1992 11 09 CC Minutes, SpecialMINUTES OF THE SPECIAL SESSION
OF THE CITY COUNCIL OF THE CITY OF BAYTOWN
November 9, 1992
The City Council of the City of Baytown, Texas, met in special
session on Monday, November 9, 1992, at 4:00 p.m. in the Council
Chamber of the Baytown City Hall, 2401 Market Street, with the
following attendance:
Eva Benavides
David Byford
*Pete C. Alfaro
Stephen DonCarlos
Rolland J. Pruett
Bobby J. Credille
Bobby Rountree
Norman Dykes
Ignacio Ramirez
Eileen P. Hall
Absent: Ray Swofford
Council Member
Council Member
Council Member
Council Member
Council Member
Mayor
City Manager
Assistant City Manager
City Attorney
City Clerk
Council Member
The meeting was opened with a quorum present, after which the
following business was conducted:
Consider Proposed ordinance Authorizing Issuance of $4,410,000 City
of Baytown, Texas, Waterworks and Sewer System Revenue Bonds,
series, 1992; Appropriating $1,110,000 of the Proceeds of Sale
Thereof for Waterworks System Improvements and $3,300,000 of the
Proceeds of Sale Thereof for Sewer System Improvements; and
Containing Other Provisions Related Thereto
The city manager mentioned an article from the Wall Street
Journal which was also published in Nation's Cities Weekly
indicating that the quality of life in cities is becoming an area
that both rating companies are delving into more deeply. The
ability of cities to manage for the future has become crucial.
Drew Masterson stated that the city has maintained its current
ratings for the sale of water and sewer revenue bonds. The Finance
Department developed a utility rate model to project water and
sewer rates. An update of the model was performed to take into
account future bond issues as well as the last two rate increases.
The city's projection during the bond program of 4 1/2% annual rate
increase due to the issuance of the bonds is still valid. The
model now encompasses much more detail as to the operating side of
the water and sewer revenue funds which will be more useful to the
city in its budgeting process next year. He complimented Monte
Mercer, Finance Director, for his work in this regard. The model
was very helpful to the fiscal agent in dealing with the agencies
in New York.
M
92110992 -2
Minutes of the Special Session - Nov. 9, 1992
Four bids were opened as follows:
Southwest Securities
TRUE INTEREST COSTS
6.628%
Prudential Bach Capital Funding 6.5700%
Smith Barney
Clayton Brown
6.3738%
6.5851%
Recess Into Executive session to Discuss Land Acquisition
Mr. Masterson asked to be excused to have the bids verified.
Therefore council recessed into executive session to discuss land
acquisition.
When the open meeting reconvened, Mayor Credille announced
that no action was necessary as a result of the executive session.
*Pete C. Alfaro present.
City Manager's Report
Veteran's Day Program - At 10:45 a.m. on Wednesday, there
will be a Veteran's Day Program at the Bicentennial Park.
Mayor's Report to Council
Mayor Credille reported that he had held a meeting with
several black ministers who were complimentary of Operation Valdez
and were very pleased with the hire of several black officers.
Drew Masterson Returns
Mr. Masterson verified that the bids were correct. Smith
Barney is the low bidder; however, there is an irregularity in that
Smith Barney's check is not a cashier's check. However, it is an
official check. Smith Barney has agreed to have a cashier's check
federal expressed on Wednesday.
Cliff Youngblood, bond counselor, was also present and he said
that the official check is an irregularity, but council is
empowered to waive that irregularity.
Is
92110992 -3
Minutes of the Special Session - Nov. 9, 1992
Therefore, Drew Masterson recommended acceptance of the bid.
The administration also recommended approval.
Council member Pruett moved for adoption of the ordinance.
Council member Byford seconded the motion. The vote follows:
Ayes: Council members Benavides, Byford, Alfaro
DonCarlos and Pruett
Mayor Credille
Nays: None
For a copy of ordinance, see Attachment "A."
Ad j ourn
Mayor Credille adjourned the special session in order that
council could move into the Conference Room to hold a work session
on the Comprehensive Plan.
Eileen P. Hall
City Clerk
W
Attachment "A"
ORDINANCE NO. 6424
ORDINANCE AUTHORIZING THE ISSUANCE OF $4,410,000 CITY OF
BAYTOWN, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE
BONDS, SERIES 1992; APPROPRIATING $1,110,000 OF THE
PROCEEDS OF SALE THEREOF FOR WATERWORKS SYSTEM
IMPROVEMENTS AND $3,300,000 OF THE PROCEEDS OF SALE
THEREOF FOR SEWER SYSTEM IMPROVEMENTS; AND CONTAINING
OTHER PROVISIONS RELATED THERETO
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN:
ARTICLE I
FINDINGS AND DETERMINATIONS
Section 1: Findings and Determinations. It is hereby
officially found and determined that the City held an election on
May 4, 1991, at which the duly qualified voters of the City
authorized the issuance of $6,450,000 waterworks system revenue
bonds for the purpose of improving and extending the City's
waterworks system and $19,150,000 sanitary sewer system revenue
bonds for the purpose of improving and extending the City's
sanitary sewer system.
ARTICLE II
DEFINITIONS AND INTERPRETATIONS
Section 2.1: Definitions. In this Ordinance, the following
terms shall have the following meanings, unless the context clearly
indicates otherwise:
The term "Act" shall mean Articles 1111 through 1118, Vernon's
Texas Civil Statutes, as amended.
The term "Additional Parity Bonds" shall mean the additional
parity revenue bonds permitted to be issued by the City pursuant
to Section -6.1 of this Ordinance.
The term "Bonds" shall mean the City of Baytown, Texas,
Waterworks and Sewer System Revenue Bonds, Series 1992, authorized
by this Ordinance.
The term "Business Day" shall mean any day which is not a
Saturday, Sunday, a day on which banking institutions in the city
where the principal corporate trust office of the Registrar is
located are authorized by law or executive order to close, or a
legal holiday.
The term "City" shall mean the City of Baytown, Texas, and
where appropriate, the City Council thereof and any successor to
the City as owner of the System.
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 "Gross Revenues" shall mean all revenues, income and
receipts of every nature derived or received by the City from the
operation and ownership of the System and the interest income from
the investment or deposit of money in the Revenue Fund, the
Interest and Sinking Fund, and the Reserve Fund.
The term "Interest Payment Date ", when used in connection with
any Bond, shall mean February 1, 1993, and each August 1 and
February 1 thereafter until maturity or earlier redemption.
The term "Maintenance and Operation Expenses" shall mean the
reasonable and necessary expenses of operation and maintenance of
the System, including all salaries, labor, materials, repairs and
extensions necessary to render efficient service (but only such
repairs and extensions as, in the judgment of the governing body
of the City, are necessary to keep the System in operation and
render adequate service to the City and the inhabitants thereof,
or such as might be necessary to meet some physical accident or
condition which would otherwise impair the Parity Bonds), and all
payments under contracts now or hereafter defined as operating
expenses by the Legislature of Texas. Depreciation shall never be
considered as a Maintenance and Operation Expense.
The term "Net Revenues" shall mean all Gross Revenues
remaining after deducting the Maintenance and Operation Expenses.
The term "Ordinance" shall mean this bond ordinance and all
amendments hereof and supplements hereto.
