined that the need of the City for such financing creates an emer gency and an urgent public necessity for the holding,at the scheduled time,of the meeting of the City Council at which this ordinance is adopted and for the adoption of this ordi nance;and the NOTICE OP MEETING relating to said meeting and heretofore posted bythe City Clerk,and the posting thereof, are hereby authorized,approved,adopted,ratified,and con firmed. PASSED,AUTHENTICATED,AND APPROVED this 26th day of August,1976. ATTEST: Mayor CITYOFBAYTOWN,TEXAS City Clerk CITY OP BAYTOWN,TEXAS r/(SfiAL)-- -15- ^ *•* 6935 EXHIBIT A 8,02 -DEFINITIONS:That,as used in this ordinance,the follow ing termsshall mean and include,andare defined,as follows, to-wit: (a)Cit£-the City of Baytown,Texas,and,where appro priate,the City Council thereof. (b)System -the Waterworks and Sanitary Sewer System of the City,including all present and future extensions,replace ments,and improvements to said Waterworks and Sanitary Sewer System. (c)Net Revenues -the gross revenues derived from the operation of the System less the reasonable expenses of operation and maintenance of said System,including all salaries,labor, materials,interest,and such repairs and extensions as in the Judgment of the governing body of the City are necessary to keep the plant or utility in operation and render adequate service to the City and the inhabitants thereof,or such as might be neces sary to meet some physical accident or condition whichwould otherwise impair the original security. -11 - 6936 (e)Additional Bonds -the additional bonds that the City expressly reserves the right to issue in Section 9.06 of this ordinance. Section 9i PLEDGE OF NET REVENUES;That allthe net revenues derived from the operation of the System,with the exception of those in ex cess of th2 amounts required to establish and maintain the funds as hereinafter provided in this ordinance,are hereby irrevocably pledged to the payment of the Bonds and,when and if issued,the Additional Bonds.For the benefit of the original and all sub sequentholders of the Bonds,coupons,or any part thereof,and in addition to all other provisions and covenants in the laws of the State of Texas and in this ordinance,itis expressly stipu lated: 9-01 "^TSS:The City shall fix and maintain rates and collect charges forthe facilities and services afforded by the System, which will provide revenues sufficient at alltimes: (a)To pay all operation,maintenance,depreciation,re placement,and betterment charges of the System; (b)To produce net revenues each year in an amount not less than one and one-half (1-1/2)times the average annual prin cipal and interest requirements of all bonds then outstanding pay ablefrom the revenues of the System; (c)To establish and maintain the Revenue Bond Fund (in cluding the ReserveAccount thereof)and the Contingencies Fund, hereinafter mentioned; (d)To pay all outstanding indebtedness against theSys tem,other than the Bonds and (when issued)the Additional Bonds, as and when the same becomes due.Provided also that no free -12 - 6937 j services of the System shall be allowed,and should the City or any of its agencies or instrumentalities make use of the services, payment of the reasonable value thereof shall be made by the City out of funds derived from sources other than revenues and income of the System. 9.02 -USE OP REVENUES:The City will deposit,as collected,all revenues derived from the operation of the System into a reparate account (herein called the "System Fund"),which shall be kept separate and apart from all other funds of the City.The System. Fund shall be administered as follows: (a)Maintenance and operation:'Prom the moneys in the System Fund,the City shall pay the expenses of operation and maintenance of the System,Including all salaries,labor,mate rials,interest,arid such repairs and extensions as in the Judg ment of the governing body of the City are necessary to keep the plant or utility in operation and render adequate service to such City and the inhabitants or such as might be necessary to meet some physical accident or conditions which would otherwise impair the original security. (b)RevenueBond Fund:There is hereby created and established c special fund for-thepayment of the interest on and principal of the Bonds,which fund is hereinafter referred to as the "Bond Fund."From the funds in the System Fund,the City shall pay into the"Bond Fund during each year beginning with the date of the Bonds,an amount equal to 100 per centum of the amount required to meet the interest and principal payments falling due on and before the next maturity date of the Bonds.In addition to suchpayment,the City shall pay into the Bond Fund,from the System Fund,in each year 20 per centum of the above required -13 - 6938 amount until such time as there is in the Bond Fund an amount f^sufficient to meet the interest and principal payments falling due on or.before the next maturity date of the Bonds and the interest and principal payments onthe Bonds for one year there after.Such additional payments shall constitute and be known as the Bond Reserve Account.The amount required to be paid into thft Bond Fund in each year shall bein substantially equal monthly