The term "Owner" or "Registered Owner ", when used with respect
to any Bond shall mean the person or entity in whose name such Bond
is registered in the Register. Any reference to a particular
percentage or proportion of the Owners shall mean the Owners at a
particular time of the specified percentage or proportion in
aggregate principal amount of all Bonds then outstanding under this
Ordinance, exclusive of Bonds held by the City.
The term "Parity Bonds" shall mean the Bonds, the Series 1991
Bonds, and each series of Additional Parity Bonds from time to time
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hereafter issued, but only to the extent such Parity Bonds remain
outstanding.
The term "Paying Agent" shall mean the Registrar.
The term "Record Date" shall mean, for any Interest Payment
Date, the fifteenth (15th) calendar day of the month next preceding
each Interest Payment Date.
The term "Register" shall mean the books of registration kept
by the Registrar in which are maintained the names and addresses
of, and the principal amounts of the Bonds registered to, each
Owner.
The term "Registrar" shall mean First Interstate Bank of
Texas, N.A., Houston, Texas, and its successors in that capacity.
The term "Series 1991 Bonds" shall mean the City of Baytown,
Texas, Waterworks and Sewer System Revenue Bonds, Series 1991.
The term "Special Project" shall mean, to the extent permitted
by law, any waterworks or sanitary sewer system property,
improvement or facility declared by the City not to be part of the
System and substantially all of the costs of acquisition,
construction, and installation of which is paid from proceeds of
a financing transaction other than the issuance of bonds payable
from ad valorem taxes or Net Revenues of the System, and for which
all maintenance and operation expenses are payable from sources
other than revenues of the System, but only to the extent that and
for so long as all or any part of the revenues or proceeds of which
are or will be pledged to secure the payment or repayment of such
costs of acquisition, construction and installation under such
financing transaction.
The term "System" shall mean• all properties, facilities,
improvements, equipment, interests, and rights constituting the
waterworks and sanitary sewer system of the City, including all
future extensions, replacements, betterments, additions, and
improvements to the System. The System shall not include any
Special Project.
Section 2.2: _Interpretations. All terms defined herein and
all pronouns used in this Ordinance shall be deemed to apply
equally to singular and plural and to all genders. The titles and
headings of the articles and sections of this Ordinance have been
inserted for convenience of reference only and are not to be
considered a part hereof and shall not in any way modify or
restrict any of the terms or provisions hereof. This Ordinance and
all the terms and provisions hereof shall be liberally construed
to effectuate the purposes set forth herein and to sustain the
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validity of the Parity Bonds and the validity of the lien on and
pledge of the Net Revenues to secure the payment of the Parity
Bonds.
ARTICLE III
TERMS OF THE BONDS
Section 3.1: Authorization and Authorized Amount. The Bonds
shall be issued pursuant to the Act in fully registered form,
without coupons, in the amount of $4,410,000. The estimated
maximum amount, the amount appropriated, and the purposes for which
the Bonds are issued are $1,110,000 for improving and extending the
City's waterworks system and $3,300,000 for improving and extending
the City's sanitary sewer system.
Section 3.2: Designation. Date. and Interest Payment Dates.
The Bonds shall be designated as "City of Baytown, Texas,
Waterworks and Sewer System Revenue Bonds, Series 1992," and shall
be dated November 1, 1992. The Bonds shall bear interest at the
rates set out in Section 3.3 of this Ordinance from the later of
November 1, 1992, 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, payable on
February 1, 1993, and semiannually thereafter on August 1 and
February 1 of each year until maturity or earlier redemption.
Section 3.3: Initial Bonds; Numbers and Denomination. The
Bonds shall be initially issued bearing the numbers, in the
principal amounts, and bearing interest at the rates set forth in
the following schedule, and may be transferred and exchanged as
set out in this Ordinance. The Bonds shall mature, subject to
prior redemption in accordance with this Ordinance, on February 1
in each of the years and in the amounts set out in such schedule.
Bonds delivered on transfer of or in exchange for other Bonds shall
be numbered in order of their authentication by the Registrar,
shall be in the denomination of $5,000 or integral multiples
thereof, and shall mature on the same date and bear interest at the
same rate as the Bond or Bonds `..n lieu of which they are delivered.
Bond
Principal
Year of
Interest
Number
Amount
Maturity
Rate
R- 1
$ 100,000
1994
$
R- 2
110,000
1995
$
R- 3
115,000
1996
$
R- 4
125,000
1997
$
R- 5
135,000
1998
$
R- 6
145,000
1999
$
R- 7
155,000
2000
$
aC
R- 8
170,000
2001 $
R- 9
180,000
2002 $
R -10
190,000
2003 $
R -11
205,000
2004 $
R -12
210,000
2005 $
R -13
225,000
2006 $
R -14
235,000
2007 $
R -15
250,000
2008 $
R -16
270,000
2009 $
R -17
280,000
2010 $
R -18
300,000
2011 $
R -19
11010,000
2012 $
Section 3.4: Execution of Bonds; Seal. The Bonds shall be
signed on behalf of the City by the Mayor and countersigned by the
City Clerk, by their manual, lithographed, or facsimile signatures,
and the official seal of the City shall be impressed or placed in
facsimile thereon. Such facsimile signatures on the Bonds shall
have the same effect as if each of the Bonds had been signed
manually and in person by each of said officers, and such facsimile
seal on the Bonds shall have the same effect as if the official
seal of the City had been manually impressed upon each of the
Bonds. If any officer of the City whose manual or facsimile
signature shall appear on the Bonds shall cease to be such officer
before the authentication of such Bonds or before the delivery of
such Bonds, such manual or facsimile signature shall nevertheless
be valid and sufficient for all purposes as if such officer had
remained in such office.
Section 3.5.: Approval By Attorney General; Registration by
Comptroller. The Bonds to be initially issued shall be delivered
to the Attorney General of Texas for examination and approval and
shall be registered by the Comptroller. The manually executed
registration certificate of the Comptroller substantially in the
form provided in Article 4 of this Ordinance shall be affixed or
attached to the Bonds to be initially issued.
Section 3.6: Authentication. Except for the Bonds to be
initially issued, which need not be authenticated, only such Bonds
as shall bear thereon a certificate of authentication substantially
in the form provided in Article 4 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 Bond so
authenticated was delivered by the Registrar hereunder.
Section 3.7. Payment of Principal and Interest. The
Registrar is hereby appointed as the registrar and paying agent for
the Bonds. The principal of the Bonds shall be payable, without
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Wi
exchange or collection changes, in any coin or currency of the
United States of America which, on the date of payment, is legal
tender for the payment of debts due the United States of America,
upon their presentation and surrender as they respectively become
due and payable at the principal corporate trust office of the
Registrar. The interest on each Bond 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 record as of
the Record Date, to the address of such Owner as shown on the
Register, or by such other method, acceptable to the Registrar,
requested by and at the risk and expense of the Owner.
If the date for the payment of principal or interest on any
Bond is not a Business Day, then the date for such payment shall
be the next succeeding Business Day, and payment on such date shall
have the same force and effect as if made on the original date such
payment was due.
Section 3.8. Successor Registrars. The City covenants that
at all times while any Bonds are outstanding it will provide a
commercial bank or trust company organized under the laws of the
State of Texas or other entity duly qualified and legally
authorized to act as Registrar for the Bonds. The City reserves
the right to change the Registrar for the Bonds on not less than
60 days written notice to the Registrar, so long as any such notice
is effective not less than 60 days prior to the next succeeding
principal or interest payment date on the Bonds. Promptly upon the
appointment of any successor Registrar, the previous Registrar
shall deliver the Register or a copy 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.