paymentsfrom the moneys in the System Fund after de ductions have been made for paying the reasonable cost of oper ating and maintaining the System for such month.If the reven- f^'ues of the System in any month,after deductions for operation and maintenance,are insufficient to make the required payment into the Bond Fund,including the Bond Reserve Account,then the amount of any deficiency in such payment shall be added to the amount otherwise required to be paid into the Bond Fund in the next month.It is the intent of this provision that the sums paid into the Bond Fund shall be in excess of the immediate requirements for payment of current interest and principal on the bonds,until there has been accumulated in the Bond Fund, (T*as a reserve,an amount sufficient to service the Bonds for one year. The moneys in the BondFund shall be used solely for the purpose of paying interest oh and principal of the Bonds until all Bonds have been retired;provided that,when the total in the Bond Fund is equal to the aggregateprincipal amount of all bonds outstanding and payable from said Bond Fund,plusaccrued interest thereon,the moneys in the Bond Fund may be used to purchase such bonds at a price,exclusive of accrued interest, '■"not exceeding the principal amount thereof. ■t 693S> /#K The Bond Fund shall be established and maintained at The First City National Bank of Houston,Houston,Texas,and the moneyspaid Intosaid Bond Fund,a3 required by this ordinance, shallbe deposited on or before the 20th day of each month,be ginning May 20,1957,at said Bank.The moneysdeposited in the BondFund shall be continuously secured by a valid pledge to the City of direct obligations of the United States of America having an aggregate market value,exclusive of accrued Interest,at all times at least equal to such Bond Fund. Moneys in the Bond Reserve Account,at the option of the City,may be invested in direct obligations of the United States of America,maturine within ten (10)years from the date of pur chase or maturing before the final maturity of theBonds,which ever shall first occur,which shallbe deposited in escrow with said Bank under an escrow agreement.If such funds are so in vested and deposited in escrow,'the City shall have the right to havesold through the escrow agent on the open market a suffi cient amount of said securities in order to meet its obligations of principaland interest in the event it does not have sufficient funds,uninvested,onhand for suchpurpose.Under such clrcum- stances,the Mayor is hereby authorized,ordered,and directed to give fifteen (15)days'notice to such escrow agent of the neces sity to sell said securities on the open market.After such sale, the moneys resulting therefrom shall belong to the Bond Reserve Account of the Bond Fund,and shall be available to pay such obli gations of principal and Interest. So long as the Bond Reserve Account contains a balance of notlessthanan amount sufficient to service the Bonds for one year,as above provided,no further payments need be made into -15 - I 6940 said Reserve Account;provided,that if said balance is ever reduced to an amount which is less than that specified above, payments into said Reserve Account shall beresumed,as above provided,and shall be continued until said Account contains a balance of not lessthan an amount sufficient to service the Bonds for one year,as above provided. (c)Contingencies Fund:There is hereby created and established a special fund,as a reserve for contingencies, 4 which fund is hereby referred toas the "Contingencies Fund." After the paymentsrequired bySections 9.02(a)and 9.02(b), above,have been made,the City,on or before the 20th day of each month,beginning June 20,1957j from moneys in the System Fund,shall deposit in the Contingencies Fund a sum not less than $500.00,and such monthly payments shall be continued until suchtime as there isin the Contingencies Fund a balance of not less than $50,000.00.Moneys in the Contingencies Fund shall-be used only (l)to pay unusual maintenance and operation expenses,as such expenses are defined in Section 9.02(a)above, for which there are no other moneys available,and (2)to pre vent a default in the payment of principal and interest in the eventthere are otherwise insufficient moneys for such purposes. If in any month the City shallfor any reason fail to pay into said Contingencies Fund the full amount above stipu lated,amounts equivalent to such deficiencies shall be set apart and paid into said Contingencies Fundfrom the first available and unallocated revenues of the following month or months and shall be in addition to the monthly deposit herein- above provided to be otherwise paid into said Contingencies Fund.Said Contingencies Fund shall be established and -16 - 6941 maintained at the CitizensNational Bank (-.Trust Co.,Er.y'-.orr., Texas,and shall bo contj.nuov.Rly r.ocurred 1>y a volfri plocYp ';n the City of direct obligations of the United Stator.of Amorioa, having an aggregate market valuo,er.olusivo of accrued l^'-oror/;, at all tj.nr»3 at least ocuifO.to r-i'flh Firorvo Fund.Moneys intto Contingencies Fund,at ':-.'ia option of f.!?o City,may be invited in direct obligations of the United f'-^tnr.of America,matv.riir, within