Section 3.9. Special Record Date. If interest on any Bond
is not paid on any Interest Payment Date and continues unpaid for
thirty (30) days thereafter, the Registrar shall establish a new
record date for the payment of such interest, to be known as a
Special Record Date. The Registrar shall establish a Special
Record Date when funds to make such interest payment are received
from or on behalf of the City. Such Special Record Date shall be
fifteen (15) days prior to the date fixed for payment of such past
due interest, and notice of the date of payment and the Special
Record Date shall be sent by United States mail, first class,
postage prepaid, not later than five (5) days prior to the Special
Record Date, to each Owner or record of an affected Bond as of the
close of business on the day prior to the mailing of such notice.
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"°10,
Section 3.10. Ownership: Unclaimed Principal and Interest.
Subject to the further provisions of this Section, the City, the
Registrar and any other person may treat the person in whose name
any Bond is registered as the absolute Owner of such Bond for the
purpose of making and receiving payment of the principal of or
interest on such Bond, and for all other purposes, whether or not
such Bond is overdue, and neither the City nor the Registrar shall
be bound by any notice or knowledge to the contrary. All payments
made to the person deemed to be the Owner of any Bond in accordance
with this Section 3.10 shall be valid and effectual and shall
discharge the liability of the City and the Registrar upon such
Bond to the extent of the sums paid.
Amounts held by the Registrar which represent principal of
and interest on the Bonds remaining unclaimed by the Owner after
the expiration of three years from the date such amounts have
become due and payable shall be reported and disposed of by the
Registrar in accordance with the applicable provisions of Texas
law including, to the extent applicable, Title 6 of the Texas
Property Code, as amended.
Section 3.11. Registration. Transfer. and Exchange. So long
as any Bonds 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 Bonds in
accordance with the terms of this Ordinance.
Each Bond shall be transferable only upon the presentation
and surrender thereof at the principal corporate trust office of
the Registrar, duly endorsed for transfer, or accompanied by an
assignment duly executed by the registered Owner or his authorized
representative in form satisfactory to the Registrar. Upon due
presentation of any Bond in proper form for transfer, the Registrar
shall authenticate and deliver in exchange therefor, within three
(3) Business Days after such presentation, a new Bond or Bonds,
registered in the name of the transferee or transferees, in
authorized denominations and of the same maturity and aggregate
principal amount and bearing interest at the same rate as the Bond
or Bonds so presented.
All Bonds shall be exchangeable upon presentation and
surrender thereof at the principal corporate trust office of the
Registrar for a Bond or Bonds of the same maturity and interest
rate and in any authorized denomination, in an aggregate amount
equal to the unpaid principal amount of the Bond or Bonds presented
for exchange. The Registrar shall be and is hereby authorized to
authenticate and deliver exchange Bonds in accordance with the
provisions of this Section 3.11. Each Bond delivered in accordance
with this Section 3.11 shall be entitled to the benefits and
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security of this Ordinance to the same extent as the Bond or Bonds
in lieu of which such Bond is delivered.
The City or the Registrar may require the Owner of any Bond
to pay a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with the transfer or
exchange of such Bond. Any fee or charge of the Registrar for such
transfer or exchange shall be paid by the City.
Section 3.12. Cancellation of Bonds. All Bonds paid or
redeemed in accordance with this Ordinance, and all Bonds in lieu
of which exchange Bonds or replacement Bonds are authenticated and
delivered in accordance herewith, shall be cancelled and destroyed
upon the making of proper records regarding such payment or
redemption. The Registrar shall furnish the City with appropriate
certificates of destruction of such Bonds.
Section 3.13. Mutilated. Lost. or Stolen Bonds. Upon the
presentation and surrender to the Registrar of a mutilated Bond,
the Registrar shall authenticate and deliver in exchange therefor
a replacement Bond of like maturity, interest rate and principal
amount, bearing a number not contemporaneously outstanding. The
City or the Registrar may require the Owner of such Bond to pay a
sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith and any other expenses
connected therewith, including the fees and expenses of the
Registrar.
If any Bond is lost, apparently destroyed, or wrongfully
taken, the City, pursuant to the applicable laws of the State of
Texas and in the absence of notice or knowledge that such Bond has
been acquired by a bona fide purchaser, shall execute and the
Registrar shall authenticate and deliver a replacement Bond of like
maturity, interest rate and principal amount, bearing a number not
contemporaneously outstanding, provided that the Owner thereof
shall have:
(1) furnished to the City and the Registrar satisfactory
evidence of the ownership of and the circumstances
of the loss, destruction or theft of such Bond;
(2) furnished such security or indemnity as may be required
by the Registrar and the City to save them harmless;
(3) paid 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
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(4) met any other reasonable requirements of the City
and the Registrar.
If, after the delivery of such replacement Bond, a bona fide
purchaser of the original Bond in lieu of which such replacement
Bond was issued presents for payment such original Bond, the City
and the Registrar shall be entitled to recover such replacement
Bond from the person to whom it was delivered or any person taking
therefrom, except a bona fide purchaser, and shall be entitled to
recover upon the security or indemnity provided therefor to the
extent of any loss, damage, cost or expense incurred by the City
or the Registrar in connection therewith.
If any such mutilated, lost, apparently destroyed or
wrongfully taken Bond has become or is about to become due and
payable, the City in its discretion may, instead of issuing a
replacement Bond, authorize the Registrar to pay such Bond.
Each replacement Bond delivered in accordance with this
Section 3.13 shall be entitled to the benefits and security of this
Ordinance to the same extent as the Bond or Bonds in lieu of which
such replacement Bond is delivered.
Section 3.14: Redemption. The City reserves the right, at
its option, to redeem prior to maturity the Bonds maturing on and
after February 1, 2003, in whole or from time to time in part, on
February 1, 2002, or any date thereafter, at par plus accrued
interest on the amounts called for redemption to the date fixed for
redemption. If less than all of the Bonds of a particular maturity
are to be redeemed, the City shall determine the particular Bonds
or portions thereof to be redeemed.
Principal amounts may be redeemed only in integral multiples
of $5,000. If a Bond subject to redemption is in a denomination
larger than $5,000, a portion of such Bond may be redeemed, but
only in integral multiples of $5,000. Upon surrender of any Bond
for redemption in part, the Registrar, in accordance with
Section 3.11 hereof, shall authenticate and deliver in exchange
therefor a Bond or Bonds of like maturity and interest rate in an
aggregate principal amount equal to the unredeemed portion of the
Bond so surrendered.
Notice of any redemption identifying the Bonds to be redeemed
in whole or in part shall be given by the Registrar at least thirty
days prior to the date fixed for redemption by sending written
notice by first class mail, postage prepaid, to the Owner of each
Bond to be redeemed in whole or in part at the address shown on the
Register. Such notices shall state the redemption date, the
redemption price, the place at which Bonds are to be surrendered
for payment and, if less than all Bonds outstanding of a particular All)
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maturity are to be redeemed, the numbers of the Bonds or portions
thereof of such maturity to be redeemed. Any notice given as
provided in this Section 3.14 shall be conclusively presumed to
have been duly given, whether or not the Owner receives such
notice. By the date fixed for redemption, due provision shall be
made with the Registrar for payment of the redemption price of the
Bonds or portions thereof to be redeemed, plus accrued interest to
the date fixed for redemption. When Bonds have been called for
redemption in whole or in part and due provision has been made to
redeem the same as herein provided, the Bonds or portions thereof
so redeemed shall no longer be regarded as outstanding except for
the purpose of receiving payment solely from the funds so provided
for redemption, and the rights of the Owners to collect interest
which would otherwise accrue after the redemption date on any Bond
or portion thereof called for redemption shall terminate on the
date fixed for redemption.