ten (10)years frcn the Cr.tc of purchase o::mati«rini;be fore the final maturity of the Bonds,whichever shall first- occur,which shall be deposited in escrow with said Bank under an escrov;agreement.If suchfunds are so invested and deposited in escrow,theCity shall have the right to have sold,end shall sell,through the escrow agent,on the open market a sufficient amount of such securities to meet its duties and obligations, as herein provided,in the event it does not have sufficient in vested funds on hand for suchpurpose.Under such circumstances, the Mayor is hereby authorized,ordered,and directed to ftf-ve fifteen (15)days*written notice to such escrov;agent of the necessity to sell such securities in the open market.After said sale,the moneys resulting therefrom shall belong to the Contin gencies Fund and shall be available for the purposes as herein provided. When a balance of not less than $50,000 is reached in the Contingencies Fund,no further payment need be made intosaid Fund;however,inthe event that said balance is ever reduced to an amount less than $50,000,the monthly payments,as above pro vided,shall be resumed and continued until said balance of $50,000 is again reached and maintained. (d)Trust Funds:Moneys in the Bond Fund (including the -17 - 6942 Reserve Account)and in the Contingencies Fund shall constitute trust funds,and shall be used solely for the purposes herein provided until all the Bonds have been retired.When there are moneys in said Bond Fund and Contingencies Fund sufficient to make all interest payments and principal payments due and to be come due to the final maturity of all bonds then outstanding payable from the revenues of the Syc'jem,no further payments need be made into said Bond Fund and Contingencies Fund. (e)Surplus;Any funds remaining in the System Fund after provision has been made for the reasonable cost of operat ing and maintaining the System,and after paying the amounts required to be paid,into the BondFund and Contingencies Fund, as above provided,and after all payments that may be required by ordinances pertaining to Additional Bonds have been made,may be used by the City for any lawful purpose. 9.03 -.MAINTENANCE AND OPERATION:That the City shall maintain the System in good condition and operate*the same in an efficient manner and at a reasonable cost.So long r.s cny of tho Bonri.n nro outstanding,the City agrees to maintain insurance for th.o hone- fit of the holder or holders of the Bonds on 'She .System of a kind and in.an amount which would usually ho carried by private com panies engaged in a similar type of business.Nothing in this ordinance shall be construed as requiring the City to expend any fundsfor this purpose which are derived from sources othnr than the operation ofthe System,but nothing herein shall be construed as preventing the Cityfrom doing so. 9.04 -ACCOUNTS AND REPORTS:That the City shall keep proper re cords and accounts (separate and apart from all other records and accounts of the City)in which complete and correct entries shall -18 - 6943 be made of all transactions relating to the System.The City will ^operate the System and will keep its books of records and accounts on the basis of a fiscalyear ending September 30th.Not later than sixty (60)days after the close of each fiscal year/begin ning with the fiscal year ending SeDtember 30,1958,the City will furnish (without cost)to Moroney,Beissner &Co.,Houston,Texas, and to any holder of any of the Bonds who may so request in writ ing,a signed or certified copy of a report by an independent firm of certified public accountants,coverning the next preceding fiscal year,showing as to suchyear the following information ^relating to the System: (a)Income and expense statement; (b)Balance sheet; (c)Accountant's'comment regarding the manner in which the City has complied with the requirements of this ordinance,and his recommendation for any changes or improvements in the operation of the System; (d)List of insurance policies in force at the end of such year,showing,as to each policy,the risk covered,the name of the insurer,and the expiration date; (e)The .number of properties connected with the waterworks system and the number of properties connectedwith the sanitary sewer system,and the total income from the System for such year; (f)The number of unmetered customers of the waterworks, system at the end of such year,ifany;and (g)The number of gallons of water pumped into or taken by the waterworks system and the number of gallons of water sold duringsaid year. 9.05 -INSPECTIONS:The original purchaser of the Bonds and any -19 - 6944 holder of 25$or more in principal amount of the Bonds then out standing shall have the right at any reasonable time to inspect the System and all records,accounts and data of the City relat ing thereto. 9.06 -ADDITIONAL BONDS:In addition to inferior lienbonds authorized byChapters 249 and 250,Acts of the 51st Legislature of Texas,Regular Session,1?49,an amended (Articles 1111a and 1111b,Vernon's Texas Civil Statutes,1925,an amonded),the City expressly reserves the right to issue additional parity bonds in one or more installments and in one or more issues,and such Additional Bonds,when issued,may be secured by and payable from a first lien on and pledge of the net revenues of the System in the same manner and to the same extent as arc theBonds,t»nd such Additional Bonds may in all respects bo of crtual c*?.gn?ty vj i*.h raid Eonds.It is expressly provided,however,thp.'