ARTICLE IV
FORM OF BONDS AND CERTIFICATES
Section 4.1: Forms. The form of the Bonds, including the
form of the Registrar's authentication certificate, the form of
assignment, and the form of the Comptroller's Registration
Certificate for the bonds to be initially issued, shall be
substantially as follows, with such additions, deletions and
variations, as may be necessary or desirable and not prohibited by
this Ordinance, including any legend regarding bond insurance if
such insurance is obtained by the purchaser:
FORM OF BOND
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTIES OF HARRIS•AND CHAMBERS
NUMBER AMOUNT
R- $
REGISTERED REGISTERED
CITY OF BAYTOWN, TEXAS
WATERWORKS AND SEWER SYSTEM REVENUE BOND
SERIES 1992
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INTEREST RATE: MATURITY DATE: ISSUE DATE: CUSIP:
November 1, 1992
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
The City of Baytown, Texas, a municipal corporation duly
incorporated under the laws of the State of Texas (herein the
"City ") for value received, promises to pay, but solely from
certain Net Revenues as hereinafter provided, to the Registered
Owner identified above or registered assigns, on the Maturity Date
specified above, upon presentation and surrender of this Bond at
the principal corporate trust office of First Interstate Bank of
Texas, N.A., Houston, Texas (the "Registrar "), the principal amount
identified above, in any coin or currency of the United States of
America which on the date of payment of such principal is legal
tender for the payment of debts due the United States of America,
and to pay, solely from such Net Revenues, interest thereon at the
rate shown above, calculated on the basis of a 360 day year of
twelve 30 day months, from the later of November 1, 1992, or the
most recent interest payment date to which interest has been paid
or duly provided for. Interest on this Bond is payable by check
payable on February 1 and August 1, beginning on February 1, 1993,
mailed to the registered owner as shown on the books of
registration kept by the Registrar as of the fifteenth (15th)
calendar day of the month next preceding each interest payment
date, or by such other method, acceptable to the Registrar,
requested by and at the risk and expense of the registered owner.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
BOND SET FORTH ON THE REVERSE HEREOF, WHICH PROVISIONS SHALL HAVE
THE SAME FORCE AND EFFECT AS IF SET-FORTH AT THIS PLACE.
IN WITNESS WHEREOF, the City has caused its corporate seal to
be impressed, printed, or lithographed hereon and has caused this
Bond to be executed by the manual or facsimile signatures of the
Mayor and City Clerk.
(AUTHENTICATION (SEAL) CITY OF BAYTOWN, TEXAS
CERTIFICATE)
xxxxxxxxx
Mayor
COUNTERSIGNED:
xxxxxxxxx
City Clerk
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(Back Panel of Bond)
THIS BOND IS ONE OF A DULY AUTHORIZED SERIES OF BONDS
aggregating $4,410,000, issued for the purposes of improving and
extending the City's waterworks and sanitary sewer system, as
authorized at an election held in the City on May 4, 1991, and an
ordinance adopted by the City Council of the City on November 9,
1992 (the "Ordinance ").
THIS BOND AND THE SERIES OF WHICH IT IS A PART are special
obligations of the City that are payable, together with the City's
outstanding waterworks and sewer system revenue bonds, from and are
equally and ratably secured by a first lien on the revenues of the
City's waterworks and sewer system remaining after deduction of the
operation and maintenance expenses of that system (the "Net
Revenues "), as defined and provided in the Ordinance, which Net
Revenues are required to be set aside and pledged to the payment
of the Bonds and all additional bonds issued on a parity therewith,
in the Interest and Sinking Fund and the Reserve Fund maintained
for the payment of all such Bonds, all as more fully described and
provided for in the Ordinance. This Bond and the series of which
it is a part, together with the interest thereon, are payable
solely from such Net Revenues and do not constitute an indebtedness
or general obligation of the City. The owner hereof shall never
have the right to demand payment of this obligation out of any
funds raised or to be raised by taxation.
THE CITY RESERVES THE RIGHT to redeem Bonds maturing on and
after February 1, 2003, in whole or from time to time in part, in
integral multiples of $5,000, on February 1, 2002, or any date
thereafter at par plus accrued interest on the principal amounts
called for redemption to the date fixed for redemption. Reference
is made to the Ordinance for complete details concerning the manner
of redeeming the Bonds.
NOTICE OF ANY REDEMPTION shall be given at least thirty (30)
days prior to the date fixed for redemption by first class mail,
addressed to the registered owners of each Bond to be redeemed in
whole or in part at the address shown on the books of registration
kept by the Registrar. When Bonds or portions thereof have been
called for redemption, and due provision has been made to redeem
the same, the principal amounts so redeemed shall be payable solely
from the funds provided for redemption, and interest which would
otherwise accrue on the amounts called for redemption shall
terminate on the date fixed for redemption.
THIS BOND IS TRANSFERABLE only upon presentation and surrender
at the principal corporate trust office of the Registrar, duly
endorsed for transfer or accompanied by an assignment duly executed
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by the registered owner or his authorized representative, subject
to the terms and conditions of the Ordinance.
THE BONDS ARE EXCHANGEABLE at the principal corporate trust
office of the Registrar for bonds in the principal amount of $5,000
or any integral multiple thereof, subject to the terms and
conditions of the Ordinance.
THE CITY HAS RESERVED THE RIGHT to issue additional parity
revenue bonds, subject to the restrictions contained in the
Ordinance, which may be equally and ratably payable from, and
secured by a first lien on and pledge of, the Net Revenues in the
same manner and to the same extent as this Bond and the series of
which it is a part.
IT IS HEREBY DECLARED AND REPRESENTED that this Bond has been
duly and validly issued and delivered; that all acts, conditions,
and things required or proper to be performed, exist, and be done
precedent to or in the issuance and delivery of this Bond have been
performed, existed, and been done in accordance with law; that the
Bonds do not exceed any statutory limitation; and that provision
has been made for the payment of the principal of and interest on
this Bond and all of the Bonds by the creation of the aforesaid
lien on and pledge of the Net Revenues.
FORM OF REGISTRATION CERTIFICATE
COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO.
I hereby certify that this Bond has been examined, certified
as to validity, and approved by the Attorney General of the State
of Texas, and that this Bond has been registered by the Comptroller
of Public Accounts of the State of Texas.
WITNESS MY SIGNATURE AND SEAL this
( SEAL)
xxxxxxxxxx
Comptroller of Public Accounts
of the State of Texas
FORM OF AUTHENTICATION CERTIFICATE
AUTHENTICATION CERTIFICATE
It is hereby certified that this Bond
has been delivered pursuant to the Bond
Ordinance described in the text of this
Bond.
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First Interstate Bank of Texas, N.A.
By
Authorized Signature
Date of Authentication
FORM OF ASSIGNMENT
ASSIGNMENT
For value received, the undersigned hereby sells, assigns, and
transfers unto
(Please print or type name, address, and zip code of Transferee)
(Please insert Social Security or Taxpayer Identification Number
of Transferee)
the within Bond and all rights thereunder, and hereby irrevocably
constitutes and appoints
attorney to transfer said Bond on the books kept for registration
thereof, with full power of substitution in the premises.
DATED:
Signature Guaranteed:
NOTICE: Signature must be
guaranteed by a member firm
of the New York Stock
Exchange or a commercial
bank or trust company.
Registered Owner
NOTICE: The signature above
must correspond to the name of
the registered owner as shown
on the face of this Bond in
every particular, without any
alteration, enlargement or
change whatsoever.
Section 4.2: Legal Opinions; CusiR Numbers; Bond Insurance.
The approving opinions of Vinson & Elkins L.L.P., Houston, Texas,
and CUSIP Numbers may be printed on the Bonds, but errors or
omissions in the printing of such opinions or such numbers shall
have no effect on the validity of the Bonds. If bond insurance
is obtained by the purchaser, the Bonds may bear an appropriate
legend as provided by the insurer.
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ARTICLE V
SECURITY AND SOURCE OF
PAYMENT FOR ALL PARITY BONDS
Section 5.1: Pledae and Source of Payment. The City hereby
covenants and agrees that all Gross Revenues of the System shall
be deposited and paid into the special funds heretofore
established, and shall be applied in the manner set out herein,
to provide for the payment of all Maintenance and Operation
Expenses and to provide for the payment of principal, interest
and any redemption premium of the Parity Bonds and all expenses
of paying same. The Parity Bonds shall constitute special
obligations of the City that shall be payable solely from, and
shall be equally and ratably secured by a first lien on, the Net
Revenues, as collected and received by the City, from the
operation and ownership of the System, which Net Revenues shall,
in the manner herein provided, be set aside for and pledged to
the payment of the Parity Bonds in the Interest and Sinking Fund
and Reserve Fund as hereinafter provided, and the Parity Bonds
shall be in all respects on a parity with and of equal dignity
with one another. The owners of the Parity Bonds shall never
have the right to demand payment out of any funds raised or to be
raised by taxation.
Section 5.2: Rates and Charges. So long as any Parity
Bonds remain outstanding, the City shall fix, charge and collect
rates and charges for the use and services of the System which
are calculated to be fully sufficient to produce Net Earnings of
the System (as herein defined) in each fiscal year at least equal
to 125% of the principal and interest requirements scheduled to
occur in such fiscal year on all Parity Bonds then outstanding;
but in no event shall Net Revenues ever be less than the amount
required to maintain the Interest and Sinking Fund and the
Reserve Fund as hereinafter provided, and, to the extent that
funds for such purpose are not otherwise available, to pay all
other outstanding obligations payable from the Net Revenues of
the System as and when the same become due.
For purposes of this Section, the term "Net Earnings" shall
mean all Net Revenues of the System, except that in calculating
Net Earnings there shall not be deducted as Maintenance and
Operation Expenses any charge, disbursement or expenditure for
extensions, repairs or otherwise which, under standard accounting
practice, constitutes a capital expenditure.
The City will not grant or permit any free service from the
System except for public buildings and institutions operated by
the City.
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Section 5.3: Scecial Funds. The creation of the following
special Funds in the ordinance authorizing the issuance of the
Series 1991 Bonds is hereby confirmed, and such Funds shall be
maintained and accounted for as hereinafter provided, so long as
any Parity Bonds remain outstanding:
(a) Waterworks and Sewer System Revenue Fund (the
"Revenue Fund ") ;
(b) Waterworks and Sewer System Revenue Bonds Interest
and Sinking Fund (the "Interest and Sinking
Fund "); and
(c) Waterworks and Sewer System Revenue Bonds Reserve
Fund (the "Reserve Fund ").
The Revenue Fund shall be maintained as a separate account on the
books of the City. The Interest and Sinking Fund and the Reserve
Fund shall be maintained at an official depository bank of the
City separate and apart from all other funds and accounts of the
City and shall constitute trust funds which shall be held in
trust for the benefit of the Owners of the Parity Bonds and the
proceeds of which (except for interest income, which shall be
transferred to the Revenue Fund) shall be and are hereby pledged
to the payment of the Parity Bonds. All of the Funds named above
shall be used solely as provided herein so long as any Parity
Bonds remain outstanding.
Section 5.4: Flow of Funds. All Gross Revenues of the
System shall be deposited as collected into the Revenue Fund.
Money from time to time on deposit to the credit of the Revenue
Fund shall be applied as follows in the following order of
priority:
(a) First, to pay Maintenance and Operation Expenses.
(b) Second, to make all deposits into the Interest and
Sinking Fund required by this Ordinance, the
ordinance authorizing.the issuance of the Series
1991 Bonds, and any ordinance authorizing the
issuance of Additional Parity Bonds.
(c) Third, to make all deposits into the Reserve Fund
required by this Ordinance, the ordinance
authorizing the issuance of the Series 1991 Bonds,
and any ordinance authorizing the issuance of
Additional Parity Bonds.
(d) Fourth, for any lawful purpose.
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Whenever the total amounts on deposit to the credit of the
Interest and Sinking Fund and the Reserve Fund shall be
equivalent to the sum of the aggregate principal amount of all
outstanding Parity Bonds plus the aggregate amount of all
interest accrued and to accrue thereon, no further payments need
be made into the Interest and Sinking Fund or the Reserve Fund.
Section 5.5: Interest and Sinking Fund. On or before the
last Business Day of each month so long as any Parity Bonds
remain outstanding, after making all required payments and
provision for payment of Maintenance and Operation Expenses,
there shall be transferred into the Interest and Sinking Fund
from the Revenue Fund
(i) such amounts, in approximately equal monthly
installments, as will be sufficient to
accumulate the amount required to pay the
interest scheduled to become due on the
Parity Bonds on the next interest payment
date; and
(ii) such amounts, in approximately equal monthly
installments, as will be sufficient to
accumulate the amount required to pay the
next maturing principal of the Parity Bonds,
including the principal amounts of, and any
redemption premium on, any Parity Bonds
payable as a result of the exercise or
operation of any optional or mandatory
redemption provision contained in any
ordinance authorizing the issuance of Parity
Bonds.
Money deposited to the credit of the Interest and Sinking Fund
shall be used solely for the purpose of paying principal (at
maturity or prior redemption or to purchase Parity Bonds issued
as term bonds in the open market to be credited against mandatory
redemption requirements), interest and any redemption premium on
the Parity Bonds, plus all bank charges and other costs and
expenses relating to such payment. On or before each principal
and /or interest payment date on the Parity Bonds, the City shall
transfer from the Interest and Sinking Fund to the paying agents
an amount equal to the principal, interest and any redemption
premium payable on the Parity Bonds on such date, together with
an amount equal to all bank charges and other costs and expenses
relating to such payment. The paying agents shall totally
destroy all paid Parity Bonds and shall provide the City with an
appropriate certificate of destruction.