-.no AcW.fc:i.nna,i.Bonflp shall be isFAieO.un?een: (a)Each of tho funds created by this ordinance enntninn the amount of money then required to beon depor.it therein.? (b)The net revenues ofthe System for the last preceding fiscal year (the fiscal year next preceding the month in which the ordinance authorizing any Additional Bonds is adopted),as certi fied by an Independent public accountant or firm of independent public accountants,were equal toat least one and one-half (1-1/2) times the requirements for the payment of principal andinterest on all bonds that will be outstanding and payable from the revenues of the System after the bonds then,proposed to be issued are is sued,sold,and delivered,for the calendar year in which said requirements are greatest;and (c)The bonds then proposed to be issued are made to mature -20 - 6945 on May 15th in each of the years in which they are scheduled to mature.- The term "net revenues"as used herein shall mean all of •i the net revenues of the System (excluding income receivect speci fically for capital items)after deduction of the reasonable expenses of operation and maintenance of the System (excluding expenditures for capital items). Section 10: SYSTEM OP RECORDSAND ACCOUNTS;That the Mayor and other proper city officials are hereby instructed and directed to do any and all things in reference to the installing and maintaining cf a complete system of records and.accounts pertaining to tho Syntem and to make the moneys available for the payment of tho Pone1?,in the manner provided by law. Section i.l: SPECIAL COVENANTS:That the City covenants,by and through thin ordinance,as follows: 11.01 -POWERTO PLEDGE REVENUES:That it has lawful power to pledge the revenues supporting this issue of Bonds and has law fully exercised its powerunder the Constitution and laws of the State ofTexas,including said power existing under Articles 1111 to 1118,both inclusive,and Article Il82c-1,Vernon's Texas Civil Statutes,1925,as amended;that the Bonds shall be ratably secured under said pledge of income,and in such manner that one Bond shall have no preference over any other Bond. 11.02 -REVENUES NOT ENCUMBERED:That the City covenants and represents that other than for the outstanding bonds of thefol lowing issues: (a)City of Goose Creek V/aterworks and Sewer System Revenue Bonds,dated August 1,^ -21 - 6946 (b)City of Pelly Waterworks and Sewer System Revenue Bonds,dated December 1,1945; (c)Harris County V/ater Controland Improvement District No.7 V/aterworks and Sewer System Revenue Bonds,Series 1945,dated March 1, 1945; (d)HarrisCounty V/ater Control and Improvement District No.7 V/aterworks and Sevre?System Revenue Bonds,Series 1945A,dated September 4 (e)Harris County V/ater Control and Improvement District No.7 V/atcrv/orks and Sewer System Revenue Bonds,Series 1946,dated December 1,1946;and .(f)Harris County Water Control and Improvement District No.30V/aterworks and Sewer System Combination Tax and Revenue Bonds,1952, dated April 1,1952, the rents,revenues,properties,^and income of the System are not in any manner pledged to the payment of any other debt or obliga tion of the City,nor of the System.That all outstanding bonds of the issues described above in (a),(b),(c),(d),and (e)are tobe retired or refunded by the issuance of the Bonds hereby authorized;and that all outstanding bonds of the issue described above in (f)are tobe refunded by the $230,000 City of Baytovrn Waterworks and Sewer System Refunding Bonds,Series 1957,dated May 15,1957,now in process of issuance. 11.03 -SALEOR ENCUMBRANCE OP SYSTEM OP REVENUES:,That,so loni* as any of the Bone's remain outstanding.,the City will not sell or encumber the System,or any substantial part thereof,and that, with the exception of the Additional Bonds mentioned in Section 9.06 of this ordinance,when issued in accordance with the terms and conditions of this ordinance,it will not encumber the reven ues of the System unless such encumbrance is made junior and sub ordinate to the Bonds and to all the provisions of this ordinance. -22 - 6947 11.04 -NO COMPETING SYSTEM:That the City further covenants r.nd agrees,to the extent that it legally may,that so long ao any of the Bonds or interest thereon are outstanding,no franchise shall be granted for the installation or operation of any comparing system,that the Citywill prohibit the operation of any nystem other than the System ov/ned by the City,and that thn operation of any such system by anyone otho::L,han the City in hereby pro hibited. 4 Section 12- ORDINANCE IS CONTRACT:That the provisions of this ordinance shall constitute r.contract botvjoon tlio City and the hr\».fv>r o:? holders frcm time to time of the none1.."-.,and after ';he i £manor. of any of said Bonds,no change,variation,or altcrctj.cn of any kind in the provisions ofthis ordinance may be mn^o im'*:'J. all the Bonds have been paid in full as to both principal p.tv1 interest. END OP EXHIBIT "A"