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Section 5.6: Reserve Fund. Unless the Reserve Fund is
fully funded, on or before the last Business Day of each month so
long as any Parity Bonds remain outstanding, after making all
required payments and provision for payment of Maintenance and
Operation Expenses, and after making the transfers into the
Interest and Sinking Fund required in the preceding Section,
there shall be transferred into the Reserve Fund from the Revenue
Fund an amount at least equal to one - sixteeth (1 /60th) of the
average annual principal and interest requirements on the Parity
Bonds, so that the Reserve Fund shall contain, in no more than 60
months after the issuance of each such issue of Parity Bonds,
money and investments in an aggregate amount at least equal to
the average annual principal and interest requirements on all
Parity Bonds then outstanding. After such amount has accumulated
in the Reserve Fund and so long thereafter as such Fund contains
such amount, no further deposits shall be required to be made
into the Reserve Fund, and any excess amounts may be transferred
to the Revenue Fund. But if and whenever the balance in the
Reserve Fund is reduced below such amount, monthly deposits into
such Fund shall be resumed and continued in amounts at least
equal to one - sixtieth (1 /60th) of the average annual principal
and interest requirements on the Parity Bonds until the Reserve
Fund has been restored to such amount. The Reserve Fund shall be
used to pay the principal of and interest on the Parity Bonds at
any time when there is not sufficient money available in the
Interest and Sinking Fund for such purpose and it may be used
finally to pay and retire the last Parity Bonds to mature or be
redeemed.
Section 5.7: Deficiencies in Funds. If in any month there
shall not be deposited into any Fund maintained pursuant to this
Article the full amounts required herein, amounts equivalent to
such deficiency shall be set apart and paid into such Fund or
Funds from the.first available and unallocated money in the
Revenue Fund, and such payment shall be in addition to the
amounts otherwise required to be paid into such Funds during the
succeeding month or months. To the extent necessary, the rates
and charges for the System shall be increased to make up for any
such deficiencies.
Section 5.8: Investment of Funds: Transfer of Investment
Income. (a) Money in the Revenue Fund, the Interest and Sinking
Fund and the Reserve Fund may, at the option of the City, be
invested in time deposits or certificates of deposit of
commercial banks secured in the manner required by law for public
funds and insured by the Federal Deposit Insurance Corporation to
the maximum extent permitted by law, or be invested in direct
obligations of, or obligations fully guaranteed by, the United
States of America; provided that all such deposits and
investments shall be made in such manner that the money required
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to be expended from any Fund will be available at the proper time
or times, and provided further that in no event shall such
deposits or investments of money in the Reserve Fund mature later
than the final maturity date of the Parity Bonds. Any obligation
in which money is so invested shall be kept and held in the
official depository bank of the City at which the Fund is
maintained from which the investment was made. All such
investments shall be promptly sold when necessary to prevent any
default in connection with the Parity Bonds.
(b) All interest and income derived from such deposits and
investments shall be transferred or credited as received to the
Revenue Fund, and shall constitute Gross Revenues of the System.
Section 5.9: Security for Uninvested Funds. So long as any
Parity Bonds remain outstanding, all uninvested money on deposit
in, or credited to, the Revenue Fund, the Interest and Sinking
Fund and the Reserve Fund shall be secured by the pledge of
security, as provided by Texas law.
ARTICLE VI
ADDITIONAL BONDS
Section 6.1: Additional Parity Bonds. The City reserves
the right to issue, for any lawful purpose (including the
refunding of any previously issued Parity Bonds or any other
bonds or obligations of the City issued in connection with or
payable from the revenues of the System), one or more series of
Additional Parity Bonds payable from and secured by a first lien
on the Net Revenues of the System, on a parity with the Bonds,
the Series 1991 Bonds, and any previously issued Additional
Parity Bonds; provided, however, that no Additional Parity Bonds
may be issued unless:
(a) The Additional Parity Bonds mature on, and
interest is payable on, the same days of the year
as the Bonds;
(b) The Interest and Sinking Fund and the Reserve Fund
each contains the amount of money then required to
be on deposit therein;
(c) For either the preceding fiscal year or any
consecutive 12 -month period out of the IS month
period immediately preceding the month in which
the ordinance authorizing such Additional Parity
Bonds is adopted (the "Base Period"), either:
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(1) Net Earnings of the System (as hereinbelow
defined) were equal to at least 125% of the
average annual principal and interest
requirements on all Parity Bonds that will be
outstanding after the issuance of the series
of Additional Parity Bonds then proposed to
be issued, as certified by the City's
Director of Finance or by an independent
certified public accountant or firm of
independent certified public accountants; or
(2) Net Earnings of the System, as adjusted to
give effect to any rate increase for the
System that has been in effect for at least
60 days prior to the adoption of the
ordinance authorizing the issuance of the
series of Additional Parity Bonds then
proposed to be issued, to the same extent as
if such rate increase had been in effect for
the entire Base Period, would have been at
least equal to the amount required in
paragraph (1) above, as certified by an
independent consulting engineer or
independent firm of consulting engineers;
provided, however, that this requirement shall not
apply to the issuance of any series of Additional
Parity Bonds for refunding purposes that will have
the result of reducing the average annual
principal and interest requirements on Parity
Bonds; and
(d) Provision is made in the ordinance authorizing the
Additional Parity Bonds then proposed to be issued
for (1) additional payments into the Interest and
Sinking Fund sufficient to provide for any
increased principal and interest requirements on
the Parity Bonds resulting from the issuance of
the Additional Parity Bonds and (2) payments into
the Reserve Fund so that such Fund will, in not
later than 60 months from the date of issuance of
such Additional Parity Bonds, contain a balance
not less than the average annual principal and
interest requirements on all Parity Bonds that
will be outstanding after the issuance of such
series of Additional Parity Bonds.
For purposes of Section 6.1(c), the term "Net Earnings of
the System" shall mean all of the Net Revenues of the System,
except that in calculating Net Earnings there shall not be
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deducted as Maintenance and Operation Expenses any charge,
disbursement or expenditure for extensions, repairs or otherwise
which, under standard accounting practice, constitutes a capital
expenditure.
Section 6.2: Subordinate Lien Bonds. The City reserves the
right to issue, for any lawful purpose, bonds, notes or other
obligations secured in whole or in part by liens on the Net
Revenues that are junior and subordinate to the lien on Net
Revenues securing payment of the Parity Bonds. Such subordinate
lien obligations may be further secured by any other source of
payment lawfully available for such purposes.
Section 6.3: Special Project Bonds. The City reserves the
right to issue revenue bonds secured by liens on and pledges of
revenues and proceeds derived from Special Projects.
F.TZVO04 M i1& * 4
COVENANTS AND PROVISIONS
RELATING TO ALL PARITY BONDS
Section 7.1: Punctual Payment of Parity Bonds. The City
will punctually pay or cause to be paid the interest on and
principal of all Parity Bonds according to the terms thereof and
will faithfully do and perform, and at all times fully observe,
any and all covenants, undertakings, stipulations and provisions
contained in this Ordinance and in any ordinance authorizing the
issuance of Additional Parity Bonds.
Section 7.2: Maintenance of System. So long as any Parity
Bonds remain outstanding, the City covenants that it will at all
times maintain the System, or within the limits of its authority
cause the same to be maintained, in good condition and working
order and will operate the same, or-cause the same to be
operated, in an efficient and economical manner at a reasonable
cost and in accordance with sound business principles. In
operating and maintaining the System, the City will comply with
all contractual provisions and agreements entered into by it and
with all valid rules, regulations, directions or orders of any
governmental, administrative, or judicial body promulgating same,
noncompliance with which would materially and adversely affect
the operation of the System.
Section 7.3: Sale or Encumbrance of System. So long as any
Parity Bonds remain outstanding, the City will not sell, dispose
of or, except as permitted in Article VI, further encumber the
System; provided, however, that this provision shall not prevent
the City from disposing of any portion of the System which is
being replaced or is deemed by the City to be obsolete, worn out,
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1011'1
surplus or no longer needed for the proper operation of the
System. Any agreement pursuant to which the City contracts with
a person, corporation, municipal corporation or political
subdivision to operate the System or to lease and /or operate all
or part of the System shall not be considered as an encumbrance
of the System.
Section 7.4: Insurance. The City further covenants and
agrees that it will keep the System insured with insurers of good
standing against risks, accidents or casualties against which and
to the extent customarily insured against by political
subdivisions of the State of Texas operating similar properties,
to the extent that such insurance is available. The cost of all
such insurance together with any additional insurance, shall be a
part of the Maintenance and Operation Expenses. All net proceeds
of such insurance shall be applied to repair or replace the
insured property that is damaged or destroyed, or to make other
capital improvements to the System, or to redeem Parity Bonds.
Section 7.5: Accounts. Records. and Audits. So long as any
Parity Bonds remain outstanding, the City covenants and agrees
that it will maintain a proper and complete system of records and
accounts pertaining to the operation of the System in which full,
true and proper entries will be made of all dealings,
transactions, business and affairs which in any way affect or
pertain to the System or the Gross Revenues or the Net Revenues
thereof. The City shall after the close of each of its fiscal
years cause an audit report of such records and accounts to be
prepared by an independent certified public accountant or
independent firm of certified public accountants. Each year
promptly after such audit report is prepared, the City shall
furnish a copy thereof without cost to the Municipal Advisory
Council of Texas, the major municipal rating agencies and any
owners of Parity Bonds who shall request same. All expenses
incurred in preparing such audits shall be Maintenance and
Operation Expenses.
Section 7.6: ,Competition. To the extent it legally may,
the City will not grant any franchise or permit for the
acquisition, construction, or operation of any competing
facilities which might be used as a substitute for the System and
will prohibit the operation of any such competing facilities.
Section 7.7: Pledge and Encumbrance of Net Revenues. The
City covenants and represents that it has the lawful power to
create a lien on and to pledge the Net Revenues to secure the
payment of the Parity Bonds and has lawfully exercised such power
under the Constitution and laws of the State of Texas. The City
further covenants and represents that, other than to the payment
of the Parity Bonds, the Net Revenues are not and will not be
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made subject to any other lien, pledge or encumbrance to secure
the payment of any debt or obligation of the City, unless such
lien, pledge or encumbrance is junior and subordinate to the lien
and pledge securing payment of the Parity Bonds.
Section 7.8: Bondowners' Remedies. This Ordinance shall
constitute a contract between the City and the Owners of the
Parity Bonds from time to time outstanding and this Ordinance
shall be and remain irrepealable until the Parity Bonds and the
interest thereon shall be fully paid or discharged or provision
therefor shall have been made as provided herein. In the event
of a default in the payment of the principal of or interest on
any of the Parity Bonds or a default in the performance of any
duty or covenant provided by law or in this Ordinance, the Owner
or Owners of any of the Parity Bonds may pursue all legal
remedies afforded by the Constitution and laws of the State of
Texas to compel the City to remedy such default and to prevent
further default or defaults. Without in any way limiting the
generality of the foregoing, it is expressly provided that any
Owner of any of the Parity Bonds may at law or in equity, by
suit, action, mandamus, or other proceedings, enforce and compel
performance of all duties required to be performed by the City
under this Ordinance, including the making and collection of
reasonable and sufficient rates.and charges for the use and
services of the System, the deposit of the Gross Revenues into
the special funds herein provided, and the application of such
Gross Revenues and Net Revenues in the manner required in this
Ordinance.
Section 7.9: Discharge by Deposit. The City may discharge
its obligation to the Owners of any or all of the Parity Bonds to
pay principal, interest and redemption premium (if any) thereon
in any manner then permitted by law, including by depositing with
any paying agent for such Parity Bonds or with the State
Treasurer of the State of Texas either: (i) cash in an amount
equal to the principal amount and redemption premium, if any, of
such Parity Bonds plus interest thereon to the date of maturity
or redemption, or (ii) pursuant to an escrow or trust agreement,
cash and /or 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 Parity Bonds plus
interest thereon to the date of maturity or redemption; provided,
however, that if any of such Parity Bonds are to be redeemed
prior to their respective dates of maturity, provision shall have
been made for giving notice of redemption as provided in the
ordinance authorizing such Parity Bonds. Upon such deposit, such
Parity Bonds shall no longer be regarded to be outstanding or
unpaid.
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Section 7.10: Paying Agents May Own Parity Bonds. The
paying agents for the Parity Bonds, in their individual or any
other capacity, may become holders or pledges of the Parity Bonds
with the same rights they would have if they were not paying
agents.
Section 7.11: No Recourse Against City Officials. No
recourse shall be had for the payment of principal of or interest
on any Parity Bonds or for any claim based thereon or on this
Ordinance against any official of the City or any person
executing any Parity Bonds.
ARTICLE VIII
PROVISIONS CONCERNING SALE AND
APPLICATION OF PROCEEDS OF BONDS
Section 8.1: Sale. The Bonds are hereby sold and shall be
delivered to at a
price of $ plus accrued interest to the date of
delivery, subject to the approval of the Attorney General of
Texas and Vinson & Elkins L.L.P., bond counsel, and such price is
hereby found and determined to be the most advantageous
reasonably obtainable by the City pursuant to public competitive
bids. The Mayor and other appropriate officers, agents and
representatives of the City are hereby authorized to do any and
all things necessary or desirable to provide for the issuance and
delivery of the Bonds.
Section 8.2: Tax Exemption. (a) General Tax Covenant.
The City intends that the interest on the Bonds shall be
excludable from gross income for purposes of federal income
taxation pursuant to sections 103 and 141 through 150 of the
Code, and 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 Bonds to be includable in gross income,
as defined in section 61 of the Code, of the owners thereof for
purposes of federal income taxation. In particular, the City
covenants and agrees to comply with each requirement of this
Section 8.2; provided, however, that the City shall not be
required to comply with any particular requirement of this
Section 8.2 if the City has received an opinion of nationally
recognized bond counsel ( "Counsel's Opinion ") that such
noncompliance will not adversely affect the exclusion from gross
income for federal income tax purposes of interest on the Bonds
or if the City has received a Counsel's Opinion to the effect
that compliance with some other requirement set forth in this
Section 8.2 will satisfy the applicable requirements of the Code,
in which case compliance with such other requirement specified in
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such Counsel's Opinion shall constitute compliance with the
corresponding requirement specified in this Section 8.2.
(b) Use of Proceeds. The City covenants and agrees that
its use of the Net Proceeds of the Bonds will at all times
satisfy the following requirements:
The City will limit the amount of original or
investment proceeds of the Bonds 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 ten percent of
the Net Proceeds of the Bonds ( "private -use proceeds ").
For purposes of this Section, the term "person"
includes any individual, corporation, partnership,
unincorporated 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 carried on by a
governmental unit. Any use of proceeds of the Bonds in
any manner contrary to the guidelines set forth in
Revenue Procedures 82 -14, 1982 -1 C.B. 459, and 82 -15,
1982 -1 C.B. 460, 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 will not permit more than five
percent of the Net Proceeds of the Bonds and 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 Bonds. Further, the amount
of private -use proceeds of the'Bonds in excess of five
percent of the Net Proceeds of the Bonds ( "excess
private -use proceeds ") did not and will not exceed the
proceeds of the Bonds expended for the governmental
purpose of the Bonds to which such excess private -use
proceeds relate;
(iii) The City will not permit an amount of proceeds
of the Bonds exceeding the lesser of (a) $5,000,000 or
(b) five percent of the Net Proceeds of the Bonds to be
used, directly or indirectly, to finance loans to
persons other than governmental units.
When used in this Section 8.2, the term Net Proceeds of the Bonds
shall mean the proceeds from the sale of the Bonds, including
investment earnings on such proceeds, less accrued interest.
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(c) No Federal Guaranty. The City covenants and agrees not
to take any action, or knowingly omit to take any action within
its control, that, if taken or omitted, respectively, would cause
the Bonds to be "federally guaranteed" within the meaning of
section 149(b) of the Code and applicable regulations thereunder,
except as permitted by section 149(b)(3) of the Code and such
regulations.
(d) Bonds Are Not Hedge Bonds. The City covenants and
agrees that not more than 50 percent of the proceeds of the Bonds
will be invested in nonpurpose investments (as defined in section
148(f)(6)(A) of the Code) having a substantially guaranteed yield
for four years or more within the meaning of section
149(g)(3)(A)(ii) of the Code, and the City reasonably expects
that at least 85 percent of the spendable proceeds of the Bonds
will be used to carry out the governmental purposes of the Bonds
within the three -year period beginning on the date the Bonds are
issued.
(e) No- Arbitrage Covenant. The City shall certify, through
an authorized officer, employee or agent, that based upon all
facts and estimates known or reasonably expected to be in
existence on the date the Bonds are delivered, the City will
reasonably expect that the proceeds of the Bonds will not be used
in a manner that would cause the Bonds to be "arbitrage bonds"
within the meaning of section 148(a) of the Code and applicable
regulations thereunder. Moreover, the City covenants and agrees
that it will make such use of the proceeds of the Bonds including
interest or other investment income derived from Bond proceeds,
regulate investments of proceeds of the Bonds, and take such
other and further action as may be required so that the Bonds
will not be "arbitrage bonds" within the meaning of section
148(a) of the Code and applicable regulations thereunder.
(f) Arbitrage Rebate. The City will take all necessary
steps to comply with the requirement that certain amounts earned
by the City on the investment of the "gross proceeds" of the
Bonds (within the meaning of section 148(f)(6)(B) of the Code),
be rebated to the federal government. Specifically, the City
will (i) maintain records regarding the investment of the gross
proceeds of the Bonds as may be required to calculate the amount
earned on the investment of the gross proceeds of the Bonds
separately from records of amounts on deposit in the funds and
accounts of the City allocable to other bond issues of the City
or moneys which do not represent gross proceeds of any bonds of
the City, (ii) calculate at such times as are required by
applicable regulations, the amount earned from the investment of
the gross proceeds of the Bonds which is required to be rebated
to the federal government, and (iii) pay, not less often than
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every fifth anniversary date of the delivery of the Bonds or on
such other dates as may be permitted by applicable regulations,
all amounts required to be rebated to the federal government.
Further, the City will not indirectly pay any amount otherwise
payable to the federal government pursuant to the foregoing
requirements to any person other than the federal government by
entering into any investment arrangement with respect to the
gross proceeds of the Bonds that might result in a reduction in
the amount required to be paid to the federal government because
such arrangement results in a smaller profit or larger loss than
would have resulted if the arrangement had been at arm's length
and had the yield on the issue not been relevant to either party.
(g) Information Reporting. The City covenants and agrees
to file or cause to be filed with the Secretary of the Treasury,
not later than the 15th day of the second calendar month after
the close of the calendar quarter in which the Bonds are issued,
an information statement concerning the Bonds, all under and in
accordance with section 149(e) of the Code and applicable
regulations thereunder.
Section 8.3: Use of Proceeds. Proceeds from the sale of
the Bonds shall, promptly upon receipt by the City, be applied as
follows:
(a) Accrued interest and any premium shall be deposited
into the Interest and Sinking Fund.
(b) An amount equal to the lesser of (1) 10% of the
proceeds of sale of the Bonds or (2) the average annual
principal and interest requirements on the Bonds shall be
deposited into the Reserve Fund.
(c) The remaining proceeds from the sale of the Bonds shall
be used for the purposes set out in Section 3.1 and to pay
costs of issuance, with any remainder being transferred to
the Interest and Sinking Fund.
Section 8.4: Official Statement. The City ratifies and
confirms its prior approval of the form and content of the
Preliminary Official Statement prepared in the initial offering
and sale of the Bonds and hereby authorizes the preparation of a
final Official Statement reflecting the terms of the Purchaser's
bid and other relevant information. The use of such Official
Statement in the reoffering of the Bonds by the Purchaser is
hereby approved and authorized. The proper officials of the City
are hereby authorized to execute and deliver a certificate
pertaining to such Official Statement as prescribed therein,
dated as of the date of payment for and delivery of the Bonds.
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ARTICLE IX
MISCELLANEOUS
Section 9.1: Further Proceedings. The Mayor, the City
Manager, the City Clerk, and other appropriate officials of the
City are hereby authorized and directed to do any and all things
necessary and /or convenient to carry out the terms of this
Ordinance.
Section 9.2: Severability. 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.
Section 9.3: Open
and determined that the
adopted was open to the
time, place and purpose
required by Article 625;
amended.
Meeting
meeting
public,
of said
2 -17, Ve:
It is hereby officially found
at which this Ordinance was
and that public notice of the
meeting was given, all as
rnon's Texas Civil Statutes, as
Section 9.4: Paying Agent /Registrar Agreement. The form of
agreement setting forth the duties of the Registrar is hereby
approved, and an appropriate official of the City is hereby
authorized to execute such agreement for and on behalf of the
City.
Section 9.5: No Personal Liability. No recourse shall be
had for payment of the principal of or interest on any Bonds or
for any claim based thereon, or on this Ordinance, against any
official or employee of the City or any person executing any
Bonds.
Section 9.6: Parties interested. Nothing in this Ordinance
expressed or implied is intended or shall be construed to confer
upon, or to give to, any person or entity, other than the City,
the Registrar, and the Owners of the Bonds, any right, remedy or
claim under or by reason of this ordinance or any covenant,
condition or stipulation hereof, and all covenants, stipulations,
promises and agreements in this Ordinance shall be for the sole
and exclusive benefit of the City, the Registrar, and the Owners
of the Bonds.
Section 9.7: Repealer. All orders, resolutions and
ordinances, or parts thereof, inconsistent herewith are hereby
repealed to the extent of such inconsistency.
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Section 9.8: Effective Date. This Ordinance shall become
effective immediately upon passage by this City Council and
signature of the Mayor.
PASSED AND APPROVED this 9th day of November, 1992.
ATTEST:
/s/ Eileen P. Hall
City Clerk
CITY OF BAYTOWN, TEXAS
( SEAL)
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/s/ Bobby J. Credille
Mayor
CITY OF BAYTOWN, TEXAS